Clark Public Utilities

Transcription

1 Clark Public Utilities Conservation Potential Assessment October 22, 2015 Prepared by: 570 Kirkland Way, Suite 100 Kirkland, Washington A registered professional engineering corporation with offices in Kirkland, WA and Portland, OR Telephone: (425) Facsimile: (425)

2 October 22, 2015 Mr. Larry Blaufus Clark Public Utilities P.O. Box 8900 Vancouver, Washington SUBJECT: 2015 Conservation Potential Assessment Final Report Dear Larry: Please find attached the Final Report summarizing the 2015 Clark Public Utilities Conservation Potential Assessment (CPA). This report covers the time period from 2016 through 2035 (20 years). Significant changes have occurred since the last CPA due to updated measure and appliance standard information. The overall energy efficiency potential is significant, but due to changes in market conditions and measures since the Sixth Power Plan, it is somewhat lower than the previous assessment. We would like to acknowledge and thank you and your staff for the excellent support in developing and providing the baseline data for this project. Best Regards, Gary Saleba President 570 Kirkland Way, Suite 100 Kirkland, Washington Telephone: Facsimile: A registered professional engineering corporation with offices in Kirkland, WA and Portland, OR

3 Contents EXECUTIVE SUMMARY... 1 BACKGROUND... 1 RESULTS... 2 TARGETS AND ACHIEVEMENT... 5 CONCLUSION... 6 INTRODUCTION... 7 OBJECTIVES... 7 ELECTRIC UTILITY RESOURCE PLAN REQUIREMENTS... 7 ENERGY INDEPENDENCE ACT... 8 STUDY UNCERTAINTIES... 8 REPORT ORGANIZATION... 9 CPA METHODOLOGY BASIC MODELING METHODOLOGY TYPES OF POTENTIAL RECENT CONSERVATION ACHIEVEMENT CURRENT CONSERVATION PROGRAMS SUMMARY CUSTOMER CHARACTERISTICS DATA RESULTS ENERGY SAVINGS AND COSTS TECHNICAL ACHIEVABLE CONSERVATION POTENTIAL ECONOMIC ACHIEVABLE CONSERVATION POTENTIAL SECTOR SUMMARY COST SCENARIOS BASE CASE SCENARIOS SAVINGS SHAPE RESULTS PEAK DEMAND SAVINGS SUMMARY METHODOLOGY AND COMPLIANCE WITH STATE MANDATES CONSERVATION TARGETS SUMMARY REFERENCES APPENDIX I ACRONYMS APPENDIX II GLOSSARY APPENDIX III DOCUMENTING CONSERVATION TARGETS APPENDIX IV AVOIDED COST AND RISK EXPOSURE APPENDIX V CPU LOAD AND COINCIDENCE FACTORS APPENDIX VI MEASURE LIST APPENDIX VII ENERGY EFFICIENCY POTENTIAL BY END-USE APPENDIX VIII MEASURE DETAIL Clark Public Utilities Conservation Potential Assessment i

4 List of Tables Table ES-1 Cost-Effective Potential - Base Case (amw)... 2 Table ES-2 Comparison of 2013 CPA and 2015 CPA Cost-Effective Potential (amw)... 4 Table 1 Building Characteristics Table 2 Building Square Footage by Segment Table 3 Industrial Sector Load by Segment Table 4 Process Shares Indoor Agriculture Segment Table 5 Cost-Effective Achievable Potential (amw) Table 6 Distribution Efficiency 20-Year Cost-Effective Achievable Potential Table 7 Cost for Economic Achievable Conservation Potential Table 8 Cost Scenarios for Base Case Economic Achievable Conservation Potential Table 9 Cost per MWh Savings (First Year) for Base Case Economic Achievable Potential Table 10 Cost-Effective Achievable Potential Low Scenario (amw) Table 11 Cost-Effective Achievable Potential Accelerated Base Scenario (amw) Table 12 Cost-Effective Achievable Potential Scenario Comparison (amw) Table 13 Cumulative Peak Savings with Associated Energy Savings and Costs List of Figures Figure ES-1 Annual Base Case Energy Efficiency Potential Estimates... 3 Figure ES-2 Comparison of Conservation Targets to Achievements... 6 Figure 1 Conservation Potential Assessment Process Figure 2 Types of Energy Efficiency Potential Figure 3 20-Year Market Price Forecast (Mid-Columbia) Figure 4 CPU Recent Conservation History by Sector Figure 5 Program Achievement by End-Use CY Figure 6 and Industrial Program Achievement by End-Use CY Figure 7 Indoor Agriculture Electricity End-Use Distribution Figure 8 20-Year End System Load Forecast Figure 9 20-Year Technical-Achievable Potential Supply Curve Figure 10 Annual Achievable Potential by Sector Figure 11 Annual Potential by End-Use Figure 12 Annual Potential by End-Use Figure 13 Annual Industrial Potential by End-Use Figure 14 Annual Distribution System Efficiency Potential Figure 15 CPU Conservation Scenarios Annual Potential (amw) Figure 16 CPU Monthly Energy Efficiency Savings, HLH Figure 17 CPU Monthly Energy Efficiency Savings, LLH Figure 18 CPU Monthly Energy Efficiency Savings, HLH, Cumulative Figure 19 Annual Peak Savings, Cumulative (MW) Figure 20 Monthly Peak Savings, Cumulative (MW) Clark Public Utilities Conservation Potential Assessment ii

5 Executive Summary This report describes the methodology and results of the Clark Public Utilities (CPU) 2015 Conservation Potential Assessment (CPA). This assessment provides estimates of energy and peak demand savings by sector for the period 2016 to The assessment considered a wide range of conservation resources that are reliable, available, and cost-effective within the 20- year time horizon. Background CPU provides electricity service to more than 192,500 customers located in Clark County, Washington. CPU s service territory covers 667 square miles and includes 6,600 miles of transmission and distribution lines. Washington s Energy Independence Act (EIA), effective January 1, 2010, requires that utilities with more than 25,000 customers (known as qualifying utilities) pursue all cost-effective conservation resources and meet conservation targets set using a utility-specific conservation potential assessment methodology. The EIA sets forth specific requirements for setting, pursuing and reporting on conservation targets. The methodology used in this assessment complies with RCW and WAC Section 5 parts (a) through (o) and is consistent with the methodology used by the Northwest Power and Conservation Council (Council) in developing the Sixth Power Plan. Thus, this Conservation Potential Assessment will support CPU s compliance with EIA requirements. This assessment builds on CPU s CPA conducted in , and updated in 2013, by utilizing the same methodology and similar models. However, significant changes in the marketplace have taken place since 2010, many of which were documented in the Council s Sixth Power Plan Mid-Term Assessment 1. As a result, substantial revisions to the planning assumptions were required for this CPA. The primary model updates included the following: New Avoided Cost recent forecast of power market prices Updated Financial Parameters including discount rate, transmission and distribution credits, risk credits and other inputs Updated Customer Characteristics Data New commercial data from the 2014 Building Stock Assessment (CBSA) Updated kwh consumption and Energy Use Intensity (EUI) data Measure Updates 1 Sixth Power Plan Mid-Term Assessment Report. Northwest Power and Conservation Council, March 13, Clark Public Utilities Conservation Potential Assessment 1

6 Added new measures from the Regional Technical Forum (RTF) and the Northwest Power and Conservation Council (Council) Removed measures that have expired or are now covered by Federal standards or state energy codes Thirty five new or revised standards have been adopted since the 6 th Plan A new edition of the Washington State Energy Code (WSEC) became effective in 2013 Revised/updated measure data for existing measures Updated measure saturation data from the Council Accounting for Recent Achievements Internal programs NEEA programs The first step of this assessment was to carefully define and update the planning assumptions using the new data. The Base Case conditions were defined as the most likely market conditions over the planning horizon, and the conservation potential was estimated based on these assumptions. Additional scenarios were also developed to test a range of conditions. Results Table ES-1 shows the high level results of this assessment. The economically achievable potential by sector in 2, 5, 10 and 20-year increments is included. The total 20-year costeffective conservation potential is amw. The focus of the EIA requirement is on the 10- year potential, amw, and the 2-year potential, 7.74 amw. Table ES-1 Cost-Effective Potential 2 - Base Case (amw) 2 Year* 5 Year 10 Year 20 Year Industrial Distribution Efficiency TOTAL *2016 and 2017 These estimates include energy efficiency achieved through CPU s own utility programs, and also through CPU s share of the Northwest Energy Efficiency Alliance (NEEA) accomplishments. 2 Cost-effective potential identified in this report refers to potential that has passed the Total Resource Cost test and has had the regional applicability factors applied (e.g., 85% for retrofit measures). Cost-effective potential is both cost-effective AND achievable. Clark Public Utilities Conservation Potential Assessment 2

7 amw These estimates include energy efficiency that could be achieved through CPU s own utility programs and also through CPU s share of the Northwest Energy Efficiency Alliance (NEEA) accomplishments. In addition, it is likely that some code changes will account for part of the potential, especially in the later years. The 20-year energy efficiency potential is shown on an annual basis in Figure ES-1. This assessment shows potential starting around 3.8 amw in 2016 and ramping up to 4.3 amw per year in Potential is accelerated in the early years of the study and then is gradually ramped down through the remaining years of the planning period. This potential is shown on an annual basis in Figure ES Figure ES-1 Annual Base Case Energy Efficiency Potential Estimates Industrial Distribution Efficiency The majority of the potential is in the residential sector. The distribution of residential sector conservation among measure end uses is similar to CPU s 2013 residential conservation profile. The notable areas for achievement include: Water Heating Including heat pump water heaters and showerheads Consumer electronics including desktop computers and advanced power strips LED lighting in existing homes Heat pump and ductless heat pump upgrades, conversions and supplements Significant conservation is available in CPU s commercial sector, though the 2015 results in this sector are considerably lower compared with commercial sector potential estimated in the 2013 CPA. In addition, the distribution of end-use savings for the commercial sector is Clark Public Utilities Conservation Potential Assessment 3

8 somewhat different than in previous CPAs. Some of this difference can be attributed to the significant commercial measure updates that have been made for the 2015 CPA. Specifically, twelve new measure bundles were added to the commercial sector, some previous measures expired or are now covered by state energy codes or federal equipment standards, and the majority of the remaining measures were updated with the latest data from the RTF and Council. Notable areas for commercial sector achievement include: HVAC controls including advanced rooftop controller and energy management measures including lighting power density improvements and low power fluorescent lamps ductless heat pumps Refrigeration including grocery refrigeration measures and water cooler controls Table ES-2 shows the comparison of the Base Case results in the 2013 and current 2015 assessments. Both 10-year and 20-year cost-effective achievable potential are shown. Table ES-2 Comparison of 2013 CPA and 2015 CPA Cost-Effective Potential (amw) 10-year 20-year 2013* 2015* % Change 2013* 2015* % Change % % % % Industrial % % Distribution Efficiency % % TOTAL % % *Note that the 2013 columns refer to the CPA completed in 2013 for the time period of 2014 through The 2015 assessment is for the timeframe 2016 through Substantial changes were made to residential, commercial, industrial and agriculture sectors, which significantly affected overall conservation potential. The residential sector was significantly affected due in large part to higher baselines. Baseline adjustments are two-fold: energy efficiency programs have been effective in increasing the saturation of the measures, and new codes and standards have changed measure definitions. Essentially, homes are becoming more efficient due to programs, market transformation efforts, and code and standard updates. Some of the key differences by measure or end use are listed below: Weatherization Measures The RTF released a new set of single-family weatherization measures for existing homes after extensive review of savings estimates for these measure sets. As a result, savings for these new measures are 60 percent lower, on average. Some residential weatherization measures for new homes were removed due to new building codes. Appliances A number of new standards have recently been passed which affect residential appliances, including dishwashers, refrigerators, freezers and clothes Clark Public Utilities Conservation Potential Assessment 4

