CWEB.011/November.21.1996
THE PAST and the future of Northwest energy conservation and renewable resources blend in this issue of Con.WEB.
From times gone by we bring you a report on one of the largest conservation projects in the region, a 7.3-average-megawatt giant completed this past summer at a paper mill near Tacoma. It represents the dying breed of huge energy-saving endeavors funded with huge utility rebates. Looking ahead, we take a peek at the Regional Review, which, as of mid-November and with a mid-December deadline looming, had yet to definitively decide its policy preferences for the future of conservation and renewables. The Review's steering committee has, however, endorsed a limited scope for Bonneville Power Administration's ever-controversial Energy Services Business. Before that, however, BPA found itself in hot water with Pacific Northwest Generating Cooperative over a Bonneville proposal for a duct-leakage sealing program. And finally, the Northwest Energy Efficiency Alliance continues to move closer to the practice of market transformation--a cornerstone of the region's conservation future.
Read all about it below, and if you have any thoughts to share, send us an e-mail to [marko@newsdata.com].
One added note: Con.WEB will provide a special update as soon as the Regional Review steering committee makes up its collective mind on conservation and renewables.
[ IOD | Con.WEB Archives | NW EnerNet ]
The room was filled with pride and congratulations Oct. 29 at the Stone-Consolidated paper mill southwest of Tacoma. And with good reason. Employees, contractors and Tacoma City Light officials were celebrating the completion of one of the largest single-site energy conservation projects in the Pacific Northwest.
It took vision, partnership, big money and a fair amount of risk to make this mega-project work, but in the end the results were worth celebrating.
Stone-Consolidated's West Tacoma Division mill now uses 64.3 million kilowatt-hours, or 7.3 average megawatts, less than it did before the project started. That translates into about $1.4 million in reduced annual operating costs for the mill. And, not least, the company improved the quality of its pulp, which means better paper for its recycled and specialty newsprint products--a notable competitive advantage.
Tacoma City Light, meanwhile, has gained a substantial energy conservation resource. In fact, according to TCL's Steve Craig, this project and other Stone-Consolidated efficiencies since 1992 have saved enough electricity to supply the utility's entire residential load growth. The price is excellent, too. This latest and biggest Stone-Consolidated energy efficiency project--a $13.4 million job partially funded by $6.4 million from Bonneville Power Administration--finished at a cost of .75 cents/KWh (15 years levelized).
The municipal utility also has gained the satisfaction of its second-largest customer. Stone-Consolidated officials spoke glowingly Oct. 29 of Tacoma's support, financial and otherwise, for the efficiency improvements. "Without their effort, this never would have happened," said West Tacoma Division general manager Mike Dully, calling it "a great example of a real partnership between a customer and their supplier."
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To Craig, this relationship-building is critical as the competitive electric industry unfolds. Utilities need to "make sure we nurture the largest customers and meet their needs. Before, we took [industrial customers] for granted," he explained. Their needs extend well beyond energy savings to productivity, environmental, safety and other vital concerns. This past April, at the Northwest Industrial Efficiency Forum, Craig declared that utilities must "meet the needs of industrial customers or they will lose them. Retaining industrial customers is the most important mission of electric utilities today."
The bond developed between TCL and Stone-Consolidated has already extended to a new five-year contract in which the company, beginning next October, will be able to buy open-market electricity for all but 14 MW (or about 20 percent) of its power needs. Tacoma will provide transmission, billing and load-shaping services, according to Om Bhatia, the plant's technical, energy and environmental services director. The utility also will act as a "broker/advisor" for Stone-Consolidated in the marketplace, said superintendent Steve Klein. Bhatia anticipates electric-bill savings of 20 percent with market-priced power, compared to the company's current TCL melded rate of about 2.3 cents/KWh. Tacoma and its other customers also benefit, Klein noted, through reduced purchases of higher-priced BPA electrons. Plus, Stone-Consolidated will assume price and supply risks in the market, and leave no stranded costs on Tacoma's system. "It's definitely a win-win," said the superintendent.
Project BackgroundThe Oct. 29 festivities at Stone-Consolidated culminated a process several years in the works, dating back to earlier collaborations between the company and TCL, notably the successful installation of a high-efficiency wastewater aeration system that reduced power and water consumption at the mill (see Conservation Monitor, March 1995).
Bhatia liked the aeration project and subsequently turned his attention to the plant's thermo-mechanical pulping process, where wood chips are refined into pulp that Stone-Consolidated then turns into paper. The two TMP lines supply 60 percent of the mill's pulp (recycled materials provide the rest) and formerly used about 65 percent of the plant's total energy. Bhatia saw a "tremendous potential for energy conservation" in the TMP system; Tacoma approved $50,000 for an energy audit conducted by NLK Inc.
What emerged was a plan for a major revamping of the entire TMP process, using a package of technologies never before used together at any mill in the world. "This was probably a bigger risk than even we recognized," acknowledged project leader Karen Hart. Although she and her Stone-Consolidated colleagues were optimistic the technologies would work, "Our [industry] peers said, 'Are you crazy?'"
Twenty years earlier, the West Tacoma mill (then owned by Boise Cascade) installed the first TMP process in North America, according to Hart. Now came another risky venture, which Stone-Consolidated management and workers came to accept and even embrace. Bhatia called "the willingness of the mill and the mill people to take this risk" the single most important success factor for the project. "It was kind of unheard of," he said. "That really made this whole thing happen."
