CWEB.014/February.21.1997
SIGNS OF THE HARD TIMES for traditional utility DSM are apparent in this month's issue of Con.WEB. PacifiCorp has cut its 1997 DSM target by 40 percent, while Idaho Power has dropped altogether its industrial conservation program. At the same time, however, both IOUs profess a continued strong interest in working with customers to improve their energy efficiency. It will just be done differently.
We also share with you news of the selection of a new executive director of the Northwest Energy Efficiency Alliance, Will Lutgen, along with new agreements between Bonneville Power Administration and two eastern Washington federal facilities to seek energy efficiencies. Finally, we take a look at the most prolific commercial-scale non-hydro renewable energy resource in the region: landfill methane.
Enjoy. And if you care to share something with us, drop an e-mail [marko@newsdata.com] in your cybermailbox.
PacifiCorp's plan to reduce its 1997 DSM target by 40 percent--a reflection of energy marketplace realities--has been acknowledged by the Oregon Public Utility Commission and otherwise greeted with widespread indifference.
"That's just sort of the way things are going now, at least in the next few years," said the OPUC's Judy Johnson. "We want to see utilities do as much cost-effective conservation as they can, of course the key word at this point being cost-effective. That's hard stuff to get."
PacifiCorp reached a similar conclusion in a recent revision to its 1995 Resource and Market Planning Program. Known as the RAMPP-4 Update, the computer modeling exercise took into account lower market prices for electricity, lower natural gas prices, lower capital costs for new gas-fired resources and a reduced requirement for reserve margins--and found the amount of cost-effective conservation for PacifiCorp in 1997 had shrunk from the 25 average megawatts identified in the 1995 plan to 15.7 aMW. The new target also is considerably below the utility's 1996 goal of 23 aMW, which PacifiCorp expects it has reached.
"The big impact in doing the update did turn out to be DSM," said Nancy Esteb, PacifiCorp's manager for integrated resource planning. "We suspected it might, given that we knew market prices had come down and gas prices had come down and this would make less DSM cost-effective . . . You never know what the size of the impact will be until you do the model."
The RAMPP-4 Update reflects "a continuing . . . shift in program emphasis toward acquiring the most cost-effective demand-side management," said Scott Robinson, PacifiCorp's assistant vice president for retail marketing. "Generally speaking, we have found most of our cost-effective programs have occurred in the commercial and industrial arena, primarily in industrial. Our offerings per se won't significantly change" as a result of the RAMPP-4 Update, although funding levels will be revised, he said. PacifiCorp remains enthused about its flagship Energy FinAnswer commercial and industrial programs as its primary source of cost-effective energy savings.
PacifiCorp's RAMPP-4 Update and its planned 1997 DSM target reduction were officially acknowledged by the OPUC Feb. 18, as recommended by staff. In the preceding two months since the utility officially filed the update, not a single person or organization formally commented on the changes. "It's been sort of notable for its lack of response," said Johnson. She theorized many Oregon energy people, including conservation advocates, are preoccupied with industry restructuring issues in the state Legislature. "This is probably not a very high priority."
Esteb noted PacifiCorp has an advisory group for its integrated resource planning, and those people are kept well-informed throughout the process. "I'd say we haven't had any dramatic responses because there were no surprises, which is the way things should work," she said.
In addition to Oregon, the RAMPP-4 Update has been filed with regulatory agencies in each of the other six Western states served by PacifiCorp--Utah, Washington, Idaho, Montana, Wyoming and California. The status of the filings in these other states was not available as of Con.WEB deadline.
PacifiCorp's Rationale
In the update, PacifiCorp offered its rationale for the slimmed-down 1997 DSM target. "It is impossible to identify the exact contribution of each change in input assumptions to a change in DSM, due to the nature of a linear programming model. However, the company believes the reduction in cost-effective DSM is due to several factors: lower reserve margins in the Update, lower market prices, lower gas prices, and lower capital costs for gas-fired resources."
Specifically, the reserve margin fell from 12 percent in RAMPP-4 to 10 percent in the update. Average market prices for electricity dropped from 1.77 cents per kilowatt-hour to 1.46 cents/KWh, an 18-percent decline. Natural gas prices, meanwhile, fell from $1.55 /MMBtu in RAMPP-4 to the updated figures of $1.28/MMBtu in the west and $1.38/MMBtu in the east, a drop of 14 percent. And capital costs for the cheapest gas-fired cogeneration resource fell from $775 per kilowatt in RAMPP-4 to $629/KW in the update, a fall of 19 percent.
Taken together, the fall in gas prices and capital costs led to a 20-percent reduction in the total resource cost for gas-fired cogeneration--from 2.64 cents/KWh in RAMPP-4 to 2.12 cents/KWh in the update.
"The modeling results confirm that the major conclusions from RAMPP-4 are still valid: gas-fired resources are the least-cost supply-side choice, the deficit year does not require a resource acquisition decision in the next two years, and modest amounts of DSM are still cost effective."
PacifiCorp DSM Past, Present and Future
The 1995 RAMPP-4 established an energy-saving target for PacifiCorp of 23 aMW in 1996. Although final results are not yet known, it appears the utility cleared the bar.
As of last September, the update noted, PacifiCorp had counted 14.4 aMW achieved for the year to date. The remaining 8.6 aMW were expected to follow. Robinson in mid-February confirmed this preliminary conclusion.
