Draft proposal for initiating the Regional Technical Forum

INTRODUCTION

In 1995, the Bonneville Power Administration (Bonneville) began to shift responsibility for financing and acquiring conservation savings over to its utility customers. This shift in responsibility was intended to reduce Bonneville's costs and permit utilities to better tailor their programs to local situations. Congress recognized that one implication of this shift would likely be a more diversified approach to conservation acquisition across the region. Consequently, in 1996 it directed Bonneville and the Northwest Power Planning Council (Council) to convene a Regional Technical Forum (RTF) to develop standardized protocols for verifying and evaluating conservation savings. This is necessary because the historical program costs and savings may not be applicable to radically redesigned conservation programs. 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 target appropriately.

The Comprehensive Review's recommendations were based on its perception that the region needed to track conservation activities and renewable resource development systematically to assess whether public purpose goals are being achieved. The Comprehensive Review also stated that the uniform standards for verification and evaluation will become increasingly important as consumers gain access to energy service markets where utilities and new market entrants can expect to compete for "public purpose' funds to meet consumer demands for energy services.

In April 1997, the Council and Bonneville convened a meeting to discuss the formation of the RTF. Participants in the meeting represented public and private utilities, public interest groups, state regulatory agencies and state and local government. Attendees generally supported the formation of the RTF and requested that the Council prepare a draft proposal to serve as the basis for further discussions.

This draft proposal is meant to stimulate discussion on how the RTF should be organized and operated to achieve the goals that both Congress and the Comprehensive Review set forth. It addresses four questions that must be resolved to implement the RTF:

  • What are the goals of the RTF?
  • How should the RTF be structured and who should be included in its membership?
  • Who will sponsor/fund the RTF?
  • What is the RTF's scope of work with respect to:
    - Protocols for Verification and Evaluation,
    - Progress; and,
    - Feedback and Suggestions?

PROPOSED GOALS OF THE REGIONAL TECHNICAL FORUM

The goals of the RTF should be consistent with the charge given to it by the Congress and the Comprehensive Review. These are to

  • Develop standardized protocols for verification and evaluation of energy savings.
  • Track regional progress toward the achievement of the region's conservation and renewable resource goals.
  • Provide feedback and suggestions for improving the effectiveness of the conservation and renewable resource development programs and activities in the region.
  • Conduct periodic reviews of the region's progress toward meeting its conservation and renewable resource goals at least every 5 years, acknowledging changes in the market for energy services and the potential availability of cost-effective conservation opportunities.

Implicit in the second and fourth bullets is the need for development of regional goals taking into account estimates of cost-effectiveness.

PROPOSED STRUCTURE AND MEMBERSHIP

Congress and the Comprehensive Review indicated that the RTF should represent a broad spectrum of interest and have members with technical expertise and experience. However, neither Congress nor the Comprehensive review addressed the issue of how the actual work of the RTF would be carried out, nor who would convene the meetings. This section proposes potential approaches to addressing these issues.

Draft Proposal - The Council proposes that it carry out the functions enumerated for the RTF by the Congress and Comprehensive Review with the assistance of a standing advisory committee. Under this proposal the Council would be responsible and accountable for the policies and conclusions related to the RTF. However, to ensure broader technical and policy input, the Council would be established an "RTF" as one of its standing advisory committees to provide peer review and advice to the Council as it carries out these functions. 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. State regulatory commissioners or their staffs would be asked to serve as ex officio members. Members would be reimbursed for their travel expenses, and may be compensated for their time depending upon the level effort required to carry out their duties.

This option is being proposed because it relies on existing infrastructure and expertise. The Council and its staff have carried out most of the functions envisioned for the RTF by both the Senate and the Comprehensive Review for the last 15 years. For example, since 1991 the Council has prepared an annual assessment of regional utility conservation achievements. It has prepared and distributed case studies of successful conservation programs, including several recent ones that describe how utilities in the region are using conservation and renewable resources to successfully respond to competitive pressures. It has developed an extensive database on conservation program evaluations. The Council also prepares a regional assessment of cost-effective conservation and renewable resources at least every five years and has the responsibility for communicating its findings to regional decision-makers and the general public.

The Council is also accountable to the governors in the region, whereas a committee of the Council or an independent entity is not. This "public accountability" will be increasingly important when the efficiency and effectiveness of public purpose investments are being assessed.

From a logistical standpoint, the Northwest Power Planning and Conservation Act authorizes the Council to form advisory committees to aid it in the conduct of its duties. The Council has used such committees extensively. For example, the Council used a Conservation Resources Advisory Committee and the Economics and Forecasting Advisory Committee to assist it in the development of prior plans. The Council also has established public involvement procedure and notice processes.

