Climate Challenge - Climate Challenge Participation Accord

Climate Challenge Participation Accord

DOE's Energy Partnerships for a Strong Economy

CLIMATE CHALLENGE PARTICIPATION ACCORD

This Participation Accord describes the commitments that Delmarva Power & Light Company (DP&L) 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 (Climate Challenge Program MOU) (see Attachment A to this Participation Accord).

DP&L Background:

DP&L is an investor owned electric and gas utility which serves a 5,700 square mile area, including the states of Delaware and the eastern shore counties of Maryland and Virginia. The Company's mission is to provide gas, electricity, and energy-related services to it's customers in a safe, reliable, and courteous manner at the lowest rates consistent with an adequate return to investors. Actions taken in the implementation of this mission must reflect concern for the environment and the needs of employees. In an ongoing effort to improve productivity and profitability, efficient operation and diligent management is stressed.

In order to fulfill this mission DP&L provides electricity to nearly 400,000 retail customers and wholesale power to three electric cooperatives and nine municipally-owned utilities. Within a 275 square mile area in New Castle County, Delaware, DP&L provides natural gas is to about 93,000 customers.

DP&L currently operates 2,853 megawatts of generating capacity. This includes five fossil fuel power plants in the service territory and an ownership share of two coal-fired plants and two nuclear plants outside the service territory. The generation mix is 41% coal, 28% oil, 18% natural gas, 11% nuclear energy, and 2% purchases from other companies. DP&L also operates 1,326 miles of transmission lines, 10,781 miles of distribution lines, and 1,339 miles of gas main.

DP&L is also one of eleven utility members of an organization known as the Pennsylvania-New Jersey-Maryland interconnection, commonly referred to as the PJM. One of the major objectives of the PJM is to ensure reliability of service to the 20-million-plus customers that the member companies collectively serve. Power is exchanged by member companies on an "as needed" basis in the event that one member suffers a breakdown in a major plant and needs make-up power.

I. Utility Commitments

Undertake specific projects or actions, or make specific expenditures on projects or actions, and contribute to industry initiatives to reduce net greenhouse gas emissions, as described below.

DP&L Projects/Programs/Activities

Demand-Side Management Programs

As part of DP&L's Challenge 2000 program, the Company will continue to provide a cost effective, diversified portfolio of conservation programs to ensure an adequate supply of energy at the lowest reasonable costs to both the company and its customers. The Company currently supports a total of 14 Conservation/DSM programs within its portfolio. Four of these programs are load control programs, two are load shifting, and 8 are conservation programs. These various programs have enrolled over 80,000 residential and 900 commercial and industrial customers who in aggregate provide the company with the ability to reduce its peak electric demand by about 240 MW and save over 74,000,000 kWh annually. The Company plans to commit resources in the future to promote the continuation of cost effective Conservation and DSM efforts. A brief explanation of each program is included as Attachment B.
Renewable Energy Generation Technologies

DP&L is investigating a variety of renewable energy technologies including photovoltaics, biomass, and wind power electric generation options that emit no net greenhouse gases. Increasing use of these technologies lowers carbon emissions and conserves existing reserves of fossil fuels. An important consideration in evaluating the economic merit of renewable

energy options for DP&L is measuring the renewable resources in its service territory. DP&L will undertake resource inventories to determine whether renewable energy technologies are cost effective, where their location is optimum for performance and customer acceptance, and how renewable energy technologies can best be integrated within its existing utility operations.

DP&L's Renewable Energy Generation Technology projects include:

Photovoltaics - DP&L made a significant investment in photovoltaic technology with the construction of a dispatchable PV test and demonstration facility at its Northern Division General Office in Newark, Delaware. This 15KW capacity PV and battery storage facility was designed using a solar insolation database provided by the National Oceanic and Atmospheric Administration interpolated to estimate the solar resource at this northern Delaware location. This facility, completed on July 16, 1993, has enabled DP&L to gain experience with new PV technology, to develop solar resource data specific to New Castle County, to explore the potential for similar dispatchable building peak-shaving systems and to serve as the test-bed for development of modular, standardized building PV systems under the Department of Energy's PV:BONUS Program. In 1994, DP&L also installed a second solar monitoring station at its Southern Division General Office in Salisbury, Maryland. DP&L will continue to operate these two facilities and explore other PV projects.

