POLICY ISSUES that will help shape the destiny of conservation and renewables in the Pacific Northwest are highlighted in this fourth issue of Con.WEB. We take a look at the Regional Energy Review work group that is examining the demand side and green power, as well as the Northwest Power Planning Council's new (and controversial) draft regional power plan. Also explored are negotiations to secure funding for low-income weatherization programs around the Northwest, a new commercial green-building masterpiece in the San Juan Islands and an energy service charge finance offering from Bonneville Power Administration.
We invite you to scroll through our latest issue, print it out, share it with your friends and colleagues--whatever. For those who want additional information, please take advantage of the numerous links within the stories--in particular, a link to details about the features and the players involved with the Sustainable Technology Center. And, finally, as always, please feel free to share your thoughts with us via e-mail (marko@newsdata.com).
The future of Northwest energy conservation and renewable resources might--emphasis on might--become a little clearer through the deliberations of a key regional policy forum that started in March.
Officially known as the Conservation, Renewable Resource and Public Purposes Work Group, this policy forum is a subcommittee of the Regional Energy Review. Essentially, the work group is charged with identifying cost-effective conservation the market won't capture and coming up with ways to mitigate those so-called "market failures." For renewables, the work group is supposed to identify barriers to preservation and development of those resources and propose solutions. Developing financial and administrative systems are part of the mission for both conservation and renewables.
It is anyone's guess what the work group will put together by its July 11 deadline. After that, its proposals will be tossed into the larger Regional Review process, which is scheduled to conclude by year's end. And beyond the Review lies a host of legislative and administrative processes that must be completed before anything would be put into place.
Nevertheless, the work group deliberations promise to create some kind of regional agreement on conservation and renewables. "I think [the work group process will] be vital," said work group co-chairwoman Rachel Shimshak of Renewable Northwest Project. Her colleague, co-chairman Jim Davis of Douglas County PUD, agreed on its importance: "If this group, as diverse as it is, can find a way to effect consensus, I think that does lead the way for the region."
Indeed, the work group membership is remarkably broad-based. It includes representatives from public and investor-owned utilities, Bonneville Power Administration, natural gas companies, local, state and regional governments, industry, navigators, irrigators, environmentalists and public-interest groups. About 70 people attended the meeting in Portland April 10 and 11.
Although the initial work group gatherings have been heavy on procedural matters and background information, the nature of debates to come is taking shape. In the very first exchange April 10 on proposed goals and objectives for conservation and renewables, Intalco Aluminum's Paul Murphy said the cost for such activities should be shouldered as much as possible by their beneficiaries. Any mechanisms developed should not adversely affect the competitive positions of energy suppliers or consumers, he contended. Steve Weiss of the Northwest Conservation Act Coalition countered that many benefits of conservation and renewables, including environmental, accrue to the common good. His suggested principle: minimize the life-cycle cost of energy services around the Northwest.
Shimshak described those two views as the "bookends" for further discussion. She expects a "tremendous amount of debate" about what the market will and won't provide for conservation and renewables, as well as appropriate solutions. A non-bypassable "system benefits charge" was explicitly mentioned as a financing possibility by the review steering committee in its mission statement for the work group. This idea has already received some attention. Davis, however, is concerned about a "rush to judgment" for such a charge, before the market-failure problems it would potentially solve are even defined.--Mark Ohrenschall
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Substantial and cost-effective energy conservation resources are still out there for the taking, according to the draft 1996 regional power plan adopted in March by the Northwest Power Planning Council. Good thing it's a draft, though: the plan has been greeted with a fair amount of skepticism.
The plan, which the Council painstakingly describes as a reference document and not a call to action, identifies 1,535 average megawatts as the "mean (i.e. average) amount of cost-effective and achievable conservation over a 20 year period across the full range of Council load growth scenarios." This would-be resource comes in at an average levelized cost of 1.7 cents per kilowatt-hour (roughly two-thirds the cost of new generating resources) and a maximum cost for individual measures of 3 cents/KWh. It could reduce the region's future energy costs by $2.3 billion. Among the biggest potential contributors: new and existing industrial plants, 560 aMW at an average levelized cost of 1.5 cents/KWh; residential water heating, 335 aMW at 2 cents/KWh; and new commercial structures, 230 aMW at 1.3 cents/KWh.
