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FEATURES: 

CNG Bus Grant for Logan Airport/1 Energy Engineering Program Launch/1 

NEWS: 
EV Demo/3 Fuel Cells/5 Regional Transmission Group/5 Green Travel Voucher Benefits/6 

EVENTS: 

ICP/7 NICE 3 /7 DOE Awards/7 Calendar/8 

DEPARTMENTS: 

Guest Column from DPU Commissioner Ken Gordon/4 



FT 



A PUBLICATION OF 
THE MASSACHUSETTS 
DIVISION OF 
ENERGY RESOURCES 

Vol.3/ No. 1 
Fall 1994 



The Commonwealth 
of Massachusetts 

William F. Weld, 
Governor 

Argeo Paul Cellucci, 
Lt Governor 

Gloria Cordes Larson, 
Secretary 
Economic Affairs 



State Wins Grant % rn Sc d tS ments 
Demonstrate CNG Brases is At 
Logan Airport 



University of Massachusetts 
Depository Copy 



STATE 



Boston is one step closer to cleaner air. With help from $205,000 recently awarded by the 
U.S. Department of Energy, the Massachusetts Port Authority (Massport) will purchase four 
original equipment buses that run on compressed natural gas (CNG) for the Logan Airport 
shuttle bus system. The grant was won in a joint effort led by the Massachusetts Division of 
Energy Resources (DOER). 

"We are proud to have received the largest grant awarded nationwide in this competition," said Economic 
Affairs Secretary Gloria Cordes Larson. "Our efforts to support the use of clean-fuel transportation and to 
clean up the air in Boston will make Massachusetts a better place to live and work." 



The purchase and operation of the four compressed 
natural gas buses will mark the start of a five year 
program to improve Boston's air quality through the 
monitored use of lower emission vehicles at Logan 
Airport. The program is a unique public/private 
partnership of DOER, Massport, Boston Gas and 
Alternative Vehicles Service Group, Inc. (AVSG), a 
developer of alternative fuel infrastructure. In 
support of the program, AVSG will build a fast-fill 
CNG fueling station at the airport, unique in that one 
side of the station will be accessible only to airport 
vehicles while the other side will be open to the 
public. 

"DOER actively supports the use of alternative fuel 
transportation to reduce vehicle emissions," said 
Energy Commissioner Stephen Remen. "This project 
is particularly important because Logan Airport is in 
an area classified as a high-emissions zone, and our 
efforts here in Massachusetts will be a model for 
emissions reduction efforts in urban areas and 
airports nationwide." 

The program will compare the relative cost, 
emission, operation and maintenance characteristics 
of the CNG buses with diesel and electric buses in 
Massport's fleet. Presently, Massport is considering 
the use of soy-based diesel fuel to power some of its 
vehicles. 



NEW PROGRAM HELPS 
LOCAL GOVERNMENTS CUT 
ENERGY AND WATER 
COSTS 



LOCAL 



When it comes to energy and water 
efficiency, Massachusetts is 
practicing what it preaches. 
Recognizing that a statewide energy 
efficiency effort must also include public buildings, 
DOER has unveiled the Energy Engineering 
Program (EEP). EEP services will help state and 
local governments cut rising energy and water 
costs at no up-front capital cost to facility 
operators. 

Under EEP, engineers will be available to identify 
energy and water conservation improvements for 
new municipal and state construction projects, and 
to help managers of existing buildings identify 
improvements eligible for installation through 
third-party financing. EEP provides technical 
assistance to help municipal clients do several 
things: identify suitable facilities, generate 
competitive project proposals, evaluate proposals 
received and assist in project monitoring to ensure 
success. 



CNG Buses/Massport: Continued on page 2. 



New Program: Continued on page 6. 



FROM 

COMMISSIONER 

REMEN: 

In the past, environmental regulation, energy policy and economics have frequently found 
themselves at odds Government, in command and control fashion, has set environmental 
rules and goals — and the energy industry has worked hard to meet them, lacing the 
resultant economic challenges boldly and creatively, but not without difficulty 

Now. there is growing recognition that energy, the environment and economic growth are 
mutually dependent, and that change in any one area has resounding effects on the other 
two The Weld/Cellucci Administration recognizes that economic strength depends on 
innovation and growth in many sectors, not the least of which is energy. As such, the state 
actively seeks opportunities for market based approaches to environmental regulation in 
the energy sector. 

