CWEB.025/January.28.1998
WHILE THE POLICY DEVELOPMENTS reviewed in this first Con.WEB issue of 1998 aren't exactly favorable to energy conservation and renewables, other positive reports continue to emerge from around the region.
First, the Washington Legislature will not be restructuring the state's electric industry in 1998, which means, among other consequences, no establishment of public-purposes funding--at least for now. Meanwhile, a committee reviewing Bonneville Power Administration costs has recommended, among other ideas, a $22.4 million annual cut in BPA conservation and renewables initiatives, including an end to market transformation funding after 2001.
Turning to the marketplace, Portland General Electric has issued an innovative request for proposals for innovative energy efficiency programs, while BPA has created a regional directory of energy efficiency businesses to help customers find efficiency-related products and services.
Oregon residents, meanwhile, can now take state income tax credits for buying certain energy-efficient appliances and sealing their duct systems. This is believed to be the first tax credit of its kind nationwide. Also in Oregon, a University of Oregon team has designed a solution for affordable, energy-efficient, lower-income housing. And in Idaho, the Idaho Public Utilities Commission has issued a split decision in a spat between Washington Water Power and a geothermal developer.
Note: Reader Jim Lazar informs us that, although Washington Water Power is rightly credited for spearheading the recent push for the portfolio model of customer choice marko@newsdata.com.
The uncertainty surrounding electric industry restructuring legislation in Washington is more certain in one respect: It won't happen in 1998.
Republican Sen. Bill Finkbeiner has recently decided not to proceed with the comprehensive restructuring bill he has been working on for months. With the state House of Representatives disinclined to take up the issue, extensive restructuring--and prospects for public-purposes funding for energy conservation and renewable energy initiatives--won't be considered in the 1998 legislative session scheduled to end March 12.
Finkbeiner said he had been hoping to introduce restructuring legislation centered on the portfolio approach to customer choice, and including public-purposes funding equivalent to 3 percent of electric bills (see Con.WEB, Dec. 31, 1997, for more on Washington restructuring).
"It looks like we're not going to be pushing that out," Finkbeiner said. "Folks just aren't ready to have a real good and open debate. The case has got to be made a little more that the current changes occurring [in the industry] are serious enough to warrant a good discussion of this issue."
Some sources said there was no guarantee that the Republican legislative leadership could pass a sweeping restructuring bill, or that Democratic Gov. Gary Locke would sign it. The Legislature will, however, consider an unbundling bill and possibly a consumer protection law this session.
Finkbeiner said his planned restructuring bill was becoming politicized. He said the governor's office "said some positive things, but then they sat on it for three weeks." Also, there was a "growing fear" of opposition from labor unions, especially electrical workers, that gave members of both parties pause. "It was turning into a partisan issue, so we pulled back, to the detriment of the state." Although the subject of restructuring poses "a lot of questions" with "very difficult answers," the policy issues can be solved, he believes. However, he said, "The issue itself has to be ripe. This one isn't quite ripe."
Finkbeiner called it "a shame we weren't able to continue the discussion in the Legislature." He noted that every Washington congressional delegate speaking at the recent Power Summit conference in Seattle predicted congressional action on restructuring in 1999. "If we don't have something grandfathered in the federal act, we can expect a cookie-cutter approach." He said he was "confident we can continue this debate in the interim and still act within enough time" before Congress passes any restructuring legislation.
"The good news is we brought the issue a long way," Finkbeiner said. "The issue is more palatable to people now. I expect to continue to make progress." He also pledged to adhere to the Regional Review's recommendation for 3-percent public-purposes funding, although this aspect may be more difficult to pass next year.
Dick Byers, WUTC energy policy analyst, said the commission takes no view on Finkbeiner's action. "We do think the state's going to have to develop a more comprehensive position on retail market structure for electricity," Byers said, "but there are a lot of details not worked out yet, and the likelihood of getting all those details worked out with the amount of time available in this short session is relatively low."
"It's probably the right decision," said Snohomish County PUD's Al Aldrich. "Given the current political environment, it would be difficult to pass a restructuring bill in 1998, an election year. It's hard to separate the politics from the actual content of the bill."
Many lobbyists and lawmakers said there needs to be more discussion. They said they want to keep up the momentum for restructuring, but it is not clear who will take the lead once the session ends.
"There are some smaller bills that will come out that will be helpful in keeping the discussion going," said Tim Olson, Chelan County PUD managing director.
"The situation is ripe for some sort of serious, ongoing discussion following the end of the session," Snohomish's Aldrich said, because the prospect of a federal bill at some point is still there.
"I thought it would be interesting to have a look at [the Finkbeiner bill]," said Democratic Sen. Lisa Brown, a member of the Senate Energy & Utilities Committee chaired by Finkbeiner. "But I didn't think we were ready to enact comprehensive restructuring during this session."
Customer Protection, Unbundling Bills
Brown, meanwhile, has introduced Senate Bill 6560, designed to "protect the rights of retail electric customers." The bill already has 14 co-sponsors. Its intent is to "preserve the benefits of consumer protection, system reliability, high service quality and low-cost rates in the event of deregulation in the electrical industry."
Brown told Energy NewsData's Clearing Up newsletter that the bill instructs public utilities that do not have consumer protection rules in place to develop them and disclose them to customers. Another section directs the WUTC to study and report back to the Legislature on ways to prevent cost-shifting and to preserve reliability and service quality standards in a restructured environment.
"Should deregulation occur," Brown said, the bill clarifies there would be new consumer protection issues that would have to be addressed related to the marketing of power, including slamming, telemarketing and truth-in-advertising/disclosure standards for claims about green power. There is also a companion bill in the House, House Bill 2860.
