The
UNIVERSITY
of VERMONT
J. Michael Gower
Vice President for Finance & Administration
and University Treasurer
January 23, 2006
Susan M. Hudson, Clerk
Vermont Public Service Board
Chittenden Bank Building, Fourth Floor
112 State Street, Drawer 20
Montpelier, Vermont 05620
Re:
Act 61 Implementation Energy Efficiency
Comments on Draft Energy Efficiency Charge (“EEC”) Exemption
Conceptual Proposal
Dear Ms. Hudson:
On December 20, 2005, the Vermont Department of Public Service (the “Department” or
“DPS”) filed its Energy Efficiency Charge Exemption Conceptual Proposal for review and
comment by participants in the Public Service Board’s (the “Board”) Act 61 implementation
process. This letter sets forth the comments of the University of Vermont (the “University”) and
supplements the University’s prior comments of November 9th, 2005 on the need for and scope of
the exemption procedure to be adopted as authorized under 30 V.S.A. § 209(d)(4).
1.
The Scope of Projects that can Support the Issuance of an EEC Exemption
Should be Enlarged.
In the University’s prior comments, it proffered several principles that it believed should
guide the design of the EEC exemption in order to encourage utility customers to make investments
that further the goals of least cost planning as defined by 30 V.S.A. § 218c. The University
commends the Department for developing an EEC exemption proposal that establishes a procedure
which is simple with clear criteria that attempts to create an even playing field for efficiency
projects whether they are implemented under the auspices of the customer or the energy efficiency
utility (the “EEU”). However, the University believes that the proposal could be improved if it
were expanded to permit consideration of a full portfolio of electric energy savings options,
including cost-effective combined heat and power projects (“CHP”), not just efficiency projects of
the type that are the subject of programs offered by the EEU.
The University believes that a more proper focus for the exemption would be a proposal
that permits customers to propose any efficiency project, including CHP projects, that satisfy the
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costs-effectiveness analysis used in the administration of EEU sponsored demand side management
programs. Under the Department’s proposal, in addition to the requirement that the project not be
financed with EEU program incentives, the University understands these requirements to mean the
project is expected to:

be cost-effective using the societal test determined by use of the statewide screening
tool;

have a benefit/cost ration greater than 1.0, including only electric resource benefits; and

have a simple customer payback no shorter than 18 months.
The University recommends that these criteria be administered to assess any project proposed as a
basis for an EEC exemption by a customer.
UVM believes that one of the essential benefits afforded via an EEC exemption process is
that it will encourage customers to seek out efficiency opportunities that are not being addressed by
the EEU. In this way, the granting of qualifying customer exemptions will help to expand the
scope and success of Vermont’s efficiency efforts. Towards that end, the University recommends
that the DPS proposal be revised to address the following design principles:

the process should encourage customers to capture efficiency opportunities presented by
their unique facilities and operations;

the process should recognize customer investments in all cost-effective efficiency and
conservation opportunities, load control strategies, and CHP projects developed by or at
the customer’s premises.
Applying these principles would result in an enlarged definition for “eligible projects” that is
technology and “measure” neutral. It would also serve to further the goals of Act 61, which call on
the Board to develop “viable markets” for energy efficiency projects. See 30 V.S.A. § 8001(a)(4).
The University also recommends that the procedure encourage customers to collaborate
with their serving utility to determine if there are strategic initiatives that can be developed as a
part of the implementation of customer-driven efficiency improvements. This would assure that as
the market for efficiency is transformed, customers are sent the appropriate signal that they should
continue to seek out process and facility improvements that cost-effectively reduce the cost
necessary to meet end use requirements. Toward that end, the University suggested that the
conceptual proposal be reviewed to see if features can be added to help:

identify projects that serve to target efficiency and conservation to locations, markets or
customers where they may provide the greatest value;

foster collaboration between customers and host utilities so those project planners can
consider strategies to best integrate customer-sponsored projects with utility load
serving and resource planning activities.
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Telephone: (802) 656-0219, Fax: (802) 656-1363
Equal Opportunity / Affirmative Action Employer
This effort may be most applicable where the project can be dispatched or presents unique
performance specifications that makes it possible to deploy as a part of a utility’s least-cost plan. It
should be noted, that while an EEC exemption is not the only means to help foster collaboration
between the host utility and its customers, the exemption should be available to the customer as a
minimum backstop where it proposes to pursue a beneficial project and has not received incentives
from the EEU toward its implementation.
2.
The Definition for the Term “Extraordinary Amount of Cost-effective
Energy Efficiency” as a Condition for the Granting of an EEC Exemption
Needs to be Clarified.
The University also notes that the Department’s proposal is still somewhat difficult to
interpret because a clear definition for the term “extraordinary” as used in 30 V.S.A. § 209(d)(4)
needs to be developed. The University understands that this term is designed to limit the
availability of EEC exemptions; however, if the definition is not clear, it will be difficult for
customers to determine, in advance, if their investments will qualify.
From the customer perspective, the EEC exemption procedure needs to provide sufficient
guidance to enable planning. In this way, the exemption procedure must inform customer
investment decisions. This is especially the case where a proposed efficiency investment passes
the societal cost effectiveness tests but does not provide sufficient customer benefit to warrant the
investment under the customer’s reasonable investment criteria. In this way, the ability to retain
EEC amounts, if known, would serve to induce the customer investment and thereby enable
Vermont to capture these efficiency opportunities. Since, the procedure requires that customers
make the qualifying investment as a precondition to the receipt of an exemption, the University
respectfully suggests that a clear definition for this critical term be developed.
In the alternative, the Board should consider establishing a certification process whereby
customers could bring project proposals to the Board to determine if they will qualify to support an
EEC exemption if developed. In this way, it would be possible for a Customer to fully account for
the potential EEC exemption in its planning. While this proposal would create an additional step,
it would afford customers a valuable opportunity to help inform their decision-making regarding
the potential for an EEC exemption.
The University appreciates the opportunity to offer comments on the need for and design of
the EEC exemption and hopes that these comments will provide perspective and further the
ongoing collaborative process. If you have questions concerning this submission, please do not
hesitate to contact me.
Respectfully submitted,
J. Michael Gower
Vice President for Finance and Administration
and University Treasurer
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348 Waterman Building, 85 So. Prospect Street, Burlington, VT 05405-0160
Telephone: (802) 656-0219, Fax: (802) 656-1363
Equal Opportunity / Affirmative Action Employer