If it holds, it will continue a PacifiCorp pattern of exceeding its DSM goals, at least in Oregon. In 1995, according to Johnson, the utility gained 18 aMW of energy savings in the state, above the 15.9 aMW target. The comparable numbers for 1994 were 7.4 aMW achieved, 6.3 aMW sought, and for 1993, 10.6 aMW achieved, 7.2 aMW targeted.
PacifiCorp also prides itself on the low cost of its conservation. In 1995 in Oregon, according to Robinson, the utility's industrial energy savings came in at .6 cents/KWh total resource cost on a real levelized basis (.4 cents/KWh utility cost). For commercial retrofits, the total resource cost was 2.5 cents/KWh (.5 cents/KWh utility cost).
In its commercial and industrial programs, PacifiCorp has long relied upon an energy service charge approach in which it offers 100-percent financing (with subsequent repayment) for cost-effective efficiency projects. Recently, according to the update, the utility has emphasized increasing customer contributions--with some success. In 1995, half the Energy FinAnswer participants had self-funding or non-utility funding; the percentage rose to 65 percent last year.
"The customer's willing to pay for a substantive portion of the energy efficiency savings," said Robinson. "You don't have to go out and rebate it. That's been our experience." He added that customers also appreciate PacifiCorp's involvement throughout the process of improving their energy efficiency.
For 1997, the RAMPP-4 Update outlines specific goals of 9 aMW in commercial, 4.8 aMW in industrial and 1.8 aMW in residential. The residential savings are anticipated to come primarily from market transformation initiatives in lighting, refrigerators and washing machines, along with low-income and Super Good Cents.
Robinson noted PacifiCorp is a primary sponsor of the fledgling Northwest Energy Efficiency Alliance, the regional market transformation collaborative (see the NEEA story below). The alliance's work will be "supplementing what we're doing programmatically."
The Portland-based utility also has been actively promoting a public-benefits charge to finance conservation as the electric industry restructures. "Our general view is energy efficiency is important and needs to happen," said Robinson. "The question is where best to fund it and who should pursue that resource effectively. It may not make sense for the embedded utility to be the ones to do that." Retail power marketers are not obliged to fund DSM, which Robinson believes is an unfair competitive advantage. "I think everybody recognizes there's a need to move efficiency acquisition to a different realm and the question is what mechanism" to use.--Mark Ohrenschall
Attachments:
The Northwest Energy Efficiency Alliance board of directors has chosen Will Lutgen as the organization's first executive director.
Lutgen currently serves as executive director of the Bellevue, WA-based Utility Code Group, which provides implementation and training on Washington's non-residential energy code on behalf of the state's electric and natural gas industry. He formerly served as executive director of the Electric League of the Pacific Northwest, a trade association whose membership includes utilities, contractors, distributors and manufacturers.
Lutgen's selection was announced at the Feb. 11 NEEA board meeting at Sea-Tac International Airport. NEEA chairman Dave Houser of Montana Power said the alliance's six-member executive committee had reached "an agreement in principle" with Lutgen, although an employment contract with specific terms had not yet been formalized.
Lutgen described the new position as "a tremendous challenge" and noted the alliance's "ground-breaking work" to promote market transformation in the Northwest. "I'm excited and looking forward to getting on and doing the job," he said.
Houser also reported negotiations are in progress with Margie Gardner for a potential second NEEA management position. Gardner, a conservation analyst with the Northwest Power Planning Council, has handled much of the staff work for NEEA before and since the organization's formation last fall.
Also at the Feb. 11 meeting, the NEEA board discussed ideas for a portfolio strategy, communications and project evaluations. All these issues will be subject to further refinement. The board did reach agreement on a conflict-of-interest policy--which, as board member Marc Sullivan of Seattle City Light pointed out, also could be refined if necessary.
Portfolio Strategy
Addressing NEEA's broad approach to market transformation, board member Charlie Grist of the Oregon Office of Energy presented a draft proposed portfolio strategy. Its stated purpose is to "give the alliance a rough road map for how it might allocate its funds among various activities and transformation ventures in order to be effective, achieve success on an overall basis and satisfy basic equity concerns."
The proposal outlines four major sequential phases of the market transformation process. The first is identification of products, practices and/or services with promise for market transformation. Historically these ideas have been generated by people and organizations in the energy efficiency field (both public and private sector), but with energy industry restructuring, Grist noted, the extent to which these sources will continue to be available is unclear. For the time being, at least, "There's a lot we can harvest from existing sources and we should do that."
The next step in most cases is further assessment of the market transformation idea, which could include research, demonstration and/or verification work. "This is one of the critical pieces in market transformation broadly," said Grist. "What is the market doing without us and what do we think it will do?"
Information gathered in the identification and assessment phases is then applied toward the design and selection of specific projects. Finally and most importantly comes the actual market transformation venture (if approved) and the subsequent evaluation of its performance.
The draft proposal also offers "educated guesses" on the percentage of program funds allocated to each of these four phases. The vast majority, 85 percent, would go toward venture/evaluation, followed by 15 percent for assessment. Identification and venture design/selection would receive no program funds, although they would occupy a total of 30 percent of NEEA technical staff time.
Also in play is the notion of portfolio balance. "From the standpoint of economic efficiency," the draft proposal states, "the Alliance should focus its efforts on the technologies, geographic areas and sectors [residential, commercial, industrial and agricultural] that offer the greatest potential for cost-effective savings through market transformation. Geographic and sectoral equity would be considerations in case of a tie. In reality, however, geographic and possibly sectoral equity deserve and, in fact, require some consideration."
