CWEB.037/January.29.1999
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A new Washington state study provides further evidence of the sharp downward trend in electric utility conservation spending--sharp, as in a 72-percent reduction since 1993.
Utilities representing 86 percent of Washington's electric sales reported spending $155 million on conservation in 1993, the peak year this decade. That figure includes Bonneville Power Administration funding. In 1998 those utilities expected to invest about $44 million in conservation, a total forecast to shrink to $24 million in 2000.
"Competitive pressure to minimize prices, lower wholesale energy prices, uncertainty regarding future market structure, and programmatic changes have contributed to this decline," according to the "Washington State Electricity System Study." The report also outlines historic public policies and potential strategies for conservation, renewable energy and low-income energy services in a changing electric industry.
"I don't think any of the findings of the study are dramatic or surprising," said K.C. Golden, assistant director of the Energy Policy Group of the Washington Department of Community, Trade and Economic Development. "They do document in more detail and more systematically trends we've had some inklings on in the past."
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| Chart Source: Washington State Electricity System Study, from data submitted by utilities and Bonneville Power Administration |
Prepared by CTED and the Washington Utilities and Transportation Commission, the comprehensive and wide-ranging report was requested by the 1998 state Legislature and finished by year's end. It covers in considerable depth the state's electricity landscape, electric costs, rates, utility service territory agreements, consumer protection policies, utility service quality, system reliability, and energy conservation, renewable energy and low-income energy services. "We hope it will inform the deliberations" of the Legislature on electric-related issues, said Golden.
Conservation Spending
The public-purposes chapter documents the collective rise and fall in conservation spending by 15 responding Washington utilities: Benton PUD, Chelan County PUD, Clark Public Utilities, Cowlitz County PUD, Franklin County PUD, Grant County PUD, Grays Harbor County PUD, Orcas Power & Light, PacifiCorp, Parkland Light and Water, Puget Sound Energy, Seattle City Light, Snohomish County PUD, Tacoma Power and Washington Water Power (now Avista Utilities).
None of these utilities planned in 1998 to equal or exceed their total peak conservation-spending years from the mid-1990s, although some are close; and two--Orcas Power & Light and Seattle City Light--actually budgeted more of their own non-BPA money for conservation in 1998 than in any other year this decade. BPA's funding percentage for reporting utilities actually has slightly increased this decade, which Golden attributes to the remnants of BPA conservation contracts. Investor-owned utility conservation spending has experienced a "dramatic . . . shrinkage," he noted, as did the report.
Estimated energy savings from some programs are reported by each utility in an appendix, but they are not annualized, nor is any cumulative total presented. Utility conservation programs generally now offer less money to participating customers, Golden noted. "If you're offering less of an incentive, presumably it will have some effect on achievement. We think it does, but we didn't quantify that."
The study also outlines underlying trends influencing conservation spending: increasing competitive pressures, lower wholesale power prices, reduced costs for new generating resources, a pronounced shift in emphasis from residential to commercial and industrial programs, increasing focus on market transformation through the Northwest Energy Efficiency Alliance, and performance contracting for large customers and government agencies. These trends have also muddled least-cost planning and significantly reduced efficiency-related research and development.
Renewable Energy, Low-Income Energy Services
Non-hydro renewable energy resources--which account for less than 1 percent of the state's electric sales--face a somewhat different dynamic than conservation, the study finds.
Renewables investments are affected by declining wholesale power prices and research funding, but also by electric industry restructuring legislation (in other states), growth in overseas markets, global warming and lower energy costs from wind and solar photovoltaic technologies. Renewables, the report notes, continue to encounter developmental obstacles: higher prices, financing difficulties and siting opposition in some places. Wood- and paper-waste and landfill-gas biomass are the predominant sources of Washington's non-hydro renewable energy.
Another public-purposes category explored in the report is low-income energy services. Spending on the two primary components--bill assistance and weatherization--has dropped considerably since the mid-1990s, although not as precipitously as utility conservation funding. Still, the report finds a growing need for low-income energy services, as a higher percentage of Washingtonians live in poverty and the state's median income shrinks in real terms. Low-income funding from government and utility sources "is both declining and unstable," the report notes. Even in already weatherized homes, today's advanced weatherizing techniques could yield more energy savings. And, "large portions of the rental and manufactured housing stock remain unweatherized."
Policy Support, Conservation Achievements, Potential Strategies
Although public-purposes investments are in decline the report lists many public policies that explicitly support energy conservation and renewables, from the Pacific Northwest Electric Power Planning and Conservation Act of 1980 to the National Energy Policy Act of 1992 to the 1996 Regional Review. The Northwest also has a distinguished conservation history, with utilities alone gaining more than 800 average megawatts of energy savings from 1979 to 1995.
Yet much more is achievable. The report cites the Northwest Power Planning Council's estimate of more than 1,500 aMW of cost-effective conservation available regionwide over 20 years, at an average levelized cost of 1.7 cents per kilowatt-hour. Market forecasts are likely to capture only 20 percent of those savings. "Where private incentives are not sufficient to capture all cost-effective savings and renewable resources, public investment or other public policies may be needed," the report states.
One potential strategy is a "uniform, competitively neutral, non-bypassable" system benefits charge, the proceeds from which can be applied to efficiency, renewables and low-income initiatives. The report also discusses pros and cons of five prospective administrators of SBC funds: utilities, state government, local governments, non-profit organizations and consumers.
Tax revenues and incentives also can foster public purposes, according to the report. Specific energy efficiency policy options include energy codes, product efficiency standards and public facility energy-saving targets. Renewables strategies could involve portfolio standards for energy suppliers, fuel and emissions disclosures, and internalized environmental costs. Low-income services could encompass mandatory rate discounts and universal electric service based on a percent of income.