Meanwhile, the House Energy & Utilities Committee is considering House Bill 2831. According to a House digest, the bill requires that by Sept. 30, 1998, all electric utilities unbundle the costs of their assets and operations "to accurately allocate the cost of utility functions in serving each class of retail electric customer, and to allow for fair and accurate pricing of unbundled services and products."
Under the bill, all investor-owned and consumer-owned utilities would be required to separately allocate their costs for generation capacity and energy supply, delivery services, metering, customer account services including billing, conservation and renewable programs, marketing and sales, general administration and overhead, and other products and services. For delivery services, utilities would have to separately allocate the costs for transmission, distribution and control area services.
These provisions do not apply to smaller utilities--those with less than 25,000 meters--although the bill encourages these utilities to consider participating.
The WUTC's Byers said he was still reviewing the unbundling and consumer protection bills, but that their "general direction and objectives are positive."
Snohomish's Aldrich said "unbundling costs and prices is a logical and appropriate thing to do," but he said the consumer protection bill seems to have technical implementation problems that may not be manageable in the time left to lawmakers this session.--Ben Tansey and Mark Ohrenschall
Bonneville Power Administration energy conservation and renewable energy initiatives are among the targets of a BPA cost-cutting panel.
The Bonneville Cost Review Management Committee, in draft recommendations released Jan. 20, has outlined $22.4 million in proposed annual budget cuts for BPA conservation and renewable ventures after fiscal year 2001. Specifically, the panel suggests an end to Bonneville funding of regional market transformation (saving $14.6 million annually), no extension or modification of existing conservation contracts, and abandonment of any renewable energy work beyond two current wind-energy ventures and a planned geothermal plant. Public-purposes funding from Northwest states is suggested as a substitute for BPA dollars, at least for market transformation.
These proposed cuts are among a total of $159 million in annual budget reductions contained in the committee's draft recommendations, which are intended to help BPA reduce its costs to stay competitive in the wholesale power market. In particular, the cost-review panel wants to ensure Bonneville will be able to sell electricity to Pacific Northwest wholesale customers after the expiration of most of its current power-sales contracts in FY 2001. That, according to the committee's thinking, will help retain the benefits of the Columbia River power system within the region.
Summarizing the committee's draft recommendations at a briefing on Jan. 20, Dick Watson of the Northwest Power Planning Council described the notion of Bonneville returning to its historical roots: "That is, focused on the job of marketing and transmitting the power from the Federal Columbia River Power System and meeting its environmental responsibilities. That vision, a smaller Bonneville than in the past, requires reducing costs and will result in a Bonneville that is politically and competitively sustainable in the environment we are facing today."
In addition to the proposed conservation and renewables cuts, the cost-review committee recommended potential cost reductions from assorted actions involving power system cost management ($48 million in annual savings), BPA overhead ($42 million), transmission ($32.5 million), debt service reductions ($20 million), Washington Nuclear Plant-2 ($19 million), BPA's marketing department ($14.7 million) and the Northwest Power Planning Council ($1.7 million). Fish and wildlife spending was not part of this review. These draft recommendations are in addition to $89 million in budget cuts planned by Bonneville after 2001.
These draft recommendations are in the midst of a public comment period that ends Feb. 20. Two public meetings in which comments are welcome are scheduled for Portland on Monday, Feb. 9, and Spokane on Wednesday, Feb. 11. The committee--which numbers five private-sector representatives, four Power Council members and two BPA officials--is scheduled to present a final report to the Bonneville administrator, the four Northwest governors and the Northwest congressional delegation on March 16.
For more information, visit the cost-review panel's Web site at http://www.nwppc.org/cost_rev.htm.
Market Transformation
The proposed market transformation cuts are premised on the belief that other power wholesalers don't have such costs, and Bonneville is thus competitively shortchanged. The committee also is counting on public-purposes funding from Northwest states to help fill this gap.
"While market transformation is a promising approach to encouraging conservation in a manner more consistent with competitive markets, it is inappropriate for Bonneville to be providing funding long term," reads the draft recommendation on market transformation. "The Committee recognizes that, unlike the rest of the Comprehensive Review's conservation recommendations, the Review included provisions for long term funding of market transformation by Bonneville. This apparently was included because the Comprehensive Review thought it would be difficult administratively to get the states or local utilities to support such a regional effort.
"However," the draft recommendation continues, "this cost is not one that is borne by Bonneville's wholesale competitors. Consequently, this cost can put Bonneville at a competitive disadvantage. The Committee believes that market transformation, along with other conservation, is most appropriately supported through the state public purpose funds called for by the Comprehensive Review. In the interim, Bonneville should work with other interests to secure such funding."
Acknowledging Bonneville has legal responsibilities [under the Pacific Northwest Power Electric Power Planning and Conservation Act of 1980] to pursue energy conservation, the committee suggested: "Consider legislation removing Bonneville's obligation to encourage conservation."
The market transformation draft recommendation was the subject of some disagreement among committee members, according to panelist Mike Kreidler, a Washington member of the Power Council. In fact, he said, it was the "most contentious" of the three conservation/renewables suggestions.
"I think it would have been very difficult if you didn't see the states stepping up to it," he said. "It's still very difficult to do. I anticipate significant comment on this item. We're looking at a draft report right now. It is inevitable we're going to revisit this particular issue."
The Northwest Energy Efficiency Alliance, which currently receives about $15 million annually from BPA to promote transformed markets for energy efficiency--more than half its budget--has already objected to the proposed market transformation cuts. (Editor's note: In the interests of full disclosure, Con.WEB is an Alliance contractor and funding recipient.)
