Contract Administrator Report
June - July 2008
EEU Contract Obligations
The Department of Public Service (DPS) concluded its 2007 savings verification
activities and the Contract Administrator (CA) provided the Board with his
recommendations. The CA recommended that the Board certify that in 2007, VEIC
achieved a net annualized energy savings of 93,933 MWh, a Total Resource Benefit of
$64,416,983, a summer peak capacity reduction of 12,930 kW, and a winter peak
capacity reduction of 14,463 kW1. This recommendation results in a reduction from
VEIC’s April 1st claim of 2,329 MWh’s (2.5%; from 96,292 MWh/yr. to 93,933
MWh/yr.), $2,941,707 in TRB (4.6%; from $67,358,689 to $64,416,983), 656 kW in
summer peak demand (5.1%; from 13,587 kW to 12,930 kW) and 578 kW in winter peak
demand (4.0%; from 15,041 kW to 14,463 kW). The Department's memorandum noted
that the energy savings percentage reduction is smaller (2.9%) than the ones proposed
and adopted in the two previous years (9.9% in 2005, 6.2% in 2006). The Department
also noted improvement in EVT’s documentation and quality control processes. The
Board is considering the CA’s recommendation.
Contract modifications brought about by the Board's June 2007 Final Order in
Docket 7081 were approved by the Office of the Administration and the Attorney
General’s Office and signed by both parties. The modifications include sections detailing
EVT’s participation on the Vermont System Planning Committee, EVT’s preparation of a
20 year estimate of electrical energy efficiency savings, and EVT’s provision of nontransmission alternatives information to electrical distribution utilities.
Pursuant to the contract, Main Body, Section 6, “Terms of Agreement”, the Board
notified VEIC that it would like to extend the terms of its contract for a period of up to
three years. On July 14th, VEIC responded in the affirmative. A negotiation schedule has
been established.
EEU Reports
VEIC provided EVT's 2nd Quarter Report on August 1st. They reported a 30
month cumulative annualized energy reduction of 210,096 MWh or 80% of their 3-year
goal (261,700 MWh). If EVT is able to maintain the pace of annualized energy savings
that they experienced in the first 6 months of 2008 (63,216 MWh), they could exceed the
3-year goal by approximately 4% (~11,000 MWh). Applying the same methodology to
estimate total capacity savings, both the summer and winter peak coincident 3-year
savings goals could be exceeded by 2.9% and 7.6% respectively. The TRB savings are
estimated to meet the 3-year goal of $198,000,000. An additional factor in estimating
TRB is the historical close rate of large projects. Large project completions tend to
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.
CA June - July 2008 Report
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increase toward the end of the year. Often, these larger projects have higher TRB ratios
because they usually include efficiency equipment with long measure lives. Thus, I now
expect VEIC to exceed its cumulative 3-year TRB goal.
The 2008 energy savings were attained at a cost per MWH of $1992, a significant
improvement over contract expectations of approximately $243 per annualized MWh.
The cost per MWh is lower mainly due to two factors from the Efficient Products’ (EP’s)
initiative. The EP 2008 cost per MWh is below $60 and secondly, EP 2008 annualized
energy savings account for approximately 64% of EVT’s yearly total.
Total VEIC expenditures are approximately 5% under budget. VEIC spending for
ISO-New England Regional Capacity Activities is running slightly ahead of budget. As
noted in my previous report, this spending is primarily in support of the implementation
of the measurement and evaluation (M&E) plan submitted to ISO-NE by VEIC in
compliance with forward capacity market (FCM) eligibility requirements. Due to the
need for timely action, VEIC is currently incurring some consultant costs that might
otherwise be billed against the ISO-NE FCM revenue stream by the Department of Public
Service. Thus, the total FCM M&E expenditures are within expectations, but VEIC’s
share is slightly higher than anticipated. The DPS plans to assume its full share of the
expenditures as the FCM M&E process matures3. Efficient Products spending is reported
as having 70% of its budget expended for 50% of the year past. This increase spending is
the result of the continued success of CFL sales4.
The Geographic Equity Minimum Performance Criteria (MPC) has not been met
by Essex County. All other MPC’s appear to be within reach or to have been satisfied.
No other unusual activity is noted.
Burlington Electric Department (BED)
BED‘s 2nd Quarter Report states that total cumulative annualized energy savings
are 16,556 MWh or 143% of their 3-year goal and year 2008 spending is $744,992 or
47% of their annual budget. The 2008 energy savings were attained at a cost per MWH of
$305. Efficient Products5 accounted for approximately 47% of BED's total year 2008
annual energy savings. Over the 30 month period, the percentage falls to 21%.
BED winter (26%) and summer capacity savings (26%) claims are significantly
below their annualized energy savings level (52%). As noted in my last report, some of
the difference is due to BED’s reporting methodology. In contrast to the way EVT
reports capacity reductions, BED does not include the effects due to line losses, free
riders, and spillover. Line loss effects are significant contributors to capacity reduction
values as they increase net savings estimates by over 10%. In addition, Efficient Product
2
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.
3
The DPS issued an RFP for FCM verification services on July 17th and expects to select a contractor in
August.
4
Given the high percentage of energy and capacity savings resulting from residential CFL sales, the DPS
has recently expanded the scope of 2008 CFL evaluation activities.
5
BED titles the initiative “Retail Products”.
CA June - July 2008 Report
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CFL’s have a year 2007 combined free rider and spillover effect of 1.19. This DPS
approved estimate has the net effect of increasing savings by 19%. As more importance
is placed upon capacity reductions, differences in reporting and calculation are being
reviewed by the DPS, BED and VEIC with the long-term goal of statewide consistency.
Other Issues of Significance
The Fiscal Agent's July 18th, 2008 report states that the June 30th , 2008 closing
fund balance is $2,643,588. Indicating a substantial accumulation of analyzed potential
projects, EVT contractual customer commitments are at $1,191,287. With four months of
the EEC year past, ratepayer contributions are 2.5% ahead of budget. No unusual activity
is noted.
Both EVT and BED have successfully submitted 18 months of projects into the
Independent System Operator-New England's (ISO-NE) Transitional Capacity Market.
Year 2007 and 2008 payments for capacity reductions total $497,699. VEIC, BED, DPS,
and CA expenses to date total $508,880. Thus, the FCM transitional period net revenue is
still negative (-$11,181). Net revenue is expected to turn positive next month with a
2008 year surplus projected of approximately $141,000. As directed by Year 2008
legislation, FCM revenue is deposited into the Electric Energy Efficiency Fund.
The Qualifications Package for ISO-NE Forward Capacity Market Auction #2
(FCMA#1) was submitted in April and the Show of Interest for FCMA#3 is due by
September 16th, 2008.
The DPS residential and non-residential (C&I) evaluation contractors have begun
their work and the residential contractor has submitted several draft reports for comment.
The C&I contractor has finalized its research surveys and on-site data collection forms
and begun site visits.
The EEU Fund independent annual audit contract has been awarded and the
contractor has begun work.
I have received additional inquiries regarding Energy Efficiency Savings
Accounts. I stated that the Board is waiting for a DPS petition to open a proceeding to
define program parameters.
CA June - July 2008 Report
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