April 6, 2007 Susan Hudson, Clerk Vermont Public Service Board 120 State St. Montpelier, VT 05620 RE: Reply Comments regarding EEU Participation in the Forward Capacity Market Dear Ms. Hudson: Conservation Law Foundation (CLF) and Vermont Public Interest Research Group (VPIRG) offer these reply comments regarding the use of payments made to Efficiency Vermont from the ISO-NE Forward Capacity Market (FCM). As noted in the comments filed by CLF and VPIRG on October 24, 2006 and March 27, 2007, funds collected from the FCM for measures put in place by the EEU should be used to fund additional efficiency measures. The reasons supporting this were stated in the two previous filings. These comments are provided in response to the comments of the Vermont Department of Public Service (DPS) dated March 30, 2007. Without justification, the DPS recommended that the excess funds be returned to ratepayers. The DPS recommendation should be rejected by the Vermont Public Service Board (Board) and the funds should be used to pay for additional efficiency measures. DPS Fails to Justify Recommendation The March 30, 2007 comments of the DPS state: With respect to the second issue above, any excess revenues from the FCM transition period payments should be returned to the ratepayers, as the Department outlined in its October 23, 2006 comments to the Board regarding EEU participation in the FCM. DPS 3/30/07 Comments. The October 23, 2006 comments of the DPS state: The revenues collected through participation in the FCM should be put in the fiscal agent’s account and future energy efficiency charges should be adjusted to reflect revenues received through this process. In this way, the value of the capacity savings is appropriately returned to ratepayers. DPS 10/23/06 Comments. Neither of the DPS Comment letters provides any justification for returning the monies to ratepayers. The DPS simply baldly asserts that adjusting the budget to reflect these 1 payments will provide that “the value of the capacity savings is appropriately returned to ratepayers.” Ratepayers Will Receive Added Value by Using the FCM Payments to Acquire Additional Energy Efficiency Contrary to the DPS’s assertion, the value of the capacity savings is most appropriately returned to ratepayers by using it to acquire additional cost effective energy efficiency resources. As noted during the various hearings on the EEU budget, and confirmed by all of Efficiency Vermont’s performance reports, as well as the requirements of their contract, each dollar invested by Efficiency Vermont in energy efficiency measures delivers more than one dollar of savings to Vermonters. As further confirmation that acquiring additional energy efficiency is the best use of these funds, the Public Service Board recently affirmed Green Mountain Power’s request to use the ratepayer funds that were to be paid back in the event of a merger for acquiring additional energy efficiency. GMP demonstrated that ratepayers would receive more benefit than if the money were simply returned to ratepayers. (GMP Docket # 7213, Order 3/26/07). Similarly, when the Vermont Legislature approved the dry cask storage for Vermont Yankee it required that funds to benefit ratepayers be used to acquire additional energy efficiency and renewable power. (Act 74, 2005 Legislative Session). All of these demonstrate the additional value provided to Vermont ratepayers by using the FCM payments to acquire additional energy efficiency resources. It is indeed disappointing that the DPS seems intent on selling ratepayers short and settling for a lower value than would be provided by acquiring additional cost effective energy efficiency resources. Using the FCM payments to acquire additional efficiency resources is also consistent with the overall purpose of the FCM and the reason these payments are made. They are payments for providing capacity that ensures the reliability of the grid. The payments are from ratepayers for the value of the capacity that is provided. Using these funds to acquire additional efficiency will improve the grid’s reliability by reducing demand and will provide additional benefits to Vermonters. Thank you for your consideration of these comments. Sincerely, Sandra Levine Conservation Law Foundation James Moore Vermont Public Interest Research Group 2