Climate Challenge Participation Letter

DOE's Energy Partnerships for a Strong Economy

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Update letter dated May 8, 1997

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This Participation Accord describes the commitments that Puget Sound Power & Light (Puget Power) and the United States 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).

I. Puget Power Commitments

A.
Consistent with paragraph II.B.1.f. of the Climate Challenge Program MOU, Puget Power has implemented or will implement the following programs and specific activities to reduce, avoid or sequester greenhouse gas emissions:

1. Demand-Side Management

Puget Power supports conservation as a regional priority. Puget Power considers energy conservation as an alternative resource to its supply side resources in its latest Draft Integrated Resource Plan (IRP) (published February 24,1995). Based upon traditional load forecasts and planning assumptions, as described in the IRP, the potential for cost effective conservation is about 400 aMW1 over the 20-year planning horizon. Changes in regulations and changes to competitively priced resource options may cause Puget Power to re- evaluate its Conservation targets, mix of demand side programs and/or program timing. See Attachment B for a list of programs and current status.

Puget Power is currently participating in the Clean Air Act's Conservation and Renewable Allowances Reserve. The DSM activities described in Attachment B and the associated savings have been approved under this program.

DSM activities from 1991 to 1994 resulted in the following annual energy savings:

RESIDENTIAL: 353,848 MWh: equivalent to 153,924 tons of CO₂ avoided.

COMMERCIAL/INDUSTRIAL: 494,564 MWh; equivalent to 215,135 tons of CO₂ avoided.

TOTAL: 848,412 MWh; equivalent to 369,059 tons of CO₂ avoided, from 1991-1994.

DSM actions undertaken between 1991 and 2000 are projected to save a cumulative annual savings of 1,724,400 MWh in the year 2000. This is equivalent to 750,119 tons CO₂.

2. Carbon Offsets in Forestry at Puget Power

Reforestation and Regeneration
Puget Power manages for commercial timber production in excess of 3,300 acres associated with the company's Baker, Puyallup and White River hydroelectric production facilities. These lands were acquired at the turn of the century to protect water rights along these rivers. Only recently have the commercial timberlands come under management by the company's professional foresters for the purpose of optimizing timber production. One goal of this program is to return marginally producing timberlands into lands which are producing at optimum potential, thus maximizing carbon utilization. Reforestation can also result in significant ancillary benefits including protection of wildlife habitat, watershed protection and economic development.

As a participant of the EEI Puget Power Forest Carbon Management Program, the company will review and implement those practices on those lands which show a positive increase in carbon offsets. At this point in time, this program is developing reporting measures for member companies to access the amount of carbon offset by forest management activities.

Forest Protection and Management

Saving an acre of forest that would otherwise be logged can effectively and quickly offset as much carbon as would take decades to accumulate on a reforested acre. The major thrust of the White River Wildlife Management Plan will be the continued protection and enhancement of the wildlife habitats on 2,700 acres of reservoir and 3,000 acres of forest, meadow and wetland. Many of the non- reservoir acres have development potential, and most have harvestable resources such as timber. Puget Power will prohibit development and conduct forest management operations in a manner consistent with wildlife habitat, thus perpetuating and enhancing the carbon offset potential of these lands.

At this time, the EEI Puget Power Forest Carbon Management Program is developing reporting measures for member companies to access the amount of carbon offset by forest management activities.

Public Education
As a part of the company's vegetation management efforts, an outreach program to educate our customers may be effective in promoting tree planting. At this time, these efforts cannot be quantified in terms of CO2 stabilized or sequestered. Currently, Puget Power is involved in the following projects which provide carbon offset opportunities:

Tree Redemption Certificate: A coupon redeemable at participating nurseries enables the holder to purchase a tree appropriate for planting beneath overhead powerlines. These are generally provided to homeowners who have agreed to remove a tree which is in the way of overhead powerlines.

Cooperative Tree Planting Projects: Working with political agencies and non-profit organizations, Puget Power has sponsored numerous urban tree planting projects. Unlike the Tree Redemption Certificate program, these cooperative tree planting projects provide funding and technical assistance to plant trees in locations where trees may not necessarily exist.

