Climate Challenge Participation Accord

DOE's Energy Partnerships for a Strong Economy

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Update letter dated May 28, 1997

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This Participation Accord describes the commitments that Allegheny Power Service Corporation as agent for Monongahela Power Company, The Potomac Edison Company and West Penn Power Company (APS) and the U.S. Department of Energy (DOE) have made to participate in the Climate Challenge Program in pursuit of the President's goals for reducing greenhouse gas emissions. The Climate Challenge Program is a joint, voluntary effort of DOE and the electric utility industry to reduce, avoid or sequester greenhouse gas emissions. The framework of the Climate Challenge Program was established in the Climate Challenge Program Memorandum of Understanding and exhibits thereto dated April 20, 1994 (the Climate Challenge Program MOU) (see Attachment A to this Participation Accord).

I. APS Commitments

A.
Consistent with paragraph II.B.1 of the Climate Challenge Program MOU, APS:

1.

has committed to contribute to the five industry initiatives to the following extent:

a.

National Earth Comfort Program - APS has committed to the $50,000 annual Consortium dues and plans to continue in-house research programs, as warranted, to augment Electric Power Research Institute

and Consortium sponsored research.

b.
Electrotechnology and Renewable Energy Investment Pool - APS was instrumental in development of this initiative and has committed to pledge up to a total of $5 million.

c.
Utility Forest Carbon Management Program - APS has committed the $5,000 membership fee and will participate in future costs according to projects undertaken.

d.
EV America - APS is an Ally in this initiative and will evaluate the extent of future commitment as the initiative develops.

e.
International Utility Efficiency Partnership Program - APS has committed to provide its pro rata share of the administrative costs of this initiative and receive benefits equivalent to the amount invested in joint implementation projects and those projects taken for economic benefit.

2.
has undertaken the following actions to reduce greenhouse gas emissions:

a.

Demand-Side Management/Electrotechnology - APS has committed to various demand-side management and electrotechnology actions to improve energy efficiency, to manage peak demand, to comply with the Clean Air Act Amendments of 1990, to demonstrate concern and responsiveness to national and customer needs for environmental protection, to improve customer relations and to reduce energy consumption and demand. These actions consist of:

- Various Residential, Commercial, and Industrial Demand-Side Management Programs
- Green Lights Utility Ally Programs
- Residential Energy Conservation
- Advanced Heat Pumps for Water Heating and Space Conditioning
- Medical Waste Incineration
- Heat Pipes for Supermarkets
- Electrotechnologies
- Electronic Photo-Controls
- Lighting Retrofits
- Canonsburg Houston Joint Authority
- Adjustable Speed Drives for Plastic Injection Molding Machines

b.
Transportation - APS has committed to work with various organizations to develop, test and promote electric vehicles in order to improve air quality, reduce dependence on foreign petroleum and to increase transportation efficiency. These organizations include, but are not limited to, Ford Motor Company, the Pennsylvania Electric Transportation Council, Fairmont State College, Edison Electric Institute, the Electric Transportation Coalition and Electric Power Research Institute.

c.
Arboriculture - APS has committed to various actions to promote the planting and replacement of trees in order to prevent soil erosion, improve air quality and the water table and provide valuable wildlife habitats. These actions consist of:

- Famous and Historic Trees
- Tree Replacement
- Cool Communities
- Global Relief
- Forest Management


d.
Energy Supply - APS has committed to various actions to improve energy reliability and heat rate, to replace cement with fly ash, to replace oil with natural gas as an alternative fuel source, to keep hydroelectric plants operational, and to promote cogeneration projects with industrial customers. These actions consist of:

- Boiler Control System Replacement
- Fly Ash as Replacement for Cement
- Future Heat Rate Improvement
- Natural Gas as Start-Up Fuel
- Dual Fuel Reactivation of Coal Reserve Units
- Relicensing of Hydroelectric Plants
- Cogeneration


e.
Transmission/Distribution - APS has committed to various actions to improve transmission and distribution efficiency and to reduce fuel consumption. These actions consist of:

- Distribution Programs
- The Potomac Edison Company System Split
- Wire Replacement on Transmission Lines
- Efficient voltage Regulators
- Efficient Distribution Transformers