"Alliance board members maintain that Bonneville conservation budgets should not be cut until other funding sources are found," the Alliance said in a news release. Chairperson Jake Fey added: "Eliminating Bonneville's share of support for the Alliance in 2001 would pull the funding out from under us when we're just gearing up." Although the Alliance supports BPA cost-reduction efforts and will seek other forms of funding, "Bonneville still has a legal responsibility to deliver public benefits, and helping the Northwest use electricity efficiently is arguably one of the most important and most cost-effective services it can deliver," Fey said.
Legacy Contracts
In addition to market transformation, the cost-review committee also suggests Bonneville not extend or modify so-called "legacy" conservation contracts that preceded the Regional Review.
Bonneville currently has more than 250 such contracts, according to BPA vice president for energy efficiency Terry Esvelt. These include agreements in which utilities can flexibly spend their remaining BPA conservation funds, the Conservation and Renewable Energy System (CARES), Oregon Municipal Energy and Conservation Agency (OMECA), third-party contracts with energy services companies, and arrangements with state governments. Most of the legacy contracts expire at the end of FY 1999, but debt service payments will continue well into the future and will comprise virtually all of BPA's planned $10 million annual legacy budgets from 2002 through 2006.
Esvelt and the cost-review panel both noted that utilities frequently spend less in any given year through legacy contracts than Bonneville has budgeted. For the past two years, Esvelt said, actual spending has been 60 percent of BPA budgets. The cost-review panel, based on BPA estimates, figures $4.5 million in post-2001 annual savings from this utility underspending. However, Esvelt cautioned that utility spending is hard to predict, especially for conservation programs targeting new construction, and even for retrofit programs. In any case, both Esvelt and the cost-review panel acknowledge BPA is obliged to pay for all spending within the terms of legacy contracts.
One specific potential problem with a blanket moratorium on extending or modifying legacy contracts lies with low-income weatherization. Esvelt said low-income weatherization contractors around the region have asked for more time--but not money--for their currently contracted work because anticipated state funding is not yet available.
With or without the cost-review panel's recommendations, Bonneville conservation funding and staffing is on a steep decline.
For perspective: In FY 1994, according to Esvelt, BPA's conservation budget totalled about $180 million. The current budget is approximately $72 million. Next fiscal year, it will drop to $51 million. BPA conservation staffing peaked at 233 full-time equivalents in 1994, he said. Two years ago BPA had 150 conservation FTEs, and now it employs 66. "As the legacy contracts expire, there will be more [staffing] cuts," he said, although those will generally happen after FY 1999. "We're basically hoping it can be fairly stable now for the next year and a half."
Renewables
The cost-review panel left untouched three renewable energy projects to which Bonneville has already committed: the Wyoming Wind Energy Project now under construction (see Con.WEB, Oct. 31, 1997), the planned CARES wind venture in south-central Washington and a geothermal plant of some description.
However, beyond those, the committee recommends ending any further BPA spending on renewables after 2001. Specifically, the panel suggests elimination of the planned $3.1 million annual budget item for "uncommitted" renewable resource projects and the $200,000 earmarked each year for research and data collection. The latter category covers solar data collection, cooperative wind research, wind data collection and participation in the Electric Power Research Institute's non-hydro renewables program, according to BPA's Geoff Moorman.
"The underlying assumption is that Bonneville's core business strategy should not include development of new renewable resources or related research," the cost-review committee said. Among the implications: "This recommendation could negatively affect the relationship that Bonneville has with several of its historic constituents, as well as prospective resource development partners."
Moorman believes this could change BPA's approach to renewables. "We still think there is a market for green power," he said. With Bonneville's green-power marketing efforts and the committee's draft recommendations, "The way those two things come together is we'll probably try and line up the sales of green power before the projects, rather than the other way around."--Mark Ohrenschall
Portland General Electric is shopping the marketplace of ideas for novel energy efficiency programs.
In what could be a harbinger for the pursuit of energy efficiency in a restructured electric industry, PGE has issued a request for proposals seeking "innovative energy efficiency programs" focusing on residential, commercial and/or industrial customers. The investor-owned utility is particularly interested in "concepts or technologies that are currently being ignored or underutilized in the Pacific Northwest."
Here's how the utility describes the RFP: "PGE has historically been a leader in offering cost-effective energy-efficiency programs to its customers and has committed to continue to do so. PGE believes that a competitive bidding process may be useful to determine if there are additional cost-effective energy efficiency offers that could be included in PGE's portfolio of programs. Therefore, the objective of this RFP is to provide additional tools that PGE can use to meet future energy efficiency goals in the most cost-effective manner."
PGE sent out the RFP in late December, with a due date of March 2 for proposals.
This type of sweeping RFP is not unprecedented for utility-funded efficiency programs; the Northwest Energy Efficiency Alliance and others have taken similar approaches. Nor is the potential dollar amount huge: PGE plans to spend up to $1 million on the program(s) selected.
Still, this approach represents a departure from the norm.
"At this point in time it's very unusual," said Lynn Plamondon of the Oregon Public Utility Commission. "It's not on the magnitude of what NEEA's doing, but it's more than other utilities are doing."
Broad RFPs, she suggested, could be the way efficiency programs are selected in a restructured electric industry with public-purposes funding.
Plamandon welcomes Portland General's RFP, as does Stan Price, executive director of the Northwest Energy Efficiency Council, a trade association for the region's energy efficiency businesses.
"I think it is a bit different," he said. "I think it's clearly in response to the conversations PGE had with a number of business and other interests prior to this who reported there were a number of areas in which good conservation savings could be had that were not the . . . usual areas of investigation that had characterized utility programs in the past . . . We're happy PGE listened to that message and came out with a solicitation that clearly is broadly written: If you've got a good idea, bring it."
