CWEB.068/Aug.30.2001
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After largely discontinuing conservation programs in the late 1990s, Idaho Power has raised the idea of a special customer surcharge to fund reinvigorated energy-saving initiatives.
Idaho's largest utility has proposed a so-called tariff rider to generate about $2.6 million annually for conservation programs in all its customer classes. That would nearly double Idaho Power's current spending for ongoing energy efficiency ventures, primarily its participation in the Northwest Energy Efficiency Alliance.
The tariff rider and 15 options for conservation measures for residential, commercial, industrial and irrigation customers are part of a July 31 Idaho Power filing to the Idaho Public Utilities Commission. It responds to a May IPUC order for the investor-owned utility to craft a comprehensive demand-side management program. "It really is more of a compliance filing than an actual demand-side management plan," said Idaho Power's Betsy Galtney. She called it "very much a working document," and emphasized that the utility needs IPUC direction on further action.
The IPUC is accepting comments on Idaho Power's filing through Sept. 21.
Idaho Power's filing also notes a particular conservation challenge. A June survey of 1,200 randomly chosen customers spread among all sectors found majority support for energy efficiency incentive programs, but also majority dislike of slightly higher rates to pay for such ventures, the utility reported. "Idaho Power faces a dilemma--how to provide a meaningful level of conservation programming while avoiding rate impact concerns raised by its customers?"
Changing Times
Idaho Power basically eliminated its conventional energy efficiency programs in the late 1990s for financial reasons, as its conservation spending dipped from $6.2 million in 1995 to $2.9 million in 1998 and below $2 million in subsequent years.
"In 1998, Idaho Power discontinued all remaining demand-side management (DSM) programs that relied on deferred accounting of program expenditures for future recovery," the utility's 1999 conservation plan reported (see Con.WEB, May 28, 1999). "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." In 2001, Idaho Power expects to spend about $1.5 million for ongoing efficiency programs, of which nearly $1.2 million is earmarked for the Alliance. The utility's efficiency spending came to almost $1.4 million in 2000 and about $1.7 million in 1999.
But times have changed, the IPUC said in a May 1 ruling granting Idaho Power an energy surcharge to raise customer rates: "The Commission believes that reinstating a comprehensive conservation program is now appropriate given the current volatility of market prices and the opportunity to incorporate long-term conservation." Commissioners directed Idaho Power to prepare a thorough conservation plan with a program structure, would-be conservation measures and potential funding means, including a customer surcharge.
Pay Now or Pay Later
Idaho Power's filing outlines two ways to fund energy conservation programs: pay now or pay later. The IOU prefers the present. "Deferral of expenses for later recovery has proven to be unsatisfactory in practice and the Company is not supportive of practices that transfer liabilities from one generation to the next. The carrying costs of deferrals is also a negative factor, since it compounds the ultimate cost to customers," the filing reads, noting the utility's current DSM balance of more than $29 million.
"Consequently, Idaho Power considers a recovery of future DSM expenses as they are incurred as the only viable funding option," the utility states. "Funding that is stable and predictable preserves continuity in the promotion and support of energy efficiency while eliminating concerns about budgeting, accumulation of regulatory assets and uncertain regulatory treatment of conservation costs."
Idaho Power's proposed conservation surcharge, known as a tariff rider, would be collected from all retail customers for two years, on a cents-per-kilowatt-hour basis. It would accumulate about $2.6 million annually, equalling 0.5 percent of the utility's operating revenues. This would come in addition to current conservation spending. The utility's 2001 budget includes the $1.5 million earmarked for the Alliance and low-income weatherization; the filing also cites an additional $760,000 committed to conservation advertising and other efficiency-related activities, raising the total to about $2.25 million, or slightly more than 0.4 percent of revenues.
"The Company anticipates that this level of expenditure [almost 1 percent of revenues] would provide a meaningful level of conservation activity while avoiding rate impact concerns by customers," the filing states. Average residential rates would rise 28 cents per month with the proposed surcharge.
Proposed Conservation Measures
In addition to the tariff rider, Idaho Power outlined a laundry list of potential conservation measures, with an overall purpose "to promote the efficient use of electrical energy by providing customers with access to information, products and financing which will assist them in making energy efficient decisions and investments."
The 15 options span all customer sectors, although most funding would be allocated to commercial/industrial ventures (45 percent) and residential programs (40 percent). The utility pledged to focus on "the special needs of each customer segment." Projected total resource costs per program range from 0.6 cents/KWh to 4.9 cents/KWh.
"They're measures that our Customer Solutions Department has come up with," said Galtney. "These are probably the best and brightest programs in terms of benefits for customers. For every [customer] class that contributes to the rider, we're committed to having programs available, should the commission decide" in favor of Idaho Power's approach.
