Austin Energy’s Renewable Energy and Demand Side Management Reza Alaghehband, P.E. Power System Consulting Engineer, Austin Energy EMS Users Conference September 9, 2008 Atlanta, GA

Austin Energy Municipally Owned Electric Utility 9th Largest Public Power Serves > 388,000 Customers (population of 900,000) Area > 437 sq. miles Serving COA (Travis Co. and portion of Williamson Co) Austin

Austin Energy No increase in base rates since 1994 Generation 2,760 MW Peak Load ~2,500 MW ERCOT Member Austin

Generation Capacity Ratio Coal (2 units) – 23% Gas (12 units) – 52% Nuclear (2 units) – 15% Renewable – 10% Austin

Transmission Portfolio 633 Miles Transmission - 345 KV - 138 KV - 69 KV

Distribution Portfolio 10,560 Miles Distribution - 35 KV - 12.5 KV 11 transmission substations 57 distribution substations

ERCOT Market Non-Opt-In Entity (NOIE) – NO part in retail Market Qualified Scheduling Entity (QSE) – Submit bids, dynamic/static gen schedules, settle retail/wholesale gen resources with ERCOT according to EPS meters at tielines and gen. terminals Power Generation Entity (PGE) Transmission and Distribution Service Provider (TDSP)

Renewable Portfolio (Current) Wind (5 farms) – 274 MW (96%) Biomass (2 Landfill site) – 12 MW (4%) Solar – 2 MW Total = 288 MW Wind Provides 8% of AE Power)

ERCOT New Generation Capacity

Austin Climate Protection Plan Will make Austin the national leader among cities in the fight against global warming. City Council Resolution on February 15, 2007

Austin Climate Protection Plan Municipal Plan - Makes all COA facilities/fleets carbon neutral Homes and Buildings Plan - Makes Austin building codes most EE in nation “Go Neutral” Plan - Mechanisms for business to reduce carbon footprint to zero Community Plan – Develop complete plan for reducing GHG emissions from sources community-wide Utility (Austin Energy) Plan Make all COA facilities & fleet carbon neutral by 2020 Facilities 100% renewable by 2012 Fleet carbon neutral by 2020 AE GHG-reduction goal by 2020 Achieve carbon neutrality on new generation Establish CO2 cap for utility emissions

Utility (Austin Energy) Plan 30% renewables by 2020 700 MW of energy savings by 2020 CO2 cap and reduction plan New generation carbon-neutral Enhance building codes for zero energy-capable homes by 2015

Load Forecast & Conservation

Projected New Resources (in MW) Year Coal/Nuclear Gas Biomass Wind Solar 2008 1,029 1,444 12 274 2 2009   100 165 2010 30 2011 (77)*100 2012 2013 200 2014 50 20 2015 2016 2017 (126)*200 2018 2019 2020 110 Total 1,744 212 (203) 1,049 102 Total Additional Resources 1,376 MW *Expiring wind contracts

Strategic Conservation AE DSM Programs Strategic Conservation Peak Clipping Load Shifting Generic Load Shape Changes

DSM Cumulative Savings

Represent 35% of new DSM program mix AE DSM Programs Peak Clipping Power Partner A/C Cycling W/H Cycling Load Co-Op Aggregator Represent 35% of new DSM program mix

Power Saver Program FREE Energy Saving Products Lower energy costs 70,000 installed in homes, apartments 10,000 installed in commercial buildings

Cycling A/C Thermostats Cycling Session, June 15, 2005

Demand Response Program Customer Type and Strategy Residential A/C SuperStat®; 33% & 50% Cycling Strategy Multi-Family A/C SuperStat; 33% Cycling Strategy Multi-Family Water Heating Vaughn; 100% (digital timer) Commercial A/C SuperStat®; 33% Cycling Strategy Municipal & Government A/C SuperStat®; 33% Cycling Strategy & Set Point Limits

DR Program Implementation Power Partner - Automatic AC cycling by radio controlled thermostats.  Participant AC’s are cycled for a 10 minute block per half hour.  Total continuous MW reduction with full deployment ranges from 20-54 MW depending on temperature. Availability: June through September, Non-Holiday, weekdays from 1600 – 2000 with a target of 15 events per season  

