DOE team issues final recommendations for changes to WAPA operations

by Robert Varela, Public Power Daily; American Public Power Association

An Energy Department task force on strategic changes to the Western Area Power Administration issued a set of 10 final recommendations after deciding not to pursue three other preliminary recommendations. The final recommendations by the DOE Joint Outreach Team (JOT) did not address some of the more controversial proposals in Energy Secretary Steven Chu’s March 16, 2012, memo on changes to the federal power marketing administrations, such as implementation of an energy imbalance market in the West.

The 10 final recommendations call for Western to:

• develop a consistent methodology for determining the regulation reserve capacity needed by each Western balancing authority;
• consolidate its four open access same-time information system (OASIS) sites within the Western Interconnection into a single OASIS site;
• revise its large generator interconnection procedures (LGIP) to conform to changes recommended by WestConnect’s LGIP Work Group;
• evaluate the potential to standardize transmission and ancillary service rate methodologies;
• initiate processes in Western’s Desert Southwest, Rocky Mountain, and Colorado River Storage Project (CRSP) service areas to identify opportunities for increased integration of transmission systems within each region;
• continue to work with regional reliability organizations to implement intra-hour scheduling, including 15-minute scheduling;
• participate in regional and sub-regional efforts to find ways to integrate variable resources cost-effectively;
• evaluate the transmission and ancillary services rates charged by each Western-owned transmission project and determine the feasibility of developing new transmission products;
• evaluate its integrated resource planning program; and
• engage customers and stakeholders to evaluate efforts within the WECC footprint to move from a contract-path to a flow-based approach. “As part of Western’s analysis, it should ensure that outcomes are cost-effective, benefits are clearly identifiable, and costs are neutral, or that any cost-shift is minimized,” the team said.

The draft recommendation to perform a Western-wide infrastructure investment study should be dropped because it would duplicate activities under way within Western’s Asset Management Program as well as transmission planning activities that WAPA regularly engages in either internally or externally with its customers and stakeholders, the report on the final recommendations said.

A draft recommendation to hire a “Renewable Energy Liaison” should not move forward “due to concerns regarding funding for the position and possible duplication of efforts with work being performed elsewhere within Western and DOE,” the team said. A draft recommendation to look at transferring the Electric Power Training Center to the National Renewable Energy Laboratory has been superseded by a re-evaluation of an earlier decision to close the training center, the team said.

In response to input received during the stakeholder process, the JOT said it developed a set of principles used to guide the development of the recommendations; those principles are:

• Consider the unique attributes of Western’s regions;
• Coordinate with federal generating agencies;
• Ensure that the beneficiary or user of the system pays;
• Build on the existing efforts already underway within Western; and
• Ensure that Western stays within the limits of its authority.

The team said it also recognized the need to acknowledge the potential impacts associated with implementing any of the proposed recommendations, “e.g., the potential for cost shifts, the need for Western’s customers, tribes, industry peers, and other stakeholders to be a part of the evaluation process.”

APPA calls for DOE to start anew on any proposals to change PMAs

The Department of Energy’s handling of Secretary Steven Chu’s proposal for changing the federal power marketing administrations has been “a confusing and secretive process that could be described as, at best, poorly organized, and, at worst, misleading and misinformed,” American Public Power Association (APPA) said. “Given the course of the proceedings up until now, we find it hard to believe that DOE is genuinely seeking customer input, or that it does not have a predetermined policy agenda it wishes to pursue, regardless of the views of the customers or the actual facts on the ground,” APPA said in Aug. 17 comments on workshops held by DOE and the Western Area Power Administration on Chu’s March 16 memorandum proposing significant changes to PMA operations.

The department should step back and start this process anew, APPA recommended. First, DOE should examine, in conjunction with WAPA and its customers, where needs exist within WAPA’s system. APPA said. Then, it should allow WAPA to work with its customers to articulate clear goals and plans to address those needs, “without saddling WAPA customers with excess costs.” This process should be led by WAPA and engage the primary PMA customers, who are the primary stakeholders, APPA said. DOE also must comply with legal and rulemaking processes, such as those required by the Administrative Procedure Act.

