Climate Challenge Participation AccordDOE's Energy Partnerships for a Strong Economy
CLIMATE CHALLENGE PARTICIPATION ACCORD This Participation Accord describes the commitments that the Montana Power Company (MPC) 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). I. Background
MPC's current electric generation capability is produced by 12 hydroelectric facilities (489 Megawatts), four coal fired thermal plants (697 Megawatts), and a mix of long-term firm purchase contracts (415 Megawatts). MPC's annual electric sales are estimated to be approximately 10.4 billion kilowatt-hours, and MPC's annual natural gas sales are estimated to be about 24.1 billion cubic feet.
II. Utility Commitments
A. Reduced Greenhouse Gas Emissions / Integrated Planning
Consistent with paragraph II.B.1. of the Climate Challenge Program MOU, MPC will initiate or continue the efforts described in items 1-8 below which will contribute to reducing, avoiding, or sequestering greenhouse gas emissions. The commitments described herein are made by MPC's Utility Division. These commitments and any future commitments are and will be contingent upon the associated programs being incorporated into MPC's Integrated Resource Plan (IRP) and upon MPC's ability to recover through rates the costs associated with those commitments.
1.
MPC's commits to continue the DSM programs described in Appendix A, subject to regulatory approval and financial constraints. MPC has expanded its DSM efforts since 1991 by enhancing programs that were in place prior to 1990 and by adding new programs. Generally, MPC's DSM programs are designed to increase the efficiency, or modify the timing, of its customers' use of electric energy services. Annual CO2 emissions reductions of approximately 370,000 tons are estimated in 2000.
Since 1991 MPC has co-funded demonstrations of emerging end-use technologies. For example, MPC funded the development of, and subsequently obtained a patent for, an integrated fan coil hydronic loop heating and cooling system which competitively uses natural gas as an alternative to packaged terminal electric resistance heating and air conditioning units. MPC has also worked with several consultants, vendors and customers to install and monitor the performance of innovative energy saving devices. MPC commits to continue evaluating demonstrations projects and to participate where appropriate. MPC has not estimated the potential greenhouse gas reduction available from this effort.
In the context of its IRP process, MPC has considered co-firing or fuel substitutions for generating facilities. MPC commits to continue evaluating these alternatives and to pursue them where appropriate. MPC has not estimated the potential greenhouse gas reduction available from this effort.
Technology Demonstrations
Since 1991 MPC has been involved in the National Wind Coordinating Committee and in the Montana State University Regional Program for Energy Innovation. MPC is a participant in the Rice Ridge Renewable Energy Park. The Park is expected to include demonstration of alternative energy sources in the Northwestern environment, including an investigation of solar photovoltaic applications and utility grade wind turbines. Other renewable technologies and applications are considered within MPC's resource and program planning efforts. For budget year 1995, MPC has committed $210,000.00 to investigate renewables. MPC has not estimated the potential greenhouse gas reduction available from this effort.
MPC, along with other interested parties, has been proactive in the development of the IRP process in Montana. Since 1991, these efforts have resulted in IRP rules for resource development and an IRP statute in Montana. The IRP process includes an Environmental Externality Adjustment Factor which accounts for environmental impacts (including greenhouse gas emissions) of resources. MPC commits to continuing this effort as appropriate. MPC does not attribute greenhouse gas reductions directly to this effort because these impacts are considered elsewhere.
MPC is currently expanding its Thompson Falls Hydroelectric Project by 50 MW. MPC will expand by an additional 73.6 MW in its Missouri-Madison Hydroelectric Project if approved in MPC's relicensing. Annual CO2 emissions reductions of approximately 116,000 tons are anticipated in 2000.
MPC commits to participating in efforts to reform transmission system pricing relative to FERC efforts on wholesale wheeling. MPC, in coordination with the Western Systems Power Pool, and potentially in conjunction with regional transmission groups, will continue to work to optimize the utilization of affected transmission systems. MPC has not estimated the potential greenhouse gas reduction available from this effort.
MPC commits to investing $30,000.00 in forest carbon management prior to the year 2000. MPC has not yet determined in what specific programs MPC will participate. However, MPC is strongly considering programs in the State of Montana.
MPC will report to DOE 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 Exhibit B of the Climate Challenge Program MOU. The first such report may include a description of the activities and achievements of MPC prior to its becoming a participant in the Program, expressed on an annual basis to the extent possible.
MPC will confer with DOE on or before June 1, 1997, to evaluate jointly MPC's progress in achieving its Climate Challenge Program goals and to discuss possible adjustments to its voluntary commitments.
Jack Haffey Vice President, Administration and Regulatory Affairs Montana Power Company 40 E. Broadway Butte, MT 59701 MPC agrees to notify DOE prior to or, in any event, no later than 30 days after any change in the contact.
III. DOE Commitments
A.
US - DOE 1000 Independence Ave SW Washington, D.C. 20585 (202) 586-1786
IV. General Provisions
A.
