10. PERC INVESTMENT ALLOCATION AS OF
APRIL 30, 2016 (IN MILLIONS)
Deposits, $7.5, 20%
CD, $22.0, 60%
MB, $7.4, 20%
TOTAL: $37M
Cash & Money Market (Deposits)
Cert.of Deposits (CD)
Municipal Bond (MB)
11. PERC TWELVE MONTH CUMULATIVE
INVESTMENT RETURNS AT APRIL 30, 2016
(0.32%)
0.00%
1.00%
2.00%
3.00%
Total
0.81%
1.13%
Return %
Investment
Actual Returns
CPI
43. Corporate Communications Budget Initiatives: $830,000
2017 PROGRAM BUDGET â
CORPORATE COMMUNICATIONS INITIATIVES
Marketer Outreach,
$200,000, 24%
Outreach & Communications,
$230,000, 28%
Program Support,
$400,000, 48%
Activity Type
44. 44
Propane Market Challenges and
Opportunities in 2017: Setting
Expectations for PERC Programs Driving
Consumer Propane Demand
July 13, 2016
45. 45
Propane Market Challenges and Opportunities in 2017: Setting
Expectations for PERC Programs Driving Consumer Propane
Demand
July 13, 2016
By:
Michael Sloan
Principal
ICF International
9300 Lee Highway
Fairfax Virginia
22031
michael.sloan@icfi.com
703-218-2758
Disclaimer: This presentation presents the views of ICF International. The presentation includes forward-looking statements
and projections. ICF has made every reasonable effort to ensure that the information and assumptions on which these
statements and projections are based are current, reasonable, and complete. However, a variety of factors could cause
actual market results to differ materially from the projections, anticipated results or other expectations expressed in this
presentation.
46. 46
1) General market conditions plus lower propane prices create
opportunity for growth, particularly for markets competing against
electricity.
â Residential and commercial markets.
â Forklift markets.
2) The largest growth opportunities remain in internal combustion
engine markets.
â However, lower gasoline and diesel prices mean the propane industry will have
to work harder to develop these markets.
3) The propane supply balance is shifting, potentially slowing future
opportunities.
â From an over-supplied market with propane prices below sustainable levels, to
a market with potentially tighter supplies and increased price volatility.
Propane Market Conditions Impacting the Effectiveness of
PERC 2017 Programs
47. 47
2017 Propane Market Outlook â
Residential/Commercial Demand Overview
ď§ Residential housing markets
are improving:
â Growth in new construction markets
â More competitive market
ď§ Conversions away from
propane remain relatively low
due to lower prices relative to
electricity.
ď§ Long term efficiency trends will
continue to reduce use per
customer.
ď§ Commercial markets are
expected to remain relatively
stable.
â Improvements in efficiency offset
increased utilization of propane
resulting from economic growth.
Outlook for New Propane Space Heating Households
Source: ICF PDFM, US Census
48. 48
2017 Propane Market Outlook â Engine Fuel Demand
Overview
ď§ Most engine fuel markets should see
accelerating growth as new products
become more widely accepted by the
market.
â However near term growth is
constrained by low gasoline and diesel
fuel prices.
ď§ Forklift markets will continue to face
challenges from electric lift trucks and
changes in commercial markets.
â There is an opportunity for a new
generation of forklifts to grow demand.
â Lower propane prices improve
competitive position.
ď§ Agricultural markets should see solid
growth supported by agricultural engine
applications:
â Irrigation engines
â Space heating
â Grain drying load likely to decline due to
continuing improvements in efficiency
as well as low commodity prices.
0
10,000
20,000
30,000
40,000
50,000
60,000
Units
Total Propane On-Road Vehicle Sales
FORECAST
ICF Forecast of Propane On-Road Vehicle Sales
Source: ICF International
50. 50
PERC 2017 Program Impacts on Propane Gallon
Sales
ď§ The PERC programs funded by the proposed 2017 budget are
expected to lead to 120 million gallons in incremental propane sales in
2017.
â 781 million gallons in incremental propane sales for the three year period
2017 â 2019.
ď§ The PERC gallon targets reflect the PERC Staff forecast for the Council
regarding the expected impacts of PERC programs.
â The primary measurement for PERC impact is first year sales â gallons consumed by
new equipment installed during the budget year for one year of consumption.
â Cumulative impacts for three years are also reported. Gallon sales beyond the third
year add significant value to the propane industry, but are not considered in the
targets.
ď§ The estimate of PERC gallon impacts represents a simplification of the market
designed to facilitate measurement and evaluation. Actual market activity in
the target year is driven by PERC expenditures in previous budget years, as
well as the current year.