Any new actions taken by the PMAs “must be in accordance with the standard established in Section 5 of the Flood Control Act of 1944, which provides that sales of wholesale electric power to PMA customers are to be made ‘at the lowest possible rates to consumers consistent with sound business practices,’” APPA said.

“DOE has consistently shifted its rationale for its proposed changes to the PMAs,” the association said. While the department “has used words such as ‘collaboration’ and ‘transparency’ to describe its intentions for the PMA-change process, APPA believes this process has been full of changing justifications.”

The agency’s approach to the workshops “left the strong impression with the PMA customers that these regional meetings were more form than substance, intended as a ‘check the box’ exercise,” and demonstrated that DOE intended to move forward with or without the cooperation of PMA customers, APPA said.

DOE’s portrayal of WAPA’s grid as being in disrepair is “a distraction from any actual evaluation of transmission improvements that might in fact be needed, and raises questions about DOE’s understanding of WAPA’s infrastructure,” APPA said. Using selected statistics to mischaracterize the grid “raises additional concerns that the intent of DOE is to drive to predetermined policy outcomes, regardless of the facts ‘on the ground,’” the association said.

As to Secretary Chu’s forgone conclusion that an energy imbalance market in the West will capture untapped efficiencies, there are significant uncertainties regarding the benefits and costs of an energy imbalance market, APPA said. Those uncertainties “indicate the need to proceed very cautiously on this measure, and to carefully evaluate other alternative methods to integrate variable energy resources.”

APPA voiced concern about Chu’s directive to the PMAs to create rate structures that incentivize programs for energy efficiency and demand response, the integration of variable resources, and preparation for electric vehicle deployment. That could “artificially and inappropriately raise the cost of providing federal hydro power to preference customers, resulting in wholesale and retail rate increases,” APPA said. “This proposal could well mean that PMA customers would be subsidizing wind development and energy efficiency and demand response programs, whether or not they receive any benefits from these programs.” Also, energy efficiency, demand response and electric vehicle integration are primarily retail issues, not wholesale issues.

While Chu apparently seeks to mandate use of programs authorizing third-party financing of transmission projects, PMA customers could potentially be required to take on the costs of system-wide transmission upgrades not needed to serve them, APPA said.

Some broad goals laid out in the March 16 memorandum are admirable, APPA said. “This process by which they have been announced and initiated, however, has been characterized by DOE’s apparent unwillingness even to acknowledge, much less evaluate and incorporate, the accomplishments of WAPA and other PMAs in these areas,” the association said. “Similarly, DOE seems to have paid little more than lip service to the PMAs’ statutory obligations to their customers, and the costs and need for these directives.”

Reprinted with permission. By Robert Varela, Editorial Director, Public Power Weekly, APPA

Heartland’s Extreme Energy Home Makeover contests featured on WAPA site

A story about Heartland’s extreme energy makeovers appears in the November issue of Western Area Power Administration’s (WAPA) Energy Services Bulletin. WAPA is one of four power marketing administrations within the U.S. Department of Energy that markets and delivers electricity from multi-use water projects within a 15-state region of central and western United States. See WAPA’s story below:

Heartland energy makeover contest educates by example

To educate their customer systems and consumers about modern energy-efficiency strategies, Heartland Consumers Power District sponsored Extreme Energy Makeovers in 2009 and 2010, targeted at both homeowners and communities.

The contests introduced the South Dakota-based power wholesaler’s new Power Forward energy-efficiency program. “We thought the energy makeovers would make a great promotional tool,” explained Heartland Communications Manager Ann Hyland. “It gave our customer utilities examples they could point to when their consumers asked about building improvements. They could say, ‘this was done; this is what it cost; this is how much money the measure saved.'”

Customer communities got in on the savings, too, with a municipal version of Extreme Energy Makeover in 2010. Heartland offered two cities in South Dakota and two in Minnesota up to $20,000 to make improvements to public buildings such as the city hall, local community center or fire hall.

