Jonathan A. Aldrich
966A Mail drop
1000 River Street
Essex Junction, VT 05452
May 3, 2006
Via e-mail
Susan M. Hudson, Clerk
Vermont Public Service Board
Chittenden Bank Building, Fourth Floor
112 State Street, Drawer 20
Montpelier, Vermont 05620
Re: Act 61 Efficiency Utility Budget Review
Dear Ms. Hudson:
This letter presents the comments of International Business Machine Corporation (IBM) on the report
prepared by GDS Associates, entitled “Draft Report: Vermont Electric Energy Efficiency Potential Study,”
which was prepared for the Department of Public Service and designed to provide input to assist the Board
with the task of setting the budget for the Efficiency Utility (EU) over the next three years.
The GDS Associates Report examined several EU budget scenarios, including maintaining the budget at its
current level, as well as increasing the budget by several times over. IBM believes the budget should
remain at its current level for the following reasons:
1. Maintaining the EU budget at its current level is consistent with the principles of “least cost planning,” as
defined in 30 V.S.A § 218c.
2. Electric Rates in Vermont are already high in comparison to our competition throughout the United
States. Please see the attached charts titled “Vermont Electric Rates.” Increasing the EU budget will
further exacerbate this rate disparity and reduce IBM’s competitiveness in the global marketplace.
3. IBM in Essex Junction is already facing a number of significant cost increases in its energy and utility
costs next year.
A. Green Mountain Power has requested a 12% rate increase.
B. Vermont Gas Systems has requested a 14% rate increase.
C. Interruptible natural gas prices are expected to be higher in 2006/2007.
D. Fuel oil costs have increased 50% since last year.
E. Champlain Water District has also informed us of a 5% rate increase, effective July 1, 2006.
4. Over the last six years, IBM has paid $3.7M into the Energy Efficiency fund. IBM has received benefits
from the EU of only $2.7M in return. By program definition, IBM can only receive up to 70% of the dollars
it pays in to the EU. IBM supports energy efficiency and has documented significant energy savings each
year for the last 15 years. Over the last 6 years alone, IBM has made investments and operational changes
that have saved an average of over 30,000,000 kWh/year. IBM, like all competitive businesses, is
motivated to produce it’s products at the least possible cost. We believe that markets are far more efficient
at allocating scarce economic resources than governments.
Jonathan A. Aldrich
966A Mail drop
1000 River Street
Essex Junction, VT 05452
Rather than increasing the EU budget, IBM strongly suggests that the Board focus on optimizing the
“efficiency” of the Efficiency Utility process to maximize energy savings at the lowest possible cost. For
example, the Efficiency Utility could sponsor “alternative funding methods” to encourage energy
conservation projects. Methods such as “shared savings” and/or “Performance Contracting” could be used
to help companies fund energy conservation projects. Any EU budget increase should be strictly on a
voluntary “Opt-in” basis, which will allow firms to decide for themselves whether taking advantage of the
services provided by the Efficiency Utility are worthwhile expenditures of scarce capital.
Sincerely,
Jonathan Aldrich
Energy Manager