9 washers. More standards will become effective in the first few years of the conservation planning period. These changes have resulted in new appliance measures with lower incremental savings over current market conditions, as compared to market conditions assumed in the 2013 CPA (higher baselines). Consumer Electronics consumer electronics potential increased due to the addition of cost-effective advanced power strip measures. Heat Pump Water Heaters Heat pump water heaters are a new measure for the commercial sector. These measures constitute a significant amount of costeffective commercial conservation. HVAC Controls New commercial energy management measures added notable savings in the commercial sector. Energy Independence and Security Act of 2007 (EISA) This code change significantly impacted both residential and commercial lighting potential. Standards affecting incandescent and CFL lighting have been phased in since 2012 and CFL measures were eliminated in New measures have been added for LED lighting and solid state lighting. Industrial End-Use Savings The distribution of end-use consumption in the industrial sector was significantly revised due to Council review. Targets and Achievement Figure ES-2 compares historic achievement with CPU s targets. The 2016 and 2017 targets are based on the Base Case scenario presented in this report. The figure shows that CPU has consistently met its energy efficiency targets, and that the potential estimates presented in this report are achievable through CPU s utility conservation programs and the utility s share of NEEA savings. ES-2 shows projected achievement for Clark Public Utilities Conservation Potential Assessment 5

10 amw Figure ES-2 Comparison of Conservation Targets to Achievements Achievement Estimated Potential Target Conclusion This report summarizes the CPA conducted for Clark Public Utilities for the 2016 to 2035 planning period. Based on the results of the Base Case scenario, the total 10-year cost effective potential is 39.1 amw and the 2-year potential is 7.7 amw. The results of this assessment are lower than the previous assessment due to changes in market conditions, code and standard changes, recent conservation achievements, and revised savings values for RTF and Council measures. Clark Public Utilities Conservation Potential Assessment 6

11 Introduction Objectives The objective of this report is to describe the results of the Clark Public Utilities (CPU) 2015 Conservation Potential Assessment (CPA). This assessment provides estimates of energy savings by sector for the period 2016 to 2035, with the primary focus on 2016 to 2025 (10 years). This analysis has been conducted in a manner consistent with requirements set forth in RCW (EIA) and WAC (EIA implementation) and is part of CPU s compliance documentation. The results and guidance presented in this report will also assist CPU in strategic planning for its conservation programs in the near future. Finally, the resulting conservation supply curves can be used in CPU s integrated resource plan (IRP). The conservation measures used in this analysis are based on the most recent set of measures approved by the Regional Technical Forum (RTF) and are representative of the measures that will be used in the Council s Seventh Power Plan. The assessment considered a wide range of conservation resources that are reliable, available, and cost-effective within the 20-year planning period. Electric Utility Resource Plan Requirements CPU provides electricity service to more than 192,500 customers located in Clark County, Washington. CPU s service territory covers 667 square miles and includes 6,600 miles of transmission and distribution lines. CPU serves its loads with a variety of resources, including demand side resources. In October 2011, CPU began purchasing power from the Bonneville Power Administration (BPA) as a Slice/Block customer under a power contract signed in December As a Slice/Block customer, CPU purchases an approximate 2.2% share of the real-time capability of the Federal Based System (FBS) and monthly flat blocks of energy. CPU expects average annual supply from the Slice/Block contract to be between 294 to 310 amw, with peak capability of 508 MW. Under good water conditions, it is estimated that BPA resources could provide up to 70% of CPU s power requirements through the end of the contract term in As a Slice/Block customer CPU relies on scheduled output from the FBS as well as market transactions to follow load. CPU owns and operates the River Road Generating Plant; a 248 MW natural gas-fired power plant. The utility estimates that this resource will provide approximately 225 amw of average annual generation to serve loads for the foreseeable future. Output from the River Road plant meets approximately 37% of CPU s current annual average load requirements. In 2009, CPU signed a contract to purchase the entire output of the Combine Hills II wind project for a 20- year term, which began in January Average annual supply from this resource is approximately 18 amw. CPU is under contract to purchase 18% of the production capability of the Packwood Project. This hydroelectric project is owned and operated by Energy Northwest Clark Public Utilities Conservation Potential Assessment 7

12 and CPU s share provides approximately 1.1 amw of average annual energy to serve utility loads. According to Chapter RCW, utilities with at least 25,000 customers are required to develop integrated resource plans (IRPs) by September 2008 and biennially thereafter. The legislation mandates that these resource plans include assessments of commercially available conservation and energy efficiency measures. This CPA is designed to assist in meeting these requirements for conservation analyses. The results of this CPA may be used in the next IRP due to the state by September More background information is provided below. Energy Independence Act Chapter RCW, the Energy Independence Act, requires that, each qualifying utility pursue all available conservation that is cost-effective, reliable and feasible. The timeline for requirements of the Energy Independence Act are detailed below: By January 1, 2010 Identify achievable cost-effective conservation potential through 2019 using methodologies consistent with the Pacific Northwest Power and Conservation Council s (Council) latest power planning document. Beginning January 2010, each utility shall establish a biennial acquisition target for costeffective conservation that is no lower than the utility s pro rata share for the two-year period of the cost effective conservation potential for the subsequent ten years. By June 2012, and 2014, each utility shall submit an annual conservation report to the department (the department of commerce or its successor). The report shall document the utility s progress in meeting the targets established in RCW Beginning on January 1, 2014, cost-effective conservation achieved by a qualifying utility in excess of its biennial acquisition target may be used to help meet the immediately subsequent two biennial acquisition targets, such that no more than twenty percent of any biennial target may be met with excess conservation savings. This report summarizes the preliminary results of a comprehensive CPA conducted following the steps provided for a Utility Analysis. A checklist of how this analysis meets EIA requirements is included in Appendix III (p. 54). Study Uncertainties The savings estimates presented in this study are subject to the uncertainties associated with the input data. This study utilized the best available data at the time of its development; however, the results of future studies will change as the planning environment evolves. Specific areas of uncertainty include the following: Customer characteristic data and commercial building data and appliance saturations are in many cases based on regional studies and surveys. There are Clark Public Utilities Conservation Potential Assessment 8

13 uncertainties related to the extent that CPU s service area is similar to that of the region, or that the regional survey data represents the population. Measure data In particular, savings and cost estimates (when comparing to current market conditions), as prepared by the Council and RTF, will vary across the region. In some cases, measure applicability or other attributes have been estimated by the Council or the RTF based on professional judgment or limited market research. Market Price Forecasts Market prices (and forecasts) are continually changing. The market price forecasts for electricity and natural gas utilized in this analysis represent a snapshot in time. Given a different snapshot in time, the results of the analysis would vary. However, risk credits are included in the analysis to mitigate the market price risk over the study period. Utility System Assumptions Credits have been included in this analysis to account for the avoided costs of bulk transmission and distribution system expansion and local distribution system expansion. Though potential transmission and distribution system cost savings are dependent on local conditions, the Council considers these credits to be representative estimates of these avoided costs. Discount Rate The Council develops a real discount rate for each power plan based on the relative share of the cost of conservation and the cost of capital for the various program sponsors. The Council has estimated these figures using the most current available information. This study reflects the current borrowing market although changes in borrowing rates will likely vary over the study period. Forecasted Load and Customer Growth The CPA bases the 20-year potential estimates on forecasted loads and customer growth. Each of these forecasts includes a level of uncertainty. Load Shape Data The Council provides conservation load shapes for evaluating the value of time-differentiated energy savings. In practice, load shapes will vary by utility based on weather, customer types, and other factors. This assessment uses utilityspecific load and coincidence factors to estimate peak demand savings over the planning period, based on shaped energy savings. Since the load shapes are representative of the region, and are not specific to CPU, peak demand savings presented in this report may vary from actual peak demand savings. Frozen Efficiency Consistent with the Council s methodology, the measure baseline efficiency levels and end-using devices do not change over the planning period. In addition, it is assumed that once an energy efficiency measure is installed, it will remain in place over the remainder of the study period. Due to these uncertainties and the changing environment, under the EIA, qualifying utilities must update their CPAs every two years to reflect the best available information. Report Organization The main report is organized with the following main sections: Methodology CPA methodology along with some of the overarching assumptions Clark Public Utilities Conservation Potential Assessment 9

14 Recent Conservation Achievement CPU s recent achievements and current energy efficiency programs Customer Characteristics Housing and commercial building data for updating the baseline conditions Results Energy Savings and Costs Primary base case results Scenario Results Results of all scenarios Savings Shape and Savings Results Base Case potential results by month and by sector Summary Appendices Clark Public Utilities Conservation Potential Assessment 10

15 CPA Methodology This study is a comprehensive assessment of the energy efficiency potential in CPU s service area. The methodology complies with RCW and WAC Section 5 parts (a) through (o) and is consistent with the methodology used by the Northwest Power and Conservation Council (Council) in developing the Sixth Power Plan. This section provides a broad overview of the methodology used to develop CPU s conservation potential target. Specific assumptions and details of methodology as it pertains to compliance with the EIA compliance are provided in Appendix III (p. 54) of this report. Basic Modeling Methodology The basic methodology used for this assessment is illustrated in Figure 1. A key factor is the kilowatt hours saved annually from the installation of an individual energy efficiency measure. The savings from each measure is multiplied by the total number of measures that could be installed over the life of the program. Savings from each individual measure are then aggregated to produce the total potential. Figure 1 Conservation Potential Assessment Process Clark Public Utilities Conservation Potential Assessment 11

16 Types of Potential Three types of potential are used in this study: technical, achievable, and economic potential. Technical potential is the theoretical maximum efficiency in the service territory if cost and achievability barriers are excluded. There are physical barriers, market conditions, and other consumer acceptance constraints that reduce the total potential savings of an energy efficient measure. When these factors are applied, the remaining potential is called the achievable potential. Economic potential is a subset of the technical-achievable potential that has been screened for cost effectiveness through a benefit-cost test. Figure 2 illustrates the four types of potential followed by more detailed explanations. Figure 2 Types of Energy Efficiency Potential 3 Not Technically Feasible Technical Potential Not Technically Feasible Market & Adoption Barriers Achievable Potential Not Technically Feasible Market & Adoption Barriers Not Cost-Effective Economic Potential Not Technically Feasible Market & Adoption Barriers Not Cost-Effective Program Design, Budget, Staffing, & Time Constraints Program Potential Technical Technical potential is the amount of energy efficiency potential that is available, regardless of cost or other technological or market constraints, such as customer willingness to adopt measures. It represents the theoretical maximum amount of energy efficiency absent these constraints in a utility s service territory. Estimating the technical potential begins with determining a value for the energy efficiency measure savings. Then, the number of applicable units must be estimated. Applicable units refers to the number of units that could technically be installed in a service territory. 3 Reproduced from U.S. Environmental Protection Agency. Guide to Resource Planning with Energy Efficiency. Figure 2-1, November Clark Public Utilities Conservation Potential Assessment 12

