Climate Challenge Participation Letter

DOE's Energy Partnerships for a Strong Economy

The Climate Challenge Program is a joint, voluntary effort of the United States Department of Energy ("DOE") and the electric utility industry undertaken in pursuit of the President's goals for reducing greenhouse gas emissions. The framework of the Climate Challenge Program was established in the Climate Challenge Memorandum of Understanding dated April 20, 1994 ("Climate Challenge MOU"), (see Attachment A to this Participation Accord).

This Participation Accord describes the actions that North Carolina Electric Membership Corporation ("NCEMC"), and DOE have committed to undertake under the Climate Challenge Program. NCEMC's commitments include specific activities and efforts to reduce, avoid, or sequester greenhouse gas emissions. DOE's commitments include specific actions designed to assist NCEMC in achieving its Climate Challenge Commitments.

NCEMC provides wholesale generation and transmission service to 27 of the 28 electric cooperatives in North Carolina. The cooperatives are member-owned, not-for-profit, and overseen be a board of directors elected by its membership. The network of electric cooperatives provides electric service to more than 650,000 homes, farms, and businesses in North Carolina and serve approximately 1.6 million people.

Electric cooperatives listed in Attachment B have an ownership interest and receive bulk electric power from NCEMC. Due to this ownership and power supply relationship, the cooperatives in Attachment B will participate in the Climate Challenge Program through NCEMC.

I. NCEMC Commitments.

A.
Consistent with Paragraph II.B. 1 and Exhibit B of the Climate Challenge MOU, NCEMC commits to the avoidance of CO₂ emissions in the amount of 72,243 tons of CO₂ in the year 2000. This avoidance is based upon purchased power generation. The avoidance is relative to the year 2000 greenhouse gas emission levels for a modified reference case that was projected from NCEMC's 1990 baseline year. NCEMC's projected fuel mix in the year 2000, compared to 1990, reflects an increase in the use of nuclear and conventional and pumped storage hydro and a decrease in the use of oil and gas. (See Attachment C for summary data and calculations.)

B.

NCEMC will report to DOE annually on its 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 Section 1605(b) of

the Energy Policy Act and the Supplemental Guidance on Commitment Definitions and Reporting in Exhibit B of the Climate Challenge MOU. The first such report may include a description of the activities and achievements of NCEMC prior to its becoming a participant in the program, expressed on an annual basis to the extent possible.

C.

NCEMC will confer with DOE no later than October 31, 1996 regarding NCEMC's participation in the Climate Challenge Program. The purpose of such meetings will be to evaluate NCEMC's progress towards achieving its Climate Challenge commitments and possible adjustments to these commitments based on the availability of reasonable, cost- justified activities for reducing greenhouse gas emission.

D.

The Climate Challenge representative for the NCEMC will be June Small, 3400 Sumner Boulevard, Raleigh, North Carolina, 27604. NCEMC will notify DOE prior to or, in any event, no later than 30 days after any change in contact.

A.
DOE will perform the actions and fulfill the commitments set out in section III of the Climate Challenge MOU.

B.

The Climate Challenge representative for DOE will be Mr. Larry Mansueti; Office of Utility Technologies EE-10, 1000 Independence Avenue, S.W., Washington, DC 20585, (202) 586-2588. DOE will notify NCEMC prior to, or in any event, no later than 30 days after any change in representative.

C.

DOE will meet with the NCEMC upon request regarding possible adjustments of the Climate Challenge commitments set forth in subsection I.A. of this Participation Accord.

D.

DOE will consider requests by NCEMC to intervene in 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 NCEMC for purposes of addressing Climate Challenge Program issues, it will provide notice to NCEMC.

E.

To the extent permitted by applicable law and regulations and by the availability of funds, DOE will consider NCEMC's participation in Climate Challenge as a factor to be weighed positively in evaluating applications for financial and other assistance submitted to DOE in support of commitments made by NCEMC under this Participation Accord.

F.

DOE agrees to provide public recognition to NCEMC for its Climate Challenge activities. DOE will, among other things, prepare an annual report summarizing results achieved under Climate Challenge and highlighting any outstanding achievements or innovative approaches of NCEMC.

A.
Use of any DOE-developed materials by NCEMC will be governed by the provisions of section IV of the Climate Challenge MOU.

B.

In addition to the foregoing provisions, DOE and NCEMC agree to act in accordance with the principles set out in section I of the Climate Challenge Program MOU and the general provisions set forth in subsections V.A., V.B., V.C., 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 the activities under the Climate Challenge Program without penalty and without being subject to remedies at law or equity.



