A SERVICE OF ENERGY NEWSDATA

Con.WEB

Pacific Northwest Energy Conservation & Renewable Energy Newsletter

FINAL EDITION: CWEB.008/August.29.1996

Special Update

Regional Review Steering Committee Proposes $210 Million
Annual Program for Northwest Conservation/Renewables

A $210 million annual program for energy conservation and renewable energy in the Pacific Northwest has been proposed by the Regional Review Steering Committee as part of its draft restructuring proposal. The proposal--which emerged from last week's marathon committee meeting in Portland--relies heavily on voluntary funding commitments by electric utilities around the region; two-thirds of the $210 million would be collected and spent locally on energy-saving projects. The remainder, $70 million, would be earmarked regionally for conservation market transformation ($30 million annually) and renewable energy activities ($40 million). The proposal includes a five-year review and a 10-year sunset. Described as a compromise with considerable consensus support from steering committee members, the conservation/renewables design--along with other elements of the restructuring proposal--will be subject to a public-comment period this fall. A more detailed account follows.

IN THIS last full month of summer, we bring you a number of sunny stories about Northwest energy conservation. The news is particularly good in market transformation: the proposed regional collaborative is coalescing toward a potential January start, while the regional compact fluorescent lighting program reports strong initial sales of low-priced, high-quality CF bulbs-at least in urban areas around Puget Sound. Meanwhile, a survey by the Oregon Municipal Energy and Conservation Agency (OMECA) found considerable utility activity (and interest) in financing programs for energy efficiency, a finding that bodes well for local conservation. Also, the Resource Conservation Manager program has spawned a number of successors beyond Oregon schools. And, for some historical perspective, we summarize a Washington State Energy Office report that shows the Evergreen State has grown significantly more energy efficient since 1970.

Enjoy this issue, and the rest of your summer. And please share with us any comments via [marko@newsdata.com] e-mail.


[ IOD | Con.WEB Archives | NW EnerNet ]


In Con.WEB this month. . .

SPECIAL UPDATE
Regional Review Proposes Conservation/Renewables Package Deal

MARKET TRANSFORMATION
Regional Collaborative Moves Closer to Reality
CF Lighting Program Reports Brisk Sales
Gas Company Drops Programs; Markets Transformed

FINANCE
OMECA Survey Finds Extensive Utility Financing Programs

ENERGY SERVICES
Resource Conservation Managers Expand Beyond Schools

KEEPING SCORE
Washington Energy Efficiency Increases Statewide Since 1970

BRIEFS
More Northwest Conservation/Renewables News


SPECIAL UPDATE

Conservation/Renewables Package Deal

Regional Review Steering Committee Proposes $210 million
Annual Program for Conservation and Renewables

The $210 million annual conservation/renewables package proposed by the Regional Review steering committee represents a compromise between regional and local perspectives, as well as between the magic of the marketplace and the social responsibilities of the commons.

"It's like most compromises, probably unpalatable to some on both sides of the fence," said steering committee member Jim Davis of Douglas County PUD, who also co-chaired the Conservation, Renewables and Public Purposes Work Group. "I think it's a reasonable proposition in terms of serving the interest of the region . . . I think it's a starting point and may or may not be a final version depending on how the public in general perceives all of the pieces of the puzzle."

Steering committee member Rachel Shimshak of Renewable Northwest Project, the other Public Purposes work group co-chair, offered this summary: "I thought the entire [draft restructuring] package with all the issue areas is pretty good," she said. "It's definitely a good place to start and I think it is remarkable that the group could put it together considering all the various interests around the table." She described the conservation/renewables element as "a different way to do it than what is done today [so as] to accommodate a more competitive electric system. We tried to strive to recommend a system [that would be] competitively neutral and non-bypassable and apply to all market participants and would actually provide some meaningful" levels of energy savings and renewables development.

The proposed $210 million equals about 3 percent of total retail utility revenues in the Northwest (an estimated $7 billion per year). It would cost residential customers of investor-owned utilities an estimated average of about $1.90 a month, according to Shimshak. Some had advocated spending less--much less--on conservation and renewables, while others wanted to spend more--much more. "We had people on our work group who had the notion the market . . .will take care of it," said Davis. "Others were roughly double" the steering committee's proposal. "I'd say we ended up in the middle."

As an example of the compromises involved in reaching 3 percent/$210 million, steering committee member Ken Canon, representing Industrial Customers of Northwest Utilities, initially objected to that amount, stating it was twice as high as in the committee's earlier "strawman" proposal. But Canon came around after Shimshak and others agreed to support open customer access to power concurrent with the implementation of the conservation/renewables policies. She said she was also open to the idea that industrial customers could be credited for conservation spending in their own plants. "I think it's very important to balance the product the steering committee puts out," Shimshak said. "The industrial customers, in particular, believe that they will receive substantial economic benefits from direct access, for instance. It seems only fair that if you're going to have a substantial economic gain that you balance that with environmental gains."

In any case, the proposed $210 million spent regionally by utilities on conservation and renewables would be a substantial decline from recent years. In 1994, according to Tom Eckman of the Northwest Power Planning Council, regional utilities spent $332 million on conservation. The estimated 1995 total was $295 million. However, as Davis said, times have changed: "The problem with looking at historical comparisons is that we are in a new ball game in terms of market-driven values, and historical conservation has been driven by BPA (Bonneville Power Administration) budgets and the regional act and so on . . . The funding context is a very different one."

And, unlike prior regional programs for conservation, the committee's draft proposal contains no megawatt target numbers for energy savings. "We didn't talk about that," said Shimshak, although she added that the committee's goal is certainly to achieve conservation and renewables development.