17 This includes accounting for units that may already be in place. The applicability value is highly dependent on the measure and the housing stock. For example, a heat pump measure may only be applicable to single family homes with electric space heating equipment. A saturation factor accounts for measures that have already been completed. In addition, technical potential considers the interaction and stacking effects of measures. For example, if a home installs insulation and a high-efficiency heat pump, the total savings in the home is less than if each measure were installed individually (interaction). In addition, the measure-by-measure savings depend on which measure is installed first (stacking). Total technical potential is often significantly more than the amount of economic and achievable potential. The difference between technical potential and economic potential is due to the number of measures in the technical potential that are not cost-effective and the applicability or total amount of savings of those non-cost effective measures. Achievable Achievable potential is the amount of potential that can be achieved with a given set of conditions. Achievable potential takes into account many of the realistic barriers to adopting energy efficiency measures. These barriers include market availability of technology, non-measure costs, and physical limitations of ramping up a program over time. The level of achievable potential can increase or decrease depending on the given incentive level of the measure. The Council uses achievability rates equal to 85 for retrofit measures and 65 % for lost opportunity measures over the 20-year study period. This CPA follows the Council s methodology, including the achievability rate assumptions. Note that the achievability factors are applied to the technical potential before the economic screening. Economic Economic potential is the amount of potential that passes an economic benefit-cost test. In Washington State, the total resource cost test (TRC) is used to determine economic potential (per EIA requirements). This means that the present value of the benefits exceeds the present value of the costs over the lifetime of the measure. TRC costs include the incremental costs and benefits of the measure regardless of who pays a cost or receives the benefit. Costs and benefits include the following: capital cost, O&M cost over the life of the measure, disposal costs, program administration costs, environmental benefits, distribution and transmission benefits, energy savings benefits, economic effects, and non-energy savings benefits. Nonenergy costs and benefits can be difficult to enumerate, yet non-energy costs are quantified where feasible and realistic. Examples of non-quantifiable benefits might include: added comfort and reduced road noise from better insulation, or increased real estate value from new windows. A quantifiable non-energy benefit might include reduced detergent costs or reduced water and sewer charges. For this potential assessment, the Council s ProCost models are used to determine costeffectiveness for each energy efficiency measure. The ProCost model values measure energy savings by time of day using conservation load shapes (by end-use) and segmented energy prices. The version of ProCost used in the 2015 CPA evaluates measure savings on a monthly basis and by four segments. The four segments differentiate savings values across heavy load hour, shoulder, and light load hour periods in each month. Clark Public Utilities Conservation Potential Assessment 13

18 Program Program potential is the amount of potential that can be achieved through utility administered programs. The program achievable potential excludes savings estimates that are achieved through future code changes and market transformation. The program potential is not the emphasis of this assessment, but understanding the sources of achievement is an important reporting requirement. Energy Efficiency Measure Data The characterization of efficiency measures includes measure savings (kwh), demand savings, measure costs ($), and measure life (years). Other features, such as measure savings shape, operation and maintenance costs, and non-energy benefits are also important components of the measures. The Council s Seventh Power Plan is scheduled for release at the end of 2015, and the vast majority of the conservation analysis has been completed and made available. Due to the timing of this CPA, the primary sources for conservation measure data are the Council s Seventh Plan supply curve workbooks, which include the most recent information. The measure data include adjustments from raw savings data for several factors. The effects of space-heating interaction, for example, are included for all lighting and appliance measures, where appropriate. For example, if an electrically-heated house is retrofitted with efficient lighting, the heat that was originally provided by the inefficient lighting will have to be made up by the electric heating system. These interaction factors are included in measure savings data to produce net energy savings. Other financial-related data needed for defining measure costs and benefits include: current and forecasted loads, growth rates, discount rate, avoided costs, line losses, and deferred capacity-expansion benefits. A list of measures by end-use is included in this CPA is included in Appendix VI (P. 69). Avoided Cost The avoided cost of energy is represented as a dollar value per MWh of conservation. Avoided costs are used to value energy savings benefits when conducting cost effectiveness tests and are generally included in the numerator in a benefit-cost test. These energy benefits are often based on the cost of a generating resource, a forecast of market prices, or the avoided resource identified in the integrated resource planning process. Figure 3 shows the price forecast used as the primary avoided cost component for the planning period. The price forecast is shown for heavy load hours (HLH), light load hours (LLH), and average load hours (ALH). Clark Public Utilities Conservation Potential Assessment 14

19 $/MWh Figure 3 20-Year Market Price Forecast (Mid-Columbia) $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 HLH ALH LLH The EIA requires that utilities set avoided costs equal to a forecast of market prices. As discussed in Appendix IV (p. 58), CPU may be resource deficit on an average annual basis as early as 2021, under a high load growth scenario. In addition, the utility already experiences annual peak load deficits. Market purchases may be used to serve future load growth. Therefore, the market price forecast shown in Figure 3 is appropriate for modeling the value of avoided energy. The EIA also requires that deferred capacity expansion benefits for transmission and distribution systems be included in the cost-effectiveness analysis. To account for the value of deferred bulk transmission and local distribution system expansion, a local system distribution credit value of $31/kW-yr and a bulk transmission and distribution system credit of $23.14/kwyr were applied to peak savings from conservation measures. The local distribution system credit is taken from the Council s Seventh Plan supporting documents. The bulk transmission credit used in this assessment is based on Council s bulk transmission credit assumption calculated for the Seventh Power Plan adjusted for CPU s transmission coincident factor. Specifically the Seventh Plan bulk transmission system credit is $26/kw-yr, based on updated cost estimates for deferred upgrades and expansion of the regional transmission system. However, CPU s peak load is not fully coincident with the regional peak. Thus, peak demand savings from CPU s conservation achievement should be adjusted when evaluating the deferral of transmission system expansion investments. Over the past three years, CPU s system peak has been 89% coincident with the regional peak, represented by the Bonneville Power Administration s (BPA) system peak. Accordingly, CPU s bulk transmission and distribution credit for this assessment is adjusted to 89% of the regional $26/kw-yr. A $23.14/kw-yr transmission credit is used in the cost-effectiveness analysis for this assessment. Clark Public Utilities Conservation Potential Assessment 15

20 Risk credits of $22.72/MWh and $32.46/MWh were included in the avoided cost for retrofit and lost opportunity measures, respectively, to account for the reduced power supply cost risk associated with energy efficiency measures. A sensitivity analysis around the value of the risk mitigation credit is included in this study. Additional information regarding the avoided cost forecast and risk mitigation credit values is included in Appendix IV (p. 58). Finally, a 10% benefit was added to the avoided cost as required by the Pacific Northwest Electric Power Planning and Conservation Act. Discount Rate The Council develops real discount rate assumptions for each of its Power Plans. The most recent real discount rate assumption developed by the Council is 4% based recent conservation program data collected from 2008 to The 4% discount rate was developed to model conservation potential for the Seventh Power Plan. The discount rate is used to convert future cost and benefit streams into present values. The present values are then used to compare net benefits across measures that realize costs and benefits at different times and over different useful lives (years). The discount rate is developed from two sets of assumptions. The first set of assumptions describes the relative shares of the cost of conservation distributed to various sponsors. Conservation is funded by the Bonneville Power Administration (BPA), utilities, and customers. The second set of assumptions looks at the financing parameters for each of these entities to establish the after-tax average cost of capital for each group. These figures are then weighted, based on each group s assumed share of project cost to arrive at a composite discount rate. The Council s 4% discount rate is used in this analysis. Building Characteristic Data Building characteristics, baseline measure saturation data, and appliance saturation influence CPU s total conservation potential. For this analysis, the characterization of CPU s baseline was determined using data provided by county records. Details of data sources and assumptions are described for each sector later in the report. This assessment primarily sourced baseline measure saturation data from the Council s Seventh Plan measure workbooks. The Council s data was developed from NEEA s Building Stock Assessments, studies, market research and other sources, and the Council has updated baselines for regional conservation achievement in preparation for the release of the Seventh Power Plan in January Historic conservation achievement data are often used to update measure saturation levels when current market data is unavailable. EES adjusted measure baselines, using CPU s conservation achievement history, for those measures with baselines that have not been updated since the 2011 Building Stock Assessment. CPU s historic achievement is discussed in detail in the next section. Clark Public Utilities Conservation Potential Assessment 16

21 amw Recent Conservation Achievement CPU has pursued conservation and energy efficiency resources since The utility currently offers several rebate and incentive programs for both residential and non-residential applications. CPU also provides information to customers in the form of energy-use tracking software and professional energy audits to inform customers of the types of energy efficiency applications that may be most suitable for their home or facility. CPU has consistently conserved energy through its commercial and residential programs and has conserved significant energy through its industrial programs. In 2014, 2.68 amw of energy was saved through industrial programs; this was the highest annual industrial achievement in at least five years. Figure 4 shows the distribution of conservation among the utility s customer sectors and also shows conservation achieved through Northwest Energy Efficiency Alliance (NEEA) efforts over the past five years. CPU obtains a share of NEEA savings through two avenues: 1) CPU s share of regional load, and 2) CPU s contributions to BPA programs. Figure 4 CPU Recent Conservation History by Sector Industrial NEEA Current Conservation Programs CPU offers a wide range of conservation programs to its customers. These programs include several residential loan programs, rebates, energy audits, and commercial projects. The current programs offered by CPU are detailed below followed by recent achievements for these programs. Clark Public Utilities Conservation Potential Assessment 17

22 Recycling Programs CPU offers $30 bill credits for recycling qualifying refrigerators and freezers. In addition CPU offers CFL light bulb replacements for light bulbs recycled at CPU s offices. Energy Star Rebates CPU offers a number of rebates for energy star appliances. These include $25 for refrigerators and $50 for clothes washers. Weatherization Loans This loan program provides five and seven year low interest loans (3.5 % minimum), up to $15,000 for air sealing, duct sealing, attic insulation, wall insulation, floor insulation and window replacement. Loan processing fees apply. Weatherization Rebates Rebates of up to $400 are available for floor, attic, or wall insulation improvements, and up to $500 for energy efficient window replacements. CPU also offers up to $250 rebates for PTCS duct sealing and 50 % (up to $100) of the cost of airsealing envelope. Weatherization Assistance Using state and public utility funds, CPU offers low-income weatherization grants. These programs offer insulation and minor weatherization-related repairs to Clark County families with income up to 125 % of the federal poverty level. Participants are responsible for 10 % of the project costs and participant commitment is capped at $500. This program is open to customers with electrically-heated homes. Heat Pump Loans The utility offers financing up to $20,000 for installation of air source or ductless heat pumps. Eligible customers include those with electrically heated homes in existing construction. Heat Pump Rebates Rebates of up to $750 are available for energy efficient air-source heat pumps and ductless heat pumps. Heat Pump Water Heater Rebates The utility offers $300 for Tier 1 qualifying heat pump water heaters and $500 for Tier 2 qualifying heat pump water heaters. Solar Water Heater Rebates CPU is offering a $500 rebate on the installation of a qualifying solar water heater. In addition to the rebate, qualified customers may finance up to $10,000 of the cost of a solar water heating system. Solar Pool Heating Systems CPU offers $500 rebates, with financing of up to $10,000 for solar pool heaters. On-Site Visit Energy auditors are available over the phone and on-site for home energy efficiency improvements. Energy auditors analyze energy use, provide tips on winterization, guide customers through home improvement upgrades related to weatherization, provide written information on conservation products, programs, and practices, and they are available to speak to groups and organizations regarding home energy efficiency improvements. Photovoltaic Systems CPU offers financing up to $30,000 for installation of solar cells or photovoltaic. Clark Public Utilities Conservation Potential Assessment 18