Board member Mary Smith of Puget Sound Energy (the new merged entity of Puget Sound Power & Light and Washington Energy) raised the idea of balance among different approaches to transforming markets: "You don't want all incentive programs, all information programs, all [energy] code programs. You need some balance." Others noted that the nature of a particular market will largely determine the approach taken and how the alliance intervenes.
The draft portfolio strategy will continue to be polished.
Communications
Spreading the NEEA word both externally and internally is the focus of a draft communications strategy formed by a NEEA board committee.
This is a critical piece of the alliance's overall work, believes board member Liz Klumpp of the Washington Department of Community Trade and Economic Development. "I tend to think this is really important," she said, describing "a lot of mixed emotions around the region about the work this group is doing." Good communications can influence the skeptics and "gain their confidence their money is being spent wisely, benefitting their end-users and a wide variety of people around the region."
More than three months after NEEA's official formation, some Northwest public-power people are not even aware of the organization's existence, according to board member Larry Bryant of Kootenai Electric Cooperative. To help bridge the communications gap, board member Jake Fey of Tacoma City Light has spoken to the Public Power Council's executive committee about NEEA
Accordingly, the first objective of the proposed communications strategy is to "develop and preserve support from stakeholders for NEEA and its use of ratepayer funds for energy efficiency market transformation activities . . . This support is critical to NEEA for preserving commitments, for demonstrating that is spending public resources efficiently and meaningfully and to stimulate general acceptance of its programs." NEEA stakeholders include representatives utilities, state and local governments, public-interest and environmental groups, regulators and end-use customers. The means of communication would vary depending on the group.
Members of the communications committee floated the idea of a NEEA newsletter as a means to inform stakeholders. Smith noted that the alliance already is funding a newsletter--the one you are now reading--but other board members raised concerns that Con.WEB is not reaching enough people with information on NEEA activities. Board members also discussed the need for a consistent NEEA message in communicating with stakeholders, particularly in formal presentations.
The second element of the proposed strategy involves keeping trade allies and other market players informed about relevant NEEA activities. Third, the strategy proposes a goal to "reach out to energy efficiency delivery organizations beyond the Northwest to recruit participation when the markets are national in scope."
The fourth objective deals with internal communications among NEEA board members and staff. And the fifth strategic goal is to create, where needed, "educational campaigns that can effectively overcome market barriers to greater energy efficiency as determined by market and technical research." The key audience here would be decision-makers for buying, installing and/or maintaining efficient products or services.
This plan, too, will be further developed.
Evaluation
Evaluating market transformation projects is another crucial function, but so far the alliance is getting "very uneven approaches to evaluation," according to board member Ken Keating of Bonneville Power Administration
Keating--an experienced evaluator himself--proposed the establishment of a standing regional committee on monitoring and evaluation with a half-time chairperson most likely selected by the executive director. This committee would not actually conduct evaluations, but according to a Keating memo would work with project sponsors on their evaluations, develop a plan to carry out monitoring, baseline measurements and evaluation, serve as contract managers for NEEA evaluation-related contracts and function as the main peer-review and quality-control group for evaluation research.
Keating argued in his memo NEEA staff won't have time to adequately handle evaluation details, and evaluation expertise is too specialized to warrant a full-time evaluation staff position. He told the board the Northwest contains "a great treasury of experienced and knowledgeable evaluators [who could help NEEA]. It just needs to get done well, and I think with semi-independence."
Board members and Lutgen supported the idea of a committee to address evaluation of projects already funded by NEEA. Houser said NEEA staff should develop a long-term plan in the near future.
Conflict-of-Interest Policy
After considerable discussion on fine points and potential examples, the board approved, with one abstention, a policy statement on conflict of interest for board members.
The policy is intended to provide guidance but not to govern every conceivable conflict of interest. Board members were encouraged to seek legal advice if they have specific questions or concerns.
"Our [individual board member] interests are really complexly intertwined with the business the alliance is trying to do," said Sullivan. "This is not a Constitutional amendment. We can change it two weeks from today. Let's get something on the books [with a] general sense of what is and is not appropriate behavior and refine it over time."
The policy begins by forbidding board members to use their alliance role "in a way that results in a conflict or appearance of a conflict between the interest of the Alliance and his or her personal interests." It also reminds board members they are required to put alliance interests foremost in their work with the organization.
If a board member has a "material personal financial interest" in any potential transaction with the alliance, full disclosure is required in advance of any discussions or negotiations. A board member can sit through presentation and discussions of such proposals, but can't vote or even be present for the voting.
When a board member's organization proposes to exercise the option to provide local delivery of an alliance project, the member must disclose this interest before any motion is made, "stating whether his or her employer intends to receive either funds or an offset to its contribution from the Alliance for the local delivery component of the project." The board member can discuss and vote on the overall project. However, the executive committee or some other specified committee will decide on the local-delivery element; an executive committee member whose organization has a local-delivery proposal must step aside for this deliberation.
The NEEA board will meet again Monday and Tuesday, Feb. 24 and 25, at Two World Trade Center, Bridge Level, Room A, at 121 SW Salmon in downtown Portland. Another board meeting was tentatively scheduled for March 20 in Spokane.--Mark Ohrenschall
In another sign of the changing times for utility-funded DSM in the competitive era, Idaho Power has dropped its flagship industrial energy conservation program.
