CWEB.016/April.25.1997
Special Update/May.6.1997Public-purposes funding for energy conservation, renewable resources and low-income energy services is coming to Montana in 1999, under the first electric industry restructuring legislation approved by a Northwest state. Annual funding amounts for these public purposes must equal at least 2.4 percent--an estimated $13 million to $14 million--of utility retail sales revenues. The Montana Electric Utility Industry Restructuring and Customer Choice Act passed the state House of Representatives and Senate in April and was signed into law by Gov. Marc Racicot on Friday, May 2. It provides for customer choice of electric supplier by July 1998--for large customers of state-regulated utilities (notably Montana Power)--and by July 2002 for all other regulated-utility customers. The bill also includes provisions for utility cost recovery of certain stranded investments; a rate freeze from July 1998 through June 2000; functional separation of utility power supply, transmission, distribution and retail energy services; and open-access transmission and distribution systems. Many similar guidelines apply to the state's cooperatively owned utilities, although they can choose to exempt themselves from all but the public-purpose-funding mandate. For public purposes, the new law allocates 2.4 percent of each utility's annual retail sales revenue in Montana--based on 1995 levels--for cost-effective local energy conservation, low-income weatherization and energy assistance, renewable resource projects and applications, research and development for conservation and renewables, and "market transformation designed to encourage competitive markets for public purpose programs." The minimum annual funding amount statewide for all these endeavors will be in the range of $13 million to $14 million, according to John Hines of the Montana Northwest Power Planning Council office. Utilities as well as large customers will receive credit toward the 2.4-percent requirement by spending money on their own public-purpose initiatives. Cooperative utilities can pool their credits statewide to satisfy the public-purposes requirement, which begins Jan. 1, 1999 and continues through July 1, 2003. A closer look at the Montana plan will be featured in the May 23 issue of Con.WEB, along with a summary of restructuring and public-purposes legislation in the other three Northwest states and in Congress.--Mark Ohrenschall |
CHALLENGES FOR ENERGY CONSERVATION in the late 1990s are reflected in this issue of Con.WEB, along with a sprinkling of positive developments and--we hope--thought provoking-pieces.
Among the struggles depicted are the initial efforts to put together a Regional Technical Forum to monitor regional conservation, and the process to further define the appropriate role for Bonneville Power Administration in the energy efficiency marketplace. The setbacks include Snohomish PUD's downsized residential weatherization contract with SESCO, a bond-levy failure that jeopardizes a proposed high school notable for its energy-efficient design practices, and the resounding negativism around Idaho Power's proposal for a flat-rate meters charge to fund its participation in the Northwest Energy Efficiency Alliance.
We also feature an extensive interview with the Alliance's new executive director, Will Lutgen, who talks at length about himself, the organization he now heads and market transformation. We hope you find this conversation stimulating. Another article focuses on University of Washington architecture and urban design professor Doug Kelbaugh, who shares his opinions on sprawl, architecture and energy.
Last, but certainly not least, we have some good news to report, in the form of a huge performance-based energy-saving contract awarded by the U.S. Department of Energy to Johnson Controls for the Hanford Site in southeastern Washington. This promises to be a harbinger for future such agreements to improve the efficiency of federal government facilities.
Enjoy, and please share your own thoughts, if you so choose, with marko@newsdata.com.
Idaho Power's proposal to institute a public-purposes charge to fund its participation in the Northwest Energy Efficiency Alliance has prompted a host of objections. The Idaho Public Utility Commission has received more than 50 public comments on the utility's plan to institute a flat-rate meters charge to cover NEEA costs--and nearly all of them have been negative.
Under Idaho Power's plan, residential customers would be assessed 25 cents per month to fund the utility's contribution to the Alliance. Larger business and commercial customers would pay $2 a month, special contracts and large industrial customers would pay $70 monthly and irrigators would pay $6 per month, only during irrigation season. Idaho Power's total contribution to the Alliance is capped at $4.25 million from 1997 through 1999; the utility wants to collect $4.05 million of that from Idaho retail customers.
Some of the objections--as from the Northwest Conservation Act Coalition and Idaho Rivers United--are based on the mechanics of the meters charge rather than the concept. Others don't like the idea of Idaho Power collecting money from them to give to NEEA, and several claim the proposal constitutes a rate case in disguise.
In the latter category is the Rate Fairness Group, which has filed motions to intervene and dismiss the case, as well as a protest to the use of a modified procedure to consider the proposal. Paul Jauregui, attorney for the group and a former general counsel for Idaho Power, said the utility's proposal should be handled under general rate-case procedures. "We think hearings should be held so customers have an opportunity to testify and witnesses are subject to examination." RFG also claims the proposal violates a rate-stability agreement--reached by the Idaho PUC and Idaho Power in the utility's last general rate case--that includes a moratorium freezing Idaho Power's rates until Jan. 1, 2000. "This seems to fly in the face of that and seems to be a way to get around that," he said.
Jauregui also said the Rate Fairness Group--13 Idaho Power residential customers, two of whom also have commercial accounts and one with an irrigation account--questions the benefits from the utility's participation in NEEA. "It's represented that this is a public-interest charge," he said. "There's no record, no evidence . . . without knowing what [NEEA] is and without having evidence in the records and without hearings, it's speculation on what it is."
There's no speculation, as far as the Idaho Farm Bureau Federation is concerned. The federation--with 47,000 members, many of whom are irrigators--called membership in NEEA a "corporate decision" that is "of very limited value to individual customers." The proposed surcharge could easily make irrigation operations unprofitable, and the Farm Bureau "would much rather keep customers operating than extract over $4 million from ratepayers to spend on projects with almost no value to individual Idaho Power ratepayers."
The Industrial Customers of Idaho Power also question whether NEEA will provide "tangible benefits for the dollars Idaho Power's ratepayers are being asked to contribute." But as with RFG, ICIP's first item of concern is procedural: the group claims the utility's application violates the rate-moratorium settlement agreement, the IPUC order approving the rate moratorium and the commission's rules on general rate cases.
The proposal violates the rate moratorium, ICIP maintains, because it seeks recovery of additional revenues, rather than a change in the manner in which demand-side management charges are recovered--which ICIP says is the only change allowed. In addition, ICIP asks: Why should Idaho Power ask for new revenues for NEEA market transformation activities when it is ending its own conservation programs?
Comments from Micron Technology and FMC Corp. follow similar lines. Micron criticizes the utility's past conservation programs and also doubts that spending ratepayer dollars on NEEA is in the public interest. FMC agrees with Micron and ICIP and also claims the proposal represents a "tax on Idaho ratepayers to fund as yet unspecified expenditures by [a] quasi-public body that is not subject to the jurisdiction or control of any elected or appointed agency of the state of Idaho."
Idaho Power takes on these arguments in its response comments.
The utility says the contention that changes in the "manner" of DSM funding limit the company to changes in collecting funds for existing programs is "neither logical nor supported by the record," because it means the provision is a "prohibition on the company's changing its conservation programs." And since the proposal for a public-purposes charge can be defined as "a pass-through of an increase in an identifiable expense"--out-of-pocket costs Idaho Power will incur in its NEEA funding contributions--it does not constitute a general rate-increase request.
The utility also takes issue with the criticisms leveled at the Alliance. The company points out that many of its past conservation programs, including the one Micron found unsatisfactory, were incentive-based programs that paid customers to make DSM investments they otherwise would not have made. Rather than providing those types of programs, NEEA's goal is to encourage customers to make their own investments in energy-efficiency measures. Furthermore, market transformation, in NEEA's definition, "does not refer to the process by which competition for supply is under consideration," the utility says. Rather, it's the process of encouraging more efficient use of electric energy--which benefits customers more than the utility itself.
While Idaho Power maintains a flat-rate meters charge is the most appropriate way to fund such market-transforming activities, the utility has no strong position on rate design. The recommendation of IPUC staff, NCAC and Idaho Rivers United that the public-purposes charge be applied as a uniform percentage increase on total bills "would also result in the recovery of overall public-purposes revenue."
Idaho Power also agrees to most of the staff's other recommendations, including that its participation in NEEA be "active and effective." IPUC staffer Lynn Anderson (an ex-officio Alliance board member) said it's now up to the commissioners to decide how to proceed. "It's certainly within the realm of possibilities" that the commissioners will hold a hearing on the proposal, he said. No further information on the process was available by Con.WEB deadline.--Jude Noland
Attachment:
Idaho Power's Proposal to Fund Its NEEA Participation (Con.WEB, Jan. 24, 1997)
Will Lutgen is the new executive director of the region's newest conservation entity, the Northwest Energy Efficiency Alliance, a collaborative undertaking seeking to transform markets for energy-efficient products and services.