U.S. DEPARTMENT OF ENERGY

(Original Signed By)
Hazel 0 Leary
Secretary of Energy




NORTH CAROLINA ELECTRIC MEMBERSHIP CORPORATION

(Original Signed By)
Charles W. Terri
Executive Vice President


Attachments:

Attachment A - Climate Challenge Program MOU and Exhibits
Attachment B - Distribution Cooperatives which are Participating in the Climate Challenge Program through NCEMC

Attachment C - 1990 and 2000 Energy Projections, Fuel Mixes, and Estimated CO₂ Emissions

Year                 Energy Projections/Fuel Mix/Estimated CO2 Emissions

               Nuclear                      Natural Gas/Oil                    Coal
               Conventional and                  
               Pumped Storage   
                     Hydro

_________________________________________________________________________________________________

1990           51%                          8%                                 41%

7,740 GWh      3,947.4 GWh                  619.2 GWh                          3,173.4 GWh

               0 lbs. CO2                   683,100,000 lbs. CO2               6,442,205,000 lbs. CO2


2000(1)        51%                          8%                                 41%

13,061 GWh     6,661.1 GWh                  1044.9 GWh                         5,355 GWh

               0 lbs. CO2                   1,153,542,000 lbs. CO2             10,924,200,000 lbs. CO2


2000(2)        52%                          7%                                 41%

13,061 GWh     6,792 GWh                    914 GWh                            5,355 GWh

               0 lbs. CO2                   1,009,056,000 lbs. CO2             10,924,200,000 lbs. CO2 




(1) Percentages reflect 1990 fuel mix resulting in emissions of 12,077,742,000 lbs. of CO2

(2) Percentages reflect year 2000 projected fuel mix resulting in emissions of 11,933,256,000 lbs. 
of CO2 


SUMMARY:  The difference between the Year 2000 estimated CO2 emissions based upon 1990 
fuel mix (12,077,742,000 lbs. CO2) and the Year 2000 estimated CO2 emissions based upon the 
projected fuel mix (11,933,256,000 lbs. of CO2) yields a CO2 avoidance of 144,486,000 lbs. of 
CO2 (72,243 tons) in the year 2000.

1MM btu = 1,000,000,000 btu



1990 Energy Based Upon 1990 Fuel Mix

     Natural Gas/Oil:  619.2 GWh

            Energy = (8,000 btu/kwh)(619.2 GWh)(1,000,000 GWh/kwh)
                   = 4.95 MM btu

            Carbon Content = 69.0 million tons/quadrillion btu
                           = 69,000,000 tons/1,000 MM btu
                           = .000000069 tons/btu

            Carbon oxidized = btu x tons/btu
                            = (4.95 MM btu)(.0000000069 tons CO2/btu)
                            = 341,550 tons CO2
                            = (341,550 tons CO2)(2000lbs/ton)
                            = 683,100,000 lbs. CO2


     Coal:  3,173.4 GWh

            Energy = (10,000 btu/kwh)(3,173.4 GWh)(1,000,000 GWh/kwh)
                   = 31.735 MM btu

            Carbon Content = 101.5 million tons/quadrillion btu
                           = 101,500,000 tons/1,000 MM btu
                           = .000000102 tons/btu

            Carbon oxidized = btu x tons/btu
                            = (31.735 MM btu)(.000000102 tons CO2/btu)
                            = 3,221,102 tons CO2
                            = (3,221,102 tons CO2)(2000lbs/ton)
                            = 6,442,205,000 lbs CO2

2000 Energy Assuming 1990 Fuel Mix

     Natural Gas/Oil:  1044.9 GWh
            Energy = (8,000 btu/kwh)(1044.9 GWh)(1,000,000 GWh/kwh)
                   = 8.359 MM btu

            Carbon Content = .000000069 tons CO2/btu

            Caron oxidized = (8.359 MM btu)(.000000069 tons CO2/btu)(2000lbs/ton)
                           = 1,153,542,000 lbs CO2

     Coal: 5,355 GWh
            Energy = (10,000 btu/kwh)(5,355 GWh)(1,000,000 GWh/kwh)
                   = 5.355 MM btu

            Carbon Content = .000000102 tons/btu

            Carbon oxidized = (5.355 MM btu)(.000000102 tons CO2/btu)(2000lbs/ton)
                            = 10,924,200,000 lbs CO2


2000 Energy Assuming Year 2000 Fuel Mix

     Natural Gas/Oil:  914 GWh
            Energy = (8,000 btu/kwh)(914 GWh)(1,000,000 Gwh/kwh)
                   = 7.312 MM btu

            Carbon Content = .000000069 tons CO2/btu

            Carbon oxidized = (7.312 MM btu)(.000000069 tons CO2/btu)(2000lbs/ton)
                            = 1,009,056,000 lbs CO2

     Coal:  5,355 GWh
            Energy = (10,000 btu/kwh)(5,355 GWh)(1,000,000 Gwh/kwh)
                   = 5.355 MM btu

            Carbon Content = .000000102 tons/btu

            Carbon oxidized = (5.355 MM btu)(.000000102 tons/btu)(2000lbs/ton)
                            = 10,924,200,000 lbs CO2

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