Rate impacts, fears of stranded investment and evidence of transformed markets were cited by Idaho Power as primary reasons for its decision to end the Partners in Industrial Efficiency (PIE) program. The Boise-based investor-owned utility still intends to offer customized efficiency services to industrial customers, which could mean financing and technical support but will not include rebates or grants or any formal program.
"All of us in the investor-owned utility business are beginning to look towards a future that is somewhat different than what we've been used to in the past," said Idaho Power's general manager of retail support Jim Baggs. "One of the things we've been doing is looking at our . . . DSM-type programs and making sort of a decision about what and how much should be continued in the future . . . This particular program sort of stood out to us as one that might be ripe for termination."
Idaho Power's move was officially endorsed in mid-January by the Idaho Public Utilities Commission, which nevertheless displayed some ambivalence about the utility's proposal:
"This Commission supports investment in conservation and renewable resources. The social value of such programs, while difficult to quantify, is undeniable. The electric industry is, however, in the midst of fundamental change. Idaho's regulated electric utilities will face the challenges of at least partial deregulation and competing in a more open market with other providers including utilities and independent power producers. Funding for the furtherance of social objectives such as DSM programs must be reexamined and structured in a competitively neutral manner." The IPUC ended its Jan. 13 order with this conclusion: " . . . we are not reversing the Commission's historical commitment to the value of conservation. We are simply recognizing that the manner in which it is implemented is changing in light of the restructuring of the electric industry."
However, Industrial Customers of Idaho Power--a trade group representing a dozen-plus customers with 60 percent of the utility's industrial load--has appealed for reconsideration of the commission's decision on PIE termination.
In earlier comments to the IPUC, the trade association supported the program's demise but took issue with the utility on a number of points. Specifically, the customer group said Idaho Power failed to quantify its potential stranded costs. ICIP also believes PIE's elimination discriminates against industrial customers, since they will continue to pay for other utility conservation programs but will lack access to any of their own. The industrialists suggested an end to all Idaho Power conservation programs, or an exemption for industrial customers on DSM-related rates.
ICIP attorney Peter Richardson said his clients continue to endorse PIE's termination. However, he said the commission's order failed to tackle their key complaints about stranded costs and discrimination. "If they think our support was significant [in their decision], then they ought to at least address our issues . . . Clearly there's no stranded-cost record. Our position is if you don't terminate the program based on a record, at least insulate us from [the costs of] other conservation programs." He called it "a fairness question."
Ironically, Idaho Power's decision to wrap up the PIE stemmed at least partially from statements by some industrial representatives during the IPUC's generic inquiry last year into electric industry restructuring. "There were a lot of comments that programs of this type should perhaps be discontinued," said Baggs. "Primarily, it seems industrial customers were expressing an interest in the lowest possible rate and competitive choices [for electric suppliers] and didn't seem to be particularly interested in things that would put upward pressure on prices." Those customers currently pay among the lowest IOU industrial rates in the nation, an average of 2.8 or 2.9 cents per kilowatt-hour, according to Richardson--although the open market now offers even lower rates, he added.
Idaho Power has not specifically figured PIE's rate impacts, but Baggs noted the program offered substantial funding for industrial conservation projects: a maximum of 50 percent of project cost or 10 cents/KWh, up to $250,000 per customer account (industrial firms with multiple sites counted as one account). From 1992 through 1995, the 48 program participants saved 3.3 million KWh (.38 average megawatts). Total direct project costs per participant averaged $162,719, including an average Idaho Power incentive of $50,777.
Idaho Power also believes market transformation is occurring among its industrial customers, reducing the need for utility incentive payments. "Several of the technologies funded through PIE are now becoming commonly used by Idaho Power's industrial customers including efficient lighting measures, variable speed drives and more efficient refrigeration technologies," according to the IPUC order's interpretation of Idaho Power's proposal.
In addition, IOU officials formed worrisome visions of stranded DSM investments with PIE's continuation. Energy efficiency incentive payments are deferred for future cost recovery by Idaho Power in its rate base and are classified as regulatory assets. Under deregulation, the utility argued, these could turn into stranded assets should customers change power suppliers before the end of the 24-year amortization period for DSM funding. Idaho Power received IPUC permission to collect refunds for any such unamortized funding from PIE participants with last-minute contract signings: " . . . Idaho Power faces some degree of risk that any investment it makes in DSM programs will not be recovered, if partial or full deregulation occurs and some of the Company's industrial customers leave the system," the IPUC found. However, the commission turned down a utility proposal to require those 11th-hour PIE signees to remain Idaho Power customers for a certain period of time.
IPUC staff, meanwhile, wanted Idaho Power to develop guidelines for the customized services it plans to offer industrial customers, but the commission ruled such definition would be premature.
"We do have the desire to continue to help those customers with their energy efficiency needs," said Baggs. He mentioned financing as a potential service option--"determined on a case-by-case basis"--along with technical support and sharing information. "What won't continue to be available is the outright rebate or grant."--Mark Ohrenschall
Attachments:
IPUC's decision on PIE termination
Two large federal facilities in eastern Washington have signed long-term agreements with Bonneville Power Administration to examine energy conservation opportunities that potentially could save the government millions of dollars.
The 10-year agreements with the Hanford Site near Richland and Fairchild Air Force Base outside Spokane were signed in December, according to officials of BPA, which supplies power directly to the two facilities.
"What we're trying to do is help those two agencies identify the [efficiency] opportunities that may be at their sites that are cost-effective and make good business sense," said Tom Hannon, BPA's federal agency market lead for energy efficiency. He noted that federal agencies are required by a 1994 executive order from President Clinton to reduce their energy consumption 30 percent over 1985 levels by 2005.