Bhatia himself took a chance, too, Craig noted. "No senior middle manager in their right mind would've taken this project on," he said Oct. 29. Back in April, at the Northwest Industrial Efficiency Forum, Craig was even more blunt: "If this thing didn't work, Om would be out of a job and I'd be right behind him." Bhatia said he had heard such dire talk, but he felt secure about the project and optimistic it would succeed. Rather than worry about the possibility of failure, he adopted the mind-set: "We've got to focus on how to make it happen."
A critical element for such a major undertaking was financing. Stone-Consolidated originally estimated the project would cost $11 million, of which the company thought it could afford $3.3 million. After a flurry of discussions among Tacoma City Light and Bonneville officials, the utility pledged a $6.4 million incentive from Tacoma's third-party bond-financing arrangement with BPA (see Conservation Monitor, March 1994).
Bhatia also persuaded the Stone-Consolidated board of directors to support the project. "The selling [to the board] was based on the cost benefits of . . . saving energy and of being competitive with the new technology," he said.
A project contract was signed in February 1995, with completion targeted for summer 1996.
Less Energy, Better Pulp with Revamped TMP ProcessStone-Consolidated set two primary goals with its TMP revamping: save 50 million KWh a year with equal or greater pulp quality. It succeeded on both counts.
Here's how:
This diagram shows the basics of the thermo-mechanical pulping process at Stone-Consolidated's West Tacoma Division mill. In the TMP revamping that created energy savings of 64.3 million kilowatt-hours, Stone-Consolidated installed new high-speed and high-refining equipment in the primary refiners, upgraded the secondary refiners and added the tertiary refiners. These changes account for 50.8 million KWh savings. The mill also installed variable-frequency drives on eight large pumps used in the screening and cleaning system (saving 3.7 million KWh) and rearranged various processes, primarily by idling equipment (saving 9.7 million KWH). |
In the TMP refining process at Stone-Consolidated, a series of opposite rotating plates are pressured very close together while steamed wood chips flow between them; this pressure causes the chip fibers to separate and turn into pulp. The refined pulp is then cleaned and screened in preparation for the paper-making process.
"We've modified the whole [TMP] process," explained Bhatia. The two primary refiners were replaced with new equipment, the secondary refiners were upgraded and a third, or tertiary, refiner was added to each of the two lines. These changes account for 50.8 million of the 64.3 million KWh total savings.
The centerpiece is new high-speed and high-intensity refining technologies using an advanced integrated controls strategy. The rotating plates used to spin at 1,800 revolutions per minute; now they are up to 2,300 rpm, with the same motors and same applied energy, according to Bhatia. Meanwhile, the high-intensity refining reduces the tiny gap between the plates and increases the force applied to the fibers, allowing optimum control. It also provides greater command of pulp consistency.
"The two concepts [high-speed and high-intensity refining] are not used any place together," said Bhatia, who personally visited the handful of plants in the world using separate elements of this technology.
In addition to the main-line refiner changes, Stone-Consolidated has installed variable-frequency drives on eight large pumps used in the screening and cleaning system, saving 3.7 million KWh. Assorted process rearrangements--primarily idled equipment--chalked up another 9.7 million KWh in energy savings.
Based on Stone-Consolidated's current TCL rate of 2.34 cents/KWh, the TMP changes have cut the plant's annual spending on energy--its second-biggest cost of doing business, according to Dully--by some $1.47 million. And its energy consumption per ton of pulp produced has dropped to less than 1,500 KWh, which Bhatia believes is among the lowest such rates in the world. "That is a very good competitive advantage, and sustainable," he said.
Another significant advantage from the TMP improvements is better pulp--and better paper. Most notably, the variability in pulp quality has been reduced by 25 percent to 60 percent, according to Bhatia. "That's the key driver . . . If you can reduce variability, you can consistently produce good-quality paper."
Hart acknowledged the changes had caused "some slight degradation on [pulp] strength, but that's coming back." On the whole, she said, "Our [pulp] stock is much better."
Although successful in the end, the TMP changes did not proceed flawlessly. For one thing, the final cost--$13.4 million--exceeded earlier estimates of first $11 million and then $12.6 million. "The project was not easy . . . it was not a simple installment," said Bhatia. As an example, four 12,000-horsepower motors had to be rewound to accommodate the new high-intensity refining.
Also, during the installation period this year, the mill reconfigured one TMP line at a time, essentially halving its pulp production. This put the mill "at risk of running out of pulp stock," said Hart. "It's a huge risk. It's also a big incentive to get [the project] done quickly." As it turned out, she said, the West Tacoma Division was able to obtain most of the supplemental pulp it needed from another Stone-Consolidated operation.
The project also encountered, at least initially, some resistance from the people who work on the TMP lines. There was a degree of "cynicism" about the project's chances for success, according to Bhatia. He acknowledged he may have empowered employees too much, although he took more direct involvement in the closing months of the January-August installation period.
Cultural Change at Stone-ConsolidatedThe TMP reconfiguration at Stone-Consolidated essentially finished the era of Tacoma City Light handing out big BPA-funded checks for energy conservation projects. As of Sept. 30, Craig said, Tacoma eliminated its grant funding for commercial and industrial efficiencies, although it does offer interest-free loans. "As an interesting footnote, the last industrial conservation contract was signed [Sept. 27] with Om. He sucked us dry of our last $500,000 to do six other smaller process upgrades," Craig reported.
