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Military Base Standard Offer Program

El Paso Electric

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Background

SB 652, enacted during the last legislative session, resulted in changes to Public Utility Regulatory Act (PURA).

SB 652 was a comprehensive bill to improve the prospects for maintaining military bases in Texas. By increasing energy efficiency and reducing energy costs, bases have a better chance of remaining open.

The legislation targets electric utilities that are located in areas that are outside of ERCOT.

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Background PUCT approved rules for this Program on March 4. Applicable facilities in EPE service area are Ft. Bliss and

ADAC. The goal is to reduce aggregate electricity consumption

(kWh) at these facilities by 5% before 1/1/2005. Goal is 7,370,000 kWh Incentive levels are higher than other standard offer

programs being implemented by utilities under SB 7 (electric utility restructuring bill).

EPE is making $1.3 million in incentive funds available to achieve this goal.

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What’s a Standard Offer Program?

Any energy efficiency measure meeting PUCT requirements can qualify. Not measure-specific.

EPE pays incentives based on the kW and kWh savings. Not tied in to measure costs.

Measure eligibility: Retrofit or new construction measures Permanently-installed measures only Most renewable measures are allowed Installed equipment must exceed minimum efficiency

standards, if applicable.

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Project Opportunities

HVAC Lighting Motor retrofits Variable frequency drives Controls Process improvements Fuel-switching from electric Renewable energy projects, including wind and PV

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Ineligible Measures

Measures with life less than 10 years Removable measures (generally includes plug loads) Cogeneration or self generation (except renewables) Fuel switching to electric Measures that rely on changes in behavior and require

no capital investment Projects that eliminate an existing function, or relocate

existing operations outside the EPE service area.

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EPE’s Role as Program Administrator

Oversee that programs follow rules and template guidelines

Review, approve or reject program applicationsVerify and inspect that measures meet intended

purposeAdminister incentive dollarsProvide outreach to project sponsors

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The Role of the Project Sponsor

Develops a energy efficiency project that meets the requirements of the Program and Ft. Bliss.

Executes an agreement with EPE to deliver a specific quantity of kW and kWh.

Negotiates with Ft. Bliss to implement the proposed energy efficiency project.

Implements the project within the required timeframe. Documents the installation and resultant energy

savings. Receives incentive payment from EPE.

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Fort Bliss acting as its own project sponsor Third-Party Project Sponsors

A/C Dealers Insulation Contractors Energy Efficiency Service Providers Renewable Energy Project Developers A&E Firms Lighting Contractors Electrical Contractors

Examples of Project Sponsors

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Third-Party Project Sponsor Requirements

Third-Party Project Sponsors must have: Adequate insurance All appropriate licenses References Evidence of technical and managerial

capabilities and experience Evidence of financial capability

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Comparison with Other SOPs

Military Bases SOP Goal is kWh, not kW Better for motor drive and

other high-load factor projects

No limit on lighting projects Higher payments Expedited project approval

and payments. Ft. Bliss can act as its own

project sponsor.

Other SOP Emphasis is peak demand. Reduced payments for high

load factor projects May require a deposit. Most projects are lighting

only. Most project sponsors are

third-party ESCOs.

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Standard Incentive Payment

Demand payment: $278.29 per kW of peak demand savings

Energy payment: $0.095 per kWh of annual energy savings

All incentives are paid directly to project sponsor.

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“Hard-to-Reach”

Projects that benefit “hard-to-reach” customers, such as certain personnel living in military housing units, may be eligible for the HTR incentive payments of $556.58/kW and $0.19/kWh.

EPE estimates that the majority of family housing for E-1 through E-3 grades would qualify as hard-to-reach households, and that many additional units for grades E-4 through E-6 are also hard-to-reach, with over 1,000 potential hard-to-reach units.

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Incentive Payments

Certain projects are eligible for a eligible for a 20% adder, since El Paso is in an EPA non-attainment area.

Previous energy efficiency projects implemented under SB 5 have qualified for the higher payment.

Projects that would not have been implemented without the adder are eligible.

