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The Regulatory Assistance Project 50 State Street, Suite 3

Montpelier, VT 05602

Phone: 802-223-8199

www.raponline.org

CHP Power Sector Policy:How government action enables CHP

Georgia Tech Energy Series

Presented by Richard Sedano

December 4, 2013

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Introducing RAP and Rich

RAP is a non-profit organization providingtechnical and educational assistance togovernment officials on energy and

environmental issues. RAP staff haveextensive utility regulatory experience.

Richard Sedano directs RAPs US Program.

He was commissioner of the VermontDepartment of Public Service from 1991-2001and is an engineer.

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CHP development inevitable,can be nurtured

Inevitable because customers are beingempowered

Technology

Use of markets in regulation

Valuable to the Electric Grid

Nurtured how? And how well?

By State Government?

By Utilities?

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CHP as a programHow a utility would encourage CHP rather than be passive?

Programs are about customers

Can CHP fit into utility program practice?

Screening Distinctions with Industrial Energy

Efficiency?

Managing Electric / Gas Savings

Compare with Geothermal Heating

Counting against requirements

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Regulatory Issues

Mechanics of counting (and EM&V)

Sharing electric and gas responsibility

Motivating performance by customer Motivating performance by utility

Enabling customer

Costs

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Regulatory Issues

Mechanics of counting (and EM&V)

Routine EM&V methods apply

Sharing electric and gas responsibility Motivating performance by customer

Motivating performance by utility

Enabling customer

Costs

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Regulatory Issues

Mechanics of counting (and EM&V)

Sharing electric and gas responsibility

Methods are fine, companies often dont agree Motivating performance by customer

Motivating performance by utility

Enabling customer

Costs

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Regulatory Issues

Mechanics of counting (and EM&V)

Sharing electric and gas responsibility

Motivating performance by customer Motivating performance by utility

Enabling customer

Fair Interconnection, stand by rates,

Costs

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Advanced program elements:planning and market rules

Geo-target

Motivate CHP where most needed by gridconditions

Acquire ancillary services with capacityand energy

Responsive customers

motivated especially by high amounts of windand solar, enabled by tech)

what does that mean for CHP?

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Policy Barriers to CHP

Rate design

Presumptions in Stand by Rates aboutreliability of CHP tend to be too cautious

Planning

Credit for reliability benefits from CHP

Operations

Purchase terms and valuation of products

REC issues where applicable

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Policy Barriers to CHP

Loss of sales in traditional regulation is adisadvantage to utilities

This can be addressed, some utilities dont

want to

Control of utility operation by the utilitymay not be compatible with customer-

sited generation

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A Resource Standard is a political actto value preferred resources

CHP can qualifyfor any standard

Assure no double

counting

Carve out / tierfor CHP?

All or justnew/recent?

Make it easy utilityacquires tags withpower

Make it market allow marketing oftags

Adding CHP means

standard amountsshould be reassessed

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Resource Standard is a political actto value preferred resources

Policy first

Resource standard should be designed tomeet policy goals so best to be clear about

them

Then create market rules that work anddont interfere with other markets created

Try to give the created market stability,but remember that government hascreated the market to serve policy

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http://www1.eere.energy.gov/seeaction/pdfs/

see_action_chp_policies_guide.pdf

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About RAP

The Regulatory Assistance Project (RAP) is a global, non-profit team of experts thatfocuses on the long-term economic and environmental sustainability of the powerand natural gas sectors. RAP has deep expertise in regulatory and market policiesthat:

Promote economic efficiency Protect the environment Ensure system reliability Allocate system benefits fairly among all consumers

Learn more about RAP atwww.raponline.org

rsedano@raponline.org