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EXECUTIVE SUMMARY

Burlington Electric Department (BED) is a municipal utility that has served the residents of Burlington, Vermont with a mix of electricity and energy efficiency services since the late 1970s when it responded to the oil shocks by introducing its first energy efficiency programs. Since then a number of factors have driven efficiency in Burlington, ranging from the very pronounced concerns over power purchases from Hydro-Quebec and its controversial James Bay development to the termination of 40 MW of purchased power contracts in the next ten years.

Perhaps it was the controversy over the prospect of purchasing additional blocks of power from the James Bay that was most telling of the City’s and utility’s commitment to environmental and social responsibility. Although the power would have been generated in hydroelectric dams, the Burlington community was deeply concerned about the plight of the Cree and Inuits that are native to the James Bay area, as well as other environmental concerns. While purchasing power would have been the most expedient option, Burlington’s voters elected instead to pass an $11 million bond issue to catalyze DSM in Burlington. Despite the fact that doing so would raise rates, voters in the City chose to reduce the flow of dollars out of the community and to avoid participation in the ecological impacts of the James Bay.

Burlington is a highly progressive community politically and thus it’s no surprise that its utility has been a national leader in a number of program areas. BED introduced its Smartlight program, a leasing program for compact fluorescent lamps (CFLs), at a time when many energy efficiency enthusiasts questioned whether it was possible to get desirable levels of program participation and thus savings with any form of customer payment requirement. And while electric utilities across the country fear fuel switching away from electricity, BED promoted the conversion from electric resistance heating to other fuels to reduce its winter peak and worked with the City’s Building Department to get resistance heating banned in all future applications.

BED has been careful to offer all ratepayers the opportunity to participate in its DSM programs. Thus its eight programs provide a comprehensive package, from residential audits, direct installations, leasing of CFLs, fuel switching assistance, to programs targeted specifically at small commercial and industrial customers, to the "Top 10" program which emphasizes savings for BED’s largest customers. This portfolio of programs has been extremely well received, resulting in a situation where the utility is "of the people and for the people." This fundamental orientation, whereby BED considers its customers as owners, has been key to BED’s success with the delivery of energy services.

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EXECUTIVE SUMMARY

Waverly Light and Power is an inspiring model of what a small, municipal utility can do to promote local economic and sustainable development through investments in energy efficiency and renewable energy resources. While energy efficiency advocates have enthusiastically pointed to Osage, Iowa as the consummate example of a small town's successful experience with energy efficiency, Waverly, Iowa stands prominently at the front of the second generation of small municipal utilities that have embodied integrated resource planning and the promotion of customer energy efficiency, also with marked success.

Waverly’s most compelling reason to do long term, integrated resource planning was not so unique: Its future resource mix is uncertain since its favorable power contract with Midwest Power Systems expires in 1999. But a series of less usual events transpired in Waverly that led to this small town’s unique success. Two of its Board members became inspired by Osage’s positive experiences with energy efficiency and local economic development. Not only had Osage deferred the need for additional capacity, but its efficiency programs have clearly benefitted the local economy with rate reductions and the expansion of a major manufacturing plant in town, meaning more jobs. (See The Results Center Profile #5) Waverly’s leaders wondered if the same results might be possible in their town.

To pursue its vision the Board hired an energy efficiency advocate by the name of Glenn Cannon to become WL&P’s General Manager. Despite his inexperience at the helm of a utility, he was selected to chart its new course. Cannon in turn commissioned the company’s first integrated resource plan, a plan that helped the utility further explore and envision its future balance of supply and demand-side resources. The plan also mapped a cost effective strategy for customer energy efficiency programs and provided the economic rationale for investments in renewable energy resources, notably wind.

Today, Waverly offers a comprehensive set of residential, commercial, and industrial efficiency programs for its customers which have been well received and which have provided a new course for the utility. Its Board and management have embodied their notion of "the obligation to con-serve." Clearly Waverly Light and Power has been challenged by its own size, and limited staff and resources to implement its DSM programs, but its staff have been able to clearly benefit from the small size of the town and the fact that word travels fast in Waverly. As such, raising awareness of the potentials for efficiency has been relatively easy, and total expenditures on direct incentives have been a fraction of the overall DSM budget, proving that effective communication and education can motivate customers in the absence of large incentives, perhaps especially in small towns with publicly owned utilities.

