Successful incentive program keeps Union County, S.D., in hot water
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| A tour of Water Heater Innovations, Inc.,
the Eagan, Minn.-based manufacturer of Marathon water heaters,
persuaded several East River member co-ops to offer the
super-efficient units to their customers. (photo courtesy
of Water Heater Innovations, Inc.) |
Most utilities wouldn't consider an incentive
program that resulted in the installation of 500 super-efficient
electric water heaters over 13 years a runaway success unless
the utility was Union
County Electric—serving 1,000 customers.
The tiny municipal utility in southeastern South
Dakota also offers rebates on compact fluorescent light bulbs,
ground source heat pumps and other types of energy-efficient
electric heating systems, but its Marathon
water heater program is by far the most successful.
"It's a matter of finding a technology that
really fits our customers' needs," Member Services Director
Ralph Morse explained. "The
water here, especially from farm wells, is very hard on components.
Also, our tiered rate structure lends itself to electric heat,"
he added.
Utility customers seem to agree. Each year for
the last six years, about 30 customers have taken advantage
of the utility's $2.50-per-gallon rebate to replace their inefficient
old water heaters, mostly with Marathon's 85-gallon model. East
River Electric Power Cooperative, Union County's power wholesaler,
offers another $2-per-gallon incentive. "We deduct the
rebates at the time of the sale, which helps," said Morse.
"People can walk out of here with a Marathon for around
$187."
Quality product, intensive
marketing drive successful rebate program
The incentive program began 13 years ago when East River told
Morse about a new, nonmetallic hot water heater with a lifetime
warranty. Water Heater Innovations, Inc., manufacturer of Marathons,
invited the G&T and its member co-ops to tour its Eagan,
Minn., facilities. The utility managers liked what they saw
there—a hot water heater with an R-20 insulation factor
that used the same amount of electricity to heat 85 gallons
that conventional units used to heat 55 gallons. "The
water inside doesn't change the unit's skin temperature,"
Morse stated. "It puts an end to the days when people
could heat their basements with the heat loss from their water
heaters."
Water Heater Innovations was also willing to
work with small utilities to make it easier for them to carry
Marathons. For example, most manufacturers offered free delivery
on a minimum order, usually of 50 units, on a factory-direct
basis. That order was more water heaters than a co-op like Union
County could store or sell in a year. "So they dropped
the number to something we could manage," said Morse.
"And they are quick to resolve any problems with the merchandise.
I have no complaints at all about working with the company."
Union County joined East River and its member
co-ops in offering Marathons for sale to their customers and
providing rebates on installation. Morse promoted the program
with ads in the utility's "Cooperative Connections"
newsletter, ads in the county's local weekly newspaper and joint
ads in East River's newsletter. The manufacturer supplied brochures
and displays for the lobbies of utility offices. "Promotion
is just part of the budget, and we get some help from East River,"
he said. "If you have a program that is going to help your members,
you have to make sure they know about it."
Sub-metering data adds weight to advertising
In Morse's view, members would be more likely to install
Marathons if they knew exactly how much the super-efficient
water heater was going to help them. "If you want to sell
people on a technology, you have to back up marketing claims
with numbers. Otherwise, it's just more advertising."
The member services director sub-metered
different sized units in several different settings and invited
users to read the meters themselves. Members reported substantial
savings over a four- to five-year period, giving the utility
hard data to support the program. "Best of all, the Marathon
owners had plenty of hot water without using more electricity."
The incentive program took several years
to gather momentum, but eventually 50 percent of Union County's
members installed Marathons—and the market isn't
completely saturated yet. The utility was set to beat its 2003
projections on rebate requests, with 36 installations and a
month left in the year.
Initially, most installations were retrofits,
prompting Morse to admit, "When someone who used a propane
water heater for 20 years requests a Marathon, that's
my favorite."
In the last few years, the county got two
major housing developments and 50 to 60 percent of those homes
installed Marathons. About 33 percent of the new houses will
be heated by geothermal heat pumps.
There is some indication that Marathons
are not as cost effective when combined with super heater systems,
Morse noted, but electric heating still pays the greatest dividends
in safety and efficiency. "The rising price of natural
gas, the volatility of the fossil fuel market and off-peak electric
rates are making it more competitive all the time," he
concluded. "I don't want to sound like a commercial,
but Marathon water heaters and geothermals provide our members
with cost savings and, more important, peace of mind."
