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									                      A Guidebook to Expanding the Role of
                      Renewables in a Power Supply Portfolio


                      Chapter 6   Implementation Planning

                      April 4, 2005



Altera Energy, Inc.
321 Gaylord Street                                             ALTERA
Denver, CO 80206                                                Energy
(303) 355-1030
            Agenda


                    I. Summary of Guidebook

                    II. Review of Chapter 7 – Implementation Planning

                    III.Utility Case Studies in Renewable Energy

                        •     Palo Alto Utilities: Karl Knapp and Lindsay Joye
                        •     Austin Energy: Mark Kapner
                        •     Basin Electric: Ron Rebenitsch
                        •     Resource Solutions: Ray Draker
                        •     SMUD: Mike DeAngelis and Mike Batham
                        •     Richmond Power and Light: Harry Phillips



Guidebook Webcast April 4, 2005 “Implementation Planning”   2                    ALTERA Energy
       History and methodology for guidebook


   • Guidebook available from Energy-Efficient Development Program (DEED) of the
     American Public Power Association
      • Offered free to DEED member utilities as a tool to facilitate renewable alternatives
      • Sponsored by: Gila Resources and Western Area Power Administration

   •    Guidebook completed in latter half of 2004
        • Authors:
              • Brian Walshe, Altera Energy, Inc.
              • Larry Barrett, Barrett Consulting Associates, Inc.
        • Management team:
              • Ken Mecham, President and CEO, Gila Resources
              • Randy Manion, Western Area Power Administration

   • Initial webcast reviewed plans and progress with over a dozen utility representatives

   • Guidebook of over 80 pages, including references and case studies available from
     APPA

   • Detailed presentations, discussion of results, and upcoming webcasts available on
     www.repartners.org website


Guidebook Webcast April 4, 2005 “Implementation Planning”   3                                  ALTERA Energy
      Outline of guidebook and webcast discussion


                                                            Table of Contents

                      I.       Introduction and Background
                      II.      Encouraging Public Participation and Governance
                      III.     Defining Renewable Energy Objectives
                      IV.      Screening Renewable Energy Alternatives
                      V.       Designing Projects and Programs
                      VI.      Analyzing Renewable Energy Costs and Risks
                      VII.     Implementation Planning



                      Appendix
                           • Gila Resources Case Study
                           • Other Utility Case Studies
                           • Check List for Talking with Developers
                           • Additional Website References
Guidebook Webcast April 4, 2005 “Implementation Planning”          4             ALTERA Energy
      This is last scheduled webcast presentation and discussion



          Monday, November 1, 2004: -                       Overview of Renewable Guidebook

          Monday, December 6, 2004: -                       Encouraging Public Participation and
                                                            Meaningful Governance

          Monday, January 3, 2005: -                        Defining Renewable Energy Objectives


          Monday, February 7, 2005: -                       Screening Renewable Energy Alternatives
                                                            Including Wind, Geothermal, Hydro, Biomass,
                                                            and Solar

          Monday, March 7, 2005:                   -        Analyzing Renewable Energy Costs & Risks

          Monday, April 4, 2005:                   -        Designing Projects and Programs




                      Copies of webcast presentations available at www.repartners.org


Guidebook Webcast April 4, 2005 “Implementation Planning”      5                                       ALTERA Energy
       Quick Review
       Chapter 1: Introduction and background

        •      Guidebook objective: What should utility managers be doing to expand the
               role of renewables in their energy supply portfolio?

        •      Guidebook scope
               •   Focused on helping the utility identifying alternatives in public participation,
                   resource objectives, resource selections, project design, risk analysis and
                   program implementation
               •   Examined seven key drivers
                                                              Costs
              Natural gas price volatility
                                                                           Renewable portfolio standards


                                                             Utility
                  Green pricing                             Decision          Corporate governance
                                                             Maker

            Costs to integrate with grid
                                                                       Technical/experience base




Guidebook Webcast April 4, 2005 “Implementation Planning”         6                                   ALTERA Energy
        While the Guidebook described 3 basic alternative strategies to
        achieve renewable goals, a 4th could also be considered

                    Goal(s)                                     Alternative Strategies


                                                                        Build New
                                                                  1     Renewable
                                                                        Generation



                       Expand the Role of                             Buy Renewable
                       Renewables in the                          2     Generation
                     Power Supply Portfolio                           Output via PPA




