CWEB.041/May.28.1999
People want utilities to invest in energy efficiency and renewable energy, according to a new Bonneville Power Administration report. And that preference is consistently expressed around the Northwest and the nation. BPA also found that large percentages of customers are willing to pay more for renewable energy--although an apparent gap exists between this expressed opinion and actual green power sales to date.
These findings are contained in "Renewable Resources and Conservation: What Consumers Want." Author Gene Ferguson of BPA examined results from 27 different sources, including 15 opinion-gathering exercises by Northwest utilities or utility groups. Most were conducted between 1994 and 1998. BPA's primary goal was to ascertain public interest in green power, renewable energy and energy efficiency; it plans to use the report to inform its own such initiatives.
"The major finding is that there is a significant population of people throughout the Northwest who would support utilities implementing programs to support conservation or to buy resources from renewable projects," Ferguson told Con.WEB. "There seems to be strong support almost everywhere you look," in the Interstate 5 corridor as well as east of the Cascades.
For example, a 1995 survey of consumers of member utilities of Western Montana Generation and Transmission Cooperative found that 70 percent wanted their utility to promote conservation, 61 percent thought the utility should acquire only environmentally neutral or positive energy resources, and about 50 percent said they would pay 10 percent more for conservation as well as renewables. Orcas Power & Light in Washington's San Juan Islands, meanwhile, reported that 55 percent of its customers indicated they would pay 50 percent more for electricity created in an "environmentally friendly manner."
Public support for conservation and renewables is "probably stronger in some of the I-5 corridor utilities but I think there's definitely market potential in other parts of the Northwest as well," said Ferguson.
Other major conclusions in the report:
The Green Market Gap
Despite the professed widespread public support for clean energy, retail green power initiatives have yet to generate correspondingly high participation. "Early reports from some green marketing offers do not seem consistent with what would be expected if people acted consistent with the data from the surveys cited in this paper," acknowledged the report. It also may be too early to make judgments on what the report called "a new market in which utilities lack experience and consumers are offered choices unlike anything they have faced before."
But this discrepancy does raise questions. "How can we make it a viable industry?" asked Ferguson. "People want clean air, clean water, fewer contaminants. If that's what they want [from energy resources], then we have to think about different ways of getting there."
He believes many electric industry officials downplay public interest in green power, thinking people ultimately will choose price over other attributes and that consumers don't really understand what they are saying in declaring support for renewables. This attitude is reinforced by the relative lack of success to date in green power marketing. But Ferguson's research indicates to him that the demand is real and substantial. "The sooner we have a better understanding of this, the more likely we'll be able to meet what is pretty strong public opinion. We have to satisfy those people and figure out ways to take credit for it so they'll have brand loyalty."
Ferguson also thinks Bonneville, in marketing wholesale green power, needs to provide tools to help local utilities sell green power to their customers. "This is going to succeed by and large if it's successful regionwide," he said. "If it's only successful with a few utilities here and there, green power won't make the impact people who are supporting it would like it to make, and support could even dwindle away in those places where they have support from utility managers."
Further Research
Ferguson said none of the studies he examined contradicted the general theme of popular support for conservation and renewables, although one customer survey, conducted by Clark Public Utilities in 1998, found that 61 percent of respondents wouldn't pay more on their electric bills for renewables. This came in response to a question prefaced by a statement that renewables are more expensive than other electricity sources.
Ferguson did acknowledge some differences in the methodologies of the various opinion-gathering activities. "Not all of the surveys that are cited are equally scientifically valid," such as focus groups. On the other hand, he noted, "A lot of the focus groups supported the overall conclusion."
Still, further research is needed on such topics as green power marketing, sub-regional differences in public support, and rate-basing conservation and renewables, according to the report.
"There is a big demand. People really support it," said Ferguson. "If we're not succeeding we have to ask ourselves why. I think investigating some of those issues . . . would be a key in reaching a success laying out there."--Mark Ohrenschall
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Idaho Power has forsaken conventional energy efficiency programs for financial reasons, but it continues to support public-purposes initiatives such as the Northwest Energy Efficiency Alliance, according to the utility's 1999 conservation plan.
The investor-owned utility spent $2.9 million on efficiency programs and recorded savings of 1.8 average megawatts in 1998--which also marked the end of industrial, commercial lighting, school and agricultural ventures.
Idaho Power's conservation spending has substantially declined in recent years, from $6.2 million in 1995 to $4.3 million in 1996 to $3.2 million in 1997, according to previous conservation plan figures.
"In 1998, Idaho Power discontinued all remaining demand-side management (DSM) programs that relied on deferred accounting of program expenditures for future recovery," according to the latest conservation plan. "The Company continues to support public purpose programs such as Low Income Weatherization Assistance and, as a member of the Northwest Energy Efficiency Alliance, to promote energy efficiency through regional market transformation."
The $1.7 million Idaho Power contributed to the Alliance in 1998 accounted for nearly 60 percent of the utility's efficiency spending. "We think [the Alliance] makes sense," said Idaho Power's Paul Werner. "Market transformation has the potential to be a bigger payoff, and the benefits of regional coordination . . . certainly make sense."
"From my perspective they have dismantled their independent efforts and put all their eggs in the Northwest Energy Efficiency Alliance basket," said Bill Eastlake of the Idaho Public Utilities Commission, which requires but does not act on the annual conservation plans.
Eastlake told Con.WEB earlier this year that Idaho Power fears the future 
implications of efficiency spending. "The primary pitch they've been making to us is that [conservation]
represents a potential stranded cost in a deregulated world," he said, although Idaho's lack of enthusiasm for electric industry restructuring "weakens the argument a bit."
