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Energy Efficiency

Energy Efficiency. Budget and Justification for Investment in Energy Efficiency. Act 61. Removed cap on EU budget Legislative Intent All Cost Effective Measures Sec. 6. 30 V.S.A. § 209

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Energy Efficiency

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  1. Energy Efficiency Budget and Justification for Investment in Energy Efficiency CLF / VPIRG

  2. Act 61 • Removed cap on EU budget • Legislative Intent • All Cost Effective Measures Sec. 6. 30 V.S.A. § 209 • “The charge established by the board pursuant to subdivision (3) of this subsection shall be in an amount determined by the board by rule or order that is consistent with the principles of least cost integratedplanning as defined in section 218c of this title.” • “As circumstances and programs evolve, the amount of the charge shall be reviewed for unrealized energy efficiency potential and shall be adjusted as necessary in order to realize all reasonably available, cost-effective energy efficiency savings.” CLF / VPIRG

  3. Recommendations • Current Spending: $17.5 million / year • Increase to $52.5 million / year by 2008 • Begin increase in 2006 -- $25 million • Transition to methodology based approach for determining budget CLF / VPIRG

  4. Need for Increased Investment in Energy Efficiency • Vermont Law • 30 V.S.A. § 202a – State energy policy • Encourage efficiency & demand side management • 30 V.S.A. § 209, 218 & 218c • Efficiency programs • Act 61 • Broadened efficiency opportunities CLF / VPIRG

  5. Need for Increased Investment in Energy Efficiency • PSB Decisions • Docket #5270 (1990) • Potential of efficiency • Docket #5980 (1999) • Energy Efficiency Charge • Docket #6777 (2002) • Value of efficiency measures CLF / VPIRG

  6. Need for Increased Investment in Energy Efficiency • Uncertain Power Supply • Lower Electricity Costs • 2004 State Electric Plan: “Rather than always choosing to build to meet the increasing demand for power, stakeholders (including regulatory agencies) contemplated addressing the problem on the customer side of the meter – where the demand is created. If the demand for power could be lowered through energy efficiency and load management, the costs to build new power plants and pole and wire upgrades might be deferred. The expected end result would be lower utility costs over the long term for customers.” • Efficiency Vermont has lowered the cost of electricity when it is most expensive, during summer and winter peak hours. CLF / VPIRG

  7. Need for Increased Investment in Energy Efficiency • Environmental Need • 2004 efficiency investments produced a 500,000 ton reduction in greenhouse gases that would have otherwise been emitted by conventional electric generation. • These also resulted in a savings of 1.2 million gallons of propane, 175 million cubic feet of natural gas, 600,000 gallons of oil and 360 million gallons of water. • PSB decisions have placed an economic value on environmental externalities of about 5% (Docket #5270 (1990) and $7.86 MWh for natural gas (Docket #6290 (2003). CLF / VPIRG

  8. Economic Benefits • Cheapest power available • Efficiency -- 2.8 cents / kWh • VY – 3.9 cents / kWh • Market ~ 8 cents / kWh • Comparison to market rates • 2004 Electricity savings were delivered at 37% of the cost of wholesale power purchases • From 2004 installations Vermonters will realize $38 million in lifetime economic value. • Assuming a similar return in ’05, with the increase in power costs the savings delivered by the efficiency utility will be less than 30% of what the power would cost on the wholesale market (70% savings for rate payers) CLF / VPIRG

  9. Economic Benefits • Cost of not investing in efficiency • Docket #6777 • $2 million reduction in EEU budget = $900,000 net loss • VELCO study by Optimal Energy (2003) • $569 million investment = $1,207 million benefits CLF / VPIRG

  10. Rate Impacts • Balance rate impacts – A. 61 • Significant investment in efficiency will lower electric bills. • Avoided Transmission investments • Failure to invest in efficiency results in higher rates over time • Amortization options CLF / VPIRG

  11. Economic Benefits CLF / VPIRG

  12. Success of Efficiency Investments • EEU experience • Since 2000 : • 27,000 kW reduction in summer peak capacity requirements. • 211,158,000 annual kWh saved • $66,000,000 net benefits • $172,275,000 lifetime economic value delivered to Vermont rate payers • EEU ranked 8th in 2003 for cumulative annual kWh savings as a % of kWh sales • VT- 4.8%, CT- 7.8%, CA – 7.5% CLF / VPIRG

  13. Scale of Investment • Current $17.5 million • Not based on available cost effective investment • Previous legislative cap which is now removed CLF / VPIRG

  14. Scale of Investment • Higher level of investment is justified • Power to Save (1997) – • Investment 3-5 times higher is cost effective • DPS Study (2002-03) Optimal Study – • Investment up to 10 times higher is cost effective • Connecticut (2004) • 13% reduction of load possible from feasible and cost effective efficiency investment by 2012 CLF / VPIRG

  15. Conclusion • All cost effective investments are required, reasonable and prudent • Potential for efficiency is 5 to 10 times greater than current $17.5 million investment • EEU Budget should be tripled over next three years beginning mid-year 2006 • Transition to methodology based approach CLF / VPIRG

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