Energy Efficiency Budget
Justification for Significant
Increase in Energy Efficiency
Utility Budget
1
August 6, 2008
CLF / VPIRG
Recommendations
2

Current Spending – $30.75 million / year

Increase to $52.5 million in 2009

Transition to $85 million / year by 2011
August 6, 2008
CLF / VPIRG
Vermont Law

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
Budget Must Capture All Reasonably
Available Cost Effective Efficiency Savings
as Rapidly as Possible
Statutory Standards
30 V.S.A. § 209
 “As circumstances and programs evolve, the amount of the charge shall be
reviewed for unrealized energy efficiency potential and shall be adjusted as
necessary in order to realize all reasonably available, cost-effective energy
efficiency savings.” 209(d)(4)

3
“Provide for delivery of these programs as rapidly as possible, taking into
consideration the need for these services, and cost-effective delivery
mechanisms.” 209(e)(9).
August 6, 2008
CLF / VPIRG
Need for Increased Energy
Efficiency Investment

Statutory Standards


PSB Decisions
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4
“Ensure that the energy efficiency programs implemented under this
section are designed to make continuous and proportional progress
toward attaining the overall state building efficiency goals established
by 10 V.S.A. s. 581, by promoting all forms of energy end-use efficiency
and comprehensive sustainable building design.” 209(e)(15).
Docket #5270 (1990) (potential of efficiency)
Docket #5980 (1999) (Energy Efficiency Charge)
Docket #6777 (2002) (Value of efficiency measures)
Docket #6860 (2005) (Efficiency in transmission expansion)
Docket #7081 (2007) (Efficiency in transmission planning)
August 6, 2008
CLF / VPIRG
Need for Increased Energy
Efficiency Investment

2006 EEU Budget Order

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5
Recognized higher budget level justified
“It would have been reasonable to increase
the budget further” (EEU Budget Order at 39)
Concern regarding short term rate impacts
Recent Vermont Energy Legislation
August 6, 2008
CLF / VPIRG
DPS Avoided Cost Study
Supports Increased Budget

All energy efficiency resources that cost
less than the avoided cost should be
acquired. (EEU Budget Order at 18)

2007 Cost of Energy Efficiency: 2.6 cents/kWh
saved
DPS Avoided Costs: 5.8 cents/kWh to 8.9
cents/kWh
Avoided costs of comparable electric supply as
reported by Efficiency Vermont: 10.7 cents/kWh
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6
August 6, 2008
CLF / VPIRG
Rising Energy Costs Justify
Increase in Efficiency Budget
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7
Rapidly rising fuel costs affect wholesale
energy costs
Price of oil has nearly doubled since 2006
when previous budget was approved
Between 2006 and 2007, wholesale price
of electricity in New England increased
20% from 6.8 to 8.2 cents/kWh
August 6, 2008
CLF / VPIRG
Rising Electric Supply Costs
8
August 6, 2008
CLF / VPIRG
Volatility of Electric Costs Support
Increase in Efficiency Budget

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Expiration of contract with Hydro Quebec
Uncertain extension of Vermont Yankee license

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Volatility would be mitigated by proposed
efficiency budget

9
Reliability problems
Concerns about decommissioning funds, radiation
levels and corporate restructuring
Recommended budget of $85.5 million would supply
equivalent to 6% of Vermont’s annual power at less
than half the avoided cost of supply
August 6, 2008
CLF / VPIRG
Increased Avoided Costs
Winter Peak
Winter Off
Peak
Summer
Peak
Summer Off
Peak
AESC 2005
0.064
0.052
0.061
0.045
Change
from 05-07
0.032
0.018
0.040
0.025
Percent
Change
49%
34%
65%
55%
10
August 6, 2008
CLF / VPIRG
Energy Efficiency Costs Have
Been Decreasing
2006
2007
Avg. cost/kWh
0.035
0.037
0.026
120,000
60
100,000
50
80,000
40
60,000
30
40,000
20
20,000
10
0
0
2000
2001
2002
Incremental annual MWh savings
11
Yield
2005
MWh
Year
2003
2004
2005
2006
2007
Yield - MWh savings per $10,000 invested
August 6, 2008
CLF / VPIRG
Energy Efficiency Costs Have
Been Decreasing
2006$/MWh
CT IOUs 2000-2005
70
MA IOUs 2003-2005
60
Efficiency Vermont
2000-2006
SMUD 2000-2006
50
Seattle 2000-2005
PG&E 2000-2005
40
SDG&E 2000-2005
SCE 2000-2005
30
Mass. Electric 20002002
W. Mass. Electric 20002002
Boston Ed/Nstar 20002002
Cambr. Elec. 2000
20
10
0
0.0%
0.5%
1.0%
1.5%
2.0%
Annual Incremental Savings as % in Annual Sales
12
August 6, 2008
2.5%
Com. Elec. 2000
Fithb. G&E 2000-2002
CLF / VPIRG
More Efficiency Resources
Available

Higher reductions may be achieved in
targeted areas

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13
Increased investments in targeted areas are
providing additional efficiency savings and still
costing below avoided costs
Majority of state untapped
New opportunities & technologies
August 6, 2008
CLF / VPIRG
Change in Federal Efficiency
Standards

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A significant portion of efficiency savings in 2007
came from CFLs
New standards not in place until 2012
New technologies available and costs declining
Many remaining efficiency measures still below
avoided costs

14
Even if CFL’s were replaced with measures that cost
4 times more, they would still be cost effective
August 6, 2008
CLF / VPIRG
Environmental Benefits

15
Environmental Need

2007 efficiency investments produced a 661,500 ton reduction in
carbon dioxide, 562 tons in nitrogen oxides, and 1,103 tons in
sulphur dioxides that would have otherwise been emitted by
conventional electric generation.

These also resulted in a savings of 4.7 million gallons of
propane, 242 million gallons of natural gas, 3 million gallons of
oil and 283 million gallons of water.

PSB decisions have placed an economic value on
environmental externalities of about 5% (Docket #5270 (1990)
and $7.86 MWh for natural gas (Docket #6290 (2003).
August 6, 2008
CLF / VPIRG
Scale of Investment

Higher level of investment is justified

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16
$52.5 million investment supported by
previous recommendation.
$85 million investment provides ramp up
similar to past experience
Investments made earlier will have greatest
benefit as power contracts expire.
Expanded scope of EEU services creates
new opportunities
August 6, 2008
CLF / VPIRG
Conclusion

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
17
All cost effective investments are required,
reasonable and prudent
Efficiency resources continue to provide
savings at 1/3 to 1/2 the cost of supply
resources
EEU Budget should be set at $52.5 million
for 2009 and transition to $85 million for
2011
August 6, 2008
CLF / VPIRG