A number of NEEC members are interested in responding to the RFP, Price said, and he expects PGE will receive "new and different ideas" for cost-effective efficiency ventures. In particular, he sees considerable potential in the industrial sector beyond traditional programs for the likes of lighting and motor efficiencies. "What's left out there is a whole lot of system integration, a whole lot of process improvements, a whole lot of opportunities to link energy savings with productivity, with other resource issues in a much more global or holistic approach. That's the basis of the innovation here. Before, utility programs tended to focus on a single energy-use item."
A Collaborative Idea
As Price noted, the RFP stemmed from collaborative discussions. Specifically, it developed last fall in PGE's least-cost resource planning process for 1998 and 1999, according to PGE's Carol Brown.
Portland General has substantially reduced its energy-saving goals in recent years, Brown said, from 20 average megawatts in 1995 to 8 aMW for 1996 and 7.35 aMW for 1997. In its new least-cost plan PGE proposed targets of 5.9 aMW for 1998 and 6.1 aMW for 1999. "Our avoided costs [for new resources] had dropped considerably, which affects the amount of [cost-effective energy-saving] potential out there," Brown noted.
PGE in its customer choice plan has proposed a 3-percent system benefits charge to fund energy conservation, renewable energy and low-income weatherization in the future, but collaborative members were interested in PGE's plans for efficiency programs in the meantime, as a transition. Thus the RFP for innovative programs materialized. "We were willing to spend more money [than originally budgeted] if we could get more cost-effective kilowatt-hours," said Brown.
RFP Details
Cost-effectiveness, indeed, is a major criteria in the RFP. Using OPUC-approved 1997 cost-effectiveness numbers, PGE has set limits ranging from 3 to 4 cents per kilowatt-hour for residential programs, and generally between 2 and 3 cents/KWh for commercial and industrial ventures. Any accepted proposals also must pass muster with the OPUC.
Other stated goals for proposals are to offer the highest potential for savings, respond to customer needs or wants, and promote market transformation.
Specifically, bidders are asked to elaborate on the technical basis for claimed efficiency improvements, program management, PGE assistance requested (such as customer billing and load monitoring data), quantification of costs and benefits (using the total resource cost test), and plans to evaluate and verify energy savings. Pay-for-performance arrangements are explicitly encouraged. And confidentiality agreements are allowed.
Portland General plans to judge the proposals by their compliance with the stated RFP goals, and each bidder's abilities, experience and character. Compatibility with other PGE efficiency programs is another criteria.
"We're just hoping to find some [programs] that we aren't doing," said Brown. "I know the hardest criteria is cost-effectiveness; we struggle with that one, too. We're willing to look and . . . we're definitely keeping an open mind."
As for specific areas, "We really would like to have more breadth than one particular focus" such as residential or commercial/industrial. "But I don't want to limit it," said Brown.
Although cost-effective energy savings are PGE's primary aim here, the utility also anticipates gaining education. "We'll definitely learn about opportunities out in the marketplace," she said. "We really haven't done very many of these, definitely not this kind of breadth."
Standard Practice?
Will this become a standard practice for PGE? "It's too early to say," said Brown. "It depends how this goes. It may or may not work," and the IOU may or may not receive any acceptable proposals.
Price believes it will. And, he added, "I would suspect a number of other utilities will watch this particular process very closely, and if it works successfully for PGE and a number of innovative approaches come forward I would hope that creates some additional impetus for other utilities" to launch similar RFPs.
For questions about the RFP, call Brown at (503) 464-7011; for a copy of the RFP, call Joe Waitman at (503) 464-7625; for technical questions on residential proposals, call Allan Jaklich at (503) 464-7713; and for technical questions on commercial and industrial proposals, call Shelley Martin at (503) 464-7686.--Mark Ohrenschall
Linking electric customers and energy efficiency suppliers, Bonneville Power Administration has created an on-line directory of companies that provide a broad range of energy efficiency products and services.
BPA's Northwest Energy Efficiency Business Listing is designed as an information resource for customers, particularly commercial and industrial. Listings are free and available to any efficiency-related business.
"We think the energy efficiency marketplace is big . . . and there's a lot of players and we're not sure consumers are as informed [about it] as they could be," said BPA vice president for energy efficiency Terry Esvelt.
The listing, located on BPA's World Wide Web site at http://www.bpa.gov/cgi-scripts/ncs/custhome.asp, is especially suited for customers in the market for specialized help, as, Esvelt cited for example, a manufacturer wondering where to send a request for proposals for HVAC equipment in Washington.
"Are you looking to improve your energy use, but don't know where to start?" BPA's directory begins. "Plug into the Northwest Energy Efficiency Business Listing."
The listing includes firms offering all manner of efficiency goods and services, from billing aggregation to energy-efficiency equipment to financing to lighting to power quality to utility operations. All told, 30 categories are listed. Searchers also can look up specific market types (agricultural, commercial, federal, industrial, international, other, residential and utility), service territories (Western states, elsewhere in the United States, and Canada), company type (14 categories) and company name. Each business listed has contact information as well as a summary of its markets, service territories, type of company and products.
Bonneville developed the on-line listing in response to what Esvelt called "a common lament: If you're an end-use consumer, particularly in the commercial/industrial sector, everybody can look up a local insulation contractor. But getting into more specialized stuff . . . Who can help?" He compared this directory to the Yellow Pages: "Who can I go to for this kind of service? Where would I start?"
Bonneville, under the leadership of Jennifer Eskil, has culled names from a variety of sources, including its own contractors, utilities, the Northwest Energy Efficiency Council (a business trade association) and others. More than 400 businesses already are listed, and the directory continues to grow.