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EXECUTIVE SUMMARY

The U.S. Department of Energy’s retrofit of its own headquarters, the James Forrestal Building located at 1000 Independence Avenue, is a unique and symbolic project for a number of reasons. Its shared savings financing plan, funded in part by the local electric utility, and financed by EUA Cogenex, a leading energy service company, represents an important trend in the capture of energy efficiency in the United States. The retrofit required essentially no outlay of U.S. taxpayers' dollars and will result in a revenue stream of savings over time. Less well known, however, is the living proof that energy efficiency can not only save energy but can enhance the quality of the workplace. Retrofitting 37,000 fixtures has provided far more attractive lighting and workers report high levels of satisfaction with the project. And while energy efficiency gains were clearly made, light levels were increased by 165% from an average of 30 footcandles to 50 footcandles to enhance the quality of the workplace.

From a project management standpoint the project was also exemplary. Asbestos in the ceilings made the fixture retrofits complex. Nevertheless, work was completed on time and in 178 days. At the height of the activity, fully 675 fixtures were retrofitted each night using 20 men working ten-hour shifts, four days a week. To address the asbestos, minimal intrusions were made in ceiling panels. Crews working at night worked in concert with clean-up crews following installers, all checked and cleared for security purposes. (The Forrestal Building is perhaps one of the most secured building in Washington after the Pentagon due to DOE’s role with nuclear energy for both civilian and military applications).

The Forrestal retrofit also is a model of the Federal Energy Management Program. The seven-year shared savings arrangement coordinated by EUA Cogenex, an energy service company located in Lowell, Massachusetts, allows the DOE to engage in the retrofit with no out-of-pocket expenses and will result in savings of $400,000 annually. A million dollar prescriptive rebate from Potomac Electric Power Company provided additional support for the project participants to engage in more sophisticated retrofits. Under the terms of the agreement, for the first three years the DOE will retain 27% of its energy savings while paying EUA the 73% balance. For the final four years, the DOE will keep 85% of its savings while paying EUA Cogenex the remaining 15%. As such the Forrestal Building retrofit is a primary example of effective leveraging resources through Federal government, energy service company, and utility collaboration.

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EXECUTIVE SUMMARY


The State of Texas’ LoanSTAR program is a model design for retrofitting public buildings. By loaning money to existing institutional facilities at low-interest rates the Loan to Save Taxes and Resources program is a revolving loan fund that has enabled a tremendous amount of retrofit activity in medical institutions, schools, libraries, university buildings, state offices, and other public facilities that would otherwise simply not have occurred.

LoanSTAR has leveraged significant dollar savings through the use of oil overcharge funds, money that the Federal government sought to have redistributed for maximum societal benefit. By identifying exceptional retrofit candidates, auditing facilities, enabling retrofits, and then working closely with facility managers to maximize operational improvements over time, through the use of approximately $100 million dollars worth of loan fund activity LoanSTAR has the potential to leverage as much as $850 million in savings over the next 20 years.

One of most important aspects of LoanSTAR has been its emphasis on monitoring and verification of energy savings. Rather than resting on auditors’ projections and engineering estimates of potential savings, the State of Texas instead chose to carefully analyze the program’s impact. To fulfill this function, the State Energy Conservation Office contracted with the Energy Systems Laboratory (ESL) at Texas A&M University. Through this collaboration and ESL’s extensive knowledge of building systems, LoanSTAR has a tremendous amount of technical depth as well as resilience to political shifts that might have otherwise threatened a less well-documented program. Through careful attention to the detail uncovered through rigorous monitoring procedures, the program has achieved even greater savings through operations and maintenance improvements.

By the end of 1994 and only four years, LoanSTAR had provided capital for the retrofit of over 22 million square feet of space in 225 buildings at 34 sites. The average payback of the projects was 3.5 years while the program has stimulated retrofits ranging from lighting conversions to HVAC upgrades, shell improvements, high efficiency motors and variable speed drives, energy management control systems, and boiler upgrades. Already the program has generated over $20 million in cost savings derived from reductions in the use of electricity, natural gas, steam, and chilled water.

Given the challenges to conventional energy efficiency incentive programs promoted by utilities, revolving loan funds will likely become that much more important as a means of providing capital for cost effective retrofits in institutional facilities. While oil overcharge funds are drying up, the model that LoanSTAR represents can be funded through utility seed capital programs and from Federal, state, and municipal sources. LoanSTAR represents an attractive program design for the capture of efficiency in institutional facilities that can and likely will be replicated in other states and jurisdictions keen on the success enjoyed by the program in Texas.

 

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