July 31,2012

Governor John Kitzhaber

160 State Capitol
900 Court Street
Salem, Oregon 97301-4047

RE: Comments on the Draft Oregon10- Year Energy Action Plan

 

Dear Governor Kitzhaber:

The NW Energy Coalition (Coalition) is pleased to offer the following comments on the Draft 10- Year Energy Action Plan for Oregon (Draft Plan). Forging clean energy-focused actions will reward all Oregonians with a cleaner environment, a stronger economy, new local jobs, and decades of reliable and affordable energy.

We strongly support the draft’s No. 1 goal: meeting 100% of new electricity load growth with energy efficiency. Conservation and energy efficiency is the cheapest, fastest, cleanest way to meet energy demand and reduce our greenhouse gas emissions. Oregon is already en route to meeting this aggressive goal thanks to existing policies and institutions that encourage energy efficiency.  Achieving the goal will create jobs throughout the state and save customers money they can spend on other things.

Oregon has solidified its leadership role in a strong regional conservation effort.  The state’s utilities have exceeded their shares of the savings targets set by the Northwest Power and Conservation Council (Council). In 2010, the Pacific Northwest region achieved 254 average megawatts of energy efficiency savings, exceeding the Council’s target by 25%. Oregon utilities significantly helped the 4-state region exceed this target – Oregon utilities account for just 28% of regional retail electric demand, yet were responsible for about 36% of Northwest utilities’ total energy efficiency achievements in 2010. Working through the Energy Trust of Oregon (ETO), our investor-owned utilities (IOUs) consistently deliver strong energy efficiency achievements that exceed the Council’s goals and often meet or exceed ETO’s highest (stretch) goals.

We also support the Draft Plan’s commitment to meet the state’s greenhouse gas (GHG) emissions reductions goals. We hope the final plan will define a broader set of actions to achieve these goals. Meeting the goals will require a phase-out of the coal-fired generation now serving Oregon and replacing it, at least in part, with new renewable energy. The final plan should include more detailed strategies for reducing Oregon’s reliance on out-of-state coal-fired generation and stimulating in-state renewable energy development at both the utility and distributed-generation scales. We support the recommendation in Renewable Northwest Project’s comments that the final plan include an explicit10 year statewide strategy and action plan to reduce carbon emissions

The following detailed comments express our recommendations for the final 10-Year Energy Action Plan. These comments focus primarily on the energy efficiency section (Goal 1) and to a lesser extent on infrastructure (Goal 2); we offer no recommendations on transportation, which lies outside the Coalition’s scope.

I. State Energy Goal One: Maximizing energy efficiency and conservation to meet 100 % of new electricity load growth.

The Coalition recommends that the final plan directly address the following issues critical to advancing energy efficiency in our state:

All utilities and their customers must share meeting the goal of acquiring 100 % of load-growth through efficiency. As the economy picks up and demand for energy follows, we will need to support and strengthen our existing programs for energy efficiency to ensure that we are capturing all cost-effective conservation from investor owned utility (IOU) and consumer owned utility (COU) territories across the state. We will need strong participation by both IOUs and COUs to meet the statewide energy efficiency goal outlined in the plan. While the Draft Plan focuses considerably on the IOU system, the Final Plan should provide more detail regarding the policies that will encourage significant energy efficiency achievements in COU service areas.

Additionally, the Draft Plan focuses on the electric sector for its energy efficiency goals and actions, but does not adequately address other fuels. The final plan should include efficiency goals for natural gas end use, fuel oil and propane.   While natural gas usage in Oregon has increased in recent years, average natural gas use per customer has significantly declined over the last decade due to aggressive partnerships between natural gas utilities and ETO.  We need to continue this momentum to ensure that direct use of natural gas, and other fuels, in homes, businesses and industrial applications maximizes efficiency.

The final plan should address low-income weatherization and energy assistance. Oregon is experiencing significant unmet needs with regard to low-income weatherization and direct energy bill assistance. This crisis is caused by a severe reduction in Federal assistance dollars for these programs. The final plan should recognize this urgent need and offer solutions to aggressively serve low-income Oregonians. It is also important to note that both low-income weatherization services and direct bill assistance provide system benefits for all ratepayers through energy efficiency gains and reductions in utility costs due to billing and disconnect/reconnect charges.

In the area of low- income weatherization we offer the following specific recommendations:

1)   Expand State resources for low-income weatherization to fill the Federal funding gap and maximize the number of low-income customers that can be assisted to stay healthy and warm.

2)   Set aggressive but realistic goals to weatherize a significant portion of low income housing in the state.

3)   Ensure that low-income weatherization programs continue to include safety considerations.