Here's a breakdown of the proposal:

While the steering committee proposal essentially makes conservation voluntary for local utilities, it does include some accountability. This fall Northwest utilities collectively must demonstrate their commitment to the steering committee proposal; public utilities might do so through resolutions from their governing boards, investor-owned utilities through tariffs filed with their regulators. "We think a voluntary system could work, but people have to prove it," said Shimshak.

It is unclear exactly how the steering committee will determine sufficient commitment from utilities to make the proposal work, but Davis offered this assessment: "It'll be our best judgment, our best tracking and our best accounting, if you will, that can be done in a relatively short period of time." He acknowledged this would leave some uncertainty, but added, "That is the nature of a voluntary commitment. There's an element of trust there."

Should utility commitments be deemed insufficient, the steering committee would then look at alternatives, including state and/or federal legislation. Another possibility might be a transmission charge, although Davis believes such a notion would not gain steering committee consensus.

As for potential oversight of the voluntary system, Shimshak said the steering committee has talked about "the idea of a regional technical forum . . . some place where people would report their activities and some general goals and guidelines would be set up so there's some level of consistency." But the potential details, as with many other aspects of the restructuring proposal, remain to be developed. "This is a very general place to start," noted Shimshak. "It needs some more legs."

Utilities also might be able to offset the regional requirements, according to a Public Power Council memo. One possibility: offering some type of "green rates or marketing." Another potential credit might come through independent conservation projects by utility customers.

Market transformation would account for $30 million annually--the same amount proposed by the evolving Northwest Conservation Collaborative.

Of the $40 million proposed each year for renewable energy, $34 million would be allocated to new projects. Another $5 million would go toward distributed applications (such as solar photovoltaics), and $1 million would be spent on research and development. Shimshak also noted the steering committee encourages follow through by sponsors of Northwest renewable-energy works already in development, but there would be no specific funding for these wind and geothermal projects.

The entire draft restructuring proposal will be reviewed again by the steering committee Sept. 19--only for factual errors, according to Shimshak. Then a series of public hearings will be held around the region through November, after which the steering committee will develop its final recommendations.--Mark Ohrenschall and Pamela Russell


MARKET TRANSFORMATION

Regional Collaborative Moves Closer to Reality

Market Transformation Consortium
Settles Enough Differences to Draft MOA, Bylaws

The establishment of a regional consortium to promote energy conservation through market transformation is moving forward. Earlier this month, representatives of public and investor-owned utilities, Bonneville Power Administration, states and regulatory agencies settled enough of their differences to agree to draw up a memorandum of agreement and draft bylaws for the collaborative undertaking.

On Aug. 12, members of the Market Transformation Trust Convening Committee revised and approved a draft proposal for the so-called Northwest Conservation Collaborative. If all goes as planned, the first meeting of the new group's board of directors would be held Oct. 30, and the collaborative could be operating by January.

Discussion at the Aug. 12 meeting centered around comments jointly submitted by Idaho Power, PacifiCorp, Portland General Electric, Puget Sound Power & Light and Washington Water Power--as well as separate comments from Montana Power--asking for clarification or revision of the draft proposal for the conservation collaborative. Among the items discussed were makeup of the collaborative's board of directors, the length of initial funding commitments, local utility options to deliver market transformation locally, project funding issues and the concept of a non-bypassable charge to fund market transformation.

The draft proposal outlines an interim funding method, in which Bonneville and the IOUs would contribute equal amounts to the market transformation efforts, with the total starting at $15 million in 1997 and increasing to $30 million annually by 1999. BPA's share represents the contribution of public power and the Direct Service Industries, who agreed to that level of support as part of BPA's last rate case settlement. Each of the region's IOUs would make individual contributions. The proposal calls the collaborative a "multi-year commitment" with an interim funding review after five years.

While the IOUs were willing to make a "best-faith" commitment to several years of funding, concerns about regulatory approvals led them to suggest a shorter time limit for the interim funding mechanism. "We cannot promise this money," said PGE's John McLain. "There is another person in the background [regulators] who can say no. In this case, this is new and different stuff. It makes us nervous when we go to our commission."

Concern about the possibility state regulators would disallow spending on the collaborative also prompted the IOUs to suggest funding on a project life-cycle basis, rather than an annual budget basis. McLain said making a long-term commitment to projects using short-term funds would assure completion of projects and would also help with trade allies, who will know "the money's in the bank long-term for the project." Other members of the convening committee wanted the option of funding short-term projects, however, and the group compromised by deciding the collaborative's board would need to give prior approval for long-term financial commitments to a project.

The IOUs also said a permanent funding mechanism-like a non-bypassable meters charge-must be developed for the collaborative. Montana Power's Dave Houser said his company's support is contingent on developing a meters charge within two years, while the other IOUs want such a charge in place within three years.

Public power, on the other hand, was less than enthusiastic about a non-bypassable meters charge and a three-year sunset on interim funding. "Public power has already agreed with a long-term funding commitment that isn't bypassable," said the Public Power Council's Maureen Carr. Public power is providing support for the collaborative through its Bonneville wholesale rates, she said; and public utilities don't want the authority of their boards and commissions usurped by a state or regional meters charge. Carr also indicated that even if the IOUs decide to pull out of the collaborative after two or three years, public power is willing to continue its support through the five-year review.

While public power seemed to bristle at the IOU insistence on a non-bypassable charge, the IOUs questioned the equity of public power's funding arrangement with Bonneville. Bonneville is covering all of public power's commitment, but Puget Power's Mary Smith pointed out that more than 14 percent of the region's public power load is not served by Bonneville, but by generating publics such as the Seattle and Tacoma municipal utilities and the mid-Columbia PUDs. "If the goal [of the collaborative] is equity within the region, loads not served by Bonneville should be included," Smith said.