Biomass - Biomass encompasses energy materials from biological sources including wood waste, food industry waste, sewage and municipal solid waste (MSW), crop waste, and biological materials cultivated as energy crops. The economies of burning biomass wastes in either dedicated facilities or co-firing with coal in existing plants are dependent upon the local availability of the biomass fuel, processing costs, and landfill costs. To gain an understanding of the regional biomass marketplace, DP&L works closely with the Delaware Department of Agriculture and its Forestry Division. In December 1993, the Forestry

Division with financial assistance from DP&L initiated a comprehensive biomass resource assessment which focused on the quantities and sources of sawmill, forestry, MSW, and poultry industry wastes available for consideration as biomass fuel. The study will be completed in early 1995 and will be used in an economic analysis to assess the cost-effectiveness of biomass as a fuel for power generation.

In addition, DP&L has committed funding and technical assistance to a three-year effort which commenced in December 1994 by the Delaware Forestry Division to investigate the potential for energy crop production in Delaware. The study will determine growth rates of several species of poplar, willow, black oak, and sycamore plantings in a multiple-acre plantation environment. Study results, expected in 1997, will be beneficial in establishing species preference, land and feeding requirements to maximize tree growth rates for carbon sequestering, and biomass crop production.

Wind - To gain an understanding of the magnitude and location of wind resources in DP&L's service territory, a wind energy monitoring station was installed on a 150-foot tower near Lewes, Delaware in December 1993. This location was chosen because a projection in a 1987 wind energy report published by Pacific Northwest Territory for the Department of Energy determined that this coastal site conformed to a favorable Class 4 wind resource. DP&L installed a second wind monitoring station in November 1994 at the Company's Red Lion site, a more northern coastal location. Wind data from these sites collected over several years will be used to define the wind regime throughout much of Delaware's coastline and to estimate the performance and energy output characteristics of commercially available and developing variable-speed wind turbines.

Ultimately,DP&L will evaluate the economic viability of renewable energy generation technologies through the Company's integrated resource planning process. solar, biomass, and wind energy projects which prove to be cost-

effective and which have reasonable expectations for successful permit acquisition, construction, and operation will be developed in detail for budgeting and implementation.

Other Generation Technologies
- Natural Gas Combustion Turbines and Combined Cycle Unit at Hay Road Power Plant
  
  On June 1, 1991, DP&L declared available for commercial operation the third natural gas-fired combustion turbine at the Hay Road Power Complex. This unit, designated as Hay Road Unit 3 (HR3), was rated at 109 MW and constructed to operate in a simple-cycle mode for peaking service, as was the operating mode for its earlier sister units, Hay Road Units 1 and 2 (HR1&2) installed in 1989. Incrementally, HR3 generated approximately 108,630 MWHR of electricity in contribution to the total facility output of 470,720 MWHR during 1991. The plant capacity factor was approximately 18% overall.
  
  To improve the dispatch cost characteristics of these gas-fired units, the facility was converted to combined- cycle operation by the addition of a Heat Recovery Steam Generator to each combustion turbine and a common steam turbine-generator (HR4) rated originally at 163 MW. The conversion was completed on June 1, 1993. The successful reduction of the heat rate through the combined-cycle conversion results in a lower overall cost of power generation. The units are thereby dispatched more frequently, operating at twice the capacity factor of a simple-cycle combustion turbine plant and dramatically increasing the proportion of natural gas usage for electric generation by Delmarva's generating system.
  
  By example, HR1&2 generated 202,986 MWHR of electricity during their first year of commercial operation. Capacity increases and heat rate improvements attendant to the addition of HR3&4 increased the power generation for the completed combined-cycle complex to 1,420,637 MWHR during its first 12 months of commercial service, an incremental increase of about 1,217,650 MWHR of electricity generated by natural gas fuel.
- Natural Gas Usage at Edge Moor Power Plant
  
  The Edge Moor Power Plant is comprised of two operating pulverized coal units, Units 3&4, totaling 251 MW, and one 427 MW unit, Unit 5, which uses No.6 oil. The original facility design called for the usage of No. 2 fuel oil for boiler warm-up and the lightoff of the design fuels. To take advantage of nearby sources of natural gas and to enhance the fuel flexibility of the plant, Delmarva initiated a phased approach toward increasing the gas burning capability of its Edge Moor units.
  