51. 51
Approach to Projecting PERC Program Impacts
ď§ The PERC gallon targets are based on a projection of PERC impact on market
activity for each specific PERC program:
â # of propane vehicles/ irrigation engines/ etcâŚinstalled during the budget year.
â Attributed to PERC activity:
â For example, new residential propane households or propane forklift sales that would
have occurred in the absence of PERC activity are not credited to PERC.
â Incremental residential propane households and incremental propane forklift sales are
attributed to PERC.
ď§ For equipment sales for new propane technologies, projected sales are
based on program expectations provided by PERC project managers
based on input from PERC partners and expected market conditions.
ď§ For residential and commercial construction, and other activities not
directly related to specific technologies, ICF works with PERC staff to
develop a baseline and program impact estimate reflecting market
conditions and program potential.
52. 52
Approach to Projecting PERC Program Impacts
ď§ The overall PERC Gallon Impact targets are scaled down from the sum
of the individual program goals to reflect realistic overall market
expectations.
â Individual program targets reflect planned (optimum) market conditions.
â Not all technologies will reach the market when expected to do so.
â Not all PERC partners will follow through on marketing activities and schedules.
â Market conditions may not be as healthy as expected.
ď§ PERC investments in consumer education and industry outreach impact
the likelihood of success for PERC programs.
â The greater the investment in market outreach activities, the more likely PERC
programs are to reach program targets.
â Residential and commercial programs supported by the consumer education
program are expected to reach on average 65 percent of the individual
program targets.
â Engine fuel and commercial technology programs are less likely to benefit
from the consumer education program are expected to reach on average 60
percent of the individual program targets.
53. 53
ď§ PERC targets have increased
over time as PERC
investments have had a
cumulative impact on the
market.
â For example, school bus sales
are expected to increase even
though PERC investment in the
sector does not.
ď§ Three year targets for 2017
are down slightly due to
slower penetration of
propane engines.
â Due to lower diesel and
gasoline prices.
Growth in PERC Gallon Growth Targets Over Time
-
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
140,000,000
2013 2014 2015 2016 2017
PromisedPERCProgramImpacts
(Gallons)
First Year Gallon Target
-
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
600,000,000
700,000,000
800,000,000
900,000,000
1,000,000,000
2013 2014 2015 2016 2017
PromisedPERCProgramImpacts
(Gallons)
3-Year Cumulative Gallon Target
54. 54
2017 PERC Staff Gallon Growth Target
Potential
Increase in
Unit Sales
in 2017
Potential
Contribution
to Gallons in
2017*
Potential
Contribution
to Gallons in
2018*
Potential
Contribution
to Gallons in
2019*
Cumulative
Contribution to
Gallons 2017 -
2019**
Propane Engine Programs
On-Road Vehicles 7,485 24,400,590 28,813,238 34,329,047 165,157,292
School Buses 2,505 9,420,000 10,087,500 10,921,875 59,356,875
Other OEM 2,580 10,180,590 12,725,738 15,907,172 71,900,417
Conversions*** 2,400 4,800,000 6,000,000 7,500,000 33,900,000
Commercial Mowers 4,214 4,042,500 4,479,510 4,927,461 26,013,981
OEM 2,114 1,942,500 2,169,510 2,386,461 12,552,981
Conversions 2,100 2,100,000 2,310,000 2,541,000 13,461,000
Other Non-Agricultural Engines*** 10,431 34,170,000 39,651,000 42,329,100 224,141,100
Sum of Engine Fuel Programs 22,130 62,613,090 72,943,748 81,585,608 415,312,373
Agricultural Sector Programs
Irrigation and Other Agricultural Engines 2,678 14,601,048 15,999,532 16,477,725 92,279,931
Other Agricultural 6,757 16,733,925 18,616,325 18,802,615 106,237,040
Sum of Agricultural Sector Programs 9,435 31,334,973 34,615,857 35,280,340 198,516,971
Residential Sector Programs
New Construction/Renovation/ Conversion 110,889 18,552,396 21,084,411 20,331,324 118,157,333
Commercial Sector Programs
New Construction/Renovation/ Conversion 4,998 7,212,449 8,196,798 7,904,027 45,934,969
Residential and Commercial New Technology
(CHP, Generators, Heat Pumps) 2,730 575,640 611,416 645,554 3,595,306
Sum of Programs 150,182 120,288,548 137,452,229 145,746,852 781,516,953
55. 55
Footnotes to Gallon Target Table
*Potential contribution to gallons reflects gallons consumed by the units sold in each
year. Hence the potential contribution to gallons in 2018 reflects only the gallons
consumed by the units sold in 2018.