As we examine our biggest energy users and look for ways to reduce their environmental 
impact, we must not halt operations, but rather find ways to improve operations. We need 
to approach regulation constructively — and seize opportunities for economic develop- 
ment. 

One key example is the use of emissions reduction credits, which are awarded to existing 
facilities that meet and exceed the requirements of the Clean Air Act. Facilities may either 
use these credits to compensate for emissions created by future expansion, or sell them to 
help other businesses meet emissions reduction requirements. 

In other examples covered in this newsletter, the state works closely with industry and other 
partners to secure federal grants that support innovative environmental and energy 
efficiency efforts in many sectors, including manufacturing, alternative fuel transportation, 
and schools and hospitals. 

Lastly, Massachusetts is a major stakeholder in utility market reform efforts, which have the 
potential not only to reduce rates tor consumers, but also to provide a creative atmosphere 
that will accelerate the growth of energy efficient and environmentally compatible technolo- 
gies. Recent history has shown that unleashing competitive forces in the energy market 
induces technology development. For example, since the enactment of the federal Public 
Utility Regulatory Policy Act of 1978, which provided the impetus for competition in the 
wholesale power market, efficiency in power generation technology has increased 
immensely, producing a significant reduction in the demand for fossil fuels by these 
technologies. 

As electric industry restructuring moves forward, we must work to ensure that the new 
market is conducive to, and provides incentives for, continued technology innovation. Our 
efforts toward market based regulation will be rewarded with adequate supplies of 
affordable energy, a cleaner environment and continued economic development. 




Noitheast. 



A CLEAN REFUELING 
NETWORK FOR THE 
NORTHEAST 

Work is well underway on a 
refueling network tor alternative 
fuel vehicles along major 
highways and byways of the 
I he Northeast Clean Fuels 
Corridor Project, as it is called, is being 
conducted by the Coalition of Northeastern 
Governors (CONEG). 

The project includes a detailed study of the 
refueling needs of fleet vehicles which travel 
along the northeast corridor, an area spanning 
Virginia to Maine. The study will examine 
both government and private heavy duty 
vehicle fleets to assess the potential market 
demand lor a network of private alternative fuel 
refueling stations. In addition, CONEG will 
determine ways to make such a network 
attractive and cost effective, in order to 
encourage fleet operators to use the facilities, 
and to encourage investment in the develop- 
ment of a refueling infrastructure. 

The overall project will identify and assess 
current travel patterns and key operating 
characteristics of fleets most likely to use an 
alternative fuel refueling network. An 
additional task of the study is to determine 
general attitudes among fleet operators toward 
alternative fuels. The project will recommend 
ways to make the fuels more accessible and 
less expensive, and to make refueling as easy 
and fast as for conventional gasoline and 
diesel vehicles. 

The project is managed by the CONEG Policy 
Research Center, Inc. in close consultation 
with the project Technical Committee, staffed 
by representatives ot CONEG, state and federal 

Clean Refueling: Continued on page 6. 



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CNG BUSES MASSPORT: From page 1 

Logan Airport is the tenth busiest airport in 
the country with 24 million passengers each 
year. Approximately 88% of Logan's 
passengers begin or end their trips in Boston, 
which results in heavy dependence on the 
free shuttle within the airport complex. 
Currently, each bus in the fleet carries 30,000 
to 35.000 passengers per month, travels 
some 60,000 to 70,000 miles per year and 
consumes 15,000 to 20,000 gallons of diesel 
fuel annually. 



The use of alternative fuel vehicles at Logan 
Airport is expected to have a measurable 
effect on exhaust emissions, and the study 
will provide solid evidence of the cost-benefit 
of using such fuels. By demonstrating the 
use of the alternative fuel buses, the project 
will support the development of this new 
industry and lessen the state's dependence on 
imported fuels. In addition, the project will 
introduce thousands of passengers each year 
to alternative fuel vehicles. 