23 Energy Star Homes Homes which meet Energy Star Homes requirements for Washington are eligible for a $1,500 rebate, paid to the Energy Star builder. Figure 5 summarizes the recent savings achievement for the above utility-managed programs. These savings do not include end-use savings from CPU s share of NEEA savings. Figure 5 Program Achievement by End-Use CY Appliances 3% HVAC 22% Energy Star Homes 2% 57% Envelope 8% Water Heating 1% Appliance Recycling 7% and Industrial Improvement Program (CLIP) CPU offers rebates to commercial and industrial customers for approved LED lighting projects. A lighting audit is conducted to determine the upgrade opportunities and rebate amounts. EnergySmart Grocer This program offers grocery customers, restaurants and other businesses with commercial refrigeration no-cost energy audits and information regarding energy efficient technology, operations, and management. CPU offers rebates to offset the cost of energy efficient upgrades and retrofit projects, potentially covering up to 100 % of equipment expenses. EnergySmart Industrial This program offers technical resources and incentives for industrial facility efficiency improvements. Current incentives may cover up to 50 % of project cost for retrofit projects and 70 % for new construction projects (capped at varying per kilowatt rates for verified savings). Clark Public Utilities Conservation Potential Assessment 19

24 Building Energy Audits Key account managers provide walk-throughs to identify opportunities for energy efficiency. This service is free and provides information to business owners regarding energy efficiency and bill reductions. Green Motor Rewind Motors between 15 and 5,000 horsepower can be rewound to improve their efficiency. CPU offers incentives of at least $1 per horsepower for qualifying rewinds. Compressed Air Audits CPU offers financial assistance to manufacturing customers to assist with the completion of compressed air audits. Professional energy specialists identify energy efficiency gains that lead to improved air supply, enhanced maintenance cycles, and noise reductions. Heat Pump Equipment Conversion and Upgrade in Buildings An incentive program is available for qualifying air source heat pump equipment conversions and upgrades in buildings with electric resistance heat and which meet additional program specifications. Small Ductless Heat Pump (DHP) CPU s commercial DHP program offers reimbursement of $250 per ton of installed outdoor capacity for eligible DHP units and installations. Web-Enabled Programmable Thermostats (WEPT) CPU offers incentives to help offset the costs of new and existing WEPTs installed in commercial buildings. Multifamily Weatherization CPU offers a range of rebates for weatherization improvements in electrically-heated multifamily housing. The utility currently offers incentives for attic, wall, and floor insulation, as well as improvements to windows and patio doors. Energy Management Software CPU offers two software packages for energy tracking and analysis in commercial and industrial applications. Both E-Manager and Energy Expert are web-based programs that provide electricity consumption data to indicate areas where the facility may benefit most from energy efficiency improvements. E- Manager provides hourly consumption data and is designed for manufacturing and production facilities where electricity costs are due primarily to equipment load. Energy Expert provides building energy modeling solutions, based on daily energy consumption. Custom Projects The custom project program provides incentives to commercial and industrial customers who install energy efficiency measures. The utility currently offers incentives for up to 50 % of project cost for retrofit projects and 70% for new construction projects (capped at varying per kilowatt rates for verified savings). Figure 6 summarizes the recent savings achievement by end-use for the above utility-managed programs. These savings do not include end-use savings from CPU s share of NEEA savings. Clark Public Utilities Conservation Potential Assessment 20

25 Figure 6 and Industrial Program Achievement by End-Use CY Energy Smart Grocer 6.5% Green Motors 0.0% Ductless Heat Pumps 0.0% Roof Top Units / Controls 0.2% Com Custom Projects 15.7% Ind 2.3% Web Enabled Thermostats 0.3% Com 21.2% Ind Custom Projects 47.4% Track & Tune 3.0% HPEM 3.2% Insulation 0.0% Appliances 0.0% Summary CPU plans to continue offering incentives for energy efficiency investments. The results of this study will assist CPU program managers decide in strategic planning for energy efficiency program offerings, incentive levels, and program review. Clark Public Utilities Conservation Potential Assessment 21

26 Customer Characteristics Data CPU serves approximately 192,500 electricity customers in Clark County, with a total service territory population of approximately 474,600. A key component of an energy efficiency assessment is to understand the characteristics of these customers primarily the building and end-use characteristics. Characteristics for each customer class are described below. For the residential sector, the key characteristics include house type distribution, space-heating fuel type, and water heating fuel. Table 1 shows relevant residential data for single family, multi-family and manufactured homes in CPU s service territory. The data for new and existing homes were provided by CPU and are based on Clark County data collected for the Northwest Energy Efficiency Alliance (NEEA) 2011 Building Stock Assessment (RBSA). These data provide an estimate of the current residential characteristics in Clark County and are utilized as the baseline in this study. The Regional % columns show 2011 RBSA data weighted by the regional distribution of home types (new and existing). 4 These data have been provided for reference. Heating Zone Cooling Zone Table 1 Building Characteristics Solar Zone Households Total Population , ,599 Housing Stock Existing New Homes Regional % Existing New Regional % House Type Foundation Type Single Family 76% 98% 72% Crawlspace 73% 79% 58% Multi-Family 21% 2% 18% Full Basement 17% 11% 26% Manufactured Homes 3% 0% 10% Slab on Grade 10% 10% 16% Housing Vintage Water Heating Pre % N/A 61% Electric 51% 11% 65% % N/A 18% Natural Gas 49% 89% 32% Post % N/A 20% Heat Fuel Type Appliance Saturation Natural Gas Homes 38% 89% 24% Refrigerator 130% 100% 123% Electric Homes 46% 11% 55% Freezer 47% 0% 43% Other Fuel Homes 16% 0% 21% Clothes Washer 99% 99% 89% Electric Heat System Type Electric Dryer 97% 97% 88% Forced Air Furnace 17% 11% 11% Dishwasher 94% 94% 85% Heat Pump 27% 54% 17% Electric Oven 89% 82% 79% Zonal (Baseboard) 44% 28% 70% Room AC 14% 0% 13% Electric Other 13% 7% 1% Central AC 40% 40% 38% 4 Single-family and multi-family reference data are specific to Washington State and regional (WA, OR, ID and western MT) data were used to describe manufactured homes characteristics. Clark Public Utilities Conservation Potential Assessment 22

27 Building square footage is the key parameter in determining conservation potential for the commercial sector, as many commercial measures are based on savings as a function of building square footage (kwh/sf). CPU provided 2014 commercial square footage and energy consumption (kwh) for each of the 18 building types shown in Table 2. The 2014 commercial sector square footage totaled million square feet. Overall, the commercial square footage estimates used in the 2015 CPA are 1.11 million square feet higher compared with the 2013 CPA. Regional energy use intensity values (EUI) are often used to derive commercial sector square footage by segment if only energy consumption data is available. To establish square-footage using EUIs, annual kwh consumption by segment is divided by regional EUI data to produce square foot data. These figures are then benchmarked and adjusted to county building database figures. Since CPU provided square footage and energy consumption data, the EUI values shown in Table 2 were calculated based on the utility-provided data. Regional EUI values were used to benchmark building square footage for this assessment. Regional growth rates by building type were adjusted to match expected growth for the commercial rate class. The growth rates presented in Table 2 are net of commercial building demolition assumptions for CPU s service territory. Demolition rates are based on Council assumptions of -0.4% annually (varies by building segment). Table 2 Building Square Footage by Segment Segment Area (Square Feet) * EUI (kwh/sf)* Net Growth Rate Large Office 3,241, % Medium Office 5,185, % Small Office 11,603, % Big Box Retail 2,797, % Small Box Retail 6,113, % High End Retail 1,256, % Anchor 371, % K-12 Schools 13,151, % University 1,128, % Warehouse 11,048, % Supermarket 1,660, % Mini Mart 602, % Restaurant 1,588, % Lodging 4,412, % Hospital 2,065, % Other Health Facilities 3,613, % Assembly Hall 5,625, % Clark Public Utilities Conservation Potential Assessment 23

28 Table 2 Building Square Footage by Segment Other 4,807, % Total 80,274, % *Square footage and EUI data provided by CPU. Industrial The methodology for estimating industrial potential is different than approaches used for the residential and commercial sectors primarily because industrial energy efficiency opportunities are based on the distribution of electricity use among processes at industrial facilities. Industrial potential for this assessment was estimated based on the Council s top-down methodology that utilizes annual consumption by industrial segment and then disaggregates total electricity usage by process shares to create an end-use profile for each segment. Estimated measure savings are applied to each sector s process shares. Table 4 shows an example of an end-use profile for one industrial segment. CPU provided 2014 energy consumption for each of the 20 industrial segments shown in Table 3. The 2014 industrial load totaled 883,391 MWh. However, CPU expects to complete a project for an electric manufacturing customer in late 2015 or early 2016 which will save the customer an estimated 6 amw (52,560 MWh). Since it is expected that electrical manufacturing load will be 6 amw lower at the beginning of the 2015 CPA planning period, the estimated project savings have been removed from the MWh inputs for the electric manufacturing segment. The total adjusted load is 834,789. This figure is approximately 71,100 MWh lower compared with the 2013 CPA. Industrial sector consumption and growth rates by segment are shown in Table 3. Regional growth rates were revised based on current sector loads and estimated future growth. Table 3 Industrial Sector Load by Segment Annual Base Load MWh Annual Growth Rate (Regional Average ) Mechanical Pulp - 0.8% Kraft Pulp - 1.0% Paper 12, % Foundries 6, % Frozen Food 3, % Other Food 69, % Sugar 0-0.1% Lumber 10, % Panel 1, % Wood 15, % Electric Fabrication 438, % Silicon 2, % Metal Fabrication 43, % Equipment 1, % Cold Storage - 2.1% Clark Public Utilities Conservation Potential Assessment 24

29 Table 3 Industrial Sector Load by Segment Annual Base Load MWh Annual Growth Rate (Regional Average ) Fruit Storage - 2.2% Refinery % Chemical 114, % Miscellaneous Manufacturing 113, % Indoor Agriculture % Total 834, % A new industrial segment was added for CPU s 2015 CPA: indoor agriculture (marijuana grow operations). This segment is not part of the Council s standard 19 industrial subsectors included in the Sixth Power Plan, so end-use electricity profiles were created based on industry research and other Council analyses. Specifically, the Council has conducted surveys of marijuana grow operations in order to begin modeling energy usage at these facilities. 5 The Council s research indicates that electricity use in marijuana grow operations is distributed as shown in Figure 7. Figure 7 Indoor Agriculture Electricity End-Use Distribution Vent & Dehumid 30% Space Heating 5% AC 21% CO2 Inject. 2% Water Handling 3% 38% Drying 1% Table 4 shows the resulting end-use profile for indoor agriculture operations. Adjustments were made to measure applicability to account for the high probability of slow customer adoption of energy efficiency measures in this subsector. Slow adoption is expected since this is a new area for energy efficiency applications; and anecdotal evidence from the region 5 Northwest Power and Conservation Council. Impact of Cannabis Production in the Pacific Northwest on Regional Electricity Loads. September 9, Available online: Clark Public Utilities Conservation Potential Assessment 25

30 suggest indoor agriculture business owners can be difficult to reach and may be reluctant to adopt some of the measures. Since non-medical marijuana grow operations are illegal at the federal level, CPU is not permitted to use BPA funds to pay for energy efficiency incentives for indoor agriculture customers. Table 4 Process Shares Indoor Agriculture Segment Pumps 3% Drying and Curing 1% HVAC 51% 38% Other Process 7% All Electric 100% All Motors 44% CPU estimated near term indoor agriculture growth based on current licensed square footage and square footage for pending licenses. This assessment projects 5% annual load growth in the indoor agriculture segment for the next five years, and that no growth will occur in this segment for the remaining years of the planning period. This translates to a 1.23% annual growth rate, as shown in Table 3. Total estimated conservation potential for indoor agriculture facilities is amw over the study period. This translates to 9% savings from baseline consumption for the indoor agriculture segment. Distribution Efficiency (DEI) As discussed in CPU s 2013 CPA, the utility has conducted a significant amount of research and completed numerous upgrades to their distribution system. CPU participated in a Distribution System Efficiency and Voltage Optimization Scoping Study in 2010 to determine the availability of distribution system efficiency upgrades and optimization. Based on the findings from that report, total energy savings of 1,600 MWh per year were estimated for the three substations tested (0.82% reduction). For CPU s 2013 CPA, distribution efficiency potential was estimated in two ways: 1) multiplying the individual substation savings (0.06 amw) by the number of substations in CPU s service territory (55), and 2) multiplying the estimated savings as a percent of load (0.82%) by the total 2012 CPU load of amw. The two approaches provided similar results and CPU staff selected the percent savings approach (this method estimated the highest potential). For this analysis, EES developed an additional estimate of distribution system conservation potential using the Council s Seventh Plan approach. The Seventh Plan estimates distribution potential as a fraction of end system sales or 0.12 to 4.4 kwh per MWh depending on measure. For reference, the Sixth Power Plan estimated DEI savings as 1.7 to 8.1 kwh per MWh of system sales. CPU provided a total system load forecast for This forecast is consistent with the utility forecast submitted as part of CPU s most recent annual North American Electric Clark Public Utilities Conservation Potential Assessment 26