Urban Forestry Notebook: This is an urban tree reference source that was produced in cooperation with the Washington Department of Natural Resources. This guide provides the user with a quick reference on recommended species for landscape planting in the Pacific Northwest. It has proven to be extremely helpful for City Planners, Park Superintendents and non-profit groups.

3. Hydropower

Undertake System Efficiency Improvements
Puget has started a program to make efficiency improvements at its existing hydro projects. The continuation of the program is subject to an annual budget review and approval process. In general, the improvements will consist of refurbishing or replacing turbine runners and rewinding generators as needed on a one unit per year basis.

The hydro efficiency improvement program will start in 1995 and be completed in 2004. It is estimated that by the year 2000 the gain in annual energy production will be 49,836 MWh. This equates to 21,530 tons of CO₂ reduction.

Between the years 2001 through 2004 the additional gain in annual energy production from efficiency improvements is estimated to be 7,260 MWh. This equates to 3,140 tons of CO₂ reduction.

Hydropower Projects Associated With FERC Licenses
Puget Power is in the permitting stage for a number of hydropower projects. As one of our Climate Challenge commitments, Puget Power will work towards obtaining licenses for the following projects, one of which will begin operation in 2000, and three of which will begin operation in 2001. Attachment C and the following text present information on these projects.

Year 2000 - Snoqualmie Falls Project Upgrade: This project currently has a capacity of 41 MW. The application is currently being revised to reflect complete refurbishment of the existing facility. This will result in an increased capacity of 8 MW. The expected license issuance date is 1996 with an completion date of 2000. Energy production is estimated to increase 41,000 MWh per year. This equates to 17,712 tons of CO₂ avoided.

Year 2001 - Upgrade the Nooksack Project: This project currently has a capacity of 1.7 MW. Puget Power has proposed, in a license application, to increase the size of the project to 8 MW through complete refurbishment of the facility to support a larger turbine generator set. The expected license issuance date is 1997 with an operational date of 2001. Energy production is estimated to increase 36,240 MWh per year. This equates to 15,656 tons of CO₂ avoided.

Year 2001 - Construct the Thunder Creek Project: This project consists of constructing a new hydro facility with a 5.6 MW capacity. The expected license issuance date is 1997 with an operational date of 2001. Energy production is estimated at 29,500 MWh per year. This equates to 12,744 tons of CO₂ avoided.

Year 2001 - Construct the Connells Prairie Powerhouse: This project is part of the license application for upgrading the overall White River Project. It represents a new powerhouse located upstream of the existing reservoir with a related capacity addition of 14 MW. The expected license issuance date is 1997 with an operational date of 2001. Energy production is estimated at 70,200 MWh per year. This equates to 30,326 tons of CO₂ avoided.

NOTE: The estimates of avoided CO₂ presented above assume that an efficient, natural gas fired combined cycle combustion turbine would have been utilized in the absence of these programs or actions. All estimates are in short tons.

B.
Puget Power 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 Subsection 1605(b) Energy 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 Puget Power prior to its becoming a participant in the Program, expressed on an annual basis to the extent possible.
C.
Puget Power will confer with DOE on or before June 30, 1997 to evaluate jointly the progress of Puget Power in achieving its Climate Challenge Program goals and to discuss possible adjustments to its voluntary commitments.
D.
The Climate Challenge Program representative for Puget Power will be Susan Keith, Director Environmental Services, P 0 Box 97034, OBC-11N, Bellevue WA 98009-9734. Puget Power agrees to notify DOE prior to or, in any event, no later than 30 days after any change in the contact.

A.
DOE's commitments to Puget Power are those set out in Section III of the Climate Challenge Program MOU, which are hereby incorporated in this Participation Accord by reference.
B.
DOE will consider Puget Power's request 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 Puget Power for purposes of addressing k Climate Challenge Program issues, it will provide notice to Puget Power.
C.
DOE will provide an annual report to Puget Power describing the actions that it has taken to fulfill its commitments under Section III and Exhibit C of the Climate Challenge Program MOU and the results of those actions.
D.
The Climate Challenge Program representative for DOE, who will serve as liaison to Puget Power, will be Larry Mansueti, Director, Climate Challenge Program, Office of Utility Technologies, U.S. Department of Energy (EE-10), 1000 Independence Ave. SW, Washington DC 20585, (202)586-2588. DOE agrees to notify Puget Power prior to or, in any event, no later than 30 days after any change in liaison responsibilities or personnel.

