The Regional Technical Forum and Bonneville's Conservation and Renewable
Resource Discount:
How should the RTF be structured?
February 4, 1999 | document 99-1
Related links: RTF website
[Comment period is past. Jump to issue paper.]
Dear Interested Parties:
The Council is requesting public comment on the
attached issue paper, "The Regional Technical Forum and Bonneville's
Conservation and Renewable Resource Discount - How Should the RTF Be
Restructured." The paper sets forth a draft proposal for
restructuring the planned Regional Technical Forum (RTF) to be better able
to carry out responsibilities supporting implementation of the
conservation and renewable resource rate discount that is part of
Bonneville's Subscription Strategy.
In 1996, Congress directed the Council and the
Bonneville Power Administration to convene a Regional Technical Forum to
develop standardized protocols for verifying and evaluating conservation
standards. Subsequently, the Comprehensive Review of the Northwest Energy
System (Comprehensive Review) recommended that the RTF also track progress
toward conservation and renewable resource goals and provide feedback and
suggestions for improving the effectiveness of conservation and renewable
resource development in the region. In July of 1998, the Council issued an
issue paper exploring alternatives for the structure and operation of the
RTF and, on the basis of comment received on that paper, decided to
proceed with the formation of the RTF as an advisory committee to the
Council.
In the fall of 1998, Bonneville proposed a
conservation and renewable resource (C&R) rate discount as part of its
subscription strategy. The planning and discussions regarding the
implementation of the C&R discount have been focused on using the RTF
in an advisory capacity to carry out much of the technical work underlying
the C&R discount. It is clear that the work associated with the
C&R discount will increase both the amount of work the RTF must
accomplish and the sensitivity of that work. Consequently, the Council has
re-thought the structure of the RTF.
The attached Issue Paper (99 -1) proposes a
restructuring of the RTF in terms of its relationship to Bonneville and
the Council, its make-up and its decision-making.
The Council is seeking public comment on this
proposal for the RTF: Are the proposed structure, make-up and
decision-making processes appropriate? Are there other alternatives that
would better serve the RTF and the region? If so, what are they and why
are they superior?
The Council is requesting comments on the issue
paper by close of business, March 17, 1999. Public comments on this paper
will also be accepted at the Council's February 23 meeting in Portland,
Oregon and its March 17 work session in Spokane, Washington. Please
address all comments to Mark Walker, Director, Public Affairs, Northwest
Power Planning Council, 851 SW Sixth Avenue, Suite 1100, Portland, Or
97204, and indicate that you are commenting on Council publication 99-1.
Sincerely,
Stephen Crow
Executive Director
How should the RTF be structured?
Introduction
During the summer of 1998 the Council released an issue paper aimed at
defining the role and general structure of a "Regional
Technical Forum" (RTF). This effort was in response to direction
from Congress and the Comprehensive Review of the Northwest Energy System.
It was also in response to the Council's own interest in finding ways to
encourage and facilitate the development of cost-effective conservation
and renewable resources in the partially restructured utility environment
in which the region finds itself.
Subsequently, the Bonneville Power Administration has initiated plans
to provide a rate discount during the FY 2002 - 2006 rate period to
encourage customer (utilities and direct service industries) activities in
conservation, renewable resource development and low-income weatherization.
The planning for the Conservation and Renewables (C&R) rate discount
has looked to the RTF to carry out much of the "technical" work
needed to support the rate discount program.
It is clear that the responsibilities associated with the C&R
discount will increase the RTF's workload and the sensitivity of that
work. This has necessitated a re-visiting of the thinking about the RTF.
The purpose of this paper is to suggest a different formulation for the
RTF in light of the responsibilities it will have with respect to the
C&R discount and to seek public comment on that formulation. This
public input is intended to assist the Council in the decisions it will
have to make about the makeup, governance and administration of the RTF.
Background
The "Original" RTF
Congress had directed Bonneville and the Northwest Power Planning
Council (Council) to convene a Regional Technical Forum to develop
standardized protocols for verifying and evaluating conservation savings.