Public power representatives firmly defended their position. Public power's agreement to fund the collaborative through Bonneville is an "inside the family thing," said PPC's Carr. "I don't think that's the IOUs' business," she told Con.WEB.

It was clear the two factions were not going to agree on this point, but the convening committee did reach a compromise of sorts. The IOUs' concerns about funding equity were assuaged by public power's offer to credit the IOUs for their contribution to Bonneville revenues through purchases of BPA power. The IOUs are expected to account for about $240 million of Bonneville's revenue stream, based on net revenue estimates for fiscal 1997 (public power will account for about $1 billion, the Direct Service Industries $360 million); for that, Bonneville will credit them $1.9 million, which would be subtracted from the agency's $15 million commitment to the fund, thus reducing the public power/DSI contribution to $13.1 million. The IOUs would therefore contribute $11.1 million in new dollars, since they would already be contributing $1.9 million through Bonneville. Total funding for the collaborative would drop from $30 million to $26.2 million, and-as in the original proposal-only half that amount would be available in 1997. To make up for that, Ralph Cavanagh of the Natural Resources Defense Council urged the group to provide full funding for the collaborative in 1998 rather than 1999 (as originally suggested). "I'd rather see the collaborative go forward at [$26.2] million instead of die at $30 million," said PPC's Carr. Other members of the group supported Cavanagh's timetable.

The group ironed out several other issues Aug. 12. Among them was how to select the six board members who will represent state and local governments and public interest groups. The Northwest Conservation Act Coalition and the Northwest Energy Efficiency Council-a trade group for energy-efficiency businesses-would each have a board representative. The other four slots would be filled by each of the region's states, with the governors selecting the state representatives-with assistance from their Northwest Power Planning Council members.

The other 12 members of the 18-member board are to be divided equally among public power and IOU representatives, and there was some discussion of BPA's role and whether the agency should be included on the board. If so, the question was whether BPA would be specifically designated as one of public power's six representatives, or whether an additional position would be added to the board for BPA.

BPA's Terry Esvelt said since BPA is providing about half the collaborative's financing, the agency has a "fiduciary responsibility" that can only be fulfilled by inclusion on the board of directors. "I understand people are arranging for our funeral, but I really don't want to be buried today." Esvelt suggested BPA be appointed as a public power board member for now, and the group accepted.

After the meeting, another wrinkle developed over representation on the board of directors: the Power Council had not been included. One idea discussed, but apparently vetoed, was giving the Council one of the seats initially designated to the four states, with the states sharing the three remaining seats. The states didn't like that idea, however, and the issue of Council representation remained unresolved.

The convening committee also granted local utilities what amounts to a first right of refusal for delivering market transformation locally. Money the utility spends on such activities would be counted as part of the utility's financial contribution to the collaborative. Other existing entities, such as state energy offices, would also be granted the local performance option.

Other, perhaps lesser issues remain unresolved, but the committee determined that most of them are more appropriately dealt with in development of the bylaws or through action by the yet-to-be-appointed board of directors. One issue, however, must still be decided: the organization's name. The collaborative's original name, the Market Transformation Trust, was firmly vetoed; but the current Northwest Conservation Collaborative had less than unanimous support as well. The group hopes to resolve this matter and have the MOA approved by Oct. 30, with the collaborative up and running by January 1997.--Jude Noland

SIDEBAR LINKS

***Return to Contents


Brightening the CF Market

Utility Collaborative Reports Brisk Urban Sales
of Low-Priced, High-Quality Compact Fluorescents

LightSaver Facts and Figures
Sponsoring utilities: Bonneville Power Administration (on behalf of its customer utilities), PacifiCorp, Portland General Electric, Puget Sound Power & Light, Washington Water Power.

Participating manufacturers:
Lights of America, Osram Sylvania.

Program administrator:
Consultant Jody Moore, subcontractor to Portland Energy Conservation, Inc.

Program approach:
Manufacturers receive $5 incentive payment from sponsoring utilities for each compact fluorescent bulb. In 1996, 185,000 compact fluorescent bulbs are expected to be distributed to retail stores in Washington, Oregon, Idaho and western Montana.

Program goals:
1. Give manufacturers incentives to produce high-quality, low-priced compact fluorescent bulbs.

2. Overcome barriers to competition with incandescent bulbs by: increasing consumer awareness of options for energy-efficient lighting; increasing consumer acceptance of and support for quality compact fluorescents; reducing long-term retail prices by creating a competitive and valuable marketplace in the Northwest for manufacturers.

3. Exit the market with efficient lighting able to maintain a stable and substantial market share in the region.

Products available:
Lights of America offers four different bulbs: 13-watt Brite Lite, a double twin-tube equivalent to a 60-watt incandescent; 18-watt Quad Lite (75-watt equivalent); 22-watt Circle Lite; and 30-watt Circle Lite (150-watt equivalent). Osram Sylvania offers three different triple-tube bulbs, in 15-, 20- and 23-watt models (60-, 75- and 90-watt incandescent equivalents, respectively).

All LightSaver bulbs screw into normal light sockets; last up to 10 times longer than incandescent lights, and use about one-fourth the energy; have advanced electronic components, start almost instantly and are flicker-free; and provide excellent color rendition, high power factor and low total harmonic distortion. Purchase limit: 10 per customer.

Retail price:
Generally ranges from $8 to $12. The 18-watt Quad Lite bulb from Lights of America, for example, typically retails for slightly under $9. In addition to the reduced retail price, manufacturers may offer separate discounts.