Many of these policy strategies already are at work in the Northwest and elsewhere. As one example cited in the report, Washington Water Power and Puget Sound Energy both have adopted SBC variations.--Mark Ohrenschall
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Bonneville Power Administration's proposed wholesale rate discount for energy conservation and renewable energy initiatives is taking shape but is not yet fully formed.
BPA has settled on the total conservation/renewables discount amount it intends to offer its customers through power-sale subscriptions beginning in fiscal years 2002-2006: $30 million--equivalent to .05 cents per kilowatt-hour in wholesale rates--with potential additional funding in good financial years.
Bonneville and its stakeholders generally agree on many but not all details about how the discount would work, and discussions continue towards consensus. The federal power marketing agency expects to unveil a fleshed-out discount plan by late February, in time for inclusion in BPA's upcoming rate case for 2002-2006.
Discount Amount: Some months back Bonneville officials decided to limit the discount's rate impact to .05 cents/KWh, a figure reaffirmed by BPA energy efficiency vice president Terry Esvelt. "We're focused on that," he told the conservation/renewables discount working group Jan. 13 in Portland. Each dollar spent on qualifying public purposes would be eligible for a dollar of rate discount.
But acknowledging some criticism that $30 million annually is too little, BPA plans to raise the discount in bountiful cash years. Although the benchmark is undetermined, in those years BPA would apply the first $15 million "dividend" to the public-purposes discount, available to customers on a 2-to-1 spending-discount ratio. Additional monies would go to customers, the U.S. Treasury and other public purposes, according to BPA's power subscription strategy. The conservation/renewables discount potentially could receive more than $15 million in particularly good years, Esvelt said, depending on the allocation formula determined in the rate case.
Public-Purposes Allocations: Bonneville wants the discount to promote regionwide public-purposes investments in conservation, renewables and low-income energy services in the proportions recommended by the Regional Review. However, BPA won't require individual customers to meet those percentages to receive the discount. One idea floated by Esvelt: BPA could apply cash, perhaps from its dividend, to make up any regional shortfalls in the three categories. This approach might ease particular concerns about funding uncertainties for low-income energy services.
Discount Amount for Specific Activities: This thorny issue centers on how much of a discount should be offered for specific conservation initiatives. A stakeholder subcommittee generally agrees on one option, a so-called "cost-plus" approach in which BPA customers can retrieve their costs along with a fraction of the difference between those costs and the value of the energy savings gained, Dick Watson of the Northwest Power Planning Council told the working group. The savings value of a measure would serve as the discount cap.
Another approach would provide straight cost reimbursement for discount-eligible measures. Most subcommittee members favored this as one option, Watson reported, although "a significant minority" either opposed it or had reservations.
Supporters believe the cost method would lessen utility risk of unsuccessful programs, and simplify discount administration. They also think utilities can be trusted to spend their public-purposes money wisely, a position buttressed by Esvelt's report that 90 utilities with so-called "flex contracts" for BPA conservation dollars delivered energy savings in 1997 at an average cost of 1.3 cents/KWh.
Skeptics of the straight cost approach, however, believe it could lead to programs that are not cost-effective, undermining the regional conservation pursuit.
Working group discussion and a subcommittee report indicated that some limitations on the cost-reimbursement approach may be a viable compromise. The proposed Regional Technical Forum is likely to help BPA determine discount-qualifying measures and discount levels for those measures.
Renewables: A subcommittee has crafted a list of potentially eligible renewable resources. Among those qualifying would be solar, wind, geothermal, some biomass (including landfill gas) and hydro, direct-application renewables (such as solar water-heaters) and research and development. Resources would have to be located in the Northwest, with a handful of exceptions, and start commercial operations after BPA's upcoming rate case begins.
Favoring payment for production, resource diversity, development of new renewables and administrative simplicity, among other attributes, the subcommittee proposes discount credits of 1.5 cents/KWh for new geothermal, solar or wind facilities; 1 cent/KWh for eligible biomass and hydro resources, and expansions to existing geothermal, solar or wind projects; deemed output for direct-application renewables and unmetered customer generating resources; and full cost reimbursement for qualifying R&D.
Discount Credit Trading: Another subcommittee has been exploring discount credit trading among BPA customers as a potential means to increase utility participation, encourage public-purposes initiatives and provide flexibility for discount participants.
The subcommittee believes buyers must be able to earn margins on credit trading, or a market won't develop. It also thinks traded credits should be bankable. However, the subcommittee hasn't agreed on whether credit buyers can install qualifying measures in their own territories, or whether measures must go into the seller's area. Nor has full consensus emerged on whether an investor-owned utility's traded credits could be applied solely to measures for residential and small-farm customers--customer groups that qualify IOUs for BPA power purchases through the residential exchange--or to all customers.
Small Utilities: Yet another subcommittee agrees small utilities should be allowed an alternative path to receive discount funding. These utilities would have to offer residential customers basic energy efficiency information, including financing options, and conduct home energy audits upon request. Esvelt proposes defining a small utility as one with a maximum 7.5 average megawatt annual load, which would apply to 40 Northwest publicly owned utilities accounting for 3 percent of total BPA load.
Public-purposes avenues that small utilities could pursue include joint ventures, renewables projects and local collaborations with the Northwest Energy Efficiency Alliance, according to working group discussion.--Mark Ohrenschall
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With little more than a week remaining before public-purpose funds collection was scheduled to begin under Montana's comprehensive electric restructuring act, the Montana Public Service Commission on Dec. 23 authorized Montana Power to collect $8.5 million for universal system benefits programs during 1999.
Under the restructuring law, the money--equal to 2.4 percent of the utility's 1995 retail sales revenues--must be spent on energy conservation, renewable energy and low-income energy assistance. If Montana Power does not spend the total amount on public-purpose programs of its own, it must deposit the difference in a universal energy assistance fund.