Congress further recommended that the RTF's membership include individuals
with technical expertise in conservation program planning, implementation,
and evaluation and that its services be made available to all utilities in
the Northwest. The Comprehensive Review of the Northwest Energy System
(Comprehensive Review) supported the Congressional directives and
recommended that the RTF should, in addition, track conservation and
renewable resource goals and provide feedback and suggestions for
improving the effectiveness of conservation and renewable resource
development programs in the region. The Comprehensive Review also
recommended that the RTF conduct periodic reviews of the region's progress
toward meeting its conservation and renewable resource goals at least
every five years and communicate recommended changes to appropriate
decision-makers. These periodic reviews are to acknowledge changes in the
market and adjust targets appropriately.
The Council's initial RTF issue paper proposed goals for the RTF;
alternatives for its structure and membership; alternatives for funding
the RTF; alternatives for its scope of work; and alternatives for
providing feedback and suggestions for improving the effectiveness of
conservation and renewable resource programs.
Based on the public comment received on this paper, the Council
endorsed the formation of an RTF. The RTF would be established as one of
its standing advisory committees to provide peer review and advice to the
Council. Members of the RTF would be selected by the Council based on
expertise and experience from a list of nominees provided by stakeholders.
Membership would consist of individuals drawn from utilities, the private
sector, Bonneville, public interest, state and local government, academic
and national laboratory personnel. It would be supported from the
Council's budget with possible augmentation from state public purpose
funds and/or individual utilities that would use the RTF's services but
that do not contribute proportionately to the Council's funding.
The RTF would collect, review and distribute existing protocols for
verification and evaluation, and develop and promulgate new methods in
response to new information and/or new approaches to achieving
conservation savings. Upon request, the RTF would review whether the
appropriate verification and/or evaluation protocols had been applied
correctly. For tracking, the RTF would develop standardized forms and data
definitions for use by retail electricity distribution utilities, state
and local low-income weatherization service providers and renewable
resource developers. The RTF would compile the data submitted and publish
an annual regional summary. It would also present this summary report to
the Council. This summary would compare the level of activity and
expenditures reported with the Comprehensive Reviews "public
purpose" goals. In addition and clearly more important, the RTF would
assess what was being accomplished through those expenditures -
electricity savings achieved, low income consumers served, renewable
resource production achieved - and at what cost. To provide feedback, the
RTF would prepare an annual report that profiled a limited number of
successful conservation and renewable resource development programs and
activities. The RTF would, on request, also provide peer review services
on new program designs or major program re-designs.
The RTF would also take a proactive role to promote effective programs
and approaches. For example, it could establish a mechanism for publicly
recognizing exemplary conservation and renewable resource development
programs. In addition, the RTF would provide its findings and
recommendations to local utility governing bodies and/or state regulatory
agencies regarding program effectiveness and potential for improvement. In
this role, the RTF might serve as a "regional" clearinghouse on
successful program design and implementation.
The Bonneville Conservation and Renewable Resource Rate Discount
Subsequent to the development the original concept for the RTF, the
Bonneville Power Administration has announced its intent to include
conservation and renewable resources rate discount as part of its rates
for the 2002 - 2006 rate period. The stated purpose of the discount is to
serve as "a catalyst in encouraging its customers to make investments
in these important and valuable resources" and "to complement
and supplement the efforts of state legislatures and the Council in
addressing the regional need to develop these resources."
The amount of the discount would be approximately 0.5 mills/kWh. That
is equivalent to approximately $30 million per year. The discount would be
awarded on a "dollar for dollar" basis, i.e., a dollar's worth
of activity would earn a dollar of discount. An additional 0.25 mills/kWh
would be available on a two for one basis if Bonneville is able to build
sufficient reserves and certain financial risks in the 2007-2012 rate
period are resolved. However, how a "dollar's worth of activity"
is defined is, as this is written, still somewhat at issue, as will be
discussed further.
To facilitate the operation of the discount program, we are assuming
for the purposes of this paper that the RTF would be called upon to make
recommendations to Bonneville regarding:
- A list of conservation measures and programs, the estimated savings
associated with those measures and programs, and the estimated
regional power system value associated with those savings.
- A process for updating the list as technology and standard practices
change and an appeals process through which customers can demonstrate
that different savings and value estimates should apply.
- A set of protocols by which the savings and system value of
measures/programs not on the list could be estimated. These would
include complex commercial or industrial projects.
- Criteria for renewable resource projects. 5. Recommended protocols
for measurement and evaluation of savings or production.