31 Reliability Corporation (NERC) reliability report. The forecast was escalated through the end of the planning period (2035) using the average annual growth rate from 2016 to 2024 (0.16%). The forecast was then adjusted for line loss using CPU s 2013 total system losses (3.6%). The results of CPU s end system load forecast are shown in Figure 8, and distribution system conservation is discussed in detail in the next section. Clark Public Utilities Conservation Potential Assessment 27

32 amw Figure 8 20-Year End System Load Forecast Clark Public Utilities Conservation Potential Assessment 28

33 amw Results Energy Savings and Costs Technical Achievable Conservation Potential Technical achievable potential is the amount of energy efficiency potential that is available regardless of cost. It represents the theoretical maximum amount of achievable energy efficiency savings. Figure 9, below, shows a supply curve of 20-year, technically achievable potential. The supply curve is developed by plotting energy efficiency savings potential (amw) against the levelized cost of the savings. The technical potential shown in Figure 8 has not been screened for cost effectiveness. Costs are standardized (levelized), allowing for the comparison of measures with different lives. The supply curve facilitates comparison of demand-side resources to supply-side resources and is often used in conjunction with integrated resource plans (IRPs). Figure 9 shows that approximately 63 amw of potential is available for less than $30/MWh and approximately 79 amw is available for under $80/MWh. Total technical achievable potential for CPU is approximately 99 amw over the 20-year study period. Figure 9 20-Year Technical-Achievable Potential Supply Curve <10 <20 <30 <40 <50 <60 <80 <90 <100 <110 < Levelized $/MWH Clark Public Utilities Conservation Potential Assessment 29

34 amw Economic Achievable Conservation Potential Economic potential is the amount of potential that passes the Total Resource Cost (TRC) test. This means that the present value of the benefits exceeds the present value of the measure costs over its lifetime. Table 5 shows amw of economically achievable potential by sector in 2, 5, 10 and 20-year increments. Annual potential estimates by sector are included in Appendix VII (p. 77). Compared with the technical and achievable potential, it shows that amw of the total amw is cost effective for CPU. The last section of this report discusses how these values could be used for setting targets. Table 5 Cost-Effective Achievable Potential (amw) 2 Year 5 Year 10 Year 20 Year Industrial Distribution Efficiency TOTAL Sector Summary Figure 10 shows achievable potential by sector on an annual basis Figure 10 Annual Achievable Potential by Sector Industrial Distribution Efficiency Clark Public Utilities Conservation Potential Assessment 30

35 amw Over half of the potential, on an annual basis, is in the residential sector, followed by substantial savings potential in the commercial sector. The industrial sector potential is significant as well due largely to end-use savings distribution work by the RTF. Ramp rates from the Seventh Power Plan are used to establish reasonable annual conservation achievement levels. Achievement levels are affected by factors including timing and availability of measure installation (lost opportunity), program (technological) maturity, non-programmatic savings, and current utility staffing and funding. conservation potential is substantially lower compared with previous assessments. Savings were reduced for many measures due to baseline changes and savings recalibration and analysis from the RTF and Council. In particular, residential weatherization measure savings and heat pump water heater savings have been significantly reduced. Figure 11 shows the distribution of annual residential potential across measure end uses for the first ten years of the planning period. measures account for a significant fraction of conservation potential in the residential sector. lighting measures have been replaced due to lighting standards that took effect over the past two years. Whereas previous residential lighting measure sets included CFL measures, the new measure set is designed solely around LED lighting. Incremental savings for residential lighting measures are considerably higher compared with previous lighting measures. Consumer electronics is another area with significant conservation potential. Though savings have been reduced for some residential consumer electronics measures, overall savings for consumer electronics have increased, due to the addition of cost-effective advanced power strip measures. Figure 11 Annual Potential by End-Use Cooling Envelope New Appliances Consumer Electronics Water Heat Envelope Retro HP / DHP Clark Public Utilities Conservation Potential Assessment 31

36 amw lighting measures remain one of the largest contributors to commercial conservation potential, though savings have been significantly reduced since CPU s previous CPA (Figure 12). HVAC control measures make up a substantial part of commercial conservation potential for this assessment period, due largely to new savings estimates for advanced rooftop controller measures. Conservation potential for refrigeration measures remains strong although commercial refrigeration potential has been reduced somewhat compared to previous assessments. RTF changes to deemed refrigeration measures prompted numerous revisions and expirations. Packaged refrigeration measures were removed and grocery refrigeration bundle measures were revised. New measures for water cooler controls were added to refrigeration. Another notable area for this assessment is savings due to commercial ductless heat pump measures. This is a new measure bundle with notable cost-effective savings. As shown in Figure 12, the custom nature of commercial building energy efficiency improvements is reflected in the wide variety of end-uses and corresponding measures. Figure 12 Annual Potential by End-Use Compressed Air Motors HP / DHP Water Heat Street/Roadway Chillers Food Preparation Ventilation Envelope Ext Refrigeration HVAC Controls PC Network/Supply Industrial Industrial conservation potential has been significantly impacted by end-use savings distribution work completed by the RTF. CPU has achieved notable savings from industrial conservation projects since the previous assessment which reduces available industrial potential over the planning period. Clark Public Utilities Conservation Potential Assessment 32

37 amw Over half of the industrial sector conservation potential is due to electronic manufacturing processes (Figure 13). This corresponds to the distribution of industrial sector load across the industry loads, since the electric fabrication segment is expected to account for approximately half of CPU s industrial sector load in Industrial lighting measures also account for a notable share of sector savings. measures are widely applicable across many of the industrial segments. Conservation potential for municipal wastewater treatment plants is included in Figure 13. Savings estimates for these measures are based on equipment upgrades and modifications to operations/processes and facilities. Adding end-use savings across the industry segments results in total industrial sector potential. Figure 13 Annual Industrial Potential by End-Use Refrigerated Storage Water Supply & Wastewater Pumps Process: Wood Mfg Process: Paper Mfg Process: General Process: Electronic Mfg Motors Fans Compressed Air Distribution Efficiency Distribution system energy efficiency measures regulate voltage and upgrade systems to improve the efficiency of utility distribution systems and reduce line losses. Table 6 shows two methods for estimating distribution system potential for this analysis. For CPU s 2013 assessment, the utility chose to estimate distribution potential using a percent savings. As previously described, this approach estimated savings for three of CPU s substations which were analyzed as part of a region-wide distribution system efficiency and voltage optimization study. This method was utilized again for estimating distribution system conservation potential for the planning period using CPU s updated load forecast. The results of this method are shown in the column on the right in Table 5. Clark Public Utilities Conservation Potential Assessment 33

38 amw Distribution system potential was also estimated using the Council s methodology. The Seventh Plan estimates distribution system potential based on end system energy sales. The results of the Council methodology approach are shown on the left side of Table 6. Table 6 Distribution Efficiency 20-Year Cost-Effective Achievable Potential End-System Sales Method Percent Savings Method amw (2016 estimated total system load) 0.82 % savings (based on 3 substations) 3.60% line loss amw (2016 estimated total system load) amw (2016 estimated end-system sales) 85% achievability 10% recent accomplishment 10% recent accomplishment 3.73 amw 2.83 amw Distribution system conservation potential for the end-system sales method is shown in Figure 14. The cost estimates for distribution system potential shown in Table 7, in the next section, are also based on the end-system sales method Figure 14 Annual Distribution System Efficiency Potential Major system improvements Minor system improvements Reduce system voltage Cost Budget costs can be estimated at a high level based on the incremental cost of the measures (Table 7). The assumptions used to estimate utility costs to acquire the conservation potential presented in this report include: 20% of measure capital cost for administrative expenditures and 35% of the incremental cost for incentives is assumed to be paid by the utility. A 20% allocation of measure costs to administrative expenses is a standard assumption for utility conservation programs. This figure was used in the Council s analysis for the Sixth Power Plan. The figures shown in Table 7 are calculated using a 35% utility-share assumption. Both the Clark Public Utilities Conservation Potential Assessment 34

39 administrative cost allocation and the utility share assumptions are consistent with assumptions used in CPU s 2013 CPA. Table 7 Cost for Economic Achievable Conservation Potential Utility First Year Cost ($2016) 2 Year 5 Year 10 Year 20 Year $11,349,600 $29,896,500 $57,578,400 $110,090,300 $3,609,900 $9,665,000 $18,441,200 $28,138,200 Industrial $1,747,400 $4,343,400 $7,237,900 $9,223,300 Distribution Efficiency $104,100 $454,000 $1,417,300 $3,865,100 TOTAL $16,811,000 $44,358,900 $84,674,800 $151,316,900 Total ($/MWh, first year) $248 $248 $247 $252 This chart shows that CPU can expect to spend approximately $16.8 million to acquire estimated savings over the next two years. The bottom row of Table 7 shows the cost per MWh of first-year savings. The cost estimates presented in this report are conservative estimates for future expenditures since they are based on historic values. Future conservation achievement may be more costly than historic conservation achievement since utilities often choose to implement the lowest cost programs first. In addition, as energy efficiency markets become more saturated, it may require more effort from CPU to acquire conservation through its programs. The additional effort may result in increased administrative costs. Cost Scenarios To provide a range of program costs over the planning period, EES tested a Low and a High cost scenario relative to the Base Case conservation potential scenario. For the Low scenario, the utility share of measure capital cost is reduced to 30 percent. A situation where the utility is responsible for a lower share of measure capital cost may result from higher conservation achievement through programs for which the customer is responsible for a higher fraction of measure cost. An example of this scenario would be if more conservation were achieved through commercial or industrial custom projects where lower incentives may be required to gain customer participation. For the High Cost scenario, administrative costs were increased to 30 percent (compared with 20 percent in the Base Case). The High Cost scenario reflects the case where program administration costs may increase in order for CPU to connect with hard-to-reach customers. Table 8 shows 2, 5, 10 and 20-year program costs for the Expected (Base Case), High and Low cost scenarios. Table 9 shows the cost per megawatt hour (first year savings) for each of the cost scenarios. Clark Public Utilities Conservation Potential Assessment 35

40 Table 8 Cost Scenarios for Base Case Economic Achievable Conservation Potential, $2016 Utility First Year Cost 2 Year 5 Year 10 Year 20 Year Expected Case $16,811,000 $44,358,900 $84,674,800 $151,316,900 Low Cost Case $15,282,600 $40,326,400 $76,977,000 $137,560,900 High Cost Case $19,867,400 $52,424,200 $100,070,100 $178,829,100 Table 9 Cost per MWh Savings (First Year) for Base Case Economic Achievable Conservation Potential, $2016 Utility First Year Cost 2 Year 5 Year 10 Year 20 Year Expected Case $248 $248 $247 $252 Low Cost Case $225 $226 $224 $230 High Cost Case $293 $293 $292 $298 Table 9 costs are again presented as dollars per first year savings (MWh). These units do not consider the savings over the life of a measure, but they do provide an indication of the costs CPU could expect to acquire conservation going forward. Over the next two years, conservation programs are expected to cost between $225 and $293/MWh (first year savings). Overall, CPU can expect the biennium potential estimates presented in this report to cost between $15.3 and $19.9 million for utility incentives and administrative expenditures. Clark Public Utilities Conservation Potential Assessment 36