Retail Stores with LightSaver bulbs (as of Aug. 20)

Ace Hardware:
Washington: Spokane.

BI-MART:
Oregon: Albany, Aloha, Ashland, Bend, Corvallis, Cottage Grove, Eugene (3), Florence, Forest Grove, Grants Pass, Gresham, Hillsboro, Keizer, Klamath Falls, La Grande, Lincoln City, McMinnville, Medford (2), Monmouth, Newburg, North Bend, Oregon City, Pendleton, Portland, Redmond, Roseburg, Salem, Springfield (2), Stayton, The Dalles, Tigard, Woodburn.
Washington: East Wenatchee, Ellensburg, Orchards, Sunnyside, Walla Walla,Yakima (3).

Coast to Coast:
Oregon: Baker City, John Day.
Washington: Camas.

Drug Emporium:
Oregon: Aloha, Tigard.
Washington: Bellingham, Edmonds, Everett, Federal Way, Issaquah, Kent, Kirkland, Lynnwood, Olympia, Seattle (3), Silverdale, Tacoma (2), Tukwila, Yakima.

Eagle Hardware & Garden:
Oregon: Medford.
Washington: Bellevue, Bremerton, Everett, Federal Way, Issaquah, Kennewick, Lynnwood, Mount Vernon, Puyallup, Seattle, Spokane (2), Tukwila, Union Gap.

Ernst Home & Nursery:
Idaho: Coeur d'Alene, Lewiston, Moscow.
Montana: Kalispell, Missoula (2).
Oregon: Albany, Bend, McMinnville, Milwaukie, Tigard.
Washington:
Aberdeen, Bellevue (2), Everett (2), Gig Harbor, Kennewick, Kirkland, Longview, Lynnwood, Mill Creek, Olympia (2), Port Orchard, Redmond, Renton (2), Richland, Seattle (4), Sequim, Silverdale, Spokane (4), Tacoma (3), Wenatchee, Woodinville.
Wyoming: Cheyenne.

Evergreen Ace Hardware:
Washington: Winthrop.

Four Seasons Supply Center:
California: Alturas.

Fred Meyer:
Washington: Lake City, Renton, Seattle (3), Shoreline.

Hank's Warehouse:
Oregon: Forest Grove.

Home Base:
Oregon: Beaverton, Clackamas, Portland, Salem.
Washington: Bellingham, Kirkland (2), Lacey, Lynnwood, Renton, Silverdale, Spokane, Tacoma, Vancouver.

Home Depot:
Oregon: Eugene, Portland (2), Salem, Tigard.
Washington: Bothell, Federal Way, Olympia, Puyallup, Seattle (3), Tacoma, Tukwila.

Junction (True Value):
Washington: Seattle.

Merwin's (True Value):
Idaho: Sandpoint.

Penguin Plumbing:
Idaho: Coeur d'Alene.
Washington: Kennewick, Yakima, Walla Walla.

Searing Electric and Plumbing
Washington: Longview.

Seattle City Lights
Washington: Seattle.

Target:
Idaho: Coeur d'Alene.
Montana: Missoula.
Oregon: Albany, Beaverton, Bend, Clackamas, Hillsboro (2), Medford, Portland, Salem, Springfield, Tigard.
Washington: Bellevue, Bellingham, Burlington, Everett, Federal Way, Issaquah, Kelso, Kent, Kennewick, Lynnwood, Olympia, Puyallup, Redmond, Silverdale, Seattle, Spokane (2), Tacoma (3), Tukwila,Yakima.
Thurman:
Oregon: Bend, Pendleton.
Montana: Butte, Missoula.
Washington: Chehalis, Kennewick, Moses Lake, Wenatchee.

True Value:
Oregon: Lake Oswego, McMinnville.

Valley Lumber
Washington: Okanogan.

Yakima Hardware:
Washington: Yakima.

For more information: Contact your local utility and/or the above-listed retail stores; program administrator Jody Moore, (818) 335-2076; Dulce Setterfield at BPA in Seattle, (206) 216-4213, e-mail, dasetterfield@bpa.gov.

A regional utility collaborative seeking to improve the market for energy-efficient lighting reports brisk initial sales of low-priced, high-quality compact fluorescent bulbs in populous places around the Northwest, particularly Puget Sound. At the same time, however, distribution and purchases in smaller communities are lagging, and communications with retailers regionwide needs improvement. And finally, while it is too early to assess the market-transforming effects of the LightSaver program (see sidebar at left), some promising early indications have emerged.

These are among the key findings of the LightSaver consortium six months after the program first brought less expensive ($8 to $13) energy-saving CF bulbs to Northwest stores, through a $5 per bulb rebate from utility sponsors to participating manufacturers Lights of America and Osram Sylvania.

A LightSaver report circulated in late July shows the program has resulted in delivery of more than 65,000 CF bulbs to retail outlets in Washington, Oregon, Idaho, Montana and far northern California. Shoppers at more than 200 stores have purchased some 48,000 LightSaver bulbs to date. About 15 different retail chains are offering LightSaver products. At large retail stores, LightSaver bulbs are moving out the doors at a rate of 17 percent of inventory every eight weeks; the normal such rate for unsubsidized CF bulbs is typically 1 to 3 percent. "Where the product is at, we're selling at a very good rate right now," said program administrator Jody Moore. He thinks the program will come close to reaching its 1996 goal of 185,000 distributed bulbs regionwide.