**Cumulative contribution to gallons reflects the gallons consumed by all of the units
sold in 2016, 2017, and 2018. Hence the cumulative contribution to gallons includes
the gallons consumed by the units sold in 2016 over the three year period from 2016
through 2018, the gallons consumed by the units sold in 2017 for the two year period
from 2017 through 2018, as well as the gallons consumed by the units sold in 2018
during 2018
*** Total unit sales in the market exceed the incremental units shown. Not all units
sold are attributed to PERC efforts, and not all units sold are considered incremental to
the market.
60. 2017 BUDGET RESOURCE DISTRIBUTION
(IN MILLIONS)
Program Labor
$4.2 , 10%
IT Support
$0.4 , 1%
Rebates
$7.8 , 19%
Operating Programs
$25.3 , 61%
Admin Expenses
$2.7 , 7%
Other Expenses
$0.5 , 1%
Surplus
$0.4 , 1%
TOTAL: $41.4 million
61. 2017 BUDGETED OPERATING PROGAMS
(IN MILLIONS)
Residential &
Commercial
$2.4 , 9%
Agriculture
$1.9 , 8%
Consumer Campaign
$8.2 , 32%
Engine Fuel
$5.5 , 22%
Corporate
Communications
$1.0 , 4%
Propane Industry
$4.8 , 19%
Partnership with States
$1.5 , 6%
TOTAL: $25.3 million
62. 2017 PROPOSED CAPITAL BUDGET
Program Development
$132,000, 72%
IT Hardware Operations
$6,000, 3%
Office Capital Fund
$45,000, 12%
Program Development
⢠Contacts Management
⢠FPR Enhancements
⢠Websites
TOTAL: $183,000
63. 2017 BUDGET RESOURCE DISTRIBUTION
(IN MILLIONS)
Program Labor
$4.2 , 10%
IT Support
$0.4 , 1%
Rebates
$7.8 , 19%
Operating Programs
$25.3 , 61%
Admin Expenses
$2.7 , 7%
Other Expenses
$0.5 , 1%
Surplus
$0.4 , 1%
TOTAL: $41.4 million
71. UNIQUE ENGINES AVAILABLE BY
HORSEPOWER RANGE
0
2
4
6
8
10
12
14
16
18
20
0-99 100-175 >175
Continuous Horsepower at 1800 RPM
NumberofEngines
72. DOCKET 20896
⢠Objective is to stimulate the development of competitive new high
horsepower (>175HP at 1800 continuous HP) industrial engines, to be ready
to compete with Tier 4f engines as flex programs expire.
⢠Partners selected by an RTD HHP engine working group.
⢠Target of $100,000 per applicant; however, working group may choose to
fund more or fewer at higher or lower amounts.
⢠Phased funding based on milestone achievements.
⢠25% with a certification ready engine
⢠35% upon EPA certification
⢠40% with 50 units sold within 36 months
OFF-ROAD ENGINE DEVELOPMENT STIMULATION
Primary Contractor PERC with up to 5 OEM partners TBD
Amount $515,000
74. DOCKET 20905
⢠3.5 year project (time sensitive)
⢠Maximum PERC contribution: $6,083,162
⢠Cummins contribution: $6,083,162
⢠Seeking Department of Energy funding (April 2017)
⢠Development and demonstration
⢠Suitable for bobtail and other class 6-7 applications
High Efficiency, High Performance, Ultra-Low NOx Medium Duty
Propane Engine
Primary Contractor Cummins, Inc.
Amount $1,000,000
78. CONSUMER EDUCATION CAMPAIGN
Goal: Develop a consumer-facing campaign that communicates the
benefits of propane and the diversity of applications in the home and in
the community.
Strategy: Create a diversified multimedia plan to reach users and
nonusers nationally, through a mix of national and geo-targeted tactics.
Target audience â Consumers 35 to 64 with limited or no access to
natural gas.
80. PROUDLY PROPANE ROLLOUT
⢠Industry Outreach â January
⢠Marketer Materials â June 15
⢠Social Media (Facebook) â June 22
⢠Print â June 24
⢠Press Release â June 27
⢠TV Commercials â June 27
⢠Consumer Website â June 27
⢠YouTube Channel â June 27
⢠Cinema â July 1
⢠Radio â July 18
⢠Facebook Sweepstakes â July 25
84. BRAND AND SOCIAL MEDIA GUIDELINES
⢠Doâs and donâts of graphic design
⢠Color specifications
⢠Sizing requirements
⢠Photograph guidelines
⢠Brand voice
⢠Crisis action plan
⢠Posting frequency
⢠Trending topics
85. MEDIA INVESTMENT BY CHANNEL
60%
22%
9%
9%
Video
Digital
Audio
Print
$7 million
86.