BPA has intentionally kept it wide open. "This is not a filter at all," said Esvelt. "Anybody who wants to be listed, we'll list them," as long as firms declare they can deliver efficiency-related goods and/or services. However, as a government agency, BPA offers no special treatment. "This listing does not constitute an endorsement of any firms by BPA, nor is it a promise of work," Bonneville declares. "It is an opportunity for businesses to share their capabilities and link with the energy community."
Officially unveiled in November, the listing has "gotten great reception within the business community," Esvelt reported. "The test is, are companies getting leads that are derived from this database? We're hearing more and more that they are."
For more information, browse the directory or contact BPA's Mari Rosales: phone, (509) 358-7474; e-mail, mesibbett@bpa.gov.--Mark Ohrenschall
In a novel governmental action designed to foster markets for residential energy efficiency, Oregon has enacted state income tax credits for the purchase of certain energy-efficient appliances and the installation of tightly sealed duct systems.
Thought to be the first of their kind nationwide, these credits became effective Jan. 1. They stem from a law passed by the Oregon Legislature and signed by Gov. John Kitzhaber last July expanding the state's tax credit program for residential alternative energy devices. (See Con.WEB, Aug. 28, 1997, for a story on the legislation).
Household appliances eligible for the new tax credit are energy-efficient clothes washers, refrigerator/freezers, dishwashers and water-heaters. New or retrofitted duct systems deemed premium efficient also qualify. In addition, heating and cooling systems will be considered for inclusion in coming months. The residential tax credit program previously focused on (and still covers) renewable energy applications, mainly solar water-heating.
Based on first-year energy savings, the new tax credits range from $65 for certain dishwashers to $670 for specific types of water heaters (all limited to 25 percent of net cost). These credits directly lower income tax bills, as opposed to simply reducing the amount of taxable income. They are offered annually and expire at the end of 2001.
The Oregon Office of Energy projects that more than $2 million worth of energy-efficient appliance and duct system tax credits will be granted in 1998.
Principles
OOE officials kept several principles in mind in crafting state rules on eligible technologies and tax credit amounts.
First, said OOE's Charlie Stephens, "We wanted to link up with any other national or regional efforts going on to do a market transformation for any particular piece of equipment." Heading the list were resource-efficient clothes washers, the focus of the popular WashWise program sponsored by the Northwest Energy Efficiency Alliance. The federal Energy Star program, meanwhile, already was promoting refrigerators and planned to include dishwashers, he noted.
Second, OOE wanted to influence markets but without being too charitable to taxpayers. "At the lower end of [efficiency] qualifying levels, you have free riders everywhere," he said, alluding to people who would buy energy-efficient appliances regardless of any tax credits. "At the upper end, there's hardly any equipment available and hardly any impact. We had to find some sort of middle ground where we were pushing the market a little bit but we weren't giving the money away."
Also considered were prior and specific regional improvements in energy efficiency, as with water heaters. "Utilities have done an excellent job of moving the market for water heating quite a way up the scale," Stephens noted; thus, the very high efficiency standards for water-heater tax credits.
The energy office also looked at the potential impact of the tax credits on the state's treasury.. Although the residential energy tax credit program has no official cap--unlike Oregon's Business Energy Tax Credit, which can allocate up to $40 million annually--OOE sought to be judicious. "We are mindful that if we provide tax credits to people, we want to make sure it has an impact on the marketplace and on the overall efficiency of residential energy use," said Stephens.
With these considerations, OOE worked on proposed rules and solicited opinions from interested parties through a pair of meetings in October and a public comment period that ended in late November.
Only a dozen or so people expressed their thoughts, and they were "just kind of interested where we were going with it," said Stephens. "No one had any particular problems with the way we proposed to run the program." OOE did clarify the eligibility of propane-fueled equipment in natural gas categories, and assured questioners that alternative-fuel vehicles--which are also covered in the new tax credits--do not include electric boats, three-wheeled rigs and other modes of transportation that Stephens said "aren't typically registered to operate on the highway."
OOE, however, did run into difficulties trying to establish suitable tax credit amounts for residential heating and cooling equipment, such as heat pumps, furnaces and air-conditioning units. OOE plans to hold a series of stakeholder meetings beginning in February to further discuss space-conditioning tax credits.
Following is a summary of the technologies eligible for the new credits:
Clothes washers: Stephens predicts these will be the single most popular item, potentially responsible for half or more of the estimated $2 million-plus in new tax credits awarded for 1998. "They look like the big seller," he said. "The rate of increase in success of the WashWise program has been quite a surprise to many people." (See Con.WEB, Dec 1997, for stories on WashWise).
OOE set the eligible efficiency levels to match those of WashWise, Energy Star and the Consortium for Energy Efficiency. "We want to mutually support all of those things," he said.
Tax credits for clothes washers range from $145 to $250--which, Stephens noted last year, when combined with the $130 WashWise incentive make high-efficiency clothes washers comparable in price to high-end standard models.
Refrigerator/Freezers: Although new federal efficiency standards for these appliances will take effect in 2001 (see Con.WEB, May 23, 1997), "We don't have any testing results that benchmark today's equipment relative to the 2001 standard," Stephens explained. OOE decided to set the minimum efficiency level eligible for tax credits at 25 percent beyond the current federal guidelines, enacted in 1993. Oregon offers six different tax credit amounts for efficient refrigerator/freezers, from $95 to $190.
This tax credit category is likely to change over time as the market changes. "Within a year of the new standards, we may eliminate fridges entirely, or set a new benchmark based on 2001," said Stephens. "We'll ratchet it up."
Dishwashers: "The total energy savings [from this category] compared to so many other targets of opportunity are fairly small, but not totally insignificant," said Stephens, noting that new federal efficiency standards for dishwashers went into effect in 1994 and are unlikely to be revised in the near future.
OOE established two qualifying levels for these appliances. Dishwashers with an energy factor, in cycles per kilowatt-hour, from .56 through .59 are eligible for a $65 tax credit; those with energy factors of .60 and above get $85.