Werner noted that deferred conservation costs add to Idaho Power's regulatory assets. Conservation accounted for $43 million of the utility's total regulatory assets of $266 million in 1998. "Once the company started working through the hearings on restructuring, it became evident this was not the best time to be building up regulatory assets," he said. Although recent PUC decisions have eased concerns about deferred cost recovery for conservation, "We don't want to add to any deferred balances." The utility has received IPUC approval to recover 1997 Alliance costs with existing funds, although 1998 cost recovery remains undecided. (See Con.WEB, Jan. 29, 1999.)
A utility news summary on the conservation plan's submittal offered this insight: "The company's participation in NEEA has resulted in a shift from more traditional conservation programs. Reflective of this changing emphasis, the company has sought and received regulatory approval to discontinue its more traditional conservation programs."
Out With The Old
These are the programs no more:
Idaho Power also has finished a pilot program for Oregon school energy efficiency and is collecting energy service charge payments from one participating school district, according to the conservation plan. More recently, in May, Idaho Power received IPUC approval to end its Residential Weatherization Cash Grant Program, which funded up to 70 percent of cost-effective energy savings. No customers had participated in the program since 1993, according to the IPUC.
The IOU is continuing its low-income weatherization assistance program, which provides money to local weatherizing agencies in Idaho and Oregon. Idaho Power has spent $2.7 million on this program since 1989 and the energy savings to date total 1.4 aMW for the 3,200-plus participants. Also still available are programs required in Oregon to notify commercial and residential customers of energy audit opportunities, and of financing programs for residential customers.--Mark Ohrenschall
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As the Northwest Energy Efficiency Alliance nears the end of its initial three-year funding period, the regional market transformation collaborative is considering revising the representation on its board of directors.
Although the exact nature of the board change remains under discussion, it could involve customer representation. Idaho Power industrial customers advocated such a move at the Alliance's April 28 board meeting in Eugene. Contending they pay for the Alliance through electric rates and deserve formal representation, the Idaho industrialists pushed for the addition of four board seats for industrial customers, one from each of the four Northwest states.
The Alliance board rejected that proposal, but is mulling new board configurations. It voted to formally consider in July adding two consumer representatives to the board, including at least one from the industrial sector. It also established a committee on long-term board representation, which will report back by October.
The current Alliance board consists of 18 voting members: six from the region's investor-owned utilities, five from publicly owned utilities, one from Bonneville Power Administration, four from the Northwest governors and one apiece from the Northwest Energy Coalition and Northwest Energy Efficiency Council. The Alliance's $65 million funding for 1997-1999 has come from the IOUs and BPA (on behalf of its customers), and the collaborative plans to seek additional money from utilities for next year and beyond.
Board Membership
A number of people and organizations have urged the Alliance to restructure its board, according to Alliance board members, including Ken Canon of Industrial Customers of Northwest Utilities and commissioner Ron Eachus of the Oregon Public Utility Commission. Other compelling circumstances include potential public-purposes funding from Northwest states for market transformation, and the prospects that large public-power utilities may contribute their own money to the Alliance.
But changing the makeup of the Alliance's governing body is a complicated matter, as discussions in Eugene indicated. Representation questions, for one, can be tricky. For example, the four governors' appointees on the board represent electric customers in their respective states, but they acknowledged that as a very difficult balancing act. Utility representatives on the board also represent customers, at least to some extent. Another issue is control over funding decisions, particularly for IOUs subject to regulatory review of their spending.
When the Alliance formed in 1996, 
recalled board member Brian Hedman, the board essentially consisted of stakeholders, primarily utilities that provided the money. Now the Alliance board may need to change to lead the organization into the future, as the Alliance has already demonstrated the concept of market transformation. The current board lacks senior managers, marketers and direct customer representatives, Hedman said, and consists largely of "old school DSM kilowatt-gatherers." He even suggested his utility, PacifiCorp, does not necessarily need an Alliance board seat, as regulators seem to be generally satisfied with the Alliance's work.
Other board members indicated an interest in reshaping the Alliance board beyond demographic representation. Ken Keating raised the notion of a two-tiered governing structure, with a board of trustees (representing funding entities) choosing a separate board of directors selected to "best serve the needs of the Alliance . . . This would allow us to branch out into other areas and bring other things to the board other than money."
Into this debate came Industrial Customers of Idaho Power, which raised the issue of taxation without representation. "The true funders for NEEA are the people who write their checks every month to their utility," ICIP attorney Peter Richardson told the Alliance board. "The funders really should be around the table." ICIP's solution: a fourth "pod" on the board, consisting of industrial customers from each Northwest state.
"NEEA is at the most critical time in its existence," said Richardson, with the initial three-year funding expiring. "It's a critical time for you to have customer representation. It's important to your credibility, it's important for customer representation, and it's important to do so now."
David Hawk, director of energy and natural resources for J.R. Simplot Co., said his company will have spent, through electric rates, $300,000 on the Alliance in its first three years. That equals sales of 30 million pounds of French fries, he noted. "We'd like to be involved in the decision-making and be truly represented."
Both Richardson and Hawk said they support energy efficiency and market transformation. "Conservation and energy efficiency are more than just laudable goals," said Hawk. "They're necessary for us to compete against a new plant in Canada," and elsewhere.
But Alliance board members wondered why industrial customers should get their own pod and not other customer sectors or even aggregations of customers, such as schools, hospitals, grocery stores, farmers or low-income customers. Industrial customers could offer special expertise, said board member Liz Klumpp, but they contribute proportionally less money to the Alliance than residential and commercial customers. Adding four industrial customer seats to the board is "skewed," in Klumpp's view. Richardson said industrial customers simply want "equal footing . . . It doesn't preclude footing for other customers."
