Senator Harris B. McDowell III

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OVERVIEW OF THE SUSTAINABLE ENERGY UTILITY
Presentation to
Council of State Governments ERC Energy and
Environmental Committee
Senator Harris B. McDowell III Chair, Delaware
Sustainable Energy Utility Task Force Chair,
Delaware Senate Energy and Transit Committee
August 13, 2007
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Environmental Leadership from Long Experience
State Senator Harris B. McDowell, III, Chair,
Delaware Sustainable Energy Utility Task Force,
and Chair of the Senate Energy and Transit
Committee since 1977. Among other
accomplishments Sen. McDowell is credited with
creating the Delaware Energy Office, the first
Low Income Heating Assistance Program in the
country, as well as passage of two RPS bills, a
Performance Contracting bill, and the Sustainable
Energy Utility legislation.
Dr. John Byrne, Co-chair, Delaware Sustainable
Energy Utility Task Force, Founder (1981) and
Director, Center for Energy and Environmental
Policy, and Distinguished Professor of Public
Policy, University of Delaware. Since 1992, Dr.
Byrne has contributed to the assessments of the
Intergovernmental Panel on Climate Change.
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SEU Task Force Members
Senator Patricia BlevinsSenator Charles
CopelandSenator Gary SimpsonRepresentative
Bethany Hall-LongRepresentative Vincent
LofinkRepresentative Teresa SchooleyRepresentati
ve Pamela ThornburgArthur Padmore, Public
AdvocateCharlie Smisson, State Energy
CoordinatorKeith Lake, Executive Director,
Peoples Settlement AssociationDominique Baron,
Delaware Nature SocietyAndrew Slater, Delaware
State Senate Office
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SEU Research Team Technical Consultant Ralph
Nigro, Vice President, Applied Energy Group,
CEEP Policy Fellow CEEP Researchers Dr. John
Byrne Dr. Aiming Zhou Jason HouckRebecca
WalkerLado Kurdgelashvili Huei WongJackson
SchreiberRyan HarryEric Partyka
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U.S. Energy Supply by Source (Quadrillion Btu)
250
200
Savings from Efficiency Gains
150
100
50
0
1970
1975
1980
1985
1990
1995
2000
2005
Coal
Oil
Gas
Nuclear
Renewables
Note Data from U.S. EIA, Annual Energy Outlook
(2007)
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Projected U.S. Energy Supply by Source
(Quadrillion Btu)
450
Savings from Efficiency Gains
400
350
300
250
200
150
100
50
0
2005
2010
2015
2020
2025
2030
Coal
Oil
Gas
Nuclear
Renewables
Note Data from U.S. EIA, Annual Energy Outlook
(2007)
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U.S. Cost per kWh Saved versus kWh Supplied
Source Delaware Sustainable Energy Utility Task
Force (2007) http//www.seu-de.org/docs/Section_F
.pdf http//www.seu-de.org/docs/Section_H.pdf and
http//www.seu-de.org/docs/App_A.pdf
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U.S. Power Plant Capacity
500
450
400
Megawatts
350
Gigawatts
300
250
200
150
100
50
0
1930
1950
1970
1980
1990
2000
Sources T. R. Casten (1995) The Energy Daily
(September 7), Hirsh. 1999 274 and EIA Electric
Power Annual (1981, 1990, 2000, 2003)
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State Renewable Portfolio Standards in the U.S.
WA 15 by 2020
MN 25 by 2020
ME 30 by 2000
MT 10 by 2015
NY 24 by 2013
NH 23 by 2025
MA 10 by 2015
CT 10 by 2010
PA 8 by 2010
NV 20 by 2015
NJ 23 by 2021 2 PV
Delaware 20 by 2019 2 PV
CO 20 by 2020
Delaware 10 by 2019
CA 20 by 2015
CA 20 by 2010
Wash DC 11 by 2022
AZ 15 by 2025
NM 10 by 2011
TX 3 by 2009
29 states have completed Climate Change Action
Plans
Sources CEEP Survey, 2007 DSIRE, 2007 UCS, 2007
http//yosemite.epa.gov/oar/globalwarming.nsf/cont
ent/ActionsStateActionPlans.html
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U.S. Cost per kWh Saved versus kWh Supplied
20
16
Cents per kWh
14.8 cent premium
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11.9 cent premium
11.5 cent premium
9.4 cent premium
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7.6 cent premium
7.0 cent premium
4
0
CA
CT
MA
NJ
NY
VT
Source Delaware Sustainable Energy Utility Task
Force (2007) http//www.seu-de.org/docs/Section_F
.pdf http//www.seu-de.org/docs/Section_H.pdf and
http//www.seu-de.org/docs/App_A.pdf
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New Direction Goals of a Sustainable Energy
Utility