Shortly after he took over the top Alliance staff position, Lutgen sat down with Con.WEB editor Mark Ohrenschall and talked about himself, the Alliance and market transformation in the Northwest and elsewhere.
Following are edited excerpts from their March 25 conversation in Lutgen's office in Bellevue, WA.
Con.WEB: What attracted you to the job and to the Alliance?
Lutgen: I think the Alliance provides a very unique opportunity to combine business practices that are found in the private sector with needs that need to be fulfilled in the public sector. And that combination of elements packaged in a non-profit organization directed by a cross section of people interested in energy efficiency is a pretty unique occurrence. I took a look at . . . my education, I took a look at my skills, I took a look at the experiences that I've had over the last 25 years and said, What do I know about this? How could I help these people? And would I like to do this work? And the answer came up a resounding yes.
Con.WEB: What sort of particular skills and experiences do you bring to the work?
Lutgen: I think I have a good foundation. I have a degree in communications, which was an advertising/marketing degree from the University of Washington, and had the good fortune to study under some professors who were top people in the advertising and marketing world. I worked for four years at Puget Power. I've spent the last 20 years managing trade associations. Those associations had members comprised of utilities, manufacturers, distributors, reps and dealers of electrical products. I know the association management business and I know the manufacturer/distribution/retail chain. I've worked with the state on energy code issues, with the utilities on conservation programs. I've worked with boards. Overall, I've experienced and successfully lived through a lot of the things the Alliance needs to be successful.
Con.WEB: How do you see your role with the Alliance? What's your function as a director working with a board and all the other [interested] parties?
Lutgen: It's multi-faceted. First I have a responsibility to the board to make sure that the organization is managed correctly. This means making sure we're doing good business things . . . we have a true and accurate accounting system, that our receivables and payables are taken care of in a timely fashion, that we comply with federal, state and local rules and regulations, that we hire the best people that we can find and brief those people on what our goals and what our objectives are and what our philosophy of doing business is, and we turn them loose to go out and get the organization's work done . . . Those are some pretty fundamental things to . . . running a good business and we've got an obligation to do that first and foremost.
Another role I think that we play as staff--and I'll say we because my view of managing any business is that it is not a single person's effort, but it is a collection of people who share the same vision working together to accomplish a goal--I think we as a staff will have a responsibility to bring to the board the best mix of ventures and infrastructure and sponsorships and other programmatic activities that have a high chance of sustaining themselves after this three-year funding ends, and if they can't sustain themselves entirely, develop them to the point that their reliance on public-purposes funding is minimal and at the same time continues to deliver the goods. To me that's the best of all worlds, if we can move in that direction. So to that end, I think our job as staff is to bring to our board program ventures that we think are going to have a high level of success and have moderate risk.
On the other hand I think it's our job to bring to the board some ideas and ventures that really push the envelope in terms of what we ought to be able to achieve, how long it ought to take to achieve it and how much money is required to do that. I think we need to be innovative. One of the things that I learned at the ACEEE [American Council for an Energy-Efficient Economy] conference a couple weeks ago is that there are about five or six areas in the country that are actively pursuing market transformation/public-benefits kind of work. They are the Northeast Energy Efficiency Council, the state of New York, the state of Wisconsin, the state of California and the Pacific Northwest. Essentially those five entities are being examined by utilities and by utility regulators . . . I would suspect by financial markets and by anyone who has an interest in the electric utility or energy business, and I think those five organizations will be looked to for leadership in this area we're calling market transformation or public-benefits/energy-efficiency activities.
This gets back to the part of the board retreat [in Spokane March 18-19] about thinking big, coloring outside the box, using colors that maybe no one has ever seen before. And I wish I could be more specific in telling you what those are, but my experience is that as we proceed with identifying different markets, as we take a look at technologies and other inputs, a combination of circumstances will germinate ideas with staff and with the board and in other people who watch our board meetings. As these ideas come forth, we should be able to develop and use them to accomplish our goals.
That's pretty exciting stuff. Who else gets to do that besides people who start their own company and start with one or two people and then grow it to something big, or go out and buy a company because they know it has the potential to do things beyond what it's currently doing? Not very many people get an opportunity to do that.
Con.WEB: You feel pretty fortunate, it sounds like.
Lutgen: I really do. Yes. Absolutely.
Con.WEB: How would you assess the significance of the Alliance's formation? The fact that this group is able to actually get together: What does it signify about the region and primarily its electric system, at this particular point in history?
Lutgen: It always signifies that the people in the Pacific Northwest are willing, ready and able to collaborate when they see an opportunity, I think in this case, to preserve our electric system, our environment and at the same time provide direct benefits to consumers by way of energy-efficient products and services which enhance all of our lives.
Let me digress for just a second, to give you my story about energy codes and housing. We built an all-electric house when our family was starting out. When we built it, we knew about energy efficiency. So we put in double-pane windows and better ceiling insulation and better floor insulation. But even with these upgrades, during the highest winter months we would have a two-month bill for $750 for a 2,100-square-foot house. We went on budget billing and paid an average of about $235 or $240 a month.
Well about five years ago we decided to move. We moved to a house that was 3,100 square feet but was built to energy code with 6-inch walls, better thermal-pane windows and the entire package. Our combined gas and electric bills on a monthly basis are now about $85 to $115 average per month. Which means that we saved enough money in our energy bill to pay a significant portion of the additional cost of our monthly mortgage for our new house. Talk about providing a direct benefit where a family can have what they perceive to be a better home, a larger home, a better-built home, a better-insulated home, reduce our energy consumption, reduce our energy bill and be able to turn around and use that disposable income to pay for the mortgage. That's a great deal. And to the extent we can take that concept and do it with other energy-efficient products and services . . . To me that's what it's all about.
Con.WEB: What are your thoughts on the Alliance's work in the first few months?
Lutgen: Great question. It's a question I've been looking at very closely the last couple, three days after the retreat. There are several things that we obviously need to do. One is we have to bring staff on board so that we can begin addressing the organization's work. That's a job in and of itself. We need to address the 30 to 35 projects or ventures that have previously been funded, either by BPA [Bonneville Power Administration] or by a group of utilities on a region-by-region or locale-by-locale basis. We absolutely have to do that.
At the same time we have to develop our strategic plan for what's going to go into our portfolio, our ventures in the residential, commercial, industrial, agricultural arenas. And budgets or approximate budgets that go along with that. And the energy savings that we hope we can capture in addressing those markets. Those are the crucial things.
The other thing . . . is that we've got to start implementing this new process for the board to do its work. So if we can get those four or five things done in the next three months, then I think we will have positioned ourselves very well for proceeding with the rest of the work. To get all of this accomplished may push our capability a bit.
Con.WEB: What other issues do you foresee coming along as NEEA evolves beyond what might be considered short-term foundational issues? Looking ahead a year or two what things do you see you need to take a look at?
Lutgen: I think that the whole issue of continuity is going to be very important. Continuity in the sense that we've embarked on a market transformation process. I believe in order to have continuity, we will need to evolve into a public-purposes process. Now some people think those are one and the same thing, and I think they can achieve one and the same thing, but I think they do so from different perspectives. I think the primary difference in the perspective is that in the market transformation scenario we're really looking to transfer the continuation of these energy-efficient programs and services to the private sector or to an association or to some other entity to carry forward. I think in a public-benefits scenario, you've got to start looking at the possibility of sustained support for those initiatives which have value but may not otherwise be viable under the market transformation scenario.
Con.WEB: So you're . . . sort of drawing a distinction, then, between market transformation and some of these other public purposes?
Lutgen: Well, I want to be careful about that, because the other public purposes as I understand them are renewables and low-income/elderly.
Con.WEB: I think the [Regional] Review's recommendations were . . . They had $30 million for market transformation out of the $210 million [annual recommended Northwest utility spending], and . . . most of the rest of it was for local conservation, as however that's defined, and then renewables and low-income.
Lutgen: The only thing I'm talking about is the market transformation portion of it, because I believe that there will be some ventures or there will be some activities that for any number of reasons may not be picked up by the private sector and yet still have value to consumers, still have value to society. These activities need to be looked at, not in the sense of market transformation, this handoff idea, but they need to be looked at in terms of continuity and sustainability over time.
Con.WEB: How transformed would you say are current Northwest markets, both for energy-efficient technologies and practices? If you can either generalize or sort of pick maybe some specific examples [to illustrate] the state of the markets.
Lutgen: I think in the area of codes the Pacific Northwest is a leader and well-developed inasmuch as we have residential codes in all of the four Northwest states, we have non-res[idential] codes in three out of the four Northwest states and I would hope that one of the ventures that our board will take on is to work towards getting a non-res[idential] code in that remaining . . .