A preliminary BPA "guesstimate" shows a potential dollar savings of $1 million to $1.5 million from efficiency upgrades at Fairchild, according to Hannon. This could come from energy efficiencies as well as improved operations and maintenance practices. The Hanford Site, meanwhile, has a potential for many thousands of dollars in savings, according to Bill White, an engineer with the U.S. Department of Energy's Richland Operations Office. His agency manages the vast former plutonium-manufacturing complex that is now host of the world's largest environmental cleanup.
Although both locations have been subject to some auditing for energy efficiency opportunities, neither has been the site of a "comprehensive analysis," said Hannon. An outside consultant already is performing such a review of Fairchild, according to BPA energy efficiency spokeswoman Sharon Doggett.
Hannon described Fairchild as "almost like a small town," with homes, schools, churches, barracks and administrative buildings. "They really have sort of the full range of energy efficiency measures one might find in a small community."
Fairchild has more than 6 million square feet of covered floor space throughout the base, according to assistant civil engineer Fred Zitterkopf. Much of it is industrial and aircraft-related. The base also has a "tremendous amount of exterior lighting." In fact, Hannon said BPA already is scoping out a potential lighting retrofit at a site where military planes are parked in a readiness condition. This particular project could result in estimated savings of 300,000 kilowatt-hours and $85,000 annually, Doggett reported.
As a direct customer of BPA Fairchild pays very low electric rates--slightly more than 2 cents/KWh. Consequently, Zitterkopf said, it's difficult to economically justify energy efficiency projects. But the Bonneville agreement provides a unique opportunity for Fairchild to tap into BPA's energy management expertise and financing capabilities for mutually acceptable energy-saving work. "In essence, we accomplish with them the same thing you would do with an ESCO [energy services company] except you don't have a special contract and shared-savings agreement." Bonneville will finance projects and Fairchild will pay back the power marketing agency.
For years Zitterkopf has sought ways to improve the base's energy efficiency and reduce its annual electric bill of $1 million-plus. "I've looked at so many alternatives and saw either the cost reasons not to enter into agreements with ESCOs or other long-term commitments that government entities, in particular military installations, aren't in a position to sign." The 10-year BPA deal has escape clauses and means to recoup investments if necessary, he noted.
"Their benefit is they don't have to generate electricity from new sources and for us, in the long term, the investments will pay back in terms of reduced energy costs to the government," said Zitterkopf. A longtime federal worker, he called the agreement "a mechanism for two federal agencies to work together for the good of both. It's terrifying, isn't it?" he laughed. "I don't see these very often. When it does happen, you kind of smile. It's something we're very pleased with."
At Hanford, DOE-Richland "would be open to development of [efficiency] projects related to any of our pumping operations or lighting," said White. The recent agreement allows BPA to look into certain areas at the huge 560-square-mile complex, which has a total electric demand exceeding 50 megawatts. Bonneville, its contractors or DOE-Richland can propose energy-saving projects, according to White. DOE-Richland plans to use Bonneville money to finance projects and then repay BPA from the energy savings. His agency generally looks for efficiencies with payback periods of five to 10 years, he added. For its part Bonneville wants to recover its costs, according to Hannon.
Bonneville officials--aware of their staff capabilities and mindful of the criticism they heard last year about their proposed Energy Services Business--made clear they will substantially rely on private-sector firms for much of the efficiency work at these two federal facilities. "Really what our focus is is to help identify the opportunities and hopefully our skills and capabilities [and] aggregate the appropriate providers and then provide the agency sort of a turnkey project," said Hannon. Bonneville plans to tap the private sector for such tasks as design engineering, equipment purchasing and installation. "We really don't have the technical wherewithal to do as much as people had [earlier] thought we were going to do" through the ESB. For Fairchild, Hannon noted, BPA project manager Rick Miller already is compiling a list of prospective contractors to work on the potential lighting retrofit.
Nevertheless, the two agreements raise potential concerns for the Northwest Energy Efficiency Council, according to administrative director Stan Price. While pleased to learn of the two federal partnerships and the potential opportunities for the region's energy efficiency industry, Price said the timing of private-sector involvement with Bonneville-generated projects is a critical issue.
"What we're certainly hoping is that when these kinds of projects happen at the instigation of Bonneville that the project is structured from the very beginning so that the private-sector businesses have an opportunity to maximize their involvement in that particular project," he said. "The earlier they're involved, the more opportunities there are to utilize the expertise of the private sector." For example, many firms handle engineering analysis and project management for energy efficiency works; any time Bonneville fills those roles it limits private-sector opportunity.
The Fairchild and Hanford agreements are likely to arise in discussions at the inaugural meeting next week-Wednesday, Feb. 26-of Bonneville's regional advisory board for its energy efficiency services. "Where does Bonneville's role start and stop and where does the private sector's? That's going to be the meat of the matter for this advisory committee," said Price.
BPA hopes to streamline its procurement process for such contract work, Hannon said. "We want it to be fast, fair but effective . . . not long, not tortuous. There needs to be a medium in there where we can assured that there's enough competition that the Air Force really is going to get the benefit of the sharpest pencil, [but] to do so without bogging down the process."
In some cases, according to Hannon, it is easier for federal agencies to work with each other than with the private sector, according to Hannon. He said Bonneville plans to use this advantage as well as its unique federal flexibilities to improve the efficiency of the entire process of energy-saving improvements at Fairchild and Hanford.