Residential: "The potential residential measures were selected based upon existing regional programs, seasonal system load reduction, ease of implementation, and partially in response to the Commission Order requesting the Company to consider providing assistance to customers in the highest block rate," the filing said. Specific ideas are compact fluorescent lamp coupons, Energy Star appliance promotions, rebates for high-efficiency air conditioners and heat pumps, and weatherization loan buy-downs. Additional options include duct sealing, new construction "market-pull" measures and low-income ventures.
Commercial/Industrial: "The commercial measures include both menu driven and customer driven opportunities (similar to the industrial sector) and could target specific markets, for example, schools. Idaho Power anticipates that industrial efficiency measures will be structured for maximum customer flexibility and participation where customers may propose and manage all efficiency efforts while the utility will review and approve proposals to ensure eligibility," according to the filing.
Idaho Power specifically lists a commercial CFL coupon venture, VendingMi$er installations, incentive programs for light-emitting diode (LED) traffic lights, lower energy use through fans and the BacGen wastewater treatment process, and Plug and Play commercial/industrial lighting retrofits, building tuneup and maintenance, and small commercial/industrial retrofits. Customized projects also could be part of the mix.
Irrigation: "Irrigation sector measures have been based upon customer characteristics and experience in the Company's previous Agriculture Choices program," according to Idaho Power. Two potential ideas are a retrofit venture for existing irrigation systems and another initiative targeted at new irrigation system efficiencies.
These program ideas are preliminary in nature, noted the utility's filing. "Final selection of measures to be funded would be made after recommendations are received from the [proposed] Energy Efficiency Advisory Group . . . and upon further refinement of measure costs, savings and design." Cost-effectiveness would determine priorities, according to Idaho Power. Other selection criteria include providing services to all sectors and leveraging Alliance and other resources to improve cost-effectiveness.
Idaho Power believes its proposed program approach "would provide a dynamic environment for the development and delivery of energy efficiency measures that are successful in their goal of conservation, flexible in terms of measure selection and implementation and in sync with the Company's Integrated Resource Plan. At the same time the concept would reduce the number of tariff filings and revisions usually associated with DSM programs while presenting an easy to understand and cohesive conservation philosophy to the public."--Mark Ohrenschall
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An ambitious broad-based program to increase energy efficiency in commercial buildings is to be launched by the Northwest Energy Efficiency Alliance.
The Commercial Buildings Initiative will incorporate both new and existing Alliance ventures into an effort to make efficiency standard practice in this energy-consumptive sector (office and retail buildings account for more than 10 percent of regional power use).
The Alliance board of directors adopted a CBI strategic plan at its July 11-12 meeting in Whitefish, MT, along with an initial budget of up to $5.8 million. This venture could eventually cost up to $30 million through 2004, encompassing all Alliance programs involving commercial buildings.
Planned elements of the Commercial Buildings Initiative cover marketing and communications, connecting decision-makers with energy-efficient solutions, development of specific strategies for targeted markets, education/training/technical assistance, promotion of new business and technology options, and support for energy codes and standards.
An underlying theme is energy efficiency as a business advantage.
"This is a leading-edge approach to energy efficiency," said Dave Hewitt, manager of the Alliance's Commercial Buildings Initiative. "We're trying to build the business case for high-performance buildings to illustrate the many reasons the commercial building market ought to incorporate energy efficiency. We're not just talking simple payback and financial benefits. We're talking about the broader benefits of having improved control systems that deliver more comfort, lighting systems that work better with people looking at computer monitors . . . daylighting strategies that lead to improved productivity in retail sales and schools.
Hewitt anticipates that major aspects of the Commercial Buildings Initiative will be in place by early 2002, some earlier.
In addition, the Alliance board in Montana also endorsed funds for two new projects--the first approved through the unsolicited proposals process--as well as continued financial support for Con.WEB.
Commercial Buildings Initiative
The Alliance in early 1998 launched the Efficient Building Practices Initiative, a $6 million-plus venture that includes a public information campaign and the BetterBricks.com Web site. This has been the most comprehensive of the Alliance's eight commercial-sector ventures.
With EBPI funding expiring this year, the Alliance last fall began planning "to establish a long-term strategy for Alliance market transformation activities in commercial sector markets," according to an Alliance summary document.
The main question, according to Hewitt: "Given what we know now, how do we go forward in the commercial building market?"
Market research since 1998 served as a valuable tool as the Alliance developed its Commercial Buildings Initiative. These various analyses led to a number of principles, including connecting efficiency to market values, relationship-based marketing over general advertising, an acknowledgement of this sector's complexity and the need for equally complex program strategies, and the importance of institutionalizing efficiency in the development and operation of commercial buildings as well as by decision-makers.
