PowerOptions - July 2008 Bulletin

Bulletin - July 2008

Governor Patrick signs major new energy legislation:
Big changes in store for energy consumers, municipalities, and state facilities

On July 2, Governor Patrick signed a major new piece of energy legislation, with far-reaching implications for Massachusetts energy consumers. A summary of the legislation is on our web site here (PDF - 76K).

Provisions with the most immediate impact on consumers include:

All consumers:

Additional $0.003/kwh in charges added to utility bills for all customers to fund renewable energy and energy efficiency programs. Your organization will have the opportunity to get back some of this money in the form of rebate programs to be developed by the state.
Utility companies have to create plans for providing all cost-effective energy efficiency to customers. This provision, combined with regulatory action in coming months, is expected to increase the amount of money available to utilities for efficiency rebates to customers.
15% of the energy supplied by your supplier must come from renewable sources by 2020, an increase from the current standard.

State institutions:

Life-cycle cost minimization will be required for all new buildings and renovations over $25,000.
At least 5% of new vehicles must be alternative fuel or hybrid.
Funding available: new funding will be available for energy efficiency and renewable energy projects.

Municipal facilities:

"Green Communities": a new program sets aside technical help and $10 million for towns that apply for the program. To qualify, towns must: reduce their energy consumption, adopt policies allowing development of renewable energy, and purchase fuel-efficient vehicles.
Funding available: The new law provides new funding for energy efficiency, including allowing for a program of zero-interest loans to municipalities

If you are building new facilities or doing large-scale renovations:

The legislation adopts a new energy efficiency building code that will help you minimize life-cycle costs from operating the building.

If you are interested in installing solar or wind power:

If you put electricity back into the grid, the new "net metering" law requires the utility company to credit you at the same rate you pay them for electricity - a much higher rate of reimbursement than in the past.
New utility charges will increase the amount of money available for rebates.

Save the Date!
October 7th, 8:30-12:30
PowerOptions Seminar on Massachusett's new "Green Communities" Act and what it means for energy consumers.
Details and registration coming soon.

There are many other provisions as well. We are planning a half-day seminar with Department of Energy Resources Commissioner Phil Giudice on October 7th for PowerOptions members to explain the implications of this new Massachusetts legislation for your facilities and to give you a chance to ask questions. We plan to send out a meeting invitation with dates and places as soon as possible.

It is budget time and energy prices are skyrocketing: What should you forecast for natural gas and electricity costs next year?

Click graph for a larger version

Since January, surging global demand and a shrinking dollar have caused an enormous upheaval in energy markets. In this volatile environment, it can be very difficult to estimate your energy budget for the coming year.

Many PowerOptions members already have their electricity and/or natural gas rates locked in for future periods through supplier contracts, but prices have gone up over 30% since this same time last year and they're still climbing. What numbers should you put in your budget for next year?

If you do not already have a contract for supply for next year, the best way to figure out what to budget for next year is to get a contract quote for your accounts. If you call Wendy (Lee) O'Malley, she can assist you with obtaining a quote for your natural gas or electricity supply for any length of time, and she will also help you decide if you should lock in a price now or wait a while. Getting a quote is not difficult, and it does not commit you to buy anything, but it can give you useful information. Remember, in the PowerOptions program, you don't have to wait until your existing contract ends to get a quote and lock in rates for future periods!

We also recommend that you discuss the current market conditions under which you are making energy purchasing decisions with your management or your board. Making decisions in the face of rapidly-changing markets is a difficult task, but it can be made easier if your management understands the assumptions you are making up front. A recent presentation about current market conditions by Hess Corporation, our natural gas supplier, is available here (Powerpoint - 2.8MB). This presentation has useful graphs that may help you understand, explain and illustrate changes in the market.

In New England, the price of electricity follows the price of natural gas very closely, so when budgeting for next year you should also take into account a potential steep rise in both electricity prices and natural gas prices. (And, needless to say, heating oil and gasoline)

Direct Energy Acquisition of Strategic Energy

Our electricity supplier, Direct Energy, announced in May that it had acquired Strategic Energy, another supplier licensed in Massachusetts. We have met with Direct Energy and Strategic Energy management to learn about what this may mean to PowerOptions electricity customers. Although there have been some changes to management due to the acquisition, our Direct Energy sales team is staying in place, and your bills will still come from and have the Direct Energy name on them. We do not expect any changes that will directly affect our members and their executed electricity contracts. One of the key terms in your contract is a financial guarantee from Direct's parent company, Centrica plc, that they will perform according to their commitments as stated in your contract - this is an important protection that we negotiate for you as a member of the PowerOptions program, and one that is unique to our program.

Since December 2006, all Massachusetts electricity consumers pay a new "capacity" charge, determined on the peak New England consumption day every year. Your "tag" - your electricity demand on that peak day - determines how much you will pay in capacity charges in the following year. For the past 7 years, this day has occurred between July 27 and August 30. Currently, the capacity charge adds about 6-10% to your overall electricity budget, and the per-kwh charge is slated to go up every year at least through 2010.

While it is impossible to predict which day our combined electricity load in New England will hit its yearly peak, attention to consumption during heat waves, especially any conservation measures you are able to take between 1:00 p.m. and 4:00 p.m. may yield savings over the next year, depending on how your supply contract is structured. If you are already locked into an all-in contract rate with Direct Energy under the PowerOptions program, this will not directly affect your accounts or contract, but conserving during this time will also help keep a lot of power plant emissions out of the air! If you are unsure about how this will affect your electricity accounts, please contact PowerOptions and we can help you determine your status.

If you would like, you can also sign up for our "Tag Day Alert" - we will send out an email on any morning when the regional consumption forecast is 95% of the power pool's official "required capacity" (a sign that a "tag day" may be a possibility). To sign up for this alert send an email to cwall@mhefa.org. (If you signed up last year there is no need to do so again) You can track the regional power consumption forecast yourself at http://www.iso-ne.com/sys_ops/mornrpt/index.html.

What does your organization do to respond to peak days? Please email Carter Wall at PowerOptions cwall@mhefa.org to tell us your initiatives and suggestions and we will share the ideas we receive from members in our newsletter and on our web site. Thanks!

Here is a sample message a facilities manager might send to employees in the morning on a hot day:

Today is forecast to be one of the hottest days of the summer. To save money and reduce air pollution from power plants, we ask you to help us by conserving power. Some simple things you can do to cut your use, particularly between the hours of 1:00-4:00 p.m.:

Shut off lighting in rooms when not in use.
Shut down computers and other equipment when not in use.
Conserve cool air in work areas by lowering blinds and closing doors to un-air-conditioned spaces.
When possible without interfering with your work, put off running equipment between 1:00 and 4:00 today.

Thank you for your help! There is no need to go overboard! Just use your best judgment. The most effective conservation is done by individuals like you, who are in the best position to figure out how to conserve without disrupting your work. Thanks!

Geothermal Energy Workshop

Several PowerOptions members have asked us about geothermal energy (also know as "ground source heat pumps"). This renewable energy technology, which uses the constant temperature of ground water to heat or cool buildings, is becoming quite popular, and can generate significant energy savings over time for buildings of any size. If you are planning a boiler replacement, or a new facility or facility renovation and are interested in a workshop on geothermal technologies to see if it would benefit your facility, send an email to cwall@mhefa.org and we will schedule a workshop if we receive enough interest from members.