The
UNIVERSITY
of VERMONT
J. Michael Gower
Vice President for Finance & Administration
and University Treasurer
July 11, 2006
Ms. Susan M. Hudson, Clerk
Vermont Public Service Board
Chittenden Bank Building, Fourth Floor
112 State Street, Drawer 20
Montpelier, Vermont 05620
Re:
DPS Draft Combined Heat and Power Program Proposal
Dear Ms. Hudson:
The University of Vermont (the “University”) submits the following comments on the
Draft Combined Heat and Power (“CHP”) Program Proposal filed by the Vermont Department
of Public Service (the “DPS” or “Department”).
The DPS proposal seeks to provide interested CHP developers education, information
and technical assistance to help them pursue their projects. DPS would target, on a statewide
basis, the most suitable CHP applicants including colleges, hospitals, schools and industrial /
commercial business. The DPS also notes that it will work with host candidates and request
additional technical assistance from the Northeast CHP Application Center.1 The Department
will design the program to help developers determine all funding options and assist them with
the host distribution utility on interconnection and back-up service issues.
As the Department acknowledges, developers of CHP projects face many barriers. These
include regulatory, environmental and access to capital. The University believes that the DPS is
correct in identifying these barriers to the implementation of CHP and that significant assistance
will be required to overcome these concerns for the best host sites to move forward with project
development.
While the development of a CHP project means that a customer will be involved in the
production of electricity, it should rightly be viewed as a positive contribution to Vermont’s
1
The Northeast CHP Application Center was established in October 2003 for the U.S. Department of Energy at the
University of Massachusetts Amherst and Pace University. The Center is a partnership between UMass, Pace, the
New York State Energy Research and Development Authority, the Massachusetts Division of Energy Resources and
the Maine State Energy Office. Its mission is to provide application assistance, technology information, and
educational support in the seven Northeast states including Vermont.
348 Waterman Building, 85 So. Prospect Street, Burlington, VT 05405-0160
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energy future. As an example, CHP may lower the risks to other host utility customers since
additional parties can make investments in critical infrastructure. The University believes any
state CHP Program will have to promote the development of cost-efficient CHP and integration
of such projects into utility energy planning. Without DPS assistance in convincing utilities of
the positive role of CHP, it will be difficulty to pursue new CHP projects and Vermonters will
not garner the benefits that these locally sited, highly efficient technologies provide.
Another critical barrier which must be overcome is affordability. While the DPS Program
proposal notes that funding for CHP projects may become available through Vermont’s Clean
Energy Development (the “CED”), the University notes that the Program proposal does not
propose specific financial incentives or other terms to help jump start projects. Where a
proposed CHP project is cost justified and can be shown to be a part of a least-cost strategy to
help meet Vermont’s energy requirements as contemplated under 30 V.S.A. §218c, the
University believes that project financial support would be justified. In addition to funding made
available from the CED, it may make sense to consider funding provided through the Energy
Efficiency Charge (the “EEC”). At the very least, interested project developers should be
granted an exemption from the EEC for costs incurred to support the planning and development
of CHP. The DPS Program Proposal is silent as to such alternatives and the University believes
that a thorough airing of these options should be made a part of the process for adopting the
Department’s Program Design.
Also as the DPS notes, project interconnection issues can be significant. To help farmgeneration project developers shoulder this burden, Central Vermont Public Service Corporation
created its own Renewable Development Fund and is able to award grants to assist in
interconnection efforts. Similarly, the Vermont Electric Cooperative worked with Ethan Allen
Operations, Inc. and the Northern Community Investment Corporation to help overcome
financial barriers to the installation of CHP equipment at the Ethan Allen manufacturing facility
in Beecher Falls. The University believes that the DPS Program Proposal should be expanded to
include similar support for CHP projects. Since some CHP projects can be quite large,
depending upon the character of the host facility, the need for and complexity of the
interconnection issues can be quite daunting. However, if a project is not interconnected, it
cannot provide flexibility and benefits to the host utility, and other customers will not derive as
much benefit from CHP developments as could otherwise be the case (e.g., excess energy sales,
energy banking, peak-shaving and other system operating strategies).
While the University applauds the efforts of the Department to put the issues associated
with CHP development back before the Board, it believes that the Program Proposal offered for
consideration needs additional work before it can be fully accepted. Toward that end, the
University recommends that the Board and other interested stakeholders work with the
Department to define further program details.
These efforts should include the Vermont Agency of Natural Resources so that clear
environmental permitting criteria can be developed that recognize the various trade-offs
associated with CHP development. Through these efforts, the University believes that the goals
of Act No. 61 can best be achieved and Vermont can begin to see development of CHP as a part
of the energy landscape.
The University appreciates the opportunity to comment on the DPS Program Proposal
and hopes that its comments will provide the Board helpful guidance on this important energy
348 Waterman Building, 85 So. Prospect Street, Burlington, VT 05405-0160
Telephone: (802) 656-0219, Fax: (802) 656-1363
Equal Opportunity / Affirmative Action Employer
planning issue. Should you have questions or wish to discuss this matter, further, please feel free
to contact me.
Respectfully submitted,
J. Michael Gower
Vice President for Finance and Administration
and University Treasurer
cc:
Act 61 Service List
348 Waterman Building, 85 So. Prospect Street, Burlington, VT 05405-0160
Telephone: (802) 656-0219, Fax: (802) 656-1363
Equal Opportunity / Affirmative Action Employer