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EXECUTIVE SUMMARY

To the credit of Northern States Power and its focus on the promotion of energy-efficient motors and drives, the utility has recently been invited to Washington, D.C. to attend the signing of a new U.S. Department of Energy, Environmental Protection Agency, industry, and utility compact called the "Motors Challenge." Four utilities have been invited to attend the signing and to participate in the kick-off of this new public/private sector partnership to promote the efficient use of energy in drivepower systems.

Northern States Power has been offering its commercial and industrial customers energy-efficient motor rebates since 1986 and expanded its program to encompass rebates for energy-efficient adjustable speed drives in 1992. At the same time, it increased its rebates for motors to ramp up participation and boost energy savings.

One of the features of NSP’s program is that it provides its customers with a two-tiered rebate schedule. Smaller per horsepower rebates are offered for motors in new applications to reflect the marginal costs of high efficiency motors, while larger rebates are offered for the replacement of standard efficiency motors in existing applications. In addition to providing rebates, NSP offers its customers free motor testing to demonstrate the potentials for energy-efficient motors. Vendors of energy-efficient motors are also provided with rebates and are treated specially, as NSP considers its trade allies very important to the success of the program.

For adjustable speed drives, NSP offers several rebate levels based on the size of the drive. The highest per horsepower rebates are offered for smaller applications, while the per horsepower rebate is reduced for larger applications.

NSP has also taken direct steps to overcome one of the classic problems with moving customers to the use of energy efficient motors: many motors are embedded in pieces of equipment, such as compressors and fans. As such, NSP offers rebates to its customers for motors in "OEM or original equipment manufacturer" applications. Thus customers will put pressure on OEM manufacturers by specifying energy efficient motors in these applications.

Another attractive aspect of NSP’s Motors and Drives program design is that purchases of energy-efficient equipment can be financed through NSP’s Energy Financing program. While used almost exclusively for lighting installations to date, NSP disbursed close to $11 million in low-interest loans for energy-efficient equipment to its commercial and industrial customers in 1992. The intent of the financing program is to facilitate participation in DSM programs by removing the up-front financial barrier of purchasing conservation measures. Customers pay back their loans on their NSP bill, using a mechanism similar to an energy service charge.

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EXECUTIVE SUMMARY

Sacramento Municipal Utility District (SMUD) is rapidly building an impressive reputation as a utility that is aggressively pursuing energy efficiency and renewable energy. In fact, largely due to the early retirement of the Rancho Seco nuclear power plant, SMUD is facing severe capacity constraints and has developed plans to secure 800 MW from its demand-side management programs and 400 MW from renewable sources.

Given these ambitious resource goals, it should be no surprise that the utility has devoted considerable attention to solar programs. On the supply-side, SMUD operates the largest photovoltaic generating plant in North America, a 2 MW plant located in the shadow of "the Ranch." Recently the utility has begun to install residential-scale PV units on the roofs its customers. These participants are volunteering to be part of SMUD’s innovative attempt to build a decentralized power plant. Finally, 150 MW of solar thermal generation is on the drawing board.

To conserve its use of traditional energy resources, SMUD implemented the most aggressive solar domestic hot water heating system program in the country in 1992 and plans to install 20,000 systems by the year 2000, resulting in annual energy savings of 48,300 MWh and a summer peak demand reduction of 7.4 MW. This magnitude of market penetration represents fully half of the residential electric water heating market in Sacramento and nearly a quarter of the total electric water heating market for all sectors, a radical increase when compared to the fewer than ten systems installed each year in Sacramento prior to the launch of SMUD’s program!

Fully 875 solar systems were installed in the program’s first year, providing 400 kW of summer peak capacity and total annual energy savings of 2,775 MWh. By October of 1993, an additional 600 systems were in operation, resulting in a further demand reduction of 240 kW and additional energy savings of 1,757 MWh.

The program cost SMUD $1,150,000 during 1992. This translates into a utility cost of $1,314 per water heater and preliminary assessments show that the utility’s average system costs for 1993 have dropped to $976 per system. An incentive cap instituted by SMUD in late 1993 will likely improve the cost-effectiveness of the program, and long-term costs will decrease as the market for SDHW systems becomes more established, thereby reducing unit production and installation costs.

