Climate Challenge Participation LetterDOE's Energy Partnerships for a Strong Economy
Climate Challenge Participation Accord This Participation Accord describes the commitments that Public Service Company of New Mexico (PNM) 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). PNM is an integrated energy company that provides electric and natural gas service to more than 1.3 million people in the state of New Mexico. PNM also markets power to wholesale customers throughout the U.S. and offers a comprehensive range of energy and water management services to municipalities, government agencies, and other institutional clients. PNM owns portions of two large coal-fired power plants, smaller oil/gas-fired power plants, and part of the Palo Verde Nuclear Generation Station. As a consequence of the significant population growth in the Southwest, PNM's electricity demand has been steadily increasing over the past several years and this trend is expected to continue well into the next decade. I. PNM Commitments A. Consistent with paragraph II.B. I of the Climate Challenge Program MOU, PNM will undertake the following activities to reduce, avoid, and/or sequester greenhouse gases: 1. Generation Increase at Palo Verde Nuclear Generating StationII. DOE Commitments A. DOE's commitments to PNM are those set out in section III of the Climate Challenge Program MOU, which are hereby incorporated in this Participation Accord by reference.III. General Provisions A. Use of DOE-developed materials by PNM 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. {signed} PNM'S CLIMATE CHALLENGE PROGRAM GREENHOUSE GAS REDUCTION ACTIVITIES
PNM is owner of 10.2 percent of the 3-unit Palo Verde Nuclear Generating Station (PVNGS), one of the largest powerplants in the U.S. Since 1990, the PVNGS owners have undertaken a number of activities to increase both the maximum dependable capacity and the capacity factors of the units. The effect of these activities has been to substantially increase the megawatt-hour annual output of this carbon-free generation source. Since 1990, the capacity utilization of PVNGS has been improved substantially. The 1990 capacity factor was 64.2 percent, already well above the 1987-1989 average of 46.6 percent. By 1996, PVNGS capacity factor had been improved to a record 89.1 percent. Current projections anticipate this plant running at about 88 percent capacity factor through the year 2000. In 1993, it became apparent during a steam generator analysis that additional power could be gained by initiating a new operational engineering specification. The culmination of these efforts was a power gain to thermal output, a nominal 16 MWth/unit and 48th MW for the entire plant. The effect of these improvements has been an increase of more than 40 percent in this plant's carbon-free generation since 1990. PNM's share of PVNGS's output, which totaled 2.09 million NM in 1990, rose to 2.94 million MWh in 1996. The projected 2.90 million @ in the year 2000 represents an increase of about 0.81 million NM over 1990 levels. Were this increased generation to have come from PNM's San Juan Generating station (a subbituminous coal-fired plant with a 1996 heat rate of about I 1, 100 Btu/kWh), each additional NM would have emitted about 1. 181 tons C02Consequently, the increased generation from PVNGS over 1990 levels will avoid about 957 thousand tons of C02 from PNM's sources in the year 2000. 2. Fossil Fuel Generation Activities 2.a Heat Rate Improvements at San Juan Generating Station (SJGS)PNM is owner of approximately 46 percent of the San Juan Generating Station (SJGS), a large four-unit plant burning subbituminous coal. Since 1990, PNM has undertaken a number of activities to improve the heat rate at SJGS relative to its 1990 level. These heat rate improvement projects include the following: 1990: Unit 2A/13 primary air heater hot end element replacement; Unit 2 high pressure feedwater heater replacement 1991: Unit 3 cooling tower restoration; Unit 2 #4 feedwater heater retube; Unit 2 cooling tower restoration; Unit 4 burner front refurbishment 1993: Unit 1 #2 feedwater heater replacement; Unit 2 burner front refurbishment 1994: Unit I secondary air heater cold end element replacement; Unit I cooling tower refurbishment; Unit 1 #4 feedwater heater retube 1995: Unit 4 turbine packing replacement 1996: Unit I burner front refurbishment; Unit 3 secondary air heater cold end element replacement Additionally, increases in the plant's overall capacity factor have led to a decrease in load following requirements, improving the overall heat rate. Collectively, the effect of these activities has been an improvement in the overall SJGS heat rate of about 6.2 percent, from approximately II, 849 Btu/kWh in 1990 to approximately I 1, 1 18 Btu/kWh in 1996. This heat rate improvement alone resulted in SJGS C02eniissions in 1996 being about 400,000 tons less than they would have been in 1990 if heat rates had not been improved. PNM's maintenance program is aimed at keeping these improvements intact, with comparable C02 savings in the year 2000. 2.b SJGS Limestone Conversion ProjectThe Limestone Conversion Project will convert three of the existing Wellman-Lord absorbers on each unit at SJGS into limestone forced oxidation scrubbers. The retrofit will utilize the existing absorber cell and booster blower arrangement, and will add two recirculation pumps and an oxidation air supply to each cell. The remainder of the Wellman-Lord FGD system, including the chemical plant, will be retired in place. The project is scheduled for completion and full operation in March 1999. Heat rate savings will result from the elimination of process steam requirements and the reduction in auxiliary power requirements for the new system. The combination of steam savings and auxiliary load reduction should result in a total plant net heat rate reduction of 430 Btu/kWh after project completion, an improvement of nearly four percent over 1996 heat rates. Assuming energy output of the SJGS is at or above 1996 levels in the year 2000, this efficiency improvement would result in annual C02 savings