ICIP's proposal was rejected for action at the next Alliance board meeting--scheduled for late July in Butte, MT--but the board did endorse consideration of a proposed by-law change to add two customer representatives. Other options also could be considered.
Other Action
In other action at the quarterly meeting, the Alliance board:
This venture, adopted in 1997 as a pilot program to gauge the market for a Northwest duct retrofitting industry, has resulted in more than 1,500 duct-sealed homes, 71 trained contractors and 65 researched homes. It also involves 22 local utilities. The Alliance and its program contractor, the Oregon Office of Energy, have concluded duct sealing is more profitable and cost-effective as part of a portfolio of value-added heating system services offered by private-sector contractors, according to Alliance staffer Tom Eckman. "This is giving guys a way to put $500 more worth of services in their pockets," he told the board.
Although duct sealing cost-effectiveness is not great from an energy-saving standpoint, the non-energy benefits are substantial, if not quantifiable, according to Alliance staff. These include healthier indoor environments and peace of mind for residents.
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Bonneville Power Administration has committed to spending an additional $6 million to $8 million over the next two years for low-income weatherization programs around the region.
This pledge, announced in early May, extends BPA low-income weatherization funding for the four Northwest states that would have ended in September. The $3 million to $4 million annual new spending will apply through September 2001 for state-run programs in Northwest public-power service territories.
BPA intends the additional money to serve as a transition to local utility and, potentially, public-purposes funding for low-income weatherization. About a year ago, Bonneville contractually extended the four-state weatherization program through September 1999, fulfilling a recommendation from the BPA Cost Review Management Committee, which envisioned eventual state funding for this purpose. But in the absence of public-purposes funding outside Montana, and with BPA's proposed energy conservation/renewable energy wholesale rate discount not starting until October 2001 as a means to encourage local utilities to fund low-income weatherization, BPA decided to continue its funding role.
"States are quite legitimately worried that that important [low-income weatherization] infrastructure is going to be lost," BPA energy efficiency vice president Terry Esvelt told Con.WEB. "They've been doing an absolutely great job at delivering on what we think is an important area . . . We were quite frankly worried about it falling through the cracks."
The exact amount of annual funding remains to be determined, but Esvelt said it would fall within the range of $3 million to $4 million. It will be spread proportionally among Idaho, Montana, Oregon and Washington state agencies that contract with local community agencies for low-income weatherization programs. The additional money, Esvelt noted, will not come from BPA's energy efficiency budget, but from elsewhere within the federal power marketing agency's multibillion dollar budget.
"We're feeling very good about the work that's been done [in low-income weatherization] and we're happy to continue our support in this area," he said.
Also happy is Sara Patton of the Northwest Energy Coalition. "The brave new world still isn't here," she said, and the conservation/renewables discount incentive for utility funding of low-income weatherization won't take effect for two more years. "We were looking at that gap and strongly urging Bonneville to make sure that we didn't lose people through that hole." She called BPA's decision "exemplary."
Johansen's Support
Washington housing official Steve Payne praised BPA administrator Judi Johansen for understanding the states' concern about the demise of BPA low-income weatherization funding without alternative sources available. "I think it's noteworthy that Judi Johansen really listened to us," said Payne, of Washington's Department of Community, Trade and Economic Development. "Judi heard us that we needed to extend that bridge in a way that give states time to get another mechanism in place. That was gratifying [that] she recognized the value of the program and recognized the need to continue."
Without BPA's continued funding, Payne said, "Probably some [community] agencies within the state may have faced layoffs come October, because their infrastructure is built up based on the level of funding . . . We're already seeing those problems in Oregon. They've spent their funds" allocated through September.
"Bonneville funding has meant the difference between almost no program in most publicly owned utility service territories and having some funding to keep things going," said Patton.
Bonneville provides about 15 percent of Washington's state-run low-income weatherization funding; the remainder comes from federal, state, utility and other sources, according to Payne. Other states also collect and spend a mix of low-income weatherization dollars, with Bonneville funding a significant minority percentage of the total.
"This is the end of the direct Bonneville funding," said Esvelt. "Now the utilities are being incentivized [through the discount] to spend their money. I think our obligation is to create an infrastructure for states, CAP [community action program] agencies and tribes to allow the utilities to just step right into our funding role and not miss a beat." Johansen has formally promised BPA will make up any discount-related spending shortfalls for low-income weatherization, beginning in the second year, to ensure regionwide investments up to the Regional Review's recommended level of $4 million annually.
Payne believes local utility funding of low-income weatherization may be uneven. "I think it will work with some. I have doubts with some of the smaller PUDs. It depends how the program's approached," he said, adding that his agency wants to ensure consistent quality in low-income weatherization work. "Otherwise it's a disserve to low-income households." Esvelt said the states also share a concern about administrative hassles dealing with many utilities rather than a single entity such as BPA. They also worry about the discount's first year, for which BPA has made no commitments for low-income weatherization funding. For that, Esvelt acknowledged, "I don't have a good answer right now."
A new wrinkle in the Bonneville funding extension is the potential inclusion of Northwest Native-American tribes, which Esvelt said have not directly participated in this low-income weatherization program but now have expressed interest. "I don't envision major contractual changes in . . . the structures, specifications, reports," he said. "It's all working very well. The only question is how to meet the tribes' interests."
Since 1982, BPA has spent nearly $50 million on weatherizing more than 35,000 homes of low-income people. Total energy savings exceed 8.2 average megawatts, according to the latest BPA figures. The number of homes represents about 14 percent of all homes weatherized through BPA funding. "We consider this an excellent achievement, since low-income households have been notoriously difficult to reach with utility programs," said BPA's Gene Ferguson.