3.
will undertake certain energy supply and transmission/distribution actions, to various degrees, depending upon the ability for APS to receive cost recovery for these actions. These actions could improve energy reliability and heat rate, replace coal with natural gas as a fuel source, and improve transmission, distribution and generation efficiency. These actions consist of:

- Amorphous Core Distribution Transformers
- Future Fuel Switching to Natural Gas
- Plant Closings and Repowering
- Dispatch to minimize CO₂ Production vs. Economic or SOx Control Environmental Dispatch

- Generation Using Methane from Landfills
- Coalbed Methane


4.
will evaluate and undertake any action listed in the Climate Change Action Plan, where applicable, as long as efficiency, reliability, cost, aesthetic, land use and environmental acceptability are assured.

APS estimates the above listed actions, where measurable, have the potential to achieve annual greenhouse gas emission reductions of approximately 500,000 tons by the year 2000. This number does not include reductions

associated with required control of NOx emissions under both Title I and IV of the 1990 Clean Air Act Amendments, reductions associated with sulfate aerosols and reductions associated with actions in the development stage. Through a firm commitment to continuous research and development and as reductions with on-going actions become known, APS believes it will meet the goals of the Climate Challenge Program.

Descriptive details of APS actions are provided in the attached "Allegheny Power System - Climate Challenge Program".

B.
APS will report annually on activities and achievements under the Climate Challenge Program. Results achieved during each year shall be reported in a clear and understandable manner that is consistent with the guidelines adopted pursuant to subsection 1605(b) Energy Policy Act and the Climate Challenge accounting protocols in the Supplemental Guidance on Commitment Definition and Reporting (Exhibit B) of the Climate Challenge Program MOU.

C.
APS will confer with DOE on or before March 1, 1997 to evaluate jointly the progress of APS in achieving its Climate Challenge Program goals and to discuss possible adjustments to its voluntary commitments.

D.
The Climate Challenge Program representative for APS will be Keith L. Warchol, Tower Forty Nine, 12 East 49th Street, New York, NY 10017 . APS agrees to notify DOE prior to or, in any event, no later than 30 days after any change in the contact.

A.
DOE's commitments to APS are those set out in section III of the Climate Challenge Program MOU, which are hereby incorporated in this Participation Accord by reference.

B.
DOE will consider APS requests to intervene in regulatory proceedings of federal, state and local commissions and boards on issues pertinent to the Climate Challenge Program. Before DOE intervenes in regulatory and other proceedings pertaining to APS for purposes of addressing Climate Challenge Program issues, it will provide notice to APS.

C.
DOE will provide an annual report to APS describing the actions that it has taken to fulfill its commitments under section III and Exhibit C of the Climate Challenge Program MOU and the results of those actions.

D.
The Climate Challenge Program representative for DOE, who will serve as liaison to APS, will be Allan Hoffman, Room 6B-128 (EE-10), 1000 Independence Avenue SW, Washington, DC 20585, (202) 586-1786. DOE agrees to notify APS prior to or, in any event, no later than 30 days after any change in liaison responsibilities or personnel.

III. General Provisions

A.
Use of DOE developed materials by APS will be governed by the provisions of section IV of the Climate Challenge Program MOU, which are hereby incorporated in this

Participation Accord by reference.

B.
In addition to the foregoing provisions, DOE and APS agree to act in accordance with the principles set out in section I of the Climate Challenge Program MOU and the general provisions set out in subsections V.A - V.D, V.F and V.G of the Climate Challenge Program MOU, which are hereby incorporated by reference.

C.
Either party may withdraw from this Participation Accord or any of its activities under the Climate Challenge Program without penalty and without being subject to remedies at law or equity.

(Original signed by)
______________________________________
President/CEO or designee
Allegheny Power Service Corporation

____________________________[date]

(Original signed by)
_____________________________________
Secretary of Energy or designee
U.S. Department of Energy

____________________________[date]

Attachments:

Allegheny Power System - Climate Challenge Program

Attachment A - Climate Challenge Program MOU and exhibits

Please send comments to:
Lawrence.Mansueti@hq.doe.gov