Contract Administrator Report
July - August 2007
EEU Contract Obligations
On August 20th, I sent a memo to the Board regarding Efficiency Vermont's Year
2006 Annual Electrical Savings, Total Resource Benefits, Summer Peak Demand Savings
and Winter Peak Demand Savings. On September 10th, the Board issued a letter to
VEIC adopting my recommendations. Therefore, for the year 2006,
 52,947 MWh will be credited towards VEIC's cumulative three-year annual
electrical savings goal of 270,000 MWh;
 $41,930,699 will be credited towards VEIC's cumulative three-year total resource
benefits goal of $184,000,000;
 7,775 kW will be credited towards VEIC's cumulative three-year summer peak
demand savings goal of 40,000 kW;
 7,161 kW will be credited towards VEIC's cumulative three-year winter peak
demand savings goal of 40,000 kW.
EEU Reports
VEIC provided EVT’s July Monthly Report on August 31st. EVT Services and
Initiatives monthly spending ($1,169,700) is significantly less (47%) than the monthly
average ($2,197,000) needed in the last half of 2007 to reach EVT's estimate of annual
spending. Energy savings, traditionally highly correlated with spending, are at 35% of the
three year goal being claimed with approximately 53% of the contract period past. Thus,
it appears that increasing energy and capacity savings at the rate needed to meet contract
goals remains a formidable challenge. VEIC reports that they have successfully hired
and trained additional staff as well as awarded a significant contract for direct-install
services in the geo-targeted areas. They expect expenditures and savings to increase
steadily.
The Efficient Products Initiative continues to contribute substantial annualized
energy savings with a contract cumulative total of 44,528 MWh or 46% of contract totalto-date MWhs. Overall, annualized energy savings continue to be acquired at a cost
slightly below projections ($211/MWh versus $246/MWh). This success can be largely
attributed to the Efficient Products Initiative with a very cost-effective average cost of
$63/MWh. No other unusual activity is noted.
BED
BED submitted its July Monthly Report and recorded year to date energy savings
of 4,363 MWh or 119% of their annual goal and spending of $605,410 or 52% of their
annual budget. Business New Construction accounted for approximately 50% and
Business Existing Facilities 29% of BED's total annual energy savings. Although BED
records achieving 96% of their cumulative three year annualized MWH goal, their
progress on achieving their cumulative three-year summer and winter peak capacity
CA July - August 2007 Report
1
reduction goals is significantly lower at 21% and 24% respectively. No other unusual
activity is noted.
Other Issues of Significance
The Year 2006 Vermont Energy Efficiency Utility Fund (VEEUF) Audit is
complete. The audit found that the financial statements present fairly, in all material
aspects, the financial position of the VEEUF. Copies of the audit have been mailed to the
Board. This audit completes the present contract for independent audit services of the
VEEUF. The Board will need to initiate a competitive bidding process for the 2007 and
2008 VEEUF audit.
The Fiscal Agent’s August 15th Monthly Report shows an adequate Closing Fund
Balance of $3,559,406. EVT contractual customer commitments are at $897,591
indicating a substantial accumulation of analyzed potential projects. Customer
contributions are as expected at 100.02% of projections. Expenditures for BED's
Regional Capacity Market Activities (RCMA) are exceeding the original budget
estimates. This is the first year of estimating costs for this activity and there was no
similar activity to use as a guide. The costs are relatively small and are reasonable given
the RCMA requirements that were established after the budget was proposed. A more
complete accounting of the EEU RCMA follows in this report. No other unusual
elements are noted.
As of July 31st, total funding received from EEU participation in ISO-NE's
Forward Capacity Market Transition Period equaled $80,591. Year 2007 expenses
totaled $130,631. Year 2006 expenses totaled $85,082 for a combined net loss of
(-$135,121). The net loss is partly due to the low winter peak period capacity reduction
fees combined with high start-up costs associated with EVT's and BED's Qualification
packages required for their participation in the Forward Capacity Market Auction #1.
Additional factors that contributed to this initial net loss are those costs attributable to the
initial deliberations regarding EVT's participation in this market as well as direct and
indirect costs associated with VEIC becoming a knowledgeable market participant.
Starting in May, the EEU Summer Peak Capacity Reduction payments are substantially
higher (225%) than winter payments. In addition, administrative costs have decreased
while the VEIC and BED Qualification Packages are being reviewed by ISO-NE. During
the transition period (December 2006 through May 2010), estimates of the revenue
stream from capacity reductions are fairly predictable, estimates of costs are harder to
quantify. Costs will vary depending upon the specific additional verification activities
that will be determined later. The current estimate for EEU RCMAs turning cash
positive is in mid-year 2008, with a projected 2008 year end surplus of a minimum of
$200,000.
On August 29th, the DPS held a Residential Monitor and Evaluation ( M&E)
scope-of-work presentation. Nexus Market Research, Inc., the DPS's lead contractor for
residential evaluation activities, led the presentation which included a walk-through of
their proposed activities and an opportunity for comment. Overall, I felt that the scopeof-work is well defined and inclusive of previously identified research activities. The
DPS is planning to hold a similar workshop for commercial M&E activities.
CA July - August 2007 Report
2