ML19321B210

Transcript of R Freeman Before House Subcommittee on Conservation & Credit

ML19321B210
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Site:	La Crosse File:Dairyland Power Cooperative icon.png
Issue date:	03/19/1980
From:	Freeman R AFFILIATION NOT ASSIGNED
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State:ent of nand'/ F:ee:an, nen er.e c,er, Pierce-Fepin I'ec::ic :seperative 3efere the

~ui:c~~- * ~ ee on enservation att C:eit:

s Agriculture cc 1.;3, U 3 Ecuse of Representatives March 19, 1980 e

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My name is Randy Freeman. I resids at 3ex 232, Rural Route 1 Hager City, '4I, 55014. ' Since August of 1979 I have seried as a member of the Pierce-?epin Electric Cooperstive 's Task Force en Alte=ative Energy. Pierce-Pepin Electric Cooperative is one of the 29 member co-ops of the Dairyland Power Cooperative, headquartered in La Crosse, '41sconsin.

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• he Alternative Energy Task Terce was created a-Pierce-Pepin's last an= cal menbership meeting as a result of a three year effort by an organiced group of co-op members who scught to tu= the co-op away from participation in a ;1&nned nuclear plant and who wanted the co-op to take a sericus lock at consertatien and alte=ative energy technclogies as ways to meet future energy needs in our se:vice te=itory. The task force has fcur : embers at large, including =yself, and three members f== the board of direc crs.

.e are to present a reper, to the sembership a. this year's annual meeting in April.

3ecause the task force has not ecmpleted its report, and because seme of the mors controversial recc :enda ions have not yet been voted on, the sub-commi tee shculd realice -hat in the following remarks, I 's speaking for myself. Several members of Pierce-Pe;in, including one direct.cr, want ce to con =unicate their intention to send letters to this committee endorsing =y cc sen.s at today's hW;ings.

In our work since Au6ust, the task fo=e has investigated t!;.e co-op's conservation potential as well as the follow 1::g new energy supplies:

small hydro at existing dams in the area, consumer-owned wind power ;:cjects, a solar hot water heating pregram, solar pain drying, consumer-os ned micro-hydroelectric systems and the use of passive solar construction techniques.

'le have limited cur attention to devices or strategies which pr duce er displace electrical energy. As a result of our work so far, I :annot concur with the impression left by NRECA that co-ops have taker or are planning adequate conservation measures. The point. I want to 2ke today is that a much greater emphasis on conservation and alternativa energy is required at all levels of the RZA system.

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2 The very first thing the trak force discovered was the importance of conservation in future utili.y planning. 3y consertation, I mean any pregram to reduce peak demand or electrical energy census; tion.

!iew capacity now on the drawins teards of co-ops acrcss the countr/

will cost a.s =ch as $1200 per kilowat, for coal plants and ever $2000

,per kilowatt for nuclear plants. I view the expl:sion of power plant costs over the last decade as a crisis which demands an immediate re-orderin6 of cooperat.ive pricrities and refer: of =anf co-op policies.

Until co-ops enter into consertation and 1 cad management pregrams with the sa:e enthusiasm ani funding levels now reserted for new power plants, net-her lire 0A nor anyone elese can f.eriously~ claim that the werk of electrical conserra.icn is underway in the nation's co-ops.

Consertation surteys sponscred by li3ECA are a ;cor way of deter-mining rural electric cc-c;s' level cf concitment o conservation.

Al.hcu6n truthful and prepared in gecd faith, I believe that the response filed by my es-o; shows how this data, can te misleading. One ficare i

which can te easily ext.racted frca the fern is the esti:ated expendi ure of $26,000 on 1980 conservation efforts.1 In a cen*.ex cf meanin6ful policies and planning, such a figare wohld te impressiv. A closer look in.o Pierce-Pepin's and ::airyland Power's operations reveals, however, no effective consertation plan. As a =coter I have to wonder what I'm get. ting for =y =cney.

I believe that the way to deter =ine whether co-ops are serious about conservation is to examine their Power Requirements Studies, Load Management Studies, Advance Plan filin6s and retail rate proposals. I have done jus-that for my two co-ops and found no sericus commitment to either conserta.icn or alternative energy. It wo: ries se to think that these docunent.s become the basis of REA loan applications, and will eventually dete==ine the cost of my electricity-3efore accepting the idea that co-ops are well down the read *o energy efficiency, this subcommittee should ask co-op represen.atives the same questions I have asked Dair/ land to consider before ;:oceeding with a planned 50 percent increase in capacity by 1987. That is, how much expensive new capacity will the ut.ilities' consertat. ion efforts displace in the next two decades? Ani, how much capacity could te saved by a greatly intensified effort?