The Alliance crafted four goals to pursue through the CBI: increase the awareness of and build demand for energy efficiency in terms the market understands and values; develop and disseminate information to market decision-makers that is credible, reliable and useful; build and maintain the capability to deliver efficient products and services in the marketplace; and standardize energy efficiency as part of normal practices within the market.
Six Efficiency Pieces
Also created were six specific strategies for transforming the market.
"On top of everything," Hewitt said, "We are trying to develop an overall marketing and communications strategy, directed as a business-to-business approach." Previous EBPI marketing focused on employees, but the Alliance now will target the people in charge of commercial buildings. This aspect will incorporate and expand BetterBricks as the future brand name for information provided by the Commercial Buildings Initiative.
Another part, known as "Market Connections," will furnish efficiency information regarding commercial buildings, through a help desk, advisors and a Web site. "We want the market to view BetterBricks as a valuable information resource," said Hewitt.
The CBI also will pursue a better understanding of target markets, such as large retail outlets, schools and grocery stores. The idea is to "figure out how energy efficiency can help them do better in their business, and present the energy efficiency story in their language," according to Hewitt.
Education, training and technical assistance will primarily come from existing Alliance commercial-sector ventures, such as the Lighting Design Lab, Energy Ideas Clearinghouse and Building Operator Certification.
A fifth element is titled Efficient Business and Technology Solutions. "We're trying to bring new ideas into the marketplace," said Hewitt. One is daylighting for commercial buildings, which generally isn't a design strategy in the current market. The Alliance plans an expanded daylighting initiative, and also is looking to promote more building commissioning. Other potential focus areas are energy-efficient operations and maintenance, lighting and HVAC systems, commercial equipment loads and integrated design.
The sixth piece covers energy codes and standards. Hewitt called this "a continuation and expansion of existing efforts within individual states for improved building code development practices. Our job is not to change regulations, but present evidence on the benefits of enhanced standards."
The Alliance has not attached an energy-saving goal to the Commercial Buildings Initiative, but Hewitt expressed confidence that the overall venture will prove cost-effective.
With board approval of the strategic plan and a $5.8-million budget for new CBI activities through 2002, "I'm expecting to roll out all the major elements of this project by January or February of next year," said Hewitt. "A number of individual pieces will come out before that." Existing Alliance commercial-sector ventures will continue with little change in the near future, he noted, although modifications are possible over time.
Other Project Funding Decisions
In addition, the Alliance board in Montana also approved funding for three ventures, two of which came in through the Alliance's unsolicited proposals process.
EZConserve Surveyor Software allows for strategic energy management of networked personal computers, including remote enabling of ENERGY STAR efficiency features. Personal computers account for 7 percent (and growing) of office electricity use, according to the Alliance, but fewer than half of commercial PC users enable energy-management features. EZConserve plans to install more than 450,000 units of this product in the Northwest by 2010; potential savings by then could reach 9.3 average megawatts. This project was approved for up to $750,000 through 2003, contingent on EZConserve's acquisition of a like amount of funding from other sources.
The Alliance board also agreed to provide $200,000 over three years in support of a soil moisture data-logger product to foster the spread of energy- and water-saving scientific irrigation scheduling. This product is touted as a simple and inexpensive tool to help farmers begin irrigation scheduling, and is seen as particularly cost-effective with low-value crops. Potential energy savings are 4.8 aMW by 2010.
In addition, the Alliance board approved $160,000 a year for three years in continued funding support for the Con.WEB newsletter you are reading. --Mark Ohrenschall
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| Courtesy of Bonneville Environmental Foundation |
The Internet offers countless buying opportunities--including, now, a novel way to support renewable energy.
Bonneville Environmental Foundation recently launched a Web site enabling individuals to buy green tags, which represent the environmental benefits of designated renewable resources. Revenues from green tag sales help fund BEF investments in new renewables.
The Portland-based non-profit foundation has made green tags available to businesses since last year, and numerous Northwest utilities--14, according to the Renewable Northwest Project--offer retail green power programs. BEF's latest twist allows individuals to financially contribute on their own to new renewable energy and a greener power supply.
"What you are doing is taking the activities you are currently involved in and you're taking an [environmental] action by buying the green tag," said BEF marketing director Pam Field. "In essence . . . you're actually greening those activities." The foundation's Web site includes a carbon dioxide calculator by which people can figure their approximate CO2 emissions from electricity use, home heating and travel by automobile and airplanes. They can then buy green tags to offset those emissions.
"We think it's really important that individuals and small businesses that are interested in supporting new renewable energy facilities have the ability to do that, and that it's offered in a way that has the endorsement of the environmental community . . . and offers them a product with a very high level of integrity," said BEF vice president and renewable energy programs director Rob Harmon.
As of mid-August, green tag buyers were signing up at the rate of about one per day, according to Field. BEF plans a promotional campaign beginning in earnest in early September.