In Washington, weatherization of electrically heated homes of low-income residents has made substantial inroads over the years, Payne said, thanks to utility and other funding sources. Still, the overall need remains great. His agency estimates between 155,000 to 160,000 Washington residences of low-income people require weatherization.--Mark Ohrenschall
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Like the little engine that thinks it can, environmentalists remain chugging up the hill of California's year-old competitive electric market knowing, just knowing, that green power products will catch on with retail consumers and renewable energy will replace polluting fossil-fueled plants.
The green market is far from a lost cause, but with 13,500 megawatts of fossil-fueled generation ready to be built as soon as agencies approve the plans, compared to 500 MW of renewables, green marketers will have to keep chugging for a couple more years--overcoming obstacles such as lack of consumer knowledge, a dearth of economic incentives for consumers to switch, the sluggish pace of getting new renewable power plants on-line and the yawning need for feeding more coal, er, capital, into the marketers' business engines to get them over the hill.
The good news for green consumers comes at some expense for marketers. Preliminary audit results trickling into Green-e to authenticate marketing claims are showing that companies retailing green power overestimated the size of the market and thus contracted for more green power than necessary. That means customers who buy a product that is supposed to be 50-percent green are getting a much higher percentage of renewables in their energy mix.
"For 1998, with one exception, companies bought more renewables than needed," explained Jan Hamrin, director of the Center for Resource Solutions, Green-e's non-profit parent organization. "About 97 percent of products came from renewables, but we would have expected more like 75 percent, given the product mix." She added that the "exception" was on target. Hamrin would not reveal company names or individual statistics.
Green Power Certification
Green-e was set up to verify marketers' claims. Marketers submit independent auditors' reviews of their books to Green-e. But in the first year of competitive market operation Green-e had no annual books to audit and thus no method of verifying marketers' claims, so information is just now being reviewed. Green energy may consist of: hydro, if the dams have less than a 30-MW nameplate capacity; a product that contains 50 percent or more renewable energy and has no greater air emissions for the balance than the fossil portion of an equivalent amount of system power sold in the same region; wind; biomass; landfill gas; and geothermal.
Beginning next year products with Green-e certification will have to incorporate 5 percent new renewables, increasing to 25 percent in five years. New hydro will not be considered in the mix. The California Energy Commission has had "power content label" mandated for green products since fall. The label, like the nutritional content labels on food products, shows the mix of generation from system power and compares that with the green power product being sold. However, a CEC spokesperson said that the agency does not audit company claims on a regular basis.
This good news for the energy mix came out of some bad news for Enron Energy Services. The marketer braved the years leading up to the deregulated commodity market, participating heavily in the California Public Utilities Commission's process. But it dropped out of the market only a month after competition began on March 30, 1998. All the customers who did sign up--Enron claims about 30,000--were automatically assigned a 50-percent green power product when the company pulled out. Enron's price, for the first two years, tracked utilities' prices with a promise of a week's free commodity after one year.
Green Power Prices Less Expensive Than Anticipated
At the time Enron entered the market, green products were priced with a premium--in some cases twice the cost of utility commodity. Now, after a year in business, the biggest green marketers are finding they can sell green power at a discount off the Power Exchange price and still remain in business.
Commonwealth Energy also automatically shifted its customers to a green product earlier this year. That would account for about one-half the total green market, according to the Coalition for Energy Efficiency and Renewable Technologies.
"There's very aggressive competition in the market for environmentally superior products," Ralph Cavanagh, Natural Resources Defense Council energy program attorney, said of green energy's reasonable pricing.
A good part of the reason green power is becoming cheaper to its customers is the 1.5-cent rebate every kilowatt-hour of green power sold can get from another CEC program. Since September 1998, $75.6 million is being funnelled through the CEC to green marketers until 2002. Some marketers are not passing on the lowered cost of power, but Commonwealth is passing a 5 percent discount off the PX price to its customers. On March 24 Green Mountain followed with a 1.25-cent/KWh discount off the PX price for its 100 percent products.
Another surprise from the year of experiences is that green power is not only competitive in price due to the rebate, but is actually cheaper to produce than many presumed.
Those competitive prices for building new renewables were recognized in June 1998, when the CEC held an auction to give away $162 million in subsidies. That auction gave money to every developer for 55 projects totalling 500 MW for future generation.
Overall Green Power Demand Still Tiny
While the news that green marketers are making good on their promises is positive, and it is less expensive than previously thought, the green market as a whole remains miniscule, meaning consumer demand is not driving the hoped-for expansion of renewable energy. Only 1 percent of retail customers have chosen non-utility providers, although now all the major ones are, indeed, solely offering green products. Hamrin said the numbers are not all that bad: "It took two years to get 1 percent with telecom."
The lack of retail switchers is mostly blamed on the lack of consumer education. Cavanagh, Hamrin and all the sources for this story scoffed at the CPUC's attempt to educate the public about retail competition through advertising. "It was very lame, but it did raise awareness in terms that customers have a choice. What hasn't been done yet is to drive home the point that the choice matters" in reducing pollution, said V. John White, director of the Coalition for Energy Efficiency and Renewable Technologies. "If green customers stay around 1 percent, it's a yawner," added Cavanagh. "During 1999, the challenge is for people who believe in environmentally superior products to make significant growth."
Green Mountain, whose omnipresent television commercials with Kenny Loggins disappeared in the fall, was not grabbing enough consumers to make it worth the company's dollars in the short run, according to Julie Blunden, Green Mountain vice president of new markets. The company instead put its advertising dollars in Pennsylvania. "The fundamental difference is that customers are shopping for new electricity in Pennsylvania." Blunden said that California has yet to have a "fully functioning retail market." She added, "It's not to say California is dead or broken, it's just a narrow, value-added market."
