Climate Challenge Logo

Climate Challenge Participation Letter

DOE's Energy Partnerships for a Strong Economy

Participation Accord
Between
Potomac Electric Power Company
and
the United States Department of Energy
Regarding Climate Challenge

This Participation Accord describes the commitments that Potomac Electric Power Company (PEPCO) 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 (MOU) (see Attachment 1 to this Participation Accord).

I. PEPCO Commitments

    A.
      Consistent with paragraph II.B.l.b of the Climate Challenge Program MOU, PEPCO will reduce greenhouse gas emissions to approximately 3 % below its 1990 baseline of about 20.42 million tons by year 2000. In order to achieve the emissions reductions, PEPCO will:

      1.

        continue to operate and evaluate the following energy-use management programs (see Attachment 2 for detailed description of each program): 

        i.	Kilowatchers Club(R)
ii.	Kilowatchers PlusSM
iii.	Residential Time-of-Use Rates
iv.	Commercial Time-of-Use Rates
v.	Curtailable Load
vi.	Powerchoice(R)
      2.
        continue to operate its High-Efficiency Air Conditioner and Heat Pump Rebate Program (see Attachment 2 for program description).
      3.
        complete gas conversion project to enable co-firing at its Chalk Point Generating Station Units 1 & 2 by early 1996.
      4.
        continue active participation in EPA's Green Lights program.
      5.
        initiate the following efficiency improvements to various turbines, cooling towers, instruments and control projects at generating stations within its system over a six year construction period: 

        Generating Station Units           Equipment                Year
Chalk Point Unit 1                 Turbine Overhaul          - '96/95
"       "    "   2                 "            "            - '97/95
"       "    "   3                 "            "            - '95
Chalk Point Unit 3                 Cooling Tower             - '95
"       "    "   4                 Turbine Overhaul          - '96
"       "    "   4                 Cooling Tower             - '96
Dickerson Unit 1                   Turbine Overhaul          - '95
Dickerson Unit 2                   "        "                - '98
"         "    3                   "        "                - '99
Potomac River Unit 2               "        "                - '98
"         "    "   3               "        "                - '95/98
"         "    "   4               "        "                - '97
"         "    "   5               "        "                - '96
Morgantown Unit 1                  "        "                - '97
"         "    2                   "        "                - '98
Benning Unit 16                    Cooling Tower             - '99
"         "      15                Turbine                   - 2000
"         "      16                Turbine                   - '99
      6.
        participate in the EPRI Boiler Emission Research effort.
      7.
        use its ownership in two solar power plant projects as a mechanism to promote and generate more interest in solar power.
      8.
        promote electrotechnologies by developing programs to educate and inform potential users of such technologies and their benefits, and by developing methods for measuring reductions associated with these technologies.
      9.
        continue to use mass media, special promotions, classroom seminars and community events to ensure customers remain informed about the value of energy conservation.
    B.
      Consistent with paragraph II.B.l.a of the Climate Challenge Program MOU, PEPCO will make financial or other resource contributions to the following initiatives:

      1.

        Envirotech Investment Fund - $1 million to be disbursed during 1995 through 2000.
      2.
        Geothermal Heat Pump Consortium - $50 thousand in 1995.
      3.
        EV America - PEPCO is serving as program manager. EV America intends to purchase 500 vehicles by the end of 1995 and 5000 vehicles by the end of 1997.
    C.
      PEPCO 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 the Energy Policy Act subsection 1605(b) 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 PEPCO prior to its becoming a participant in the Program, expressed on an annual basis to the extent possible.
    D.
      PEPCO will confer with DOE on or before March 31, 1997, to evaluate jointly PEPCO's progress in achieving its Climate Challenge Program goals and to discuss possible adjustments to its voluntary commitments.
    E.
      The Climate Challenge Program representative for PEPCO will be Mr. James S. Potts, Vice-President Environment, 1900 Pennsylvania Avenue, Room 705, Washington, D.C. 20068. PEPCO agrees to notify DOE prior to or, in any event, no later than 30 days after any change in the representative.
II. DOE Commitments
    A.
      DOE's commitments to the utility industry, as set out in section III of the Climate Challenge Program MOU, are hereby incorporated in this Participation Accord by reference.
    B.
      DOE will consider PEPCO 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 PEPCO for purposes of addressing Climate Challenge Program issues, it will provide notice to PEPCO.
    C.
      DOE will provide an annual report to PEPCO describing the actions that it has taken to fulfill its commitments under section m and Exhibit C of the MOU and the results of those actions.
    D.
      The Climate Challenge Program representative for DOE, who will serve as liaison to PEPCO, will be Allan Hoffman, U.S. Department of Energy, 1000 Independence Avenue, S.W., Washington, D.C. 20585, phone No. 202/586-17786. DOE agrees to notify PEPCO prior to or, in any event, no later than 30 days after any change in liaison responsibilities or personnel.
IV. General Provisions
    A.
      Use of DOE-developed materials by PEPCO 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 PEPCO 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)
_________________________________           Date: ___________________
John M. Derrick, Jr., President &
Chief Operating Officer
Potomac Electric Power Company