                                                                         Purchase
                                                                  3        RECs




Some have argued a fourth alternative is also valid….            4
                                                                      Actively Support
                                                                        Renewables


Guidebook Webcast April 4, 2005 “Implementation Planning”   7                            ALTERA Energy
             Chapter 2
             Ensuring Public Participation and Meaningful Governance

                   • Public participation defined:                             Municipal Utility Membership of the Board
                                                                                               of Directors

                   “Any process that involves the public in
                     problem-solving or decision-making                                                          Appointed
                                                                                                                   29%
                     and uses public input to make
                     decisions.”
        •      Municipal utilities by design                                       Council
                                                                                    59%
               are more democratic with
                                                                                                             Elected
               more public participation.                                                                     12%


         Utility                                 Participation Rate       Start Date
         Lenox Municipal                             11.1percent            2003
         City of Palo Alto Utilities                 6.6 percent            2003             • Municipal utilities
         Moorhead Public Service                     5.5 percent            1998               tend to have higher
         Holy Cross Energy                           5.1 percent            1998               participation rates in
         Montezuma Municipal Light and Power         4.9 percent            2003               renewable energy
         Orcas Power and Light                       4.9 percent            1999               programs compared
         Fairbanks Municipal Utilities System        4.7 percent            2003               to other utilities.
         Sacramento Municipal Utility District       4.6 percent            1997
         Central Electric Cooperative                4.1 percent            1999
         Madison Gas & Electric                      3.9 percent            1999



Guidebook Webcast April 4, 2005 “Implementation Planning”             8                                                    ALTERA Energy
            Chapter 3
            Defining Renewable Energy Objectives


          Planning Pyramid
                                                                Vision
                                                            What you want to
                                                             be in five years

                                                               Mission
                                                    What the organization does
                                                  that brings value to customers

                                                                Goals
                                                   Major accomplishments to
                                                 achieve the vision and mission



                                                              Strategies
                                        Methods (how and when) for achieving goals



                                                  Objectives and Targets
                                 Specific steps (milestones) in strategies to reach goals



                                                               Budget
                                    Resources to meet objectives, strategies and goals
Guidebook Webcast April 4, 2005 “Implementation Planning”            9                      ALTERA Energy
            Chapter 4
            Screening Renewable Energy Alternatives


      • Utility scale projects
             - Wind
             -   Geothermal
             -   Bioenergy
             -   Solar
             -   Hydro
             -   Oceans
             -   Hydrogen
      •Customer scale projects
          - Solar water heating
             -   Passive solar design
             -   Transpired collectors
             -   Geothermal direct use
             -   Geoexchange heat pumps
             -   Photovoltaic systems
             -   Small wind turbines
             -   Fuel cells




Guidebook Webcast April 4, 2005 “Implementation Planning”   10   ALTERA Energy
            Chapter 5
            Designing Projects and Programs


         Determine stage of development and implementation


                  Research                      Field Test        Pilot     Full
                                                                  Program   Implementation




Guidebook Webcast April 4, 2005 “Implementation Planning”    11                              ALTERA Energy
                 Chapter 6: Analyzing Renewable Energy Costs and Risks:
                 Monte Carlo simulation can greatly improve your understanding of
                 the impact of different amounts of renewables in a portfolio

                Load Forecast                                  Excel spreadsheet model can quickly simulate 8760 hours x
                                                               20 years dispatch and expected portfolio cost
                                                                • Allows for hundreds of iterations, giving more robust answers
        -30%        -15%
                               Dispatch model
                               base case        +15%   +30%     • Allows stakeholders to see impact of changes to input
                                                                  assumptions (e.g. 2% wind, 5% wind, 10% wind)

                Hydro Conditions


                                                                                      Portfolio “A”
                                                                                       5% Wind
                               Dispatch model
        -30%        -15%       base case        +15%   +30%


                                                                           Portfolio “B”
                                                                                                      Portfolio “A” shows higher
                                                                             2% Wind                  expected cost, but a smaller
                Electric Price Forecast                                                               range of potential outcomes
                                                                 Standard Deviation




                               Dispatch model
        -30%        -15%       base case        +15%   +30%




                Gas Price Forecast
  Probability




                                                                                                          Expected Total Portfolio Cost
                           Mean = 1.00
         -60%      -12%           +35%          +83%   +231%