But while the utility incentives may have disappeared, a new ethic supporting energy efficiency has taken root at Stone-Consolidated's West Tacoma Division.
Bhatia traces this cultural change to the high-efficiency wastewater-aeration system installment earlier in the decade, which he believes increased awareness of energy conservation opportunities within the mill. Now, he gets e-mails from other employees wondering how to improve the energy efficiency of a specific piece of equipment like a motor, or a process.
Hart also has noticed what she called this "interesting evolvement. I've watched over the last four, five years more and more people start asking the question, 'Is that an energy-efficient motor?' So many people have started thinking in those terms . . . We've made a cultural change. Those questions were being asked; I didn't hear that before. Small things and how you do things" can make a difference, she concluded. --Mark Ohrenschall
Bonneville Power Administration's controversial Energy Services Business has survived regional scrutiny, but with tight limits on its activities and costs, and a directive for a new name.
The reprieve came Nov. 15 from the Regional Review steering committee, which adopted a set of recommendations for Bonneville's ESB that address two primary concerns: the potential for competition with the private sector, and the prospects for the venture to become self-supporting.
Fundamentally, Bonneville's ESB "should be structured and managed to enlarge energy efficiency markets beyond that which is being profitably captured by private business," the steering committee decided. Specifically, Bonneville should only work with its regional power-sales contract customers and federal agencies, and only in "situations that are not currently accessible, viable, or profitable for the private sector energy efficiency industry." BPA should primarily serve as a "facilitator/aggregator of transactions for services provided by its partners."
In addition, the steering committee capped BPA's net costs for these so-called market development activities at $8 million from fiscal year 1997 to 2001. The committee also set a borrowing ceiling from the U.S. Treasury of $5 million annually--half what Bonneville had most recently requested. Treasury borrowing also is limited to federal energy efficiency projects. And, the venture should become self-supporting by September 1999.
Bonneville also was directed to create an advisory board, and to change the venture's name from energy services to energy efficiency, "to clarify that previous proposals to undertake a broad spectrum of other retail services have been dropped, and to preclude BPA support for load-building activities that are inconsistent with BPA's conservation directives."
Responding to the new guidelines, Terry Esvelt, Bonneville's vice president for energy services, said he was "pleased that we were given this opportunity. We think that we can make a positive contribution to the efficiency marketplace in ways that don't compete." The steering committee's recommendations are "far from an open-ended endorsement," he noted. "It's very clear this is a limited role we are proposing and that people are allowing us to do. They don't want us to be expansive . . . We've got a challenge to succeed in that environment [but] we were given permission to try."
These are "reasonable guidelines," said Stan Price, administrative director of the Northwest Energy Efficiency Council, a trade group for the region's energy efficiency industry. Many NEEC members have viewed Bonneville's ESB as a potential (and inappropriate) competitor.
"We think it's a reasonable outcome in that it provides for the industry's concerns that Bonneville in fact wouldn't be exhibiting competitive behavior with things that the private sector businesses are doing," he said. "It does afford the region the opportunity to take Bonneville up on its commitment that it wants to do things that increase the size of the efficiency marketplace."
In the federal sector particularly, Price said, Bonneville has special capabilities for developing efficiency projects. "Because of the influence Bonneville can have with them, because they are federal colleagues, they may in fact be able to bring those projects to the market more quickly than those projects would otherwise happen, and maybe some of them would never happen at all." Esvelt agreed that work with federal agencies is "probably the area of [our] greatest opportunity."
The steering committee guidelines culminate months of debate over Bonneville's ESB. BPA officials have characterized the undertaking as an attempt to expand the regional market for energy efficiency, primarily for federal agencies and small- and mid-sized utilities. Earlier ESB versions, Esvelt acknowledged to the steering committee on Oct. 31, focused on producing revenue for the agency. They outlined the potential for a wide range of energy services.
However, the ESB met with an equally wide range of skepticism, including from congresspeople (such as U.S. Rep. Peter DeFazio), investor-owned utilities (such as Portland General Electric) and the region's energy efficiency industry. Although their interests varied, their concerns centered on the notion of BPA as a government agency providing revenue-generating services in the energy marketplace.
Consequently, a U.S. House-Senate conference committee in early September established ground rules for the ESB. The conferees asked the Regional Review to take up issues of appropriate capitalization, competitive implications and potential for BPA cross-subsidies with the ESB.
Meantime, Esvelt and his staff worked with NEEC on principles for what became known as BPA's market development proposal. The six principles: grow the regional pie; act as a market catalyst; leverage private sector services; facilitate/aggregate transactions; exit viable markets after cost recovery; and track and report results. These principles were essentially incorporated in the steering committee's recommendations. --Mark Ohrenschall
Bonneville Power Administration's plan for a new residential duct-leakage sealing program directly conflicts with a similar initiative soon to be unveiled by Pacific Northwest Generating Cooperative, according to PNGC general manager David Piper.
In a Nov. 1 letter, Piper told BPA administrator Randy Hardy the Bonneville plan is an "unnecessary and expensive duplication of our efforts" and violates the compromise language on BPA's Energy Services Business adopted earlier this year by Congress. Piper said the BPA effort should be suspended.
However, Bonneville officials believe Piper has misunderstood the federal agency's intent. "The duct sealing proposal that we've got is not part of this market development activity [through ESB]. It's really market transformation," said BPA energy services vice president Terry Esvelt. Bonneville's goal is to "create a [duct sealing] knowledge base and an infrastructure so the market can take off." He anticipates this proposal will be submitted by BPA to the Northwest Energy Efficiency Alliance for consideration of regional market transformation funding.