Blunden vowed advertising will return despite the hurdle that "in California its figuratively a door-to-door campaign. You have a conversation with each individual customer as opposed to having a whole bunch of people out shopping and choosing our product."
Little Reason to Switch From Utilities
Retail switchers appear to be stymied by the dearth of reasons to abandon their comfortably ubiquitous utilities. There is still basically no reason to switch on price, which will only add up to pennies saved on a monthly bill even on green products with a discount. Thus, consumers have to want to make a difference in the sources of electricity for the state. Even if consumers understand enough of the electric business to know their Helms from their Geysers, the necessary pooling of electricity removes customers from seeing a direct benefit to their choice. That is, consumers do not get electrons directly from renewable sources. Those sources are dumped into the same swamp of electrons as nuclear and coal. Consumers dip into that pool for their share. The benefit of making the pool cleaner for everyone--including those who do not contribute or who buy "brown" power--is not an easy sell.
Many marketers inadvertently made it difficult for customers to switch during the first year. As nascent competitors, their employees were not well-trained and often gave out conflicting information. Applications were lost or never processed. A legislative protection against customers being "gridnapped" from one electric service provider to another--the customer has to expressly sign for the move--also put up a barrier in the more-paperwork category.
Large Customers, Governments Take to Green Power
Another surprise was the response of large power consumers. At the beginning of the competitive market, few people dreamed big customers would choose electricity that was not the absolute cheapest available, or that management would be driven by an opportunity to tout environmental friendliness. Hamrin said her preliminary estimates indicate 21 percent of green power is going to larger customers. It might cost more than cutting deals for system power from the PX or bilateral contracts from fossil-fuel producers, but some businesses think they can make it up in their own customers' goodwill.
Patagonia, for instance, is contracting to buy 100 percent green power for California from new wind turbines under construction around Palm Springs; Toyota Motor Sales USA has 100 percent green for four California facilities totalling 12 MW; Florida Power & Light is taking 18 MW of its own geothermal for its own use; SeaWest Energy is buying 100 percent green for internal use; the Geothermal Resources Council is buying 100 percent green for its offices; the largest student housing cooperative in the country, University Students' Cooperative Association in Berkeley, is buying 100 percent green; seven San Francisco Bay area Episcopal churches are buying green; and Bentley Carpet Mills installed a 127-KW solar array on its manufacturing facility in the City of Industry.
Less surprising is municipalities' bent toward green power. Santa Monica, a stronghold of left-of-center activists, recently contracted for 5 MW for city facilities.
The governmental market was helped enormously by a little procurement quirk. While governments have to buy products from the least-cost source in any category, two categories were developed for power purchases: the traditional "regular" electric purchase and the green purchase. Thus, the cheapest green power source, even if it is more expensive than the regular source, can be approved for the governmental sector.
Even with wholesale demand, the green wholesale market lost its only all-green marketer in the first year. Foresight Energy "may have been just one more layer that an early market couldn't support," Hamrin reasoned. Other wholesalers offer green power but don't restrict their business to renewables.
Finally, some environmentalists claim that those marketing brown power should not be able to claim they are using "system power" which, as a portfolio, is 13 percent renewable. "It might be time to put this in the spotlight," Hamrin said. "If you're buying only the dirtiest, awfulest stuff, you can still claim system power"--J.A. Savage
Bonneville Power Administration will financially support an emerging distributed generation technology it believes has considerable potential as a clean, efficient energy source for the 21st century.
BPA on May 27 announced a $3.5 million contract with an Oregon-based subsidiary of IDACORP Technologies to develop fully integrated small-scale proton exchange membrane fuel cell systems, which combine hydrogen and oxygen to create electricity, with heat and water as byproducts. The first 10 3-kilowatt PEM units are scheduled for delivery over the next year to BPA, which will distribute them for installation in public-power territories around the region, cost-sharing with local utilities. Another 100 units are scheduled to follow.
The IDACORP Technologies subsidiary, Northwest Power Systems, has targeted 2003 for commercialization of cost-competitive PEM fuel cells for home and small-business applications.
BPA previously contracted with Bend-based NPS on a prototype 5-kilowatt PEM fuel cell successfully demonstrated at two Oregon homes. The prototype also ventured on a regional road trip, generating considerable interest among local utilities. (See Con.WEB, Feb. 26, 1999.)
BPA/NPS Fuel Cell Agreement
The new $3.5 million agreement calls for testing, development and delivery of 110 3-KW PEM units, which will incorporate Northwest Power System's unique fuel-processing system, along with other components.
"This is a garage invention in Bend, Oregon, and we're turning it into an R and D project, from a theoretical to a real-world application," said BPA deputy administrator Jack Robertson at a May 27 Seattle press conference.
The first 10 machines, described as "experimental prototypes" by Northwest Power Systems president Alan Guggenheim, will be delivered and installed beginning this fall and continuing through mid-2000. They will be sited in a variety of Northwest public-power locales, testing how they work in different applications, Robertson said. Many more than 10 utilities have expressed interest in hosting the units in their territories, he noted: "They all see benefits to them and their consumers." BPA plans to seek cost-sharing arrangements with participating utilities, in the range of $10,000 to $25,000 per utility. After the initial 10 units have operated for several months the next 100 will follow, adjusted if necessary based on results from the first 10.
By April 2003, Guggenheim said, his company plans to have fuel cells commercially available for homes and small businesses, "competitive with the price paid for grid power today."