Guidebook Webcast April 4, 2005 “Implementation Planning”                                      12                                  ALTERA Energy
            Chapter 7: Implementation Planning
            Phase I: Organizing the Implementation Team

                                                      Board/City Council


                                                            Steering Team

                                                                                                            Partner/ Ally
                                                        Project Manager
                                                                                                             Interface

                                                                                                           • If appropriate


                Customer                          Finance                             Legal/                            Regulatory
                Interface                                                            Contracts                           Interface

            •   Green pricing                 • Project                            • Land and                       •   Utility commission
            •   Rate base                       financing                            property issues                •   Legislatures
            •   Incentives                    • Tax                                • Contract w/                    •   Land use codes
            •   Green tags                    • Budgets                              developer                      •   Building codes
            •   Promotion                     • Rates                              • Power purchase                 •   Environmental
            •   Delivery                                                             agreement                      •   Transmission
                                                                                     negotiations
                                  Public                     Construction                              Operations
                                Interface

                           • Education                       •   Engineer                          • Grid integration
                           • Polls                           •   Procure                           • Testing/
                           • Communication                   •   Construct                           certification
                                                             •   Contract                          • Metering/ billing
                                                             •   Interconnection                   • Power purchase
                                                                                                     agreement admin.

Guidebook Webcast April 4, 2005 “Implementation Planning”                13                                                             ALTERA Energy
            Chapter 7: Implementation Planning
            Phase II: Implementation Planning Work Steps

        Step I                     Step II                    Step III                Step IV               Step V
          Ensure Clarity of         Designate                   Develop                Develop                Initiate Work
          Objectives,               Team, and                   Detailed Cost          Individual             Report Progress
          Roles &                   Project                     & Schedule             Work Plans for
          Responsibilities          Organization                Information            Team Leaders
         1. Compile relevant       4. Define roles &         6. Translate approved   9. Separate plan for   10.Initiate discussions/
            documents on              responsibilities and      budget into cost &      each team leader      negotiations with
            renewable energy          reporting                 schedule tasks and       – Mktg/Customer      developer (s)
            goals , strategies,       requirements for          areas of                 – Finance          11.Coordinate with
            and objectives            team leaders              responsibility           – Legal/             vendors and trade
              – Project analysis        – Mktg/Customer      7. Define project             Contracts          allies
              – Approval                – Finance               management tools         – Regulatory
                authority               – Legal/                and approach             – Public           12.Document progress
              – Budget                    Contracts                                      – Construction       - Project team
                                                                 – Project
                authority               – Regulatory                                     – Operations         - Steering team
                                                                   reporting
              – Explicit goals,         – Public                                         – Partner/Ally        - Public information
                                                                 – Performance
                strategies and          – Construction                                     Interface (if
                                                                   measures
                objectives              – Operations                                       appropriate)
                                                                 – Progress
         2. Compile relevant       5. Communicate                  reviews
            documents on              organization               – Contingency
            goals , strategies,       structure and                planning
            and objectives            responsibilities via
              – Internal              communication
                                                             8. Review available
              – External              plan
                                                                information from
              – Feedback loop                                   APPA, NREL, DOE
         3. Identify steering                                   and other public
            team and project                                    sources
            manager and
            define roles &
            responsibilities



Guidebook Webcast April 4, 2005 “Implementation Planning”                14                                                        ALTERA Energy
                            Case Studies: Dr. Karl Knapp and Lindsay Joye
                                        City of Palo Alto Utilities
                             karl.knapp@cityofpaloalto.org; 650-329-2309
                            lindsay.joye@cityofpaloalto.org; 650-329-2680

                         Palo Alto Renewable Energy Plan and Accomplishments

     1. PV Partners Program (1999-current)
       • offer incentives to residents & businesses to install net metered PV
       • 95 systems, 291 kWac = 5 watts/capita

     2. City PV Demonstration (2005-06)
       • Co-fund 250 kW on city facilities
       • Provide solar resource for Palo Alto Green program

     3. Palo Alto Green (2003,-current)
       • 1.5 ¢/kWh premium, content is 97.5% wind, 2.5% solar
       • 11% participation in < 2 yrs!