Renewables Supply and Demand
Bonneville Environmental Foundation works both the supply and demand side of renewable energy.
The foundation, created in 1998, has funded four solar-power projects and 13 watershed restoration initiatives, according to its Web site.
In 2000 it inaugurated green tags. BEF president Angus Duncan has described these as "basically green power without the transmission path, and without the fiction of actual green power delivered to your house. You buy an environmental improvement in the mix of electricity that's coming into the grid." BEF offers green tags as the environmental attributes from wind, solar, geothermal, biomass and low-impact hydro projects around the Northwest, acquired from Bonneville Power Administration and other suppliers.
In the past year seven entities have signed up for BEF green tags: five businesses, one non-profit group and an investor-owned utility (see Con.WEB, April 30, 2001, for a story on three Puget Sound-area businesses that committed to 100-percent new renewables via green tags).
Individual Market
BEF also discovered a potential green tag market among individuals. "As we started talking to businesses, individuals were saying, 'How can I do this? . . . I really want to green my electric use and I don't have a way to do that,'" said Field. This interest became especially apparent in areas without utility green power programs.
Individual green tags cost $20 apiece per year (minimum purchase is two) and the expense can be a tax-deductible charitable contribution. "The money you pay to BEF goes first to cover any higher costs of the cleaner renewable power," reads the foundation Web site. "Any remaining net revenues are then reinvested in the next generation of renewable energy." Each green tag equals 1,000 kilowatt-hours, according to Field. These tags are now derived from the Foote Creek Rim wind project in Wyoming; other wind and solar ventures under development are anticipated to join the portfolio.
BEF may eventually consider going outside the region for green tag resources, "especially if we get a lot of customers elsewhere," said Field. "Right now our focus is on the Pacific Northwest."
BEF has already sold green tags to people from Vermont, Missouri and California since the program's debut in July, according to Field. "It's just very random right now," she said. BEF plans to spread the green tag message through such means as press releases, localized advertising and collaborations with environmental, work, church, civic and other organizations.
"We see this as a good tool to educate folks," said Field. "If a group embraces this [green tag] idea and starts sending people [to BEF], the first layer would be to help them understand the issue." The BEF Web site provides a thorough question-and-answer section on electricity, renewable energy, environmental impacts and green tags, along with the CO2 calculator.
"Once they understand the issue, each individual can make an impact on CO2 and air pollution and global climate change," she said. "One by one, people will start taking action. Our research shows that people are very aware of environmental issues and they are willing to take action as long as the action is easy. Hopefully, this is."
Field called this "a very exciting time for Northwest renewable energy . . . so many good things are happening." Since January, she noted, BEF green tag sales have exceeded the output of five wind turbines at Foote Creek Rim. --Mark Ohrenschall
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Energy imbalance charges scheduled to take effect when RTO West takes control of the Northwest power grid in 2003 may create a special problem for operators of intermittent, non-dispatchable generating resources such as wind power.
These imbalance charges potentially could drive wind-farm owners out of business in a matter of months, and with Northwest wind resource capacity anticipated to rise to 1,450 megawatts in 2003, concern is growing.
Consequently, regional buyers and sellers of existing and prospective wind plants have formed a collaborative to achieve 90-percent wind forecast accuracy within two years in the mid-Columbia River Basin. In addition, a new effort is in progress to develop up-to-date, high-resolution wind maps for the Pacific Northwest.
Balancing Energy Deliveries
Regional wind-power stakeholders are working to improve short-term wind forecasting as a means to address a potentially serious new obstacle for the burgeoning industry.
Under Federal Energy Regulatory Commission transmission rules adopted by RTO West, wind generators and the transmission owners that serve them face separate imbalance charges in real-time markets if generation falls outside scheduled levels. On hot days with little wind, the imbalance price can soar, potentially creating huge financial losses for utilities and wind-plant operators that cannot meet their schedules. As an intermittent, non-dispatchable resource, wind is particularly vulnerable to these charges.
"The risk [of incurring the imbalance charges] is punitive enough that they could go out of business in several months, or be forced to schedule so conservatively that they could not get a rate of return to meet their financing commitments," said John Pease Jr., a project manager in Bonneville Power Administration's renewables group.
Imbalance charges are triggered if a generator's deliveries fall outside a tolerance band equal to 1.5 percent of their bid or 2 MW, whichever is greater. The cost for underdelivery is 110 percent of the highest hourly price that month; overdelivery yields a payment of 90 percent of the cheapest hour. "Both sides are punitive," Pease noted. Margins are also shaved when generators must rely on backup resources to meet schedules.
With an estimated 1,450 MW of wind generation coming online in the Northwest in the next 2-1/2 years, BPA, Portland General Electric, Pacific Power Marketing and others have been investigating the implications for system reliability, operations and costs. Imbalance charges emerged as a significant issue.