Con.WEB: Which is Idaho.
Lutgen: Which is Idaho, yes it is . . . So in the area of codes I think that we've done quite well. I think that we've essentially achieved a level of market transformation by virtue of the fact that it has been placed into the code. We need to make sure that those codes again continue and are sustained in order to have the benefits.
In terms of technologies or products, it seems to me that the Northwest has been a leader in the area of electronic ballasts, high-efficiency ballasts.
Con.WEB: In their use, or in their development?
Lutgen: Both. Through the Lighting Design Lab and a collaboration, I don't remember the name of the collaboration group, but I think Anne Ducey and Diana Campbell, Nora Williams, Veronica Kuhlman, a group of Puget Sound-area utility people working through the Lighting Design Lab have a great deal to do with successful market transformation. They accomplished market transformation by working with manufacturers to get energy-efficient ballasts. They specified THD [total harmonic distortion] and power factor standards for electronic ballasts. This collaborative essentially made electronic ballasts an industry standard in the Pacific Northwest. I think that's a great example of some work that's been done here on the product side.
Another example is in the area of lighting . . . compact fluorescent light bulbs and compact fluorescent light fixtures. Again this same group working through the Lighting Design Lab has a lot of good experience. I'm not sure that those two markets have been transformed as yet. That's part of the work that I hope our organization will do in determining where that state of the market is and further identifying market barriers that need to be overcome. To the extent that we believe identifiable barriers can be overcome, [we will be] recommending to our board that some portion of our resources be placed against those barriers to make those bulbs and fixtures more mainstream in the Pacific Northwest, the same way that the ballasts have become.
I know on appliances that Ken Keating at BPA, Sue Hill at the city of Seattle Water Department, Nora Williams at Puget Power and Veronica Kuhlman at Tacoma City Light, have been involved in horizontal-axis washing machines. I believe that this is another good example of local people working with CEE [Consortium for Energy Efficiency] at a national level, EPA [Environmental Protection Agency] and DOE [Department of Energy], to establish high efficiency standards, establish relationships with manufacturers of those products, encourage the manufacturers of those products through local marketing and promotion activities to build, distribute and retail those products in this area.
Margie Gardner and the [Northwest] Power Planning Council have developed a list of additional ventures that they believe have potential for energy efficiency, have potential for market transformation and can be stepped through the same kind of process that the lighting and horizontal-axis washing machine collaboratives went through to develop their programs. Am I answering your question?
Con.WEB: It sounds like there are areas that are in various stages of progress toward being transformed. It's very specific depending on [the market]. . . It's really hard to make I suppose a generalization about the overall market in the region.
Lutgen: It is, because again, I think one of our jobs, one of the key jobs we have as staff, is to take that step back and take a look at the residential market and say, gee, What kind of products and services are currently available in the residential market today? What are on the drawing board for tomorrow? Which ones do we think have the promise of energy efficiency, have the promise of being actively pursued, promoted, marketed and retailed to the consuming public? That's one of our jobs, is to take a step back and to look at the big picture in order to put together a coherent strategy that says we want to make some investment of our resources in residential market, in the following areas, because we think we can get the most return on our investment there, the same thing being true for the commercial market, the same thing is true for the industrial and agricultural markets. Clearly that's one of our jobs.
There are different sources to get this information. NEMA, the National Electrical Manufacturers Association, EPRI [Electric Power Research Institute], the appliance dealers association and many others. Work on energy efficiency is going on in many industries, the motor industry for example. There's another example of market transformation, premium energy-efficient motors.
Con.WEB: That's one of your [current] ventures.
Lutgen: Yes. Other ventures, building commissioning, operations and maintenance, and many others are potentials. And from each of those areas will come additional input and additional ideas as to what can be done.
Con.WEB: Are there any of those opportunities that you think right now are the most ripe for being pursued?
Lutgen: That's what I've got to take some time to assess.
Con.WEB: What do you see as the primary barriers to the whole idea of market transformation?
Lutgen: The one that always comes up regardless it seems of the project is price. It seems, although I can't verify this, that when you talk about energy-efficient products or services it usually costs more than a standard model or a standard service. So that would be one that I think we're going to have to take a look at in most instances. I think another is just plain unfamiliarity
Con.WEB: Among the buying public?
Lutgen: Among the buying public. And I think that there a number of different pieces that fall under that topic. I think that, first, lack of knowledge that the product is even made. I think there's the whole issue of whether or not a particular product will perform as advertised. 'Is it available?' I believe this is going to be another issue. One of the basics of marketing is that you can't promote a product that isn't available. It doesn't make a whole bunch of sense to make that investment, so the product has to be available. Use may be another factor. Do you have to use these products and services differently?
We will use market research to ferret out, if you will, whether or not the barriers that I have outlined have any basis in fact, or whether there are a whole list of other barriers that we need to address on a venture-by-venture basis, or market-sector-by-market-sector basis. Our success is going to be based on our ability to overcome barriers. And the most important thing we can determine is whether or not those barriers are real or whether they are simply perceived. And I guess it doesn't make any difference, because perception is reality, but . . . I think that we have a real obligation to make sure that we know, that we have a high level of confidence that the barriers that are identified on a venture-by-venture or a market-by-market basis are real. To spend money on barriers that somebody thinks are there versus barriers that are really there is going to be a crucial evaluation factor.
Con.WEB: You've already talked about this to some degree, but how much influence does the Northwest have in influencing these various markets? How best can the region and NEEA use its size, or whatever other criteria you want to use, to influence markets?
Lutgen: I think we've absolutely, positively got to work with CEE, the Alliance to Save Energy, any of the national organizations that have that same commitment to energy efficiency that we have in the Pacific Northwest. We've got to work with them because the Pacific Northwest, in and of itself, when you're talking about markets, is a relatively small slice of the national market. And although I don't have specific numbers, I believe it's somewhere around 8 to 10 percent of the total market.
Con.WEB: By population?
Lutgen: By population. And so it's critical that we work with--I identified the five other entities that seem to be moving forward--that we work with them to develop programs that emulate one another, share the same standards, drive the market in sufficient quantity to achieve our goals. Manufacturers have a huge capital investment if they change their manufacturing process to produce any particular product line, let alone an energy-efficient product line, and they need to have some level of assurance that their investment is going to pay off.
Con.WEB: The population centers and the commercial markets in the region are pretty clearly mostly along the Interstate-5 corridor in Oregon and Washington, and yet NEEA is a regional entity. How can NEEA spread the benefits of market transformation throughout the whole region and yet still capitalize on the market opportunities that are predominantly on the west side of the mountains?
Lutgen: That's a good question. Before I answer that, one of the things that Margie [Gardner, Alliance deputy director] and I have talked about is that we would like people to start referring to the organization as the Alliance. We think the Alliance, as a word, says that we want to ally ourselves with other companies, associations and organizations in order to accomplish the goals of our organization. NEEA doesn't mean anything to most people. It's an acronym at best, and those who know what it means certainly are free to use it. But in terms of the perception of who we want people to think about, we want people to think about us as the Alliance and all that that brings to the sense of the word. So let's start with that.
Now on to your question. This is purely conjecture, but I think if the Alliance looks at markets that it thinks have potential for transformation first, and then looks at a mix of ventures within those markets, the issue or the matter of equity, regional equity, starts to go away. The reason I say that is, let's go back to the example of the electronic ballast. If as an organization we focus on projects of that nature rather than what I'm going to characterize as utility-specific conservation programs that may or may not have regional applications, if we can focus on what I'm going to call the higher level-type programming, where there's an opportunity for us to improve the efficiency of commercial lighting by working with ballast manufacturers to create a ballast that provides for more energy-efficient lighting, then that benefit crosses everyone's service territory regardless of a particular program. Projects or products that become a standard, or products meeting that standard, will go into a commercial building whether it's built in Butte or whether it's built in Boise or whether it's built in Tri-Cities or whether it's built in, what's a mid-Oregon city?
Con.WEB: Bend.
Lutgen: Bend. OK, all cities starting with the B's. I think that's where the real opportunity lies to address this whole issue of regional equity. I think if we can play at that level the issue largely goes away. What do you think?
Con.WEB: I think you're right. I think that's a good way to look at it. It's almost more of a political concern, it seems like, as it's been raised to date. I know the geothermal heat pumps [a market transformation proposal rejected by the Alliance board in December] was an example. That's before you came on board, but I think there was some ill feelings on the east side because a lot of the east-side utilities were supporting that one. If you can approach it this way, I think that will increase the acceptance.