There was some doubt whether the commission would authorize collection of the USBP funds because of CI-75--a constitutional initiative passed by Montana voters in November that prohibits the state and its agencies from enacting and accruing revenues from new taxes and tax increases without prior approval by a majority of affected voters (see Con.WEB, Dec. 22, 1998). The initiative also gives citizens the right to sue government agencies and officials in civil court if they believe they've been subject to an unfairly levied tax.
With concerns over liability, the commission in early December solicited comments on how CI-75 would affect collection of public-purpose funds. There were questions whether USBP charges--enacted as part of Senate Bill 390 in May 1997 but not implemented until Jan. 1, 1999--could be considered "new," and further, whether the charges fit CI-75's definition of a "tax."
"In earlier work sessions, a majority on the commission was leaning toward feeling they couldn't implement the USBP without violating CI-75," said PSC staffer Will Rosquist. "But when the comments came in, the parties were pretty much unanimous in saying CI-75 shouldn't apply. That upped the commissioners' comfort level."
In its order the PSC determined the public-purpose charge could not be considered "new" under CI-75 since it was enacted as part of SB 390. Commissioners also found that the question of whether the charge constitutes a tax is irrelevant, since the initiative includes no retroactive provisions. Montana Power subsequently filed new rate schedules, which went into effect Jan. 1.
Lingering Questions on USBP Allocation, Administration
Pat Corcoran, Montana Power director of regulatory affairs, said the company agreed with the commission's ruling. So did Debbie Smith, an attorney representing both the Natural Resources Defense Council and the Renewable Northwest Project. "The commission reached conclusion on the most crucial issue--the collection of the funds," Smith said. But she pointed out that the PSC's order didn't address some potentially controversial issues, including the allocation and administration of USBP money.
"Who approves the way this money is spent is a very crucial issue. It's yet to be resolved by the PSC, and different parties involved in restructuring have very different views," Smith said. She believes some of the ambiguity can be traced to the language of SB 390, which fails to give the commission explicit authority to determine allocation of USBP funds and specifies only that a minimum 17 percent must be spent on low-income weatherization and bill assistance programs. "That's only a minimum, and not a maximum," Smith observed. "So this sets up a really invidious allocation scheme, where low-income programs could potentially take up all of the USBP money."
Smith called SB 390 a "poorly written piece of legislation" that "puts the PSC between a rock and a hard place . . . The PSC needs to determine the extent of its authority to recommend an allocation of the USBP funds, and then recommend how the money gets administered by the utility."
Rosquist said the commission plans to issue an order on administration of the USBP funds. "We needed to get the mechanism in place to collect the money by Jan. 1, as required by the law," Rosquist said. "The next step is to put together an order addressing the other issues."
Meanwhile, draft legislation that would resolve some of the ambiguity remains on hold pending review of CI-75 by Montana's state Supreme Court. The legislation would charge the state Department of Revenue with adopting rules and procedures for governing utilities' USBP credits. The draft was approved by the legislative Transition Advisory Committee, but held up at the request of committee chairman Sen. Fred Thomas and USBP subcommittee chair Rep. Ernest Bergsagel.
In the meantime Montana Power plans to spend most of the collected USBP funds on existing utility-operated public-purposes programs. "The charge will allow those funding levels to increase," Corcoran said. He noted the utility's testimony on its plans for the USBP money garnered little response during its transition plan proceeding, and the commission stopped short of recognizing the company's specific proposals in its Dec. 23 order. "Until some determination is made about the funds' allocation, either by the Legislature or the commission, we'll simply proceed to target our existing programs outlined in the transition plan," he said. Those encompass various efficiency, renewables and low-income energy assistance ventures.
Montana electric cooperatives also are subject to the USBP provisions, beginning Jan. 1, although they have a choice on whether to open their territories to other retail electric suppliers.--Angela Becker-Dippmann
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The Northwest Energy Efficiency Alliance has compiled a solid organizational track record in its first two years, displaying many strengths, but it could improve its long-term strategic focus, increase its professional diversity and expand its communications efforts.
Those conclusions and recommendations come from an independent operational audit of the regional market transformation collaborative by the firm PricewaterhouseCoopers. The report, completed in December, was presented at the Alliance board's Jan. 21 meeting in Seattle.
Board chairwoman Carol Brown later described the audit as "very positive for an infant organization . . . I think they did recognize the alliance is in its infancy and definitely working towards its goals and has made a lot of progress. As far as the suggestions for improvement, I believe they are ones we should take seriously and consider in the future."
Executive director Margie Gardner told the board, "Overall we should feel pretty proud how far [the Alliance] has come. It is a positive audit."
Alliance officials believe progress is already apparent on some of the audit recommendations, including a more strategic focus by the board. Another key suggestion--changing the board's composition--is seen as a challenging undertaking greatly influenced by outside forces.
Audit Findings
In preparing the report, PricewaterhouseCoopers interviewed nine Alliance staffers, 13 board members and 21 outside vendors, and reviewed 19 types of Alliance documents. The firm sought to evaluate the Alliance's operational performance and suggest improvements.
In its overall assessment, PricewaterhouseCoopers wrote: "The Alliance has accomplished much in its short history, from creating an infrastructure within which to operate, to the launch of over two dozen projects aimed at achieving market transformation." It found the Alliance acting and planning in sync with its purposes, and praised "many strengths in effectiveness and efficiency of the organization's overall performance."
Listed strengths include a strategic plan, "an effective organizational environment in the areas of management philosophy, operating style and direction," a "proactive approach to market transformation" and good processes and controls to carry out management directives. Although PricewaterhouseCoopers did not conduct a financial audit (a separate process), the firm noted that the Alliance's total funding, staffing levels and administrative costs ($90,000 per employee) are quite reasonable compared with similar energy efficiency organizations around the country.
The Alliance's proposal evaluation and award process drew "generally favorable responses," although decision notifications could be more timely.