Pease said wind developers ought to be concerned: "They know about it, but there is this kind of a hoping it will somehow go away." On the plus side, he said, the region has two years before the RTO rules take effect, leaving time to develop the wind-forecasting model.
New Wind Forecasting System
In that vein, BPA, PGE and PPM are collaborating with regional wind developers, including SeaWest WindPower and Pacific Winds, to sponsor the three-year, three-stage Mid-Columbia Pacific Northwest Wind Energy Forecasting System. The idea, said Pease, is that "if you can predict wind in the next hour or day ahead, you'll be better able to aggressively schedule to maximize the energy in that hour."
The goal is to predict wind levels with 90-percent accuracy within two years, and thus have a "good idea of how aggressively we can schedule these wind plants," avoid imbalance charges and minimize the use of backup resources.
The project consists of a meteorological model that will predict wind in the rough geographic triangle formed by The Dalles (OR), Hermiston (OR) and Kennewick (WA), along the midpoint of the Oregon-Washington border. Predictions will first be made for the 25-MW-capacity Vansycle Ridge wind farm near Helix, OR--the only wind plant with historical data. These predictions will cover the next hour and 12-, 24-, 48- and 72-hour periods.
The project uses a model and other systems developed by the Electric Power Research Institute, which has started similar forecasting programs in California and Texas. EPRI has also reported on European wind forecasting work from the early 1990s.
Pease said not much data has yet been created on the performance of wind forecasting, though he cited one Southern California Edison plant in Palm Springs that reduced imbalance charges from $22 million to $11 million after adding a forecasting model. EPRI's report of the European work said the performance of that model--which was applied to data from a wind plant in Minnesota--"was only slightly better than that of a simple persistence model," but performance would likely "improve significantly" by reducing the size of the grid studied.
Pease said that during the first year of the Northwest program, three groups will make separate predictions for the Vansycle site--the Risoe National Laboratories of Denmark, TrueWind Solutions of New York, and a team with members from Oregon State University and the University of Washington, both of which already have wind forecasting operations. Data will be routed automatically via EPRI to these groups.
Whichever group best forecasts wind and power output will then be asked to further refine and operate the Vansycle program for another 12 months, and do the same for the Stateline project and as many as six other large wind farms expected to come online by 2003. During the third year, further refinements will be made to include a real-time scheduling and dispatch wind-farm prediction system.
Wind Mapping
Meanwhile, a separate effort is under way to produce high-resolution, state-of-the-art maps of wind energy resource potential in the Northwest. Results would be publicly available in the form of maps, CD-ROMs and an interactive Web site.
"High-resolution wind maps attract developers to regions because they reduce the risk and costs of finding good sites," said Heather Rhoads-Weaver of Northwest Sustainable Energy for Economic Development (Northwest SEED). They also "help landowners and utilities make a first-cut determination of the feasibility of installing distributed wind turbines to supply power on-site."
Current wind atlases are based on old data and methods that may underestimate or overstate resources for specific locations, she added. To date, more than 65 percent of the $200,000 estimated budget for the project has been pledged from organizations such as BPA, Idaho Power and the Washington PUD Association. A number of other public- and private-sector organizations are involved in this initiative. --Ben Tansey
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This month's issue inaugurates a new Con.WEB section called News Bytes, offering summary coverage of selected energy conservation and renewable energy-related developments around the Northwest.
Featured this time are utility news, conservation numbers, awards, public opinion and more.
Con.WEB welcomes submissions for News Bytes; send information to editor Mark Ohrenschall: phone, (206) 285-4848; fax, (206) 281-8035; e-mail, marko@newsdata.com.
Utilities
In the realm of energy-efficient lighting:
Numbers
Awards
The Body Politic
A recent poll of Washingtonians found mandatory conservation to be the leading proposed solution to the energy crisis--although by only a tiny majority. The Elway Poll showed that 51 percent of respondents favored mandatory conservation and 41 opposed it, followed by relaxed environmental standards to build new power plants (48 percent yea-45 percent nay), building nuclear power plants (47 percent yes-46 percent no), decreased water for salmon (42 percent in favor, 45 percent opposed) and decreased water for agricultural irrigation (23 percent yes, 66 percent no).
At the same time, only 37 percent of respondents thought the energy shortage was real; 57 thought it "an attempt by energy companies to force higher rates on consumers." Noted pollster Stuart Elway: "Washington voters are a long way from coalescing behind any coherent state energy policy--or even strategy."
More News Bytes
These are the dog days of summer, and they have seemed a lot doggier here in Walla Walla than in Seattle.
I am sitting in my blessedly still air-conditioned office while the rest of the house continues to bake without air conditioning, waiting for the contractor to call with some good news about when the new HVAC system will be installed. Please, please . . . this week???