Fuel Cell Prices, Advantages
These fully integrated PEM fuel cells will initially produce power in the range of 8 to 9 cents per kilowatt-hour, according to Robertson. Northwest Power Systems now offers 3-KW systems for a listed price of $50,000 apiece (for 10-24 units). As fuel cell production increases system prices and energy production costs should drop substantially. "BPA's objective is 5-cent power with 95-percent efficiency in five years," Robertson said.
This type of fuel cell has a system efficiency--fuel in, energy out--from the low 30 percent range to the low 40 percent range, according to Northwest Power System's David Edlund. But when recoverable heat is factored in along with electricity the total system efficiency rises to about 90 percent, and in some cases exceeds 95 percent. A 3-KW unit, he noted, can produce "more than enough [electricity] to supply an average home."
These PEM fuel cells offer a number of benefits, Robertson said. They fit comfortably in a basement (he called it "energy in a box"), they are quiet, they produce reliable power and they can operate on alternative and renewable fuels. The initial Northwest Power Systems units will use methanol as fuel; natural gas and propane are potential fuels for subsequent models.
"The interesting part to Bonneville is this fuel cell is the only one that can run off of multiple fuels to extract hydrogen," Robertson said. Northwest Power System's patented fuel processor uses a catalytic reforming process to create purified hydrogen for the fuel cell.
Energy Production Revolution
Robertson views fuel cells as part of "an important revolution in the creation of the electron. We think this has potentially tremendous impacts for individuals for the next century." Centralized power generation and its accompanying infrastructure is running into environmental and other constraints, while technological advances in electrotechnologies, digital communications and materials are creating great opportunities for small-scale generation. "This can be a tremendous new economic base for the Northwest," he said. "We can become the Silicon Valley of energy production." Globally, fuel cells also have the potential to bring power to non-electrified regions without building poles, wires and central-station generation. Guggenheim offered this prediction: "Fuel cells will be bigger than the Internet in 25 years."
Also enthusiastic was Roger Breezley, president of IDACORP Technologies, an unregulated subsidiary of Idaho Power's holding company. IT recently purchased a majority share of Northwest Power Systems (see story in Briefs). Idaho Power has a long interest in renewables, Breezley noted, with its hydropower system and solar-energy initiatives. "A three-way partnership of a strong invention and technical aspects, a sound owner in IDACORP and a wonderful marketing partner in BPA is very, very exciting," he said.
No Guarantees
Of course, success is not guaranteed. Among the challenges cited by Robertson are increasing mass production to gain efficiencies, and regulatory issues for potential net metering with fuel-cell systems.
"As with all technologies, there are deliberate steps you have to follow to move it forward from conception to first practical demonstration to commercial viability," said Edlund. "One of the last hurdles to cross is demonstrated lifetime. There's no substitute for operating hours under real conditions. This program at BPA will start that." He anticipates these fuel cells, which have no moving parts and nothing to consume except fuel and oxygen, will run for up to 80,000 hours, or about nine years.--Mark Ohrenschall
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An international campaign with Northwest roots will advocate energy efficiency and renewable energy over the next 11 months leading to Earth Day 2000.
The Earth Day Network--with headquarters in Seattle and led by Earth Day luminary Denis Hayes, who directs the Seattle-based Bullitt Foundation--in April launched "New Energy for a New Era." EDN describes it as "a global campaign to bring about a swift transition to clean, renewable energy sources and a giant leap forward in energy efficiency."
Its agenda includes principles, goals and strategies for renewable energy, energy efficiency and pollution reduction, which EDN plans to foster by raising awareness and mobilizing support among citizens as well as governments, businesses and utilities. "It's designed to be a year of action and issues of energy," said Earth Day Network communications director Michelle Ackermann.
Why Energy?
"Almost every major environmental issue connects to the way humans produce and use energy," reads an Earth Day Network organizer's guide. "The wasteful use of outdated energy sources contributes to climate change, oil spills, nuclear waste, acid rain, air pollution, species losses, and myriad other environmental problems."
Energy represents "a huge issue of great potential," Hayes told Con.WEB. And, he added, "It's a good organizing issue."
Asked why he signed up for a third stint leading Earth Day activities (after 1970 and 1990), Hayes said it was a combination of the year 2000 and the promise for "genuine political action of the sort we had in 1970," which was followed by establishment of the federal Environmental Protection Agency and landmark environmental legislation including the Clean Air Act, Clean Water Act and Endangered Species Act.
While energy isn't prominent on today's national agenda, it had a significantly 
higher profile during the energy crises of the 1970s. At the time, Hayes said, environmentalists and others thought oil prices would continue to rise dramatically toward $100 a barrel, and "we just had to make sure a bunch of alternatives were out there and suddenly they would begin to eat [oil's] market share." Instead, America reached a point in which "gasoline was cheaper than water and people were buying sport utility vehicles. The whole framework within which we were viewing the problem had vanished."
Yet burning fossil fuels for energy continues to affect human health and the natural environment. The real threat of scarcity these days, Hayes believes, is not energy resources such as coal, but the planet's capacity to absorb human-caused pollution.
"If we're successful in 2000 by 2005 we'll look at this as a place of a real inflection point with the efficiency with which energy is used in the United States and the marginal rate of new renewable energy," Hayes said. "We're not flitting a little bit on the margins. We're beginning the serious process to move off fossil and nuclear fuels."
Earth Day 2000 Objectives
Earth Day Network lists four broad principles for the United States to achieve, along with more specific goals and strategies.
Hayes finds some indications of progress toward EDN's clean energy agenda, such as the formation of bipartisan renewable energy caucuses in the U.S. Congress and the "explosive interest" in renewables around the world, particularly wind energy. "There are not things that look at all like the robust optimism a great deal of us had in 1980 and 1981," he said, but, "There are a lot of hopeful signs."