Lutgen: I think the portfolio strategy is going to help balance things. I suspect there are going to be a variety of projects that answer the questions: Is this a market transformation activity? Is it a project that was developed as a conservation program in one particular utility that now has the ability to be rolled out, if you will, to the region? I think you're going to have some of those. But those still are going to have to pass the market transformation test. So I think you're going to get a mix. And I think that mix, plus the desire to work at that higher level, should mitigate the problem.
I've also found that our board members understand that there are going to be some trade-offs, and it's not always going to be a one-to-one relationship.
Con.WEB: That was explicit in the early formation [of the Alliance], that that just wasn't going to happen.
Lutgen: So I think there's that level of understanding within our board that they want to make sure that there's some balance. No question about that, and that's definitely one of our goals. But I think it's solvable.
Con.WEB: What sort of benchmarks should be used to determine the success or failure of specific ventures as well as the Alliance's overall performance? I guess that's almost an evaluation question.
Lutgen: It is an evaluation question, which is one of the reasons I would like to bring a full-time evaluation market research q/a person on board. There have been assurances made to the state public utility commissions that we will evaluate the Alliance on its overall performance. We will do, on a venture-by-venture basis, q/a and we will do evaluation as well. What those benchmarks are precisely, on a venture-by-venture basis, I can't say specifically.
On the Alliance itself, I think that we know what the board's visions of success are, but the staff needs to propose to our board that we put some kind of quantifiable, measurable objectives to those topics. That's part of what we need to do with the strategic plan. I'm sorry I don't have a specific answer for you at this point in time, but I know that is something that we need to do in order to make evaluation possible.
Con.WEB: I didn't expect you to have all the answers right now. I mean, you've been on the job what, a month here?
Lutgen: No, I officially started on the first Monday in March, so I think probably less than 15 [working] days.
Con.WEB: We'll give you some time on that . . . NEEA currently has a three-year funding commitment. How does that timetable affect your work? Does it bring any particular pressures to do things quickly, even though market transformation requires a sort of long-term perspective? How do you work with that tension?
Lutgen: Another excellent question. There are several sub-points to that question. For example, if we don't work quickly now, will we forego an opportunity to engage in some ventures that could help us achieve our goals? Clearly that's a question. How you balance that question against spending the Alliance's resources without knowing whether or not that's the best strategic investment you could make today, is a whole another question. And again, that's why the board decided and the staff is in complete agreement, that we need an opportunity to take this step back and make an overall assessment of each market, ventures within each market, and where our opportunities lie. So again, I don't know that I have a specific answer to that question.
I do know this, you asked me earlier what some of our problems or issues are. I know that we need to deal with those 30 to 35 ventures in the next 90 to 120 days, for some very basic reasons. The primary reason is that the people who have been doing conservation work in the region deserve to know where the Alliance is likely to be coming from. These are bright, enthusiastic, hard-working, committed people. We need to talk with them, explain our mission, find out where they are coming from, find out where we share mutual objectives. Depending on the discussions, they should be given an opportunity to reassess whether their particular venture fits into the Alliance's view of market transformation. They can then determine whether or not to make a proposal. These are discussions that need to take place immediately . . .
I'll come back to the example of energy codes and the impact of codes in our home. I think if people know and understand the benefits, the improvement in the quality of life, the ability to have additional discretionary income as a result of making decisions to be energy-efficient, they support it. To the extent that they don't understand what the dynamics are, we're in trouble. Isn't that the essence of it?
Con.WEB: You've got to reach people where they live.
Lutgen: One of the things we talked about at the board meeting was that the Alliance is really interested in moving markets. This notion of being customer-specific was important, but the importance of moving markets is a priority. I'll keep coming back to the example of electronic ballasts. You move markets in that way, and that's where you get high leverage. But you have to have the end-consumer's understanding of what the benefit is as part of that overall process.
Con.WEB: I think of my wife, sometimes she goes into Fred Meyer and sees the compact fluorescents and we have some in our home and she doesn't like them because they don't have good enough light for various purposes. She's an informed, environmentally aware consumer but . . . That's just a very small example of the kind of thing that has to be looked at and addressed.
Lutgen: That's right. And you can't move the market unless you know what the consumers, ultimately what the consumers want. That's a great example.
Con.WEB: Well, Will, one more question. What would you like NEEA's legacy to be three years, five years, 10 years, a hundred years [from now]?
Lutgen: It's almost premature to ask that question.
Con.WEB: How about three years? Can you look three years ahead? Do you know where you'd like to be at that point?
Lutgen: I don't have the specific quantifiable goals yet, but I would certainly like to say that we took a look at each sector of the marketplace--the residential, commercial, industrial, agricultural marketplace--made our best estimate of where we could achieve energy efficiency, energy savings, pursued those initiatives with vigor and enthusiasm from a market transformation perspective, and that our activities resulted in the availability of energy-efficient products and services that created a better standard of life for the citizens of the Pacific Northwest. To the extent that we can measure and quantify those activities, I believe we'll be considered a big success.
As Northwest energy conservation moves into a future of diffuse approaches and (quite possibly) public funding in an era of electric industry competition, a significant policy question arises: How should we monitor our energy-saving progress around the region?
The days of centralized planning and resource acquisition target-setting for Northwest energy conservation are clearly waning, if not gone altogether, but keen interest remains in the region's initiatives to improve its energy efficiency. In particular, assuming some form of public-purposes funding for conservation and renewables is eventually enacted at state and/or federal levels, citizens and their elected representatives will demand accountability for how this public money is spent.
But setting up a workable system for keeping score is likely to be a daunting task--judging by a recent organizing meeting for a Regional Technical Forum. After an all-day meeting April 9 in Portland some 25 people--representing utilities, governments, regulators, public-interest groups and the private sector--could agree only to review an RTF concept paper to be developed by the Northwest Power Planning Council. The notion of establishing an organizing work group fell flat, and nothing resembling consensus emerged on such issues as establishing regional protocols for verifying and evaluating energy savings, determining cost-effectiveness or charting regional conservation.
Although participants expressed some interest in an RTF and acknowledged the need for accountability, the role and direction of a technical forum were unclear. Some people questioned whether their organizations would or should take part, for competitive and policy reasons. Clearly, sharing information is a much more sensitive matter in a competitive world than a monopoly world.
And there was no support at all for devoting a lot of resources or creating a new bureaucracy for this monitoring function. "No one's excited about organizational details. I think that's damping people's sense of ambition," said K.C. Golden of the Washington Energy Policy Group. However, he added, the idea of an RTF as an Internet discussion group--as one suggestion had it--is "a lot less than we need to accomplish . . . Maybe there's a middle ground that allows us to have a real substantive forum . . . short of organizing anything resembling a new institution." Golden cited the chartered group of independent scientists involved in regional fish issues as a potential model.
The Road to An RTF
The impetus for the Portland gathering came from Congress and the Regional Review steering committee, both of which recommended the creation of a Regional Technical Forum. Congress, in a 1995 appropriations bill, advised the Council and Bonneville Power Administration to convene a forum to develop standards and protocols for verification and evaluation of energy savings around the region. BPA's conservation reinvention was creating more diverse approaches to conservation by local utilities, and federal lawmakers wanted regionally consistent standards to assess them.
A little more than a year later, the Review added the suggested functions of tracking regional progress toward conservation and renewable resource goals, making suggestions for improving program effectiveness, conducting periodic reviews and communicating any recommended changes. The steering committee sought a means to determine whether public-purpose goals are being achieved, a voluntary forum for the exchange of information and idea on conservation and renewables, and uniform standards for competitive energy services markets.
"Lots of people are interested in how we're doing [in conservation]," noted BPA vice president for energy efficiency Terry Esvelt, who cited the absence of a "single place for that information to be presented and reported." Added Dick Watson of the Council: "Let's stick our heads up once in a while and see how we're doing to collectively achieve these 'public purposes' in this new way."
Esvelt stressed the voluntary and collaborative nature of an RTF, and disclaimed any leadership role for Bonneville: "We've been given a shove, but whether it has any further momentum is up to the people in this room." Tom Eckman of the Council later added the forum would not function as the "energy gestapo or the heat police."
Still, a number of people raised concerns about an RTF.
Skepticisms and Questions
Phil Sher of Pacific Northwest Generating Cooperative took issue with the idea that regionwide protocols would minimize controversies over claimed energy savings. "I think that point of view is a little utopian. I don't think we're going to stop arguing about some of these things."