Piper's letter referred to a Sept. 11 memo on recommendations for a second phase of the Residential Duct Leakage Control Project. The information was prepared by Pacific Sciences for BPA and the Electric Power Research Institute. It recommends pilot programs in the Washington cities of Tacoma, Spokane and Moses Lake, and the Oregon cities of Corvallis and Redmond, focused on "mass marketing (public awareness), informational training, technical training, contractor certification, program control and energy savings assessment." Research shows that people "will gladly pay for better ductwork" once they learn about the costs and benefits, the memo noted. "Many people have referred to it as a 'no brainer' after only a brief discussion."
The memo states that "accurate and reliable energy savings data are not available for duct sealing measures." It offers "rough estimates" of some project costs, totalling $250,000.
This memo, Piper wrote, "details a plan for developing new 'trademarks & logos,' newsletters, training and other promotional items to persuade our consumers and trade allies to seal up their heating ducts. As your research staff is aware, we are currently completing the same materials for a PNGC sponsored program."
PNGC's heating-duct sealing program is scheduled to debut in January 1997 with marketing and training materials "very similar" to those outlined in the memo. Piper said he had "no way of knowing" how much BPA spent on this effort, but "discussion with staff" put the amount at between $75,000 and $100,000, exclusive of expenses such as overhead, travel and BPA research staff time. He said the total costs for PNGC's heating duct sealing program "are expected to be one-fourth those proposed by BPA's research staff." He also noted BPA was an unsuccessful bidder in PNGC's 1994 open competitive process to select an organization to perform the work.
Although he believes in competition, Piper said "it makes little sense for us to have to compete with an entity, particularly a federal entity, that is funding its efforts with money that is derived--through BPA rates--from the very consumers we are seeking to serve. This appears to be the type of encroachment on private markets that Congress had in mind when it raised concerns" about the ESB.
Piper maintained that "BPA's activities in this area are inappropriate and inconsistent with current agency cost-containment policies." He said the program also violates the Statement of Manager's Language included in the 1997 Energy and Water appropriations bill that bars BPA from energy services work "that the private sector could reasonably perform."--Ben Tansey and Mark Ohrenschall
Attachment
As the Regional Review heads into its final days, energy conservation and renewable resources continue to figure prominently in the debate over the Northwest's electric future. But the exact role of negawatts and green energy remained a bit fuzzy as of mid-November--less than a month before the review's steering committee was scheduled to present a final report to the governors of Idaho, Montana, Oregon and Washington with recommendations for electric industry restructuring.
As of Nov. 18, ongoing tensions were still evident between localized and regionalized approaches to conservation and renewables (particularly renewables). Also still at issue was voluntary vs. mandatory funding by Northwest utilities. And the proposed target for regional spending on these so-called public purposes--3 percent of retail utility revenues--had not been universally accepted.
The steering committee scheduled a marathon meeting Nov. 21 and 22 (after Con.WEB deadline) to work on outstanding issues for the Review. Another meeting was planned for Dec. 5, the final scheduled committee gathering before the Dec. 12 presentation to the governors. (Editor's note: Con.WEB will post an update story on the committee's final report as soon as possible.)
The committee's draft proposal from August called for Northwest electric utilities to collectively spend 3 percent of retail revenues on conservation, renewables and low-income weatherization, or roughly $210 million a year (based on 1995 figures). Two-thirds of the money would be collected and spent locally on energy-saving projects, while the remainder--approximately $70 million--would be earmarked regionally for conservation market transformation and renewable energy activities.
Since August, the draft proposal has been the subject of nine official public hearings and countless other formal and informal reviews. The public purposes section has stirred considerable debate, along with such other major issues as federal power marketing and customer choice for electricity.
Local/Regional and Mandatory/Voluntary DebatesThe deliberations over public purposes have largely focused on two interrelated issues: the extent to which conservation and renewables should be locally derived as opposed to regionally, and whether utility funding should be mandatory or voluntary.
Public power utilities around the region generally favor the local, voluntary approach. "The biggest issue for public power is probably one of local control, the desire to make their own decisions about what sort of choices they make," said Bill Drummond, manager of Western Montana Electric Generation and Transmission Cooperative and a member of the Review steering committee.
One of the key questions has been whether public power would make sufficient pledges of support for the largely voluntary nature of the steering committee's draft proposal. In response, the Public Power Council has gathered and distributed formal commitments from more than 100 of its utility members, representing more than 90 percent of the region's public power retail load. These utilities "are on record as supporting locally controlled and implemented conservation, renewables and low income programs within their service territories," wrote PPC manager Jerry Leone.
PPC senior analyst Maureen Carr said she spoke with steering committee chairman Chuck Collins, who told her the collective commitments from public power couldn't be ignored. "I'm hoping that means we can survive without mandates," she said Nov. 18, although "some kind of an accountability mechanism or system and some kind of default" may be needed.
However, the cumulative extent of these local pledges was not immediately clear--and not enough for the Northwest Conservation Act Coalition. Coalition director Sara Patton said by her count, only six utilities--Seattle City Light, Snohomish County PUD, Eugene Water & Electric Board, Emerald PUD, Salem Electric and the city of Idaho Falls--said they would support a mandatory approach to public purposes if the voluntary 3-percent commitment falls short regionally. "All the other documents are general statements in support of conservation and that just does not meet the criteria that the Comprehensive Review set down or any reasonable expectation of continued investment and it absolutely doesn't meet the requirement that we have a competitively neutral system out there," she said.