4)   Energy efficiency upgrades should be part of all low-income multi-family housing retrofits; all state housing dollars should be tied to energy efficiency improvements.

5)   Low–income energy advocates should be included in the task force and advisory committees formed to implement the final plan to ensure that our strategies for clean energy address the needs and realities of low-income households throughout the state.

Oregon needs a strategy to thoughtfully address data center and other single large load impacts on the state energy system so that the state’s energy policy is aligned with its economic development and industrial policies. Although the 100% energy efficiency goal is a goal and not a mandate, it is important that as a state we have a common understanding about how that policy is applied.  It cannot be applied to the arrival of a single large load on a utility’s system, either in IOU or COU territory. The ultimate goal for this strategy should be to power single large user operations with 100% clean power by maximizing energy efficiency and renewable generation.

The following are some components we should consider as part of this strategy.

1)    All new data centers should be required to maximize energy efficiency in design, construction and operation.

2)    Data centers should contribute to energy efficiency programs beyond their own operations to offset new load growth.

3)    Data center or other single large load electricity needs should be met with clean, renewable power.

The Final Plan should address shortcomings in current funding mechanisms for industrial customers and ensure that these customers have access to the needed funds to achieve energy efficiency upgrades. The potential for cost-effective energy efficiency in the industrial sector — 25% of the total energy consumed in Oregon — is significant. Capturing this potential by improving production process efficiency, installing more efficient lighting, motors, chillers, air handling systems and other measures will allow industry to reduce its energy use at very low costs and help the region avoid the need for new power plants to meet growing energy needs. These industrial savings are a bargain, with levelized costs often less than $50 per megawatt hour (the NW Power and Conservation Council’s 6th Plan assumes that energy efficiency costing up to $200/megawatt hour is cost effective). Because the 2007 Oregon Renewable Energy Act restricts energy efficiency funding for these large energy users, it is unclear whether all of the energy savings can be achieved.  The Final Plan should ensure that funding is adequate to achieve all of the cost-effective energy efficiency among PGE’s and Pacific Power’s industrial customers.

Codes and standards mandating minimum efficiency standards are key to maintaining steady progress on energy efficiency over time. Oregon has proven to be a national leader in developing strong energy codes and efficiency standards. It is critically important that Oregon maintain its commitment to strong codes and standards since they produce some of the most cost effective long-term energy savings available.  The 10-Year Plan should acknowledge the important role of good codes and standards and acknowledge the need for the state to contribute to the cost of code training, education and evaluation, nearly all of which is currently borne by utilities via the NW Energy Efficiency Alliance (NEEA).

The following comments offer specific recommendations organized according to the Draft Plan sections.

Utilities’ Role in Energy Efficiency (Pg. 18)

The current system for IOU energy efficiency is efficient (one office, the Energy Trust of Oregon, rather than one in each utility) and has been very successful in reducing energy usage. Oregon’s IOU’s are leaders in treating energy efficiency as a resource to serve customers.  We can do more, but need to ensure that policies are cost-effective, add benefit to our current system and contribute real savings.

The Final Plan should clarify the goals of the recommended task force. Some specific charges to the task force could include: identifying the particular finance and regulatory items that are presenting barriers, a review of existing research in this area, and a review of how cost-effectiveness is ascertained to ensure that fluctuations in fuel costs do not disrupt ongoing investments in energy efficiency or renewable energy projects.

State Building Innovation Lab  (pg. 19)

The State Building Innovation Lab is an exciting proposal that offers many tangible benefits. It allows state government to lead by example, gaining energy savings that will also save state funds, while demonstrating best practices and spurring innovation. It also provides an opportunity to demonstrate best practices for the private sector, and support local governments with technical innovation, strategies for financing and measure prioritization in building retrofits.

Our state legislature has already adopted statutes to accelerate energy efficiency in publically owned buildings including requiring state buildings to benchmark energy efficiency performance and to do a more detailed audit for poor performing facilities. The State Energy Efficiency Design program (SEED) requires that new or renovated public buildings exceed the state energy code by at least 20%. Existing buildings must reduce energy use by 20% compared to the building’s baseline energy use in 2000 by June 30, 2015 (ORS 276.915(4)). Additionally, Oregon has energy services performance contracting to allow energy savings to pay for retrofit services for state projects. Many of these existing programs can work in synergy with the new State Building Innovation Lab to achieve deeper savings for state buildings and models for the private sector and locally owned public buildings.  SB 838, adopted in 2007, also provides the authority for the Public Utility Commission to approve funding to acquire specific cost-effective savings over and above the 3 % public purpose charge (Section 46).  Some projects within state buildings could qualify to be considered under that provision.