Sher said he personally disagrees with the methodology of a number of previous evaluations, even though they represented the "best efforts" of "very talented people." He would prefer to hire contractors and/or have professional peer review rather than share information with an entity like the forum. Some of the people at the meeting are "competitors" and even "antagonists," he noted. "I don't want them to know how I'm doing things unless I'm trying to sell them something. For competitive reasons, this isn't the forum I would use. For professional reasons, I would use other methods to get at the standards and practices."
A Regional Evaluation Network already exists. It is an informal group of evaluators who share information on the practice of determining energy savings. However, REN participation has substantially diminished, according to Jennifer Williamson of the Conservation and Renewable Energy System (CARES). Portland General Electric's Sharon Noell called the REN "very academically based and policy-based," and noted it is "built on a pact of professional confidentiality." In a competitive marketplace, Noell believes, it will be more difficult to share internal information as well as to establish mandates. There are no consistent standard practices for evaluation today, she added.
Another big issue is the future utility role in conservation, as well as the shifting demand-side interests of utilities. PacifiCorp's Connie Colter raised the possibility that her utility might someday just collect a public-purposes charge from customers and pass it on to another entity responsible for public-purposes programs.
"We're not sure this remains a utility function, nor the appropriateness of our sitting on an RTF at this point," she said. PacifiCorp's demand-side work is moving to market orientation. "We're more and more looking at conservation as a function of keeping customers and we're not so much interested in tracking the cost-effectiveness" from a traditional utility perspective; customer value will be assuming a higher priority in assessing conservation. Montana Power's Mike Panisko reported a similar evolution within his utility.
PacifiCorp acknowledges the need for accountability, Colter said, but wonders, "What is [our] responsibility and charter . . . in this endeavor?"
A number of people stressed accountability for public-purposes spending, including Watson: "The end result of what we're talking about is accountability. To get to accountability we need some protocols." Consistent standards also would enhance the integrity of bidding processes for public-purposes funding and serve a consumer-protection function, suggested Eckman.
But no common ground emerged on an ideal scenario for verifying and evaluating energy savings.
As for tracking regional conservation, the Council for several years has published a Green Book of utility energy savings across the four Northwest states. The latest version, from February 1996, showed total utility conservation achieving about 1,000 average megawatts in savings from 1978 through 1995. But the Green Book relies on utility-reported data--"It's credible only to the extent . . . the input is credible," Watson said--and it also doesn't take into account non-utility energy conservation efforts around the region. "We weren't chartered to find out what the private sector is doing," Eckman noted. "Neither is Bonneville."
Stan Price, who represents the private sector as administrative director of the Northwest Energy Efficiency Council, argued for some way to assess the effectiveness of public-purposes funding in enlarging the energy efficiency marketplace. "The old ways of measuring and evaluating are clearly outdated," he said.
Now What?
Near the end of the meeting, an informal show of hands revealed virtually no support for a work group to organize an RTF. Price, who thought some kind of next step would be useful, suggested there is a lack of direction for a work group to pursue.
Accountability for public-purposes funding was widely accepted among the meeting participants. Still, it's unclear who must be held accountable and to whom, Esvelt said earlier. "It may be just premature for us to sit down and draft a charter" for an RTF.
In the end, everyone agreed to look over an RTF concept paper Eckman will develop that will seek to address the questions and issues raised at the meeting.
In addition, a number of people supported the broad goal of allying an RTF with existing institutions--such as the Northwest Energy Efficiency Alliance--as much as possible. "I don't know that creating another bureaucratic group out there is in the best interests of the region," said Eric Brateng of Puget Sound Energy.
Still, Eckman believes it will require commitments of people and money to make an RTF happen --Mark Ohrenschall
A huge and innovative contract to save a huge amount of energy and money at the Hanford Site in southeastern Washington has been awarded by the U.S. Department of Energy to Johnson Controls.
The contract, valued at $160 million over 25 years, is believed to be one of the largest performance-based energy-saving agreements the federal government has ever signed. It includes the upgrading of old and inefficient steam plants in two areas of the Hanford complex as well as the potential for extensive energy-efficiency improvements in close to 100 buildings.
Although the actual amount of energy conservation under this agreement was unavailable, the performance-based contract is projected to save DOE an estimated $108 million over the next quarter-century. DOE also touted the agreement for its environmental benefits of reducing emissions of carbon dioxide, nitrogen oxide and sulfur dioxide from existing coal- and oil-fired steam plants at Hanford.
"The most noteworthy thing about this is that it is the harbinger of things to come," said DOE spokesman Guy Schein. "We've had quite a number of inquiries already from other sites . . . and even other government entities. This is probably the cutting edge of changing the way we do business and coming up with new and innovative ways of saving the tax dollars . . . It's a pioneering effort we're going to see more of."
Hanford manager John Wagoner said he "welcome[s Johnson Controls'] expertise on energy efficiency and conservation. The savings they help us achieve could be applied to other cleanup projects or the development of environmental technologies."
Senior energy engineer Mike Fuentes of Johnson Controls said he has "never heard of a contract being this big. As the federal government starts doing more and more performance contracting, this will be something that's pretty common. The federal government is really starting to get into this way of doing business. The people who will see the benefits are the taxpayers."
Background
Sprawling over 560 square miles near Richland, WA, the Hanford Site was established secretly in World War II to produce plutonium for nuclear weapons. The production of weapons materials continued until the late 1980s, and now, Hanford hosts the self-described "world's largest environmental cleanup project."
The Department of Energy has had an energy-management program at Hanford since about 1980, DOE's Tim Kehrli said in early 1996. "The difficulty was there was never enough money to meet the needs," he said.
The 1992 Energy Policy Act authorized federal agencies to solicit proposals for energy conservation services, according to a December 1995 DOE press release. For Hanford, DOE's Richland Operations Office sought a private firm that would be "responsible for paying all capital costs associated with modernizing the heating, processing, cooling and other energy utilization systems of the 30- to 50-year-old buildings and facilities in the 200 and 300 areas of the Hanford Site. The contractor will be compensated based on the energy cost savings to the government using a baseline of current costs over a year plus inflation."
DOE-Richland received eight proposals and in late 1995 selected Johnson Controls and Honeywell as the two finalists. The federal agency eventually chose Johnson, although negotiations for the actual contract award took many months.
How The Contract Works
In the first phase of the contract, Johnson Controls will install a distributed boiler system to replace two aging and inefficient central steam plants.
The existing steam plant in the 200 area burns coal, while the plant in the 300 area is fueled by No. 6 bunker oil, according to Fuentes. The 200-area plant has a thermal efficiency estimated at 33 percent; for the 300-area plant, the thermal efficiency is about 60 percent at best. "The systems we'll be putting in are greater than 82 percent" thermal efficiency, he noted. Natural gas will fire the new 300-area boilers and No. 2 diesel oil will power the 200-area boilers. These units are planned to be operating by year's end.
This change in fuel source will lead to "significantly lower emissions of carbon dioxide, nitrogen oxide and sulfur dioxide," according to DOE. It will also save the federal government about $7 million a year in energy and operational expenses, Fuentes said.
Under the performance-based contract, Johnson will pay the capital and operating costs for the energy-system upgrading. "We will run and operate the equipment and have a service contract on that equipment for the next 25 years," said Fuentes. "We guarantee energy savings for the next 25 years."
In return, Johnson will be paid a fixed monthly rate that DOE expects will average $555,657. The monthly payments generally will be higher in the first 10 years, to compensate Johnson for its investments, and "much lower" in the last 15 years, according to Schein.
In addition, the contract has provisions for Johnson to propose energy-conservation measures in just under 100 buildings in the 200 and 300 areas at the Hanford Site. These strategies could include "anything that you've ever seen before," said Fuentes. He listed such options as variable-frequency drives for motors, variable-volume pumping, variable-air-volume systems, more efficient cooling systems, energy-management control systems, duct-system improvements, more efficient lighting (T-8 lamps, electronic ballasts, occupancy sensors) and de-lamping wherever possible.
Once Johnson Controls and DOE reach agreement on the scope and price for energy conservation measures, "They give us the go-ahead and we go ahead and install the ECMs," Fuentes said. "It's just basically a change order to the performance contract." Johnson will be paid based on the projected savings, according to Schein. The potential amount of energy savings is "quite extensive," Fuentes said.
Hanford operates its own electric utilities and has a total demand of more than 50 megawatts.
In addition to the Johnson Controls contract, Hanford recently signed a long-term agreement with Bonneville Power Administration to examine energy conservation opportunities (see Con.WEB, Feb. 21, 1997).--Mark Ohrenschall
The political controversy that arose last year over Bonneville Power Administration's plans in the energy services and energy efficiency marketplace has subsided, but the process of refining an appropriate BPA role continues.
Bonneville's so-called "market development" activities for energy efficiency are circumscribed by 13 broad principles recommended in December by the Regional Review Steering Committee in its final report.