41 Scenarios The costs and savings discussed throughout the majority of this report describe the Base Case scenario. Under this scenario, annual potential for the planning period was estimated by applying the Council s 20-year ramp rates to each measure and then adjusting the 20-year savings shape to accelerate potential in the first 10 years of the plan to more closely reflect CPU s recent historic conservation achievement. The two-year target is lower than CPU s recent achievement; however, CPU s recent achievement is based on deemed measure savings values that are higher compared with the updated deemed savings values (those used in this study). For reference, some of the key parameters of the Base Case are listed below. Base Case Base market price forecast growth = 1.4% growth = 1.2% Industrial growth = 0.6% Population growth = 1.1% 6 Risk-mitigation credit = $32.46/MWh Lost Opportunity; $22.72/MWh Retrofit Regional Conservation Act credit = 10% Local system distribution credit = $31/kW-yr Bulk system transmission and distribution credit = $23.14/kW-yr Discount Rate = 4% Scenarios Three additional scenarios were developed to identify a range of possible outcomes and to account for uncertainties over the planning period. In addition to the Base Case scenario, this assessment tested a Low scenario and an Accelerated Base Case scenario. The Low scenario is relative to the Base Case. Additional details about each of the scenarios are described in the following subsections. 6 Office of Financial Management. (2012). Washington State Growth Management Population Projections for Counties: 2010 to [Data files]. Retrieved from: Clark Public Utilities Conservation Potential Assessment 37

42 Low Scenario The Low conservation scenario evaluates conservation potential under conditions that reduce CPU s exposure to market price volatility. For this scenario, the risk credits are reduced to $0/MWh. A situation in which CPU has risk of exposure to market prices may arise from the acquisition of less expensive resources to meet average energy and peak load requirements. All other assumptions for the Low scenario are the same as assumptions used in the Base Case scenario. Results of the Low scenario analysis are shown in Table 10. Under this scenario, amw of technically-achievable potential is available over the 20-year planning period. Key parameters for the Low scenario include: Base market price forecast Base Case growth assumptions Risk-mitigation credits = $0/MWh Table 10 Cost-Effective Achievable Potential Low Scenario (amw) 2 Year 5 Year 10 Year 20 Year Industrial Distribution Efficiency TOTAL Accelerated Base Scenario The Accelerated Base scenario represents a case where CPU is able to very quickly ramp up program savings, or savings from NEEA initiatives are realized sooner than expected. This scenario is modeled with more aggressive ramp rates in the first 10 years of the planning period, beyond what is presented in the Base Case; therefore, savings during the last 10 years of the planning period are reduced. Aside from adjusted ramp rates, the assumptions for the Accelerated scenario are identical to the Base Case. The Accelerated Base 2-year potential is approximately 77% higher compared with the Base Case 2-year potential (Table 11). Table 11 Cost-Effective Achievable Potential Accelerated Base Scenario (amw) 2 Year 5 Year 10 Year 20 Year Industrial Distribution Efficiency TOTAL Clark Public Utilities Conservation Potential Assessment 38

43 amw Scenario Summary The 2, 5 and 10 and 20-year savings estimates for the three scenarios tested in this analysis are shown in Table 12, and Figure 12 graphs the Base Case, Low Case, and Accelerated scenarios. Figure 15 also shows the Base Case potential from CPU s 2013 CPA, which is provided for reference. Potential is graphed for program years 1 to 20 to provide a better comparison between the 2013 and 2015 potential estimates. Table 12 Cost-Effective Achievable Potential Scenario Comparison (amw) 2 Year 5 Year 10 Year 20 Year Base Case Accelerated Base Low Scenario Figure 15 CPU Conservation Scenarios Annual Potential (amw) Program Year 2015 Base Case 2013 Base Case Accelerated Base Low Scenario Figure 15 shows that the Low scenario is lower on an annual basis compared with the Base Case scenario and the potential is approximately 30% lower over the planning period. This decrease is due to the difference between the number of measures that were cost-effective with the inclusion of risk credits in the avoided cost and the lower number of measures that were cost effective without risk credits. The Accelerated scenario may be an achievable scenario for CPU, since the 2-year potential is lower than the utility s historic annual conservation achievement. However, continuing to achieve similar levels of conservation would likely require that CPU continue to receive credit Clark Public Utilities Conservation Potential Assessment 39

44 for the same level of NEEA savings. In addition, decreases in deemed measure savings for residential weatherization will make it more difficult to maintain the utility s historic achievement level going forward. Clark Public Utilities Conservation Potential Assessment 40

45 amw Savings Shape Results Energy efficiency is typically reported on an annual basis (kwh, MWh, or amw). However, savings occur throughout the day and year at different levels. Annual savings for each measure are distributed to the applicable load segments for each month, based on the load shape affected by the measure. The measure load shapes are also used to estimate the value of the measure, based on projected time-differentiated savings. Load segments and load shapes used in this analysis can be found in the Mid-C and Load Shape file. Figures 16 and 17 show total monthly energy savings by sector for the 20-year planning period. Figure 16 shows heavy load hour (HLH) savings and Figure 17 shows savings during light load hour (LLH) time periods. As would be expected, the savings are higher during the winter months. However, the winter savings are not as pronounced as winter savings estimates from previous assessments. The difference can be attributed to several factors: 1) total residential savings are substantially lower compared with previous assessments, 2) measure savings for residential weatherization measures, which have historically accounted for a significant portion of winter energy conservation, have been substantially reduced, and 3) commercial and industrial savings, which are more consistent on a monthly basis, have increased. The result of these changes is a seasonal load shape that is flatter compared with the overall shape presented in the 2013 CPA. Another factor affecting the 2015 CPA load savings shape is the introduction of cost-effective commercial heat pump measures, which provide savings in both winter and summer months. Figure 16 CPU Monthly Energy Efficiency Savings, HLH DEI Industrial - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Clark Public Utilities Conservation Potential Assessment 41

46 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 Jul-23 Jan-24 Jul-24 Jan-25 Jul-25 MWh, Cumulative amw Figure 17 CPU Monthly Energy Efficiency Savings, LLH DEI Industrial - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Figure 18 shows the cumulative heavy load hour monthly energy savings over the first 10-years of the planning period. Figure 18 CPU Monthly Energy Efficiency Savings, HLH, Cumulative 30,000 25,000 20,000 15,000 10,000 5,000 Industrial DEI TOTAL 0 As would be expected, energy efficiency savings shapes are similar to the electric utility load shapes from a seasonal perspective. Clark Public Utilities Conservation Potential Assessment 42

47 MW Peak Savings To estimate demand savings for this assessment, utility-specific load and coincidence factors by class (residential, commercial, etc.) were applied to cumulative monthly energy savings. The load and coincidence factors are consistent with the factors used in CPU s 2014 Cost of Service Analysis (COSA) and are provided for reference in Appendix V (p. 67). This section presents summer and winter peak savings, coincident with CPU s system. Figure 19 shows cumulative winter and summer peak demand savings over the planning period. 7 Figure 19 Annual Peak Savings, Cumulative (MW) Winter Peak Summer Peak Figure 20 shows monthly cumulative peak demand savings for the 20-year planning period. 7 CPU s annual winter peak is in January and the summer peak is in August. Clark Public Utilities Conservation Potential Assessment 43

48 MW Figure 20 Monthly Peak Savings, Cumulative (MW) DEI Industrial - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec The monthly demand savings profile shown in Figure 20 is similar to the energy savings profile. Figure 20 shows that demand savings are highest in December and are lower during the summer months. Table 13 shows cumulative annual energy savings and peak summer and winter demand savings for the 20-year planning period. The costs shown in Table 13 are annual, incremental utility costs (administrative expenditures and incentive costs). The costs were modeled with Base Case utility program assumptions. Clark Public Utilities Conservation Potential Assessment 44

49 Year Table 13 Cumulative Peak Savings with Associated Energy Savings and Costs Cost Energy Savings (amw) Peak Savings (MW) Winter Summer Peak Peak 2016 $8,187, $8,623, $8,916, $9,231, $9,399, $9,053, $8,568, $8,128, $7,571, $6,993, $6,804, $6,764, $6,721, $6,688, $6,663, $6,646, $6,588, $6,588, $6,588, $6,588, The 20-year cumulative peak demand savings estimates for this assessment are MW during CPU s winter peak and MW during the summer peak. For reasons previously described, the 2015 CPA peak demand savings estimates are lower compared with previous assessments. Clark Public Utilities Conservation Potential Assessment 45

50 Summary This report summarizes the results of the 2015 CPA conducted for Clark Public Utilities. The assessment provides estimates of energy savings by sector for the period 2016 to 2035 with a focus on the first 10 years of the planning period, as required by the EIA. The assessment considered a wide range of conservation resources that are reliable, available, and cost effective within the 20-year planning period. Market conditions that include codes and standards changes, lower electricity market prices, and recent high achievements by CPU resulted in an assessment with lower potential compared with the prior assessment conducted in However, the 10 and 20-year potential for energy efficiency remain strong and energy efficiency is expected to remain an integral part of the CPU resource portfolio. Conservation remains the lowest cost and lowest risk resource and will serve to keep future electricity costs to a minimum. Methodology and Compliance with State Mandates The energy efficiency potential reported in this document is calculated using methodology consistent with the Council s methodology for assessing conservation resources. Appendix III (p. 54) lists each requirement and describes how each item was completed. In addition to using methodology consistent with the Council s Sixth Power Plan, this assessment utilized many of the measure assumptions that the Council developed for the Sixth and Seventh Regional Power Plans. Utility-specific data regarding customer characteristics, service-area composition, and historic conservation achievements were used, in conjunction with the measures identified by the Council, to determine available energy-efficiency potential. Conservation potential was assessed for multiple periods: 2 years, 5 years, 10 years, and 20 years. This close connection with the Council methodology enables compliance with the Washington EIA. Three types of energy-efficiency potential were calculated: technical, economic, and achievable. Most of the results shown in this report are the achievable potential, or the potential that is economically achievable in the CPU service territory. The economic and achievable potential considers savings that will be captured through utility program efforts, market transformation and implementation of codes and standards. Often, realization of full savings from a technology, particularly a new or emerging technology, will require efforts across all three areas. Historic efforts to measure the savings from codes and standards have been limited, but regional efforts to identify and track savings are increasing as they become an important component of the efforts to meet aggressive regional conservation targets. Clark Public Utilities Conservation Potential Assessment 46

51 Conservation Targets The EIA states that utilities must establish a biennial target that is no lower than the qualifying utility s pro rata share for that two year period of its cost-effective conservation potential for the subsequent ten-year period. 8 However, the State Auditor s Office has stated that: The term pro-rata can be defined as equal portions but it can also be defined as a proportion of an exactly calculable factor. For the purposes of the Energy Independence Act, a pro-rata share could be interpreted as an even 20 percent of a utility s 10 year assessment but state law does not require an even 20 percent. 9 The State Auditor s Office expects that qualifying utilities have analysis to support targets that are more or less than the 20 percent of the ten year assessments. This document serves as support for the target selected by Clark Public Utilities and approved by its Commission. Summary This study shows a range of conservation target scenarios. These scenarios are estimates based on the set of assumptions detailed in this report and supporting documentation and models. Due to the uncertainties discussed in the Introduction section of this report, actual available and cost-effective conservation may vary from the estimates provided in this report. 8 RCW Energy conservation and renewable energy targets. 9 State Auditor s Office. Energy Independence Act Criteria Analysis. Pro-Rata Definition. CA No Clark Public Utilities Conservation Potential Assessment 47