Oregon Innovation Council  (pg. 20)

A statewide approach to coordinating and leveraging public and private investment in energy technology research, development, demonstration and deployment is essential to maintain and grow Oregon’s leadership in energy innovation. This innovation will help keep the costs of our future energy system down and generate local jobs for Oregonians. Because this effort will foster such broad benefits to the state, this research should be funded from a broad-based funding source, not just the ratepayers of Oregon IOUs.

Unparalleled Public /Private Work (pg. 21)

 

 

Expanding the Energy Trust of Oregon’s Charter

The Energy Trust’s current mission, as provided by state statute and administrative rule, is to help utility customers benefit from saving energy and generating renewable energy. The work of the Energy Trust has produced benefits well beyond energy savings – by creating jobs, adding significantly to the Oregon economy, and reducing greenhouse gas emissions and other pollutants. Any discussion about expanding the charter of the ETO needs to ensure that the main goal of serving ratepayers is not lost or even subsumed by other laudable policy or social goals. It may also be fruitful to discuss the role of the ETO as part of a long-term climate policy so that its investments in energy efficiency and renewables are considered properly against utilities’ investments in fossil fuel generating plants.

It is also important to recognize in this effort that programs like Clean Energy Works Oregon (CEWO) are still very small parts of the overall efficiency market and that the larger efforts that are funded by the ETO are not disrupted as we seek to create new tools for consumers in the marketplace.

Cool Schools Action Item: ODOE coordinate with ETO and CEWO to provide assistance to schools.

We strongly support the continuation of this program. The Governor’s Cool Schools program is realizing needed upgrades to our public schools that will help districts save money, as well as provide a healthier environment for our children. Utility bills are public schools’ second biggest operating expense and money saved can be redirected back to our struggling classrooms. Upgrading older school buildings improves airflow and lighting, and reduces mold and asbestos offering significant improvements to the learning environment. Schools that undergo retrofits often experience increased performance among their students and lower absentee rates.

Energy Performance Score (EPS) (pg. 22)

Creating a tool that clearly communicates the energy use of a home or commercial building is a critical step in helping owners and/or occupants evaluate the efficiency of their structure. It is also needed to help prospective owners or tenants establish the cost of living in or operating in a particular structure. We support the ongoing efforts of the Energy Trust to develop a working model of such a scoring system. We recommend pursuing mandatory EPS disclosure legislation in the 2013 session.

Financing Energy Efficiency and Conservation (pg. 22)

 

New Financing Tool

The Draft Plan references a variety of potential financing mechanisms to assist in doing deeper energy efficiency. Potential benefits from additional types of financing tools could be substantial if designed well and coordinated properly with ratepayer-funded incentives.  New financing tools should be carefully considered by a broad-based group of interested parties to ensure that the recommended mechanisms add value to our current system, maximize cost-effective conservation and consider ratepayer interests.

Align Existing Incentive Programs

We support the Draft Plan’s commitment to extend and expand existing state incentive programs. Most energy efficiency implementation comes from decisions consumers make. Consequently, incentives that drive customer behavior to make cost-effective energy efficiency decisions are exceedingly valuable in achieving energy savings. The conservation tax credit serves as an important driver to achieve energy efficiency targets and is a strong complement to utility and Energy Trust of Oregon programs. Additionally, in COU territory, where energy efficiency programs are not required it sometimes serves as the only state-level energy efficiency incentive for energy consumers. Money invested in the conservation tax credit creates savings for families, small businesses and industry and helps create and maintain jobs for Oregonians.

 

II. State Energy Goal Two: Removing financial and regulatory barriers to clean energy infrastructure development

The Coalition recommends that the final plan directly address the following issues critical to advancing clean energy infrastructure throughout the state:

Promote Distributed Generation

We believe Oregon has only begun to tap into the potential to develop its distributed generation potential. We support the inclusion of more specific action items in the 10-year energy strategy that will promote the development of distributed generation throughout the state. Options for policy actions include improving net metering laws, evaluation and next steps for Oregon feed in tariff policies, and policies that advance community scale renewable development.

Smart Grid and Energy Storage Technology

The use of smart grid technology, energy storage technology, demand response programs and other related efforts for load balancing, shifting and management will become critical parts of a clean energy portfolio that seeks to maximize renewable resources as we seek to reduce fossil resources, particularly coal.  The Final Plan should include more information about these key tools and outline a policy framework for considering and including them.

Geothermal Resources

The Final Plan should include a discussion of the potential for geothermal resources in Oregon and recommendations for moving beyond policy and financial barriers to developing these resources.

