Climate Challenge Participation Letter

DOE's Energy Partnerships for a Strong Economy

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Update letter dated February 25, 1997

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This Participation Accord describes the commitments that Wisconsin Power and Light Company (WP&L) 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).

Utility Commitments

A.
Consistent with paragraph II.B.1 (a and f) of the Climate Challenge Program MOU, WP& L will undertake specific projects or actions, or make specific expenditures on projects or actions, to reduce greenhouse emissions; and will make a specified contribution to particular industry initiatives identified in Exhibit A, "Industry Programs".

In order to achieve the commitments, WP&L will undertake the specific projects listed below, which includes those projects undertaken since January 1991, or that we intend to undertake before December 1999 to reduce greenhouse gas emissions (see Attachment B to this Accord for a more detailed description of these projects and their expected greenhouse gas reductions). The project list includes:

Supply Side Programs-Electric Generation
WP&L has done and will continue to make plant efficiency improvements.
WP&L has done and will continue to develop renewable energy projects.
WP&L has increased the utilization of Natural gas as a replacement generation fuel and will continue this increased use of natural gas.

WP&L has done and will continue to make Nuclear plant improvements.
Supply Side Programs-Electric Transmission and Distribution
WP&L has done and will continue loss reduction projects.
WP&L has done and will continue to make interconnections to improve efficiency.
WP&L has done and will continue to make distribution transformer replacements.

Supply Side Programs-Other
WP&L will participate in the EPA Landfill Methane Energy Recovery program.
WP&L has done and will continue to market coal combustion by-products.
WP&L has done and will continue to recycle office waste paper and appliances.
WP&L has done a Clean Coal Reburn project for other greenhouse gas reductions.

Demand Side Programs-Electric and Natural Gas
WP&L has done and will continue Residential1 Agricultural, Commercial and Industrial demand side management and process improvement projects.
WP&L has done and will continue direct customer load management projects.
WP&L has and will continue to participate in the EPA Green Lights program.
WP&L has and will continue to participate in the Golden Carrot Program.

Land Management Programs
WP&L has and will continue to actively manage forested buffer lands near facilities.
WP&L has and will continue to sponsor Stewards of Nature, Trees for Tomorrow, and the Leopold Foundation land management programs.

Participation in Industry Initiatives
WP&L will participate in the Forest Carbon Management Program.

B.
WP&L 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 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 WP&L prior to its becoming a participant in the Program, expressed on an annual basis to the extent possible.

C.
WP&L will confer with DOE on or before November 30,1996 to evaluate jointly the progress of WP&L in achieving its Climate Challenge Program goals and to discuss possible adjustments to its voluntary commitments.

D.

The Climate Challenge Program representative for WP&L will be Joseph E. Shefchek. Wisconsin Power & Light Company. P.O. Box 192. Madison. Wisconsin 53701-0192. WP&L 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 WP&L 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 WP&L 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 WP&L for purposes of addressing Climate Challenge Program issues, it will provide notice to WP&L.

C.

DOE will provide an annual report to WP&L 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 these actions.

D.

The Climate Challenge Program representative for DOE, who will serve as liaison to WP&L, will be Allan Hoffman. Department of Energy. Room 6B-128 (EE-10). 1000 Independence Avenue SW. Washington. DC 20585 (202) 586-1786. DOE agrees to notify WP&L 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 WP& L 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 WP& L 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 VA-V.D, V.F and V.G of the Climate Challenge MOU, which are hereby incorporated by reference.

C.

Either party may withdraw from this Participation Accord or any of its activities under the Challenge Program without penalty and without being subject to remedies at law or equity.

_______________________________         ______________________________
President/CEO or designee               Secretary of Energy or designee
Wisconsin Power & Light CompanyU. S. Department of Energy
February 3, 1995                        February 3, 1995

Attachments:

Attachment A - Climate Challenge Program MOU and Exhibits
Attachment B - Wisconsin Power & Light Climate Challenge Action Plan

Background

Wisconsin Power and Light (WP&L) conducts its activities in an environmentally sound manner and demonstrates environmental responsibility through active participation in the formation of environmental policy at all levels of government and through each individual employees' actions on the job and in the community.

Uncertainties exist surrounding the scientific study of global warming. There are also major uncertainties concerning the future regulation of greenhouse gases and future cost recovery due to increasing competition within the utility industry. It is certain, though, that if global warming is a dilemma, a comprehensive multi-national and multi- sector program to reduce greenhouse gases will have the most impact. It is also certain that voluntary environmental compliance programs are preferable to more costly command and control environmental programs. Voluntary programs permit the choice of compliance steps that are the most cost-effective. Future greenhouse gas reduction regulations will most likely be developed by regulators in dialogue with participants in today's voluntary programs. With all of this future uncertainty, WP&L must develop a policy to guide our actions in the Climate Challenge program.