87. MEDIA STRATEGY
⢠National air cover
⢠Geo-targeted heavy up
Channel Reach Potential
TV 97%
Smartphone 92%
Radio 88%
Computers 72%
Newspaper 63%
Magazine 62%
Tablet 42%
92. TV PROGRAMS
Dogs 101
Penn Vet
The Vet Life
Dr. Jeff Rocky Mountain
Vet
Dr. Dee Alaska Vet
Pet Nation Renovation
Pets Inc.
Americaâs Cutest
My Cat from Hell
Too Cute!
My Fat Pet
Treehouse Masters
Big Cat Diary
Bad Dog
Animal Cops
Pitbulls and Parolees
Tanked
Cats 101
93. TV PROGRAMS
Yard Crashers
The Vanilla Ice Project
Texas Flip and Move
Barnwood Builders
The Treehouse Guys
Renovation Realities
Desperate Landscapes
Kitchen Crashers
Rehab Addict
Mega Decks
Salvage Dawgs
Building Alaska
94. TV PROGRAMS
Fixer Upper
Property Brothers
Beachfront Bargain Hunt
Love It or List It
House Hunters
Flip or Flop
Island Hunters
House Hunters Intâl
Property Virgins
Property Brothers
Buying & Selling
Yard Crashers
95. ROLE OF SOCIAL MEDIA
⢠Use paid social media to
strike a balance between
audience reach and
sophisticated targeting
⢠Focus on Facebook, since
thatâs where weâre most
likely to find our target
96. DRIVE AWARENESS
Complement TV campaign with
national post targeting and establish
Proudly Propanesocial channels
PROVIDE LAYERED
INTERACTIONS
Publish avariety of entertaining content
that increasingly engagesconsumers
over time
DIRECT USERS TO DEEPER
PROPANE KNOW LEDGE
Showcasethemodern usesof propane
in content and direct usersto Proudly
Propanemicrosite
INCREASE
FAVORABILITY
INSPIRE
ENGAGEM ENT
CHANGE
PERCEPTIONSSOCIAL MEDIA
98. PRINT ADS
Publication Ad Unit Issue
American Profile Full Page + Cover Strip July
Real Simple Full Page July
Time Full Page July
Popular Mechanics Full Page July/August
Midwest Living Spread July/August
American Profile Full Page August
Guideposts Full Page August
Real Simple Full Page August
This Old House Spread August
Time Full Page August
Guidepost Full Page September
Popular Mechanics Full page September
This Old House Full Page September
Time Full Page September/October
Midwest Living Full Page + Cover Strip October
American Profile Full Page November
American Profile Full Page September
104. GOING FORWARD STRATEGIES
⢠Optimize multichannel campaign
⢠Release second phase of marketer engagement plan
⢠Leverage added value to optimize investments
⢠Track and measure channel performance
⢠Test new channels and promotions to bolster impact
106. NATIONAL CABLE â ADDED VALUE
Network Tactic Description
10x billboards in
Petopia and Pet block
Sponsorship in Petopia
programming block in dog
focused shows
2x billboards
Sponsorship Hot 20
Countdown
Energy Bits
DIY Download
The Treehouse Guys
Tagged Tune-ins
Labor Day Stunt
Lower Third Graphic
Integration
Mix of sponsorships and
tagged tune-ins during
The Treehouse Guys and
other DIY scheduled
programming
107. NATIONAL CABLE â ADDED VALUE
Network Tactic Description
Lifestyle Vignette
Labor Day Stunt
Custom billboards
Mix of tune-ins and
billboards throughout GAC
scheduled programming
Tagged Tune-ins
Billboards
4-week sponsorship Cesar
911
Labor Day Stunt
Custom Billboards
Property Brothers Tagged
Tune-ins
Energy Bits
Lower Third Graphic
Integration
Mix of tune-ins and
sponsorships during
Property Brothers and
other HGTV scheduled
programming
108. NATIONAL CABLE â ADDED VALUE
:05 static with âPresented by Proudly Propaneâ voiceover and graphic
during the end card
109. NATIONAL CABLE â ADDED VALUE
DIY
:60 sponsored custom programming custom
message with âBrought to you by Proudly Propaneâ
voiceover at the beginning and end of the clip
DIY and GAC
:15 copy with âBrought to you by Proudly
Propaneâ voiceover on the end card
DIY and HGTV
Proudly Propane image will appear in the lower
third of the screen during programming
110. NATIONAL CABLE â ADDED VALUE
GAC
:60 custom copy with âBrought to you by
Proudly Propaneâ voiceover during the end card
GAC
:10 custom copy with âBrought to you by Proudly
Propaneâ voiceover during end card
HGTV
:15 tagged tune-in with âBrought to you by
Proudly Propaneâ voiceover during end card
114. DIGITAL ECOSYSTEM APPROACH
Proudly Propane Microsite
Digital Video
Run video across devices to
grow reach efficiently.