The Council also forecasts the prospective sources for about a third of these potential regionwide savings. A total of 515 aMW, with an average cost of 1.6 cents/KWh, "are assumed to be developed by the utility programs and market forces, the momentum created by those programs and ongoing consumer response to electricity prices." The rest, about 1,000 aMW, is up for grabs.
The Council's vision, however, is not universally shared around the region. For starters, many people question the value of looking ahead 20 years in the midst of great uncertainty in the electric industry. Even the Council's conservation manager, Tom Eckman, called a two-decade forecast "insane" and acknowledged that an energy plan today ideally should extend the three or four years it takes to develop a gas-fired combustion turbine.
More specifically, substantial disagreement has arisen over some of the numbers in the conservation section of the draft plan. Bonneville Power Administration officials, for example, cite an additional 500 aMW of anticipated conservation from market transformation endeavors. BPA people also think the industrial-sector forecast is inflated by about 200 aMW, while questions over cost-effectiveness levels add up to another 117 aMW disputed by Bonneville.
As for the potential regional benefits cited, Maureen Carr of the Public Power Council noted that 80 percent of the $2.3 billion would accrue after 2015. That's a long time coming, she suggested.
From a policy perspective, Carr said many PPC members are worried that whatever regional number emerges from the plan will be perceived as a target for public-utility conservation--despite the Council's intention that the plan be viewed simply as a guide for the Regional Energy Review and the competitive era. A Bonneville official, meanwhile, is disturbed by a movement to establish 1,535 aMW as the goal for a regional system benefits charge.
The Council's draft plan does have supporters, though. Marc Sullivan of Seattle City Light agrees with the plan's basic conclusions that there is much cost-effective conservation still to be acquired and that the market along with planned utility efforts will fall well short of getting it. Seattle's estimate of achievable cost-effective savings in its own territory is proportionally consistent with the Council's regional view, he added.
The Council welcomes comment on the draft plan through the duration of the Regional Review.--Mark Ohrenschall
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On picturesque San Juan Island in northwestern Washington, a new commercial development is showing how softly the built environment can tread on the natural environment--using available materials and technologies, interdependently and cost-effectively.
The Sustainable Technology Center, a privately funded research project in Friday Harbor, is a green-building masterpiece. Three solar photovoltaic arrays stand outside. An electric-vehicle charging station occupies a prominent spot in the parking lot. Landscaping uses collected rainwater as well as recycled water. The two buildings themselves, full of recycled-content materials, contain super-efficient heating, water, sewer and electrical systems, lighting, insulation, windows and appliances. And, not least, digital controls help the place run at optimal efficiency.
Just by themselves, the STC numbers are eye-opening. Co-developer Jim Sackett, president of Seventh Generation Systems, reports an 80-percent reduction in energy use compared with conventional building practices, and a 70-percent drop in potable water consumption.
Co-Developer Jim Sackett wanted the Sustainable Technology Center to "approach zero environmental-footprint construction," and to do so cost-effectively using a full range of available materials and technologies.
But beyond the numbers lie a couple of eye-opening truths. First, the stuff in STC is far from experimental; its materials and technologies are on the market today. "This is not pie-in-the-sky; it's real world," said project manager Gary van't Riet of Seventh Generation Systems. "All the products were there. Nobody was just putting them together." Second, the center's total system construction costs were in the range of reasonable, about 7 percent higher. And when operating costs are considered, the economics improve dramatically. STC tenants pay 10 percent higher rent than elsewhere in Friday Harbor, according to Sackett, but because their utility bills are so small, the net cost to tenants for rent and utilities is 18 percent less.