WP&L Policy Statement

WP&L will follow a policy that chooses actions consistent with the most certain knowledge available concerning global warming. These actions include the following:

1.
WP&L will provide adequate resources to advocate the need for a voluntary program that is international in nature and multi-sector in approach with legislators and regulators. WP&L will resist development of command and control programs that are state or local in nature and control emissions of only utilities.

2.

WP&L will be an active participant in inter-industry coalitions by volunteering all those actions which reduce greenhouse gases that are already underway to satisfy other operating objectives. These would include cost-effective current and proposed demand side management programs, land management programs, and other applicable operations improvement projects.

3.

The Climate Challenge policy will remain consistent with operating policies

(such as demand side management policies) as they evolve to meet future competitive forces within the industry.
4.
WP&L will monitor its policies and reassess its level of participation regularly with the intention of being an active participant in the dialogues with regulatory and legislative interests as programs evolve to meet the Climate Challenge and future greenhouse gas reduction programs.

Wisconsin Power and Light's Action Plan incorporates three facets, supply side options, demand side options, and land management options. The following briefly describes the various programs to be included in WP&L's Climate Challenge Action Plan. Reporting on the results of the following various and numerous programs will utilize, to the maximum extent possible, existing mechanisms and reports which are assembled for various Federal and State of Wisconsin agencies.

Supply Side Programs - Generation

Plant Efficiency Improvements

WP&L has an ongoing power plant efficiency improvement program which has incorporated several projects including new capital projects as well as operational improvements. Examples of these are as follows:

• New high efficiency turbine blades at Columbia Units 1 & 2 will improve performance of these units by 1%
• Increased boiler efficiency projects at nearly all units include boiler cleaning devices, reduced boiler exit gas temperatures, etc.
• Reduced auxiliary power requirements such as condensate pump shutdown at Edgewater 4 and low head pump operation modification at Columbia
• Control system upgrades at Nelson Dewey and Edgewater 3 recently with others planned in the near future

Renewable Energy Projects

WP& L has incorporated and will continue to foster the development of cost-effective renewable energy technologies. At the present time WP& L has focused on the utilization of alternative, waste fuels which displace coal in existing coal-fired generating facilities. WP& L has undertaken an extensive program which utilizes a large majority of the waste tires produced in the State. WP& L estimates that 15,000 tons of coal per year is displaced by tire-derived fuel (TDF). Projections indicate that additional volumes of TDF or TDF-like fuel will be utilized in the future which would increase coal displacement to 25,000 to 30,000 tons annually by 1996.

In addition, WP& L has undertaken the licensing and re-licensing of existing Rockton, Janesville, Rock River, and Prairie du Sac hydroelectric generating facilities. Renewal of these licenses ensures their availability as reliable renewable resources for years to come.

Wind energy is under development as the result of a joint research and development project with three other Wisconsin utilities. The project will build, in collaboration with the largest U.S. wind project developer, 400Kw wind turbines which will more efficiently harness the relatively low wind speeds found in Wisconsin.

WP& L has a residential solar water heating program as well as a program to assist customers with residential photovoltaic systems such as yard lights.

Natural Gas Utilization

WP& L has increased the utilization of natural gas through incorporating new natural gas-fired combustion turbines at Fond du Lac into the generation mix. Also, one of WP& L's older coal-fired facilities (Rock River) has been utilizing natural gas for fuel in lieu of coal. These generation mix changes over the last few years that replace coal- fired generation with natural gas generation will continue in the future and yield significant emission reductions.

Nuclear Energy

WP& L co-owns a minority share in the Kewaunee Nucear Plant, a medium size nuclear generating facility on the Lake Michigan shore. Operating improvements continue to be implemented, as well as the investigation of new methods of efficiency improvements. Turbine-generator

improvements have been made as well.

Supply Side Programs - Transmission

Loss Optimization

WP& L has implemented various projects which continue to reduce transmission system losses through such things as increased transformer efficiency, reconductoring of older, overloaded transmission lines, and adding capacitor banks at strategic locations throughout the electrical system.

Increasing Transmission Line Voltage

In conjunction with the optimization of losses and serving additional load in certain areas, WP& L has increased transmission line voltage. WP& L will continue to investigate this option to minimize losses and serve additional localized loads.

Build New Transmission Lines

WP& L has and continues to investigate and build new transmission lines as well as new utility interconnections. WP& L builds on average 30 miles of line each year, and rebuilds others, as well. In addition to being one method of reducing system losses, new transmission facilities can provide access to new resources of supply, including low cost hydro power from Canada.