Water Heaters: Eligibility requirements for this technology are high but so are the potential energy savings and the four tax credit amounts: $260, $410, $480 and $670.
Separate qualifying guidelines were established for natural gas/propane water heaters and for electric water heaters. "There are not a lot of models that qualify in either case," Stephens said. "We hope to get more experience in those and make those a little more prevalent in the marketplace."
Duct Systems: Oregon now provides a tax credit for "well designed and sealed duct systems," according to OOE's application form. It can be applied to new as well as retrofitted duct work, with a maximum allowable cost of $1,000 and a tax credit limit of $250. The work must be performed by OOE-certified contractors. Duct cleaning is specifically excluded.
"It's designed to be completely synchronous with NEEA's program," Stephens said. "Whatever specs and training are accomplished by the Alliance [through its duct program] we'll put to use in the tax credit program."
Although offered separately, the new appliance tax credits can be taken as a package. Stephens said he is working with a couple of developers interested in installing eligible appliances in new homes. The added mortgage payments to the homeowner might exceed the energy savings by a few dollars each month, he estimated, but that doesn't take into account other benefits.
In addition, a number of jurisdictions have shown interest in Oregon's appliance tax credit program. OOE has sent information to Washington state (which has no income tax but does levy other taxes), Virginia, Wisconsin, New England, the other Washington (D.C.) and appliance manufacturers. "Nobody else is doing this sort of thing in this way," said Stephens. "We'll see how it goes."--Mark Ohrenschall
Attachments:
A University of Oregon team has designed an answer to the challenges of creating energy-efficient housing that maintains a low first cost--Cascadia.
UO's Energy Studies in Buildings Laboratory in Eugene has developed construction documents for this one-and-a-half story, three-bedroom, 1,040-square-foot home that exceeds Oregon's stringent residential energy-code requirements by some 20 percent. The Cascadia design, which features stressed skin insulated core panels for exterior walls and roofing, can be built for an estimated $59,000 including a detached garage--in the same range as comparable wood-framed homes built to code.
The complete set of detailed working drawings and accompanying information are offered free to non-profit organizations, and cost $100 for other builders.
"We ended up with a building that is 20 percent or more [energy] efficient than stick-built and has the same first costs," explained ESBL director and UO architecture professor G.Z. Brown. Cascadia also offers a number of other advantages, such as quicker construction and potential financial incentives, including rebates from utilities, better interest rates and qualifying ratios from lenders, and tax credits.
Brown described Cascadia as a "solution to a typical problem . . . Adding more energy efficient features while maintaining beauty and comfort in buildings normally costs extra for initial materials and installation. In most cases, this initial cost can be recouped over time through savings in energy costs, yet for many people such potential is still not enough incentive to allocate the extra cash up front. What's more, people of lower income are lucky to afford a home at all, much less one that costs more because of the energy efficient features that are added. Cascadia is a solution to this problem."
The Eugene-Springfield Habitat for Humanity will start building the first Cascadia house in a few weeks. Other non-profit developers are doing site planning with the Cascadia design; one is a 26-unit housing development, and another is a four-unit complex. Both are located in Oregon's Willamette Valley. Brown expects these inaugural models to be finished sometime in 1998, and once Cascadia homes are built and people can view them, "That'll make a big difference" in their dispersal.
Cascadia Origins
Cascadia stems from the Energy Efficient Industrialized Housing Program, funded by the U.S. Department of Energy's Office of Building Technology.
"Several years ago one of the things we identified as a technology that DOE should pursue is stressed skin insulated core panels," said Brown, citing its better structural performance and better thermal performance than frame construction.
ESBL, with assistance from manufacturers, non-profit housing developers and others, designed and built a demonstration home in Springfield using stressed skin panels. This model exceeded Oregon's energy code by 40 percent and cost less to build than a conventionally constructed home of the same design, ESBL found. It also reduced on-site labor requirements by 40 percent, and shortened construction time by a week.
"We said, 'OK, let's de-tune the demo house and see if we can do one that costs us the same as a stick-built house that non-profits would buy,'" Brown recalled.
Non-profit organizations, he noted, are surprisingly conservative in their building tastes. They have boards trying to keep them solvent. They're not in the construction business, and they generally don't embrace new technologies. Their focus is getting people into homes with minimal hassles. For Cascadia, "It's a bigger barrier than you might think," Brown said. It took several months of discussions before non-profits decided to pursue the handful of Cascadia designs now planned. Brown estimated ESBL has sent out 10 to 20 Cascadia sets altogether.
Cascadia Features
The most prominent physical feature of the Cascadia design is the stressed skin panel system, which is intended for the exterior walls and roof. Respectively, they have a 5-1/2-inch and 9-1/4-inch core of expanded polystyrene laminated between two layers of oriented strand board or other engineered materials. The panels are pre-manufactured as specified, and assembled on site. In the Cascadia design, the wall panels carry a nominal R-value of 23 and the roof panels are rated at a nominal R-value of 40.
Stressed skin panels are "very advanced, very strong, very energy-efficient," according to David Wright, a north-central California architect who participated in a brainstorming session at ESBL several years ago. "They're a much better use of resources, providing a better-built structure." And, they can be put up much more quickly than standard stick framing.
These panels are not brand-new technology, he noted. They have been installed in thousands of American homes, most in the Midwest and East where the climates are generally more extreme, energy costs are generally higher and lumber is a little less prevalent than out West. In the Northwest, Seattle's Model Conservation Home used this technology (see Conservation Monitor, September 1994).
Stressed skin panel construction typically adds about 5 percent to the total cost of building a home, according to Wright, but, he added, "It's an investment in energy efficiency and quality."