3 In ny study of Oairyland's Advance Plan 2 for the next ten years, I identified te following consera. ion' alternatives which were not considered

--A crash pr: gram o shift all exis*ing and anticipated controllable loads to off-peak times. Electric heat, hot water heaters and future sola: taek-up installations are the obvious targets for such a plan which would involve the use of timers or centralized switching,1 cans to members for the installation of increased heat storage capacity and a retail rate s.ructure which would make participation in the program at.ractive to Con. reliable leads such as these currently make up :.early censumers.

one-quarter of Pierce-pepin's peak demand.3

--Retail ra,es which reflect the reality of today's energy costs and encourage conservation. pierce-Pepin does not yet have flat rates or a definite timetable for achieving flat ra.es. To my knowledge, none of the wide variety of innovative rate desiens such as time-of-day or inverted rates are presently in use in the Oairyland syste cr planned for use in the future.

--A wea.herization progra for every existing electrically heated tuildin6 Such a program which featured audits and 1 cans to members would also be a gced vehicle for refitting electric heat installations with off-per. king capability.

--The use of incentives or penal.ies to see that all new electrically heated buildin6s maet a very high standard of efficiency. Houses constructed and monitored in our climate by the Mid-America Solar Energy Complex (a 20E funding outlet in the midwest) have demonstrated that homes whien are carefully sealed during const:uction, which use triple-glacing on north, eas and west windows, which meet an insulation standard twice as' strict as present codes require and which use air-to-air heat exchan6ers to in-sure fresh indoor air and provide humidi.y control can pay off all their conservation-oriented features in three years or less."

--Active co-op promotion of agricultural an:1 other appliance efficiency improvements. The '41sconsin Energy Office has predicted in

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testimony before the state's Public Service Commission 5 that one device alone--heat exchangers for cooling milk ani heating water--can be res;cas-ible for a twenty percent reduction. in '41sconsin's agricultural electrical energy use by the year 2000.

14 Only when Dairyland Power has evaluated the impact on demand an:1 provided cost es.imates of such measures should anyone assume that Cairy-land and similar co-ops are serious about conservation as an alte=ative to new plant construction in the 1960's.

n the area of al e=a-ive energy, I fin:i the same situation in y

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plent,y of o;;or unities bat littla will to proceed. As wit.h conservation, Oairyland's advance plans demonstrate that the '41sconsin co-op has not integrated alte=ative energy into its forecasting pro-cecdures or its investment plans fer the 1980's.6

7. &lso found that a few ins-itu,ional ;;oble:s in the REA lea.n program itself ;;even co-c;s fro:

.aking cer.ain steps to promote alte=ative energy.

3efore detailing these problems. I should give sete examples of the new energy.ha p= grams of the type not now available culd produce in my co-op's ce: tice territe:7 I believe that Pierce-?epin. in cooperation with no neighboring ec-c;s oculd develop up to fcur negawatt.s of small hydro at existing dass Pf 1990.7 A concerted wind pre ra could produce e

one negawatt of censumer-cwned capaci y by 1990 and a. nether.en mess. watts by the year 2000. Tlie co-op i self ecul:1 install at leas

.75 me61wa.:s of wind plants by 1990 and up to 6.25 meEawatts by the year 2000.8 In adciition, co-op members could displace perhaps four negawatts of de:and with solar de estic hot water systems by the year 2000.9 The possible

-= * ~ contribution of passive solar bailding techniques is hard to quantify ht should te si:eable. Remember tha, all of this potential is in a. co-op that now reaches only 16 megawat.ts of peak deman:1.

Everyone, including Dairyland Power, admits that the initial high capital cost of = cst alte=ative energy systems inhibits their greater use.10 Yet, according to a. letter from Frank '4.

3ennett of RZA to the Pierce-Pepin task force, "at this time, RIA has no provisions for financing alte=ative energy systems (solar, wind, bic: ass, etc.) for installation by members or b/ dis rihtion-cooperatives."11 Mr. 3ennett also fe:.nded us nat. Pierce-Pepin is required to purchase all of its energy from the C&T co-op, Dairyland Power, and that 'Dairylanci woul:1 have to pursue any loan applications.

