July 11, 2006
Ms. Susan M. Hudson, Clerk
Vermont Public Service Board
Chittenden Bank Building, 4th Floor
112 State Street
Post Office Drawer 20
Montpelier, Vermont 05620-2701
Re:
DPS Draft CHP Program Proposal
Dear Ms. Hudson:
This letter will serve as Central Vermont Public Service Corporation’s (“Central
Vermont,” “CVPS” or the “Company”) comments on the proposed Draft Combined Heat
and Power (“CHP”) Program Proposal filed by the Department of Public Service (the
“Department” or “DPS”). These comments are offered pursuant to the Public Service
Board’s (the “Board”) notice of June 20, 2006 in the above referenced matter.
As the Department recognizes, the development of CHP projects can be an important
resource that is available to help meet Vermont’s need for energy and to improve the
efficiency by which customer end-uses are served. For these reasons, the Vermont
General Assembly recognized the potential role for CHP and the potential to include
CHP as a resource with support comparable to that provided for the implementation of
demand side management, energy efficiency and load control efforts. See Act No. 61; 30
Vermont Statutes Annotated (“V.S.A.”) § 209(d).
As part of its experience and study of using distributed resources to help resolve
transmission supply problems and reliability deficiencies, Central Vermont has learned
that potential distributed generation supply resources may not be societally cost-effective
in many specific circumstances. An exception may be CHP projects but, again, we
would expect that to depend critically on the circumstances (i.e., reliability of the units,
investment cost, thermal host requirements, size, etc.). The DPS program proposal seeks
to help CHP project developers overcome barriers to the development of their projects
with efforts targeted at specific industries and customer groups. We believe the DPS will
test such project proposals to assure that they are cost-effective as a part of this effort.
However, Central Vermont suggests that the program should also target reliable, costeffective, CHP into areas where the projects can help in the near term to prolong the life
of existing or planned transmission and distribution facilities that are needed to defer
near-term utility investments. Adding such a feature should produce avoided cost type
benefits for non-participant customers. CVPS also suggests that the Program design
discuss the potential role for utility owned CHP units that may be developed as a part of a
least cost plan to deliver service within a utility service area.
For example, some cost effective CHP projects have been identified by CVPS in its
Southern Loop analysis. Targeting the DPS program on such potential could provide a
test for the Department’s program to develop CHP resources in such an area. Central
Vermont urges that the program design include features such that program efforts are
deployed to help promote reliable CHP projects where they can cost-effectively produce
benefits for non-participant customers. We note that the development of CHP that is not
designed to be reliable enough to meet host customer needs may result in demands on the
network to provide service unexpectedly when onsite power generation is down – which
of course means the utility system must make or maintain capacity in the network to
serve such loads and that can forgo the potential avoided cost benefit for non-participants.
This would also provide an opportunity to consider development of operational, structural
and ownership models to best help utilities integrate CHP into their electric systems.
Similarly, a CHP project can be a so-called “SPEED resource” and help utilities to meet
the SPEED goal established under 30 V.S.A. § 8005. Initially, CVPS believed that the
development of new wind resources would be sufficient to assure that Vermont utilities
achieved the legislature’s goals of serving incremental demand with new renewable or
CHP resources. However, it is now becoming more apparent that siting issues associated
with wind projects may lessen this resources’ ability to help meet the Section 8005
mandate and that greater focus on developing cost-effective CHP will be necessary to
meet this requirement. As a result, CVPS believes there should be a linkage between the
actions of the SPEED Facilitator contemplated under Proposed Rule 4.300, the needs of
utilities to meet the Section 8005 test, and the DPS CHP program. CVPS believes that
the CHP program design should thus be modified so that program administrators are
under a duty to work with utilities to see where CHP can be developed to help utilities
meet the requirements of the SPEED program in as cost-effective a manner as possible.
Toward that end, CVPS is prepared to work with the DPS to help develop program
features to achieve this objective.
In large part, the DPS program design makes the DPS a clearinghouse for information on
CHP and proposes to utilize DPS staff to assist customers to obtain technical advice from
regional CHP resources. CVPS supports a clearinghouse role for the DPS, however the
Company believes that if CHP is to be relied upon as a resource as a part of utility
planning, it may be necessary to develop greater technical knowledge and expertise in
Vermont. CVPS proposes that the Program design be modified to work with Vermont
organizations such as Efficiency Vermont, the Biomass Resource Center, and Renewable
Energy Vermont to help develop this capability in-state. CVPS therefore recommends
that a working group of in-state resources, including utilities, be convened to assure that
the CHP program best serves Vermont’s needs, avoids fragmentation of services and
helps to build capability in-state to make CHP a viable and reliable supply option to meet
customer demand.
Central Vermont would also support building upon the proposed DPS program by adding
a budget, a funding source and a description of the methods to be used to assure that the
program efforts will result in support for societally cost-effective CHP that serves the
best interests of the host utility and its non-participant customers. CVPS respectfully
suggests that these changes would help the Board to find that the program proposal “will
be beneficial to the ratepayers of the companies” as contemplated under 30 V.S.A. §
209(d)(1).
Central Vermont very much appreciates the opportunity to offer comments in this matter.
Should you have questions or wish to discuss any matter raised in this submission, please
feel free to contact me.
Respectfully submitted,
Bruce W. Bentley
c: Electronic Service List