(Original signed by)
_________________________________           Date: ___________________
Hazel O'Leary, Secretary
United States Department of Energy
Attachments:

Attachment 1 -- Climate Challenge Program MOU and exhibits

Attachment 2 -- Energy Use Management/Conservation Programs

ATTACHMENT 2

Energy Use Management/Conservation Programs

1. Kilowatchers Club(R)

PEPCO offers residential customers summer bill credits for participating in the Kilowatchers Club(R) , a cycling program for central air conditioners, heat pumps, and electric water heaters. From June through October, customers in the District of Columbia and Maryland receive credits for voluntary program participation.

PEPCO limits cycling of air conditioners to no more than 15 non-holiday weekdays over the five-month period, and to no longer than six hours between noon and 8 p.m. For air conditioning, the program employs a 43% cycling strategy, which means that air conditioner compressors may be cycled off for 13 minutes and then on again for the next 17 minutes of each half-hour of program operation. Water heaters may be cycled off entirely for up to six hours during curtailment periods, no more than 20 days throughout the year. PEPCO introduced residential equipment cycling on a full-scale basis in Maryland in 1987 and in the District of Columbia in 1990. See Table 1 for program projections.

2. Kilowatchers PlusSM

Kilowatchers PlusSM is a variation of the Kilowatchers Club(R) . PEPCO operates the program on a full-scale basis in Maryland and on a pilot basis in the District of Columbia. Participants receive higher billing credits for participation in this program because air conditioner and heat pump compressors are completely turned off for up to six hours at a time when the program is operated. As with the Kilowatchers Club(R), PEPCO limits operation of Kilowatchers PlusSM to 15 non-holiday weekdays per summer, with a maximum of six hours per control period between noon and 9 p.m.

PEPCO initiated the full-scale Kilowatchers PlusSM in Maryland in the summer of 1991. In the same year, the Company initiated this program on a pilot basis in the District of Columbia. Under the Kilowatchers PlusSM program, the typical peak day demand reduction capability for air conditioners alone ranges from approximately 1.5 kW per participant in the District of Columbia to approximately 2.1 kW per participant in Maryland.

Impact evaluations for the Kilowatchers Club(R) and the Kilowatchers PlusSM show the coincident peak demand reduction capability from air conditioner and water heater cycling ranges from

approximately 0.9 kW per participant in the District of Columbia to approximately 1.2 kW per participant in Maryland. See Table 1 for program projections.

3. Residential Time-of-Use Rates

Time-of-use (TOU) rates provide a financial incentive to reduce on-peak electricity usage. Kilowatt hour consumption during summer on-peak hours is priced significantly higher than off-peak and intermediate-peak energy, reflecting PEPCO's marginal cost of service.

In 1984, the Maryland Public Service Commission allowed PEPCO to apply residential TOU rates to PEPCO's largest residential customers. Residential TOU rates were implemented in the District of Columbia in 1986. In the District of Columbia, PEPCO placed its 800 largest customers on a TOU rate. In Maryland, PEPCO placed approximately 250 customers with usage exceeding 6,000 kWh during two or more summer months on a TOU rate.

The Maryland Commission has since allowed PEPCO to include customers with usage exceeding 2,500 kWh during two or more summer months. PEPCO also asked the District of Columbia Commission for permission to lower the TOU qualification threshold to the 2,500 kWh level. The Commission allowed PEPCO to initiate comparative billing at the 2,500 kWh level, but the Commission deferred approval of live billing of these customers to a subsequent rate proceeding.

For purposes of this program, peak hours are 12 noon to 8 p.m., Monday through Friday, excluding holidays. Intermediate hours are 8 a.m. to 12 noon and 8 p.m. to midnight, Monday through Friday, excluding holidays. All other hours are considered off-peak.

An analysis of the program shows that implementation of the rate leads to statistically significant reductions in average weekday hourly demands during the peak rating period that range from 4.07% to 12.89% (based on 20-year average weather). See Table 1 for program projections.

4. High-Efficiency Air Conditioner and Heat Pump Rebate Program

PEPCO pays rebates to residential and multifamily customers who purchase high-efficiency central air conditioners, room air conditioners, and heat pumps. The Company provides rebates on a graduated scale so that higher efficiency units qualify for higher rebates. Program implementation began in 1990. See Table 1 for program projections.

PEPCO promotes the rebate program through equipment dealers, contractors, and retailers who are well positioned to influence customer purchase decisions. The Company provides these trade allies with marketing and technical support. PEPCO also promotes the program through bill inserts, direct mailing to trade allies, and personal contacts with customers as opportunities arise.

