Development and Deployment of A Standardized Savings and Economic Valuation System for Tracking Conservation Resource Acquisitions in the PNW Presented February 16, 2008 Encore? Energy Efficiency Program Performance Tom Eckman Northwest Power and Conservation Council OR... Why We Think We Know What We Think We Did

slide 2 In This Presentation Historical Look at the Pacific Northwest (PNW) Conservation Resource Acquisition Program Savings Historical Look at the Pacific Northwest (PNW) Conservation Resource Acquisition Program Savings How the Pacific Northwest Is Attempting to “Standardize Savings Estimation and Economic Valuation” Processes How the Pacific Northwest Is Attempting to “Standardize Savings Estimation and Economic Valuation” Processes Some Random Thoughts on Why Power Planners May View EM&V Differently Than Regulators Some Random Thoughts on Why Power Planners May View EM&V Differently Than Regulators

slide 3 PNW Regional Savings Now Total Nearly 3300 aMW

slide 4 So What’s 3300 aMW? It’s enough electricity to serve the entire state of Idaho and all of Western Montana It’s enough electricity to serve the entire state of Idaho and all of Western Montana It saved the region’s consumers nearly than $1.3 billion in 2005 It saved the region’s consumers nearly than $1.3 billion in 2005 It lowered 2005 PNW carbon emissions by an estimated 13.5 million tons. It lowered 2005 PNW carbon emissions by an estimated 13.5 million tons.

slide 5 Since 1980 Energy Efficiency Resources Met Half of PNW Load Growth

slide 6 Utility Acquired Energy Efficiency Has Been A BARGAIN!

slide 7 Did Meters in the PNW Really Turn Slower?

slide 8 Why We’ve Tracked Savings The Northwest Power and Conservation Act established in federal law that cost-effective conservation (i.e., the more efficient generation, transmission or use of electricity) was to be treated as a resource equivalent the generation. The Northwest Power and Conservation Act established in federal law that cost-effective conservation (i.e., the more efficient generation, transmission or use of electricity) was to be treated as a resource equivalent the generation. Since its first Plan in 1983, the Council has set “regional conservation savings targets” based on its integrated resource planning process. Since its first Plan in 1983, the Council has set “regional conservation savings targets” based on its integrated resource planning process. So we track “savings,” not just “expenditures” So we track “savings,” not just “expenditures”

slide 9 How We’re Trying to Standardize Savings Estimation (But We’re Not California) Established An Ongoing Centralized Process for Technical Review Established An Ongoing Centralized Process for Technical Review –Carried out by Regional Technical Forum (RTF) –RTF composed of utility and non-utility engineering and economic experts, staffed by Council –Funded by BPA, utilities and system benefits administrators Public process Public process RTF builds on historical program experience and ongoing evaluations of regional acquisition programs RTF builds on historical program experience and ongoing evaluations of regional acquisition programs

slide 10 RTF’s Major Functions Establish a Standardized Regional Cost- Effectiveness Methodology Establish a Standardized Regional Cost- Effectiveness Methodology –Public domain software for evaluating conservation cost-effectiveness Recommend Measurement and Verification Protocols Recommend Measurement and Verification Protocols –Adding: NAPEE Model Energy Efficiency Program Impact Evaluation Guide, already use IPMVP, FEMP, etc. Develop and Maintain Internet-based System for Tracking and Reporting regional conservation savings and expenditures Develop and Maintain Internet-based System for Tracking and Reporting regional conservation savings and expenditures –Deemed savings (with minimum technical specifications & Q/C criteria) –EM&V protocols –Default inputs for cost-effectiveness evaluations (e.g., forecast of future energy prices, cost of deferrable distribution and transmission, value non- energy benefits such as water savings, etc.) –Forecast CO2 content/kWh saved (based on load shape of savings)

slide 11 RTF’s Major Functions Process for updating deemed savings as technology and standard practices change. Process for updating deemed savings as technology and standard practices change. Appeals process through which utilities or other parties can demonstrate that different savings and value estimates should apply. Appeals process through which utilities or other parties can demonstrate that different savings and value estimates should apply. Collaborative Development of EM&V designs for conservation programs operated across multiple utility service areas Collaborative Development of EM&V designs for conservation programs operated across multiple utility service areas

slide 12 The RTF cannot and does not require use of its deemed savings values nor does it mandate or oversee EM&V! However - The RTF Doesn’t Count Votes

slide 13 What Power Planners Don’t Worry About Attribution Net-to-Gross Adjustments –Free-Ridership –Non-Participant Spill Over

slide 14 A Power Planner’s View of “Attribution” We Don’t Care Who Was Responsible for Screwing in the CFL We Don’t Care Who Was Responsible for Screwing in the CFL We Do Need to Know That We Do Need to Know That –It got installed –What it saves while functioning –How long it will function

A Power Planner’s View of the Derivation of “Net-to-Gross” Ratios

slide 16 Some Thoughts on Net-to-Gross Adjustment for Regulators Reductions in CO2 emissions from the actions “free-riders” counts toward climate mitigation just as much as the actions of “participants” Utilities might just be interested in this when CO2 emissions are “monetized”

slide 17 Some Thoughts on Net-to-Gross Adjustment for Regulators When program or portfolio “cost- effectiveness” is determined using a total societal cost (TSC) or total resource cost (TRC) test savings from “free-riders” should be counted

A Concluding Thought on Net-to-Gross Adjustments From a Climate Change, Power Planning and TRC Perspective There Is No Such Thing as a “Free-Rider”