In a perfect world, I would be installing a geothermal, or ground-source, heat pump system that is 40-percent more efficient than a more traditional air-source heat pump. I would be reducing the size of the unit by changing out the rest of my aluminum-framed dual-pane windows for double-glazed, low-e, argon-filled high-efficiency vinyl-framed windows; upgrading the insulation in my walls, floors, ceilings and attic; and installing solar roof tiles.
I would also be researching installation of a new solar hot-water heater. In the meantime, I'd be putting in a drain water heat-recovery system that uses a gravity film heat exchanger--essentially, a vertical counterflow heat exchanger that extracts heat out of drain water and applies it to preheat cold water entering my hot-water heater.
And since we've been meaning to remove the carpeting upstairs anyway, we'd also be installing 'hydronic' or water heat in the floor of my office and my daughter's bedroom. We'd run this with a small heat pump, along with solar support from the roof tiles, and also use the heat pump for summertime air conditioning as we do now.
I'd also be taking this opportunity to upgrade my refrigerator to a super-efficient model, put in a new resource-efficient clothes washer and dryer (we've already upgraded the dishwasher), replace all our incandescent lighting with compact fluorescents, and install timers or motion sensors on all the outdoor lights.
Not-So-Perfect Choice
In this not-so-perfect world, however, I have opted for an efficient natural gas furnace with a variable-speed fan, two-stage burner and AFUE (Average Fuel Use Efficiency) rating of 96.6 percent, along with a new air conditioner with a SEER (Seasonal Energy Efficiency Ratio) rating of 12. I'll wait until my old water heater burns out (with my luck, this will be soon) before upgrading to a more efficient model. I like the idea of the gravity film heat exchanger, but I doubt I could find someone here who would install it--and I KNOW I wouldn't be able to install it myself. I am not exactly handy around the house.
I came very close to selecting the option many readers recommended as the most energy-efficient--the above-named natural gas furnace with an efficient heat pump. But the initial cost of the more efficient heat pump would have necessitated a delay in installing the natural gas furnace, and that made me reconsider. I kind of agreed with some of my advisors, who warned that putting in the heat pump now with the intention of doing the gas furnace later is a great idea in theory, but in practice, the furnace almost never gets installed. And I really didn't want to go through another winter with the heat pump and the existing electric backup furnace. So I went for the next most efficient/effective option.
Besides economics, another reason I chose this option is because it seems the simplest. Use the air conditioner in the summer, the furnace in the winter; no need to install special gauges to switch between a heat pump and gas furnace when the outdoor temperature makes one or the other more cost- and/or energy-efficient. I returned to my old standard, the KISS rule: Keep it simple, stupid: natural gas heat, traditional air conditioning.
That's also one of the reasons I crossed off the ground-source heat pump alternative--it just didn't seem to meet the KISS rule. Not only would one of these be expensive, it would require tearing up a lot of the yard--no doubt hitting either lawn irrigation pipes or phone lines in the process. In addition, the chances of finding someone locally who could install such a unit are pretty close to zero.
Energy Audit Results
I couldn't find anyone locally to perform an energy audit on my house, either. But thanks to the folks at Portland General Electric, I finally did get that energy audit and discovered a few other things I need to do--short of moving, that is.
The options for improving the efficiency of our house, built in 1980 to state energy code standards, are somewhat limited. We did get some good news: other than one duct that needs a little additional taping, the duct work is nice and tight--no leaks. But we have cathedral ceilings in parts of the house that cannot accommodate additional insulation; we'll have to wait until the roof needs replacement (probably sooner than later) and install some rigid board insulation under the new roof.
In addition, we have a tongue-in-groove wood ceiling that has no Sheetrock above it, so it accounts for a lot of air leakage. Again, improvements will have to wait until the new roof. We also found a lot of air infiltration around the fireplace; the brick facing that runs up to the cathedral ceiling leaks all along the edges and needs to be caulked somehow. There is also some crawl space to be insulated, plus some joists being used as ducts in the basement that need a bit more sealing along the edges.
Doors and windows are also surprisingly tight, and of course the payback on the window changeover would be about 64 years, so . . . until the seals go, they're staying.
We can't add more wall insulation, either, due to the 2-by-4 construction, but at least it's insulated to 1980s code. And while I installed foam insulation in some of the wall outlets, the auditors advised putting gaskets in the rest of them as well--even interior walls. I'd love to replace all of our obnoxious can lights--not only do I find them aesthetically offensive, but they are also very leaky. They are old fixtures, however, and can't be retrofit with insulation; to replace them would be cost-prohibitive. We'll just have to live with those leaks for now.
Where's The Energy Info?
