Contract Administrator Report
October – December 2008
EEU Contract Obligations
Negotiations have successfully concluded for the 2009 – 2011 PSB / VEIC contract1.
As usual, prior to the signing, the contract is being reviewed by the Secretary of
Administration and Vermont’s Attorney General’s Office. That review is expected to be
concluded in January.
VEIC filed EVT’s Annual Plan covering the time period 2009 - 2011 in December.
The Advisory Committee will be reviewing the Plan at its January 15th meeting. A Board
workshop will be scheduled this winter for a VEIC presentation.
The 2006 – 2008 PSB / VEIC contract is being amended to include all-fuels energy
efficiency tasks and budget2. The contract is also being amended to recognize the effects
of changes in estimates of avoided capacity and energy costs that the Board first
approved to begin in July, 2007. The Board further revised those estimates and adopted
the final changes to begin in January 2008. In addition, the DPS revised their estimation
of line losses to start in July, 20073. The avoided cost revisions resulted in higher
estimated dollar values for energy and capacity reductions. Consequently, the Total
Resource Benefit Contract goal increased. At the same time, the reduction in estimated
line losses lowered the value of energy and capacity savings at generation4. Combining
these effects, the final 2006 – 2008 #1 to #6 Performance Indicator 100% Targets are as
follows:
#1
#2
#3
#4
#5
#6
Title
Electricity Savings
Total Resource Benefits
Summer Peak Demand Savings
Winter Peak Demand Savings
GT Summer Peak Demand Savings
GT Winter Peak Demand Savings
100% Target
262,031 MWh
$225,392,772
37,702 kW
41,492 kW
7,200 kW
7,740 kW
The 2009 - 2011Contract is an extension to the original 2006 – 2008 contract and thus is legally
considered a contract amendment.
2
Legislation passed and signed into law in 2008 authorized the EEU to begin providing all-fuels energy
efficiency services funded by the net proceeds from ISO-NE’s Forward Capacity Market.
3
Performance goals were revised a total of four (4) times over the contract period. The first revision
occurred in Spring of 2007 to reflect the increase in the EEU’s three year budget; the second in Fall of 2007
to reflect initial changes in avoided costs, the revised estimate of line loss, and increased funding available
to the Customer Credit Program; the third in the Summer of 2008 due to recognition of errors in the
calculation of GT capacity reduction goals; the fourth in December of 2008 due to the revision of avoided
costs and adjustments resulting from the use of verified 2007 savings versus estimated savings in
adjustment number two.
4
VEIC’s performance goals are based on energy and capacity savings at generation.
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EEU Reports
VEIC provided EVT's November Monthly Report on January 5th. They reported a
thirty-five month cumulative annualized energy reduction of 263,160 MWh or 100% of
their three-year goal (262,031 MWh). They also reported reaching 101% or 41,950 kW of
the Winter Peak Coincident goal, 102% (38,406 kW) of the Summer Peak Coincident
goal, and 92% ($206,415,007) of the TRB goal.
The 2008 energy savings were attained at a cost per MWH of $2225, in line with
contract expectations of approximately $243 per annualized MWh. Business Existing
Facilities (BEF) activity accounts for approximately 69% of all November initiatives and
service costs. This reflects increased expenditures for completed retrofit projects in the
GT targeted areas. BEF spending has exceeded its three-year budget by 2%. If its current
monthly rate is maintained in December, BEF spending may be as much as 14%
($2,025,000) over budget. Because spending in Residential Existing Homes and
Business New Construction is under-budget, this should not cause VEIC to overspend its
overall three-year budget.
Total VEIC expenditures are at appropriate levels. VEIC spending for ISO-New
England Regional Capacity Activities is over budget. As noted in my previous reports,
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 higher than
anticipated. The DPS plans to assume its full share of the expenditures as the FCM M&E
process matures6. More detail about the FCM Transition Period net revenue appears in
the last section of this report. Efficient Products spending is reported as having 113% of
its budget expended. This increase spending is the result of the continued success of CFL
sales7.