A process evaluation conducted in 1993 identified several opportunities to improve program performance. PEPCO took several actions based on the evaluation recommendations, including:

    • Expanding program marketing and educational efforts to increase customer and trade ally awareness of the program, and improve retailer knowledge about high-efficiency room air conditioners and PEPCO's rebates for that equipment; and
    • Streamlining the rebate application process in response to comments gathered during the evaluation.
5. Commercial Time-of-Use Rates

Maryland TOU rates are mandatory for commercial accounts whose demands exceed 25 kW or whose energy use exceeds 6,000 kWh for two consecutive winter months or 7,500 kWh for one summer month. In the District of Columbia, TOU rates are required for customers with electricity demands of 100 kW or greater.

In 1990, the District of Columbia Commission approved comparative billing of customers with demands between 25 and 100 kW, but deferred live billing of these customers to the Company's next rate case. See Table 1 for program projections.

6. Curtailable Load Program

PEPCO offers summer incentives to large commercial customers who agree to curtail their peak period loads at the Company's request. Currently, PEPCO operates full-scale curtailable load programs in the District of Columbia and Maryland, as well as a pilot program in the District of Columbia.

In its full-scale program in the District of Columbia, PEPCO offers summer billing period credits, based on kW reduced, to commercial customers who agree to provide at least 100 kW of load curtailment. Upon receipt of a signal from PEPCO, participating customers reduce their electricity demands to a ''firm service level" for the duration of a curtailment request. Participating customers who fail to reduce their demand to the firm service level pay a penalty for each kW used above the firm service level.

The full-scale curtailable load program currently operated in Maryland and the pilot in the District of Columbia also pay credits for each kW reduced, and include a "target demand level." However, there is no penalty provision. The target demand level reflects a customer's unique operating concerns and equipment, to allow each customer to attain maximum benefit from the program. Total bill credits are based on the average monthly load reduction for all curtailments in a billing cycle, better reflecting a customer's actual contribution to reduced demand. Customers must agree to provide at least 50 kW of load curtailment when requested. PEPCO's Maryland program was implemented as a pilot in 1991, and became a full-scale program in 1993. The District of Columbia Public Service Commission authorized the Company to undertake the pilot curtailable load program which PEPCO began in 1992.

PEPCO limits operation of these programs to 15 curtailments per summer season, the billing months from June through October. Curtailments may be requested only on non-holiday weekdays between the hours of noon and 8 p.m., and may last no longer than six hours.

An impact evaluation focusing on the program reductions achieved during 1991 and 1992 shows that program participants provide statistically significant reductions during the curtailment period. The evaluation also indicates that there is no statistically significant change in the level of the reduction provided when a customer switches from the full-scale program structure in effect in 1991 to the pilot program structure operated during 1992. See Table 1 for program projections.

7. Powerchoice Program(R)

Powerchoice(R) offers small commercial and master-metered multifamily customers an opportunity to participate in a load shedding program. Customers with maximum summer demands from 25 kW to 500 kW are eligible to participate, provided they can deliver at least 5 kW or 5% of load reduction, whichever is greater. PEPCO operates Powerchoice(R) as a full-scale program in Maryland and as a pilot in the District of Columbia.

Under the program, load-control equipment is installed at each participant's site that automatically drops certain specified loads upon receipt of a radio signal from PEPCO. Each customer agrees ahead of time as to the amount and types of loads affected. Participants earn bill credits for each kilowatt reduced. They can also use the load control equipment to manage energy use when the program is not operating.

The number of load curtailments is limited. PEPCO cannot invoke load shedding more than 15 days per season, and then only on non-holiday weekdays between noon and 8 p.m. Each curtailment lasts a manumit of six hours. See Table 1 for program projections.

Table 1

Energy Use Management/Conservation Programs
System Cumulative Ramped Gigawatt-Hour Savings 

                          1994   1995   1996   1997   1998   1999   2000   
                                                                           
Residential:                                                               
                                                                           
  Kilowatchers Club(R)      7    7      7      8      9      9      9      
  Kilowatchers PlusSM       4    4      4      4      4      4      5      
  Residential TOU          (1)   0      (1)    (1)    (1)    (1)    (1)    
  High Efficiency AC       13    21     29     38     47     57     66     
Rebate                                                                     
                                                                           
Total Residential          23    32     39     49     59     69     79     
                                                                           
Commercial:                                                                
                                                                           
  Commercial TOU           122   125    134    138    142    147    152    
  Curtailable Load          4    5      5      5      5      5      6      
  Powerchoice(R)            0    0      0      0      0      0      0      
                                                                           
Total Commercial           126   130    139    143    147    152    158    
TOTAL                      149    162   178    192    206    221    237



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