The Logan Airport CNG Bus Demonstration is 
part of DOER's Alternative Fuel Vehicle 
Demonstration Program. The demonstration 
supports commitments outlined in The 
Massachusetts Energy Plan to diversify the 
state's transportation fuel mix, reduce air 
pollution, increase the use of alternative fuels 
and promote public transportation. 

For more information, contact Jack Bevelaqua, 
DOER's Director of Programs, at 
(617) 727-4732, ext. 126. 



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EV DEMO UPDATE: HIGH MARKS FOR SUMMER, PVs ARE UP 



Phase I of the Massachusetts Electric Vehicle 
Demonstration Project continues with high 
marks from EV users. All charging stations 
are in place at the Alewife and Braintree MBTA 
parking garages, and panels are in place for 
the photovoltaic (solar electric) arrays. The 
use of photovoltaics to replace grid energy 
consumed during charging of the electric cars 
makes these truly zero emission vehicles. 

A DOER cumulative survey indicates that, 
since April of this year, participants ranked 
their vehicle performance at 8 out of a 
possible 10, showing a very high level of user 
satisfaction. This winter's cold temperatures, 
however, will provide additional information 
on vehicle performance and user satisfaction 
levels. 

DOER also collects information on vehicle 
performance using a computer application and 
on-board data loggers. The constant 
monitoring of data will allow the state to 
evaluate electric vehicles as a viable option for 
commuting and for reducing vehicle emis- 
sions to meet the air quality standards 
established by the Clean Air Act. 




Photovoltaics are installed at Braintree T Station. 

The charging stations at MBTA parking 
garages and at all of the commuters' homes 
are fully operational. Energy used to recharge 
the vehicles at the MBTA stations is recorded 
daily by Commonwealth Electric Company. 



The company also will record the energy 
generated by the photovoltaic arrays, when 
operational. 

In a further development, the U.S. Advanced 
Research Project Agency (ARPA) has awarded 
funds for two additional EV Demo components 
under the Northeast Alternative Vehicle 
Consortium. DOER will receive $45,000 to 
purchase and test an electric vehicle with an 
advanced heating, ventilating and air 
conditioning system. The vehicle is designed 
to minimize the use of energy during hot and 
cold seasonal driving. In another project, 
DOER will collect data on ten "next genera- 
tion" hybrid electric vehicles now being built 
for testing in the Northeast. 

The Massachusetts EV Demo Project, officially 
launched on April 22, 1994, is the nation's 
largest effort to test and evaluate the everyday 
use of electrically powered motor vehicles for 
commuting. 

For more information, contact Jack Beveiaqua, 
at (617) 727-4732, ext. 126. 



POWER NEEDS? THINK PVs 




Photovoltaic (PV) technology, 
in which radiant energy from 
the sun is converted to direct 
current electricity, is particularly 
useful for electric power generation in small or 
remote applications. In many circumstances, 
PV systems are the most cost-effective method 
of powering street lighting, call boxes, 
amenities at recreation facilities, and 
navigation and communication equipment. 
Even remote homes can be powered by PVs at 
a fraction of the cost of extending utility lines 
to the same location. Unfortunately, since 
many procurement officials and planners aren't 
familiar with the technology, good applications 
for PVs are often overlooked in Massachu- 
setts. 



To increase the use of PVs in the state, DOER 
and the Massachusetts Photovoltaics for 
Utilities (PV4U) Working Group held a 
workshop on cost-effective PV applications on 
September 22, 1 994 . Over fifty people, 
including state facility managers, public works 
engineers, electric utility managers, university 
researchers and government officials, came to 
learn about PV systems and applications. 

Presenters included Jane Weissman, National 
Coordinator for PV4U, Ed Kern, President of 
Ascension Technology and Jerry Oppenheim, 
Director of the Pace University Law School 
Renewable Energy Technology Analysis 
Project. Workshop attendees learned how PV 
technology works, its advantages and 
limitations, and how to identify and evaluate 
their own applications. 



DOER and PV4U are promoting the use of PVs 
and other renewable energy technologies as 
one way to increase the environmental 
compatibility of our energy sources and 
promote economic development. PV4U, 
chaired by Executive Office of Economic 
Affairs General Counsel David Tibbetts, is an 
organization of government, utilities, industry, 
environmental advocates and other stakehold- 
ers working to advance the commercialization 
of PVs. 