Compact Fluorescent Light Bulb

However, more than two-thirds of LightSaver bulbs shipped to date have landed in stores around Puget Sound, in Seattle and neighboring communities. The report attributes this concentration to previous utility programs-including a CF mail-order catalog--and extensive participation by local retail chains. For example, Eagle Hardware & Garden, which has at least 10 participating Puget Sound stores, has sold more than 16,000 LightSaver CFs. Eagle's prominent LightSaver displays, which have remained up even through the summer, have greatly contributed to the chain's "extraordinary job," according to Moore.

He acknowledged, however, that LightSaver distribution and sales have lagged in more rural areas of the Northwest: "We've got a long way to go with that." Better LightSaver communications with utilities and retailers in smaller communities is vital, Moore believes. On the other hand, he noted, the program has made some high-quality CFs available in places they weren't seen before-an indication of market transformation.

Improved communications also are needed between management and employees of participating retail outlets, according to Moore. Staffers in the stores "oftentimes aren't aware of the program . . . We know there's a lack of communication." LightSaver information sent directly to department heads and store managers may be one solution.

Retailers clearly play an essential role in promoting LightSaver, according to a separate report from project manager Portland Energy Conservation Inc. About 7,500 survey cards returned by LightSaver purchasers reveal that 65 percent heard about the program through stores. Utility marketing-such as bill inserts, brochures, home show and fair displays, and other activities-accounted for another 23 percent. "These grass roots [utility] promotions are key to changing consumers' behavior about high quality compact fluorescent bulbs," the LightSaver report noted.

Compact Fluorescent Light Bulb

Most LightSaver buyers made their purchasing decisions based on store displays and price, according to Moore. "The majority see a good price for a high-quality product . . . [they] think of it as an appliance." Seven of nine retail chains surveyed in the report sell all their LightSaver bulbs for less than $10, and an eighth peaks at $10.41. "We're at a pretty good price point," said Moore. Interestingly, customer comments on the survey cards said little about LightSaver prices, according to PECI's Lois Gordon. "It's at least in the range where it doesn't raise any red flags for them," she said, although, "We know through other research that [CF] customers are very price-sensitive."

Although LightSaver people caution it will take several years to really know how the program has influenced the CF marketplace, some encouraging signs have already appeared. For one, some non-participating manufacturers have increased their coupon discounts on products competing with LightSaver bulbs in the same stores. "That's very important," said Ken Keating of Bonneville Power Administration. Moore noted that one manufacturer is not selling a medium-power-factor CF anywhere on the West Coast because of the presence of the high-power-factor LightSaver CF bulbs. "You're changing a little bit of what manufacturers are able to do," said Moore, adding, "How much of [the market] have you transformed and changed, I don't know."

Requests for proposals for the 1997 LightSaver program are scheduled to go out in September. That process could reveal more about the market-transforming impacts of LightSaver, Keating indicated, based on the number and competitiveness of bids from potential participants.--Mark Ohrenschall

***Return to Contents


Market Transformation Happens

Idaho PUC Tells Intermountain Gas: Drop Some
Efficiency Programs, Markets are Transformed

Intermountain Gas Company won't be offering a low-flow showerhead and faucet aerator distribution program after all. The Idaho Public Utilities Commission has told the state's largest natural gas utility that such a program isn't needed: "Energy efficient practices and related standards have transformed the marketplace," the PUC stated in its order.

Idaho PUC staff had initially encouraged the company to develop a pilot low-flow showerhead program back in 1994; the company filed its proposal this past June. Byron Defenbach, Intermountain's program development and planning manager, said the company proposed to solicit 10,000 customers initially and eventually expand the program to its entire residential customer base in southern Idaho.

PUC staff analyzed the proposal and was unable to recommend approval because of concerns about the cost of the program for customers who would not benefit, as well as whether the program was even needed. Defenbach said Intermountain was surprised at the staff's recommendation. "We'd been working with them for five years," he said. "Our assumption was they'd approve it."

At the same time Intermountain filed its pilot low-flow proposal, the company asked the commission to approve a reduction from $100 to $50 in the rebates Intermountain offered for high-efficiency water heaters. PUC staff recommended instead that Intermountain drop its water-heater rebate progam altogether.

IPUC spokesman Gary Richardson said new, more stringent federal efficiency standards for shower heads, aerators and water heaters make it difficult to buy anything but efficient appliances. The PUC's decision that the programs are unnecessary is an indication that market transformation is happening, he added. "It is now apparent that some demand-side management programs which have or would have been deemed prudent only a short time ago are, because of these changes, no longer necessary or supportable," the IPUC order reads. "We encourage the company to review its other DSM programs to determine their necessity, cost/benefit ratios and effectiveness."

Defenbach said the only other DSM program Intermountain offers is a rebate for high-efficiency gas furnaces. The company will be reviewing that program in light of the commission's order.

Under the IPUC order, Intermountain's water-heater rebate program will end Oct. 1 of this year, to give the company time to notify affected dealers of the change and complete processing of current applications.--Jude Noland

***Return to Contents


FINANCE

Rebates Wane, Financing Waxes

Many Northwest Utilities Offer Energy Efficiency
Financing, OMECA Survey Reveals

Rebates for energy conservation measures are clearly waning across the Northwest, but a large number of the region's utilities are now offering energy-efficiency financing for their customers.

A survey undertaken in recent months by the Oregon Municipal Energy and Conservation Agency found that 44 of 60 participating utilities-large and small, urban and rural, public and investor-owned-provide assorted types of conservation financing. And most of the other 16 utilities reported they were either planning or considering such a service. Why the big interest in financing conservation? Much of it can be traced to serving customer needs in an increasingly competitive world, along with community and utility interest in enhancing conservation, according to OMECA manager Cathy Higgins.