There are at least two other options for structuring the RTF:

Option 1 - Under this option the RTF would be an "independent" committee, supported by the Council. This committee would function similarly to the Council's Independent Economics Advisory Board and the Independent Scientific Advisory Board to provide peer review and advice on investments in fish and wildlife protection, mitigation and enhancement. The RTF would be established as one of the Council's standing advisory committees. This would permit it to have access to the Council's technical staff and public involvement and administrative support. Members would be selected by the Council for a list of nominees provided by "stakeholders" based on expertise and experience. Members would be drawn from the private sector, utilities, public interest, and academic and national laboratory personnel. State regulatory commissioners or their staffs would be asked to serve as ex officio members. Members would be reimbursed for their travel expenses, but not their time.

Option 2 - Under this option the RTF would be established as an independent entity, perhaps as a private, non-profit organization. This committee might function similarly to the Northwest Energy Efficiency Alliance. It would have a its own governing board and independent staff. It would be operated with funding from the region's private utilities and Bonneville. Membership on the RTF board while self-selected would need to be consistent with Congressional and Review recommendations.

SPONSORSHIP/FUNDING

Some level of financial support will be needed to carry out the functions of the RTF. Neither the Congress nor the Comprehensive Review's recommendations indicated how the work of the RTF was to be funded. This section offers possible proposals for financial support of the RTF.

Draft Proposal - Support RTF activities from the Council's budget and potential future contributions from funds collected in each state to support "public purposes." This approach to funding the RTF's functions appears to be appropriate because it distributes the cost of supporting the RTF across the region and is more likely to provide an adequate and sustainable funding base. However, it does rely on the ability of the Council to support the RTF within its budget in the near term with potential funding from other sources in the future. Due to anticipated constraints on the Council's future budget, this may impact the scope of work that the RTF can effectively carry out or have an on impact other Council activities.

Other options for funding are described below.

Option 1 - Rely on volunteers to carry out the functions of the RTF. This option is implied by the use of the word "voluntary" in both the Congressional and Comprehensive Review recommendations. However, the functions that the RTF is charged to carry out by the Comprehensive Review appear to require an ongoing commitment of resources for a period of at least 10 years. It seems unlikely that a group of volunteers would be either willing or able to undertake the scope of work envisioned for the RTF and sustain these activities over such a prolonged period.

Option 2 - Support RTF activities from the Council's budget, supplemented by fee revenues. This also does not appear to be a viable option because it is not clear that supporting the RTF through charging fees for service is either likely or perhaps even appropriate. For example, the RTF could assess whether an energy service provider's claims for energy savings are based on the correct application of a standardized evaluation protocol. At least in the near term, it is not apparent who might be willing to pay for such "services." Additionally, services that could be charged for by the RTF might more appropriately be provided by the private sector or as part of normal state regulatory oversight.

SCOPE OF WORK

As directed by the Congress and the Comprehensive Review, the RTF has three major ongoing tasks. These are to:

  1. Establish standardized protocols for verification and evaluation of energy savings,
  2. Track regional progress towards the achievement of conservation and renewable resource goals; and,
  3. Provide feedback and suggestions for improving the effectiveness of the conservation and renewable resource development programs and activities in the region.

While on the surface these tasks seem rather straightforward, neither the Congress nor the Comprehensive Review provided detailed guidance as to the specific work scope the RTF should pursue and the time frame for that work. How the RTF decides to fulfill these tasks directly impacts the level of resources (budget and personnel) required to support it. Listed below are some draft proposals for the scope of work and level of effort that the RTF might undertake to fulfill its charter.

Protocols

The Comprehensive Review recommended that participation in the RTF should be voluntary. However, the recommendation from Congress and the Comprehensive Review that charges the RTF with the development of standardized protocols for verification and evaluation of energy savings seems to imply that programs that are funded by "public purpose" sources should be evaluated in accordance with accepted standards. Evaluation involves more than documenting that the public purpose funds were spent in accordance with standard accounting principles. Evaluations are not audits; they are critical assessments of whether the program's objectives were achieved.

Draft Proposal - The RTF should collect, review and distribute existing protocols, and develop and promulgate new methods in response to new information and/or new approaches to achieving conservation savings. These verification and evaluation protocols would be distributed via the Internet and mail, and through RTF sponsored seminars for practitioners. Upon request, the RTF would review whether the appropriate verification and/or evaluation protocols had been applied correctly.

This level of effort appears appropriate because it would allow the region to leverage resources for the purpose of standardizing verification and evaluation protocols and to evolve these protocols as circumstance change. It also has the potential for establishing consistent application of protocols across the region. It should be noted that regardless of the level of resources committed to the development and dissemination of standardized protocols, activities underwritten by "public purpose" funding should be subject to independent evaluation.