"At the end of the day there's a lot of strengths to draw from," PWC's Curtis Matthews told the Alliance board.
Opportunities for Improvement
The single most important suggestion, Matthews said, is for the board to engage in more collective strategic thinking.
"Alliance Board meetings have been focused primarily on the review and evaluation of proposals and projects," the audit said. "While this is important to the success of the Alliance, especially during the genesis of the Alliance, it is a tactical activity that may be better suited for the staff. This narrow focus may impair the Board's ability to adequately address critical wide ranging issues including, but not limited to, funding, possible partnering with other organizations, educating constituents, and the future of the Alliance." PWC recommends leaving project details, including proposal evaluation and management, to the staff, while keeping the board informed via periodic reports. The firm also suggests continuing strategy-focused retreats, the third annual of which is scheduled for February.
"A fair number of [board] people are frustrated with some of the meetings," Matthews said. "They may not be vocal, but they're concerned. They really want to see the organization achieve its objectives and succeed by focusing on long-term objectives." It's hard to make effective decisions with a 22-member board, he said.
Board member Nancy Hirsh said she believes the board has tried to shift its focus from tactical to strategic over the past year. "You can do more," said Matthews. "Have you improved? I think so. Just based on what you said, things are getting better."
Another PWC recommendation calls for diversifying the board's composition, which is heavily weighted toward people with energy conservation and evaluation backgrounds. "The lack of a diverse Board limits its perspectives and skill sets, which reduces the ability to generate revolutionary ideas that may greatly benefit the Alliance's ability to achieve its vision." The Alliance staff, although it has "extensive energy efficiency experience, is highly educated and very motivated," also could benefit from greater professional diversity, the report said.
Seating top-level management people on the board could particularly help the Alliance in securing more funding, according to Matthews. Perhaps, said a couple of board members, although they indicated utility funding is not strictly discretionary. For investor-owned utilities, as an example, spending is subject to regulatory review.
The utility-dominated board reflects the Alliance's funding, noted Hirsh. "Most of the board recognizes that should our base funding source change from one driven by utilities to one where policy-makers make decisions independent of utilities, that the structure of the board will change."
PWC also found inconsistencies among board members on who exactly the Alliance is serving, whether it be regulators, utility executives, end-use customers or others. "Define who your ultimate customer is, and agree on it," said Matthews. "Expand the communications strategy to relate to this. If your ultimate customer is the ratepayer, they probably ought to know that you exist."--Mark Ohrenschall
With prospects uncertain for public-purposes funding, the Northwest Energy Efficiency Alliance plans to rely on utilities for continued financial support of the regional market transformation collaborative.
The Alliance has spent or specifically budgeted all but about $400,000 of its inaugural funding of $65 million, after board approval of two additional projects Jan. 21-22 in Seattle. Those decisions, along with others made at the meeting, essentially conclude the Alliance's second request-for-proposals process.
Starting its third full year of operations with very little money uncommitted, the Alliance intends to seek more funding later this year from Northwest utilities, which have bankrolled the regional collaborative since its inception.
Executive director Margie Gardner told the board representatives of the current funders (Bonneville Power Administration and the Northwest's six major investor-owned utilities) met recently and agreed more work remains in regional market transformation. They also concluded, she said, "Legislation in the Northwest states [outside Montana] is looking iffy in terms of a restructuring bill including public purposes." When the Alliance formed in 1996, she noted, many people believed public-purposes funding could be available for market transformation when the organization's initial three-year charter expired at the end of 1999. Although public-purposes dollars may eventually materialize, "At this point in time we're focusing a number of efforts on finding funding within the utilities."
The Alliance tentatively plans to seek three more years worth of money, which could be spent over five years. The amount remains under discussion. In addition to the seven current funders, the Alliance may also request money from publicly owned utilities that are not full-requirements BPA customers. Bonneville now provides about 57 percent of the Alliance's total budget, on behalf of its public-power and direct-service customers. The Alliance also expects to discuss continued utility funding with state regulatory agencies overseeing IOUs.
Gardner said the Alliance would like to gain renewed funding commitments by this fall. But a number of questions remain to be answered. Examples: What happens to utility funding levels if and when public-purposes funding begins? What if the Alliance board changes composition? What if IOUs fail to get full cost-recovery from regulators for Alliance spending? How much money should BPA partial requirements customers contribute?
Nevertheless, board member Nancy Hirsh praised the funding utilities for their tentative commitments to renew Alliance funding. "It's a really positive step within the organization and the region," she said.
Board chairwoman Carol Brown believes the Alliance is working well, citing a recent audit (see related story), and is gaining cost-effective energy efficiencies. "I'd have a real struggle why somebody would pull the rug out from under us," she said later, while acknowledging uncertainties in Idaho and Montana (see related stories).
Two new Projects, RFP Conclusion
The Alliance received 45 proposals from its RFP last spring and five ultimately were adopted; a sixth is pending.
One of the new projects approved at the Seattle board meeting involves a motor speed-control technology using magnetic coupling to separate the motor and the electric load, increasing efficiency and allowing for downsized motors or greater torque loads on the same motor, according to Alliance staffer Jeff Harris. It also reduces vibration and enhances motor reliability. However, it is less efficient, precise and responsive than competing variable-speed drive technologies.
The Alliance's ultimate goal with this project is to expand the currently small market share of all energy-saving motor-speed controls, which are applied on about 4 percent of total industrial motor energy loads. To that end, Harris said, the Alliance can help validate the magnetic-coupling technology while providing some needed capital to the contractor, Magna Force, based in Port Angeles, WA. Board member Stan Price, however, described the VSD market as fairly healthy and questioned whether a small firm could realistically compete with the large multinational companies dominating that market. This venture, if successful, could erode market share of VSDs, against the Alliance's interest in promoting efficient technologies, he said.