For further information on photovoltaic 
technologies or the Massachusetts PV4U 
Working Group, or to obtain workshop 
materials, contact DOER's Nils Bolgen at 
(617) 727-4732, ext. 178. 



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( -I uu u>ii ig Directions Iii Energy Markets 
— Yel Again 



By Ken Gordon, Chairman, Department of Public Utilities 




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Massachusetts, along with its 
sister New England states, has 
been on an energy roller 
coaster lor more than twenty 
While there have been notable 
evements in some areas — environmental 
protection and the enhancement ot energy 
efficiency come to mind — we still have 
critical problems to address in the energy cost 
and competitiveness arena 

The prospect of unlimited cheap energy ended 
in 1973 The steep cost rise forced energy 
policy to focus on security and increased 
efficiency — and propelled Massachusetts 
into a national leadership position on these 
issues. Finally, as a result of federal and state 
policies developed during the 1980's and 
1990s, we are moving toward more competi- 
tion in wholesale electricity and throughout 
the gas marketplace. 

The critical remaining energy problem in the 
Commonwealth is cost competitiveness. The 
existing utility/regulatory planning and 
operating framework has still not achieved the 
level of efficiency needed to allow Massachu- 
setts' industries to compete effectively in the 
national and global marketplace. 

There are things regulation must do and other 
things it must not do as we turn our attentions 
to the competitiveness issue. First, the 
"don'ts." 

Policymakers, utility customers and utilities 
cannot rely on the status quo, whether in 
industry or regulatory structures, to solve the 
cost problem. It won't do the job. 

Neither should they assume that by adopting 
new structures, whether industry or regulatory, 
important social goals — environmental, 
efficiency, low income support — must be 
given up. This confuses goals with instru- 
ments. 

The "do's": First, resolve to maintain important 
environmental and efticiency gains that have 
been achieved in ways that will allow the 
problem of cost competitiveness to be 
addressed more successfully. Tradable 
emission permits and other market based 
environmental regulations offer the possibility 



of achieving a cleaner environment at lower 
cost. Closer to home, the Department ot 
Public Utilities is simplifying its processes to 
allow utilities to respond to market changes 
and changing customer needs more quickly 
and effectively. Integrated Resource Manage- 
ment relorm, already underway lor certain 



THE CHANGES TAKING 
PLACE IN ENERGY 
MARKETS ARE DEEP 
AND FUNDAMENTAL, 
AND THE REACTIONS OF 
UTILITY MANAGEMENTS 
MUST BE SIMILARLY 
FAR REACHING. 



companies, will continue and be extended. 

Secondly, it remains essential that we 
continue to move as expeditiously as possible 
to an open wholesale electric generation 
market. All participants in the marketplace 
must renew their efforts to create a regional 
transmission group that can receive the 
necessary federal approvals. The public utility 
commissions of New England will not allow 
parochial concerns to interfere with the 
achievement of this critical regional need. 
Massachusetts is in the forefront of these 
efforts. 

The third and fourth legs of policy are 
intrastate. In August, the DPU issued an order 
on mergers and acquisitions, re-emphasizing 
that reorganization and restructuring of the 
energy industries is a course that must be 
explored, and, where it can yield benefits to 
customers, taken. The changes taking place 
in energy markets are deep and fundamental, 
and the reactions of utility managements must 
be similarly far reaching. 

In September, the DPU followed with a Notice 
of Inquiry seeking comments on incentive 
regulation as an alternative to traditional cost- 
based, rate-of-return regulation for both 
electric and gas companies. Incentive 
regulation, properly designed, may well be 



superior to traditional regulation in its 
incentives to operate efficiently, and at the 
same time may better be able to accommodate 
utilities' participation in the transition to a 
more competitive environment. The primary 
objective ol any such alternative framework, of 
course, is to provide marketplace benefits to 
consumers through more efficient utility 
operations, stronger incentives for cost 
control, and therefore, enhanced opportunities 
tor lower rates for everyone. Regulation has 
long been an imperfect substitute for 
competitive market forces and the benefits that 
result to consumers from the free play of those 
forces. The goal of our Notice of Inquiry is - 
paradoxically — to use regulation to liberate 
the very competitive forces for which it so 
long substituted. 