It would have been nice to know all these energy efficiency deficiencies before we bought this house. Now that we've lived here for three years, we're used to its idiosyncrasies, we love the view, and we've made enough improvements that we really don't want to move again right now. But in retrospect, would we have bought this house if we had known all of its energy efficiency limitations? I can't say for sure, but I'm guessing it probably would have affected our decision.
And why wasn't that kind of information available to us--for that matter, why can't all prospective home-buyers get energy consumption data for a house before they make a purchase decision?
Admittedly, at this point there probably hasn't been much outright demand for it. But as electricity prices rise throughout the region, it seems to me this kind of data will become more important to consumers. If a home buyer knew ahead of time that the operating cost of one home would be significantly higher than the operating cost of a similarly priced home, it's likely he or she would purchase the more efficient home. Lenders could offer better mortgage rates or allow smaller down payments for such energy-efficient homes, too. (Gee, that sounds familiar . . . didn't some banks offer just that sort of deal in our more efficiency-conscious recent past?)
Market Transformation Opportunity
This seems like a perfect opportunity for some market transformation activity. Stimulate demand for more efficient housing (and the equipment and services needed to produce such housing) by providing consumers with energy efficiency information on houses--like the yellow-and-black energy guide labels on my new air conditioner and furnace. Perhaps one of these could be posted on the front door of the house.
OK, OK, I know the argument--that's not what home-buyers care about; it's curb appeal and location, location, location. But, then again, has anyone really promoted this concept--I mean, outside the fairly narrow demographic of manufactured-home buyers? How do we know home-buyers don't care if we haven't offered it? Or if they don't even know it's available in the first place?
And don't forget that time-honored marketing concept of creating a need for a product. Look at what advertising has done for those so-called energy drinks, cell phones and manicures. It's time for the energy industry to jump on the bandwagon and do some promoting, too. No one can live without the basic service it provides--electricity--but given the current energy supply and delivery situation, everyone could use it a bit more wisely.
It's too bad Pepsi has already signed up Britney Spears as its spokesperson.
Or maybe not.--Jude Noland
If there is any good news at all to come from the past year of energy crisis and chronic emergencies in California and the Western United States, it is that conservation and energy efficiency are once again priorities for customers, utilities, system managers, regulators and lawmakers.
Now if we can only align demand responses to the marketplace, we might be more than halfway to resolving the continuing crisis.
Fundamental Problem: California Can't Say No to High Prices
While others tend to blame high energy and fuel costs on out-of-state profiteers wielding their market power like a sword against hapless consumers, I take a fundamental approach to diagnosing the problems with the system.
A competitive bidding system designed to accommodate surplus capacity encountered resource deficits due to demand growth, aging infrastructure and competition for available power from buyers across the Western region--who themselves faced the same problems of greater demand from a rising population and increasingly obsolete facilities. That provided an opportunity for capturing profits based on scarcity and playing the obvious flaws in the system.
Power prices went so high (and remained there) only because someone was willing to pay the price. That someone was initially the California Independent System Operator, which was hard-wired with the objective of keeping the lights on at any cost.
During the worst of the winter emergencies, California ISO was in competition with buyers from the Pacific Northwest, and a review of regional pricing during that time will attest to the fact that Mid-Columbia power prices were frequently higher than those at the California-Oregon Border. Now that summer heat is upon us, Southwestern buyers are the ones willing to pay premiums--despite new regional price caps set to favor California.
When the California utilities fell off their financial pedestal and the state Department of Water Resources took on the role of default power buyer, it also assumed the deep-pockets position of being willing to pay whatever price was necessary to maintain power flows. Panic buying and an obvious lack of trading skills put DWR staff at a disadvantage in the competition for scarce resources. The demise of the California Power Exchange disrupted the underlying premise of "marginal price bidding" in the marketplace and eliminated the crucial mechanism for price transparency--with the side effect of pretty much killing off direct-access service alternatives for end-use customers, thus ballooning the "net short" position that needed to be met by DWR and the ISO each hour.
We are only now beginning to see what the price tag was, with the court-ordered release of $43 billion worth of long-term contracts and an initial report on DWR's first $7.6 billion in daily power purchases that was revealed in June.
An unhealthy situation, to be sure. But rather than blaming power sellers for manipulating the market or for price gouging, I believe that the fundamental problem was California's inability and unwillingness to say no to high prices.
Market Power
If you want to put it in terms of "market power," try this approach. In a supply-demand imbalance, market power shifts to sellers, unless there is countervailing buyers' power in the form of conservation and demand responsiveness.
When California established its power marketplace, it was presumed there would be a regional capacity surplus for the duration of the transition period (defined by law as the retail rate freeze for stranded-cost recovery purposes).
All the market power on the buyers' side was shifted to the daily spot power auctions conducted by the Power Exchange, which was established and designed to artificially drive energy commodity prices to the level of some hypothetical system marginal cost.