• By 2015
• Participating Delaware residents and businesses
  cut conventional energy use by 30 ALL FUELS,
  ALL SECTORS
• Utilize Market Transformation Rebate Programs
  pay the incremental cost difference between
  standard and high-efficiency models
• Create a Green Buildings Initiative reward green
  renovations of existing buildings and provide tax
  and other incentives for new construction that
  contributes to Low/No Emissions Buildings
• Adopt a Sustainable Transport Plan set Clean
  Energy Vehicle Portfolio Standards reward
  Employee Commute Planning incent Carsharing

• By 2019
• 20 of electrical generation serving the State to
  come from Renewables
• Upgrade the Renewable Portfolio Standard (RPS) to
  20 by 2019
• Include a Solar Carveout of 2 by 2019 with
  High-Value Solar RECs
• Encourage a Renewable Energy Credits (RECs)
  Market, providing a revenue stream to
  customer-sited renewables

Both Goals 25-30 reduction in Delawares
carbon footprint
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New Direction Funding a Sustainable Energy
Utility

• Green Energy Fund (GEF)
• Support Rebates for customer-sited renewables,
  energy efficiency affordable energy services
  from a Public Benefit Charge on electricity use
  (0.000356 /kWh)
• Cost increase for the average consumer of 18
  cents per month
• Sustainable Energy Bond
• Authorize 30 million in Sustainable Energy Bonds
  that creates jobs, lowers energy bills and
  improve the environment
• Reinvest through Shared Savings and RECs
• In return for assumption of initial capital cost
  of Sustainable Energy investments, sign
  agreements with participants to share savings
  (e.g., 33 for 5 years) and REC revenues (e.g.,
  25 for 8 years)
• Encourage implementation contractors to acquire
  volume discounts in return for SEU market
  development and share benefits with the SEU

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Performance Contracting
SEU Savings Share
Customer Savings Share
Source King, 2003
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Renewable Energy Credits (RECs) Markets for
Sustainable Energy
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New Direction A Sustainable Energy Utility
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Policy Agenda

• Renewable Portfolio Standard (RPS)
• Upgrade to proven best practice 20 by 2019
• Add 2 Solar Carveout
• Green Energy Fund (GEF)
• Support customer-sited renewables energy
  efficiency
• Cost to the average residential customer 18
  cents per month
• Net Metering Standards
• Enable commercial and industrial customers to
  generate up 2 MW
• Enable residential customers to generate up to 25
  kW
• Net meter customer generation at full retail
  rates (including generation and TD)
• Authorize a Sustainable Energy Bond
• Authorize the State to initially invest 30
  million in a Sustainable Energy Future that
  creates jobs, lowers energy bills and improves
  the environment
• Create the Delaware Sustainable Energy Utility
• An incentive-based institution that utilizes
  performance contracting
• Offers one-stop, comprehensive sustainable energy
  services to all