Last, but surely not least, is the issue of 
customer choice. Electric service remains one 
of the few areas where customers cannot 
typically select their own service provider. 
That may be changing. In Great Britain, the 
Nordic countries and elsewhere, electricity 
markets are becoming more open to retail 
choice. California has opened a proceeding to 
develop a retail competition framework that is 
being closely followed all over the country. 
Retail customers, themselves under enormous 
pressure to contain costs in order to be 
competitive in their own markets, will try to 
reduce their energy costs by whatever means 
are available. This will surely include 
switching to new suppliers when possible. 

The ability ol customers to change suppliers 
is, in the end, the most critical element of the 
incentives that drive firms in a competitive 
market. While it is uncertain just how the 
pressures of competitive forces will unfold in 
electricity markets, they are affecting policy 
today. It is already clear that we must accept 
the challenge of assuring that all customers 
benefit, and that important reliability, 
environmental and social goals are preserved, 
as we gain the benefits of more direct access 
by customers to their energy suppliers. 

If we are able to meet this challenge success- 
fully, Massachusetts will be better positioned 
to move into the new economy ol the next 
century. 



REGIONAL TRANSMISSION GROUP UNDER DEVELOPMENT IN NEW ENGLAND 



REGION 



New England electric utility 
companies, independent power 
producers, regulators and 
policy makers have been hard 
at work developing a New England regional 
transmission group (RTG). An RTG would 
facilitate increased competition in the 
wholesale electricity market and broadened 
transmission access, as mandated by the 
federal Energy Policy Act of 1992. 



An RTG would establish regional rules for fair 
and equitable transmission access and prices. 
This should result in more robust competition 
in the wholesale electricity market and lower 
electric bills for consumers. Possible 
members of the RTG include investor-owned 
utilities, municipal utilities, non-utility 
generators and other users of the high voltage 
transmission system. 

All RTG stakeholders met on September 22, 
1994 to begin negotiations. Hosted by New 
England Electric System, the conference was 
co-sponsored by the New England Council of 
Public Utility Commissioners and the New 
England Governors' Conference Power 
Planning Committee. 



At the conference, former Massachusetts DPU 
Commissioner Barbara Kates-Garnick 
presented a set of principles for an RTG on 
behalf of all six New England public utility 
commissions. The principles propose, first, 
that the RTG ensure fair pricing of and open 
access to transmission lines. Second, if the 
RTG requires access fees for transmission line 
use, then stranded investment and non- 
economic costs should be considered. Third, 
siting approval for new power plants and 
transmission lines should remain state 
regulated. 

The public utility commissions also proposed 
the formation of an advisory group that 
includes environmentalists, consumer groups, 
industrial groups and some state agencies. 
The group would be entitled to all RTG 
communications and made aware of decisions 
in order to maintain public accountability. 

The various stakeholders will negotiate over 
the next six months to develop an agreement 
that meets federal and regional guidelines and 
principles. The agreement will be presented 
to the six public utility commissions for 
review to ensure that recommendations 



DPU OPENS DOCKET ON PERFORMANCE-BASED 
UTILITY REGULATION 



STATE 



The Massachusetts 
Department of Public Utilities 
(DPU) announced the 
opening of an inquiry into 
incentive regulation on September 20, 
1994. The inquiry will investigate the effect 
of a performance-based incentive regulatory 
framework on electric and gas customers in 
Massachusetts. 

Performance-based regulation uses 
financial incentives and market competition 
to achieve regulatory goals. The DPU's 
expectation is that "a well-designed 
incentive regulation scheme may allow a 
regulated utility to participate more 
effectively in a competitive marketplace and 
to achieve the ... goal of safe, reliable, and 
least-cost service to society more effi- 
ciently." 



Performance-based regulation was recom- 
mended in the July 1994 report of the Electric 
Utility Market Reform Task Force, and is 
consistent with the Commonwealth's 
commitment to reducing utility bills while 
preserving important energy, economic and 
environmental goals. 