Other possible demand responses, including energy efficiency programs and even customer choice via direct access, took a backseat to this goal. Though utility demand-side management programs continued at pre-restructuring funding levels, there was no great push by regulators to make sure the utilities were even spending the money as planned. Goals changed from demand reduction to an ill-defined "market transformation" concept that never took hold.
Direct access, in retrospect, pretty much died at birth, the victim of halfhearted regulatory support and a hundred picayune fights between utilities and energy service providers. Without any real incentive to stay in the market and a limited chance for success, ESPs fell away in droves, and most cast their customers back to the utilities at the first signs of economic distress.
Even those few companies that remained committed to the goals of selling green power and offering new alternative services, Green Mountain and NewEnergy among them, could not withstand the market disruptions and regulatory hurdles.
Other possible strategies for allowing customers to achieve energy independence, such as distributed generation and net metering, fell into a regulatory morass. It has taken emergency legislation and executive orders to restore these options at all, and what has come out of the California Public Utilities Commission seems less than optimal for realizing their potential.
Conservation Fervor
And yet, Californians are now conserving energy with a fervor not seen since the energy crisis of the 1970s.
Data from the California Energy Commission indicate a steady and general decrease in energy consumption each month this year compared to last year.
The decrease in actual metered load for the ISO shows modest success compared to the year 2000, but when the figures are adjusted for weather and economic growth, they portray a fairly dramatic response for reductions in both total energy consumption and peak demand (see chart).
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That translates to as much as 5,500 megawatts cut from peak demand, and I believe it can be credited (along with a few other factors, such as 2,500 MW of cuts by Northwest aluminum smelters) with preventing California from tipping over into the daily Stage Three rotating outages that were widely predicted as recently as six weeks ago by the North American Electric Reliability Council.
Data Prove Conservation is Real
Even if you believe that the "adjustments" for weather and economic activity are suspect, done only to inflate the success rates and to make Gov. Gray Davis seem like he is doing something positive, the actual metered-load data prove that conservation is real. The consumption decrease went from 1.1 percent in January to 8.3 percent for the reported period in June, with some ups and downs along the way but clearly improving.
As time goes by, there will be further research into the raw numbers and a better understanding of the effects on system reliability and motivation of consumer responses. In the meantime, I offer some observations.
Much of the incentive to save energy is economic, not altruistic. The retail rate freeze that came along with restructuring was a well-intentioned mistake that prevented proper pricing signals to alert customers and regulators to a growing problem with the design of the market structure.
The utilities were well aware of the disparity between wholesale costs and retail rates, but regulators and lawmakers hesitated to allow any increase in the rates to consumers because of the political backlash that was so apparent in San Diego Gas & Electric territory last summer.
When prices rose in San Diego last May, energy use dropped. When rate caps were reimposed by state law, conservation was cut in half, according to SDG&E officials. Economists found that "a doubling of price led to a 2.2 percent to 7.6 percent drop in demand" as well as valuable load-shifting by San Diego households.
When the CPUC finally enacted a "temporary" rate surcharge in late March, there was a demonstrable increase in conservation activities in the rest of the state. The tiered rate hikes later enacted are only now translating into customers' bills, but they will likely continue the trend because they even more closely link the concept of saving power with preventing higher bills.
Bolstering Demand Side
This should be the first step in bolstering the demand side of the market-power equation. The high-price disincentives should be backed with beneficial savings incentives--perhaps the governor's 20/20 program will prove to be one such approach for individuals able to outpace the statewide averages (as of mid-July, 29 percent of Pacific Gas & Electric Customers, 31 percent of Southern California customers and 38 percent of SDG&E customers had qualified for 20-percent rebates by reducing power usage at least 20 percent).
Although traditional customer curtailment programs were nearly destroyed through overuse last summer and this past winter, California ISO and the utilities are beginning to replace them with better-constructed plans that tie demand response to price signals rather than to preset contract discounts. Finally, the CPUC has moved on guidelines and rules to encourage backup generation, distributed resources and net metering for renewable resources--all things that should have been a priority four years ago but were not.
High prices and the threat of blackouts have elicited new technologies, such as the Power-Pact advance-warning and automated load-shedding program that recently got its first serious road test. Finally, there is a widespread push for the use of real-time meters, although without a formal price-setter such as the Power Exchange, there is a hurdle to full implementation.
Few of these things would have happened absent the crisis of the past year. If California's attempt to create a truly competitive market for energy survives (and is not subverted by those who want a complete state takeover of the system, or derailed by the continued push for strict wholesale price caps and cost-based regulation), I hope and expect that these demand-side components will provide us with the proper tools to restore balance in what has become a dangerously destabilized system. --Arthur O'Donnell, California Energy Markets
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