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EXECUTIVE SUMMARY

PSI Energy’s Smart $aver® program began as a means of promoting electrically-heated homes in Indiana but it has evolved over the years to encompass a far broader mission. The Smart $aver® program, coupled with the more recent Summer $aver® program extension, offer a series of interesting incentives for customers, builders, and vendors for the use of high efficiency heat pumps and central air conditioners.

The goal of the program is to encourage and assist residential home builders, manufactured home dealers, and apartment developers and owners to construct, display, advertise and sell/rent Smart $aver® homes, condominiums, manufactured homes, and apartments. In addition, existing homeowners and apartment owners are encouraged to retrofit their air-conditioning and/or electric-heating systems to Smart $aver® standards.

The program began with the specific intent of addressing the market share decline of electrically-heated homes in PSI’s service territory. The proportion of the single-family new construction market selecting electric space heating had declined six years in a row and a similar situation was taking place in the existing home market as well with many existing electric heat customers switching to other fuels, primarily natural gas. If allowed to continue, this trend would lower the system load factor, pressuring PSI to raise rates. Thus PSI’s challenge was to design a program that would stabilize if not increase the saturation of electric heating in the residential sector, particularly the single family segment. The program has been very successful in achieving this objective: since the program began, the percentage of new single-family construction selecting electric space heating has grown from 26% in 1989 to 42% in 1992 and 80% of these new electrically-heated homes have met the Smart $aver® efficiency standards. Furthermore, hundreds of older heat pumps in existing homes have been replaced with high-efficiency Smart $aver® heat pumps.

In order to maintain electric-heat customers, PSI developed a series of innovative means of coupling electric heat (and later air conditioning) with energy efficiency. The utility developed a Smart $aver® designation, and both new and retrofitted homes that met the criteria became eligible for reduced electric rates by 30% for electricity usage over a 1,000 kWh threshold in winter months. The requirements for the program are based on the installation of high efficiency heating and cooling systems matched with properly designed duct work and insulation. PSI also provides incentives for builders and heating contractors to help defray incremental costs of the higher-efficiency equipment.

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EXECUTIVE SUMMARY

While most utilities engaged in demand-side management are providing their customers with direct incentives and other services such as energy audits, analysis, and modelling, Portland General Electric has taken a lead position with its schools program. School programs represent a class of DSM programs that foster long-term value changes while serving to implement short-term retrofit measures in both schools and students’ homes. As such school programs will quite likely be the focus of additional utility attention in the coming years.

Energy Smarts for Schools draws from two well-defined disciplines, energy awareness curricula and school facilities retrofits, and then embellishes this synergistic combination with some quite unique and potentially powerful elements. First off, schools are retrofitted with energy-efficient equipment saving school districts money and demonstrating energy efficiency retrofits for the student body and faculty alike. Second, school children from kindergarten to 12th grade are exposed to an innovative and progressive curricula that fosters an appreciation of the value of energy and raises awareness of the critical link between energy use and the environment.

One element of the curriculum is an innovative program called "In Concert with the Environment." Students take home a questionnaire about their household’s energy use, purposefully too complex to complete without the assistance of their parents. Then students bring the questionnaire back, enter the data into user-friendly software, and take home a profile of their home’s energy use and a list of recommended energy efficiency measures! (PGE also sends the students home with some basic, low-cost measures to start the "self-administered" retrofit process as well!)

PGE has added two other elements to the program. First, the utility will provide funding (in the form of assurances) so that school districts can hire resource managers who are intended to be instrumental in fine-tuning building operations and resource use including electricity, oil and gas, and water. Second, as an outgrowth of the curricula programs, PGE provides small grants for a wide variety of student-initiated educational projects that focus on energy efficiency.

The strength of this profile is not its data, but its concept. While Energy Smarts for Schools began in 1991 and preliminary impact data is beginning to surface, trying to assess the impact of value changes that result from the curricula programs is nebulous at best. This issue will not only affect PGE’s ability to recover its DSM costs associated with Energy Smarts for Schools, but will be shared by utilities across North America trying to move beyond short-term incentives and towards a market transformation that must be fundamentally based in value change.

 

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