In addition, the RTF would analyze the reporting information submitted
by customers to Bonneville to claim their discounts in order to track the
kinds of conservation being implemented, the costs and electricity savings
achieved and the quantities and types of renewable resource production
achieved with the discount. The purpose would be to provide a regional
level assessment of the effectiveness of the C&R discount. The RTF
would also have the ability to carry out, through staff or contractors, a
limited number of targeted evaluations. These evaluations are intended to
improve understanding of the cost and performance of technologies or
applications that prove to be popular and with which there is relatively
little experience. In both instances, the purpose of collecting and
analyzing this information is to improve the program effectiveness on a
going forward basis, not to penalize customers for past actions.
In assessing the power system value of conservation actions, we are
assuming the RTF would rely on Council estimates of "avoided
cost" adopted through Council processes with full public involvement.
These avoided cost estimates would reflect seasonal and daily differences
in the value of power and locational premiums associated with transmission
system constraints. The RTF would estimate the value of conservation
savings using these avoided cost estimates and would take into account the
effects of climate differences where appropriate (e.g., for actions that
affect heating and cooling loads). By so doing, local differences in
savings and value would be approximated. The estimates would also take
into account differences in how measures or programs are delivered if
those differences are likely to affect the savings actually produced.
The use to which these value estimates would be put is not fully
resolved at this point. Under one approach, customers could claim their
actual costs, subject to some restrictions but with no cost-effectiveness
cap, up to the total amount of discount for which they are eligible. Under
this proposal, the RTF's information would be advisory for the use of
customers in their planning. Another approach is intended to provide an
incentive to customers to deliver conservation as inexpensively as
possible and seek consumer contributions to the cost. Under this proposal,
customers could claim their costs plus an incentive equal to a fraction of
the difference between the cost and the value of the savings produced. The
total they could claim would be capped by the value of the savings
produced. (with allowances for activities like administration and
advertising that are essential but that do not directly produce
electricity savings). A third approach would allow utilities their choice
of one or the other of the foregoing proposals. Under the latter two
proposals, the work of the RTF could affect how much of a discount a
customer could claim for a given activity. Ultimately, however, the amount
of the discount allowed will be Bonneville's decision.
Proposed Structure, Make-Up and Decision-making for the RTF
In light of the possible responsibilities described above, the
questions of who should be on the RTF, how the should it be structured,
and what is its relationship to Bonneville and the Council have become
more important. The following is a draft proposal for how the RTF should
be structured, who should be on it and how it should make decisions. The
Council is seeking comment on this proposal and invites the suggestion of
alternatives.
Guiding Goals
In thinking about the RTF, the overriding goals have been credibility
and buy-in. The RTF and its products must have credibility with the
various interests including the customers, regulators, public interest
groups and so on. This means that interests must be satisfied that the RTF
is producing high quality, objective technical information, not unduly
influenced by one set of interests or another. A related goal is buy-in by
the important interests. These groups must be convinced that the RTF
provides a fair and open forum in which their views have an opportunity to
be heard and given due consideration. Much of the proposal is aimed at
achieving these goals.
Structure
Relationship to Bonneville
We propose that the RTF be independent of Bonneville and that its
products, as they relate to the C&R rate discount are advisory in
nature. Independence is necessary to ensure credibility with the community
of interests associated with the C&R discount. The recommendation that
its products be advisory to Bonneville reflects the legal requirement that
decisions affecting Bonneville's rates must ultimately be made by the
Administrator. Consequently, Bonneville will have carry out a process of
its own to accept, reject or modify the recommendations of the RTF.
Relationship to the Council
It is proposed that the RTF be constituted as a special Council Advisory
Committee. However, the RTF must have independence from the Council in
order to be credible with some of the key stakeholders. For the purposes
of the RTF's responsibilities with respect to the C&R discount, the
Council would provide staffing and logistical support to the RTF. Council
staff, augmented as necessary with loaned staff from Bonneville and
possibly others, would support the activities of the RTF. This support
would include providing the RTF with the Council's latest assessments of
conservation and renewable resource technologies and estimates of avoided
costs developed through the Council's planning process and providing the
RTF with support in carrying out public involvement in RTF processes.
Staff would work with the RTF in developing: a list of
"standard" conservation measures; qualifying criteria for
renewable resource projects; estimates of the performance of
"standard" conservation and renewable resource alternatives;
proposed protocols for estimating the savings produced by non-standard
projects and programs; and protocols for the measurement and evaluation of
conservation and renewable resource performance.