These guidelines make clear that BPA's function is to enhance the energy efficiency marketplace. The power marketing agency should limit its activities to "markets or individual situations that are not currently accessible, viable or profitable for the private sector energy efficiency industry," and should act primarily as a facilitator/aggregator of services provided by the private sector. The steering committee also recommended BPA work only with federal agencies and its Northwest power-sales contract customers, and spend a maximum of $5 million annually in U.S. Treasury funds. Finally, the committee said BPA market-development initiatives should be self-supporting by Sept. 30, 1999--or be ended.
While these principles established boundaries for Bonneville, they did not chart the interior territories in any detail--territories Bonneville already is exploring with at least 10 separate energy-efficiency projects around the region.
The process of drawing a satisfactory map occupied much discussion April 23 at a Portland meeting of BPA's Energy Efficiency Advisory Committee. This group of people from energy efficiency businesses, utilities, governments and public-interest organizations is chartered to advise and guide Bonneville and monitor its compliance with the 13 principles, as well as to identify opportunities for BPA to help expand the energy efficiency marketplace.
Although the committee is only advisory, its ideas will be taken seriously, pledged BPA energy efficiency vice president Terry Esvelt. He acknowledged the inherently political nature of Bonneville's market-development work, and added, "I think this group has the power to stop Bonneville from doing anything it wants to do. I would not be smart if I ignored the advice of this committee."
At the same time, committee members do not always share the same perspectives and are unlikely to reach complete agreement on all issues. Private-sector firms want to maximize their business opportunities, for example, while local utilities are focused on serving their customers and, from a financial view, ensuring that BPA's rate-based costs for market-development activities are fully covered.
"Dialogue is probably the most important part," Esvelt said. This will help Bonneville define where it should tread and where it should not tread. Before the Regional Review recommendations, he acknowledged, "We were flying blind. Now we've got some guidelines . . . Now our challenge is interpretation in real-world circumstances."
The Real World
One of those is a recent 10-year memorandum of agreement between BPA and Fairchild Air Force Base near Spokane to examine conservation opportunities. The first specific project arising from this MOA is an exterior lighting retrofit, in which 78 900-watt quartz lamps and fixtures will be replaced with about 24 1,000-watt high-pressure sodium lamps, saving an estimated 206,458 kilowatt-hours annually. This $35,000 project is anticipated to save $158,000 annually over the life of the lights, according to BPA.
Why this lighting work first? Fairchild officials see considerable energy-savings potential at the base and are anxious to complete projects, explained BPA's Tim Scanlon. "The simplest, easiest ones to move forward with are the lighting ones," he said.
Bonneville expects to receive about $12,000 for its lighting-retrofit work--auditing, administration, project management, inspection, verification--while private-sector firms are projected to get about $23,000. This 30-percent share for Bonneville raised the eyebrows of Stacey Lin of Bouillon, Christofferson and Schairer. That's more than a private firm would get, he suggested. Scanlon replied that this retrofit had considerable initial costs. "I don't think the 30-percent figure would be representative as a proportion of Bonneville's compensation in future projects," he said. Scanlon also noted that more complex efficiency projects at Fairchild are likely to include even greater private-sector involvement.
Bonneville could have contracted out the auditing for this lighting retrofit, Esvelt acknowledged, but the procurement costs alone would have exceeded the actual auditing costs. That would not be the case, however, on a $200,000-plus retrofit project. Roger Hunter of BRACO suggested BPA could develop a specific dollar limit for auditing work, while Lin thought Bonneville should either always do auditing or never do auditing, since "auditing itself is not a big portion of the job."
The Fairchild case also brought up the issue of Bonneville's level of aggressiveness in the marketplace. Base officials were in a hurry, and if BPA spent too much time determining whether and where it had an appropriate role, "You might miss an opportunity," said K.C. Golden of the Washington Energy Policy Group. "That seems to me kind of the difficult balance in all of this."
Another tricky issue for Bonneville is how it works with its customer utilities. One of the 10 current projects, for example, came about after Peninsula Light on Washington's Olympic Peninsula asked BPA to provide its local school district with information on the resource conservation manager program. As a result, BPA provided the school district with resource-accounting software and will also help with assorted technical support and training for the district-hired RCM. Bonneville plans to recover its full costs from the RCM savings.
In this case, Esvelt said, Peninsula sought out BPA. "I'm not going to be real comfortable telling our customers we can't help them," he said. But Hunter wondered whether that help could come in the form of introductions by Bonneville to private-sector firms that provide the same services.
Another question: What if, as part of a power-sales contract, a utility wants Bonneville to do some energy-efficiency work? "The essence of this business transaction is a power sale," Esvelt believes, and the funding would come from BPA's power-supply section. But Hunter, again, wondered what would prevent BPA from turning to private-sector partners. "You have a huge plug we don't, and that is the power business. To tie those together is taking it out of the realm of a level playing field." Golden, too, questioned the notion of "it's our customer and anything goes."
On the other hand, Maureen Carr of the Public Power Council doesn't want Bonneville disadvantaged in the competitive power marketplace. Energy efficiency is "a traditional market the utilities have looked to Bonneville for help to . . . I don't want to mess with that relationship. It's worked pretty well."
Bonneville as Objective Source
Speaking of relationships, Esvelt believes Bonneville can serve as an objective source on energy efficiency. "Some public-sector managers are wary of working with private companies," he said. They often, for example, lack the expertise to scrutinize the sales pitches from businesses. "Our value-added [role] is to bring a comfort level to that . . . decision-maker [so] they're not feeling like a minnow in a pool of sharks."
Darroll Clark of Franklin County PUD said he is concerned for his customers, and cited the value to them of third-party information. Steve Weiss of the Northwest Conservation Act Coalition compared this function to truth-in-packaging laws passed by government. This could enhance the marketplace by improving the confidence of energy-efficiency buyers, he suggested.
Stan Price of the Northwest Energy Efficiency Council acknowledged a useful role for BPA to "sort out the charlatans," but at the same time he warned against the creeping expansion of this comfort relationship with customers. "The challenge is to draw the line so the comfort zone doesn't begin to harm businesses . . . who are also working in the interests of customers."
Yet another quandary arose in discussion: What if a federal agency with whom BPA is working in the Northwest requests help for its facilities outside the region? Esvelt said this question has already arisen, although Bonneville has concerns about the financial and staffing implications. Carr thought non-Northwest work could pose political problems for Bonneville if it is seen as competing with private-sector energy-efficiency firms from other regions.
What Next?
The next meeting of the advisory committee is scheduled for July 23 in Seattle, at which Bonneville plans to focus on financial issues for its market-development activities.
In the interim, BPA officials will work with committee members and others on partnerships with the private sector. Lin asked for "a clear picture of how you're going to choose firms" for various aspects of efficiency projects, and urged a "fair, open and acceptable" process.
Bonneville and committee people also will further refine suggested guidelines for how BPA can avoid the "red circle" of forbidden market-development activities.
There remain some "fuzzy edges," said Esvelt, "but I think we're all getting in the same quadrant at least." --Mark Ohrenschall
Attachments:
The 13 Principles for BPA's Energy Efficiency Market Development Activities
BPA's Market Development Activities
Membership of the Energy Efficiency Advisory Committee
Minutes from the Energy Efficiency Advisory's Committee's First Meeting, on Feb. 26
In another sign of the changing environment for utility energy conservation, Snohomish County PUD has reduced the scope of an energy-management agreement between the PUD and SESCO, a New Jersey-based energy services company. Under the new agreement, SESCO will weatherize 5,500 homes rather than 10,000, and the residential conservation program will end this summer rather than next.
The Snohomish PUD board of commissioners approved the amended contract March 25. The change will save the district some $6 million over the next five years by reducing the expected costs of the program from $13 million to $7.2 million, the PUD reported. The reductions also follow the district's efforts to transform its energy efficiency focus to "participant-funded and revenue-enhancing offerings" that still capture resource efficiencies.
Bob Nicholas, product development manager for Snohomish, said the PUD has been looking at a number of ways to restructure itself to survive in a deregulated and competitive market. "Incentive-based programs are hindering our goal of self-preservation," he said. In addition, "SESCO was brought in for resource acquisition rather than as a revenue-supported activity."
Nicholas said Snohomish approached SESCO about renegotiating the contract, and the company agreed. While the program will end a year earlier and the 5,500 homes involved will be significantly less than the potential maximum of 10,000 under the three-year agreement, Snohomish will pay SESCO over the course of a year, rather than over five years, as the contract originally stipulated. "Both parties felt good about the deal," Nicholas said. SESCO's payments are based on expected average savings of 2,800 kilowatt-hours annually per home.