This local/regional and voluntary/mandatory conflict also played out in the public hearings around the region this fall.
Public-power representatives often invoked the local control notion that is central to their existence. "Three-percent voluntary commitment is a half step from mandatory and would substantially erode local control of local utilities," said Bud Tracy of Raft River Rural Electric Cooperative in Idaho, at the Idaho Falls hearing.
Many public-power people reported their successful histories with energy conservation, including Mike Burnett, managing director of the Conservation and Renewable Energy System (CARES), whose consortium of eight Washington public utility districts tripled its energy-savings goals at a price of less than 1 cents per kilowatt-hour in its first two years. "This reflects a commitment based in our communities," he said at the Seattle public hearing. "Don't misinterpret public power's local control theme with a lack of commitment to public purposes."
Public power found widespread support among industrial firms whose representatives spoke at public hearings. Among the big companies who publicly endorsed the local, voluntary approach: Intalco Aluminum, Weyerhaeuser, Boise Cascade, Hewlett-Packard, Direct Service Industries Inc. and Industrial Customers of Idaho Power.
On the other side of this debate are environmental and conservation advocates, and to a degree the region's major investor-owned utilities.
At the Seattle hearing, the proposed voluntary system was repeatedly attacked as inadequate by representatives of NCAC, the Washington Environmental Council, Save Our Wild Salmon, Friends of the Earth, the Seattle Audubon Society and The Mountaineers, among others. They were among kindred spirits in the audience of some 300 people; when Tim Stearns of SOWS asked those who support conservation, renewables and salmon to stand, the vast majority of people rose. "We do want to allow local control to determine how we get there," said Stearns. "We don't want local control to determine where we're going."
Dick Fiddler, a former Seattle City Light policy analyst and longtime observer of regional conservation, said he believes "conservation simply won't happen without utility participation . . . and utility dollars." Although many utilities will do fine work on their own, he said, "We really need a long-term, stable commitment to conservation. The draft [proposal] is really a triumph of hope over experience."
Fiddler advocated a non-bypassable universal funding source for conservation, so no utilities are put at a competitive disadvantage when they finance energy-saving projects from rates.
Also supporting that idea at the Seattle hearing was Gary Swofford of Puget Power, who thought a non-bypassable meters charge should be assessed on all electric users, by state law. "We don't believe the voluntary funding system will work," he said. The meters charge concept also was endorsed at a Portland hearing by John Esler of Portland General Electric and Sheila Holden of PacifiCorp.
The IOUs want public-purposes funding to be "market-neutral," explained IOU consultant Jim Litchfield at an Oct. 17 steering committee meeting in Portland. He believes that will require "regionally consistent state legislation."
During the public hearings, disputes also arose over the 3-percent spending level specified in the steering committee's draft proposal. A number of conservation advocates and members of the energy efficiency industry thought the amount was too small, since it represents a 35-percent decrease from 1995 spending by Bonneville Power Administration and regional utilities. Others, such as Ralph Nelson of the Idaho Public Utilities Commission, reported it was greater than Idaho utilities were currently spending.
Drummond, meanwhile, raised the issue of equity. "People have generally been willing to accept the 3-percent figure as a regional target. I kind of expected a 'Hell, no' reaction from a lot of folks. The biggest thing utilities had a problem with was it was 3 percent for every utility and didn't recognize local conditions or desires," he said. The link between public purposes spending and total revenues is "a very regressive approach. It penalizes the high-cost system."
A Potential Bridge-BuilderIn mid-November, a modified public-purposes proposal emerged that seeks to span many of the ideological differences. "I think we have to get past the chest-beating on both sides of the mandatory/voluntary issue," said steering committee member K.C. Golden, who helped develop this latest approach. "Where I think the light is at the end of this tunnel is we need very strong local control and a credible minimum standard" for conservation and renewables.
Under this new plan, the public-purposes funding level would remain roughly the same as proposed in the draft, but money would be collected from a transmission system access fee--assessed on the distribution utility or direct access customer--that would remain in place until states adopted minimum standards, Golden explained. And instead of being calculated as a percentage of revenue, utility funding would be based on proportion of regional load. This would accommodate low-density, high-cost rural electric systems, he said.
This proposal also addresses one of the most contentious specific elements in the draft: the $34 million earmarked annually for regional development of new renewable resources. Many public-power utilities, in particular, have criticized this aspect of the proposal. "There's no momentous need to create an uneconomic, centrally funded, mandated [renewables program] that would be the moral equivalent of a failed WPPSS system," said Jim Davis of Douglas County PUD, another steering committee member. "Those [public-power] folks learned a lesson with centrally planned resource acquisitions from the 70s and 80s. That is something you only want to learn once."
The latest proposal would give utilities a local spending option for renewables, in which they could acquire green resources, offer a subsidized green rate to their customers or otherwise locally support renewables.
That would leave $6 million a year committed regionally by utilities to renewables research and demonstration and decentralized applications. "Local control advocates have won" this debate, said Golden.
Davis called this option "helpful" in acknowledging the value of local control, although he said he was "not really comfortable" with the transmission system access fee. The potential patchwork of exempted states "seems to defy the way electrons move."
Although the proposal did not generate instant support among public power, Davis said, "It is a serious attempt to bridge the difference. I'll give the sponsors support for their efforts . . . We all want this Regional Review final proposal to look like a consensus. There may be some elements of this proposal that might not be consensable. That's an open question."
