- Email: [email protected]
Ontario hydro floats program to cut load by 4500 MW
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Indiana interests think REA is being peremptory as well as preemptive.
In the letter, REA directed the coop to raise rates 9% across the board immediately, with permission of the bankruptcy court, and to increase rates 9% in each of the next two years. Heath said the agency had since offered to settle the matter if Wabash agrees to a series of three annual rate increases of 6% each. While that figure would not necessarily cover the entire obligation-which REA daims is over $900 million, counting the interest accrued since Wabash filed for bankruptcy--Heath said REA would be satisfied with such an ag~emerit and would shoulder some of the risk. Wabash spokesman John Samples daims REA's unwillingness to work with the co-op on repayment terms and its threat to take legal action against individual directors forced the co-op into bankruptcy and continues to fuel the controvers~ The bankruptcy proceeding is on hold pending outcome of the preemption case. Wabash reached a settlement with PSI in the RICO and fraud case which is contingent upon REA accepting $450 million as
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payment for the co-op's debt. Samples said REA's attempt to preempt state regulators has thrown a monkey wrench into the settlement proposal which has a drop-dead date of May 31. Brenda Rodeheffer, a deputy attorney general who represents the URC, refutes REA's daim to ratemaking authority over an Indiana co-op. "Our view is the Indiana URC has authority to set rates and cannot impose Marble Hills costs on ratepayers," she said. REA participated in the cases from which that decision came, she said, and now does not want to abide by the judgment. There is some feeling REA has forfeited its right to take preemptive action, even if it were legal because the agency submitted to the decisions of the court by participaring in various proceedings pertaining to Wabash and Marble Hills. Wabash has also suggested that REA may be short-circuiting its own contracts since they require the co-op to operate with URC-approved rates. Wabash has asked the court for summary judgment in the case. Meanwhile, neither Wabash nor
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any of its members can look to REA for funds. In mid-March, the federal agency made official what it has reportedly been doing unofficiaUy for the past year: REA put Wabash's 22 Indiana members and its two members in Michigan and Ohio on notice that their loan applications pending with REA were rejected. --Sonya Bruce
The Demand-SideDragon
Ontario Hydro Floats Program to Cut Load by 4500 M W Ontario Hydro has faced up to its burgeoning load growth by launching the most ambitious demandside management program ever seen in Canada or in most of the United States. Hydro plans to reduce its demand by almost 20% or 4500 MW by the year 2000 through a variety of progams for the residential, commercial and industrial sectors. Hydro's vice president for energy management, Dane MacCarthy, who is in charge of the effort, explains that in the face of load growth that was running close to 4% or 5% for the past few years, Hydro undertook some studies of the economics and availability of energy-saving equipment, appliances and technologies, and of the financial feasibility of a major program to encourage their adoption. The result is an ambitious set of targets to reduce demand by reaching out to The Electricity Journal
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customers to make them aware of their energy use and giving them incentives to decrease consumption. Andrew Roman, general counsel for the Public Interest Advocacy Centre, a consumers' organization in Toronto, doesn't quarrel with the objectives of the conservation program; but he thinks there should be less "propaganda" and more attention to efficient rate design. Specifically, he thinks Hydro's rate structure needs overhauling to stop it from favoring large industrial customers and that proper energy pricing offers the most potential to decrease energy consumption. MacCarthy says the program, which will cost well over $1 billion dollars before it is finished, is strongly supported by the provincial government as well as consumers. He adds that the environmental protection aspects of the effort should also ensure its acceptance, noting that "no supply-side option is entirely benign." In the commercial sector, which has the most potential for savings, Hydro has developed computerassisted design programs and is offering technical and financial incentives to building owners, for example, to help them bring their lighting systems up to more effident standards. In some cases, Hydro approaches customers with ideas and financial inducements to carry them out. In other cases, the customer can identify its own strategy to save energy and approach the utility for support to make it happen. The ufil-
April 1989
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ity has targeted demand by commercial customers to drop by 480 MW over the next five years. MacCarthy says the program is just getting under wa~ with about $8 million (Cdn) in incenfives to be spent this year and $30 million next year. He says the rate impacts appear to be about a half a percent a year, but that overall calculation depends on how the incentives that underpin the program are amortized, a topic that will be explored in upcoming hearings before the provincial utility commission. One demonstration program the crown corporation has under way involves monitoring of electrical and other energy use in large plants. Hydro worked with 12 large companies, such as breweries and auto manufacturers, to install energy monitoring systems in each plant and shared half the cost of the systems. As a result, owners got detailed information on patterns of use and costs by operation. One company stopped charging truck batteries during peak energy hours and began
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charging them during offpeak rate periods. Savings have been documented in every plant, with a Molson's plant cutting costs by about $160,000 a year. The objecfive now, according to MacCarthy, is for the plants to continue the monitoring themselves, with Hydro's role being phased out. Hydro is also working to increase the use of energy-efficient motors in the commercial and industrial sectors. Utility reps met recently with owners of a new Suzuki plant near Toronto and convinced them, by contributing to their initial capital investment, to buy more efficient motors. There is also an innovative thermal cool storage program in the works to introduce new technologies to Hydro's summer peaking customers. On the residential side, Hydro is promoting new energy-efficient housing designs, water heater blankets and other home conservation measures. "Your Hydro Stores" are being opened in shopping malls where consumers can see the latest in energy efficiency. Customers are taking a strong interest, MacCarthy notes. He says Hydro ordered 25,000 thermometers that measure the temperatttre inside home refrigerators to be given away as part of the new program. They went like hotcakes, with 125,000 now given out and requests still coming in. Whether this kind of interest will translate into measurable savings or just good public relations will take some time to ascertain. --Susan L. Whittington
15
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E
W
S
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Indiana interests think REA is being peremptory as well as preemptive.
