LDD Workshop Energy 101 2008

1. LDD WorkshopEnergy 1012008 We help the best buildings in the world get that way.

2. Special thanks to our workshop sponsors We help the best buildings in the world get that way.

3. Workshop Objective • Introduce the global perspective on energy economics. • Identify what this means for your organization. • Begin to understand your energy bills. • Understand the impact of your energy use. • Consider a plan to manage your energy use. Energy 101

4. A Global Perspective • Global energy demand • Hubbert theory of fossil fuel supply • How will this affect future costs? • Past history is the best predictor of future performance. Energy 101

5. Energy 101

6. Energy 101

7. Energy 101

8. Energy 101

9. What Does This Mean? • Energy demand is growing • Increased reliance on fossil fuels • New discoveries fuel production • Production must meet growing demand Energy 101

10. Individual Oil Well Production • One oil well acts with a long, fairly stable plateau -Source: diagrammatic Energy 101

11. Hubbert Curve: Four Oil Wells • Four wells begin to create a smooth curve -Source: diagrammatic Energy 101

12. Hubbert Curve: Eight Oil Wells • Eight wells smoothes the curve more -Source: diagrammatic Energy 101

13. The Hubbert Model Idealized Hubbert Curve Amount Time  • Hundreds or thousands of oil wells would ideally look like a bell curve Energy 101

14. The Hubbert Curve • Fossil fuel discoveries • Exponential growth • Peak numbers reached • Discoveries begin declining • Fossil fuel production • Wells are drilled – technology improves • Production increases • Peak output is reached • Production begins declining Energy 101

15. The Hubbert Model Idealized Discovery and Production Curves Amount Discovery Production Time Discovery fuels the production Energy 101

16. Oil Crisis US Oil Production 1970s oil production began to fall…what happened? Source: Energy Information Administration – www.eia.doe.gov Energy 101

17. Pennsylvania Coal ProductionA need for alternate sources! Energy 101

18. US Natural Gas Production Similar trend in natural gas Source: Energy Information Administration – www.eia.doe.gov Energy 101

19. Energy: Important to Our Economy Don’t see electric – It is a by-product of other fuels! Energy 101

20. Fuel Price Escalations are Real Energy 101

21. Real Budget Implications Energy 101

22. Return to Energy Costs of Five Years AgoHow do you make it happen? Energy 101

23. Implications?? • What can be done to prepare for the reality of higher fuel costs? • Reduce consumption? How much? • Raise budgeted allocation? Increase taxes? • Develop a strategic plan!!!! Energy 101

24. What Energy Sources Come from Pennsylvania? • Any Guesses? • Coal • Oil • Natural Gas • Wind generated electricity • Can these be leveraged in your plan? Energy 101

25. Starting a Process to Take Control • Understand what is HYPE vs. REALITY. • You need to be able to communicate your situation. • Work towards developing a Strategic Energy Plan. • Need to gain an understanding of what we are going to manage!!!! Energy 101

26. How Well Can You Define Your Situation? Better Question: How well can you communicate your situation? Energy 101

27. Rate Caps Going Away Beginning in 2010, the five electric companies that serve 85 percent of the state’s electric customers have all but guaranteed they will increase customers’ bills by as much as 50 percent … The impending 2010 expiration of rate caps, projected to cause electric bills to jump by at least 30 percent, is getting attention in Harrisburg and has local political hopefuls talking. This week, state Rep. Camille “Bud” George, D-Clearfield, and state Sen. Lisa M. Boscola, D-Bethlehem, met with Gov. Ed Rendell to persuade him to consider extending the rate caps. Boscola and George have bills targeted toward that end. Is electricity rate caps extension possible?By MIKE REUTHER mreuther@sungazette.comFebruary 7, 2008 Energy 101

28. ELECTRICITY Generation (*) Transmission (*) Distribution Consumption Maximum Rate of Use Inefficient Use Stranded Costs (*)* Partial Regulation until 2010. NATURAL GAS Commodity Purchase Transportation Distribution Consumption Seasonal Use Energy – What do you pay for? Energy 101

29. Tariff Terminology • Tariff • The document that the PUC must approve that establishes the method and pricing of a regulated commodity. • Rate • A specific pricing class within the tariff. • Demand • The billed rate at which electricity has been used over the billing period. • On-peak • A term used to represent the energy used during normal business hours. The time period varies by utility. • Off-peak • A term used to represent the energy used during non-business hours, typically evenings, holidays and weekends. • Block • A grouping of energy to be billed at a specific rate, i.e. a block of kWh. • 200 hours use of demand • Language found in many rates that refer to a block of kWh that is equivalent to 200 kWh per kW demand, or 200 hr x billed kW Energy 101

