1. Block Island Vermont CHP and Customer Generation Potential Study September 15 th Study Team Progress Report VSPC Study TeamPresented by: La Capra Associates, Inc. Stantec Consulting Inc. Presented to: September 15, 2010

2. 2 Agenda  Objectives for today’s briefingJohn Athas  Existing CHP/Customer Generation Dan Kelly, Jose Donnell  CHP Technology Overview Dan Kelly  CHP Potential Methodology - John Athas, Patty Richards, Barbara Stoddard, Melissa Whitten  Assumptions and Economic TestingJohn Athas  Summary of Issues from Discussion Patty Richards  Next Steps Patty Richards, John Athas 

3. 3 Objectives for today’s briefing 1.Provide an Update of the current CHP / Customer Generation Investigations 2.Provide an Update on the CHP Potential including an understanding of:  Methodologies and approximations  Progress in Data Gathering 3.Discuss any study issues and obstacles with the VSPC Study Committee –Sub-bullet

4. 4 Existing CHP/Customer Generation  Data Gathering  Industrial Database review  Vermont Utility Survey by La Capra Team  VT PSB Net-metering applications Posted CHP Existing Facilities  Host Customer Electric Load Information Request?  Mapping of Locations  Summaries of Technology and Operations  Customer Phone Interviews  Economic Review

5. 5 Existing CHP/Customer Generation – Preliminary Tabulation

6. 6 CHP Technology Overview  Prime Mover Technologies to be Studied  Internal Combustion Turbine  Diesel Based Configurations  Fuel Cells  Combustion Turbine  Steam Turbine / Back Pressure Steam Turbine  Key assumptions being finalized  Available Sizes and Fuel  Electric and overall thermal efficiencies  Cost & Performance

7. 7 CHP Potential Methodology  Overview of analysis  Customer / Segment Characteristics  Segment Size  Electric Load  Thermal Load  Natural Gas Availability  CHP / Customer Generation Equipment Operation

8. 8 CHP Potential Methodology - Overview  Begins with estimation of Customer segment sizes represented by a typical customer  SIC Code – two digit  Load Zone  Fuel availability  Electric and Thermal Use Characteristics, potential for CHP and Electric to Thermal Switching such as Absorption Chilling  Various Generation technologies and sizes tested for each segment.  Analysis approximates the operation of a CHP unit based upon electric and thermal match  Lowest cost per kWh plant will be chosen

9. 9 CHP Potential Methodology – Electric Load Data  MWH by Zone  Statewide - EVT Data  Burlington - BED Data  Retail Sales (no distribution, transmission or sub-transmission losses)  Missing IBM 2008 and 2009 data set –Used average 2005 to 2007 for missing IBM data  Missing ~ 8% of the load data from the zone counts. –Per EVT missing data : »OMYA »Stowe Mount Mansfield Load »Unknown Loads »Will make adjustment to load zones per above 

10.  Customer Count by Zone  SIC  MWH by Zone by SIC  Number of Customers by Zone by SIC  No KW… yet (EVT)  If no data produced may need “typical load” factor  Will have to back into KW 10 CHP Potential Methodology – Electric Load Data

11. CHP Potential Methodology - Sample Customer Data 11

12. CHP Potential Methodology – Sample Load Zone Data 12

13. CHP Potential Methodology: Estimated Thermal Load  How to obtain Thermal Load – Load not served by electricity  Sources for natural gas usage by Industry may exist:  Vermont Natural Gas: –Service territory does not include entire state –Availability: to be determined  Need total thermal load served by all fuels not just gas  Input-Output data collected annually by SIC code –Annual tables have limited detail –Benchmark years have more detail but released with a lag – latest year is 2002 –Provides metric for electric, gas, coal, and petroleum used to produce each industry’s output. 13

14. 14 CHP Potential Methodology: Estimated Thermal Load  Input – Output Table: Bureau of Economic Analysis (BEA)  Provides value of fuel used as a share of output  Correspondence to 4-digit SIC code level detail (*)  Paper Mills (SIC 26): for every $1.00 of output produced: –Electricity: 3 cents Natural Gas: 2.7 cents  Algorithm to Estimate Electric to Total Thermal Load:  Relative fuel prices to electric prices for Benchmark Year 2002  Developed algorithm to estimate Electric to Total Thermal Load  Combined ratio of each fuel’s share of output to electricity’s value – in algebraically correct manner  * Fuel price ($/ mmBtu ) divided by Electricity price ($/mmBtu)  Apply to EVT, et al, kWh by SIC to obtain Thermal Load for use as input to Customer Economic Model.

15. Historical Price by Fuel Type: create price ratios 15

16. Example: Thermal Load Estimation for one SIC 16

17. 17 CHP Potential Methodology: CHP Operation  Customer Segment Characteristics  Electric Peak Demand Estimation  Split of High Quality (e.g. Steam) and Low Quality (e.g. Hot Water) Thermal Usage  Capture Existing Fuels used for Thermal Energy Production  Allowance for Thermal Use Characteristics  Thermal Match Factor (reduces customer thermal)  Thermal Requirement Split (reduces hours of CHP operation)  CHP Unit Assumptions  Sizes Evaluated – Max Customer Peak, Minimum based on Load factor  Units Operate whenever Thermal output is utilized on-site  Excess sold at Market Prices to grid

18. 18 CHP Potential Methodology: Potential Definitions  Technical Potential  Generation Plant Sized ‘optimally’ for each segment  Customer Thermal Load dependent  Will not include creation of aggregated thermal loops such as district heating and cooling  Segment CHP Cost of Electricity  Net Cost of Electricity for the “Technical Potential” Blocks  Economic Potential  Sizes Evaluated – Max Customer Peak, Minimum based on Load factor  Units Operate whenever Thermal output is utilized on-site  Excess sold at Market Prices to grid

19. 19 Assumptions and Economic Testing  Assumptions  EVT Assumptions  Cost of Money  Discount rate  Avoided Costs  Escalation Rates  ‘Core’ Fuel Price  Externality ‘costs’ of emissions  Electric Utility Rates – specific local utility

20. 20 Assumptions and Economic Testing  Economic Testing  Net Cost of Electricity  Host Customer Economics – value based upon electric rates and market prices  20 year NPV, Simple Payback, Internal Rate of Return  Electric Utility Resource Economics – value based on market prices for energy and capacity, avoided distribution and transmission  Societal Test, Total Resource Cost Test, Utility Cost Test

21. 21 Economic Testing – Net Cost of Electricity Capital O&M CHP Fuel Thermal Credit Net Cost of Electricity

22. 22 Summary of Issues from Discussion Methodology Customer Data Existing CHP

23. 23 Next Steps 23

24. 24 Thank you    One Washington Mall, 9 th Floor Boston, MA 02108 www.lacapra.com 617-778-5515 Contact Information: John Athas jathas@lacapra.com 277 Blair Park Suite 210 Williston, VT 05495 802-861-1617 or 802-861-1618