52 References Ecotope Inc Building Stock Assessment: Single-Family Characteristics and Energy Use. Seattle, WA: Northwest Energy Efficiency Alliance. Ecotope Inc Building Stock Assessment: Manufactured Home Characteristics and Energy Use. Seattle, WA: Northwest Energy Efficiency Alliance. Ecotope Inc Building Stock Assessment: Multi-Family Characteristics and Energy Use. Seattle, WA: Northwest Energy Efficiency Alliance. Navigant Consulting Northwest Building Stock Assessment: Final Report. Portland, OR: Northwest Energy Efficiency Alliance. Northwest Power and Conservation Council. Achievable Savings: A Retrospective Look at the Northwest Power and Conservation Council s Conservation Planning Assumptions. August Retrieved from: Northwest Power and Conservation Council. 7 th Power Plan Technical Information and Data. April 13, Retrieved from: Northwest Power and Conservation Council. 6 th Power Plan Supply Curve Files. December 10, Retrieved from: Northwest Power and Conservation Council. Sixth Northwest Conservation and Electric Power Plan. Feb Retrieved from: Northwest Power and Conservation Council. Northwest Industrial Supply Curve. January 14th, Retrieved from: w%20r4.pdf Northwest Power and Conservation Council. System Optimization Measures Guide. January 14th, Retrieved from: Plan%20Optimization%20Overview%20R8.pdf Office of Financial Management. (2012). Washington State Growth Management Population Projections for Counties: 2010 to [Data files]. Retrieved from: Clark Public Utilities Conservation Potential Assessment 48

53 State Auditor s Office. Energy Independence Act Criteria Analysis. Pro-Rata Definition. CA No Retrieved from: Washington State Energy Code, Wash. (2012) Washington State Legislature. RCW Energy conservation and renewable energy targets. Retrieved from: Clark Public Utilities Conservation Potential Assessment 49

54 Appendix I Acronyms amw Average Megawatt BPA Bonneville Power Administration CFL Compact Fluorescent Light Bulb CPU Clark Public Utilities EIA Energy Independence Act HLH Heavy load hour energy HVAC Heating, ventilation and air-conditioning kw kilowatt kwh kilowatt-hour LED Light-emitting diode LLH Light load hour energy MF Multi-Family MH Manufactured House MW Megawatt MWh Megawatt-hour NEEA Northwest Energy Efficiency Alliance NPV Net Present Value O&M Operation and Maintenance RPS Renewable Portfolio Standard UC Utility Cost Clark Public Utilities Conservation Potential Assessment 50

55 Appendix II Glossary 6 th Power Plan: Sixth Northwest Conservation and Electric Power Plan, Feb A regional resource plan produced by the Northwest Power and Conservation Council (Council). Average Megawatt (amw): Average hourly usage of electricity, as measured in megawatts, across all hours of a given day, month or year. Avoided Cost: Refers to the cost of the next best alternative. For conservation, avoided costs are usually market prices. Achievable Potential: Conservation potential that takes into account how many measures will actually be implemented. For lost-opportunity measures, there is only a certain % of expired units or new construction for a specified time frame. The Council uses 85 and 65 % achievability rates for retrofit and lost-opportunity measure respectively. Sometimes achievable potential is a % of economic potential, and sometimes achievable potential is defined as a % of technical potential. Conservation Calculator: Refers to Excel program developed by the Council which calculates conservation potential for Northwest utilities based on their share of the regional load. Cost Effective: A conservation measure is cost effective if its present-value benefits are greater than its present-value costs. The primary test is the Total Resource Cost test (TRC), in other words, the present value of all benefits is equal to or greater than the present value of all costs. Benefits and costs are for society as whole. CTED (Department of Community Trade and Economic Development): CTED Energy Policy Division helps deliver an economically and environmentally sound energy future to the State of Washington and its citizens. The department provides information, analysis and support and assists in developing energy policies and programs. Economic Potential: Conservation potential that considers the cost and benefits and passes a cost-effectiveness test. Levelized Cost: Resource costs are compared on a levelized-cost basis. Levelized cost is a measure of resource costs over the lifetime of the resource. Evaluating costs with consideration of the resource life standardizes costs and allows for a straight comparison. Lost Opportunity: Lost-opportunity measures are those that are installed as new construction or at the end of the life of the unit. Examples include weatherization, heat-pump upgrades, appliances, or premium HVAC in commercial buildings. MW (megawatt): 1,000 kilowatts of electricity. The generating capacity of utility plants is expressed in megawatts. Non-Lost Opportunity: Measures that can be acquired at any time, such installing low-flow shower heads. Clark Public Utilities Conservation Potential Assessment 51

56 Northwest Energy Efficiency Alliance (NEEA): The alliance is a unique partnership among the Northwest region's utilities, with the mission to drive the development and adoption of energyefficient products and services. Northwest Power and Conservation Council The Council : The Council develops and maintains a regional power plan and a fish and wildlife program to balance the Northwest's environment and energy needs. Their three tasks are to: develop a 20-year electric power plan that will guarantee adequate and reliable energy at the lowest economic and environmental cost to the Northwest; develop a program to protect and rebuild fish and wildlife populations affected by hydropower development in the Columbia River Basin; and educate and involve the public in the Council s decision-making processes. Regional Technical Forum (RTF): The Regional Technical Forum (RTF) is an advisory committee established in 1999 to develop standards to verify and evaluate conservation savings. Members are appointed by the Council and include individuals experienced in conservation program planning, implementation and evaluation. Renewable Portfolio Standards: Washington state utilities with more than 25,000 customers are required to meet defined %ages of their load with eligible renewable resources by 2012, 2016, and Retrofit (discretionary): Retrofit measures are those that are replaced at any time during the unit s life. Examples include lighting, shower heads, pre-rinse spray heads, or refrigerator decommissioning. Technical Potential: Technical potential includes all conservation potential, regardless of cost or achievability. Technical potential is conservation that is technically feasible. Total Resource Cost Test (TRC): This test is used by the Council and nationally to determine whether or not conservation measures are cost effective. A measure passes the TRC if the present value of all benefits (no matter who receives them) over the present value of all costs (no matter who incurs them) is equal to or greater than one. Clark Public Utilities Conservation Potential Assessment 52

57 Appendix III Documenting Conservation Targets References: 1) Report Clark Public Utilities 2015 Conservation Potential Assessment. Draft Report September 23, ) Model Clark CPA Base.xlsm and supporting files a. MC_and_Loadshape_Clark Base.xlsm referred to as MC file contains price and load shape data WAC Documenting Development of Conservation Targets; Utility Analysis Option NWPCC Methodology EES Consulting Procedure Reference a) Analyze a broad range of energy efficiency measures considered technically feasible. b) Perform life-cycle cost analysis of measures or programs, including the incremental savings and incremental costs of measures and replacement measures where resources or measures have different measure lifetimes. c) Set avoided costs equal to a forecast of regional market prices, which represents the cost of the next increment of available and reliable power supply available to the utility for the life of the energy efficiency measures to which it is compared. d) Calculate the value of the energy saved based on when it is saved. In performing this calculation, use time differentiated avoided costs to conduct the analysis that determines the financial value of energy saved through conservation. All of the Council's current energy efficiency measures (Sixth and Seventh Plan measures) were evaluated to determine which had greater benefits than costs. The life-cycle cost analysis was performed using the Council s ProCost model. Incremental costs, savings, and lifetimes for each measure were the basis for this analysis. The Council and RTF assumptions were utilized. A regional market price forecast for the planning period was created and provided by CPU consistent with their IRP. The Council's Sixth Plan default measure load shapes were used to calculate time of day usage and measure values were weighted based upon peak and off-peak pricing. This was handled using the Council s ProCost program so it was handled in the same way as the Sixth Power Plan models. Model All Measures worksheet Model supporting files include all of the ProCost files used in the Sixth Plan. The life-cycle cost calculations/methods are identical to those used by the council. Report See Figure 3 and associated discussion. Also see Appendix IV. Model See MC File ( Clark Base worksheet). Model See MC file for load shapes. The ProCost files handle the calculations. Clark Public Utilities Conservation Potential Assessment 53

58 WAC Documenting Development of Conservation Targets; Utility Analysis Option NWPCC Methodology EES Consulting Procedure Reference e) Conduct a total resource cost analysis that assesses all costs and all benefits of conservation measures regardless of who pays the costs or receives the benefits. The NWPCC identifies conservation measures that pass the total resource cost test as economically achievable. f) Identify conservation measures that pass the total resource cost test, by having a benefit/cost ratio of one or greater as economically achievable. g) Include the increase or decrease in annual or periodic operations and maintenance costs due to conservation measures. h) Include deferred capacity expansion benefits for transmission and distribution systems in its cost-effectiveness analysis. i) Include all nonpower benefits that a resource or measure may provide that can be quantified and monetized. Cost analysis was conducted according to the Council's methodology. Capital cost, administrative cost, annual O&M cost and periodic replacement costs were all considered on the cost side. Energy, non-energy, O&M and all other quantifiable benefits were included on the benefits side. The Total Resource Cost (TRC) benefit cost ratio was used to screen measures for cost-effectiveness (I.e., those greater than 1 are costeffective). Benefits and costs were evaluated using multiple inputs; benefit was then divided by cost. Measures achieving a BC ratio of >=1 were tallied. These measures are considered achievable and costeffective (or economically achievable ). Operations and maintenance costs for each measure were accounted for in the total resource cost according to the Council's assumptions. Deferred capacity expansion benefits were given a benefit of $31/kW-yr for local and $23.14/kW for bulk transmission in the costeffectiveness analysis. This is the same assumption used by the Council in the development of the Seventh Power Plan. Quantifiable non-energy benefits were included where appropriate. Assumptions for non-energy benefits are the same as in the Councils Sixth/Seventh Power Plan. Nonenergy benefits include, for example, water savings from clothes washers. Model the Clark Public Utilities CPA main file pulls in all of the results, including the BC ratios. However, the TRC analysis is done at the lowest level of the model in the ProCost files. Model BC Ratios are calculated at the ProCost level and passed up to the sector and total levels of the model. Model the ProCost files contain the same assumptions for periodic O&M as the Council and RTF. Model this value can be found on the ProData page of each ProCost file. Model the ProCost files contain the same assumptions for nonpower benefits as the Council and RTF. The calculations are handled in exactly the same way. Clark Public Utilities Conservation Potential Assessment 54