In addition to these two recent agreements, BPA has similar arrangements with the federal General Services Administration and the U.S. Postal Service. "We hope those turn into some more extensive opportunities," Hannon said.--Mark Ohrenschall
Within the mountains of garbage rotting in landfills can be found a renewable energy resource already spreading around the Northwest.
Methane gas produced in landfills currently fuels two power plants in Oregon, one near Eugene and another outside Corvallis. Two similar plants are under construction in Tacoma and Spokane and are anticipated to open by year's end. Together these four plants will have a combined capacity of about 8.5 megawatts. And close behind is another prospective landfill-gas project in Klickitat County, WA, that could produce up to 5 MW initially and perhaps as much as 50 MW or more eventually.
It's messy and smelly and not exactly glamorous, but landfill-gas energy production in the Northwest already exceeds the current regional output of commercial-scale wind, geothermal and solar energy sources combined at costs fairly competitive even in today's low-price energy marketplace. It also has positive environmental impacts, despite a combustion process.
"This is one of those win-win-win sort of things," said senior resource analyst Jeff King of the Northwest Power Planning Council. "Do good things for the environment. Make good use of the resource."
The resource is methane, a gas produced by the anaerobic decomposition of organic matter in garbage--food wastes, paper, weeds, cardboard and anything else that originally derived from living things. "All we're doing is taking the energy back out that was put in through photosynthesis," explained Kevin Watkins of Pacific Northwest Generating Cooperative, operators of the Coffin Butte landfill-gas plant near Corvallis. "The energy source for all the organic material that we're at the back end of is photosynthetis . . . It's a biomass."
King acknowledged "a little bit of grumbling" about the notion of solid waste as a renewable energy resource. Still, he said, "I think generally it is accepted as a renewable," including in the Regional Review.
Although each plant has distinct characteristics, the basics are similar: Methane is extracted from the garbage via a series of wells and pipes and purified before being burned in internal combustion engines connected to electric generators.
This process does create emissions, including nitrogen oxides and carbon monoxide. But those emissions are subject to air-quality regulations and, in any case, are considered far less environmentally harmful than the unrestricted release of landfill methane. The Environmental Protection Agency reported in late 1994 that methane in the atmosphere is 20-plus times more effective than carbon dioxide in trapping heat--and landfills are the largest single source of methane emissions in the nation, accounting for nearly 40 percent. In 1990, methane was responsible for 13 percent of the Northwest's contribution to global warming, according to Northwest Environment Watch.
"There are [environmental] tradeoffs, and the nature of the trades is favorable in this particular situation," said Don Arkell of Oregon's Lane Regional Air Pollution Authority, speaking in 1995 about Short Mountain (see Conservation Monitor, September/October 1995).
Landfill-gas energy production depends on a number of local variables, including sufficient volume of organic waste, adequate decomposition rates, proper moisture content and the ownership structure. Not every landfill will be a cost-effective source. Regionally, according to King, the Council's draft 1996 power plan estimates a developable potential of 126 MW over the next 20 years at a cost of 3.1 cents/kilowatt-hour--a figure quite a bit above current energy costs from Short Mountain.
King sees a number of converging forces creating momentum for landfill-gas energy production, primarily from the federal government. EPA regulations will by the year 2000 require large landfills--an estimated 500 to 700 nationally--to collect and burn methane. "Once installation and operation of a collection system is a required cost of doing business, energy recovery becomes a more attractive investment," according to EPA's Landfill Methane Outreach Program. In addition, King noted the existence of federal tax credits--for private-sector providers, 1.3 cents/KWh--and incentive payments--for tax-exempt entities, 1.5 cents/KWh--for certain landfill-gas energy plants.
Following are brief summaries of two operating and three planned landfill-gas projects in the Northwest:
Short Mountain
Short Mountain, which opened in 1992, is the forerunner of Northwest landfill-gas plants (see CM, September/October 1995). Operated by Emerald PUD, the project is capable of churning out about 3.2 MW for the utility's distribution system.
Until last year Short Mountain was operating at levels above 95-percent capacity, according to Emerald's Bill Wilson. Then the rains fell--a record deluge of more than 100 inches in the Eugene/Springfield area in 1996. "That's our biggest problem this year," said Wilson. "The landfill is full of water . . . We're still trying to pump water out of the system [more than 100,000 gallons a day]. We're down at about 70-percent capacity right now. We just don't have enough gas."
Nevertheless, the total cost of producing energy at Short Mountain--including debt service and operations and maintenance--rose only slightly in 1996, to a little more than 2.2 cents/KWh, according to Wilson. In 1995, Emerald's Alan Zelenka attributed the project's cost-effectiveness to a number of factors, including low capital costs, tight monitoring, a high percentage of organic matter in the relatively new landfill and plenty of rainfall to promote decomposition.
"We have a lot of fun doing it," said Wilson. "It's worked real well and a lot of people like it and it's made good money for us and it's got a lot of people interested [in the technology]." Although there were plenty of initial difficulties, he added, "Once you get it figured out it works great and more people should do it."
Coffin Butte
Fifty miles north of Short Mountain, outside Corvallis, the Coffin Butte landfill-gas energy project began commercial operation in October 1995. The project is owned and operated by PNGC, while the actual electricity created flows to Consumers Power.