The Alliance board voted 11-1 to allocate up to $1 million for this venture, focusing on technology validation, market research and demonstrations. The board also voted to reserve--but not yet allocate-- an additional $1 million for a potential second phase.
Another project adopted in Seattle centers on energy-saving pneumatic conveying systems for sawdust and small wood shavings in secondary wood products facilities, such as cabinet shops and door and window plants. These conveying systems employ large centrifugal fans, along with various ducts and bins, to bring wood wastes from work areas to storage areas. These systems can pick up the wastes thoroughly while saving considerable energy with slightly lower fan speeds.
This $900,000 venture--with PacifiCorp as primary contractor and subcontractors QEI Energy Management, Carroll, Hatch and Associates and Howard Reichmuth--includes market verification, demonstration sites, industry education and training for consulting engineers to pursue this market after the Alliance project ends. "We're really demonstrating the idea we can help transform the consulting engineering community to deliver this new service apart from a utility program in large and medium-sized facilities," said Harris.
In addition, the Alliance board decided to have staff develop a proposal for a market assessment of refrigeration-case efficiencies in independent grocery stores, including a demonstration of retrofit opportunities. The Alliance will work with the Conservation and Renewable Energy System (CARES), which offered through the RFP a proposal for retrofit demonstrations and information dissemination on refrigeration case efficiencies. The board also formally turned down two separate proposals involving micro-channel heat exchangers and green schools.--Mark Ohrenschall
Idaho Power has decided to participate in the Northwest Energy Efficiency Alliance in 1999.
The utility made that decision after reviewing a written order from the Idaho Public Utilities Commission approving the utility's request to cover its 1997 Alliance costs with existing funds in a revenue-sharing account, but withholding approval of 1998 cost recovery until a more thorough prudency review can be conducted.
Under a 1995 agreement with the IPUC that runs through 1999--when a current rate freeze ends--Idaho Power splits between customers and shareholders any earnings in excess of 11.75 percent. Earnings in 1997 were 12.95 percent. By using the revenue-sharing funds generated by those earnings, Idaho Power can cover its Alliance expenses without raising customer rates. At a Dec. 30 meeting, the commission agreed the utility can offset $811,750--its 1997 Alliance costs--with some of the 1997 revenue-sharing money.
In its Jan. 21 written order the IPUC also said Idaho Power can hold in reserve "whatever balance remains" in the 1997 revenue-sharing account until a final prudency determination is made on 1998 Alliance expenditures. The company can also hold in reserve "sufficient moneys" from the 1998 revenue-sharing account--if available--to offset 1999 Alliance expenditures.
The commissioners said they would determine the prudency of the utility's 1998 spending after they review a PricewaterhouseCoopers audit of the Alliance's 1998 activities, due for release this spring.
"While we have recognized, and offer Idaho Power the assurance, that we do not intend to apply the same rigorous cost-effectiveness standards to the company's involvement in a start-up market transformation organization such as NEEA, as we have applied to historical DSM programs, we do expect the company, nonetheless, to establish that it has been prudent in participating in NEEA . . ." the Jan. 21 order reads. "We expect Idaho Power to be proactive in its role as a participating member of NEEA in this regard."
The IPUC's Jan. 21 order "certainly was a welcome decision," said Idaho Power spokesman Dennis Lopez.
"The PUC order is quite supportive of energy efficiency," agreed Alliance executive director Margie Gardner. "There are some things [the PUC] would like to see, and we can certainly provide those. We're very pleased that Idaho Power decided to stay with the Alliance in 1999."--Jude Noland
Boosting the market for small compact fluorescent lamps is the goal of a national initiative spearheaded by a Northwest-based federal laboratory.
Energy-efficient sub-compact fluorescents--not widely stocked in retail outlets--are available nationwide to volume buyers through a U.S. Department of Energy technology procurement program developed and implemented by Pacific Northwest National Laboratory.
Four competitively chosen suppliers offer sub-CFLs at unsubsidized prices generally below $10 and as low as $6.10 apiece. These lamps range from 4.7 inches to 5.6 inches in length, fit in most fixtures
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| Source: Lights of America products page, sub-CFL program Web site |
"Bringing new technology to the marketplace through open competition" is the description from DOE program manager Marc LaFrance, who said the aim is to "stimulate the market in a limited amount of time, then transition totally to the private sector to get new [sub-CFL] products into the mainstream distribution channel."
The program relies on market forces, particularly on the demand side, noted PNNL's Marc Ledbetter. "We find that using that buying power makes it easier and faster to get new products into the market."
The program's second and broader phase began last fall, and officials hope to sell one million sub-CFLs in its scheduled one-year duration. In the brief first phase earlier in 1998, 85,000 sub-CFLs were sold--far above the target of 10,000-15,000, according to LaFrance. Figures are unavailable for phase two nationally and for the Pacific Northwest specifically, but Ledbetter said, "Sales continue to run quite strongly."
Sub-CFL Market, Program
LaFrance explained that many volume buyers of compact fluorescents found those lamps didn't fit existing fixtures, such as in multifamily housing common lighting. Among other consequences, this greatly limited retrofit opportunities for compact fluorescents. A need was apparent for "an affordable, small CFL that puts out a lot of light."
The program began with an introductory first phase that found sufficient market demand. "For producers to move aggressively and bring new products forward that are priced aggressively, we had to show them a decent-sized market early on," said Ledbetter. Next came the second and more ambitious phase, with lamp price and length criteria for participating suppliers. Cost is a well-known CFL barrier, Ledbetter noted, but size also hinders the market. "We really want to encourage smaller products," said LaFrance. Meanwhile volume buyers help lower prices, which contributes to stimulating the market.