59 WAC Documenting Development of Conservation Targets; Utility Analysis Option NWPCC Methodology EES Consulting Procedure Reference j) Include an estimate of program administrative costs. k) Discount future costs and benefits at a discount rate based on a weighted, after-tax, cost of capital for utilities and their customers for the measure lifetime. l) Include estimates of the achievable customer conservation penetration rates for retrofit measures and for lost-opportunity (long-lived) measures. The NWPCC's twenty-year achievable penetration rates, for use when a utility assesses its twenty-year potential, are eighty-five % for retrofit measures and sixty-five % for lost opportunity measures achieved through a mix of utility programs and local, state and federal codes and standards. The NWPCC's tenyear achievable penetration rates, for use when a utility assesses its ten-year potential, are sixty-four % for nonlost opportunity measures and twenty-three % for lostopportunity measures; the weighted average of the two is a forty-six % ten-year achievable penetration rate m) Include a ten % bonus for conservation measures as defined in 16 U.S.C. 839a of the Pacific Northwest Electric Power Planning and Conservation Act. Total costs were tabulated and an estimated 20% of total was assigned as the administrative cost. This value is consistent with regional average and BPA programs. The 20% value was used in the Fifth, Sixth, and Seventh Power plans. Discount rates were applied to each measure based upon the Council's methodology. Real discount rate = 4%, based on the Council s most recent analyses. The assessment conducted for CPU was for the 20-year planning period, thus 85% for retrofit measures and 65% for lost opportunity measures were used to determine potential. A 10% bonus was added to all measures in the model parameters per the Conservation Act. Model this value can be found on the ProData page of each ProCost file. Model this value can be found on the ProData page of each ProCost file. Model these factors can be found on some of the hidden worksheets in the main model (e.g., Applicability Table DHW Light ). These tables show the 85% value and how it is applied to the number of units. For the commercial sector, these applicability values can be found in the SC worksheets of the ProCost files. Model this value can be found on the ProData page of each ProCost file. Clark Public Utilities Conservation Potential Assessment 55

60 WAC Documenting Development of Conservation Targets; Utility Analysis Option NWPCC Methodology EES Consulting Procedure Reference n) Analyze the results of multiple scenarios. This includes testing scenarios that accelerate the rate of conservation acquisition in the earlier years. o) Analyze the costs of estimated future environmental externalities in the multiple scenarios that estimate costs and risks. Accelerated, low, and high scenarios were run and plotted next to the base-case scenario. Ramp rates were also utilized to adjust for CPU s programs. The avoided cost data include estimates of future high, medium, and low CO 2 costs. Report see Scenario Results section and Figure 20. Model there is a separate model for each scenario. In addition, there is an Accelerated Base model that further accelerates the ramp rates of the base case in the early years. Multiple scenarios were analyzed and these scenarios include different levels of estimated costs and risk. Clark Public Utilities Conservation Potential Assessment 56

61 Appendix IV Avoided Cost and Risk Exposure EES Consulting (EES) has conducted Conservation Potential Assessment (CPA) for Clark Public Utilities (CPU) for the period 2016 through 2035 as required under RCW and WAC According to WAC , CPU must evaluate the cost-effectiveness of conservation by setting avoided costs equal to a forecast of regional market prices. For the purposes of the 2015 CPA, EES has prepared a forecast of market prices for the Mid-Columbia trading hub. This appendix summarizes the methodology and results of the market price forecast and compares the forecast to the market forecast used for CPU s 2013 CPA (2014/15 biennium). Methodology For the period January 2016 through December 2021 projected monthly on- and off-peak market prices were provided by CPU s scheduling agent. CPU s scheduling agent provides CPU with forward price projections on a daily basis. The forward market prices upon which the avoided costs are based were provided March 24, The forward market prices include an average annual escalation rate of market prices is 7.9 % over the 6-year period 2016 through For the period January 2022 through December 2035, EES calculated projected market prices using the methodology described below. Merchant natural gas-fired power plants operate on the margin in the Northwest. As the market price of electricity is usually set by the cost of the marginal unit, EESC developed the market price forecast using a forecast of natural gas prices and projected market-implied heat rates or sparks spread. The projected market-implied heat rates reflect the average efficiency of gas-fired power plants in the Pacific Northwest. Projections are based on historic marketimplied heat rates which are calculated by dividing historic Mid-Columbia (Mid-C) wholesale market prices by historic Sumas natural gas prices. EESC developed a natural gas price forecast based on NYMEX forward gas prices for the Henry Hub trading hub, Sumas basis differentials, and projected market heat rates. The following steps were taken to produce the wholesale electric load forecast for the 2015 CPA: 1. Forward prices for natural gas at Henry Hub are available through February A 2.5 % annual growth rate is assumed after February The Sumas basis differential is used to adjust the Henry Hub forward prices to Northwest prices. Sumas forward gas prices are equal to NYMEX forward prices (Henry Hub) plus the Sumas basis. The Sumas basis forward curve is available through December The monthly basis for Sumas is held constant after December Clark Public Utilities Conservation Potential Assessment 57

62 Jan-16 Dec-16 Nov-17 Oct-18 Sep-19 Aug-20 Jul-21 Jun-22 May-23 Apr-24 Mar-25 Feb-26 Jan-27 Dec-27 Nov-28 Oct-29 Sep-30 Aug-31 Jul-32 Jun-33 May-34 Apr-35 $2015/MWh 3. Projected monthly market-implied heat rates are applied to the Sumas forward gas price forecast to result in a forecast of Mid-C prices. Or, Mid-C prices are equal to Sumas forward prices multiplied by forecast heat rates. 4. Projected heat rates are based on historic heat rates (Mid-C wholesale electricity prices divided by Sumas natural gas prices). 5. Monthly market-implied heat rates are escalated based on the average escalation rate in 2017 through Forecast Mid-C prices are benchmarked against other market price forecasts. Based on the methodology detailed above market prices are projected to escalate annually at an average rate of 5.2 over the 14-year period 2022 through Results Figure A-1 illustrates the resulting monthly, diurnal market price forecast. The levelized value of market prices over the study period is $42.71/MWh assuming a 4% real discount rate. The average annual growth rate beginning in 2024 is 5%. $140 Figure A-1 Forecast Mid-Columbia Market Prices $120 $100 $80 $60 $40 $20 $0 On-Peak Off-Peak The 2015 market price forecast is lower than the market price forecast used in CPU s most recent CPA. Figure A-2 compares the two forecasts. Clark Public Utilities Conservation Potential Assessment 58

63 $/MWh $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Figure A-2 Market Price Forecast Comparison, $Real 2015 CPA 2013 CPA The 2015 price forecast is 24% lower compared with the 2013 forecast due to changes in market conditions mainly due to decreases in natural gas prices. Figure A-3 illustrates historic natural gas spot prices. 10 The average 2015 natural gas price ($2.90/MMBtu) is 25% lower compared with the gas price at the same time of year in 2013 ($3.84/MMBtu). 10 U.S. Energy Information Administration. Natural Gas Data. Henry Hub Natural Gas Spot Price. Accessed April 23, Clark Public Utilities Conservation Potential Assessment 59

64 $2015/MMBtu $7.00 Figure A-3 Henry Hub Natural Gas Price History $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 Benchmarking Figure A-4 compares the January 2016 through September 2017 EES forecast with the forecast included in BPA s Initial Proposal for FY16-17 rates. Since EES relied on projected market prices during this 21-month period the EES prices shown in Figure A-4 are equal to CPU power marketer s forward market prices as of March 24, The monthly shapes are somewhat similar although BPA s forward prices include more volatility in the winter months of The difference in overall price levels is due to the fact that natural gas prices decreased between the time that BPA developed its forecast in the fall of 2014 and March 24, 2015, the day CPU s power marketer developed its forward price projection. Clark Public Utilities Conservation Potential Assessment 60

65 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 $2015/MWh $50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 Figure A-4 Comparison with BPA Forecast EES On-Peak EES Off-Peak BPA On-Peak BPA Off-Peak Risk The avoided cost forecast is used in CPU s CPA to evaluate energy efficiency measure costeffectiveness. As part of the cost-effectiveness analysis in the Northwest Power and Conservation Council s (Council) 6 th Power Plan, 11 risk adders are included to account for market price risk (inclusive of deferred capacity investments to production, environmental factors, and fuel price risk). In order to evaluate market price risk in CPU s CPA, two conservation scenarios are evaluated: Base and Low. These scenarios model market price risk deterministically by evaluating energy efficiency under different market price levels with the inclusion of risk adders. Risk adders for the 2015 CPA scenarios are discussed below, but first background information on CPU s market price risk exposure is provided. Load Resource Balance CPU regularly updates its integrated resource plan to compare projected loads and resources over a study period of 20 years. These loads are met with federal and non-federal resources, including demand side resources. In October 2011, CPU began purchasing power from the Bonneville Power Administration (BPA) as a Slice/Block customer under a power contract signed in December As a Slice/Block customer, CPU purchases an approximate 2.2% share of the real-time capability of the Federal Based System (FBS) and monthly flat blocks of energy. CPU expects average annual supply from the Slice/Block contract to be between 294 to 310 amw, with peak capability of 508 MW. Under average water conditions, it is estimated 11 Northwest Power and Conservation Council. Sixth Northwest Power Plan. February Clark Public Utilities Conservation Potential Assessment 61

66 that BPA resources could provide up to 70% of CPU s power requirements through the end of the contract term in As a Slice/Block customer CPU relies on scheduled output from the FBS as well as market transactions to follow load. CPU owns and operates the River Road Generating Plant which is a 248 MW natural gas-fired power plant. The utility estimates that this resource will provide approximately 225 amw of average annual generation to serve loads for the foreseeable future. Output from the River Road plant meets approximately 37% of CPU s current annual average load requirements. In 2009, CPU signed a contract to purchase the entire output of the Combine Hills II wind project for a 20-year term, which began in January Average annual supply from this resource is approximately 18 amw. CPU is under contract to purchase 18% of the production capability of the Packwood Hydroelectric Project. This hydroelectric project is owned and operated by Energy Northwest and CPU s share provides approximately 1.1 amw of average annual energy to serve utility loads. To evaluate resource adequacy and resource portfolio impacts under a range of scenarios, CPU evaluates average annual energy and peak energy requirements under expected, high and low load growth scenarios. The utility evaluates electric power requirements based on expected output from its existing resources. As reported in CPU s 2014 IRP, the utility expects to have surplus energy on an annual basis through 2033 under the base case load forecast. Figure A-5 shows expected annual energy from existing resources and CPU s Base Case system load forecast The base case system load forecast includes distribution system losses of 3.6%. The load forecast does not include projected savings from conservation/dsm programs. The base case long-term growth forecast annual growth rate is 1.1%. Clark Public Utilities Conservation Potential Assessment 62

67 Figure A-5 CPU Load Resource Balance, Base Case Forecast (Annual Average Energy) Figure A-5 shows that under these conditions, CPU expects to have 18 amw of surplus energy on an annual basis through This scenario, however, depends on CPU acquiring approximately 5 amw of conservation per year, as estimated in the utility s 2013 CPA. Excluding projected conservation and DSM resource acquisition, the utility s annual energy requirements would exceed its resources beginning in Figure A-6 shows annual peak requirements under the base case load growth scenario. The top line shows power requirements under the base case scenario, plus a 12% planning margin. This planning margin is included to account for resource output variability, weather events, and other impacts which may affect CPU s ability to meet its annual peak demand. Clark Public Utilities Conservation Potential Assessment 63

68 Figure A-6 CPU Load Resource Balance, Base Case Forecast (Annual Peak Energy) Figure A-6 shows that CPU has an approximate 320 MW annual peak load deficit in 2015 under base case load growth. The chart shows demand savings from conservation and DSM resources at 14 MW in 2015 and increasing to 165 MW in All of CPU s potential resource strategies for meeting incremental peak requirements include acquisition of conservation/dsm resources. Pursuing conservation will help CPU meet its peak demand requirements and will reduce the need for additional resources to meet annual energy requirements. Avoided Cost and Risk Discussion The avoided cost forecast developed for the 2015 CPA is lower compared to the 2013 CPA forecast by about 24%. The lower prices are due mainly to the current lower level of natural gas prices. This lower avoided cost may result in some conservation measures no longer crossing the cost-effective threshold. A risk credit is included in the Base Case scenario and accounts for deferred capacity investments (for production). The risk credit included in the 2015 CPA is adjusted to reflect the fact that forward market prices are less than those included in the 2013 CPA and the Sixth Power Plan. The risk mitigation credit utilized in the 2015 CPA is calculated as follows: Clark Public Utilities Conservation Potential Assessment 64