This past fall a third 820-kilowatt generator went into operation, bringing the project up to its full nameplate capacity of 2.46 MW. Although he didn't state an exact cost of current Coffin Butte energy, PNGC's Watkins in 1995 estimated a lifetime levelized price in the range of 3 cents/KWh.
PNGC sees great potential for Coffin Butte in the competitive electric marketplace. In fact, said Watkins, "We're going to be trying to market this as a green power resource, a biomass resource." The cooperative already has an interested (and unidentified) buyer for Coffin Butte energy, he noted. PNGC also is surveying customers of its member utilities to gauge the retail market for green power options; Watkins is optimistic many people will happily pay the premium.
As a green resource, Coffin Butte has a number of advantages, Watkins said. For one, it is already operating. It also lies less than a half-mile from an interconnection to the regional power grid. And its production costs are lower than wind and geothermal energy sources. The project is configured such that its landfill-gas energy capacity could be doubled, to about 5 MW. The entire landfill site potentially could support up to 10 MW of energy production, although such an ambitious expansion would depend on market demand, Watkins noted.
Operationally, landfill-gas energy production requires continual monitoring of myriad details, such as the quantity and quality of methane in the landfill and the factors influencing them. "It just takes a lot of attention," said Watkins.
Roosevelt Regional Landfill
Located east of the Columbia River Gorge on the dry side of the Cascades, the Roosevelt Regional Landfill has accumulated garbage from all over the West Coast since its opening early this decade. It is a huge site, permitted to receive 3 million tons of waste annually up to a maximum capacity of 120 million tons. Most of the incoming trash is organically rich municipal solid waste.
Roosevelt is owned and operated by the Regional Disposal Co., an affiliate of Rabanco, under a 40-year agreement with Klickitat County. After several years of study, RDC last November issued a request for proposals to develop uses for the landfill's gas. Proposals are due Feb. 27.
Although the RFP did not specify uses for the methane, electricity production is considered the most likely candidate (landfill methane also can be burned to generate heat for nearby industrial uses, or turned into transportation fuel). Initial energy output is anticipated to be 5 MW or smaller, according to consultant Ward Sanders of Power Management Corp., which is handling the RFP. But as the trash expands over time and methane production increases, a landfill-gas plant at Roosevelt could ultimately generate as much as 50 MW of power--or even more. "This is planned to be a very, very large landfill" that could turn out to be "certainly one of the largest in terms of energy production" in the country.
Among the expected respondents to the RFP are Klickitat County PUD and Minnesota Methane, which is already developing two landfill-gas projects in Washington (see below). The Minnesota Methane proposal could include the PUD as a power purchaser, according to the PUD's Tom Svendsen. In 1995, Svendsen said the landfill potentially could supply the PUD's entire load of 33 aMW.
Details about energy production, cost and other pertinent information aren't yet known, as RFP responses had yet to arrive as of mid-February. But Sanders said the evaluation and contracting process will move quickly and energy production could begin in early 1998.
Tacoma
One of two landfill-gas plants now under construction in Washington by developer Minnesota Methane, this project is planned to generate about 1.9 MW of power for Tacoma City Light. The company hopes to have the plant running by year's end, according to vice president Al Jensen of NEO, which is co-owner of Minnesota Methane along with Ziegler Power Systems, a Caterpillar dealer.
Tacoma in December agreed to a power-purchase contract for the plant's output. The utility's fixed price will be 1.6 cents per kilowatt-hour, with total annual payments estimated at $244,800 for an expected 15.3 million KWh of delivered energy. "We believe the price is consistent with the wholesale power market anticipated for the next five years," said City Light superintendent Steve Klein.
Jensen said the landfill is "almost completely closed and sealed" and the methane is currently being collected and flared, which meets EPA requirements. Creating landfill-gas energy in the Northwest is difficult because of low energy prices, Jensen acknowledged. "You've got to have a willing customer and a willing landfill, because there's not a lot of money to spread around for getting the project done. Fortunately in both cases [Tacoma and Spokane] the landfill was particularly motivated to see the project happen. If they were not so motivated, it's unlikely the project would've happened."
Spokane
In eastern Washington's biggest city, Minnesota Methane plans to start actual digging by the end of Feburary for its energy plant at the Northside Landfill. This project will be half as big as the Tacoma plant, with an expected capacity of 950 kilowatts, or .95 MW, which will be sold to Washington Water Power.
"It's definitely on the small side," said Jensen. Northside already is closed and sealed, he noted, and already has a system in place to collect and flare methane. "It's a fairly straightforward project," he said. Minnesota Methane hopes to begin producing power by early July.
Water Power is required to accept the power output under the provisions of the Public Utility Regulatory Policies Act (PURPA), according to WWP account manager Joe Brabeck. Minnesota Methane will receive the utility's standard firm energy rate for PURPA projects of 1 MW capacity or smaller. Assuming the project goes on line in 1997, the payments will start at 1.89 cents/KWh this year and rise incrementally over 20 years to 2.97 cents/KWh in 2017.
Brabeck, like Jensen, noted the economic challenges generally for landfill-gas projects in the Northwest. Water Power, besides, has low rates even for the region, and figures to have plenty of capacity available for the foreseaable future. Still, Brabeck said Water Power views the Northside project as "a positive environmentally, and when opportunities arise for us to be able to purchase power from alternative fuels or renewable-resource kinds of plants and can be done in a cost-effective way to the benefit of our customers, we're certainly willing" to consider them.--Mark Ohrenschall
Free courses for building operator certification are being offered this winter and spring by the Northwest Energy Efficiency Council and The Boeing Co.