Still, both he and Golden believe a regional agreement on public purposes and other Review issues can be achieved. "People are getting the sense inaction and failure to deliver is not one of the acceptable options," said Golden. "We've got enough to lose together" to reach common ground. --Mark Ohrenschall and Ben Tansey
Attachments
Moving closer to the practice of market transformation, the Northwest Energy Efficiency Alliance board of directors listened to presentations Nov. 12 on potential regional ventures for energy-efficient lighting, clothes washers and motors (see summaries below). Board members also shared their thoughts on a number of significant issues, notably cost-effectiveness standards, NEEA staffing and conflict-of-interest policies.
Although no major actions were taken by the board, decisions on specific ventures could be forthcoming in December. Meanwhile, the issues discussed were not resolved but the debates were furthered at the meeting at Tacoma City Light. One clear signal emerging: the NEEA organization must be lean but not anorexic. Another indication from the board: cost-effectiveness really matters, but measuring it will be a challenge.
In considering cost-effectiveness, market transformation is much different than traditional utility DSM acquisition programs. For instance, market transformation programs tend to be initially expensive but provide significant benefits in later years if markets for energy efficient products and services are permanently changed. Energy savings that cost, say, 5 to 6 cents per kilowatt-hour in the first year could become (almost!) too cheap to meter if, for example, a program leads to higher energy efficiency standards codified in law. But how should these long-term costs and benefits be measured? And how can changes in markets be accounted for in a meaningful way?
The cost-effectiveness debate matters to all NEEA members but is of particular concern to investor-owned utilities, which must answer to their regulatory agencies on energy efficiency spending. Regulators generally support the idea of market transformation, noted PacifiCorp's Brian Hedman, but, "We'll still have to go back and justify [NEEA-funded] projects." And since those funds derive from retail electric customers, the alliance needs to "somehow, some way" figure out the cost-effectiveness of electric energy savings achieved by market transformation, emphasized Mary Smith of Puget Power. Another criteria to be addressed is the total resource cost standard, she added. Several IOU representatives on the NEEA board indicated they want fairly detailed information about the costs of alliance projects.
At the same time, market transformation presents an opportunity to rethink standard evaluation criteria, according to Nancy Hirsh of the Northwest Conservation Act Coalition. "This is a new area," she said, calling for an openness to "thinking of new ways how we measure cost-effectiveness." Market transformation also needs to provide value to consumers beyond energy savings, if it is to succeed in the marketplace, according to Ken Keating of Bonneville Power Administration. "It has to be more than a techno-twit's idea of efficiency," he said.
The biggest measurement problems will come less with specific NEEA ventures than with the supporting infrastructure, believes Bev Corwin of Seattle City Light. "We can't get megawatts [of savings] unless we have that" infrastructure, she said. Regulators will need to "defer a little bit to the joint decision process of the group whether it's an intelligent way to spend the money." (Editor's note: In the interests of full disclosure, Con.WEB is a potential element of this supporting infrastructure. So too are the Lighting Design Lab, the Energy Ideas Clearinghouse, American Institute of Architect awards, industrial forums, on-line education programs and state and local government support.)
From the standpoint of the Washington Utilities and Transportation Commission, setting up evaluation methods for NEEA will be essential. "The importance is not so much on project by project determinations as it is establishing some good criteria for portfolio evaluation," said the WUTC's Doug Kilpatrick.
NEEA board members also talked about staffing, exploring a balance between having enough people to do the work but not so many as to create a mini-bureaucracy. Another aspect lies with hiring full-time people vs. contractors, as well as the use of loaned employees from NEEA members. "Is it an institution with a small flagpole and a small building or is it a virtual organization just trying to get by?" Keating asked. Corwin suggested a cap of five regular, paid staffers. "The message is: Don't think grandiose, think tight, [but] don't think you can do it without people," Keating concluded.
The top staffing priority at the moment is hiring an executive director, for which a job description was expected to be distributed before Thanksgiving. Until a director is hired, Northwest Power Planning Council people will serve as NEEA interim staff, with temporary contract help sought if needed.
Another issue emerging Nov. 12 was conflict of interest among NEEA board members. The most obvious and extreme example would be a board member personally profiting from a NEEA funding decision, but many other cases with subtler implications could arise.
Margie Gardner of the Council outlined a potential conflict-of-interest policy: If a board member's agency wants to include a local-delivery component of a NEEA venture, he or she would simply need to notify the other board members. If, however, a board member's agency wanted to be the primary sponsor of a particular project, he or she would be ineligible to vote on its approval.
It might be difficult to trace primary sponsorship, since many market transformation ventures are a collage of ideas, suggested Charlie Grist of the Oregon Office of Energy.
What really matters is the public's perception of conflict of interest, noted Smith. There could be trouble if the public thinks the process is "gamed" and NEEA funders are simply approving their own projects, said John Hines of the NWPPC's Montana office.
"If we can get this [policy] right early, it would potentially eliminate hours of future discussion," said Liz Klumpp of the Washington Department of Community, Trade and Economic Development.
This and other organizational issues are likely to come up again at the board's next three scheduled meetings: Dec. 2 and 3 and Dec. 17, in Portland, and Jan. 14 in the Seattle area. The first December meeting also will include more presentations on potential NEEA projects.
Following are brief summaries of the venture presentations from Nov. 12.