  In 1994, DP&L modified the burner system on Unit 5 to accommodate the increased usage of natural gas for power generation. Up to 180 MW of load can now be generated using natural gas. A similar project is presently underway for Unit 4 and scheduled for completion in mid-1995. When completed, Unit 4 will have the capability to generate approximately 160 MW by using natural gas. Additionally, Units 3 and 4 are being fitted with gas ignitor systems which will allow cold boiler startup and lightoff of pulverized coal fuel using natural gas in place of No. 2 fuel oil. The gas ignitor project will be completed by 1996.
  
  As a result, DP&L will use natural gas in place of No. 2 and No.6 fuel oils and pulverized coal at the Edge Moor Power Plant units when the availability and cost of natural gas make gas burning the lowest cost fuel option.
- Landfill Gas Usage at Edge Moor Power Plant
  
  In August 1994, DP&L signed a 20-year agreement with a project developer under which DP&L will purchase 40,000 MMBTU/month of landfill gas generated at a municipal landfill in Wilmington, Delaware. The project developer is presently constructing gas processing systems and a 7000-foot gas pipeline to deliver landfill gas to the Edge Moor Power Plant. The landfill gas, largely methane in composition, is scheduled to begin
  
  flowing to Edge Moor in April 1995. Burning landfill gas in Unit 5 has the potential to displace approximately 75,000 barrels of No. 6 fuel oil per year. This project captures a valuable source of fuel for power generation which would otherwise be vented from the landfill and flared without realizing its energy potential.
Transmission and Distribution Losses Reduction

DP&L is evaluating and will continue to evaluate on an ongoing basis the economic viability of a variety of loss reduction projects to decrease Transmission and Distribution system losses. These reductions in losses will save electric energy, thereby reducing unnecessary carbon dioxide emissions. These projects include: reconductoring of transmission and distribution circuits, voltage conversions, capacitor additions on both the transmission and distribution systems, and purchase of special low loss transformers for the distribution system.
Transportation
- Natural Gas Vehicles
  
  Since 1990, DP&L has converted 35 vehicles to natural gas operation. DP&L plans to add an additional 20 natural gas vehicles to the fleet each year from 1995 through 1999.
- U.S.Department of Energy Clean Cities Program
  
  In 1993, DP&L joined the U.S. Department of Energy Clean Cities Program and entered into a Memorandum of Agreement with the State of Delaware, City of Wilmington, New Castle County, U.S. Department of Energy, Dover Air Force Base, U.S. General Services Administration, DuPont Company and Chesapeake Utilities. As part of the program, DP&L will continue to provide marketing support for expansion of Alternative Fuel Vehicles, technical assistance in conversions, operation and service for these vehicles, public educational programs, maintenance of metering and gas supply facilities, and public refueling facilities.
- Compressed Natural Gas Fueling Stations
  
  In 1993, DP&L opened a compressed natural gas
  fueling station in Wilmington, Delaware. This station serves DP&L natural gas vehicles as well as the vehicles of other private and public sectors. In 1994, DP&L opened a second compressed natural gas fueling station at the Newark Post Office in Newark, Delaware. This station primarily serves the 76 natural gas postal vehicles, along with vehicles of other public and private fleet operators. DP&L will continue to actively promote, in conjunction with the Clean Cities Program, the use of its two public access stations. For example, in 1994 DP&L hosted the National Alternative Fuels Teleconference which attracted 35 fleet operators from existing stations, DP&L will continue to explore opportunities to open new public access fueling stations at other locations.
- Employee Commute Option
  
  DP&L facilities in New Castle County are located in a severe ozone non-attainment area. A plan to reduce the number of vehicles driven by the employees to and from work will be implemented in 1995. On the order of 250-300 daily trip reductions are expected under the current plan.
Other
- Use of Coal Combustion Byproducts
  