Reaching Out
Spreading the word is fundamental to Earth Day Network's campaign. "Earth Day relies on the common sense of everyday people presented a set of facts in a way that causes people to pay attention to them," he said. "We will never get anything like a Monica-style feeding frenzy," but he hopes to generate sufficient public interest in energy to lead to a "change in political consciousness." Hayes cited health-care reform as an example that went from modest visibility in 1991 to a major issue in the 1992 U.S. presidential election.
Earth Day Network also will connect with local groups, strategic partners and other organizations. It will facilitate events, drum up publicity, serve as an information clearinghouse and encourage various initiatives.
Hayes anticipates regional interest here: "Certainly our hope is the Northwest, with some creative leadership in places like Eugene and Salem and Seattle, will play a strong role."--Mark Ohrenschall
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Energy people have a new place to turn--or, more accurately, click--for technical information.
The Energy Solutions database, a Web-based service of the Energy Ideas Clearinghouse, debuted in December. It features questions and answers on a wide range of technical energy-related topics, as well as other resources designed for energy professionals and energy decision-makers in the Pacific Northwest.
EIC's Vicki Zarrell described the Energy Solutions feature as "an extension of the technical assistance we're giving through our technical staff, librarians and hotline operators. It's a way to make the information we gather and the questions we answer available to a wider audience, and it's also a way for us to keep track of what we've learned."
Here's an example: click on Motors, one of 29 specific topics listed in the database. The next screen brings up nine motor-related subsections: General, Adjustable Speed Drives, Belts and Gears, Load Determination, Motor Repair, Motor Types, Operation and Maintenance, Selection and Testing. Try Motor Repair. That leads to a page with a question-and-answer for this query: MOTOR REWIND LOSSES--How do high-efficiency motors hold up after rewinding? The short answer: Losses (for either standard or energy-efficient motors) can be minimized by following high-quality rewind specifications. The page lists four documents addressing that subject, along with an E-Source publication on rewind test results. In addition, the Motor Repair subsection provides links to the related resources of the federal Motor Challenge program and the MotorMaster+ software program.
Energy Solutions also offers a database search feature, which Zarrell said may be made more sophisticated in time.
Another resource available through Energy Solutions is Energy News, which links to several sources, including Washington State University Cooperative Extension Energy Program's Energy Newsbriefs and the publication you are now reading. Both the EIC and Con.WEB receive funding support from the Northwest Energy Efficiency Alliance.
"A lot of the resources [in Energy Solutions] are of interest to anybody who's working in the energy efficiency field," said Zarrell. "It's primarily focused on industrial and commercial customers but not exclusively . . . That's the audience we primarily serve with the hotlines and our library services."
The Clearinghouse gradually plans to expand Energy Solutions, including, for example, additional resources available through the EIC library. A new section on utility resources also is anticipated, according to Zarrell.
Energy Solutions is part of the Clearinghouse's "tiered system of information dissemination," noted EIC's Linda Witham. Electronic media, targeted intervention projects, customer service and technical assistance comprise the four tiers, with the greatest number of people accessing information through the EIC Web site, including Energy Solutions. "In addition to providing appropriate and cost-effective levels of interaction with EIC clients, this tiered approach integrates feedback among the various levels," said Witham. "For example, technical information and insights from individual cases will be posted on the Web site as appropriate and will then be available to a greatly increased audience."
Witham called Energy Solutions "a developing resource, and we invite comments regarding its organization, structure or content."--Mark Ohrenschall
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PacifiCorp has filed its first demand-side management-related rate adjustment under the Alternative Form of Ratemaking approved in May 1998 by the Oregon Public Utility Commission. If approved by the commission--which has 60 days to review the filing the 1.3 percent rate increase under the AFOR adjustment would result in an overall increase of $9.34 million.
The largest part of the rate adjustment proposed April 30 is related to PacifiCorp's ongoing DSM cost recovery mechanism, said PacifiCorp pricing manager Bill Griffith. Under the AFOR that cost-recovery mechanism has been redesigned as a system benefits charge, intended to encourage PacifiCorp to invest in sustainable energy resources and to recover other investments in energy efficiency.
PacifiCorp has added 1997 DSM expenses associated with qualifying renewable resource projects to the charge, which has been set to recover annual ongoing DSM expenses and amortize historical investments over the next five years. The result is an overall increase of $8.95 million, or 1.27 percent. Griffith added that although this means an increase in customer bills, it does not increase PacifiCorp's earnings; instead, it accelerates the process of collecting and paying off these costs. Griffith also said the filing was required under the distribution AFOR approved a year ago (see Con.WEB, May 29, 1998). That decision allows PacifiCorp to adjust prices annually, with the maximum percentage change tied to an index based on the forecast change in the Gross Domestic Product Price Index, offset by a 0.3 percent productivity adjustment. Overall price increases are limited to 2 percent in any one year, beginning July of each year, and to a total of 5 percent over the term of the plan. PacifiCorp has filed for an index-related change of $2.07 million, or an overall price increase of 0.29 percent.
The plan also sets a predetermined revenue cap for distribution revenues--in other words, a decoupling adjustment that separates the utility's profit from the amount of kilowatt-hours it sells. Temperature-adjusted actual sales revenues for each major customer class are compared to these predetermined caps, and any differences are distributed--or collected--the following year. This year, Griffith said, the decoupling adjustment is a decrease of $1.68 million, or 0.24 percent.