of over 240,000 tons. These C02 savings from the efficiency improvement will be partially offset by C02 emissions from the limestone consumption, whereas the Wellman-Lord process did not emit C02. Limestone-related emissions are estimated at 84,000 tons per year, indicating a net C02 reduction from the project of about 157,000 tons per year. 3. Renewable Energy Activities 3.a "Green Power""Green Power," electrical power generated by sources perceived to be more environmentally friendly than fossil-fired sources, is increasingly being adopted by utilities as a proactive measure, a response to regulatory mandates, and/or as a market differentiator. PNM is proposing a Green Power strategy to proceed in three phases. Phase I activities will extend into early 1998, and are aimed at promoting and demonstrating green power. PNM will help form the Enchantment Energy Trust to showcase green power technologies, providing $100,000 seed money plus technical resources for building the first green power project. Phase I will also entail market research on green power and the formation of an advisory group. In Phase 11, PNM anticipates green pricing moving toward a market-based program. As currently envisioned, this phase involves building a "green portfolio" of energy choices for voluntary customer participation as a part of overall customer choice initiatives. Voluntary green power tariffs would be used to buy green power on the market and/or to fund in-house green projects and programs that would become market-based over time. Given current market and regulatory uncertainties, this phase will require more time and effort to formulate and implement, probably two to five years. In Phase III green energy is pursued as a marketable commodity and builds upon the customer base established in Phase II. This phase could involve building or acquiring new green power generation sources, whose energy would be sold into a green energy market. This longer-term phase would likely entail several years to implement, and will likely require significant capital investments by the company. 3.b Solar Power Request for ProposalsIn cooperation with the Staff of the New Mexico PUC, PNM will develop and evaluate a Request for Proposals (RFP) for the purchase of approximately five MW of capacity from solar generation resources. PNM will also develop a cost analysis for wind power for inclusion in consideration of a green power pricing tariff. 3.c Wind Energy AssessmentPNM is supporting the New Mexico Energy Minerals and Natural Resources Department in its attempts to further renewable resources that will reduce pollution, conserve fuel, and promote economic development. The goal for this project is to develop wind energy as a viable energy resource in New Mexico. The NM E believes the state's potential for wind energy is approximate 435 billion kWh per year. PNM is funding 25 percent of the Phase I efforts, and will also be funding part of Phase 11. Under Phase 1, a Geographical Information System (GIS) model assessed the feasibility of potential wind sites with respect to factors including transmission line access, proximity to highways, economic factors, siting issues, and geographical conflicts. Phase I resulted in a list of 35 possible sites that have the potential for development into commercial wind farm locations. In Phase 11, actual wind monitoring would be undertaken to obtain more accurate wind data. This two-year effort would enable PNM to choose one of the sites and its associated wind equipment. 4. Energy Conservation Programs 4.a Energy Place Home Energy AuditAny residential gas or electric customer may request a free self-administered home energy audit. Interested customers are mailed an energy appliance and lifestyle survey form that is to be filled in by the customer. The customer returns the completed survey and a PNM energy analysis technician completes a computer analysis. The customer receives color graphs and charts describing where and how they use energy and recommendations on how to reduce energy consumption. 4.b PNM Advantage Analysis of Gas and Electric UseThis program is similar to PNM's Energy Place Home Energy Audit, and is directed toward PNM's small business customers. PNM is presently undertaking a final technical review of the software and resource considerations. 4.c PNM Advantage Energy Management InformationAny non-residential customer may request energy management information from PNM on a variety of a subjects ranging from general energy-saving options to specific information on technologies such as variable-speed drives or compact fluorescent bulbs. Information packets are mailed to the customer. At the customer's request, a customized workshop can be conducted for specific purposes. PNM will provide the in-house expert to conduct the workshop on a number of energy related topics. 4.d PNM Advantage Lighting AnalysisNon-residential customers may request an analysis of their lighting energy use. A PNM energy analysis technician conducts an on-site survey of all lighting fixtures, controls, and schedules at the customer site. The information is then input to a lighting analysis computer program that estimates retrofit costs, benefits, and payback period. The report is then sent to the customer. 