The recommendations of the RTF would be adopted by RTF and transmitted
to Bonneville. They would not be subject to approval by the Council. The
Council might choose subsequently to comment independently to Bonneville
on the RTF's product but it would not be a filter through which the RTF's
recommendations would have to pass.
Make-up
Appointment
We propose that the RTF be appointed by the Council from nominations made
to the Council by stakeholders and the public. We propose further that the
members serve two-year terms with a requirement that at least one third
and no more than one half of the membership be changed every two years.
The intent is to provide a level of continuity while providing for new
members over time. Members would be entitled to claim travel and per diem
consistent with the Council's policies.
Skills
The Regional Technical Forum's responsibilities are intended to be
primarily technical. Its members collectively should bring to the RTF
technical experience and expertise in the analysis of conservation and
renewable resources, the design of conservation and renewable resource
projects and programs, their implementation and their evaluation. The
credibility of the RTF's work will depend on the technical credibility of
the members. We propose that possession of the requisite skills should be
he first priority for membership on the RTF. The experience of the members
of the RTF should be specific to particular areas of implementation, e.g.
commercial buildings, industrial processes, residential, renewable
resources and so on.
Representation
Because the work of the RTF is intended to be primarily technical,
representation of specific interests ought not to be a problem. However,
the products of the RTF could have implications for the kinds of
activities that customers can undertake and the amount of discount that
can be claimed for those activities. Consequently, representation in the
membership of the RTF will almost certainly be an issue in the degree to
which stakeholders buy-in to the RTF's efforts. A model for representation
could be something like the Board of Directors of the Northwest Energy
Efficiency Alliance (NEEA). The NEEA Board is composed of 18 members, with
6 representatives from each of three groups -- Bonneville and
publicly-owned utilities, investor-owned utilities, and public interests
including the governors and public interest groups. The state utility
commissions are represented on an ex-officio basis.
We propose that the RTF be composed of two groups of 7 members each:
- A Bonneville and customer group composed of
- A representative of the Bonneville Power Administration;
- 6 Bonneville customer representatives selected from the customer
groups (publicly-owned utility, investor-owned utilities and direct
service industries):
x- in approximate proportion to their
estimated share of Bonneville firm load;
x- with consideration of geography and load
share considerations within the customer groups
- A public group composed of:
- 4 representatives of state energy agencies
- 3 representatives of the public interest groups, e.g. the Northwest
Energy Coalition, the Natural Resources Defense Council
In addition, representatives of the four state utility commissions would
be invited to participate in a non-voting ex-officio capacity. The RTF
should also involve key consumer representatives, e.g. industrial
consumers, and trade-allies such as energy service providers. It would do
this by establishing advisory groups to the RTF.
Decision-making
How decisions are made by the RTF will have a significant effect on the
credibility of and buy-in to the RTF. Decision-making by the RTF should
strive for consensus. However, consensus may not always be achievable and
votes may be necessary. Again, the NEEA by-laws may provide a model for
such decisions. Utilities have majority representation on the NEEA board.
However, the NEEA by-laws stipulate that decisions of the Board require a
super-majority, including representation from each of the groups.
For the RTF, we propose that a 10-member super-majority be required for
the adoption of recommendations. This would mean that if either of the
groups were to vote as a block, the votes of least 3 members of the other
group would be required to adopt a recommendation. The RTF should elect a
chair from its membership.
In reaching its decisions, we propose that the RTF process provide
opportunities for public input in its decisions. This would involve
inviting public comment on its proposed decisions and considering that
comment in its decision-making.
Request for Public Comment
The Council is seeking public comment on this proposal for the RTF:
- Are the proposed structure, make-up and decision-making processes
appropriate?
- Are there other alternatives that would better serve the RTF?
- If so, what are they and why are they superior.
The timelines for establishing the RTF are tight. Consequently, the
Council will take public testimony on this issue paper at its February 23,
1999, meeting in Portland, Oregon and its March 17 work session in
Spokane, Washington. The close of comment will be close of business on
March 17. The Council will make its decision regarding the formation of
the RTF at the April 6 meeting in Boise, Idaho. It is the Council's intent
to form the RTF in May.
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