Among the targeted buyers for these sub-CFLs are electric utilities, lodging facilities, multifamily and public housing, government agencies, universities and other volume purchasers, including some retailers. Program lamps are oriented to residential-type uses, but can be applied commercially, according to LaFrance. Minimum orders are quite small, either six or 10, depending on the manufacturer.
Participating suppliers are Duro-Test Lighting, LINK USA International (whose bulbs are currently unavailable), Lights of America and Sunpark Electronics. "On behalf of DOE, Pacific Northwest National Laboratory staged a competition among potential suppliers by developing aggressive technology and performance specifications for sub-CFLs and then asked bidders to offer products that met or beat those specifications at the lowest possible price," according to a program fact sheet.
"There are no subsidies at all," emphasized LaFrance, describing the federal role as facilitation. DOE/PNNL marketing efforts have included a mass mailing, conference presentations and a Web site. The program has cost DOE only a modest amount, according to LaFrance.
Specifications, Prices
PNNL's criteria for lamp specifications included efficiency, broad market appeal and good outdoor performance, Ledbetter said. In addition to size and self-ballasting requirements, standards were set for efficacy (60 lumens per watt, minimum), lumen depreciation (20 percent over rated life, maximum), starting temperature (minus 20 degrees, minimum), power factor (.5 for mid-power factor lamps, .9 for high power factor lamps, minimums), color rendering (82, minimum) and rated life (6,000 hours, minimum).
Delivered prices per lamp vary from $6.10 to $9.35 in the continental U.S., depending on the specific lamp and delivery location. "We believe for volume buyers, in a large number of applications, the lamps are highly cost-effective," said Ledbetter. Paybacks for high-use retrofit applications can be less than a year.
Northwest Connections
Among Northwest sub-CFL buyers is the city of Richland municipal electric utility in the Tri-Cities of Washington. The utility has given away about 50 sub-CFLs to residential customers, through home energy audits, to gauge opinions on this relatively uncommon
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| Source: Sunpark Electronics products page, sub-CFL program Web site |
The Portland Energy Office has bought nearly 100 sub-CFLs for city agencies, according to PEO's Dave Tooze. Installed lamps have been well-received. Tooze praised the price, size and spiral design, although he also noted fitting problems in certain fixtures, including downlight cans and track lighting.
The Northwest Energy Efficiency Alliance has no direct involvement in the sub-CFL program, but the regional market transformation collaborative has stayed informed. The Alliance also has revised specifications for its 1999 LightWise compact fluorescent program, largely using the sub-CFL specs as a guide, according to Alliance project coordinator Marci Sanders. Based on its own consumer research the Alliance wanted to promote smaller, brighter bulbs, she said, and the PNNL specs dovetailed with that interest.
LightWise revisions include smaller maximum lengths (less than six inches), more stringent efficacy standards (60 lumens per watt minimum) and lower minimum power factor (.5). LightWise and the sub-CFL venture are taking different approaches but, Sanders said, "The door is really open in terms of how the two programs might be able to coordinate. It's a little early to tell how they're going to play out."--Mark Ohrenschall
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Angus Duncan had a million-dollar week in mid-January.
Duncan, executive director of the Bonneville Environmental Foundation, didn't personally reap big bucks, but his fledgling organization notched two major deals the second week of January worth more than $1 million--revenues that will help BEF in its mission of fostering Pacific Northwest renewable energy and watershed restoration.
Snohomish County PUD on Jan. 12 committed to 10 average megawatts of designated (and more expensive) green power from Bonneville Power Administration. BPA will keep 40 percent of the green premium price while the private non-profit BEF will get 60 percent, or an estimated $1 million over two years. That same week BEF learned of a $350,000 grant from the California-based Hewlett Foundation, which is intended for administrative and marketing expenses.
The planned Snohomish sale follows Emerald PUD's similar 3 aMW green-power deal last year. "The [BEF] board collectively felt it was tremendously important to get a second sale," said Duncan, a former Northwest Power Planning Council member who was named BEF's first executive director in October. "These two, in two different states, validate the idea the foundation was founded upon and the agreement we have with Bonneville."
BEF Basics
Ceremonially launched in June and formally established in September, the Bonneville Environmental Foundation is "dedicated to encouraging and funding projects that develop and/or apply clean, environmentally preferred, renewable power and acquire, maintain, preserve, restore, protect and/or sustain fish and wildlife habitat within the Pacific Northwest," according to its mission statement.
Financing sources include revenues from green-power sales, as from Emerald and Snohomish, and corporate and foundation contributions, such as the Hewlett Foundation grant and donations from Enron ($50,000) and New Energy Ventures ($25,000).
The foundation plans to address the environmental impacts of Northwest energy, particularly from hydropower and coal-fired resources, by taking advantage of the nascent green-power market. "Depending on market circumstances, BPA may find it difficult to significantly increase its current investment in fish habitat and renewable energy technologies without pricing itself out of very competitive Western wholesale power markets," reads a BEF summary. "The Bonneville Environmental Foundation is an innovative response to that dilemma, based on the apparent willingness of many customers to pay extra for electricity that credibly delivers significant environmental value." The foundation's work won't be "in any way reducing or supplanting BPA's existing stewardship responsibilities," the summary adds.
Credibility of BEF's green resource portfolio derives from endorsements by Northwest Energy Coalition, Renewable Northwest Project and Natural Resources Defense Council. Those groups, working with the environmental group American Rivers, have approved two small hydropower facilities with total combined capacity of 20 average megawatts: Packwood Lake, near the headwaters of Washington's Cowlitz River, and Idaho Falls, on the Upper Snake River in the city of Idaho Falls. "Neither facility obstructs any habitat of migrating salmon, and both incorporate numerous environmental safeguards," according to BEF.
"Low-impact hydro is going to carry new renewables on its shoulders" and contribute to changing the region's current hydro-dominant renewables base, Duncan said. The soon-to-be-operating Wyoming Wind Energy Project also has gained a green-power blessing.
