CREA Energy Innovations

Summit

Paul A. Erickson, Chief Executive Officer

Sangre De Cristo Electric

The New Energy Economy: Is Public Power Doing Its

Part?

Electric Utilities – Vive La Difference

• Differences in models (x3)

• Differences in density

• Differences in revenue

• Differences in consumers

• Differences in purpose

– Wall Street versus Main Street versus City Hall

Other than moving electrons, our businesses are as different as day and night

– Then why the “one size fits all?”

Sangre De Cristo

• 2,500 square mile territory

• 1,700 miles today, half overhead and half URD

• 12,000 consumers

• < 700 kWh per consumer per month

• < seven consumers per mile of line

• No industrial load

• Most rugged terrain on the planet (earth)

• High cost to construct, operate, maintain, and little revenue with which to do it.

Sangre De CristoSometimes, the old ways are the best ways. Sangre De Cristo occasionally uses horses to string wire.

Note: No horses were injured in the production of this presentation.

Sangre De CristoIn some cases Sangre De Cristo has used helicopters to drop or help set poles.

Sangre De Blasto

Sangre De Cristo does not own a digger (auger) truck. Instead we use explosives, backhoes and plows for construction. From OSHA to ATF.

Note: No linemen were injured in the production of this presentation.

Misperception of our “silence”

• For years we enjoyed a private conversation with our consumers regarding energy efficiency and alternative energy – we know what our consumers want

• Then came the politicization of our industry

• Politicians, officials, and special interest groups have interrupted that conversation

• Now we’re regularly accused of “not doing enough” – even though they don’t know what we’re doing!

Misperception of our “silence”

• Our business model doesn’t lend itself to trumpeting our efforts outside of the family

• Politics abhors a vacuum• Suddenly everyone thinks they know

better than our consumers and us, even though we’ve been working closely with our consumers and on their behalf for over 70 years.

NRECA, APPA and Others• Touchstone Energy

• Hometown Connections

• G&Ts

• State Associations

• For years they have offered suites of programs and options on both supply and demand-side with verification strategies

• Most have long offered recognition for energy innovation – before it was cool

Holistic Efficiency – Co-ops

• Co-ops led nation in AMR– No longer deploying trucks and personnel to read

meters. This was the precursor to the ubiquitous “Smart Grid”

• Co-ops lead in line loss and load balancing initiatives– Co-ops have a vested interest in reducing line loss– Investments in system efficiency have longer-lasting

savings– Investments in system efficiency are the lowest

hanging fruit and the greatest savers– System efficiency is not politically sexy, but what if…

Organic Efficiency – Public Power

• APPA has led the effort to promote tree planting for many years

• TREE POWER (1991)• Web-based Tree Benefits Estimator• The rest of the world is discovering what public

power has known for years: Trees are the number one mitigation strategy to counter heat islands – thus a dandy passive demand reduction strategy

• The best time to plant a tree was 20 years ago. The next best time is now.

Planning:Primum non nocere

“First, do no harm”Excerpts from the Sangre De Cristo Electric Strategic

Plan

Goal: Establish and maintain proactive and deliberate short and long-term capital project plans that take into account current and future needs.

Strategy: The Association shall not undertake capital projects without a complete examination of industry standards and precedent, current and pending technologies, compatibility with present and future systems and infrastructure, and a forecast of each project’s expected useful life.

Sangre Plan Excerpts

Goal: Meet Renewable Portfolio Standards at the lowest possible cost, encourage energy efficiency, and facilitate renewable, alternative and distributive generation projects without long-term or direct subsidization by the co-op.

Strategy: Utilize Tri-State policies.Utilize all-requirements exception if it is a benefit to the co-op.Participate in projects that maintain meter relationship with the members.

Sangre Plan Excerpts

Goal: Promote energy efficiency activities that benefit the cooperative.

Strategy: The Association will not make direct subsidy for energy efficiency purposes unless there is a return on the investment or it is a demonstration project.

Renewable Demonstration

• An on-site renewable lab offering real time and historical data of residential units

Sangre EE/Alt Energy Loans• $5,000 maximum

• Five year terms

• May be used to upgrade services

• Replaced line extension loans

• Load-building in the name of energy efficiency? TOU, ETS, Solar H20 future

• Rebates help the “haves”

• Loans help the “have nots”

TOU, ETS and load building in the name of Energy Efficiency

• No cooling load• Poor soil conductivity• ETS is the solution• TOU is the efficiency answer• Comfort Cove radiant heat

– No gas tap– No propane tank– No plumbing– No sheet metal– We’ll give ‘em a water heater– BFFs

Subscribed Projects

• Sangre is currently working with a political subdivision, an HOA and a sustainability group to finance and build pre-subscribed renewable energy projects• Numerous finance and ownership options• Siting: Theirs or ours (HOA requirements)?• How to exploit tax benefits

Other stuff

• PHEV rate and program• 53¢ on peak• 15¢ shoulder hours• 4.3¢ off peak

• Renewable Vendor Only Website (we are picky)• Partnerships with GEO• Participation in NRECA CRN renewable task

force• Participation in state hydro policy project• Participation in PUC Xcel Smart Grid review

Rebates

• Energy efficiency is a “no-brainer”

• EE and conservation have always been in the hands of the consumer

• Politicians and government want us to raise your rates, take your money and give some of it back to you to spend on energy efficiency and renewables

Rebates from a Business Perspective

• What other business model is required to give its consumers money to use less of their product, and even subsidize direct competition with ourselves?

• A story of two neighbors – one is shut off for nonpayment while the other receives a rebate for a solar panel

• Free rider-ship and low income issues

Lessons Learned?

• Have we learned anything from the last 20 years of energy efficiency and alternative energy efforts?

• Make mistakes slowly• One size does not fit all• System efficiency improvements are the first and best

use of our money• Evaluate, monitor and validate savings• Keep politics out of it – if politics are driving it, it won’t be

practical• Free rider-ship does nothing but give money to the

“haves” so consider loans or other incentives

Silence is not Golden

Co-ops and Public Power have been laboratories of innovation for many years.

Looking back, it is regrettable that we weren’t telling our story to the outside world all along