EEU Contract Obligations
Following the conclusion of the Department of Public Service (DPS) 2008 savings verification activities, the Contract Administrator (CA) provided the Board with his VEIC annual savings recommendations. The CA recommended that the Board certify that, in 2008, VEIC achieved a net annualized energy savings of 140,562 MWh, a Total
Resource Benefit of $119,724,185, a summer peak capacity reduction of 19,720 kW, a winter peak capacity reduction of 22,258 kW 1 , a summer peak demand savings in geographic areas of 5,744 kW, and a winter peak demand savings in geographic areas of
2,683 kW. If adopted, this recommendation would result in a reduction from VEIC’s
April 1 st claim of 5,236 MWh’s (3.6%; from 145,562 MWh/yr. to 140,562 MWh/yr.),
$8,383,764 in TRB (6.5%; from $128,107,949 to $119,724,185), 1,220 kW in summer peak demand (5.8%; from 20,940 kW to 19,720 kW), 1,416 kW in winter peak demand
(6.0%; from 23,674 kW to 22,258 kW), 624 kW in summer peak demand savings in geographic areas (9.8%; from 6,368 kW to 5,744 kW), and 316 kW in winter peak demand savings in geographic areas (10.5%; from 2,999 kW to 2,683 kW). The Board is considering the CA’s recommendation.
On June 26 th
, the CA submitted his findings and recommendations concerning
VEIC’s 2006 – 2008 Minimum Performance Requirements. In summary, the CA found that VEIC had successfully exceeded all five minimum performance requirements. In a separate June 26 th
communication to the Board, the CA submitted his conclusions and recommendations concerning VEIC’s 2006 – 2008 Performance Awards. The CA concluded that VEIC had successfully achieved 109.7% of Performance Indicator #1
(Annual Energy Savings), 100.3% of #2 (Total Resource Benefits), 110% of #3 (Summer
Peak Demand Savings kW), 108.2% of #4 (Winter Peak Demand Savings), 98.6% of #5
(Geo-targeted Summer Peak Demand), #7 (CFL Statewide Stocking) and #8 (Community
Awareness). In addition, the CA found that VEIC failed to achieve the minimum required peak reduction for Performance Indicator #6 (Geo-targeted Winter Peak
Demand Savings). Consequently
2
, the CA recommended that VEIC be awarded
$2,316,021 out of a possible maximum award of $2,347,000. The Board is considering the CA’s recommendation.
Pursuant to the Contract, Attachment L, Section I. B., Financial Management,
VEIC contracted the firm of Alexander, Aronson, Finning & Co., P.C. to perform an audit of Vermont Energy Investment Corporation's ("VEIC") financial statements for the period July 1 st
, 2007 to December 31 st
, 2008
3
. The audit was conducted in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General
1 Performance award targets do not include energy savings or total resource benefits arising from activity in the Customer Credit Program. Therefore, these figures exclude Customer Credit Program results.
2 Performance Incentives #1 through #6 were scaled such that VEIC could earn varying amounts for under or over achievement.
3 VEIC transitioned its fiscal year to a calendar year. Thus, this audit covered an 18 month period.
CA May - June 2009 Report 1

of the United States. The results of the audit confirmed that VEIC’s financial statements are free of material misstatement. Copies of the audit were provided to Board staff.
EEU Reports
VEIC provided EVT's May Monthly Report on July 1 st . They reported a five month cumulative annualized energy reduction of 31,137 MWh or 9% of their three-year goal (360,000 MWh) while approximately 14% of the contract period has passed. Winter and summer capacity savings were at 9% and 10% of their respective three-year goals.
Because of the increased 2010 and 2011 budgets, the percent completed modestly understates achievement relative to the contract period.
The year to date TRB savings ($40,693,848) is being reported in “2009 dollars”, while the reported goal ($342,386,000) was set using “2006 dollars”. Thus, the comparison is not accurate. VEIC is updating the TRB goals to “2009 dollars” and will be providing their calculation for Board review in July.
The 2009 energy savings were attained at a cost per MWH of $278
4
or 4% higher than the contract average of $268.
Total VEIC expenditures are within reasonable limits. VEIC spending for ISO-
New England Regional Capacity Activities and for Unregulated Fuels Services and
Initiatives is lower than the CA anticipated. The Business Energy Services component is just beginning to incur costs. Given the limited year 2009 financial resources ($251,120),
VEIC reports that designing an effective focused initiative while being responsive to the
DPS’s Annual Plan comments presented a challenge. No other unusual activity is noted.
Burlington Electric Department (BED)
BED‘s May Report states that total cumulative annualized energy savings are
2,941 MWh or 44% of their annual goal and year 2009 spending is $470,504 or 32% of their annual budget. This compares with approximately 42% of the year past. The 2009 year-to-date energy savings were attained at a cost per MWH of $160. Business Existing
Facilities accounts for approximately 62% of BED's year 2009 annual energy savings.
BED winter (35%) and summer capacity savings (35%) claims align with their annualized energy savings level (32%). No other unusual activity is noted.
Other Issues of Significance
The Fiscal Agent's June 18 th
, 2009 report states that the May 31 st
, 2009 closing fund balance is $2,551,199. EVT contractual customer commitments are at $599,570, about one-half the level of last year. With three months of the EEC year past, ratepayer contributions are 1.8% or $144,744 below budget. No other unusual activity is noted.
4 This calculation excludes the cost of the Customer Credit Program and the cost of EVT's participation in the FCM in order to match the methodology used to calculate the contract estimate.
CA May - June 2009 Report 2

Both EVT and BED have successfully submitted 29 months of projects into the
Independent System Operator-New England's (ISO-NE) Transitional Capacity Market.
Payments for capacity reductions total $2,361,241 5 . VEIC, BED, DPS, and CA expenses to date total $1,018,180. Thus, the FCM transitional period net revenue equals
$1,343,161. Expenses to-date for Unregulated Fuels Efficiency Initiatives total $328,341.
This results in a balance of $1,014,821 available for future unregulated fuel implementation activity.
On May 29 th
, EVT ISO-NE formally notified VEIC that it had qualified 10,738 kW for participation in the Forward Capacity Auction #3 to be held beginning on October
5, 2009. This was the full amount that VEIC had requested to be qualified. Concurrently,
ISO-NE notified VEIC that all capacity reductions behind the system known as the
Citizens Block Loads (CBLs) may not be assigned to this resource. VEIC calculates that approximately 3% of their historic capacity reductions are from Vermont CBL participants. Given that FCM participants may adjust the amount of qualified capacity that they put into the auction, this restriction does not appear to be a substantive problem.
As noted in my last bi-monthly report, the DPS residential and non-residential
(C&I) evaluation contractors have concluded their 2006 – 2009 evaluations. The DPS is developing a timeline for a summary evaluation report, public workshop, and the submission of a 2009 – 2011 evaluation plan and budget breakdown.
5 Income started accruing in January of 2007.
CA May - June 2009 Report 3