Although BPA markets these resources and Bonneville officials, notably deputy administrator Jack Robertson, were instrumental in creating the foundation, BEF operates independently. "The relationship we have with Bonneville is the same relationship we will have with any other supplier of green power with whom we work a deal," said Duncan. "We will provide them a way to assure green-power buyers that their premiums are going to what they expect them to go to, which is environmental goods."
BEF initially has concentrated on the wholesale demand side of green power, while looking to expand its offerings of environmentally preferred resources. Over the coming months, Duncan said, the foundation will develop criteria for selecting renewables and watershed restoration projects in which to reinvest the green premiums. "These are two areas where a limited amount of money, strategically placed, can leverage a significant change," said Duncan. Potential examples: monitoring and evaluation money for watershed projects, buying down the initial costs of new wind turbines, or leveraging other funds to help develop solar energy. The criteria will be crafted in consultation with stakeholders: "We will need to cooperate with a lot of folks if the green-power market will be developed in the region."
Organizationally, the foundation will employ a small staff (eventually up to five people), and it has a revenue goal of $10 million from all sources in the first two years. It is overseen by a board of directors well-known in the regional energy community: former U.S. Sen. Mark Hatfield (the chairman), energy consultant Aldo Benedetti, Ralph Cavanagh of the Natural Resources Defense Council, former PacifiCorp head Don Frisbee, fish and wildlife consultant James Lichatowich, Donald Sampson of Columbia River Intertribal Fish Commission, Rachel Shimshak of Renewable Northwest Project, Bill Towey of the Kalispel Tribe and Brett Wilcox of Northwest Aluminum Co.
"If the organization can't succeed with the credibility they currently have in their organization, I don't see what could," said Emerald PUD general manager Jeff Shields.
Emerald, Snohomish Green Power
Emerald made the inaugural green-power purchase benefitting BEF: a flat block of 3 aMW for one full year beginning Jan. 1, at a delivered price around 3.5 cents/KWh. "Emerald's board has always been of the position we need to have an environmentally responsible energy portfolio," Shields said. "They felt that the combination of being able to see the BEF get off to a good start and add to our portfolio makes economic sense and environmental sense." He also likes the fact "we don't have to try and second-guess the industry and define a green resource, which isn't real clear. We can stand behind the certification . . . We think it's good enough."
Snohomish's board of commissioners, meanwhile, asked PUD staff to negotiate a 10 aMW green-power purchase contract. "I'm sure we'll get to an agreement but we haven't done the deal yet," said Coe Hutchison, Snohomish's assistant general manager of power and business services. BPA's quoted price is 3.57 cents/KWh for a two-year flat block of power, with delivery beginning in September. The annual green premium is estimated at $850,000, assuming a 1 cent/KWh price gap between market power and BPA green power.
Snohomish commissioners endorsed the plan even as the utility prepares a 5-percent rate increase beginning in April and a 15-percent cut in its operating and capital spending. "We're very interested in green power; it's a high priority for our utility," said Hutchison. "We're doing some very serious budget cutting, but the board said to preserve public purposes and conservation."--Mark Ohrenschall
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Portland General Electric and Northwest Geothermal Co. have signed a memorandum of preliminary commitment that could lead to development of a 30-megawatt-capacity geothermal plant at Newberry Crater, 30 miles south of Bend, OR.
The two companies announced the agreement Jan. 15--with the significant caveat it is contingent on Oregon legislative or regulatory approval of a system benefits charge to pay for public purposes and renewables, and on part of the SBC funds going to the Newberry project.
The MOPC relates to a January 1997 memorandum of understanding PGE signed with 13 Oregon public-interest groups, in which the utility agreed to a number of public-purposes commitments in return for the groups' support of the utility's merger with Enron. Among other commitments, PGE promised to file for a system benefits charge for public purposes at the 3-percent funding level recommended by the Regional Review, and to acquire renewable resources--22.5 aMW of geothermal and 25 aMW of wind.
Renewable Northwest Project senior policy analyst Peter West views the MOPC as a positive sign, and said his organization is "pleased and comfortable with [PGE's] continuing support of the SBC." But West also points out that in the merger-related MOU, PGE agreed to acquire at least 10 aMW of renewables with or without a system benefits charge. So far, the company has made acquisition commitments of about 7 aMW through its power purchase from the new Vansycle Ridge Wind Farm in northeastern Oregon. "Our concern is to make sure [the other] three of that is straight out going to be done," he said.
This isn't the first time the Newberry Crater area has been considered for geothermal development. CE Exploration--a subsidiary of Omaha-based Cal Energy--planned a 30-MW geothermal plant in the same general area and had contracts to sell the output to Eugene Water and Electric Board and Bonneville Power Administration. But in 1995 and early 1996, test drilling produced data that led CE to decide development at its Newberry site would not be economically viable. "What we found was high temperatures, but the permeability wasn't there," Cal Energy official Dale Schuster said in September 1996, explaining the rock at the site wasn't porous enough to provide an adequate steam supply.
"We believe that our lease site is more advantageous than theirs," said Stephen Pitcher of Davenport Power, a partner--along with Oregon-based Vulcan Energy--in Northwest Geothermal Co. The fact CE Exploration's tests found steam is a positive factor for NGC's site, according to Pitcher. In addition, he said NGC will use the environmental impact statement developed by CE Exploration as the "jumping-off point" for its proposal.
Pitcher also pointed out that PGE selected Northwest Geothermal's project through a competitive bidding process that took about 18 months, and included an independent consultant's evaluation of the proposals' viability.
Northwest Geothermal is actively soliciting interest in the Newberry project, according to Pitcher. He confirmed the company has had discussions with EWEB, and said NGC representatives expect to meet with BPA.--Jude Noland
Seattle City Light's conservation Web site has been named best government agency Web site by the Web Marketing Association.