Supply Side Programs - Distribution

System Voltage Optimization

WP& L has and continues to implement conservation voltage regulation and transformer load management projects throughout our distribution system. Initiated in 1993, these studies and resulting changes will determine underloaded transformers and improve voltage regulation problems. The result will be improved delivery of service at distribution voltage levels with fewer line losses and energy savings.

Low Loss Transformers

WP& L has and continues to replace distribution system transformers with amorphous

core alternatives to silicon core transformers. Amorphous core transformers have lower loss ratios that improve service delivery with reduced generation. WP& L continues to explore newer technology silicon core units, as well, that also have lower loss ratings than existing silicon core transformers.

Supply Side Programs - Other

Landfill Methane Energy Recovery

WP& L has joined and is one of the Charter Members of the U.S. EPA's Landfill Methane Program. WP& L is in the process of implementing one landfill gas-to-energy project and has investigated other such projects within its service territory.

Coal Combustion By-Products

WP& L has pioneered the use of coal combustion by-products and currently markets approximately 80% of its coal by-products for various alternative uses such as:

• Portland cement substitute
• Road pavement resurfacing material
• Grit blasting material
• Asphalt roofing shingle grit
• Flowable fill for construction site landscaping

Recycling

WP& L has programs for recycling of waste office paper, laser printer cartridges, aluminum cans, etc. In addition, WP& L assists in the recycling of old appliances for residential customers.

Reductions of Greenhouse Gases Other Than CO₂ and Methane

As part of the U.S. Department of Energy, Clean Coal Technology Demonstration Program, WP& L installed, tested, and continues to operate a coal reburn system for the

reduction of N₂O at the Nelson Dewey Generating Station. This project, through DOE sponsorship, has demonstrated a significant reduction in N₂O from Unit 2 at this facility. As a result, WP& L has been actively involved in discussions with the U.S. EPA and DOE in the development of future rules for N₂O emissions.

Demand Side Programs

WP& L has a long history of effective demand side management programs for the conservation of both electricity and natural gas. These programs apply to the following sectors:

• Commercial
• Industrial
• Multi-Family
• Agricultural
• Residential

Since January 1, 1991, WP& L has saved an estimated 685,000 MWH and over 15,000,000 therms of natural gas through these demand side management programs. The type of DSM programs WP& L offers and to which customer segments they apply to are summarized in the following table.

                             Method of Participation

                1 - Direct Rebates          5 - Direct Install
                2 - Custom Rebates          6 - Mail Order
                3 - Financing               7 - Information
                4 - Shared Savings          8 - Bill Credit

Projects are often tested in pilot efforts and thoroughly evaluated to calculate net benefits given the costs of the projects. The majority of electric conservation recently has been the result of concentrated technology improvements in the commercial and industrial sectors. WP& L's program is coordinated with the Wisconsin Center for Demand Side Research, EPRI, and the Gas Research Institute.

Demand Side Programs - Other

Green Lights and Golden Carrot Programs

WP& L has joined the U.S. EPA's Green Lights Program and since 1991 has begun an extensive plan to utilize high efficiency lighting in all of its facilities including the generating facilities and district offices. WP& L also participated in the Golden Carrot Program to develop a more efficient refrigeration system.

Land Management

Forested Buffer Lands

WP& L power plants including hydro-power projects maintain forested buffer lands that provide multiple uses of forestry, recreation, education and research, wildlife habitat, and preservation of biodiversity. WP& L owns or manages about 13,176 acres of forested lands which are primarily

stands of white and red pine. Within the last few years WP& L has begun to actively manage this land and has realized many benefits from that management activity.

WP& L has collaborated with the US Fish & Wildlife Service, Ducks Unlimited, and Pheasants Forever in the restoration of wetlands on 50 acres of abused farmland. Another project involved the creation of a savanna dry prairie sanctuary for an endangered chelonian. A third project converted conventional row crop agricultural land into 100 acres native prairie seedbank with more acreage conversion scheduled in the future.

Other Land Management

WP& L is a corporate sponsor of the Trees for Tomorrow environmental education center located in Eagle River, Wisconsin. Trees for Tomorrow educates and encourages tree planting and forestry management. WP& L's Stewards of Nature volunteer conservation group has assisted the Nature Conservancy, the Wisconsin Department of Natural Resources, the Aldo Leopold Foundation and community groups with numerous tree planting and habitat restoration projects.

Estimated Emission Reductions

The attached Appendix A provides a summary of anticipated greenhouse gas reductions that will result from WP& L's Climate Challenge Action Plan for the years 1991-1999. These estimates are derived using Table C.1 (Adjusted Electricity Emissions Factors by State) in Appendix C of Volume I of the Sector-Specific Issues and Reporting Methodologies Supporting the General Guidelines for the Voluntary Reporting of Greenhouse Gases under Section 1605(b) of the Energy Policy Act of 1992.

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