The use of all-requi::ements contracts to stifle alte=ative energy projects is very disturbing to me.

In testimony before the ~41sconsin Public Service Commission, Jack Leifer, Assistant General Manager of Dairylan:1 Power,

5 admitted that 3;C has no plans to develop wind power projects of its own in the foreseeable futures also that distribution ec-ops such as Pierce-pepin are prohibited fro conducting their own wind power projects pnjects and finally that the same contract prohibits distribution co-ops frc purchasing excess power frc member-owned machines.12 It is true that Cairyland itself will purchase such excess power, but at a low rate which disecurages such sales ard under conditions which greatly increase initial installation costs.13 What we have then, is a packsge deal to suppress the use of wind power. This is especially discouraging in the light of recent indications that -he wind power rescurce in 'tiscensin is rach e,reater than ec: enly thought, acccrding.o Cairyland's cwn ceasure-ments and testi:eny.14 The task force has found that there are cc::ercially available wird :achines which can produce power in the Wisconsin wind regime a a cost cc petitive with ;cwer frc: new coal er nuclear plants.13 In connection with the problems surrounding alternative energy development by rural electric eco;eratives, I recommend the following changes in REA lean policy, sene of which may require legislation.

REA loan funds should be made available to consumer-members for the purchase of their own alternative energy hardware at the lowest interest rate available through RF.A.

These 1 cans should be handled by the dis-tribution co-ops a. cost and paid back with conthly billings on the medel used by T7A and other progressive utilities. The glidelines fo. this program should be quite liberal, perhaps limiting any one censumer to a maximum amount over a cer ain period. 32A could require that qualifying systems te intended to produce or displace electricity and that the sys.e:

be expected to payback during its useful lifetice. I believe that any REA program of consumer loans should be funded out of existing 3EA funds and get priority over other power plant applications.

REA should loan funds directly to distribution co-c;s for renewable energy plants up to 'a certain date, perhaps 1C00 K'i per installation. This would allow co-ops to exploit local energy resources that are too large for individual members to develop but are too s:all to interest C&T co-ops.

The distributien co-ops would still have to :eet REA need and cost cri-teria, but would not have to go through the G&Ts and satisfy their internal prejudices as well. This program should also be funded out of the regalar

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REA budget now ear arked for capacity additions. In propcsals where economics are marginal or feasibility is untested, REA should give some weight to censiderations of whether the proposal has an overridin6 envirennental benefit, whether it bri 5s a renewable rescurce into use or whe-her it has an exceptiorally long service life (as in s:all hydro.)

' Once such an a;; roved small-scale plan goes into sertice, RZA should take steps to protect s=all cooperatives from abscrbing -he i.otal invest-men, cost alene. This could be done by requiring that a C&T co-op purchase all energy from such projects at cost, then sell it back at the wholesale rat.e.10 RZA should no longer require distribution co-ops to enter into.

all-requiremen s contracts with their C&Ts wnere such arrangements pro-hitit the purchase of energy by distribution co-ope from individual members or frc: their own genera i 6 equipment. All such contracts in force should be i=edia.ely revised.

Refe d n6 back.o my co=ents on conserta-ion, I would like.his sub-cc=1t ee to censider sene additional recc=enda.icns.

They are all desiened to put censertatica and alta=ative energy in ect;etition with further ;cwer plan, const=ct. ion fer the same inves. en*. funds. Few co-ops think in te=s of end-use services for members. They still feel pressed

.o provide electrical 6ene:Sti:6 capacity for any anticipated use even if these uses do not conform to national energy policy, energy efficiency requirements, wise resource allocations, rural values, rural needs, social and environmental conce=s or even.he best economic interests of co-op members. I believe that REA ani Cengress can g'.ard member interests and expand the se: tices which co-ops provide by considering these ideas:

Congress should resist the temptation (as expressed in bills like HR 5397) to es.ablish special consertation or alte=ative energy funding

rograns.

• a afraid -hat we would end up with more stagnating initia-tives like.he little-used F:EA =ral weatherication program. Special funds only insulate co-ops frem the need to consider consertation as an alternative to future plant constract. ion. In my view, only =iner tinkeri 6 with the present RZA loan process will be necessary to cure co-ops of their consertatism.