Although the survey did not cover the amount of financing money available nor the levels of customer participation, information gathered by OMECA appears to show promise for local conservation in the Northwest. "If your [financing] offer is attractive, if you spend funds on getting your [interest] rate low enough, you can get very, very good participation," Higgins said. "A lot of utilities said they were getting very, very good participation . . . The levels of conservation can be sustained and enhanced," she added. "It all depends on your offer."

The survey-compiled via fax, phone and regional meetings-details the source of financing monies, interest rates and terms, credit requirements, securities, fees, billing methods and types of eligible conservation measures for 44 utilities in the four Northwest states and northern California. Although the details vary considerably from utility to utility, some general conclusions can be drawn.

Residential energy efficiency financing is the first priority for utilities. "Everybody starts with residential," Higgins said. "It's a sector used to buying things on regular credit." Within the residential sector, weatherization and heat pumps are far and away the most popular financed measures.

Many utilities also offer financing for their commercial and industrial customers, a big shift from the heyday of rebates aimed at acquiring conservation resources for utilities. "Before we were driven by something we wanted to do," said Higgins. "Now we're establishing mechanisms for something [customers] want that's good for them." These programs give utilities "a tool to talk to their large customers," she added.

Financing money comes from any number of sources: Bonneville Power Administration (under so-called "flex contracts" designed to stretch out the remainder of BPA local conservation funding, banks, utility bonds, municipal government funds, third-party financiers-and, in many cases, the utilities themselves. Higgins said she was "impressed how many utilities are using rate-based funds as part of their program, to create their starting principal . . . some in combination with their [BPA] flex money." For Bonneville, she noted, this shows that the last of its centralized conservation program funding will reap kilowatt-hour savings well into the future.

Interest rates offered by utilities in the survey range from zero to as high as 13 percent (for Pacific Gas & Electric in California). The average for utilities with interest rates is about 6 percent, Higgins found. Setting the interest rate is typically a policy decision hinging on how much of its financing costs a utility wants to recover. Single-digit interest rates generally won't recover those costs, she said, but they can be considered an incentive for customers. Depending on the length of the financing terms-five years is the average-it can take five or six years for a financing program to become self-sustaining.

Higgins also observed that financing programs generally require more dollars to do the same amount of conservation as rebates. Under traditional BPA programs, rebates usually covered 60 percent to 80 percent of total costs for residential and commercial efficiencies, she said. With their financing programs, utilities now are likely to be paying 100 percent of measure costs.

On the administrative side, about half the surveyed utilities have discovered that billing customers for conservation financing charges through utility bills was a snap-but the other half "thought it was the worst nightmare they ever did," Higgins learned. It depends on the utility's software. Most of the surveyed utilities manage the conservation financing themselves, although a handful have worked with banks on loan buy-downs. At the same time, a number of utilities with established financing programs are considering third-party management of the financing, although the utilities would remain the sole contact point for their customers.

OMECA developed this survey to gain insights into financing options for its six members: city of Ashland, Forest Grove Light and Power, McMinnville Water and Light, Milton-Freewater Light and Power, city of Monmouth and Springfield Utility Board. For more information on the survey, contact Higgins at OMECA: 101 SW Main St., Suite 810, Portland, OR, 97204; phone, (503) 796-1850; fax, (503) 294-1250.--Mark Ohrenschall

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ENERGY SERVICES

RCM Program Leaves Legacy

Resource Conservation Managers
Expand Beyond Oregon Schools

A pilot program started in 1993 to help Oregon school districts reduce electricity use and therefore save money has expanded beyond the halls of learning to the private sector. What began as Energy Smarts, a two-year effort developed by a consortium of Oregon utilities and government agencies, is now being offered, in several forms, to businesses, hospitals and local communities.

The success of Energy Smarts was based on the concept of the Resource Conservation Manager. Under the program, participating school districts hired an RCM who helped identify opportunities for reducing energy and water use as well as the amount of solid waste generated. The money the district saved on its energy, water and garbage bills paid the RCM's salary, and the district could use any additional savings for more conservation activities or other school needs. Participating utilities-- Bonneville Power Administration, Portland General Electric, PacifCorp, Salem Electric, Northwest Natural Gas, Columbia River PUD, WP Natural Gas and the city of Ashland--helped the school districts hire the RCM and guaranteed the salary, although that turned out to be unnecessary: each of the seven school districts that participated in Energy Smarts more than covered RCM salaries with savings from reduced consumption.

If it worked in the schools, it made sense that an RCM program would reap benefits in other sectors as well. The Oregon Office of Energy has expanded the RCM concept to communities-Ashland, La Grande and Salem-and PGE has reportedly tailored the program for use with hospital customers. In addition, North American Energy Services has marketed the program in the commercial sector, to companies with multiple sites.

Jerry Bingold of NAES said the approach in the commercial sector is a bit different from that used in the schools. "Because of the nature of deregulation, corporations like [our customers] are feeling a need to set up an internal utility management function to monitor utility bills and energy purchases," Bingold said. The first step is putting together a utility management department, which NAES is in the process of doing for Payless, based in Tualatin, OR, and a major computer business with multiple sites in Oregon. That involves entering utility information into a database developed by an NAES affiliate, SourceCom, performing a rate and tariff analysis, and generally cataloging utility-related equipment and functions.

Unlike the Energy Smarts program, NAES's service is priced and sold according to the cost of setting up the utility management department. Establishing the department and understanding the potential for savings is worthwhile for most companies, Bingold said; as the electricity marketplace moves closer to open access and greater competition among suppliers, the savings potential will increase even more.

The city of Ashland started its Resource Efficiency Program in December 1995. The program is run through the city's Chamber of Commerce, where Dana Rayburn, Ashland's resource conservation manager, has her office. Rayburn spent her first three months starting up the program, which involved a lot of data entry into a resource tracking software program, as well as manager training.