Home improvements

The Extreme Energy Makeover was a good fit to demonstrate the benefits of the whole-house approach to energy efficiency. Most of the houses in Heartland’s service territory were built before 1980, so many had older windows, appliances, heating and cooling systems and inadequate insulation. Improving just one of those items helps, but greater energy savings come from treating the house as a system—up to 30 percent, research has shown.

To enter the makeover contest, applicants submitted their utility bills. Based on their energy use, three finalists were chosen to receive home energy audits.

Heartland partnered with the local community action partnership to perform the audits and make recommendations to all the homeowners.  The house with the greatest potential for energy savings won the makeover. “That was really the only criteria for selection,” said Hyland.

The improvements on the first makeover home included insulating the basement and attic, installing a programmable thermostat and compact fluorescent lights, and replacing the natural gas furnace and water heater with an electric heat-pump system and super-efficient electric Marathon water heater. Both homes received new Energy Star windows as well—usually not the most cost-effective improvement, Hyland noted. “But in this case, the windows really made a difference.”

The Schmidt family, who won the 2009 residential makeover, reduced their monthly energy use by an average of almost 32 percent. Heartland is collecting a year’s worth of billing data before analyzing the results of the 2010 makeover, but Hyland is confident that the Lake Crystal homeowners are seeing big differences in their energy bills.

Engaging communities

The process of choosing communities to receive an energy makeover was simpler than the residential contest: Customer city names were drawn from a hat at Heartland’s annual Economic Development Invitational. The assumption was that every municipality has energy-efficiency savings waiting to be captured with a little help.

And they did: Insulation improvements in Tyndall, S.D.’s finance office and city shop building cut their energy use by 35,518 kWh annually, or about $2,841 per year. An upgrade to the lighting in the city library is saving an estimated 1,281 kWh/year and 5.16 kW/month. Heartland estimates that replacing two doors and a picture window, and upgrading lighting in Tyndall’s senior center is reducing energy use by 4,415 kWh/year and 1.26 kW/month.

The city of New Ulm, Minn., used its makeover money to make major improvements on its wastewater treatment plant for an estimated annual savings of 1 million kWh.  LED and T-8 lighting upgrades and other improvements are saving Colman, S.D. an estimated 13,672 kWh/year and 22.55 kW/month. An energy makeover of the Lake Crystal, Minn., city hall included window replacements, increased insulation, lighting upgrades and installation of high-efficiency heating and air conditioning systems. These improvements will save the city an estimated total of 7,435 kWh annually—great news for the taxpayers.

Heartland’s resource manager Adam Graff worked closely with city staff to pick projects that were a good investment. That didn’t mean sticking to a specific payback period, however. “We looked at improvements case by case,” stated Hyland. “Sometimes, you have to have flexibility to get the best results.”

Another aspect both makeovers shared was that Heartland encouraged the use of local contractors. Winners could recommend contractors they knew, which helped them feel confident about the work being done in their homes and buildings and kept the ancillary benefits of energy efficiency local. “That’s probably easier to do in small towns,” Hyland acknowledged.

Intended, unintended learning

The Power Forward program has evolved into new areas, but lessons learned from the Extreme Energy Makeover contest will stay with Heartland.

One surprise was the low number of applicants for the first contest, and the reason was even more unexpected. “People told us that the makeover sounded too good to be true, so they didn’t trust it,” Hyland recalled with some surprise. “We didn’t see that one coming, and we had to adjust for that perception in promoting the second contest.”

More expected was the pushback about the home selection process. Some consumers felt that personal need should have been part of the consideration, even though Heartland acknowledged up front that potential energy savings was the only criteria. Hyland admitted that some contention is unavoidable in such contests, and utilities have to be prepared to handle it. “The good thing about managing the makeover at the power wholesaler level is that we could take that flack for our customers,” she said.

The makeover also prepared Heartland and its customers to deal with their consumers’ heightened awareness about energy-efficiency measures. “It really helps to have that experience with building improvements to answer the inquiries we get now,” said Hyland.

The Energy Services Bulletin is published by WAPA for its customers. Contact editor/web technician Kevon Storie with questions about the Energy Services Bulletin at 720-962-7508.