In reviewing loan requests, REX should require applicants to file

7 end-use forecasts and to provida a detailed analysis of how the desired new electrici y is going to be used.

In reviewing Ican requests, REA should require co-ops to prove that the sa e goal (capacity equal to demand by a certain date) cannot be achieved for less cost by an alternative investment in conservation, Icad management and new member servicu.

REA should give first access to the icwest cost =eney for 1 cans needed to underwrite conservation prejects.

In reviewing re all rate proposals, REA should require the distritu-tion co-c;s to file a timetable for achieving flat rates where that is not presently the practice. REA should prenote inverted rates in the cc ing decade and enforce a ceiling on service charges. REA shculi require every co-c; under its rate regulating authority to devise a plan to translate their de=and charge f : ;cwer suppliers into the retail rate structure (via time of day or some other ethed.)

REA should require its C&T co-ops to use a demand charge system where that is no presen-ly the case. Under this nethed, fuel costs and fixed cost of service ces s are retrieved -hrough a fla; per kilowa t-hour charge while power plant capital ecs:s are recovered through a per kilawatt de=and charge.

When studying lean applications for lead management systems. REA should be alert to the effectiveness of the proposal. An examination of Dairyland's lead management study reveals these flaws:

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1) Existing manageable leads would not be centro 11ed.

2) The sys.e is not integrated with a retail pricing stra.tegy.

3) The proposed system does not provide for a future accepmance of solar heating and wind electric systems into the OPC e% d.

4) The proposal depends largely on a non-existent controllable lead:

dual-fuel furnaces. The promotion of these devices might leave co-op consumers of the 1990's heating their homes with five dollar per gallon oil on-peak and 10 cent electricity off-peak.

5) As the Progra matures and the peak is levelled. dual-fuel furnaces will depend : ore and scre on oil or natural gas.

Qw If instituted, these relatively simple reforms wouli make co-ops rsalize the imper:ance of seeking innovative ways to serve member needs for energy while at the sa:e time respecting the national interest in careful re' source use.

I want to thank the subec :ittee for allowing me to appear teday with a view of co-ops that might not otherwise have been presented. I would r

also like to acknowled e the financial help frc: relatives and friends 6

which ade my travel fres '41scensin to '4ashington possible. U himately, my ax;enses will be covered througn bake sales, firewood raffles and other i

fund-raising events pu on by the tireless energy activists in '41scensin.

In the future, congressional ec ittees migh*, consider cover 06 travel expenses of witnesses who are the owners of : aral electric ecoperatives but who are not paid utility executives, es;1cyees of utility lobbying organica. ions or professional environmentalists.

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FCOT:iOTES

1. I an refening to the " Energy Consertation C.uestionnaire" filed by Pierce-?epin with liEECA. The cc: piled results of the liRECA surtey have been used to defend that organization's contention that RECS are pract-icing conserta-ion in a big way.

2. Revised 1978 Advance Plan, filed July 15, 1979, prepared by Cairyland

?cwer Coope:?.tive and the e.her weste= Wisconsin utilities in response to requirements of Wisconsin law and Wiscensin Public Sertice Cc=issien orders.

3. The Pierce-Pepin Alte=ative Enerrf Task Force ad_ved at this estinate through a : ember surrey in the su=er of 1979. There were 1100 responses out of a pcssible h000, making this the bes, end-use surrey ever done by Pierce-?epin.

4. MASIC NEWS, January and February issues have articles on energy efficient houses in :icr-hfieli, Mi=esota and Cedar Rapids, Iowa.

5. "?repared Direct Testimony" of Gresor/ 0. Krchn before the Public Service Co=ission of Wisconsin, Cocket lio. 05-E?-2.

6. See (2) above, p. 7-11, "While the use of alte=ative energy systems is admirable.. 0airyland and its member ecoperatives are moving cautiously in this area..."

See also 1C78 ? wer Recuirenent'Studr, Pierce-Fepin Electric, filed May 7, 1979, p. 30:

"In sum:ary, :ne anticipated effect of alte = ative enerrf u,ilization en the power requiremen s of Pierce-Pepin Electric Coop-erative is nini:al." See also my ec=ents on Dai-fland's proposed lead ana6e:ent syste later in this s.a.ecent.