Sackett returned to the San Juans six years ago, and as a builder/developer saw clearly the "collision" between needs for the built environment in a growing area and preserving quality of life. The STC evolved as a solution. When Sackett and J. Ward Phillips were planning the center, they asked themselves a central question: "How far could you go as a private developer, cost-effectively using the full gamut of technologies, to try to approach zero environmental-footprint construction?"
A building's largest environmental impacts, Sackett noted, come from ongoing operations--electricity, heat, transportation for people--and the STC focuses accordingly. It is independent from Friday Harbor municipal utilities, and gets 100 percent of its summer electricity and 50 percent of its winter power from solar.
He believes "virtually all" of STC's practices could be adapted to residential and small commercial development elsewhere. Larger commercial buildings have different needs, but they, too, can go green. "We want to transform the way the United States and other places in the world solve their infrastructure needs," said van't Riet. It's all a matter of spreading the message, particularly, he noted, among decision-makers in the building industry such as architects, contractors, planners and developers. As awareness and understanding grow, so too do the odds that future generations will successfully reconcile man-made and ecological systems.--Mark Ohrenschall
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Utility customers of Bonneville Power Administration--as well as conservation-watchers throughout the region--have known for some time that BPA would be phasing out its financial support for conservation programs. What hasn't been known is the fate of low-income weatherization programs as individual utilities decided how to treat conservation within their own service territories. Would low-income programs--admittedly one of the least cost-effective conservation acquisitions--be dismantled, leaving more burdens to the residential customers most vulnerable to price and demand increases?
The answer appears to be no. Negotiations are under way to work out the details of an agreement under which Bonneville will increase its budget for low-income weatherization over the next two years, on the condition that some of BPA's money is matched by funding from other sources.
The proposed agreement stems from the Northwest Conservation Act Coalition's opposition to BPA's decision to eliminate the so-called conservation backstop provision from proposed amendments to its power-sales contracts with public utility customers (see CWEB.003/Mar.96). NCAC's opposition to dropping the backstop provision was related, in part, to the fact that other federal, state and utility funding for conservation is disappearing and is not being replaced. Those who suffer the most adverse impacts from the reduction in funding are "the most vulnerable [low-income] electric heat customers," NCAC executive director Sara Patton said. "We decided to focus on the infrastructure that serves [them]."
BPA's proposal doesn't include everything NCAC had requested. The group wanted $10 million a year, until a new mechanism to provide funding for low-income weatherization--a system benefits charge or some variation of that concept--is in place. BPA agreed to provide $6.25 million per year for two years, which includes the $3.9 million per year BPA has already committed through existing conservation contracts, and to take another look, in 18 months, at funding beyond the first two years.
The specifics of BPA's proposal are outlined in a letter to Patton from BPA administrator Randy Hardy. The agency would provide up to $12.5 million for two years of low-income weatherization work on electrically heated homes in the service areas of BPA public utility customers. The funds would be distributed by the "appropriate agencies" in the region's four states--Washington Department of Community, Trade and Economic Development; Oregon Department of Housing and Community Services; Idaho Department of Health and Welfare; and Montana Intergovernmental Human Services Department--which would work with the utilities. The amount of funds available to each utility would depend on the amount of firm power the utility purchases from BPA--although Howard Perry, BPA's manager of conservation and energy services, said the allocation probably won't be 100-percent proportional to wholesale power sales, since community action agencies that provide low-income weatherization services often work in more than one utility's service area.
And although Bonneville is allocating an additional $8.6 million over two years--the amount over and above the $3.9 million already earmarked--only 25 percent of that will be distributed, and only for the first six months of the agreement, without matching funds. According to Hardy's letter, the rest will be parceled out over the remaining 18 months only as it's matched, dollar for dollar, with money "from any non-Bonneville source."
NCAC's Patton is concerned about the matching-funds requirement. "We don't want this money to be ultimately contingent on matching [funds]," Patton said. But in a letter responding to Hardy's offer, Patton said NCAC "will work to secure matching funds to augment that [$8.6 million] investment."