No other unusual activity is noted.
Burlington Electric Department (BED)
BED‘s November Monthly Report states that total three-year cumulative
annualized energy savings are 22,519 MWh or 195% of their three-year goal. Year 2008
spending is $1,388,172 or 87% of their annual budget. BED anticipates that the
completion of several large C&I projects may be delayed until 2009 and thus, they may
5
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.
6
The DPS issued an RFP for FCM verification services on July 17 th and has selected West Hill Energy and
Computing Inc. as the primary contractor.
7
Given the high percentage of energy and capacity savings resulting from residential CFL sales, the DPS
expanded the scope of 2008 CFL evaluation activities.
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end 2008 under budget. Efficient Products8 accounted for approximately 49% of BED's
total year 2008 annual energy savings and is at 666% of BED’s estimated annual
Efficient Product’s MWh goal. This reflects a very successful CFL market intervention.
BED three-year winter (84%) and summer capacity savings (86%) claims are
significantly below their three-year annualized energy savings level (195%). Research
into the accurate quantification of capacity savings continues to be an EEU priority.
With additional resources provided by Vermont’s participation in ISO-NE’s FCM and
knowledge gained as a result of FCM Measurement and Verification activities, BED and
VEIC continue to refine coincident peak capacity savings estimates.
Other Issues of Significance
The Fiscal Agent's December 26th, 2008 report states that the November 30th,
2008 closing fund balance is a negative $83,240.39. The negative closing fund balance
assumes the 100% payment of EVT contractual customer commitments which are stated
at $2,223,349. A significant portion of those commitments will be paid from fund
proceeds over the next 12 months. The funds total assets of $5,640,712.08 and expected
EEC revenue stream are sufficient resources to meet all current and future known
obligations.
With nine months of the EEC year past, total ratepayer contributions are 0.6%
ahead of budget. However, the last two months contributions were at 93% and 94% of
monthly budget respectively. If that magnitude of shortfall continues through the end of
EEC 2008 year, it would produce a relatively minor shortfall of approximately $500,000
or 2% of the yearly expected total of $30,581,762.
Both EVT and BED have successfully submitted 23 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 $1,215,205. VEIC, BED,
DPS, and CA expenses to date total $715,827. Thus, the FCM transitional period net
revenue is now a positive $499,378. As directed by Year 2008 legislation, FCM revenue
is deposited into the Electric Energy Efficiency Fund for use implementing EEU all-fuels
energy saving activity. As directed by the Board, VEIC began implementing limited
educational all-fuels activities in July. Those offerings were expanded in November as
the result of Board Orders9. Cumulative VEIC all-fuels energy saving expenditures
through November total $138,025. This results in a net all-fuels implementation surplus
of $361,353.
The ISO’s FCM Auction #2 (FCMA #2) concluded in early December. The VT
efficiency portfolio consisting of 10.184 MW capacity value was in the final bid. The
auction closed at the floor price of $3.60 per kW-month with an excess of 4,487 MW of
capacity. Thus, VEIC will choose to either prorate the price to approximately $3.16 per
kW-month or reduce the capacity commitment to approximately 8.95 MW. A Letter of
Intent to Participate in FCMA #3 was filed with ISO-NE on September 15th, 2008 with a
BED titles the initiative “Retail Products”.
On November 10th, the Board issued Order Re Heating System Replacement Initiative and Energy Auditor
and Installer Training. On November 12th, the Board issued Order Re Comprehensive Home Energy
Efficiency Loan Program and Grassroots Community Energy Mobilization Program.
8
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proposed capacity reduction, beginning in June 2012, of approximately 8.3 MW. The
Qualifications Package for FCMA #3 is due to be filed with ISO-NE on February 17th.
The DPS is reviewing draft residential and non-residential (C&I) evaluation
reports. The final versions should be available early in 2009.
Due to the recent loss of the DPS’s Energy Efficiency Director, the DPS petition
to open a proceeding to define Energy Efficiency Savings Account program parameters
has been delayed.
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