7. List of da:s:

KW at retirement Fotential after reft County Site River Rating Rating Dunn Elk Creek Elk Creek 125 KW

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Dunn Eau Galle Eau Calle 360

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Dunn Colfax Red Cedar 1200

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St. Croix Hudson Willow 300

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S t. Croix Little Falls Willow 300

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St. Croix Willow Falls Willow 600

(*000 KW +)

• St. Croix Mounds Willow 180

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St. Croix Mc Clure Apple 160

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St. Croix Huntington Apple 640

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Pierce Spring Valley Iau Galle new das (360)

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8. "all-out" wind trotra:

1C00 real:

1. cf machines Cwner Ave. size Total Can.fr4)

Total Enerrr (n-O 10 Co-op 75 KW 750 KW 1,971,0c0 n2 100 me=bers 10 KW 1000 KW 2,628,000 K'Id 4,599,cc0 nd 2000 ecal:

110 Co-op 75 r4 8250 KW 21,681,000 ria 1000 me=ber:

10 rd 10000 r4 26,250,000 rid 47,961,000 std l

This scenario assumes an average capacity factor of 30 percent. The low availability factor of wid machines indicates the need to integate a con-certed wind prcgram with a 1cai :/.nage: nt syste: that relies heavily on heat storage capacity in the pi:1. This was suggested by Dr. Carel C.

LeWinkel in hk reper on the Dairyland Power syste=, An Assessment of Virxi Cha acted stics ad Wid Enerer Ccnversion 5vstems for Electric Utilities. He reiterated -he impor ance of wind /lcad matening in recent tes-inony before the Wiscensin Public Sertice Cc ission.

9. Assumes a peak time water heating lead of 4000 KW (L-000 or more electric units times i KV coinciden demand) by the year 20C0. lead management can achieve this same scal with or withcut solar. Solar would probably be of

=cre benefit to -he consumer.

10. Advance Plan, p. 7-11, "Most alter.ative systems, especia11:f.hese designed for space heating, are charactericed by hign ini.ial cess, main-tenance and long ' payback' pericds." RZA financing should solve this problem nicely.

11. Frank V. 3enne.t. Director, North Central Area, RZA in a letter to Ken..eth Peterson, Secretary, Pierce-Pepin Electric Cooperative, da.ed D ec. 4, 197').

12. John P. Leifer, "Direc. Testimony" '41sconsin ?ublic Service Consission hearings,1980 and under c css-examinatien at WSC Advance ?lan Hearings,1980,

13. " Electric Service Ageemen. for Me=ber Owned Generation Systen,"

Dairyland Power Cooperative. This is an eleven-page contract giving DPC

-he right to ratche the house seter rather than let.ing 1. run backwards at times of excess winci generation. Another meter rust be hung at the machine to measure that excess energy for which DPC will pay only 15 cents

. per LM. DPC reserves the right to visit the machine a, any time, disconnect the nachine at any time, shut off the members' power a, any time and the right to require unnecessary safety systems.

"'hese absurd disincentives must be paici for by the machine owner. There are cases in Wisconsin where co-op members have abandoned wind power projects because of DPC 's attitude, t

s 14.11 PJH annual average is often cite'd as 'a'isconsin's wind speed.

10 MPH is though, to be the "'ereakeven point" at which wind power should be considered. Oairyland's wind measurement.s at A1:a, '4! show annual avera6es of 17 E4 at 165 feet and 12.6 M2H at 20 feet. For some reason, DOE is interested only in sites with speeds in excess of 14 MJH annual average.

. 15. The task force fcund several cachines in the 31000 per kilcwatt ranse ard one as low as $700 per kilowatt. '41th state and federal tax incentives, these nachines can te expected to pay back in ten years or less a.-d to pre-vide elect.ricity a, a cost as low as 4 cents per kilowatt-hour.

16. The rationale for this argument even.f an alternative energy project was more econocie than a new central station plant planned by a C&T, a distribution co-op could not pursue i-tecause tr.e cess of power fren the project vnuld 'ce hi6 er.han their wholesale cost of power from h

the C&T which represen s a tiend of old (cheap) plants and newer pl:.nts.

A dis.ribution ec-op should be freed fron -his econc=ic penalty so that it could pursue projec.s tha, were ecenc=ical eo: pared to the carginal ecst of power.

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