The estimated budget required to implement this option is approximately $100,000 in the initial year and $50,000 annually thereafter.

Two alternative levels of commitment to ensure that public purpose funds are being effectively used are described below.

Option 1 - More Limited Level of Effort. Under this option the RTF would simply collect, review and make available for use existing verification and evaluation protocols that it believes represent "best practice." Distribution of these protocols would be limited to an Internet web site and surface mail. While RTF would not develop new protocols, it could review approaches that are developed by others to assess their applicability and appropriateness. This option might be a viable alternative to the draft proposal, provided that other parties invested the resources needed to keep evaluation and verification protocols up to date. The estimated budget required to implement this option is approximately $75,000 in the initial year and $25,000 annually thereafter.

Option 2- Expanded Level of Effort. Under this option the RTF would collect, review and distribute existing protocols, develop and promulgate new methods in response to new information and/or new approaches to achieving conservation savings. Distribution of the verification and evaluation protocols would be via the Internet and surface mail, and through RTF sponsored seminars for practitioners. The RTF would also conduct randomly selected reviews of whether the appropriate verification and evaluations protocols had been applied correctly and whether the results where supportable. The level of commitment needed to support this option is significantly greater than the other two alternatives because it requires an assessment of whether the results are of a particular evaluation are justified. It also places the RTF in a much more direct oversight role.

The estimated budget required to implement this option is approximately $100,000 in the initial year and $125,000 annually thereafter

Tracking

Since 1991 the Council has systematically tracked the conservation resource development in the region through an annual survey of the region's utilities and Bonneville. This survey collects detailed information on utility conservation programs and expenditures. The Council also attempts to estimate the magnitude of the conservation savings that have been produced by changes in state energy codes and federal efficiency standards. Historically, electric utility and Bonneville programs and changes in state and federal efficiency codes and standards have dominated the region's conservation development efforts. Therefore, the Council has not accounted for conservation savings generated outside of utility programs by individual consumer actions or by government programs (e.g., the Oregon State Business and Energy Tax Credit, the Federal Energy Management Program (FEMP)).

The Comprehensive Review recommended that the RTF track progress towards the region's conservation and renewable resource goals. The Comprehensive Review also recommended that the RTF conduct periodic reviews of the region's progress (at least every five years). To assure that the RTF would have access to the data needed to track progress the Comprehensive Review recommended that all retail electricity distribution utilities and state and local low-income weatherization service providers adopt and publish an annual report of their conservation and low-income weatherization achievements. This report is to identify at least the amount of conservation achieved by economic sector (e.g., residential, commercial, etc.), the number of dwellings occupied by low-income households that were weatherized and the level of utility investments in these areas. No reporting requirements were recommended for renewable resource development.

There are two fundamental policy questions that must be addressed before the specific "tracking" scope of work can be designed. The first question is "What are the region's conservation and renewable resource goals?" The second question flows from the first. It is "What conservation and renewable resource developments counts toward these goals?" For example, do only resources developed using "public purpose" funds count? Do resources developed using state or federal tax-credits count? Do consumer funded investments count?

Draft Proposal - Historically, the Council, under the responsibilities given it in the Northwest Power Act, has established the level of conservation that is cost-effective to develop in the region, as well as establish quantitative goals for renewable (and other) resources. Under this option, the Council would continue to set these goals with the advice of RTF. The Council, in co-operation with the states, might also prepare an assessment of the need for low-income weatherization.

The RTF, again working as an advisory committee to the Council, 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. Utilities, low-income weatherization service providers and developers would be asked to report their activities on these forms and in accordance with the definitions on an annual schedule. 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. This report would describe actual expenditures were to the Review's recommended allocations of the three percent of retail revenues to local and regional conservation, low-income weatherization and renewable resources. In addition, the RTF would to assess whether all the cost-effective electric efficiency opportunities identified by the Council are being captured, whether low-income consumers are being adequately, affordably and fairly served and whether new renewable resources are being developed in the region. That is, the RTF report would track both the amount of money spent and the results (e.g., savings, number of homes weatherized, etc.) achieved. These comparisons would include both quantitative and qualitative measures of progress.

The RTF would not attempt to assess the level of conservation being developed by private market activities (i.e., without the use of "public purposes" funding.) The RTF would rely on the oversight of the state regulatory authorities and local public utility governing bodies to verify the accuracy of the data submitted by utilities and resource developers.

Systematically tracking of both the levels of expenditures and results is required to address the question of whether the region's public purpose goals are being achieved. If the data collection process is either incomplete or inaccurate, the region's citizens and policy makers will not be able to meaningfully evaluate the effectiveness of the expenditures. Without a consistent data collection process and an in-depth analysis of the impact, the sole metric by which the region measures progress will be limited to whether "the money was spent as prescribed." As a result, it will be impossible to assess whether additional cost-effective conservation opportunities are being missed or, conversely, whether lower funding levels can accomplish the region's conservation goals.