DR Program Implementation Load Coop - ~2.5 – 3 MW of load response.  Load Coop customers are paid a capacity availability charge of $1.25/kW month and a curtailed energy charge of $0.15/kW based on deployment Availability: June through September, between 1200 – 2000 limit for a fixed block of 3 hours per day, up to 15 days or 45 total hours per season with no more than 3 consecutive activations

Demand Response Program

Demand Response June 15, 2005 Peak Day: June 2, 2005 June 15, 2005

Demand Response Program Impact on AE System Load

Demand Response Program Impact on AE System Load

Demand Response Program Impact on AE System Load

Aggregator Program Types of Participants Energy management companies Large chain stores – central energy management systems Minimum 3 sites bundled 10 kW per site minimum Self-aggregator 30 kW minimum

Aggregator Program Curtailment Events 4 events per summer minimum (once/month) 15 events per summer - anticipated Time Period June 01 – September 31 Monday - Friday only No holidays or weekends Between 3 pm to 8 pm Event maximum duration – 3 hours

Aggregator Program Set-Up Incentive If no automation equipment/software exists, $40/ton up to $10,000 for existing HVAC or refrigeration equipment Ex: $40/ton x 150 tons = $6,000 If automation equipment/software does exist, $20/ton up to $5,000 for existing HVAC or refrigeration equipment Up to 50% and 500 tons

Aggregator Program Performance (Energy) Incentive $0.24 per delivered kWh Ex: 20 kW x 3 hours x $0.24/kWh = $14.40 AE’s energy incentive not to fall below the $0.24 per kWh Minimum 4 energy payments per summer

Demand Side Management (DSM)

Strategic Conservation AE DSM Programs Strategic Conservation Total Home Efficiency Small Business Efficiency Green Building Appliance Efficiency Multi-family Rebates Commercial Rebates Refrigerator Recycling Free Weatherization Municipal Conservation Air Duct Sealing Represents 65% of new DSM program mix

Promoting Energy Efficiency Cash rebates that pay 20 – 30% of cost Up to 70% buy-down incentives for Small Business Direct install measures Free home and business energy audits Low-income Free Weatherization Engineering Feasibility studies Inter-agency agreements Utility Key Account representatives Newsletter / Mail outs

Commercial Rebates Summary of Technologies EE Lighting retrofits Air Conditioning Unit Solar Film/Screens Ceiling/Roof Insulation Reflective Roof Coatings Premium Efficiency Motor Variable Frequency Drives (VFD’s) Retro commissioning Thermal Cool Storage Custom technologies

Commercial Rebates Summary of Lighting Technologies T-8 & T-5 High Efficiency Lighting Systems Compact Fluorescent Lamps (CFL’s) LED (Light Emitting Diode) Exit Signs Incandescent to Fluorescent Conversions New building designs Re-lamping & Re-ballasting of Existing Fluorescent Fixtures High-Bay Fluorescent Systems Lighting Controls (occupancy sensors)

Electronically Commutated Motors (ECM) Emerging Technology for Refrigeration Fans Replaces Shaded Pole and Permanent Split Capacitor Reduced energy consumption to 60% Relatively Simple Retrofit Typical Paybacks Range from 2 to 3 years In any motor, either the rotor or the stator must have a rotating magnetic field in order to cause the motor to turn. In Electronic commutation Power is pulsed on and off electronically with semi-conductor devices sometimes called electronic switches, transistors,

Large Grocery Chain Retrofit Retrofit currently under way 22 Locations in Austin area Fans per location store ~ 200 fan/motors Energy Cost Savings ~$10,000 /location/yr Rebate varies by size of motor. $6 - $16 on this project.