  DP&L develops environmentally beneficial alternatives for disposing of more than 50% of the waste coal ash generated at its power plants. This has resulted in a net savings of over $5 million to DP&L. Coal ash, for example, has been used to build roads, restore an historic building at a museum in Wilmington, Delaware, and create an artificial reef to attract marine life in the Atlantic Ocean. In a variety of projects, coal ash has also been used in place of cement to produce low grade concrete for construction. Since the inception of the ash management program seven years ago, DP&L
  
  has found uses for over one million tons of waste coal ash. DP&L's Ash Utilization Team will continue to explore opportunities to increase the use of coal ash for a variety of beneficial purposes.
- Recycling
  
  DP&L recycles used equipment, scrap metal, aluminum cans, glass bottles, office paper, cardboard, solvents, waste oil and motor vehicle anti-freeze wastes generated at its facilities. DP&L commits to continuing this effort, which conserves natural resources, saves energy, and reduces the Company's trash disposal costs. The aluminum can recycling program provides an additional benefit in that various community non-profit agencies receive the proceeds from the sale of the Company's recycled cans.
  
  Green Teams, which are comprised of employee volunteers at each work site, play a key role in making the recycling program work. The Teams encourage co- workers to weigh environmental considerations into every decision made on the job.
- Tree Planting Activities
  
  DP&L distributes about 10,000 tree seedlings annually to its customers for planting. The trees will continue to be distributed at festivals and trade shows in the future.
- Electrotechnology
  
  DP&L seeks to foster greater customer awareness and use of energy-saving products that help reduce carbon dioxide emissions, such as electric lawn mowers and electric grills.
  
  Through newsletters and factsheets, the company informs customers of the association between saving energy and preserving the environment. For instance, DP&L's "Energy News You Can Use", first published in 1983, has helped to keep residential
  customers up-to-date with energy conservation tips,
  
  appliance recommendations, and information on Delmarva Programs. The newsletter is enclosed with the customer's monthly energy bill.
  
  The "Energy User News Digest" newsletter informs key business people about technological and market developments that can help them reduce energy costs and increase productivity. It is distributed quarterly to 2,000 of the company's largest commercial and industrial customers.
  
  "Energy Information You Can Use Factsheets" supplement monthly Newsletter articles, and are produced to follow up on customer requests for more information on articles of particular interest.
  
  Such publications will continue to be sent out in an effort to inform DP&L's customers on energy saving issues
- Pocomoke City Energy Showcase
  
  In partnership with the Maryland Energy Administration and the citizens and businesses of Pocomoke City, Maryland, DP&L sponsored a community effort to reduce water and energy usage. The project included over 30 separate initiatives ranging from compact fluorescent bulb giveaways to photovoltaic lighting. The project will conclude in 1995 and will ultimately involve over 2,700 separate participants who will save an estimated 1,585,000 kWh annually.

2. Utility-wide Initiatives

Utility Forest Carbon Management Program

DP&L joined the Program at its inception in 1994 by contributing a $5000 membership fee. As a member of the Policy Committee, DP&L is actively involved in Program development, and with the assistance of a consultant, the participating utilities are currently evaluating various projects for implementation later in 1995 and in 1996.
National Earth Comfort Program

DP&L joined the National Earth Comfort Program in late 1994, and has committed to participate at the $40,000 annual membership dues level. As part of the Program, DP&L is a member of the Technology Confidence Building Committee which develops and implements marketing and educational programs regarding geothermal heat pump technologies. The Company has committed substantial resources to the development and implementation of a demand side management program designed to promote the installation and use of geothermal heat pump technologies within the Company's service territory. Also, DP&L is sponsoring a training and certification course designed to provide trade allies with installation and service training for this new technology. The Company plans to continue to commit resources in the future to promote the use of cost effective geothermal heat pump technology.

Robert F. Molzahn
General Manager, Environmental Affairs
Delmarva Power & Light Company
252 Chapman Road, P.O. Box 6066
Newark , DE 19714-6066

DP&L agrees to notify DOE prior to or, in any event, no later than 30 days after any change in the contact.