Energy-Efficient Lighting
The proposed Northwest Regional Lighting Venture would continue and expand the current LightSaver program, in which five Northwest utilities--BPA, PacifiCorp, Puget, Portland General Electric and Washington Water Power--have joined to provide $5 per bulb rebates to the two participating manufacturers of compact fluorescent lights. LightSaver aims to lower the retail price (most program bulbs sell for less than $10 apiece) and expand and transform the retail market for high-quality CFs--so energy-efficient lighting eventually becomes the "preferred option" for consumers, according to PGE's Randy Hansell.
LightSaver products are on the shelves of more than 300 Northwest stores, including many large retail chain outlets. Only 10 percent of those establishments offered CFs prior to LightSaver. To date, LightSaver sales regionwide amount to nearly 100,000 bulbs, according to Hansell; the 1996 program allocation is 185,000 bulbs.
Although the program is still young--the first LightSaver bulbs appeared in stores in February--signs of market transformation have already emerged. For one, customer comments have been "predominantly positive," according to Lois Gordon of Portland Energy Conservation Inc. Her personal favorite customer comment: "My psychic told me to buy one." Among the few complaints, the most common are general disappointment with the bulbs, the light is too harsh and the wattages offered aren't low enough.
In addition, LightSaver reportedly has influenced lighting leviathan General Electric. Although not a LightSaver participant, GE has reduced CF bulb prices and increased consumer rebates in many Northwest locations, according to Gordon. "We're on the path to changing this market," she said.
LightSaver's 1996 budget is about $1.1 million, including $900,000 for manufacturer rebates. The collaborative is seeking from NEEA $1.9 million in 1997, $2.3 million in 1998 and $2.1 million in 1999--a three-year funding commitment is important so manufacturers can standardize their product lines.
If approved by NEEA, the program would branch out from LightSaver in a number of ways. One would be the name: LightWise was mentioned Nov. 12 as a potential new label. Another significant change would be the addition of CF fixtures next spring.
One of the biggest developments would be the expected addition of Southern California Edison, which would expand the number of bulbs offered next year to 300,000 and establish a foothold in the huge Golden State market. Closer to home, said program administrator Jody Moore, officials believe they can work with local utilities and wholesalers to improve distribution of LightSaver products in non-urban areas of the Northwest. Increasing consumer awareness and acceptance of energy-efficient lighting would remain among the top priorities, along with reducing CF retail costs.
The ultimate program goal is to reduce and then eliminate utility funding, at such time that "energy-efficient lighting is able to maintain a stable and substantial market share." This could take an estimated five to seven years.
Resource-Efficient Clothes Washers
Resource-efficient clothes washers--typically horizontal-axis machines--are considerably more frugal than their standard vertical-axis counterparts. These resource-efficient washers use about 40 percent less water and 60 percent less energy to heat water, while cutting detergent use about 60 percent.
However, there are two primary reasons why these machines are found in less than 2 percent of American households. The biggest barrier is cost: current prices for resource-efficient washers generally range from $1,000 to $1,600, compared with a typical range of $350 to $600 for conventional vertical-axis machines. The other major obstacle is very limited consumer awareness of resource-efficient washers and their benefits, along with general satisfaction with current models.
In response, a group of Northwest utilities is proposing the WashWise market transformation program. It would spin out financial incentives and a consumer awareness campaign to achieve five key goals: increase the market share of resource-efficient washers, educate consumers on cost savings and other benefits, stimulate production of resource-efficient machines, influence federal efficiency standards and accelerate price reductions.
The WashWise proposal is an outgrowth of The High Efficiency Laundry Metering & Marketing Analysis (THELMA) (see Conservation Monitor, April 1995) research project supported by numerous utilities in the Northwest and elsewhere. Based on THELMA findings, WashWise reports a "very low probability" people will buy resource-efficient washers priced above $800. The program proposes a $130 customer discount off the in-store purchase price, plus a $50 to $75 rebate from participating water/wastewater utilities. Many utilities already enjoy positive relationships with appliance dealers, noted Puget's Nora Williams. "We know these instant discounts work," she said, adding, "Once we [utilities] move out, they tend to keep selling."
WashWise also plans a "strategically timed promotional plan and marketing campaign which effectively reaches targeted audience while best leveraging dollars." This campaign alone would increase the market share of resource-efficient washers to 4 percent within three years, WashWise proponents believe. And with the financial incentives, the market share would climb to 10 percent by 1999, they project.
Economies of scale cause the higher price of resource-efficient washers, according to Susan Hill of Seattle Water. Through WashWise, she said, the collaborative hopes to increase production of resource-efficient washers, reduce manufacturing costs and drop the consumer price.
WashWise's proposed budget for 1997 is $1.1 million, of which the program is seeking $635,870 from NEEA.
Premium Efficiency Motors
Expanding the market for high-efficiency motors of 3 to 500 horsepower is the purpose behind this proposed market transformation venture. "The program is designed to increase the quantity of energy efficient motors purchased and used currently by commercial and industrial customers in the region by increasing awareness and product availability through dealer incentives, educational tools, support of consistent national motor efficiency standards and motor testing," according to a written summary. "More importantly, it is designed to change the stocking and sales practices of the key trade ally for small motors--the distributors."
These motors are typically 10 to 15 percent more efficient than average motors, and they generally cost 15 to 20 percent more, according to Bob Zdebski of Electric League of the Pacific Northwest. "The product's out there. It's priced fairly good. We're still not getting that acceptance at the local level," he told the NEEA board.