Wright sees increasing interest in stressed skin panels. "The thing I share in common with . . . the people at the University of Oregon . . . is we can see the potential of this and have been working diligently to get it out to the guys in the field; architects, engineers and builders. The most interesting thing to me is how difficult it is to change people's perceptions of how they do things. This product doesn't take a lot of training and retooling. Any contractor with a nail gun" can learn to use it. "Education is the big aspect, plus the cost factor."
In addition to stressed skin panels, the Cascadia design also includes several other efficiency features.
One is orientation. Cascadia maximizes the window areas with southern exposure, to increase passive solar heating in cold weather. In warm weather, meanwhile, exterior and interior shading helps keep
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| Drawing Courtesy of Energy Studies in Buildings Laboratory at University of Oregon |
The Cascadia design also calls for insulated, low-e, argon-filled, vinyl-framed windows with a .32 U-value (providing lots of daylighting) and underfoot, an insulated concrete slab to provide thermal mass.
There are actually two separate Cascadia designs available, with the choice hinging on lot configuration. "Narrow lots that will only accommodate a house with its long axis oriented east-west use Cascadia I," explains program literature. "Narrow lots that only permit a house to be built with its long axis oriented north-south use Cascadia II. On larger lots either scheme can be chosen, although Cascadia I is preferred because it has slightly better energy performance." The small building footprint makes siting easier on difficult lots.
Cascadia also provides various options in form as well as appearance. These include alternative siding, a detached garage, first-floor sliding doors, low second-floor windows, a first-floor laundry room, dormers, skylights, porches, forced-air heating system and radon mitigation.
"We've completely specified everything . . . It's all there in the drawings," said Brown. Cascadia can be reasonably used anywhere in Oregon or Washington, he noted, although the design might be optimized differently east of the Cascades.
Of the $59,000 estimated construction costs, about $17,000 a piece is projected for the stressed skin panels and the interior. Other itemized expenses include electrical work ($6,200), plumbing ($5,000), garage ($4,500), other exterior work ($4,200) and foundation ($4,000). These figures include overhead and 10-percent profit on labor and materials. These estimated numbers apply specifically to the Willamette Valley; they may vary slightly elsewhere, Brown said, depending on local labor and other costs.
Benefits
Cascadia offers many advantages to non-profits, according to ESBL.
In addition to a reasonable initial cost and lower energy expenses, the Cascadia package includes 70-plus pages of free detailed construction drawings along with information about site design and Cascadia's energy efficiency. Furthermore, ESBL offers assistance to help builders and developers get started.
The program touts the proven quality of stressed skin panels, and their faster and simpler construction. Less on-site waste is generated, and much less framing lumber is used.
Cascadia's design also has received approval from the city of Eugene, and is expected to get approval soon from the city of Springfield.
Financially, Cascadia qualifies for energy-efficient mortgage programs, incentives from many electric utilities--from Eugene Water & Electric Board the incentives run as high as $1,860--and Oregon income tax credits of more than $1,200 for its passive solar design.
In addition, the Cascadia drawings are ready to go for builders and developers, which Brown called "a big help."
ESBL also has learned a few tricks for stressed skin panel construction. "In order to make the panel house low-cost, you have to do a number of different things that, unless you're experienced, you don't realize you need to do," said Brown. He cited an example involving exterior wiring. "It's just a little thing, but if you don't plan for that it runs the cost up. We spend a lot of our time looking for less than $50 [savings] on things. It's astounding how detail-oriented it becomes."
For more information on Cascadia, call ESBL at (541) 346-5647, or visit the lab's Web site, at http://darkwing.uoregon.edu/~esbl/.--Mark Ohrenschall
A power-sale fight between a geothermal energy developer and Washington Water Power has ended with a split decision--and a bruised reputation for the investor-owned utility.
The Idaho Public Utilities Commission has ordered Water Power to negotiate a 20-year contract with Earth Power Resources to buy power from one of the developer's planned small geothermal plants in Nevada, under grandfathered terms favorable to Earth Power as a qualifying facility under the federal Public Utility Regulatory Policies Act (PURPA). But the IPUC also ruled Earth Power is not eligible for a similar contract it had sought with WWP for an adjacent proposed geothermal facility.
At the same time, the IPUC sharply criticized Water Power's conduct in this long-running dispute, calling it "inexcusable. We expect regulated utilities to negotiate with QFs in a professional, responsible and honest manner. We are regrettably unable to find that Earth Power has been dealt with in such a manner by Water Power."
Peter Richardson, an Idaho attorney representing Earth Power in the proceeding, said he and his client are "pleased that the commission agreed with us that Water Power had been dragging its feet in the negotiations. The language in the commission order was surprisingly strong.
"This is the twilight of the cogen[eration] industry in terms of PURPA contracts," Richardson acknowledged. Still, he added, "The message the commission was trying to convey is that PURPA still is the law of the land, and attempts to thwart it or throw roadblocks in contract negotiations won't be permitted, in Idaho at least."
Water Power representatives could not be reached for comment on the ruling.
The conflict dates to late 1995, according to a summary in the IPUC's Nov. 25 order. In December 1995, Earth Power proposed to install a geothermal plant of less than 1-megawatt capacity at each of its PURPA qualifying facilities in Allen Springs and Lee Hot Springs in Churchill County, NV, east of Reno. The developer requested separate power-purchase contracts with Water Power for the two plants, at the then-applicable rate of 4.42 cents per kilowatt-hour for a 1998 on-line date. Under PURPA regulations 
utilities are required to buy electricity generated by qualifying cogenerators or small power producers, such as Earth Power.