And the program had to be tweaked as it moved from the schools to the community at large. "We needed to tailor our services to the size of the business, versus one-product-fits-everyone," Rayburn said. The Ashland program offers three levels of service: from initial consultation to quarterly reporting, and all the way to full project coordination for larger businesses.

"It's going really well," Rayburn said. "We're working with different businesses and looking at all the resources." The initial consultation shows businesses ways to operate more efficiently without spending money, Rayburn said. "Small businesses run on a tight margin, so this is important." For example, Rayburn is working with two local restaurants on methods to improve process efficiency.

So far, 10 of the 25 businesses eligible for the service are participating. There's no cost for these first 10 businesses, Rayburn said; others will pay a nominal fee. OOE provided a one-year, $40,000 start-up grant, but the program will run for more than a year. And, "If they're paying something [for the service], it will mean something to them," Rayburn said.

Savings haven't been counted yet, because the program is still in its early stages, Rayburn said. But the estimate is a 10 to 15 percent reduction in costs.

"Efficiency was a big sell," said David Furr, RCM project coordinator for OOE. Another benefit to having a resource conservation manager, Furr added, was that the community's businesses would have a local contact for assistance, rather than an out-of-town contractor. "We hope this is a way to achieve market transformation and deliver conservation goals that we as an agency still hold while utilities are changing focus," Furr added.--Jude Noland

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KEEPING SCORE

The Evergreen State Gets Greener

Washington's Energy Efficiency Improves in Homes,
Businesses, Industries from 1970 to 1993

Washington homes, businesses and industries have grown more energy efficient, to varying degrees, over the past quarter-century, according to one of the last reports from the Washington State Energy Office.

Although the state's total end-use energy consumption for the transportation, residential, commercial and industrial sectors rose 51 percent from 1970 to 1993--largely due to a big increase in driving-the WSEO report found that "energy intensity" actually diminished in all four sectors. WSEO attributed that decline to energy efficiency improvements as well as such economic trends as a shift to less energy-intensive industries.

In addition to using energy more efficiently, Washingtonians also are spending proportionally less money on their energy needs--6.2 percent of the gross state product in 1993, compared with a peak of 11.6 percent in 1981. That reduction coincides with a 38-percent decline in average Washington energy prices (in constant dollars) from the early 1980s to 1993 (average electricity prices declined 17 percent from 1984 to 1993).

Those are among the key findings of the "Washington State Energy Use Profile: 1970-1993," prepared by the late WSEO, which was officially dissolved June 30 and many of its functions scattered to other state agencies. The report's data come primarily from the federal Energy Information Administration.

Although the report gives much credit to energy efficiencies for the decline in energy intensity, it does not attempt to specify those efficiencies. However, utility conservation programs-along with more stringent energy codes and standards-likely played significant roles, according to Arne Olson, energy policy specialist/economist with Washington's Department of Community, Trade and Economic Development. He described the report as "a look at the overall trends . . . a big picture."

The big picture shows that Washingtonians consumed 756 trillion Btu of energy in 1970, which rose fairly steadily to 1,143 trillion Btu in 1993. However, that 51-percent increase is much smaller than the state's economic growth during that period-the gross state product more than doubled-and very similar to the state's overall population growth, from 3.4 million to 5.2 million.

In addition, more than three-fourths of the total increase in energy consumption came in the transportation sector: Washingtonians drove 20 billion miles in 1970, a figure that jumped to 48 million miles in 1993. Rapid growth in suburban and formerly remote areas, along with cheap gasoline, drove this traveling trend, according to WSEO.

Washington Map

Washington's industrial sector actually used less total energy in 1970--274 trillion Btu-than it did in 1993--253 trillion Btu. Meanwhile, energy use per dollar of industrial product shrank 47 percent from 1972 to 1993. "The improvement in energy intensity was driven by improvements in efficiency and shifts from energy intensive industry to less energy intensive, high product value industries (like electronics)," the report noted. However, in electricity specifically, the trends are somewhat different. Total industrial electricity consumption rose from 25,700 gigawatt-hours in 1970 to 40,800 gigawatt-hours in 1990; it dropped to 36,700 by 1993. During those 23 years electricity also captured a larger share of the industrial energy market, rising from 32 percent to 49 percent. Electricity consumption per dollar of industrial product remained relatively stable over that time.

Spurred by considerable growth in the service sector, Washington businesses collectively more than doubled their total energy consumption from 1970 to 1993. However, from 1982 to 1993, commercial energy consumption per employee dropped 26 percent. "This, along with a decline in energy costs, explains the decline in energy expenditures and suggests that gains in commercial sector energy efficiency were achieved during this period," WSEO found. These gains were even more pronounced from 1985 onward.

Washington's burgeoning population led to increased energy consumption in the residential sector, from 132 trillion Btu in 1970 to 174 trillion Btu in 1993. However, WSEO noted, "From its peak in 1972, household energy consumption [on a per-household basis] declined 33 percent. This long-term decline without subsequent increases (despite lower energy costs) suggests that long-term gains in energy efficiency have been achieved in the residential sector."

Among the report's other findings, electricity use grew substantially from 1970 to 1983 while natural gas consumption declined somewhat. However, from 1983 to 1993, natural gas use nearly doubled while electricity consumption grew about 20 percent. "The increased popularity of natural gas for applications such as heating and industrial use since the mid-1980s are clearly reflected in the data," WSEO reported. "The decline in the growth rate of electricity consumption may be partly due to increases in efficiency and to fuel switching, primarily to natural gas."