The one-day courses are open to any interested building operations staff and consist of hands-on training, on-the-job application and an open-book exam. Participants who successfully complete the courses receive credit towards building operator certification.
Course topics and dates: Electrical Maintenance and Troubleshooting, March 4; HVAC Controls Maintenance and Troubleshooting, March 21; Facility Water Conservation and Management, April (date to be announced); and Cooling Tower Efficiency, April (date to be announced).
The all-day courses are scheduled for a Boeing training facility in Renton, WA, south of Seattle.
In addition, NEEC is recruiting interested building managers and operators for a series of building systems maintenance courses in Kitsap County, on the Olympic Peninsula west of Seattle. NEEC also is targeting certification courses for Snohomish and Spokane counties in Washington. The trade association for the energy efficiency industry has scheduled a March 13 lunch forum in Spokane to discuss the building operator certification program, which has received funding from the Northwest Energy Efficiency Alliance.
For more information, call NEEC's Cynthia Putnam at (206) 726-9397, or send her an e-mail.
A workshop on improving the operation of compressed-air systems using AIRMaster software is scheduled for March 5 at the Lighting Design Lab in Seattle.
Sponsored by Washington State University Cooperative Extension Energy Program, the workshop will provide information on lowering costs and improving operation of compressed-air systems. It will cover reducing air system leaks, keeping proper system pressure, reducing wear and tear through better control strategies, lowering energy costs and getting more from an existing system. The workshop is designed for industrial power customers, electric utility representatives, energy auditors and compressed-air systems manufacturers.
Registration fee is $95 before Feb. 26, $125 thereafter and includes a copy of the AIRMaster software program. For more information, call WSU energy extension at (360) 956-2000.
A regional series of Energy Exchange workshops entitled "Molding a Market-Driven Utility Image" is being offered by the Northwest Public Power Association.
The all-day workshops are designed to give utility marketing and communications people "specific tools to help move their organization from a monopoly mindset to a customer-focused, market-driven operation that is designed to succeed in the new utility world," according to NWPPA. The sessions will cover marketing principles and applications, along with action steps to mold a market-driven utility image. The workshops also include a roundtable information exchange.
Workshops are scheduled for Feb. 26 in Tacoma, March 6 in Kalispell, MT, March 11 in Moses Lake, WA and March 12 in Spokane.
For more information, call Jim Brands at NWPPA: (360) 254-0109 or (503) 289-9411. He can also be reached via e-mail.
Two neighboring houses in Vancouver, British Columbia, are serving as test sites for the feasibility of geothermal heat-pump technology in the Lower Mainland climate.
B.C. Hydro and B.C. Gas are cooperating on a two-year monitoring program to compare energy use in the two homes, which are identical except for their heating systems. One of the homes has two geothermal heat pumps, one for space heating and the other for domestic hot water. The other residence has a high-efficiency natural gas furnace and a conventional gas-fired water heater. Hydro is tracking gas, water and electricity consumption in the two homes; the data will be analyzed to determine whether energy savings from the heat pump are sufficient to make it a cost-effective heating alternative in the Lower Mainland climate.
Residential geothermal heat pumps are rare in British Columbia, according to Hydro energy management engineer George Pinch. "The main barrier is cost," he said. "A typical residential ground-source system costs approximately $17,000, including installation, and does winter heating and summer cooling compared to about $6,700 for a high-efficiency natural gas system for heating only." But if the energy savings are great enough, he noted, the geothermal system could be cost-effective.
The sixth edition of the "Guide to Resource Efficient Building Elements" is now available from the Montana-based Center for Resourceful Building Technology.
This newest iteration includes product descriptions and contact information for the most resource-efficient products from more than 425 manufacturers in the United States and Canada. It also discusses the relative resource efficiency of various technologies. In addition, the guide provides background information on resource management and considerations for selecting resource-efficient designs and materials.
CRBT's Tracy Mumma described the guide as "an important tool for anyone involved in building--the client, the designer or the builder. It not only gives the reader an overview of the types of technologies and materials that are available, but equips them with the ability to obtain specific products."
Sales of the guide help fund the research, education and demonstration activities of the non-profit CRBT. For more information, contact the center: phone, (406) 549-7678; fax, (406) 549-4100; mail, P.O. Box 100, Missoula, MT 59806.
The Westin Bayshore Hotel in Vancouver is the first British Columbia lodging establishment to qualify as a "Green Hotel" under a new Power Smart program.
A joint project of B.C. Hydro and the B.C. and Yukon hotel associations, the Power Smart Green Hotel program recognizes and promotes hotels that implement energy-efficient and environmentally responsible practices.
The Westin Bayshore switched from incandescent to fluorescent lighting in certain areas--saving $17,000 a year in power costs--and cut water consumption 15 percent and hot-water demand in half by installing low-flow showerheads. A variable-speed pump for circulating hot water is saving about $3,500 annually. An energy management system plays an important role in reducing the hotel's energy consumption. "Lighting, heating and air-conditioning are only activated when needed, and this has resulted in increasingly large savings as we have improved the system," said building superintendent Jack Harding.
The hotel also has a food-waste recycling program and a commitment to reuse and consolidate paper-based products.
"By participating in environmental conservation, the hotels enhance our Power Smart program and provide accommodation for travelers who are increasingly aware of energy efficiency and environmental impacts," said Dan Miller, the B.C. minister responsible for B.C. Hydro.
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