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Major Banking Group with Extensive Bond
Management Experience reviewed the SEU pro forma
and concluded it is financeable by a private
activity bond at investment grade.
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SEU Annual Costs, Revenues Cash Balance
Prepared for the Delaware Sustainable Energy
Utility Task Force by the Center for Energy
Environmental Policy, University of Delaware.
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Delaware Sustainable Energy UtilityOur Best
Environmental Policy
Data sources Center for Energy and Environmental
Policy (CEEP). 2000. Delaware Climate Change
Action Plan http//ceep.udel.edu/publications/ener
gy/reports/energy_delaware_climate_change_action_p
lan/deccap.htm Oak Ridge National Laboratory
(ORNL). 2004. Estimates of Annual Fossil-Fuel CO2
Emitted for Each State in the U.S.A. and the
District of Columbia for Each Year from 1960
through 2000 http//cdiac.esd.ornl.gov/trends/emis
_mon/stateemis/data/datacsv.html Energy
Information Administration (EIA). 2006a. State
Energy Consumption, Price, and Expenditure
Estimates (SEDS). http//www.eia.doe.gov/emeu/stat
es/_seds.html Energy Information Administration
(EIA). 2006b. 1990 - 2005 U.S. Electric Power
Industry Estimated Emissions by State (EIA-767
and EIA-906) http//www.eia.doe.gov/cneaf/electric
ity/epa/emission_state.xls Bureau of Economic
Analysis (BEA). 2006. Regional Economic Accounts
http//www.bea.gov/regional/gs/ The Regional
Greenhouse Gas Initiative (RGGI). 2007. Regional
Greenhouse Gas Initiative http//www.rggi.org/docs
/mou_12_20_05.pdf
Estimates prepared for the Sustainable Energy
Utility Task Force by the Center for Energy
Environmental Policy, University of Delaware.
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Future Growth of Sustainable Energy Markets
Policy Drivers

• Pioneer New Policies for
• Investment in Sustainable Energy
• Solar Lifeline
• Energy Efficiency Portfolio Standards across
  end-use sectors
• Develop Energy Savings Certificates
• Carbon Reduction Certificates
• Car-less Development / Transit Communities
• Send us your IDEAS!

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Sustainable Energy Utility
Website http//www.seu-de.org
Senator Harris B. McDowell, III Chair, SEU
Task Force Dr. John Byrne Co-chair, SEU Task
Force Terri Brower Assistant to the
Director Center for Energy Environmental
Policy University of Delaware 278 Graham
Hall Newark, DE 19716 Phone [phone]
For information, please contact
harris.mcdowell_at_state.de.us
jbbyrne_at_udel.edu
tbrower_at_udel.edu
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Revenue Estimation Detail Example of RECs
Note Installed capacity of PV systems is based
on the proposed Solar Carveout to be submitted as
an amendment to the States current RPS policy.
Installed capacity of non-PV renewable energy
systems is based on the proposed upgrade of the
RPS schedule, also to be submitted as an
amendment to current policy.
Prepared for the Delaware Sustainable Energy
Utility Task Force by the Center for Energy
Environmental Policy, University of Delaware.
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SEU Cash Flow Detail (not including Sustainable
Energy Bond)
Prepared for the Delaware Sustainable Energy
Utility Task Force by the Center for Energy
Environmental Policy, University of Delaware.
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SEU Prospectus
Revenue Assumptions 25 million in Sustainable
Energy Special Purpose Revenue Bonds are
authorized. GEF mill rate is doubled. REC
revenues are based on declining price schedule.
Prepared for the Delaware Sustainable Energy
Utility Task Force by the Center for Energy
Environmental Policy, University of Delaware.
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Projected Growth in Distributed Generation
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DELAWARE A PORTRAIT OF UNSUSTAINABILITY
Sources Sustainable Energy Utility Task Force
(2007) Available at http//www.seu-de.org/docs/fi
na_report_brief.pdf Statistical details available
at http//www.seu-de.org/docs/IRP_submission_4-1
0-07.pdf (especially pp. 9-12).
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DELAWARE A PORTRAIT OF UNSUSTAINABILITY
Sources Sustainable Energy Utility Task Force
(2007) Available at http//www.seu-de.org/docs/fi
na_report_brief.pdf Statistical details available
at http//www.seu-de.org/docs/IRP_submission_4-1
0-07.pdf (especially pp. 9-12).