And lest Washingtonians get too proud of the energy efficiency improvements outlined in the report, WSEO tossed in an international perspective: "Both the United States and Washington State have per capita energy consumption that is more than twice as much as other developed countries like Germany, England and Japan and five to 10 times greater than that of the rest of the world."

The report has lots of other data on energy consumption, expenditures, prices and such. For a copy, call Olson at (360) 956-2022, or Alan Mountjoy-Venning of Washington State University Cooperative Extension Energy Program, (360) 956-2092.--Mark Ohrenschall

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BRIEFS

U.S. House, Senate Differ on Funding
for BPA Energy Services Business

The U.S. House of Representatives recently voted in its Energy and Water appropriations bill to delete $20 million in funding Bonneville Power Administration had requested to start up its new Energy Services Business. Investor-owned utilities and some private-sector energy efficiency businesses have argued that the credit line from the U.S. Treasury would subsidize the federal government in competition with private enterprise.

BPA and environmental interests found a more receptive audience in the Senate, which kept $20 million in financing as a placeholder in the appropriations bill, but placed a temporary limit of $7 million on BPA borrowing. Language in the Senate version of the bill calls for the Regional Review to decide whether the ESB is an appropriate BPA activity. The House and Senate will resolve differences between their appropriations bill in conference committee in September.--Pamela Russell

WWP Energy Solutions Snags Big Customer:
Northwest Mining Association

WWP Energy Solutions, a nonregulated energy services company started recently by Washington Water Power, has reached an agreement with the Northwest Mining Association to provide energy management consulting services to the association and its 3,000 members. Among those services are educational and informational programs, development of energy management strategies, and strategies for pooling electric and natural gas loads among members-which would ultimately give association members more competitive access to the energy marketplace by allowing them to buy at greater volumes.

"Our primary objective is to help Northwest Mining Assocation members manage energy more efficiently and maximize their energy dollar investment," said Gerry Crooks, WWP Energy Solutions vice president. To that end, the energy and informational programs will be aimed at familiarizing association members with the opportunities and risks associated with the emerging energy services market.

NMA executive director Tim Olson said the agreement with WWP Energy Solutions is an example of his group's efforts to minimize operating expenses for its members.--Jude Noland

Three Northwest Companies Honored by Green Lights

Northwest Green Lights Award Winners

1. Larry's Markets, Seattle: Partner of the Year, Small Corporation

2. Colonial Pacific Leasing, Tualatin,OR: Partner of the Year, Small Business

3. St. Charles Medical Center, Bend, OR: Partner of the Year, Small Hospital

--(continued)--

Three Northwest companies have been honored by the U.S. Environmental Protection Agency for their extensive energy-efficient lighting upgrades through the Green Lights program. The regional Green Lights award-winners-Larry's Markets, Colonial Pacific Leasing and St. Charles Medical Center-were among 20 national winners for 1996 announced recently by Green Lights, a voluntary EPA-sponsored program designed to reduce pollution through the use of energy-efficient lighting. More than 2,200 organizations nationwide-corporations, non-profit groups, hospitals, universities and governments-are Green Lights participants, including at least 68 from the Northwest.

BPA Forum to Explore Role of Energy Efficiency
in Competitive Energy Marketplace

The role of energy efficiency in an increasingly competitive energy future will be explored in a Sept. 11 forum at the Monarch Hotel in Portland. Sponsored by Bonneville Power Administration, "Energy Innovations for Tomorrow's Marketplace" will feature panel discussions, displays and exhibits, and addresses by BPA administrator Randy Hardy and Paul Hawken, author of the popular book, "The Ecology of Commerce." Cost of the forum is $96.

In addition to Hardy and Hawken, the forum will include a panel discussion, "The Customers of Tomorrow," in which panelists will discuss what they want and expect from their electric providers in the future. Two other panel discussions are scheduled--"Innovative Services for the Next Millenium" and "The Role of Energy Efficiency in the New Market"--along with a presentation by the Electric Power Research Institute entitled "Technology 2000." Also featured will be test rides in an electric vehicle. For more information, contact the Northwest Public Power Association, at (360) 254-5731; fax, (360) 254-5731; e-mail, power9999@aol.com.

On-Line Classes Offered in Market Transformation,
Building Commissioning, Non-Residential Energy Code

Market transformation, building commissioning and Washington's Non-Residential Energy Code are the topics of accredited on-line classes starting in September through the Continuing Education in Energy Management program at Edmonds Community College near Seattle.

"Measuring Progress in Market Transformation" will cover the meaning of market transformation and how to measure its progress, along with providing an opportunity for on-line dialogue between professionals working in this field. Scheduled from Sept. 23 through Oct. 18, the course will be taught by Tony Usibelli of Washington State University's Cooperative Extension Energy Program.

"Fundamentals of Building Commissioning," taught by Karl Stum and other staff from Portland Energy Conservation Inc., will offer an orientation to the practice of building commissioning, which ensures that installed building systems operate to their specifications. Course dates are Sept. 16 through Oct. 11.

"Non-Residential Energy Code: A Functional Approach to Code Compliance and Enforcement" takes a functional approach to examining and discussing the attributes of Washington's 1994 Non-Residential Energy Code. The instructor will be Kevin Madison of the Utility Code Group; the course runs from Sept. 16 through Oct. 11.

Lessons for these on-line courses are distributed weekly by e-mail, and students complete the work within their own schedules. In addition, these on-line classes emphasize ongoing e-mail discussions involving students and instructors. The program also offers complete technical support for students. For more information, call (206) 640-1010, or e-mail Kevin McKay at kmckay@edcc.ctc.edu.

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