Contract Administrator Report
September - November 2007
EEU Contract Obligations
In 2006, the Board adopted new avoided electric resource costs, revised costing
periods and revised line-loss factors. In the Fall of 2007, the Board modified the
Customer Credit Program. These modifications triggered changes to six of the eight
Performance Incentive (PI) Targets and one of the five Minimum Performance Incentive
(MPI) Targets. On November 29th, The Board provided VEIC with Contract
Amendment Number 2 which incorporated those modifications. The following PI's were
modified as well as MPR number 5. The new targets are as follows:
PI #1 Annual Electricity Energy Savings: 261,800 MWh
PI #2 Total Resource Benefits: $198,000,000
PI #3 Summer Peak Demand Savings: 37,590 kW
PI #4 Winter Peak Demand Savings: 41,490 kW
PI #5 GT Summer Peak Demand Savings: 10,100 kW
PI #6 GT Winter Peak Demand Savings: 11,150 kW
Minimum PI #5
County
Addison
Bennington
Caledonia
Chittenden
Essex
Franklin
Grand Isle
Lamoille
Orange
Orleans
Rutland
Washington
Windham
Windsor
Minimum
Total Resource Benefit
$3,813,300
$5,104,700
$2,611,100
$12,062,700
$563,900
$4,620,300
$320,600
$2,400,100
$2,177,400
$2,178,900
$8,129,500
$6,134,600
$6,503,300
$6,365,500
An additional amendment will be forthcoming following the finalization of the scope of
work for Efficiency Vermont's preparation of the May 2008 twenty year forecast of DSM
savings expected to be achieved from system-wide programs as described in the Board's
June 20, 2007 Order in Docket 70811.
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Docket 7081: Investigation into Least-Cost Integrated Resource Planning for Vermont
Electric Power Company, Inc.'s Transmission System
CA September - November 2007 Report
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EEU Reports
VEIC provided EVT’s October Monthly Report on November 30th. EVT Services
and Initiatives monthly spending reached a new all-time monthly high ($1,685,682) and
was approximately 14% higher than September's total. However, there still remains
approximately 39% of the Annual Budget estimate unspent ($8,952,424) with only two
months of invoices outstanding.
Energy savings are at 44% of the three year goal being claimed with
approximately 61% of the contract period reported. If VEIC were to maintain the level of
increase that they produced over the last three months, they would achieve approximately
88% of the contract three year cumulative annual energy savings target. Given the
significant increase in their third year budget, as well as the significant increases in staff
and program capacity that VEIC has achieved over the last several months, their
attainment of some or all of the performance targets is becoming more probable.
The Efficient Products Initiative continues to contribute substantial annualized
energy savings with a contract cumulative total of 53,743 MWh or 47% of contract totalto-date MWhs. Overall, annualized energy savings continue to be acquired at a cost
slightly below projections ($225/MWh versus $246/MWh). This success can be largely
attributed to the Efficient Products Initiative with a very cost-effective average cost of
$73/MWh2. No other unusual activity is noted.
BED
BED submitted its October Monthly Report and recorded year to date energy
savings of 5,138 MWh or 140% of their annual goal and spending of $845,707 or 73% of
their annual budget. Business New Construction accounted for approximately 43% and
Business Existing Facilities 33% of BED's total annual energy savings. Although BED
records achieving 102% of their cumulative three year annualized MWH goal, their
progress on achieving their cumulative three-year summer and winter peak capacity
reduction goals is significantly lower at 25% and 28% respectively. This discrepancy has
been discussed with the DPS and BED. They are exploring the issue as part of DPS's
annual BED savings verification. No other unusual activity is noted.
Other Issues of Significance
It now appears likely that more than 5% of the year 2007 Contractor EEU Funds
or $1,078,000 will be unspent by year end. In October, VEIC estimated that they would
surpass that threshold and thus, did not file a request to carry forward any unspent
Contractor EEU Funds3. There are several factors which make the timing of this contract
condition less than optimal. First, there is the uncertainty introduced by requiring an
VEIC estimate of unspent funds. By requiring a November 1 deadline, VEIC must
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EEP costs include allocated share of general administration and IT costs.
Attachment B: Section 11, Annual Request for Carryover of Funds, requires a request by the contractor on
or before November 1, 2007 to the Board, DPS, and each Vermont Distribution Utility to carryover any
unspent Contractor EEU Funds if said funds are anticipated to be in excess of 5% of the total Contractor
EEU Funds available in that year as shown in Attachment E.
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CA September - November 2007 Report
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estimate the total spending for the last three months of the year, months in which
spending is typically higher than earlier months. Secondly, the next year's EEC is set in
October, so even if the PSB decided to use a portion of the unspent funds to lower the
amount needed to be raised by the EEC, it would not be able to implement that change
until the following October. Consequently, the Board may want to consider changing the
future timing of the request to carry-over unspent funds from November 1st until two
months after EVT closes its fiscal year on December 31st.
The Year 2007 Vermont Energy Efficiency Utility Fund (VEEUF) Audit should
begin in the Spring of 2008 to be completed by June 30th. Because the 2006 audit
completed the present contract for independent audit services of the VEEUF, the Board
needs to initiate a competitive bidding process for the 2007 and 2008 VEEUF audit in
January of 2008.
The Fiscal Agent’s November 20th Monthly Report shows an adequate Closing
Fund Balance of $4,287,329. EVT contractual customer commitments are at $788,797,
down somewhat from historical levels. Customer contributions are as expected at 99.5%
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 November 30th, total funding received from EEU participation in ISO-NE's
Forward Capacity Market Transition Period equaled $216,706. Year 2007 expenses total
$156,906. Year 2006 expenses total $85,082, yielding a combined expense total of
$262,245. This yields a net loss of (-$45,539). The net loss is decreasing as expected.
This reinforces the conclusion in my last report that the RCMA will produce a positive
cash flow in Year 2008, resulting in a 2008 year end surplus of a minimum of $200,000.
Caution is still advised because this process is entirely new and Vermont may experience
unexpected additional evaluation costs as it implements the Measurement and
Verification Plan that accompanied VEIC's and BED's Qualification Package for Forward
Capacity Market Auction #1.
On October 5th, the DPS held a Commercial Monitor and Evaluation ( M&E)
scope-of-work presentation. KEMA, the DPS's lead contractor for commercial
evaluation activities, led the presentation which included a walk-through of their
proposed activities and an opportunity for comment. Overall, I felt that the scope-ofwork is well defined and inclusive of previously identified research activities.
Unfortunately, the DPS contract for KEMA's services is still waiting for release from the
DPS. I have no reason to believe that the contract will not be released and signed.
However, the delay in initiating the research activities will most likely prevent the results
from informing the Board's deliberations concerning the renewal of VEIC's contract.
CA September - November 2007 Report
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