     4. RPS (2003-current)
     • Goal 10% by 2008, 20% by 2015 at cost ≤0.5 ¢/kWh
     • Will reach 12% by 2007 with wind and landfill gas contracts (20 yr term)




Guidebook Webcast April 4, 2005 “Implementation Planning”   15                    ALTERA Energy
                        Case Studies: Mark Kapner, Austin Energy
                      512-322-6123; mark.kapner@austinenergy.com



                    1. Public Participation

                    2. Renewable Energy Objectives

                    3. Resource Options Screening and Selection

                    4. Program Design Issues

                    5. Program Analysis Process and Results

                    6. Program Implementation Challenges and Successes




Guidebook Webcast April 4, 2005 “Implementation Planning”   16       ALTERA Energy
                    Case Studies: Ron Rebenitsch, Basin Electric Power
                      Cooperative; 701-255-5120; ronreb@bepc.com
                                              Wind Resources: 87 MW


       Minot (2.6 MW)


                                       Edgeley (40 MW)      Annual Production
   Hyde County (40 MW)                                       ~275,000 MWH/yr
                                               Pipestone (.75 MW)
                                      Chamberlain (2.6 MW)

    Rosebud                (.75 MW)




Guidebook Webcast April 4, 2005 “Implementation Planning”                ALTERA Energy
            BEPC 2005 Green Tag Rate…



       •Small Quantities: $5.00/Tag
       •More than 5,000 Tags: Market Price


                                               1 Tag = Renewable
                                              attributes of 1 MWH
                                                                    Green
                                                                    Tags




Guidebook Webcast April 4, 2005 “Implementation Planning”   18        ALTERA Energy
Guidebook Webcast April 4, 2005 “Implementation Planning”   19   ALTERA Energy
            Current Value of Tags (RECs)




                                              Market Pricing
               50
               40                          Compliance             Current prices
                                                                 Voluntary
                                                                    $1-2/MWH
               30
               20
               10
                0
                              Eas       Tex  No     C       Mid
                                    tC         rth alifo
                                      oas as      we
                                                     st
                                                         rni west
                                                            a
                                         t

Guidebook Webcast April 4, 2005 “Implementation Planning”   20                     ALTERA Energy
        Some Marketing Hurdles…



       Regional Protectionism:
       (Possible violation of
     Interstate Commerce Clause)

                                                                 Lack of Consumer
                                                                   Recognition


                                                            Markets Are Not Liquid



Guidebook Webcast April 4, 2005 “Implementation Planning”   21                      ALTERA Energy
                Typical Three Year Contract


          Typical 3-Year Contract…




                         50
                         40                  Compliance      Voluntary
                         30
                         20
                         10
                          0
                                    Eas       Tex  No     C       Mid
                                          tC         rth alifo
                                            oas as      we
                                                           st
                                                               rni west
                                                                  a
                                               t

Guidebook Webcast April 4, 2005 “Implementation Planning”   22            ALTERA Energy
            Standards and System Integrity are Critical



     Standards & System Integrity are Critical

     Suggestions: Keep Things Simple!
     Good Reference: Nat. Assoc. of Attorneys General
          “Guidelines for Environmental Marketing”
     Verification Process:
            • Independent CPA or;
            • Qualified internal auditors
            • “Agreed on Procedures” (Audits do not apply)
     Leave fuel mix, market power, etc., to regulators




Guidebook Webcast April 4, 2005 “Implementation Planning”   23   ALTERA Energy
             3rd Party Tracking is Important - Helps…




                                                                 Customers want
                                                                   Assurance


                                                                   Verification



                                                                    Branding

Guidebook Webcast April 4, 2005 “Implementation Planning”   24                    ALTERA Energy
              National Tracking System is Needed

     National Tracking System is Needed



                    WREGIS (Western Renewable Energy Generation Information System)
                         • Western half of US (WECC footprint)
                         • WECC is institutional home
                         • Getting close to operation
                    MRETS (Midwest Renewable Tracking System)
                         • ND, SD, MN, IA, WI, Manitoba
                         • Working on procedures and final concept
                         • Legislation in ND/SD to allowingparticipate
                    Others – PJM, NEPOOL, ERCOT, etc




Guidebook Webcast April 4, 2005 “Implementation Planning”   25                        ALTERA Energy
               Last But Not Least…