4.e Energywise HomeThe Energywise Home is part of a nationwide voluntary effort -- the E Seal initiative -- by Electric Utilities and Home Builders, which was introduced in 1996. The Energywise Home is a combination of energy efficiency and environmental sensitivity in new home construction. The E Seal is similar to the "Good Housekeeping" seal of approval for the housing industry. This voluntary program specifies new home construction that goes beyond the Model Energy Code, addressing energy efficiency from the thermal envelope to lighting and appliances. The specifications also target waste management and indoor and outdoor water conservation. As its part of this program, PNM will partner with local home builders to offer the program to potential homebuyers. PNM will also work with the City of Albuquerque, Bernalillo County, and financial institutions to implement the program in the Albuquerque area. 4.f Energy Audits of PNM BuildingsPNM is presently renovating its Electric Service Center, with a targeted completion date of January 1998. In this renovation, PNM's general approach has been to make the existing systems more efficient rather than add more cooling equipment to the buildings. In the Administration building, all casement windows were replaced with energy efficient windows. By repiping the cooling tower water to go directly to the chiller condenser rather than through an intermediate heat exchanger, existing chiller capacity was increased by 40% and additional new capacity was avoided. External ducts were insulated to reduce heat gainaoss. All buildings had their office lighting replaced with more efficient T-8 fights with electronic ballast. The Line Department building had its entire HVAC system replaced with a new, more efficient system that provides better control of the temperature. In 1997, PNM Gas Services completed a building HVAC upgrade of its Metro office. The existing central plant was upgraded to optimize the energy efficiency of new technology now available through commercial products for environmentally controlling building interiors. This upgrade is a prime example of how PNM commercial customers will be able to convert their existing air conditioning systems and be able to realize similar energy dollar savings. On tours through the facility, PNM customers will be able to observe the construction modifications and the applicability to their own systems. PNM is also evaluating a multimillion dollar energy efficiency program for its corporate facilities. The draft Feasibility Review has focused on seven major areas of energy conservation - (1) lighting system upgrades, (2) lighting control upgrades, (3) installation of task lighting and occupancy controllers, (4) installing VFDs on supply and return fans, (5) upgrading air handling system controls in the Headquarters Building, (6) upgrading air handling system controls in the Alvarado Square Building, and (7) upgrading the central heating and cooling plant. If all of these measures are implemented, PNM estimates annual electricity savings of over 6.4 million kWh per year, partially offset by gas use increases of over 31 thousand therms. Net annual C02 savings are estimated to be over 7,400 tons per year. 4.g Watt Watchers ProgramWatt Watchers is a multidisciplinary program that involves students in an energy savings program in their schools. The main focus of this environmental education program is to teach students about energy conservation. Watt Watchers was started in Texas in 1991, and over 300,000 students in 500 schools participated in the program in three years. A Watt Watchers pilot project was started in southern New Mexico last year that was solely sponsored by PNM; the program is now being expanded to include all of New Mexico starting in September 1997. The focus will be on high schools and middle schools, and these students will then take the program into elementary schools and mentor those children. Highlights of the program will include direct mailings to the schools; a PNM-sponsored website for Watt Watchers of New Mexico; incorporation of the PNM Home Energy Audit into the Watt Watchers Program; and development of program manuals and training videos for the schools. 5. Methane Programs 5.a Natural Gas Leak Surveying and ReplacementPNM Gas Services has on-going programs for leak surveying and for replacement of old steel mains. Each year, several thousand feet of old steel mains are replaced, and several hundred leaks repaired. The table below presents information on these activities since 1990 for the Albuquerque Metro area, together with estimates of avoided lost gas and C02-equivalent emissions. The avoided lost gas was estimated assuming 25 mcf/year per leak, based on a study of unaccounted-for gas done by PG&E in 1989. These gas quantities were converted into C02-equivalent tonnages using 23.65 cubic feet methane per pound, and a methane Global Warming Potential of 2 1.
PNM Gas Services will continue these programs for leak surveying and for replacement of old steel mains. PNM expects that the average annual savings from these activities will exceed 7,000 tons C02-equivalent through the year 2000.
5.b EPA Natural Gas Star Program As part of its Climate Challenge commitment, PNM is joining EPA's Natural Gas Star Program, a voluntary program in partnership with the U.S. Environmental Protection Agency to cost-effectively reduce emissions of methane, a potent greenhouse gas. Under this program, PNM will determine and implement "best management practices" relating to its natural gas distribution and transmission activities. 6. Forestation Activities PNM's present forestation activities include tree planting events and a tree coupon program. In 1996, PNM sponsored several tree planting projects which resulted in approximately 50 trees being planted. In 1997, year to date, PNM expects to plant or donate for planting approximately 150 trees and to have distributed over 350 coupons redeemable for low growing trees. PNM expects to continue these activities at or above these levels through the year 2000. 7. CNG Vehicles PNM's activities require a large fleet of cars, trucks, and vans; in the twelve-month period ending 6/30/97, PNM vehicles logged nearly 24 million miles. PNM has been increasing the use of CNG vehicles in its fleet, particularly for its cars and smaller trucks and vans. In the twelve-month period ending 6/30/97, CNG vehicles logged 4,082,778 miles. Since CNG is a lower carbon fuel than is gasoline, approximately 40 pounds of C02 are saved for each MMBtu of gasoline displaced. Assuming also that (1) 90 percent of the CNG vehicle-miles are CNG fueled (these bi-fueled vehicles can also use no-lead gasoline), (2) these CNG vehicles average 15 miles per gallon of gasoline equivalent, and (3) 8.08 gallons of gasoline equal one MMBtu (at 5.2 tu per barrel gasoline), then these CNG vehicles save approximately 758 tons C02per year.
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