This venture would build upon a current program, primarily active in the Puget Sound region, in which motor dealers promote sales of premium-efficient motors through point-of-sale incentives; the dealers are reimbursed by utilities for the incentives and also receive an additional payment for stocking the motors. This approach has increased the local availability and commercial acceptance of premium-efficient motors, according to the written summary. Previously, Zdebski noted, customers considered only two criteria in purchasing motors: How much does it cost? When can it be delivered? Now, he said, "We've created a third feature. It's called efficiency."
Under the proposal, the venture would include five distinct components. The newest twist would be motor testing, in which a sample of new premium efficiency motors bought by customers would be tested at a regional, certified laboratory. If test results differ from performance claims made by manufacturers, it is hoped customers will, in Zdebski's words, "blackmail suppliers" with the discrepancies. "Customers will be influencing manufacturers based on the results of the tests," said Peter Meyer of Tacoma City Light.
The proposal also includes funding for two circuit riders, who would work with motor dealers, utilities, customers, trade groups and others in spreading the word about energy-efficient motors. Fact sheets, newsletters, education and electronic technical assistance would be part of the education component of the program.
Fourth, the program would push for uniform motor-efficiency standards. And fifth, the program would continue financial incentives for all qualifying motor purchases, and make them consistent throughout the region. These regional incentives, though, would be reduced and eventually eliminated during the three-year program, according to Zdebski.
The program's proposed budget is $482,984 in 1997, $425,673 in 1998 and $272,501 in 1999. --Mark Ohrenschall
An energy and environmental curriculum program coordinated by Puget Sound Power & Light has been named a "Special Recognition" winner in the national Energy Efficiency and Renewable Energy awards sponsored by the U.S. Department of Energy.
"In Concert With the Environment" offers schools in Puget's service territory and elsewhere in the Puget Sound region a comprehensive curriculum that covers conservation principles for students and families to use in their homes, along with basic information on air quality, water conservation, waste management and other areas of resource management. It was honored by DOE in the Energy Technology and Education category.
Puget, according to its news release, recruited 14 other utilities and agencies to participate in the program: city of Seattle, Puget Sound Air Pollution Control Agency, Washington Natural Gas, Snohomish County PUD, city of Bellevue Utilities Department, city of Kirkland, Coal Creek Utility District, the city of Everett Public Works Department, city of Issaquah Public Works Department, city of Redmond, East King County Regional Water Association, Woodinville Water District, city of Renton and Sammamish Plateau Water and Sewer.
Portland is one of six communities across the nation selected by the U.S. Department of Energy as a Rebuild America partner. As a result, the Rose City will receive $500,000 to expand energy efficiency efforts over the next four years.
The Portland Energy Office will lead a partnership effort that aims to improve local energy efficiency in 24 million square feet of public and commercial buildings, as well as 4,000 multifamily units. Other primary partners are Oregon Office of Energy, Portland General Electric, the Northwest Energy Education Institute, PacifiCorp, Portland Chamber of Commerce, Portland Public Schools and Multnomah County.
Some of the services expected to be provided by the Portland Partners for Energy Efficiency (P2E2) are on-site energy efficiency analysis and technical assistance; securing financing for building owners; offering operation and maintenance training; expanding the use of on-site energy managers; commissioning buildings; providing promotional and educational materials; and producing a model efficient appliance package for multifamily properties.
With the help of Washington Water Power's site-specific energy efficiency program, the city of Spokane is replacing two 70-year-old water pumps with new efficient models. The city expects to save about 2.6 million kilowatt-hours and reduce its operating costs $110,000 each year. The pump-replacement project will cost about $700,000, of which WWP will contribute up to $250,000 (the actual amount will depend on how much energy the pumps actually save). The two new pumps should be in place and operating by early December.
"By working in conjunction with the city of Spokane, this project will provide the modernization of equipment to reliably supply fresh water to the residents of the greater Spokane area," said Renee Coelho, program coordinator in WWP's Energy Services Department. "This type of program allows the [utility] company to obtain energy resources while continuing to keep our energy prices low."
Energy efficiency features installed in an expansion project at Vancouver International Airport are projected to save more than 6.5 million kilowatt-hours of electricity annually, according to B.C. Hydro. The utility's Power Smart new building design program helped integrate energy-efficient products and design techniques into the recently finished expansion project, which includes a new passenger terminal, control tower and new parallel runway.
A ground-water cooling system that supplements air conditioning for the terminal handles 25 percent of the building's summer cooling needs and all the winter cooling requirements. In addiition, an air-stratification system allows heat to rise to the terminal's roof without requiring cooling by the air-conditioning system. The terminal building also saves energy through the use of compact fluorescent concourse lighting and energy-efficient exit signs. And the 3,030-meter runway is lit by energy-efficient landing lights.
These features were incorporated into the airport expansion project through a collaboration between Power Smart, electrical consultant Robert Freundlich and Associates, mechanical consultant Keen Engineering and the airport authority.
Jim Nybo, longtime conservation analyst for the Northwest Power Planning Council, has left the Council and moved back to Helena, MT, where he has restarted his consulting practice as an economist working with energy issues and as an arbitrator/mediator. Nybo, whose Council position was eliminated in response to energy industry changes, said he will also continue to do some work for the NWPPC on tracking Northwest utility conservation achievements. He can reached by phone at (406) 442-9873; by mail at P.O. Box 1687, Helena, MT, 59624; or by e-mail, at jnybo@initco.net.
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