U.S. DEPARTMENT OF ENERGY MONTANA POWER COMPANY
(Original signed by) (Original signed by)
____________________________ ______________________________
Secretary of Energy or Chairman and CEO
designee
Date: ______________________ Date: ________________________
Appendix A
DSM Activity Summary
OVERVIEW
The Montana Power Company (MPC) Utility Division has been involved in the delivery of Demand-Side Management (DSM) services to its customers since 1978. Since 1991 MPC has significantly expanded its DSM efforts by expanding programs that were in place prior to 1990 and by adding new programs. Capital expenditures from 1991 through 1994 totaled about $32,000,000. MPC's DSM programs are described in this document.
The following table presents MPC's latest estimate of the contribution of DSM to MPC's existing and future resource mix.
ESTIMATED DSM SAVINGS BY CLASS
1991-1993 1994-2000 TOTAL
SECTOR (MWh)[1] (Mwh)[2] (Mwh)
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Residential 18,238 94,352 112,590
Commercial 31,522 162,433 193,955
Industrial 841 45,688 46,529
Contract Ind. 2,723 132,430 135,153
Other 3,720 0 3,720
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TOTAL 57,044 434,903 491,947
Note: These numbers are subject to change as additional program evaluations are completed, and as MPC's Integrated Resource Plan is updated periodically.
Residential Programs:
ESPII Residential Audit Program
From 1978 through mid-1992 MPC offered residential energy audits through the ESP program. MPC space heating customers were eligible for this program. Approximately 2,500 homes were audited in 1991 and 1992 through this program. The program included a walk-through audit performed by MPC representatives and a customized report to the customers for the recommended improvements and the estimated energy savings. MPC offered an interest-free loan for measures meeting program requirements. This program was replaced by the Efficiency Plus Audit program in July of 1992.
Efficiency Plus Audit Program
MPC offers the Efficiency Plus Audit to existing gas and electric residential customers. Customers who use electricity for home heat and/or electricity for water heat are specifically targeted. While the ESP II audit program served around 2,000 customers a year, MPC targets for the Efficiency Plus program are 5,000 homes a year with special emphasis on electric space and/or water heat customers.
During the audit, MPC's contractor installs cost-effective conservation measures that immediately save energy. Customers receive a report, customized for energy savings in their home. Interest-free loans are offered for recommended weatherization measures. MPC's contractor has been performing about five thousand audits per year.
This program was initially offered in mid-1992 at which time about 1,000 audits were completed. About 5,000 audits were completed in each 1993 and 1994.
Fuel Switching (Pilot) Program
MPC provides incentives to targeted electric space and water heating customers who live in areas where natural gas is available. These incentives are designed to encourage the customers to switch from electric equipment to natural gas. The results of this pilot effort are currently being evaluated. MPC expects the evaluation to support continued and expanded efforts in this area.
When cost effective, MPC offers cash incentives in addition to a low interest financing package to electric customers who switch to natural gas. The existing electric heating equipment must be removed or disabled to qualify.
In 1993, when this program was initially offered, there were 229 participants. In 1994 over 600 customers participated in the program resulting in an increase in energy savings of over 200% compared to 1993.
"Smart Choice" Natural Gas Marketing Program
MPC promotes natural gas as the "Smart Choice" and has offered cash incentives of $100 when customers switch from some other heating fuel to MPC natural gas. This is a gas marketing program and therefore does not require the customer to remove or disable the other heating source. In 1992, 1993, and 1994, MPC tracked more than 400 MPC electric heat customers who took advantage of this gas marketing offer which resulted in acquisition of electric resource.
Efficiency Plus Residential Lighting Program
In 1992 and 1993, MPC offered residential lighting programs to stimulate the compact fluorescent lighting market and to increase customer awareness of energy efficiency. Due to a non-existent retail delivery system, the 1992 program was operated as a mail order program which allowed customers to select up to five compact fluorescent products which MPC offered for $3 each. In 1993, MPC worked to develop the retail delivery system and changed to a rebate program through which the company offered customer-friendly products at a $6 discount off the retailers price. More than 70,000 products were sold as a result of the two year effort.
Free Weatherization Program (Income Qualified)
MPC offers free weatherization services to customers whose household income is below 150% of the federal poverty guidelines. MPC acquires electric and natural gas resources by funding electric and natural gas conservation measures, as well as, fuel switching from electricity to natural gas. Local community action agencies (Human Resources Development Councils) implement the program measures.
MPC is entering a partnership with the State of Montana for joint weatherization program operation in order to maximize cost effectiveness for both the company and the state, as well as, to improve program benefits.
The Free Weatherization Program pre-dates 1990. For the 1990 program year 443 low income households were weatherized. In each 1991, 1992 and 1993 more than 700 homes were weatherized. In 1994 the number of homes weatherized dropped to less than 600. However, an electric space and water heat fuel switching component was added to the program in 1994 resulting in an increase in savings over 1993.
Super Good Cents Program
The Super Good Cents Program encourages the construction of energy efficient electrically heated new homes. MPC offers Super Good Cents incentives in areas where natural gas is not available. The program promotes high efficiency, comfort, and emphasizes indoor air quality. Base incentives are provided for specific design levels, increasing as the cost effective efficiency features increase in the home.