SESCO vice president Richard Esteves said the company "regrets termination of the pilot," but understands "why the PUD feels that it must move now to redesign its programs for the future." Esteves added that this particular program was actually designed in 1993. "That doesn't seem like a long time ago, but in today's circumstances, it is."
Although Snohomish is changing its approach to energy conservation, Nicholas pointed out it's likely some residential weatherization will still be funded at the regional level. "There may be room for SESCO to work within that dynamic," he said.
Esteves also is positive about the future. "We actually think there's going to be significantly more funding down the road," he said, after public-purpose charges have been implemented. He expects regional activity will pick up in 1998 and 1999, when the Northwest Energy Efficiency Alliance is fully funded. But he added that in other parts of the country, SESCO actually weatherized more homes last year than ever before.--Jude Noland
We use a lot of energy in our homes, for warmth, light, hot water, food storage and preparation, clean clothes, electronic gadgetry and other purposes.
But we use a lot more energy--if in a different form--to power our four-wheeled homes on the road.
Accordingly, the most significant energy issue today in the Puget Sound area and elsewhere is urban sprawl, according to Seattle architect and University of Washington architecture and urban design professor Doug Kelbaugh. He gave the keynote address--entitled "Home, House, Housing"--at The Seattle Times/AIA Home of the Year 1996 Awards Program on Feb. 28 at the UW.
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| Doug Kelbaugh |
Kelbaugh also talked--in the Feb. 28 address and a follow-up interview--about energy from an architects' perspective, and concluded that energy conservation is important but not critical to the practice of designing homes.
The same conclusion can be drawn from the award-winning homes, which represent "the current direction of residential design," according to a story by Times reporter Elizabeth Rhodes.
A co-winner of Home of the Year, the Fairview Lofts in Seattle's Eastlake neighborhood, were lauded by one of the judges as "an excellent example for how to do small multi-family projects in Seattle that increase residential density in the downtown area--and still manages to give a sense of individual homes." Rhodes also cited their "hybrid hot-water/forced-air heating systems that heat hot water for the house, then use the hot water to heat the air . . . the system is more expensive initially but over time saves money and energy." The other co-winner, a new home on Mercer Island, was described by the architect as taking maximum advantage of its budget, land and rectangular shape.
Accounts of the other eight award-winning homes included such features as sensitivity to the neighborhood, views, natural light, relationships of interior spaces, practicality, low maintenance and imaginative design. One was noted for its passive-solar design, although the judges questioned its effectiveness.
Energy and Architecture
The use of energy in architecture is "considered still a technical issue you have to attend to; essential but not . . . a driving force," Kelbaugh told Con.WEB. "It may never be [a driving force] and maybe it shouldn't be. Architecture has to do a lot more . . . It has to make it livable, affordable, a beautiful environment. Those are the major charges. Energy is really secondary. You can't base your practice just on saving energy."
Still, Kelbaugh believes energy has become a much more prominent issue among architects than a generation ago. "Energy operating costs--heating, cooling and lighting--have long been serious issues for 20 years," he said. "There's been a lot of improvements, a lot of raising of standards, improved performance." Today's residential energy codes are "pretty stiff," he noted.
Now, Kelbaugh sees increasing interest in such green-building practices as the use of recycled and sustainable materials, a trend that considers home energy consumption from a broader perspective. Transportation, too, fits into this larger view. "Transportation even now is in the architects' cone of vision," Kelbaugh said. "Land use and parking has a lot to do with it."
He also thinks energy issues are returning to architectural consciousness, not so much because of cost--as it was in the 1970s--but because of concerns about air pollution, congestion, global warming and other environmental issues.
Kelbaugh himself has long been cognizant of energy. In what he called his "first architectural statement," he designed his own passive-solar home in 1975 in New Jersey. A number of additional solar homes followed, with such site-specific elements as north entryways, Trombe walls and greenhouses. Kelbaugh also designed a prototype passive-solar home for Pennsylvania Power & Light, and a multifamily complex with passive solar cooling as well as heating. "These ideas can also be applied to high-density urban housing," he told the Times/AIA gathering.
In the mid-1980s Kelbaugh and his family migrated to the Northwest. "When I moved out here, I could forget about solar. It was delightful," he said to appreciative laughter, since he'd become "obsessed" about using energy from the sun.
Later, he told Con.WEB that his solar de-emphasis was "purely driven by climate" and he still stressed energy issues in his UW curriculum. Kelbaugh's own Seattle home, in fact, uses a solar collector for domestic hot water. "Space heating in Seattle is difficult to do with active and passive solar," he acknowledged.
Still, Kelbaugh believes in particular applications of green energy in the Evergreen State. "Defensive strategies [such as insulation] all over Washington make sense. Solar strategies make sense east of the mountains and at remote sites, and daylighting makes sense particularly on the west side here, because it's darker."
Sprawl . . . And Solutions
In his Feb. 28 talk, Kelbaugh spoke of America's outsized energy appetite; we have about 5 percent of the world's population but consume 40 percent of its energy. "The biggest piece is by far what we [use] in our cars to move around," he said. "The energy in the gas tank is far more significant than in the oil tank."
Data from national and state sources corroborate this view. In 1995, according to the federal Energy Information Administration, petroleum use accounted for about 38 percent of America's total energy consumption. And in Washington, according to a 1996 study by the (late) Washington State Energy Office, petroleum use amounted to more than 50 percent of total end-use energy consumption in 1993.
In suburbia, Kelbaugh said, shopping, apartments and single-family homes are concentrated in their own zones, "all huge, separated by rivers of asphalt . . . It's mainly paved, and it's not working very well."
Metropolitan Seattle is especially prone to this kind of development, according to Kelbaugh. "We have much more area to sprawl into than Los Angeles . . . and we're doing it," and as evidence he showed a slide picture of seemingly endless housing stretching east of Seattle. He called this "a crazy sort of pattern . . . How much better to build in existing towns and cities."
Kelbaugh believes Seattle should maintain its strong blend of healthy, attractive residential areas--"one of the city's most pervasive assets and distinctive characteristics . . . A winsome mix of fine housing, landscape and views."
He advocated strategies for affordability (zoning regulations, neighborhood-based design guidelines, financial incentives), livable housing for the very poor and homeless (housing vouchers, community development corporations, streamlined city permitting) and development of currently underused areas. "Large, relatively abandoned industrial areas that show no promise of reindustrialization or new employment can be developed as mixed use, compact, walkable, transit-friendly and mixed-income neighborhoods." Rather than focus so heavily on the downtown business district, he said, Seattle should look to its neighborhoods as the "building block of the city."
Puget Sound's population is forecast to swell by some 50 percent in the next decade or two, Kelbaugh noted. "This is serious business . . . If we're not careful, this won't be a very livable place."--Mark Ohrenschall
A proposed new high school near Portland with exemplary energy-efficient design practices is in limbo following the March defeat of a local bond issue.
The planned high school for North Clackamas School District was featured in Con.WEB's Oct. 24, 1996 issue as a model for creating energy-efficient buildings. Efficiency was incorporated in the project from the earliest design stages; it had the support and cooperation of all parties; and the building designers were paid for their additional time to devise comprehensive energy-efficient solutions. "Here's a holistic kind of approach to remedy a lot of the problems we've had in the past" in promoting energy-efficient building design, project architect Heinz Rudolf of BOORA Architects in Portland said last fall.
Alas, a school district bond issue to finance the planned $32 million high school failed in mail balloting that ended March 11. The $81.9 million bond proposal actually received a 57.8-percent majority, with 13,603 yes votes to 9,933 no votes, according to the district's Web site. However, the election attracted only 45.9 percent of eligible voters--short of the 50-percent turnout required to validate the election, under the terms of an Oregon property-tax limitation measure passed in November.
"It was very disappointing," said Dave Church, the district's physical plant director.
School district officials are working with the Clackamas County clerk's office to double-check the voter rolls to determine whether the number of eligible voters was accurate. School district spokesman Joe Krumm said he is "hopeful" this investigation will overturn the bond-election results. If not, the district is likely to bring the bond proposal before local voters again this coming November or next March.
In any case, the proposed new school won't open by 1999 as initially planned. It could open a year later if the bond is approved by next March, according to Krumm. A bond issue is "the only option we have" to finance the school's construction, Church noted.
North Clackamas has already spent $340,000 on architectural fees, and the results of the completed schematic design--from an energy standpoint--have been impressive.
"We ended up that we would be saving the district $52,000 a year, or 44 percent of the total energy budget," said Rudolf.