Judges in the WMA's 1998 WebAwards competition lauded Seattle's site: "Very professional design--soft, eye-catching graphics are quick to download. Well-rounded, consistent site, exhibiting a sound understanding of Web development principles," according to judges' comments in a news release. "Great service on behalf of a municipality. Good to see cities taking an interest in getting information to residents. This site is useful to anyone in the country, if not the world. Seattle has always been innovative in using technology, and this is another example of that use." More than 500 Web sites around the nation and world were judged by independent Internet professionals, and awards were given in a variety of categories, including by industry type.
City Light's conservation Web site was developed by utility staffers Bruce Blood, Claire Wray and Sidney Freeman, and NancyEllen Regier of the city's executive services department, according to a news release. The site includes information on home and business programs and services, the value of conservation, sustainability, neighborhood and community conservation, the Lighting Design Lab, a staff directory, and other on-line conservation resources.
"This is a big deal. The competition was tough and we stood out in the crowd," City Light's Janice Boman told Con.WEB via e-mail. "Web marketing is essential to our business and we are incorporating specific Web marketing strategies for each energy management program that we provide our customers."--Mark Ohrenschall
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A number of Northwest-based federal employees and entities have received 1998 Federal Energy and Water Management Awards recently announced by the U.S. Department of Energy's Federal Energy Management Program.
An Energy Efficiency/Energy Management Award to Small Groups went to William Jackson, Leslie Fish, Donald Garvin and William Watkins of the U.S. Postal Service's Portland District. The foursome were recognized for "a remarkable track record," finishing 167 energy-saving projects from fiscal year 1992 through FY 1997. Annual first-year energy cost savings for those initiatives comes to $734,966.
Stephen Butterworth, Seattle-based regional energy manager for the Pacific West Region of the National Park Service, earned one of the Exceptional Service Awards to an Individual. Butterworth was lauded for his work to "create new relationships and innovative arrangements" to help parks accomplish energy and water efficiency goals. He also helped found the pilot Sustainability Practices Opportunity Program Team.
Certificates of Recognition also were awarded to the following: Naval Submarine Base Bangor, U.S. Navy, Silverdale, WA, and Washington Army National Guard, U.S. Army, Tacoma, for energy efficiency/energy management; Richland Operations Office, DOE, Richland, WA, for alternative financing; and Jimmy Jones, McChord Air Force Base, U.S. Air Force, Tacoma area, for water management.
Building operator training and certification is moving toward a more regionally uniform program in the Northwest.
Designed to help building operators run facilities more energy efficiently, training and certification courses will be offered in all four Northwest states in 1999, using the same curriculum. The Northwest Energy Efficiency Council will provide BOC training and certification courses at 12 regional locations; the Northwest Building Operators Association--formerly the Idaho Building Operators Association--will administer BOC videoconference courses in Idaho Falls, Idaho, and Missoula, MT. NWBOA also has opened its membership to building operators regionwide. NWBOA executive director Connie Searles encouraged building operators in Montana, Oregon and Washington to join NWBOA, benefits of which include continuing education for BOC recertification.
Idaho pioneered building operator certification in the Northwest, with a program developed in 1990. Some 300 people, primarily public-sector building operators, had earned energy efficiency-focused certification as of mid-1998, according to Searles. NEEC began offering BOC training in Washington in 1997, with funding from the Northwest Energy Efficiency Alliance, and now has expanded into Oregon. More than 50 building operators have earned certification from NEEC, and NEEC aims to certify 100 more in 1999, according to project manager Cynthia Putnam.
The videoconference BOC courses in Idaho and Montana, which begin in February, will originate through the Northwest Energy Education Institute at Lane Community College in Eugene. They will serve as a pilot efforts for BOC distance learning, according to Searles. In addition to Eugene, 1999 BOC courses are available in Portland and Medford in Oregon, and Bellevue, Everett, Longview, Spokane, Tacoma, the Tri-Cities and Wenatchee in Washington.
Developments in Idaho and Montana represent "a significant step toward achieving the Alliance's regional objectives with building operator certification," said Alliance staffer Andy Ekman. Many details of the regional BOC structure remain to be worked out, he noted.
For more information on BOC in Washington and Oregon, contact Putnam: phone, (206) 292-3977; e-mail, cmputnam@aol.com; or visit the NEEC Web site. For more information on BOC in Idaho and Montana, contact Searles: phone, (208) 345-3072; e-mail, connies@cyberhighway.net.--Mark Ohrenschall
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Applications for the seventh annual Portland-area BEST Business Awards are open until Feb. 20.
Since 1993 these awards have been issued to 42 Portland-area businesses with notable energy and environmental accomplishments, including energy efficiencies. BEST stands for Businesses for an Environmentally Sustainable Tomorrow, a city of Portland assistance program. The awards program is co-sponsored by the Association for Portland Progress, the Environmental Federation of Oregon and The Business Journal. Both small and large businesses are encouraged to apply.
For more information, contact the Portland Energy Office: phone, (503) 823-7222; e-mail, pdxenergy@ci.portland.or.us; or visit the BEST Web site.
High school students in the Northwest and across the nation are invited to enter the fifth annual Photovoltaic Design Competition.
The competition requires students to design and explain an original or improved solar-powered device. Previous solar-powered winning entries include a remote control airplane, cooling fan, hammock swing, can and barrel crusher, and portable cassette player, along with an emergency communications repeater, utility interactive solar system and solar wearable clothing.
The competition, which offers cash prizes, is organized by the Potomac Region Solar Energy Association with support from national solar energy groups. "The goal of the contest is to provide a positive influence to students interested in further pursuing scientific studies," according to PRSEA. "It is hoped that it will inspire some students to consider careers in the renewable energy field."
Entries are due April 30. For more information, call PRSEA at (301) 593-4752, or visit the contest Web site.
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