The Super Good Cents program pre-dates 1990. In 1990 there were 21 homes completed under the Super Good Cents Program. Since that time participation in the program has steadily increased and, in 1994 there were 121 completed under the program. The four year total from 1991 through 1994 is nearly 320 homes.
Efficiency Plus - Residential Heat Pump Program
Ground source heat pumps are highly efficient electric heating and cooling devices which transfer heat from the earth to the home in the winter and move heat from the home to the ground in the summer. In 1994, MPC offered cash incentives of $2,000 for pre-approved installations for new or existing homes. Incentives are not offered where natural gas is available.
This program was initiated as a pilot program in 1990 with five pilot sites. As of the end of 1994, MPC had participated in the installation of 100 systems.
Commercial/Industrial Programs:
Efficiency Plus Commercial Lighting Program
The Efficiency Plus Lighting program encourages customers to install efficient interior and exterior lighting in commercial facilities. New and retrofit installations qualify. Rebates are offered for qualified electronic ballasts, fluorescent tubes, compact fluorescent lamps, and high intensity discharge lighting equipment. Customers are contacted though direct mail and on-site visits. On-site evaluations are available to identify and qualify cost effective change-outs. Contracted design assistance is available for specific tax supported entities.
The commercial lighting rebate program was initially offered starting in 1992. Participation in the program has increased dramatically. Savings attributed to this program in 1994 are more than 3.5 times the savings estimated for 1992.
Efficiency Plus Motor Rebate Program
The Efficiency Plus Electric Motor Rebate program promotes the installation of premium efficiency motors. An information handbook and free motor efficiency analysis software are available.
Customer rebates are provided for efficient motor installations in new or existing facilities. Additionally, dealer rebates are offered to encourage the stocking of high efficiency motors. Special application, variable speed drive and motor control systems can be evaluated through the Efficiency Plus Business Partners Program.
This program was first offered in 1992. Participation in the program has increased dramatically since then. Savings attributed to this program in 1994 are almost 5 times the savings estimated for 1992.
Efficiency Plus Business Partners Program
Through an on-site audit, larger commercial customers are provided estimates of energy consumption by fuel type and end use. The audit identifies areas for potential energy and demand savings and assists the owner in qualifying his/her facility for MPC's incentive programs. MPC retains technical consultants to assist with complex audits.
The primary focus of the Efficiency Plus Business Partners is to provide tools for improving the energy efficiency of new and existing commercial, industrial, governmental and multi-family residential facilities. Funding is available for energy efficient design assistance for new as well as existing structures. This design assistance cuts the facility's energy costs by providing the owner with information needed to make sound decisions regarding equipment and material selection for new construction or retrofit of existing buildings.
MPC contributes toward the cost of building performance modeling performed by a qualified consultant to improve facility design. Standard recommendations may be offered for less complex facilities and providing cash incentives to encourage implementation of qualified measures. Proposals for energy studies and projects are submitted by facility owners, consultants, or contractors.
MPC reviews and approves proposals, and negotiates incentives, based on the value of the resource to MPC and the customers economics.
The new construction and retrofit components of the Business Partners Program were offered prior to 1990. Commercial audits were offered starting in 1992. The program has seen significant growth since 1990. Estimated energy savings for 1994 are about 3.5 times the savings estimated for 1990.
Efficiency Plus Irrigation Program
This program provides free audits and low interest financing for cost effective energy improvements on 20 horsepower and larger irrigation systems. The program targets pumping plant efficiency improvements in new or existing irrigation systems.
Program development, including implementation of one pilot project, occurred in 1993. Three projects were completed in 1994, the first program year.
Other DSM Efforts:
MPC is involved in a number of non-programmatic efforts to improve the efficient use of energy. The most significant of these efforts are listed below:
State Revolving Fund for Public Buildings
The State of Montana, through the Department of Natural Resources and Conservation (DNRC), has developed a revolving fund for public buildings. This program uses general revenue bonds to finance retrofits, and then covers the debt service through energy savings. MPC provided supporting testimony for enabling legislation and supported requests for bonding authority. MPC cooperates with DNRC to provide co-funding through its DSM programs. MPC has also worked with DNRC, the State Office of Public Instruction and the State Board of Investments to develop a coordinated funding mechanism for local government and school facilities.
State Energy Policy Development
MPC has actively participated in efforts by State Government to develop guidelines for establishing and supporting legislation consistent with a comprehensive State Energy Policy.
Building Codes
MPC has actively participated in efforts to improve the energy efficiency requirements in Montana's building codes, where those improvements were cost-justified.
Customer Service
MPC's employees routinely provide customers with information and advise on the most cost-effective and productive use of MPC's gas and electric services.
1MPC's Historical Database (reflects net savings for programs evaluated to date) 2Projected savings based on most likely DSM scenario from ongoing resource planning process. Plan to be filed - Spring 1995.
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