The $9.34 million total increase affects different customer classes differently. Residential customer rates will increase 1.3 percent, while large customers under Schedule 48 will see a 2.04 percent increase. Rates for lighting customers go up 1.07 percent. Griffith said he expects the system benefits charge component of the AFOR to remain relatively stable. The index-related change could go up or down, depending on how the index itself changes. And the decoupling adjustment is tied to allowed versus actual revenues, so that, too, could go either way in future filings.
Beginning July 1 the AFOR will also include an annual earnings review and potential rate adjustment based on PacifiCorp's overall earnings in its Oregon jurisdiction for the previous 12 months. The initial return on equity benchmark will be set at 10 percent and updated annually for each earnings review. If PacifiCorp's earnings are more than 250 basis points above or below the ROE benchmark, the company will make an earnings band adjustment.--Jude Noland
Three Montana state legislators have received the Northwest Energy Coalition's Bob Olsen Memorial Conservation Eagle Award for their leadership roles in the passage of three new Montana energy laws this year.
"The Northwest Energy Coalition is delighted to recognize three of Montana's finest legislators for their efforts in sponsoring legislation that will protect consumers and the environment during and following utility deregulation," said NWEC chair Deborah Smith in a news release.
Sens. Steve Doherty and Jon Ellingson and Rep. Ernest Bergsagel were honored for their work on legislation allowing formation of statewide small customer buying cooperatives and net metering for renewable energy resources, and clarifying the administration of universal systems benefits programs outlined in Montana's original electric restructuring act. (See Con.WEB, April 30, 1999, for more information on these bills.)
"We cannot build a sustainable economy which provides good jobs and a healthy environment without much greater reliance upon clean sources of power," said Ellingson in the news release. "Montana has taken the lead in providing incentives for investments in clean, renewable energy."
Central Electric Cooperative in Oregon has received the Renewable Energy Enterprise Award from Northwest Environmental Advocates for its retail green power marketing initiative.
Redmond-based Central Electric has signed up more than 3 percent of its total customer base in support of green power from the Coffin Butte landfill-gas energy project near Corvallis, according to a news release from Pacific Northwest Generating Cooperative, which manages Coffin Butte. "Compared to other green power programs around the country, that's a very impressive sign-up rate," said Al Gonzalez, Central Electric president and chief executive officer. "It shows that, given enough information, many customers are willing to support energy programs that are self-sustaining and make a real difference for our environment."
Central customers can buy green power in blocks as small as 100 kilowatt-hours per month, at a price 1.8 cents per kilowatt-hour more than the regular 4.85 cents/KWh rate, according to Central's Web site.
"Central Electric's green power program is innovative and action-oriented, and it's full of lessons for other companies," said Eugene Rosolie of Northwest Environmental Advocates.
An unregulated subsidiary of Idaho Power's holding company has bought a majority interest in Northwest Power Systems, an Oregon-based company developing small-scale fuel cell power generation components and systems.
"IDACORP will provide Northwest Power Systems with capital and an entrée to the electric utility industry," Northwest Power Systems president Alan Guggenheim said in a news release.
"The addition of Northwest Power Systems fits into IDACORP's strategy of investing in quality renewable energy technology companies," said IDACORP Technologies president Roger Breezley. Other such companies under the IDACORP umbrella are Applied Power Corp., Ascension Technologies, Alternative Energy Engineering Inc. and Solar Electric Specialties.
IDACORP Technologies, a new subsidiary of IDACORP, was recently formed to consolidate and lead the company's research, development and marketing of renewable energy technologies, including solar photovoltaic and fuel cells, according to the news release.
Founded in 1996, Northwest Power Systems has developed a fuel processor that generates pure hydrogen for use in proton exchange membrane (PEM) fuel cell power systems, which generate electricity through a chemical reaction. The company also manufactures and sells fully integrated PEM fuel cell systems of up to 10 kilowatts capacity. It has contracted with Bonneville Power Administration on a prototype 5-KW PEM fuel cell system (see Con.WEB, Feb. 26, 1999) and in late May announced a $3.5 million contract with BPA for development of 110 fuel cells (see story above).
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California's three major investor-owned electric utilities spent $222 million to achieve first-year savings of 69 average megawatts of electricity and 240 million therms of natural gas during 1998.
Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric have filed their complex reports on the results of demand-side management programs for 1998. The detailed reports serve as the basis for incentive earnings claims that are parsed out over several years according to a complicated formula adopted by the California Public Utilities Commission. Aside from first-year results for 1998 programs, the applications also provide incentives claims for the second installment of 1997 programs and third installments for 1994 programs, adding to the complexity of the earnings claims.
By and large the utilities claimed big savings for their 1998 programs, even though Pacific Gas & Electric and Southern California Edison did not spend all the money for DSM that had been authorized. Both Edison and San Diego Gas & Electric said they exceeded regulatory caps on their earnings claims for 1998.
Generally, non-residential DSM captured the biggest program budgets and savings. Also included in the utility expenditures were low-income efficiency programs, which generally are less cost-effective but also produced notable savings and incentives for the utilities.
Following are 1998 program highlights:
The utility seeks $10.45 million in first-year incentive claims for its 1998 programs as well as $6.7 million for the 1998 savings achieved by pre-1998 programs.
Although it calculated $8.37 million in energy efficiency awards, Edison is capped at $8.1 million for the year, plus $243,000 in low-income program incentives. The utility also asked for CPUC approval of $16.2 million in shareholder incentives for the second year 1997 programs and $5 million for its third claim for 1994 program savings.
While it claimed a total of $6.23 million in incentives for 1998 energy efficiency programs, SDG&E has a cap of $3.79 million. It asked for approval of $3.32 million in electric and $462,000 for gas programs plus $143,913 for low-income programs for 1998.--Arthur O'Donnell
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