  Last, but not least…




                                 A Commodities Market
                                   For RECs is Needed


                                            Tracking systems or a
                                            national clearinghouse
                                                   will help
Guidebook Webcast April 4, 2005 “Implementation Planning”   26       ALTERA Energy
                      Case Studies: Ray Draker, Resource Solutions
                     rdracker@ resource-solutions.org; 701-255-5120



                    1. Renewable Energy Credits (REC) Eligibility

                    2. REC Certification

                    3. REC Tracking

                    4. REC Current Markets

                    5. REC Future Prospects




Guidebook Webcast April 4, 2005 “Implementation Planning”   27        ALTERA Energy
                                 Case Studies: SMUD
                  Mike DeAngelis; mdeange@smud.org, 916-452-3211
                                    Mike Batham




           SMUD RENEWABLES GOALS

           12% of Supply by 2006; 23% by 2011
             • RPS = 10% + 2% Greenergy in 2006
             • RPS = 20% + 3% Greenergy in 2011

           RPS Mandate from Board in 2001

           Greenergy Program began in 1997
             • 100% Renewables = $6/mo;
             • 50% Renewables = $3/mo.




Guidebook Webcast April 4, 2005 “Implementation Planning”   28     ALTERA Energy
           RENEWABLES MARKET PROGRAMS




           Power Purchases – Renewables RFO
             • High MWhs, Low Risk, Moderate Cost

           Own/Operate – Wind Solano Project
             • High MWhs, Higher Risk, Low Cost

           Local High Benefits – Solar
             • Low MWhs, Moderate Risk, High Cost

           Local High Benefits – Biomass
             • Low MWhs, Moderate Risk, High Cost




Guidebook Webcast April 4, 2005 “Implementation Planning”   29   ALTERA Energy
          Estimated SMUD Renewables by Resource Type in 2006




            Small Hydro                                              Biomass
              18%                                                      22%




                         Wind                                         Geothermal
                         32%                                             27%
                                                            Solar
                                                             1%


Guidebook Webcast April 4, 2005 “Implementation Planning”       30                 ALTERA Energy
           POWER PURCHASES




           Renewables Request for Offers (RFO)
             • Conventional Technologies (Wind, Landfill & DC Biomass, Geothermal, Small
               Hydro)
                  - 46 Proposals, 24 “Finalists”


               • Emerging Technologies (Solar Thermal, PV, Biochemical, Thermochemical)
                  - Address “Valley of Death” to get Next Generation
                  - 14 Proposals




Guidebook Webcast April 4, 2005 “Implementation Planning”   31                             ALTERA Energy
           RENEWABLES RFO




                                                     Top 24 Proposals Including Existing Renewables to 2011

                                     5500


                                     5000


                                     4500


                                     4000
              Renewable Energy GWh




                                     3500


                                     3000
                                                                                                                     20%
                                     2500


                                     2000


                                     1500


                                     1000     10%
                                     500              EXISTING RENEWABLES

                                       0
                                       2005   2006             2007            2008            2009           2010         2011
                                                                               Year




Guidebook Webcast April 4, 2005 “Implementation Planning”                     32                                                  ALTERA Energy
              Case Studies: Harry Phillips, Richmond Power and Light
                         765-973-7261; HarryP@rp-l.com



           1. Public Participation – Public Education

           2. Renewable Energy Objectives – 1.5 MW

           3. Resource Options – Landfill Gas

           4. Program Design Issues – Customer Segmentation

           5. Program Analysis Process – Rate Impact Issues

           6. Program Implementation – Resource Inadequacy Issues




Guidebook Webcast April 4, 2005 “Implementation Planning”   33         ALTERA Energy
      Conclusion and Discussion




                   Questions?




                   Comments?




                   Next steps?

                                 Survey of utilities to document desired
                                 types and levels of technical assistance




Guidebook Webcast April 4, 2005 “Implementation Planning”   34              ALTERA Energy
      Contact



         If you require any additional information, or would like to discuss
         any of the topics included in this presentation, please contact us at:

         Altera Energy, Inc.
         321 Gaylord Street
         Denver, CO 80206
         (303) 355-1030

         Brian Walshe (brianwalshe@alteraenergy.com)
         Larry Barrett (LBBarrett@aol.com)




Guidebook Webcast April 4, 2005 “Implementation Planning”   35                    ALTERA Energy

								
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