High Bay Fluorescent Retrofit Manufacturing Facility Converted (514) 400-watt HID lamps to 4-lamp 240-watt T5 HO Fluorescents Annual Cost Savings: $43,812 Project Cost: $122,800 Utility rebate: $33,153 (27% of job cost) Payback was 2 years TYPE OF FACILITY: Sporting Goods Manufacturing and Distribution & Warehouse Facility (78,000 SF) OPERATING HOURS: 12 hours per day / 5 days per week Major complaint: high bills, poor light levels and poor light quality; excess heat gain. Retrofit eliminated noise, glare & heat gain associated with HID; almost doubled light levels; better CRI; and a 47% reduction in KW load. Utility rebate: $33,153 (27% of job cost)

Solar Rebate Program Up to 30% Savings 100 Mega-watts of solar by 2020 Rebates among the largest Encourage installations on homes & businesses. Demonstrations in Schools Demonstrations in City buildings

Free Home Weatherization Energy Improvements: Attic Insulation Duct Sealing Install CFLs Installing Solar Screens Caulking and Weather-stripping Free Smoke & Carbon Monoxide Detector Minor Energy Related Repairs Eligibility Requirements: Austin Energy Customer Elderly Low-to-Moderate Income Disability Renters Eligible: Rental Release Form Required Must Be in Household Minimum 3 Months Income Guidelines Number in Household 1 2 3 4 5 60 years or older $39,850 $45,500 $51,200 $56,900 $61,450 Under 60 years old $24,900 $28,450 $32,000 $35,550

Energy Conservation in Public Facilities

Strategic Conservation Municipal Energy Conservation Program Traffic Signal Conversion to LED 5,500 traffic signals Existing incandescent lamps 135 watts New LED lamps 15 watts Energy savings per lamp 120 watts 90% energy reduction

AE DSM Programs Load Shifting Time-of-Use Rate Thermal Cool Storage Systems

Load Shifting - Thermal Storage Austin-Bergstrom International Airport - July 1999

Top 160 MW is used 40 hours per year DSM Opportunity 500 1,000 1,500 2,000 2,500 0% 10% 20% 30% 50% 60% 70% 80% 90% % of Yearly Hours MWs Generated AE System Duration Curve -2004 Top 160 MW is used 40 hours per year

2007 DSM Expenditures Program Area Expenditures Cost / kW Saved Commercial $ 6,406,040 $ 327 Residential $ 6,205,155 $ 483 Demand Response $ 4,852,074 $ 295 Free Weatherization $ 600,084 $ 953 Solar $ 2,637,453 $ 4,221 Grand Total $ 20,532,076 $ 410

Natural Gas – Combined Cycle $750 Pulverized Coal $1,549 Capital Cost – New Generation Power Plant Cost/kW Natural Gas – Combined Cycle $750 Pulverized Coal $1,549 Nuclear $3,000 Source – National Energy Technology Lab (NETL)

Residential Power Saver 15% Energy Savings Typical Home Size: 2,000 Sq. Ft. Pre-Retrofit = 17,960 kWh Post- Retrofit = 15,360 kWh kWh Savings = 2,600 kWh Cost Savings = $273 Customer Benefits: Energy efficiency offers enormous potential for benefiting our customers, the environment and our industry Base Home Retrofit Home Difference kWh/Sq. Ft. kWh/Sq. Ft. kWh/Sq. Ft. 8.98 per Sq. Ft. 7.68 1.3 kWh/Sq. Ft. Improvement Air Duct System Average Home Has 27% Duct Leakage Attic Insulation 30% of Homes Heat Gain Comes from Attic Solar Shading Can Reduce Sizing of A/C by ½ Ton

Cash Flow Projection of DSM FY05 Forecast DSM Analysis 2007 2008 Base Revenue Reduction $12,000,000 $16,000,000 Fuel Revenue Reduction $13,000,000 $15,000,000 Customer Savings (Bill Reduction) $25,000,000 $31,000,000

Cash Flow Projection of DSM

Cost-Effectiveness Tests (Benefits $ / Costs $ > 1) The Participant Test = NPV of Savings on electric bill + financial rebate Customer’s additional cost incurred to participate The Utility Test = NPV of Avoided (fuel + power plant operating & maintenance + capacity cost) DSM program administrative cost + financial rebates Ratepayer Test = NPV of DSM program administrative cost + financial rebates + revenue losses The Total Resource Test = NPV of Avoided ( fuel + power plant operating & maintenance + capacity cost) DSM administrative cost + Customer’s additional cost incurred

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