With the adder: Standard incentive payments are: $333.95 per kW and

$0.114 per kWh. HTR payments are $667.90 per kW and $0.224 per kWh

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Incentive Payment Example #1

A local HVAC dealer installs 30 high-efficiency AC units, varying in size from 2.5 to 5 tons, and in SEER rating, from 13.0 to 16.0. Using the deemed savings table for central air conditioners, the total kW savings is 24.9, and the annual kWh savings is 42,750. The incentive payment is calculated as follows:

(24.9 x $278.29) + (42,750 x $0.095) = $10,991

(24.9 x $333.95) + (42,750 x $0.114) = $13,189 with 20% environmental adder

(24.9 x $668.38) + (42,750 x $0.228) = $26,390 if installed on HTR-eligible units with 20% env. adder

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Incentive Payment Estimates

The following are estimates only and not based on actual metered or measured data from Ft. Bliss: 4-lamp T-12 fixture retrofit: $38 (approximately 33,000 required

to reach goal) Energy Star residential refrig. retrofit: $115-$275 (approximately

8,500 required to reach goal) 3-ton 13 SEER central A/C unit: $282 - $887 (7,500) 10-ton rooftop A/C unit: $800 (1,750) VSD for 250 hp water pump: $30,000-$35,000 (30) 1 mW wind turbine: $400,000 - $450,000 (3-3.5)

The value of the energy savings is not included in the above estimate.

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Definition of Peak Demand Savings

The maximum average load reduction occurring during any one-hour period between 1 PM and 7 PM MDT weekdays, from May 1 through September 30 (holidays excluded).

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Energy Savings M&V Options

Deemed Savings Option: Deemed savings are pre-determined savings

values for most of the common energy efficiency measures. These kW and kWh values have been approved by the PUCT.

Incentive payments for all measures shown previously are based on deemed savings.

Project Sponsor accepts deemed savings values for measures installed and receives 100% of incentive payment after submitting an installation report.

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Energy Savings M&V Options

Project Sponsors may choose to not accept deemed savings estimates, and to perform measurement and verification (M&V) activities.

For measured savings, actual kW and kWh measurements are required to determine incentive payments.

Project Sponsors must submit a measurement and verification (M&V) plan with project application.

Certain measures do not have a deemed savings values.

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Program Steps

Project Application Initial Application Final Application

Pre-installation inspection / metering Installation report Post-installation inspection Installation payment Energy savings measurement and verification (M&V) Savings report Final incentive payment

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Initial Application for Third-Party Project Sponsors

IA includes sponsor qualifications Identifies intended measures (20 kW savings minimum) Estimates kW/kWh savings and incentive payments

EPE reviews the IA for sponsor and project eligibility. Approximately 14-day review period

Upon approval, EPE reserves funds for the project. Letter of intent from Ft. Bliss

The letter should include a summary description of the project and indication of Ft. Bliss’ level of interest in implementing the proposed project, should the project sponsor’s application be approved. Not required for Ft. Bliss.

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Final Application for Third-Party Project Sponsors

Detailed project description Savings calculations and incentive estimates Equipment surveys (use standard forms) Proposed M&V plan Finalized work plan for completing the project within

the required timeframes Due within 30 days of initial application acceptance Agreement with Ft. Bliss not required with final

application, but must be submitted within 30 days after project go-ahead. Not required for Ft. Bliss.

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Installation Report

Updated project implementation information The demolished and actual installed retrofit

equipment inventories, including equipment counts, equipment efficiencies, and equipment nameplate data.

Updates to occupancy or equipment or occupancy schedules

Updated engineering calculations estimating energy and demand savings

Final M&V plan details

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Savings Report and Final Payment

If the project sponsor is using simple of full M&V, the project sponsor should submit a savings report after all M&V activities are complete. This report should document the actual demand and energy savings measured for the projects.

Total project payment due less installation payment will be made after invoicing by project sponsor.

If deemed savings are used exclusively, the project sponsor doesn’t need to submit a savings report.

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Program Timeline

Program release April 26-27, 2004First day to submit initial applications May 13, 2004Initial application approval Within 10 days of initial application submittalFinal application due Within 30 days of initial application acceptanceSOP agreement signed Within 14 days of f inal application submittalP.S. – Ft. Bliss agreement signed Within 30 days of f inal application approvalProject installation No later than December 31, 2004Installation report due No later than January 31, 2005

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www.epelectricefficiency.com

Program Web site has: Latest program announcements Latest version of program manual for download Support files:

Deemed savings Installation standards Lighting spreadsheets

Helper applications Information on available funding Program contacts and links

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Mr. John Armstrong - Program Manager Phone - 915.543.5809 Email - jarmstro@epelectric.com

Contact Information