High-Impact Display
Native
Message matches
look and feel of
surrounding content
Social
Paid, earned,
owned media
Search
Paid and
organic
116. PROUDLY PROPANE SWEEPSTAKES
⢠Launch a Facebook sweepstakes to drive initial activity
to the Proudly Propane page
⢠Participants will see a Facebook ad and be prompted
to sign up
⢠The sweepstakes form will feature the Blue :30 video
118. KEY LEARNINGS
⢠Do a better job of involving MOT
⢠Be more selective about communications by PERC to
industry (fewer messages, greater frequency)
⢠Operate on a more realistic schedule
⢠Avoid partial roll out of key activities
120. Goal: Use the power of leverage to get the word out, build a
customer base faster, and generate revenue faster
⢠Conduct outreach calls to measure favorability and campaign
support:
⢠To state association executives
⢠To select industry leaders
⢠Gather testimonials from marketers
MARKETER ENGAGEMENT
121. ⢠Develop and distribute campaign presentation materials,
including Q-and-A and DVD, for trainers and PERC to
show in all MTST classes and at industry events
⢠Attend, exhibit, or present at 14 state association and
industry meetings (June â Sept.)
⢠Outreach phone calls and emails to marketers requesting
or downloading Blue materials to assess ease of use and
additional needs
⢠Building marketer momentum promotion (mid-July â Aug.)
MARKETER ENGAGEMENT
122. STATE ASSOCIATION AND INDUSTRY EVENTS
⢠Mid-Atlantic PGA Summer Meeting
⢠Mid-States Propane Expo
(KS, MO, AR, OK)
⢠MS PGA Summer Convention
⢠NC PGA Summer Board Meeting
⢠ND PGA Annual Meeting
⢠Northeast Propane Show
⢠NPGA Benchmarking Council Meetings
⢠PA PGA Annual Meeting
⢠Southern Connection Convention
(GA, SC)
⢠TN PGA Summer Convention
⢠TX PGA Crossroads Propane Expo
⢠VA PGA Summer Meeting
Attendance June â Sept.
123. Channels July Aug. Sept. Total Expected Impressions
Propane Daily News 20 20 20 60 90,000
Facebook 5 5 5 15 21,795
NPGA Reports (weekly) 3 3 3 9 21,600
PERC Update 4 4 4 12 14,064
Emails 2 2 TBD 4 7,200
Videos 2 1 - 3 2,400
State meetings 4 1 3 8 508
Industry trade shows 1 1 - 2 450
MTST classes 9 9 8 26 390
Campaign Ambassador Team 30 25 30 85 85
Council/AC meetings 1 - 1 2 115
Totals: 84 74 77 235 158,607
INDUSTRY ENGAGEMENT JULY â SEPTEMBER
127. CAMPAIGN MEASUREMENT AND TRACKING
⢠Brand study survey of 2,000 households
by Nielsen (November)
⢠Social and digital ad tracking by
comScore (September â November)
⢠Social listening by Sizmek (monthly)
⢠Survey of marketers (TBD)
PADD %
1A 5%
1B 10%
1C 13%
2 40%
3 15%
4 5%
5 11%
Participants by PADD (Nielsen)
128. CAMPAIGN METRICS
Video KPIs Native KPIs Social KPIs
Brand, Print,
TV, Radio
Sweepstakes Budget
⢠Video views
⢠Completions
⢠Cost per
view
⢠Impressions
⢠Time spent
⢠Engagement
rate
⢠Video
completion
⢠Click-through
rate
⢠Cost per
click
⢠View rate
⢠Engagement
rate
⢠CPM
⢠Cost per
engagement
⢠Signups
⢠Contact info
submission
⢠Fan photos
⢠Recall
⢠Familiarity
⢠Favorability
⢠Conversions ⢠$9.65 million