Negotiations on the proposal continue. A group called--for now--the Four State Low Income Weatherization Coordinating Conference has been formed and has put together a negotiating team to meet with BPA staff to work out the agreements. The team includes representatives of NCAC, each of the four state agencies that administer the U.S. Department of Energy's Weatherization Assistance Program, and representatives of community action agencies that operate low-income weatherization programs in each of the four states. If all goes well, additional low-income weatherization funds could be flowing by July.--Jude Noland
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Bonneville Power Administration has money available for customers to invest in energy efficiency and demand-side management projects, then repay BPA over time. But just remember: it's an energy service charge agreement, not a loan.
Bonneville, which is forbidden by federal law and appropriations language from lending money, has started to earnestly market the ESC to customers. This financing program is expected to be a major item in BPA's line of unbundled conservation products and services. At least one customer already has signed up, and numerous others reportedly are interested. The total estimated value of prospective ESC deals regionally is $15 million, according to BPA conservation/energy services manager Howard Perry, while the initial annual budget is $20 million.
Under the ESC, BPA makes capital available to customers for efficiency and DSM work, up to 100 percent of the cost. The recipient effectively shares the value of the energy savings with Bonneville by repaying the original capital via an energy service charge on wholesale power bills. "It's still legally, technically not a loan," said Perry.
Although the ESC concept is not unique to Bonneville or the Northwest--PacifiCorp's Energy FinAnswer programs pioneered such an approach--this current offering has stirred up considerable customer interest, according to BPA officials. "More and more of our power customers . . . [are] interested in efficiency investments as a way of satisfying and retaining their customer base," Perry said.
Specific terms will vary, but BPA will always structure the ESC to recover all capital and overhead costs. This translates now to roughly 8 percent interest for a five-year payback--a competitive rate in many but not all cases.
In addition to the financial terms, BPA people are promoting the ESC's flexibility--"What's really nice about this is that the customer gets to decide what they're going to do," said Rick Miller of BPA's Spokane office--and the relative simplicity of a power-bill charge compared with other means of financing conservation work, such as issuing bonds. BPA also will help customers analyze a potential ESC project or program, Miller added.
Large utilities may not need the ESC, Perry granted, but he thinks smaller public-power customers could find it useful. Pend Oreille County PUD already has; it signed an ESC agreement in January that provides $225,000 in 1996 for residential, commercial and small industrial conservation. The northeastern Washington utility will repay those BPA funds monthly over two years, at 8 percent interest, and pass on the costs to its retail customers. "Because we do use Bonneville power, we decided, 'Let's tie the conservation to the Bonneville bill,'" said energy services manager Mark Cauchy." The PUD still uses much of the basic framework of BPA programs, he noted, although rebates have shrunk; Super Good Cents homes, for example, now average a $1,000 incentive payment, compared with $1,800 previously.
Another potential ESC market, Perry said, is the federal government. BPA also is looking to package the ESC with power sales to new customers both inside and outside the region.
Not everyone, however, is enamored of the ESC. Perry acknowledged some conservation advocates have questioned using ratepayer money this way when other energy efficiency funding is diminishing. And some in the private sector have grumbled about BPA "going into competition with them." In time, Perry said, BPA hopes to broaden the overall market for conservation financing and other services.--Mark Ohrenschall
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A proposed geothermal energy project in southeastern Oregon has lost considerable steam after the venting of a disagreement between the developer and Portland General Electric over the price of power from the project. An Anadarko Petroleum spokesman said the proposed deal with PGE for output from the 22-megawatt Alvord Basin project is "dead," although a PGE spokeswoman left open a faint possibility it could be resuscitated. Both, however, agreed the problem is price. Anadarko's Steve Campbell said PGE wants to lower the price outlined in a 1995 memorandum of understanding between the two parties, which came to 4.8 cents per kilowatt-hour as a 30-year levelized cost for energy and capacity. But he said any lower price would render the project unprofitable.