II. DOE Commitments

Mr. Allan Hoffman
U.S. Department of Energy
1000 Independence Avenue, S.W.
Washington, DC 20585
(202) 586-1786

DOE agrees to notify DP&L prior to or, in any event, no later than

30 days after any change in liaison responsibilities or personnel.

III. General Provisions


_______________________________________________        Date:------------------

Howard E. Cosgrove, 

Chairman, President and Chief Executive Officer

Delmarva Power & Light Company





_______________________________________________        Date:------------------

The Honorable Hazel R. O'Leary

Secretary of Energy

U.S. Department of Energy

Attachments:

DELMARVA' POWER'S ENERGY
EFFICIENCY AND
CONSERVATION PROGRAMS

CHALLENGE 2000/
Residential Programs

Energy-Efficient Products
A kit that includes a water heater blanket, a low-flow shower head, 2S feet of pipe insulation, a low-flow faucet aerator, and one compact fluorescent light bulb. This kit can be purchased from Delmarva Power by mail, or through local clubs or community organizations. Currently, this kit is available in Maryland and Delaware.

Energy For Tomorrow
This program involves residential customers in energy management by offering incentives of up to $32 for cycling their central air conditioners/heat pumps and electric water heaters during Delmarva Power's summer peak usage times.

E Plu$
A program that provides rebates to residential customers who install qualifying high-efficiency heat pumps or central air conditioners. Rebates range from $150 to $900. This program is available throughout Delmarva Power's service territory.

Super E Plu$
This program awards the standard of excellence for energy homes. Qualifying homes are built to super high efficiency specifications to provide both comfort and energy savings. Rebates are offered to customers who meet the standards throughout Delmarva Power's service territory.

CHALLENGE 2000 /
COMMERCIAL & INDUSTRIAL PROGRAMS

Commercial/Industrial Air Conditioning
This program provides rebates to customers who install high-efficiency air conditioners, heat pumps, and chillers. Customers receive rebates of $180 per kilowatt saved. This program is available throughout Delmarva Power's service territory.

Commercial/Industrial Indoor Lighting
This program provides customers who install high-efficiency lighting equipment rebates of $80 to $180 per kilowatt saved, depending on the measure installed. This program is available throughout Delmarva Power's service territory. Commercial New Construction
The program offers rebates and technical assistance to new building owners who include high efficiency equipment and energy-saving design in new commercial buildings. This program is available in Maryland and Delaware.

Cool Storage
Delmarva Power offers a rebate of $140 per kilowatt shifted off-peak to commercial/industrial customers who install cool storage equipment in their facilities. To participate, a customer must shift a minimum of 50 kilowatts to off-peak hours using cool storage technology. This program is available in Maryland ant Delaware.

Load Shifting
Load shifting provides fire consultations and information to identify opportunities for commercial/ industrial consumers to shift load from on-peak periods; to off-peak periods. In return for shifting load. customers save on their monthly demand charges through our commercial/industrial time-of-use rates.

Motor Rebate
This program enables customers who replace failed motors with high efficiency motors or who install new high efficiency motors to receive rebates and advice from Delmarva Power. Currently, the program is available in Maryland and Delaware.

Peak Management
A program involving our commercial/industrial customers in energy management by offering financial incentives for curtailing their load or using on-site generation (a minimum of 100 kilowatts) during Delmarva Power's summer peak usage times.

Poultry Farm Lighting
This Program allows poultry growers who install high-efficiency lighting in their poultry houses to receive rebates of $80 per kilowatt saved. This program is available throughout Delmarva Power's service territory.

Interruptiple Power Rate

Contracted controllable power rate offered to customers with at least 2,000 kW of controllable power. Customers are provided 30 minutes notice to provide at least 2,000 kW of load reduction during peak periods in exchange for a reduced demand charge, subject to specific conditions and limitations.

Dispatchable Generation

Long Term power contract offered to customers with the capability to provide at least 1,000 kW of internally generated power during peak periods. Customers receive billing credits commensurate with available generation, subject to specific conditions and limitations.

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