A.
Use of DOE-developed materials by Puget Power 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 Puget Power 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, F.F and E.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.

President/CEO or Designee
Puget Power Sound Power & Light Company

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Date

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Secretary of Energy or Designee
U.S. Department of Energy
July 7, 1995
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Date

Attachment:

Attachment A -- Climate Challenge Program MOU and Exhibits
Attachment B -- Puget Power Demand-Side Management Programs
Attachment C -- Puget Power Hydropower Efficiency Improvements and Capacity Additions

These programs are currently being offered and will continue to be offered until Puget Power re-evaluates its conservation programs.

Commercial and Industrial Retrofit - provides funding to commercial and industrial customers for the installation of the electricity saving measures (lighting improvements, HVAC improvements, process improvements and others) in their existing facilities.

Commercial and Industrial New Construction - provides funding for new commercial and industrial facility developers to install electricity saving measures which exceed code.

Premium-Efficiency Motor Program - acquires cost effective conservation resources through the installation of premium efficiency electric AC motors in customer facilities. This is a joint program for the service territories of Puget Power, Seattle City Light and Tacoma Public Utility.

Street Light Conversion - acquire cost-effective conservation resources through conversion or retrofit of mercury vapor street light luminaries to high pressure sodium vapor. The program is available to customer owned lighting systems served under the Company's tariffs 50, 51 or 52.

Residential Single Family Retrofit Weatherization - provides funding to homeowners for the installation of electricity-savings measures in existing single family residences.

Multi-family Retrofit Weatherization - provides funding to building owners for the installation of electricity savings measures in existing multi-family residences.

Residential Low Income Retrofit Weatherization - Community Action Agency and/or housing agency arranges for the installation of electric efficiency measures in existing low income residences within Puget's service territory.

Water Heating Tank Replacement - installation of high efficiency electric water heaters in residential customer's structures.

Water Heating Energy Saver Services - installation of electric water heater heating measures in residential, multi-family and limited light commercial structures within Puget's service territory.

Residential Retail Lighting - provides payment to customer for the purchase and installation of an energy-efficient compact florescent lighting.

Washington State Energy Code (WSEC) - provides the owner of a new residential construction that complies with the 1991 WSEC with an incentive payment for the installation of electricity-saving measures.

Manufactured Housing Acquisition - a payment to the manufacturer for the installation of electric efficiency measures in new manufactured housing which has electricity as the primary source of space heat.

Non residential Energy Code (NREC) Program - Puget Power will participate with other Washington State gas and electric utilities to fund the training and enforcement for the period April 1, 1994 to March 31, 1997. This funding is to ensure obtaining the energy savings that the 1994 NREC is designed to achieve.

Contractor Initiated Lighting - replacement of existing interior or exterior lighting systems with energy efficient and related technologies in commercial and industrial facilities.

Water Heating Tank Wrap - installation of a water heater insulation blanket for existing electric water heaters installed in residential customers' structures.

Northwest Energy Code (NWEC) - provides the owner or builder with a portion of the published grant for the installation of electricity-saving measures in residential new construction permitted in jurisdictions which adopted the NWEC. This is also referred to as the early adopter program. This program is limited to structures permitted before July 1, 1991. This program was discontinued on 6/30/93.

Super Good Cents - provides an incentive payment to the owner/builder for the installation of electricity-saving measures in residential new construction permitted before July 1, 1991 and subject to the 1986 Washington State Energy Code. This program was discontinued on 6/30/93.

Super Good Cents/Manufactured Housing - provides a grant payment to the purchaser of a residential manufactured home constructed and ordered from the manufacturer before April 1, 1992. The manufactured housing must be certified under BPA's Super Good Cents standards for electricity-saving measures. This program was discontinued on 6/30/94.

Comfort Plus Program - provides payment to the owner/builder for the installation of electric efficiency measures, beyond those required by the 1991 WSEC in new electrically heated single family and multi-family homes in Puget's service territory.

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