In the letter, REA directed the coop to raise rates 9% across the board immediately, with permission of the bankruptcy court, and to increase rates 9% in each of the next two years. Heath said the agency had since offered to settle the matter if Wabash agrees to a series of three annual rate increases of 6% each. While that figure would not necessarily cover the entire obligation-which REA daims is over $900 million, counting the interest accrued since Wabash filed for bankruptcy--Heath said REA would be satisfied with such an ag~emerit and would shoulder some of the risk. Wabash spokesman John Samples daims REA's unwillingness to work with the co-op on repayment terms and its threat to take legal action against individual directors forced the co-op into bankruptcy and continues to fuel the controvers~ The bankruptcy proceeding is on hold pending outcome of the preemption case. Wabash reached a settlement with PSI in the RICO and fraud case which is contingent upon REA accepting $450 million as
14
payment for the co-op's debt. Samples said REA's attempt to preempt state regulators has thrown a monkey wrench into the settlement proposal which has a drop-dead date of May 31. Brenda Rodeheffer, a deputy attorney general who represents the URC, refutes REA's daim to ratemaking authority over an Indiana co-op. "Our view is the Indiana URC has authority to set rates and cannot impose Marble Hills costs on ratepayers," she said. REA participated in the cases from which that decision came, she said, and now does not want to abide by the judgment. There is some feeling REA has forfeited its right to take preemptive action, even if it were legal because the agency submitted to the decisions of the court by participaring in various proceedings pertaining to Wabash and Marble Hills. Wabash has also suggested that REA may be short-circuiting its own contracts since they require the co-op to operate with URC-approved rates. Wabash has asked the court for summary judgment in the case. Meanwhile, neither Wabash nor
F
0
C
U
S
any of its members can look to REA for funds. In mid-March, the federal agency made official what it has reportedly been doing unofficiaUy for the past year: REA put Wabash's 22 Indiana members and its two members in Michigan and Ohio on notice that their loan applications pending with REA were rejected. --Sonya Bruce
The Demand-SideDragon
Ontario Hydro Floats Program to Cut Load by 4500 M W Ontario Hydro has faced up to its burgeoning load growth by launching the most ambitious demandside management program ever seen in Canada or in most of the United States. Hydro plans to reduce its demand by almost 20% or 4500 MW by the year 2000 through a variety of progams for the residential, commercial and industrial sectors. Hydro's vice president for energy management, Dane MacCarthy, who is in charge of the effort, explains that in the face of load growth that was running close to 4% or 5% for the past few years, Hydro undertook some studies of the economics and availability of energy-saving equipment, appliances and technologies, and of the financial feasibility of a major program to encourage their adoption. The result is an ambitious set of targets to reduce demand by reaching out to The Electricity Journal
T
H
E
N
customers to make them aware of their energy use and giving them incentives to decrease consumption. Andrew Roman, general counsel for the Public Interest Advocacy Centre, a consumers' organization in Toronto, doesn't quarrel with the objectives of the conservation program; but he thinks there should be less "propaganda" and more attention to efficient rate design. Specifically, he thinks Hydro's rate structure needs overhauling to stop it from favoring large industrial customers and that proper energy pricing offers the most potential to decrease energy consumption. MacCarthy says the program, which will cost well over $1 billion dollars before it is finished, is strongly supported by the provincial government as well as consumers. He adds that the environmental protection aspects of the effort should also ensure its acceptance, noting that "no supply-side option is entirely benign." In the commercial sector, which has the most potential for savings, Hydro has developed computerassisted design programs and is offering technical and financial incentives to building owners, for example, to help them bring their lighting systems up to more effident standards. In some cases, Hydro approaches customers with ideas and financial inducements to carry them out. In other cases, the customer can identify its own strategy to save energy and approach the utility for support to make it happen. The ufil-
April 1989
E
W
S
I
N
ity has targeted demand by commercial customers to drop by 480 MW over the next five years. MacCarthy says the program is just getting under wa~ with about $8 million (Cdn) in incenfives to be spent this year and $30 million next year. He says the rate impacts appear to be about a half a percent a year, but that overall calculation depends on how the incentives that underpin the program are amortized, a topic that will be explored in upcoming hearings before the provincial utility commission. One demonstration program the crown corporation has under way involves monitoring of electrical and other energy use in large plants. Hydro worked with 12 large companies, such as breweries and auto manufacturers, to install energy monitoring systems in each plant and shared half the cost of the systems. As a result, owners got detailed information on patterns of use and costs by operation. One company stopped charging truck batteries during peak energy hours and began
F
O
C
U
S
charging them during offpeak rate periods. Savings have been documented in every plant, with a Molson's plant cutting costs by about $160,000 a year. The objecfive now, according to MacCarthy, is for the plants to continue the monitoring themselves, with Hydro's role being phased out. Hydro is also working to increase the use of energy-efficient motors in the commercial and industrial sectors. Utility reps met recently with owners of a new Suzuki plant near Toronto and convinced them, by contributing to their initial capital investment, to buy more efficient motors. There is also an innovative thermal cool storage program in the works to introduce new technologies to Hydro's summer peaking customers. On the residential side, Hydro is promoting new energy-efficient housing designs, water heater blankets and other home conservation measures. "Your Hydro Stores" are being opened in shopping malls where consumers can see the latest in energy efficiency. Customers are taking a strong interest, MacCarthy notes. He says Hydro ordered 25,000 thermometers that measure the temperatttre inside home refrigerators to be given away as part of the new program. They went like hotcakes, with 125,000 now given out and requests still coming in. Whether this kind of interest will translate into measurable savings or just good public relations will take some time to ascertain. --Susan L. Whittington
15