The estimated budget required to implement this option is approximately $125,000 in the initial year and $100,000 annually thereafter.

Two other options, described below, assume that the Comprehensive Reviews recommendation to allocate 3 percent of retail electricity sales revenues for conservation, low-income weatherization and renewables represent the region's goals

Option 1 - More Limited Level of Effort. Under this option the Council would continue to establish the level of regionally cost-effective conservation to be developed and renewable resource development goals. However, rather than develop a "standardized" tracking system, the RTF would annually request a copy of the annual reports published by each retail electricity distribution utility and state and local low-income weatherization service provider. It would use these reports to prepare a regional summary of conservation and low-income weatherization savings and expenditures. The RTF would also survey energy resource developers and suppliers to ascertain the level and type of renewable resource development activity in the region. The RTF would not attempt to assess the level of conservation being developed by private market activities (i.e., without the use of "public purposes" funding). The RTF would rely on the oversight of the state regulatory authorities and local public utility governing bodies to verify the accuracy of the data submitted by utilities and 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. The estimated budget required to implement this option is approximately $75,000 in the initial year and $50,000 annually thereafter.

Option 2 - Moderate Level of Effort. Under this option 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. Utilities, service providers and developers would be asked to report their activities on these forms and in accordance with the definitions to the RTF on an annual schedule. 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 Review's "public purpose" goals. That is, it would report how closely actual expenditures were to the Review's recommended allocations of the 3 percent of retail revenues to local and regional conservation, low-income weatherization and renewable resources. If standardized measurement and evaluation protocols are used, then it will also be possible to compare these results (e.g., savings, number of low-income homes weatherized) with regional conservation, renewable resource and low-income weatherization goals. As in Option 1, the RTF would not attempt to assess the level of conservation being developed by private market activities (i.e., without the use of "public purposes" funding). Also, as in Option 1, the RTF would rely on the oversight of the state regulatory authorities and local public utility governing bodies to verify the accuracy of the data submitted by utilities and resource developers.

The estimated budget required to implement this option is approximately $100,000 in the initial year and $50,000 annually thereafter.

Provide Feedback and Suggestions

The Comprehensive Review charged the RTF with providing feedback and suggestions for improving the effectiveness of conservation and renewable resource programs. In order to carry out this task the RTF will require information on the relative effectiveness of alternative approaches to accomplishing conservation and renewable resources goals. This implies that the RTF will have access to evaluations of conservation and renewable resource development programs funded by "public purpose" monies. It also assumes that these public purpose funded programs will be evaluated in accordance with accepted protocols. (See Recommendation under "Protocols.")

Draft Proposal - During the transition to a competitive electric service market it is anticipated that approaches to developing conservation and renewable resources will evolve rapidly. Under this option, the RTF would prepare an annual report that profiled a limited number successful ("best of class") conservation and renewable resource development programs and activities. It would make these profiles available to interested parties both in print and via electronic media. The RTF would also provide peer review services on new program designs or major program re-designs. These peer review services would be provided only "on request." RTF members who serve on the peer review panels might be reimbursed if such reviews require substantial time commitments. All recommendations from these reviews would publicly available.

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. This might include such activities as conducting competitions, with participants selected on a random basis or via self-nomination. 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 estimated budget required to implement this option is approximately $75,000 to $100,00 annually, including compensation for RTF members who participate in peer reviews.

Option 1 - More Limited Level of Effort. Under this option, the RTF would only prepare an annual report that profiled a limited number successful ("best of class") conservation and renewable resource development programs and activities. It would make these profiles available to interested parties both in print and via electronic media.

The estimated budget required to implement this option is approximately $50,000 annually.

Option 2 - Moderate Level of Effort. Under this option, in addition to preparing and distributing the profiles described in Option 1, the RTF would provide peer review services on new program designs or major program re-designs. These peer review services would be provided only "on request." RTF members who serve on the peer review panels might be reimbursed if such reviews require substantial time commitments. All recommendations from these reviews would be publicly available.

The estimated budget required to implement this option is approximately $100,000 to $150,000 annually, including compensation for RTF members who participate in peer reviews.

Request for Comments The Council is requesting comments on the options outlined above by close of business August 21, 1998. The Council will be also be accepting public comments on this document at its August 11th - 12th meeting in Portland. Please address all comments to Mark Walker, Director Public Affairs, Northwest Power Planning Council, 851 SW Sixth Avenue, Suite 1100, Portland, OR 97204.

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