Integrating Renewable Resources

The final plan should call on utilities and transmission providers to reduce the cost of integrating wind and solar resources. A recent report for the Western Governors’ Association recommends that states consider changes in grid operation and plan for flexible resource needs to reduce costs to consumers as we achieve higher renewable energy targets under state renewable portfolio standards. Oregon can set a leading example on requiring cooperative actions — for example, asking for regular reports from utilities and transmission providers on actions they are taking on the recommendations in the WGA report, and convening further discussions about the benefits of least-cost delivery of wind and solar resources and the solutions to institutional barriers.

Landscape Level Plan (p. 24)

The Coalition strongly supports the proposal to establish a landscape level planning process to help align the state’s environment, energy and economic goals in developing new energy resources and facilities. To achieve the sustainable, low-carbon, economy-enhancing electric grid of the future, we will need more coordination on the energy facilities to be added in Oregon, their locations and their integration into the existing system.  This must be done in a manner that reduces the environmental, landscape and community impacts while maximizing the economic benefits to the Oregon economy.

The landscape level plan will directly address these key challenges.  This should be a balanced, transparent and comprehensive process, with an adequate amount of financial and administrative support.  Full involvement of all stakeholders is essential to success, as is the continued strong commitment of the Governor to achieving a strong plan that helps guide “smart from the start” clean energy development.

The core of the plan will be drawn from Oregon’s high-bar approach to energy facility siting and comprehensive land use planning.  In addition, we can learn from the Renewable Energy Transmission Initiative (RETI) in California, the Western Renewable Energy Zones (WREZ) project sponsored by the Western Governors’ Association, and the Environmental Data Task Force (EDTF) of the Western Electricity Coordinating Council, which is enhancing transmission planning with geospatially explicit data and risk classification.

Strong Project Officer (p. 25)

The Coalition supports the proposal to explore a Strong Project Officer model to facilitate regulatory review of energy facility development.  The details can be worked out in good time; we believe, however, that two key components for success are the continued backing of the Governor and his staff, and the personal experience and qualifications of the designee, especially their connections with local governments and communities throughout the state.

Adjust Jurisdictional Thresholds for Renewable Facilities (p. 26)

The last adjustments to the EFSC review thresholds for energy facilities were made over a decade ago amidst the west coast power crisis.  We believe caution is in order in making adjustments on a resource type by resource type basis.  Some thresholds should be lowered, or a more flexible approach devised, so that substantial facilities do not escape comprehensive state review.  However, there are other factors to consider, including EFSC workload.  As the Draft Plan suggests, adjusting review levels should be considered within the context of aligning and strengthening state and local review of proposed projects.

Clarify Definition of Single Energy Facility (p. 26)

It is timely to revisit the question of how “single facilities” are defined.  However, caution is warranted so that deserving projects are not impeded, while “forum shopping” is discouraged.  What we hear most from developers and local communities alike is the need for clear and fair criteria on this and other siting review components.  Furthermore, there is a long overdue need to address cumulative effects, now that renewable energy projects are achieving more widespread success.  A balanced approach is crucial to ensure that the state’s combined environmental and economic goals can be achieved.

Amend EFSC “Balancing Rule” (p. 27)

While various concerns have been raised about the EFSC “balancing rule,” the Coalition cautions that this rule is an important part of the framework for Oregon’s energy facility standards.  The balancing rule was formulated with careful consideration of diverse goals, interests and the need for flexibility.  If any changes are made, it should be very clear what benefits are being achieved, and how to handle unexpected side effects.

Allow Over-Sizing of Transmission Facilities (p. 27)

The brief discussion of this issue in the Draft Plan leaves room for interpretation.  A one-size-fits-all approach to this issue would not be advisable. The Draft Plan recommendations regarding this issue should be clarified.  “Over-sizing” which opens up markets for transmitting power for longer distances than is needed is one possible outcome; but “over-sizing” which carefully assesses future needs and makes engineering and siting decisions that reduce the landscape footprint and environmental impacts while improving economic benefits is another.  There are many additional considerations, including risk to ratepayers, that we urge be included in further development of this policy recommendation.

 

III. Cross-Cutting Critical Paths: Cutting Edge Communities

The Coalition strongly endorses the cutting-edge communities concept outlined in the Draft Plan. Environmental stewardship and GHG emissions reduction should be a part of the goal for the cutting-edge communities. Communities in both investor-owned and consumer-owned utility service territories should be identified so that this approach has the opportunity to teach us a variety of lessons.

Thank you for providing a framework for Oregon to advance toward a clean energy system over the next ten years. We appreciate the opportunity to provide comments on the Draft Plan and look forward to working with your office to implement the bold actions outlined in the Final Plan.

Sincerely,

Wendy Gerlitz

Senior Policy Associate