taking utility energy efficiency programs to “the next level”
DESCRIPTION
Taking Utility Energy Efficiency Programs to “the Next Level”. Nevada DSM Incentive Larry Holmes December 4, 2007. Introduction. Who Alignment Enhanced Rate of Return Financial Analysis Reasonable Certainty. Where are we?. Service Territory: 1.2M Customers 7,800 MW Peak 3% Growth. - PowerPoint PPT PresentationTRANSCRIPT
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Taking Utility Energy Efficiency
Programs to “the Next Level”
Nevada DSM IncentiveLarry Holmes
December 4, 2007
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Introduction
Who
Alignment
Enhanced Rate of Return
Financial Analysis
Reasonable Certainty
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Service Territory: 1.2M Customers 7,800 MW Peak 3% Growth
Where are we?
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Public Policy Objectives
Net benefit to customers Fair distribution of benefits among
customers Balanced risk/reward for utility
providers Reduced dependence on fossil
fuels Market transformation
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Alignment
Public Policy Objectives
Interests of customers
Interests of utility providers
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Nevada Incentive Mechanism
Capital recovery
5% adder to equity portion of authorized return
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Nevada Incentive Mechanism
Project approval process Part of Integrated Resource Plan DSM savings are incorporated in load
forecasts Cost/benefit analysis required Budget Energy and capacity savings targets Delivery process Measurement and verification plan
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Nevada Incentive Mechanism
Projects are delivered to customers Energy Education Low income Demand Response Residential Commercial Market and Technology Trials
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Nevada Incentive Mechanism
Cost Accounting Costs are collected in Account 183.2
(Regulatory Assets) Costs are listed by project Program design and costs of
regulatory approval are not included Carry charge of 1/12 of authorized
rate of return is applied to the balance each month
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Nevada Incentive Mechanism
General Rate Case The balance of the 183.2 account
is included in the filing of each general rate case
The Public Utilities Commission approves only reasonable and prudent expenditures for capital recovery
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Nevada Incentive Mechanism
Cost Recovery Three year amortization Incentive provides a 5% adder to the
equity portion of the authorized return
Authorized rate of return without adder is 9.06%
Authorized rate of return with adder is 11.43%
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Sharing the Net Benefit (Nevada Power Company - 3 years)
Cost Recovery Mechanism
Net Benefit to Customers
% of Net Benefit to
Utility
Expensed $121,849,262
-
Capital Recovery $113,988,04
56.5%
Enhanced Capital Recovery
$111,931,634
8.1%
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Financial Model PortfolioPro
Based on California Standard Practice Manual Total Resource Cost Test 8760 hour avoided energy and capacity costs DSM program costs Incremental additional costs for customers Additional costs and savings for customers Energy and capacity savings Freeridership impacts
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Reasonable Certainty - Customers
Comprehensive Measurement and Verification Third party M&V contractor Results used to adjust future
projections and refine programs Annual DSM Update Report Only prudent and reasonable costs
are approved by the Public Utilities Commission
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Reasonable Certainty - Utility
DSM Plan based on Commission approved projects and budgets
Prudent and Reasonable costs will be recovered
Similar to capital investment in wires and hardware
Simplicity
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Budgeting
Nevada is fast growing state Strong competition for utility
capital dollars DSM gets priority treatment for
internal resources All proposed DSM program
increases have been funded
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Alignment - Results
Renewable Portfolio Standard 20% of sales in 2015 12% in 2010 1/4 of the requirement may be met by energy efficiency measures
DSM energy savings will exceed 1/4 of the 12% requirement by 70% in 2010
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Thank you
Questions?
Larry HolmesManager, Customer Strategy and Programs
Nevada Power Company and
Sierra Pacific Power [email protected]
702-367-5845
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