December 20, 2005
Ms. Susan M. Hudson, Clerk
Vermont Public Service Board
Chittenden Bank Building, 4th Floor
112 State Street
Post Office Drawer 20
Montpelier, Vermont 05620-2701
Re:
Act 61 Implementation – Comments on CHP Program Issues
Dear Ms. Hudson:
This letter sets forth Central Vermont Public Service Corporation’s (“Central
Vermont,” “CVPS” or the “Company”) comments on Combined Heat and Power
(“CHP”) program issues raised by the Public Service Board (the “Board”) in its
procedural memorandum of November 18, 2005. In that memorandum, Board staff
sought comments from Act 61 implementation workshop participants on the following
issues:
1.
What should the next steps be regarding this topic?
2.
Do existing studies provide sufficient information regarding issues
associated with the development of combined heat and power in Vermont?
If so, should the Board establish some type of CHP program (pilot or
otherwise)? If yes, what should the program look like?
3.
If existing studies do not provide sufficient information regarding
issues associated with the development of CHP in Vermont, should a new
study be performed? If a new study should be performed, what should be
included in the study (for example, analysis of technical potential, analysis
of market barriers, literature review, other items)?
4.
Should a pilot program be designed prior to the completion of any
studies that may be performed? If so, what should the pilot program look
like? Should any contractor hired to perform a study of issues associated
with CHP in Vermont also be asked to propose a design for a pilot
program?
5.
Should the Board authorize Efficiency Vermont to provide
technical assistance to customers considering CHP now (that is, prior to
the establishment of a combined heat and power program)?
This submission will supplement the Company’s prior filings in this matter.
In its initial comments on CHP program issues, Central Vermont recommended
that an important first step would be an investigation of the potential for and benefits
available from CHP projects that could feasibly be developed in Vermont. CVPS
continues to believe that CHP can play an important role in the provision of energy
supply in Vermont, but that before funds raised from electricity consumers are used for
its support, the resource should be considered within the integrated utility planning
perspective. From Central Vermont’s perspective, it would facilitate planning if an
inventory of potential sites in targeted regions were available so that the resource could
be incorporated into appropriate distribution utility planning efforts. Presently, CVPS is
investigating this potential for the Southern Loop as part of its planning to resolve supply
concerns in this region. As such, the Company believes that an assessment to identify
CHP potential in targeted areas, including the identification of potential host locations,
should be considered as a part of the process to include CHP in utility planning as
contemplated under Act 61.
Central Vermont notes that studies of CHP potential have been conducted in other
jurisdictions and in some Vermont transmission and distribution upgrade studies. The
Company understands from the research conducted that CHP feasibility is heavily
dependent upon the price and availability of fuel supplies and the opportunities presented
by the system’s location. There are a variety of technologies that can be used as a part of
a CHP system, however they require on-site development. In areas where CHP has been
developed more extensively, it is often installed by larger industrial customers with
significant process heat loads. Institutions and commercial customers can also present
economical host sites, but these systems are not generally developed for residential sector
applications. If this information holds true for Vermont, any decision on CHP program
design should recognize that the resource is limited and that development efforts should
be targeted toward market sectors where CHP may present opportunities for both the
customer and its host distribution utility.
Any decision to pursue a broad based program to encourage CHP will also have
to consider the impacts that the program will have on the host utilities, their customers
and the financial stability of the industry. As a result, CVPS believes that any
consideration of a program design should also include consideration of measures to better
align the interests of these stakeholders. Understanding the interrelationship between
CHP development, the energy efficiency charge, utility rate and customer bill impacts
should also be a part of the study of CHP issues.
If the Board determines that it is appropriate to pursue a pilot CHP program,
Central Vermont believes that these efforts should be closely aligned with existing utility
distributed planning (“DUP”) efforts. For CVPS, this would mean that any program
should work to help implement cost-effective solutions as a part of local DUP efforts
including the ongoing efforts to resolve conditions affecting the Southern Loop, Central
Area or Milton target areas.
Presently, the Board has yet to develop guidelines or strategies for the
encouragement of CHP as a part of utility sponsored energy efficiency efforts. As a
result, it is difficult to assess the question as to whether Efficiency Vermont should be
authorized to provide CHP advice or technical assistance during the pendency of further
efforts to develop a CHP approach for Vermont. In the alternative, Central Vermont
suggests that any authorization in this regard should require Efficiency Vermont to
collaborate with host utilities so that services are targeted to locations where projects may
be part of the solution to a DUP planning problems. In this way, both Efficency
Vermont and the host utility would gain experience in CHP matters at locations where
they are more likley to provide benefits to both participants and non-participant
customers. To CVPS, this approach would be consistent with scope of authority granted
under 30 V.S.A. § 209(d), which authorizes the deployment of CHP programs where
“they will be beneficial to the ratepayers of the companies.”
Central Vermont appreciates the opportunity to present comments and looks
forward to further collaboration in this effort. Please let me know if you have any
questions regarding these comments.
Respectfully submitted,
Bruce W. Bentley
Leader Regulatory and
Regional Transmission Team
Central Vermont Public Service Corporation