Water Power initially responded to Earth Power's request by faxing back the wrong rates (4.83 cents/KWh), according to the IPUC summary. The IOU asked Earth Power to clarify with commission staff the eligibility of geothermal plants for so-called non-fueled rates. Earth Power got the green light on that point and was ready to conclude power-purchase agreements, but Water Power notified the developer it had sent the wrong contract; Earth Power soon got a new and much longer draft contract that also included incorrect rates.
In May 1996, WWP offered a 10-year contract to Earth Power for 2.26 cents/KWh, which reflected a proposed decline in the utility's avoided cost for new resources--a revision later approved by the IPUC, effective July 1, 1996. Earth Power declined the offer, and proposed a 20-year contract at 3.91 cents/KWh if contracts were executed within a week. Water Power came back two days later with a 20-year offer for 3.27 cents/KWh, assuming a 1998 on-line date. However, no agreement was reached before the new, lower avoided-cost rates went into effect on July 1.
"It is Water Power's contention that Earth Power did not qualify for the [IOU's] less than 1 MW rates because Earth Power proposed to build multiple projects at each QF, which collectively exceeded 1 MW . . . a fact that Water Power contends that it only first learned in writing [as] of May 16, 1996," the IPUC summarized.
"It is Earth Power's contention," the commission continued, "that it was reasonable during the time frame during its negotiation with Water Power for it to assume that it could develop three less than 1 MW projects at each QF selling the output of one project from each QF to Water Power, Utah Power and Idaho Power." Earth Power contracted in June 1996 with PacifiCorp's Utah Power unit for a less than 1 MW power purchase sale for Lee Hot Springs.
The basic issue for the commission was Earth Power's eligibility for the higher, grandfathered rate for its QF geothermal plants at Allen Springs and Lee Hot Springs.
"The testimony and exhibits in this case demonstrate that Earth Power attempted to negotiate and did everything possible to commit itself to a 'legally enforceable obligation' and obtain a power purchase contract with Water Power," the IPUC concluded. "We find that Water Power Company, however, either knowingly or through negligence or ineptitude acted so as to prevent Earth Power from obtaining a contract . . . We find that 'but for' the actions of Water Power, Earth Power would have obtained a power purchase contract prior to July 1, 1996, and is therefore entitled" to the then-current (and higher) rate.
This applies to the Allen Springs QF facility, the IPUC ruled, but not Lee Hot Springs. "In electing to contract with Utah Power for the published less than 1 MW rate, we find that Earth Power elected to limit the size of its project at Lee Hot Springs to 999 kW. We find Earth Power's contention that it is able to develop multiple under 1 MW projects at any given QF to be unpersuasive regarding QF eligibility for the Commission's under 1 MW posted rates."--Mark Ohrenschall
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Applications are being accepted through mid-February for the sixth annual BEST Business Awards, which will be presented in April to Portland-area businesses with notable energy and environmental accomplishments.
BEST is an acronym for Businesses for an Environmentally Sustainable Tomorrow, a city of Portland program. The annual awards issued by BEST have gone to local enterprises for their achievements in energy efficiency, water conservation, waste reduction, efficient transportation and overall environmental accomplishments.
The BEST Business Awards are co-sponsored by the Association for Portland Progress, the Environmental Federation of Oregon and The Business Journal. Applications for the 1998 awards are due Feb. 20, and are available from the Portland Energy Office. For more information, call the energy office at (503) 823-7222 or send an e-mail to pdxenergy@ci.portland.or.us.
Energy-efficiency ratings for residential skylights in Washington have been changed by the Washington State Building Code Council.
The revision, which becomes effective July 1, will not increase the stringency of the state's energy code for skylights, according to BCC's Tim Nogler. "The skylight change was made in an attempt to be consistent with the national standard [developed by the National Fenestration Rating Council] and to provide an accurate method for rating skylights," explained Nogler. Because overhead skylights are much different than vertical windows, he said, creating an equitable rating procedure has been challenging.
The BCC also made a number of minor revisions to the state's energy code, he said, including adjusting U-values for steel-frame buildings and changing duct-insulation requirements for commercial buildings.
For more information, call the Building Code Council at (360) 586-0486.
Workshops on adjustable speed drive application, including an ASDMaster software demonstration, are scheduled for Thursday, Feb. 5, in Salem, OR, and Friday, Feb. 6 in Seattle.
The workshops are intended for industrial customers, ASD manufacturers and motor manufacturers. They are sponsored by the U.S. Department of Energy's Motor Challenge program.
For more information, call (301) 572-0299, or visit the Motor Challenge Web site.
A new version of the "Guide to Energy-Efficient Commercial Equipment" has been published by the American Council for an Energy-Efficient Economy, in cooperation with the New York State Energy Research and Development Authority.
The guidebook, according to ACEEE, "provides commercial equipment purchasers and users with practical up-to-date information on how to reduce commercial building energy consumption, improve building systems performance, and increase worker comfort and productivity." It focuses on three specific equipment areas: lighting, HVAC and motors.
For more information, call ACEEE at (202) 429-0063, send an e-mail to ace3pubs@ix.netcom.com, or visit the organization's Web site at http://www.aceee.org.
OFFICES: Mail-P.O. Box 900928, Seattle, WA 98109-9228. EXPRESS: 117 West Mercer, Seattle, WA 98119. TELEPHONE-(206) 285-4848. FAX-(206) 281-8035. E-MAIL-iod@newsdata.com. Con.WEB was created by the Energy NewsData Web team, including: Publisher-Cyrus Noë; Editor-Mark Ohrenschall; Associate Editor-Jude Noland; Contributing Editors-Pamela Russell and Ben Tansey; Internet Production Administrator-Denise Lee; Internet Operations Manager-Lisa Wachter; General Manager-Brooke Dickinson; Office Coordinator-Christina Smith.
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