30. Electric Account – Demand (KW) Monthly Peak Demand 695 KW Energy 101

31. Electrical Distribution System Transmission Distribution Generation Energy 101

32. Examples of an Electric Rate Tariff Rate information from the Tariff Summarized for Analysis Energy 101

33. Exercise #1 – Rate Interpretation • UGI GS-4 Rate Energy 101

34. Exercise #1 – Rate Interpretation • Fill in the table with the correct values: Energy 101

35. Exercise #1 – Rate Interpretation • Fill in the table with the correct values: $5.68 $0.19 $3.59 $2.23 $0.19 $1.30 $0.08287 $0.00162 200 KWh / KW $0.03033 $0.07272 $0.00162 $0.02303 300 KWh / KW $0.06892 $0.00162 $0.02031 Energy 101

36. Exercise #1 – Rate Interpretation • Fill in the table with the correct values: Total 200 KWh / KW 300 KWh / KW Energy 101

37. Exercise #1 – Rate Interpretation • Fill in the table with the correct values: Total $9.46 $3.72 $0.11482 $0.09737 200 KWh / KW $0.09085 300 KWh / KW Energy 101

38. Exercise #2 – Calculate an Electric Bill April Usage informationMeter Constant = 300 Meter Reads: Present = 3462Previous = 3112 Peak Demand = 150 kW Summary of Charges Energy 101

39. Exercise #2 – Calculate an Electric Bill April Usage informationMeter Constant = 300 Meter Reads: Present = 3462Previous = 3112 Peak Demand = 150 KW 350 x 300 = 105,000 kWh 150 KW x 200 kWh/KW = 30,000 kWh Summary of Charges 150 KW $1,332.90 30,000 KWh $2,081.10 30,000 KWh $1,636.80 $2,356.65 45,000 KWh Energy 101

40. Use Profile - Monthly Energy 101

41. Use Profile - Hourly Energy 101

42. Demand Costs: Rate of Use • How much do you use at any given time? • The rate at which electricity is used is measured as “kilowatts” or kW. • The utility needs to provide enough wire and transformer size to satisfy your largest “demand” of electricity. The utility meter can keep track of your largest 15-minute consumption every month. Energy 101

43. Reactive Costs: Result of Inefficient Use • Not all electrons are created equal! • Some electrons require more “room” in the wire than others. Electric loads that have a high amount of motors and fans require more wire capacity! – some utilities charge for this inefficiency. • Reactive Costs:Power Factor < 1.0 (pf% < 100%)KVAR > 0KVARh > 0KVA (instead of KW) Energy 101

44. Stranded CostsHow will utilities collect on previous investments? Need to pay for upgrades that are still being depreciated and divestiture of generating plants! Energy 101

45. Natural Gas – Distribution System Generation Transmission Distribution Energy 101

46. Natural Gas Tariff Terminology • Transportation • This refers to the pipeline movement of natural gas from a well-head to your local distribution company (LDC). • Distribution • Refers to the underground pipes that your local LDC maintains to deliver natural gas to your buildings. • Well-head • The originating location where processed natural gas is available to the pipeline. • City Gate • The delivery point at which the LDC receives natural gas from the pipeline and transitions it to their own distribution pipes. • Burner-Tip • The delivery point at which the end user receives natural gas from the LDC. Energy 101

47. Natural Gas Tariff Terminology • CF, CCF, or MCF • A common measure of volume of natural gas at a given pressure provided by the LDC at your local meter. Measured as cubic feet (CF), 100 cubic feet (CCF), or 1000 cubic feet (MCF). • DT, or dekatherm • The energy content of natural gas. This is the typical measurement used in the transportation pipeline. • Shrinkage and Loss • Refers to the natural gas lost to the atmosphere. Energy 101

48. Sample Natural Gas Bill Energy 101

49. Other Energy Consuming Areas • Outdoor Lighting • Street Lighting and Traffic Control • Vehicles • Water & Waste water treatment • Specific process needs (steam, chilled water) • Water consumption • Others??? Energy 101

50. Taking Control of Energy Bills • . • Learn to understand how YOUR energy is billed. • Utility Bill Analysis! • Local LDD • Local DEP • 3rd Party • Utility representative • Look for opportunities to save energy and $$. • Learn to communicate what you uncover. • Determine why it is important to YOUR Administration. Energy 101