The schematic design focused on the building itself as a source of energy efficiency. Aided by sophisticated lighting and energy-modeling software, designers have made extensive use of daylighting and natural ventilation strategies. Rudolf last fall called these "two very promising categories we think can reduce energy consumption." This approach will likely cost more for initial construction than standard large-building design, but the design team expects the added expenses will be offset by smaller, simpler and less costly HVAC systems.
North Clackamas didn't really promote the energy efficiencies of the planned high school in its bond campaign, Krumm said. When people would question the school's expense, district officials would reply, "'We need it to last 80 years, and we want it to be energy-efficient.' We'd talk in terms of economical operation."
Although Church said the design process has only delved into "generic descriptions of [mechanical] heating and lighting systems," he believes the high school's energy consumption would be roughly 20 percent below Oregon's stringent commercial energy-code requirements. Annual Btu consumption per square foot would be about 30,000, whereas a traditional high school would use anywhere from 50,000 to 100,000 Btu per square foot per year.
Without the bond funding, further design and development work is on hold, according to Church. One exception: a full-size mockup of a classroom to allow the study of various daylighting and electric lighting designs is scheduled for May at the Lighting Design Lab in Seattle. Portland General Electric will fund a portion of this work, according to PGE's Huston Eubank. The utility has been involved in the North Clackamas project with its Earth Smart program.
Despite the bond-election loss, the completed designs will remain viable for some time, according to Church: "We feel real comfortable that the schematic design would work for the next five years."
Rudolf believes the North Clackamas design process has greatly benefitted from the school district's willingness to pay for the additional time needed to incorporate widespread energy efficiencies. "It's a very good vehicle to do a lot more investigation and a lot more analysis that would not be available within a standard fee," he said. "As a consequence I think they get a much better product that is more closely tailored to their needs and a very site-specific design, in terms of energy, that is based also on real numbers as opposed to just on empirical knowledge."
BOORA has worked on a similar project for a middle school in The Dalles, OR, but that, too, fell victim to a losing bond election. "We're very excited about the whole thing," Rudolf said. "It's just a matter of getting the funds so we can actually physically demonstrate how strongly we believe in the project and energy conservation, and also physically measure the results."--Mark Ohrenschall
Attachment:
Planned Oregon High School Showcases Energy-Efficient Design Practices (Con.WEB, Oct. 24, 1996)
Washington Water Power's energy services and new product development subsidiary has a new name: Avista Advantage.
The name change--effective March 31--sheds the regional acronym, WWP Energy Solutions, that the company has carried since its inception about a year ago. Marketing director Terri Orr said the new moniker is a "name that can easily gain national recognition." WWP has moved all its unregulated subsidiaries under the new Avista Corp. name, Orr added.
At the same time WWP Energy Solutions became Avista Advantage, the company announced it has signed an energy services contract with the U.S. Postal Service in the Portland area. Orr said Avista will provide resource accounting and consolidated billing for 23 postal facilities, under a one-year pilot program for the Postal Service's Western Region, headquartered in Denver.
Avista Advantage has also named Gerry Crooks as its president and chief operating officer. Crooks, previously vice president of WWP Energy Solutions, will be responsible for all aspects of the company's operations, including sales and service, new product development and strategic focus and direction, WWP said. Crooks started with Water Power in 1979 and held various positions in residential, commercial and industrial marketing. He was named industrial sales supervisor in 1989 and manager of marketing and sales in 1991. He moved to WWP Energy Solutions last year.
And, Avista is opening an office in Las Vegas to facilitate contacts with potential customers in southern Nevada and elsewhere in the Southwest. --Jude Noland
Nine Portland-area businesses were honored April 18 for their efforts to save energy, conserve water, reduce and recycle waste, and promote transportation alternatives, in the fifth annual BEST Business Awards.
The awards are jointly issued by the city of Portland and its Businesses for an Environmentally Sustainable Tomorrow (BEST) program, the Association for Portland Progress, the Business Journal of Portland and the Environmental Federation of Oregon.
In the category of energy efficiency, winners were Henningsen Cold Storage of Gresham and Norm Thompson Outfitters of Hillsboro.
Henningsen upgraded its facility by improving the building's lighting and controls, adding insulation, installing more efficient variable-speed fan motors, and modifying its refrigeration systems. These changes resulted in savings of about $60,000 annually, 58 percent of its prior energy use.
Norm Thompson built a state-of-the-art energy-efficient corporate headquarters, using such strategies as building orientation, daylighting, an HVAC system with sophisticated controls and a heat-recovery system to minimize energy consumption. The building also was certified as Earth Smart by Portland General Electric.
Other winners: Intel Oregon and Wacker Siltronic Corp., for overall success; Merix Corp. and Oki Semiconductor, water conservation; Belmont Dairy and PED Manufacturing waste reduction/recycling; and Providence St. Vincent Medical Center transportation alternatives.
"The efforts of these businesses--and the winners from prior years--are helping to keep the Portland area both prosperous and livable," said city commissioner Erik Sten. Actions taken by the BEST award-winners in the previous four years are saving $5 million annually, he noted.
For more information, call the Portland Energy Office, (503) 823-7222, or visit the BEST Web site.
Reduced mortgages for buyers of energy-efficient homes registered under B.C. Hydro's Power Smart new home program are now being offered by 15 credit unions and the Bank of Montreal.
"This helps encourage the purchase of Power Smart new homes," said Darlene Barnett, Hydro's senior vice president for customer services. "Buyers of these homes save on their mortgages as well as enjoy greater comfort, quiet and energy savings."
These financial institutions offer discounts of one half of 1 percent on mortgages for Power Smart new homes. The savings come to about $45.58 per month on a $150,000 three-year mortgage, according to B.C. Hydro, based on a discounted mortgage rate of 5.75 percent. In addition, purchasers of Power Smart new homes save on energy costs.
More than 3,750 Power Smart new homes are either built, under construction or planned across British Columbia, which, according to B.C. Hydro, reflects strong demand for energy-efficient housing. "There is a growing awareness of energy efficiency in British Columbia," said Dan Miller, the provincial government minister responsible for B.C. Hydro.
Clark Public Utilities' no-interest loan program for residential weatherization has been included in Renew America's Environmental Success Index, a nationwide listing of more than 1,600 programs that benefit the environment.
Since late 1994 Clark has loaned about $12 million to more than 4,200 customers for residential weatherization measures, saving an estimated 28.7 million kilowatt-hours annually, according to the utility. (A story on Clark's weatherization loan program appeared in the March 1996 issue of Con.WEB).
Clark's program is listed among 120 entries in the ESI category of energy efficiency, along with a number of other Northwest-based initiatives, including the Portland City Energy Challenge, Portland Block-by-Block Weatherization, the Energy Outreach Center in Olympia, Northwest Conservation Act Coalition, Northwest Conservation and Electric Power Plan, PacifiCorp's Energy FinAnswer program, Portland's Businesses for an Environmentally Sustainable Tomorrow (BEST) program, Idaho Building Operators Association, Puget Power's In Concert With the Environment, and the Resource Conservation Management program involving Washington Water Power and local schools.
An extensive catolog of books, periodicals, directories, videos and software programs focusing on energy and resource efficiency in buildings has been released by Iris Communications of Eugene.
The catalog and its wide variety of information resources--including 16 new titles--is available in print and on the World Wide Web, at http://oikos.com/irisinfo/catalog/.
For more information, call Iris at 1-800-346-0104 or (541) 484-9353; fax, (541) 484-1645; or send mail to Iris Communications, P.O. Box 5920, Eugene OR 97405-0911.
Revised editions of the "Consumer Guide to Home Energy Savings" and "Guide to Energy-Efficient Office Equipment" are now available from the American Council for an Energy-Efficient Economy.
The consumer guide includes "nearly 270 pages of practical, easy-to-understand steps that consumers can take to make their homes more energy efficient while saving energy and money," according to ACEEE. New in this fifth edition are a chapter on energy-efficient windows; expanded discussion of geothermal heat pumps and integrated space/water heaters; electric consumption listings for furnace fans and motors; a manufacturers directory; descriptions of the EnergyGuide labels on appliances; and listings of the most energy-efficient appliances and equipment by brand name and model number.
The office equipment guide will help buyers learn the energy consumption characteristics of computers, monitors, printers, copiers, fax machines and other office technologies. It will also, according to ACEEE, help buyers find what kind of equipment to buy, learn to operate them most efficiently and discover how to reduce paper use and save on paper supplies.
For more information on these publications, contact ACEEE: 2140 Shattuck Ave., Suite 202, Berkeley, CA, 94704; phone, (510) 549-9914; fax, (510) 549-9984; e-mail: aceee.ix.netcom.com.
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