In addition to this economic issue, the proposed geothermal project has aroused considerable scrutiny over potential environmental impacts, notably to a nearby hot springs-fed lake that is home to an endangered fish species, the Borax Lake chub (see Conservation Monitor, June 1995). Campbell, however, said the breakdown in talks with PGE was the reason Anadarko decided to stop work on the project. The Houston-based oil and gas company has yet to decide whether it will sell the project or seek another buyer for the energy output.--Ben Tansey
A Seattle industrial operation in which utility-funded energy conservation projects have saved nearly 1 average megawatt received an official visit and a blessing April 17 from U.S. Secretary of Energy Hazel O'Leary. After touring the Holnam cement plant in Seattle's Duwamish River industrial corridor, O'Leary praised the plant's conservation efforts as an accomplishment "not by government mandate, but by the good common sense of providing incentives." Seattle City Light and Bonneville Power Administration covered about $1 million of the $2.1 million cost of efficiency improvements to motor and drive systems, dust collection, lighting, transformers, compressed-air systems and grinding mills. Together, these have saved 8.4 million kilowatt-hours for Seattle's fifth-largest customer and cut the plant's annual power bill from $1.8 million to $1.5 million.
The influential role of incentives also was emphasized by plant manager Nick Stiren. "These projects would not be viable without the partnership and the incentives," he said. The company's return on capital investment without utility funding would have been seven to 10 years, "just too long." Three to four years is about Holnam's limit. Other government and utility officials who joined O'Leary, including Seattle Mayor Norm Rice, stressed the benefits of public-private partnerships. Rice, who is running for governor, said the efficiencies at Holnam benefit the environment and also help keep the plant competitive and in Seattle, preserving high-paying jobs for the community. "It's clear our nation needs to invest more in conservation, not less," he said.--Mark Ohrenschall
Conservation and renewable energy resources enjoy widespread public support in the Pacific Northwest and elsewhere in the country, according to a report from the Renewable Northwest Project. RNP reached this conclusion after evaluating 13 separate survey and focus group results over the past two years, from sources including Western Montana Electric Generation and Transmission Cooperative, Salem Electric, Eugene Water & Electric Board, Emerald PUD, Kenetech Windpower, Portland General Electric, Washington Water Power and Snohomish County PUD. RNP's report summarizes key findings as well as sample questions and answers from these surveys.
"The message presented within these results is clear: the American public in general, and particularly those in the Northwest, feel that environmental preservation is important, and that their utility should prioritize conservation and renewable resources," RNP concluded. "Many are willing to pay higher rates if that led to these resources being used."
Representatives of Idaho Power are in Indonesia, studying the potential use of solar photovoltaic and other renewable energy technologies in the Southeast Asian island nation. The utility has signed a memorandum of understanding with the Indonesian government, through which Idaho Power could provide electricity services for as many as 20,000 rural Indonesian homes in 1997. With 203 million people, Indonesia is the fourth most-populated country in the world. The government has mounted a transmigration effort to decentralize its population from crowded urban areas into more rural locations. Providing electricity in the countryside is central to the success of that effort.
Photovoltaics is one solution, and Idaho Power has expertise in that field. The utility has designed and built PV installations throughout its service area--including a small system on the roof of its Boise headquarters building and a larger one that provides power to a U.S. Air Force radar site near Grasmere, Idaho (see Conservation Monitor, March 1995). Idaho Power is also looking at micro-hydroelectric and other renewable energy systems. The utility is working with Community Power Corp. of Virginia on the project. The two companies plan to form a joint-venture company--to be called Idaho Power International--that will work in international markets where public policy is receptive to sustainable private-sector energy projects.--Jude Noland
The Washington state chapter of the Association of Professional Energy Managers holds monthly meetings designed for anyone interested in energy management. Upcoming meetings this year involve energy and engineering software, plant tours, evaporative cooling, and lighting technologies, in addition to other scheduled activities.
For more information on programs, call chapter president Duane Lewellen, (206) 774-3829; for membership information, send an e-mail to Jonathan Stine, jonsti@wseo.wa.gov.
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