1. Marginal Distribution System Losses Regional Technical Forum September 30 th, 2008

2. Background To calculate busbar energy savings from site energy savings, ProCost currently assumes: Instead of applying these generic average loss ratio’s to energy efficiency measures, the RTF was requested to look into the technical merits of measure-load-shape-specific “marginal” loss ratios. At the August 5 th RTF meeting, after some detailed discussion on marginal distribution losses, the RTF asked the subcommittee to meet and come back with a recommendation.

3. Subcommittee Meeting Stats September 3 rd, 2008 2 hours Attendees: 1.Bob Fletcher – Snohomish County PUD 2.Gurvinder Singh – PSE 3.Pete Catching – ETO 4.Glenn Russel – BPA 5.Curtis Michael – BPA 6.Dave Gilman – BPA 7.Michael Schilmoeller – Council Staff 8.Charlie Grist – Council Staff 9.Tom Eckman – Council Staff 10.Adam Hadley - RTF

4. Subcommittee Meeting Results The subcommittee recommends: 1.The ratio of "marginal load losses to energy savings" is 2 times the ratio of "total load losses to total energy delivered“; 2.This factor of 2 should be used to determine the size and shape of marginal distribution system losses for standard end-use energy efficiency measures, based on the system load shape and weighted to the energy savings measure load shape. The resulting time segment-specific and measure-specific loss factors should be applied to end-use energy savings to determine and value energy savings at the busbar; 3.The assumptions for this methodology include: a)"other" losses are not taken into account, b)marginal losses and energy savings are infinitesimally small, c)the energy savings measure does not affect the distribution system power factor, d)power factor is near unity - plus or minus 2%, e)load loss power is proportional to the square of the load, f)system no-load loss power is constant, g)resistance is constant; 4.Distribution system efficiency measures should be handled differently since they do not “act” at the site; 5.Standards for how total average system losses are calculated should be developed and applied consistently; and 6.Similar methodology should be used to develop marginal transmission system losses, but the transmission system loading, which is quite different than the system load shape, should be taken into account.

5. Next Steps 1.Accept/Deny/Modify/Question the subcommittee’s recommendations? 2.Decide on the average total distribution losses. (Keep at 5%?) 3.Decide on the mix of load losses to no-load losses. (Assume 70% load, 30% no-load?) 4.Develop methodology for marginal transmission losses. 5.Implement in ProCost.