The DPU welcomes comments from interested 
parties. Written comments must be submitted 
no later than November 1 , 1 994. One original 
and ten copies of all comments should be 
filed with: Mary Cottrell, Secretary, Depart- 
ment of Public Utilities, 100 Cambridge 
Street, 12th Floor, Boston, MA, 02202. 



comply with state laws and policies. If 
accepted by the commissions, the agreement 
will be submitted to the Federal Energy 
Regulatory Commission for approval. 

The development of New England's RTG was 
recommended in the July 1994 report of the 
Electric Utility Market Reform Task Force. The 
Task Force, co-chaired by Energy Commis- 
sioner Stephen Remen and DPU Chairman 
Ken Gordon, was called for in The Massachu- 
setts Energy Plan of 1993. 

For more information on Regional Transmis- 
sion Groups, contact the DPU's Bob Harrold, 
(617) 727-9748. 



DOER thanks former Commissioner Barbara 
Kates-Garnick for her contribution to this 
article, and wishes her well in her new career. 

FUEL CELL 

COMMERCIALIZATION 
EFFORTS AT DOER 



BUSINESS 



Recent years have seen rapid 
advances in the development of 
fuel cell technology for both 
electric power generation and 
transportation. As part of a 
broader dispersed generation initiative, DOER 
is working with the fuel cell industry and other 
stakeholders to promote fuel cells as a viable 
option for improving the efficiency and 
environmental compatibility of the state's 
electric power system. Fuel cells are now 
commercially available for on-site power 
generation, with transportation applications 
close behind. 

Fuel cells produce electricity through a 
chemical process, like batteries, but rely on a 
continuous supply of fuel such as natural gas 
or hydrogen. Byproducts of the process 
include heat, water and a small amount of air 
emissions. The advantages of fuel cells 
include low emissions, high efficiency and 
high power quality. The modular nature of 
fuel cells and their quiet operation makes 
them suitable for dispersed generation 
applications. 

For further information on DOER fuel cell and 
dispersed generation activities, please contact 
DOER's Renewables Program Manager, Nils 
Bolgen, at (61 7) 727-4732, ext. 178. 



STUDY SHOWS GREEN TRAVEL VOUCHER BENEFITS 



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It it seems to you that the 

mute to work is a bigger 
headache than it was ten years 
ago, it's not your imagination 
While the Massachusetts workforce increased 
by some 300.000 between 1980 and 1990, the 
number ol people driving to work alone - 
and contributing to air pollution and tuel use 
— increased by more than hall a million. 

To address the problem, DOER proposed in 
The Massachusetts Energy Plan the use of 
Green Travel Vouchers This unique program 
would apply to employers currently paying to 
provide their employees with parking. The 
Green Travel Vouchers would provide an 
economic incentive for employees with free 
parking benefits to choose more efficient and 
environmentally friendly modes of transporta- 
tion for commuting. Under the program, 
employees would trade their parking benefits 
either for cash or for a public transportation 
voucher. 

The impact that a Green Travel Voucher 
program would have on the state is the subject 
of a recent study conducted by DOER'S State 
Annual Forecast of Energy Resources (SAFER) 
Project. SAFER uses a computer based model 
to predict the outcomes of the state's energy 
policies. SAFER estimates that if only 18% of 
eligible employees were to participate in a 
Green Travel Voucher program, 631 million 
gallons of gasoline could be saved by the year 
2000. As a result, automobiles would emit 
2,059 fewer tons of VOCs and 807 fewer tons 



How Mass. Residents Get to Work 

Carpool 11% 

Public Transport 8% 
Walk/Bike 6% 



Single Occupant 

Vehicle 

72% 




Other 3% 



Sonne 1990 Census - Massachusetts 



of nitrogen oxides. The program would also 
reduce the state's dependence on imported oil 

Since commuters will receive cash through 
the program and spend less money on 



IF ONLY 1 8% OF 
ELIGIBLE EMPLOYEES 
WERE TO PARTICIPATE 
IN A GREEN TRAVEL 
VOUCHER PROGRAM, 
631 MILLION 
GALLONS OF GASOLINE 
COULD BE SAVED BY 
THE YEAR 2000. 



gasoline, a Green Travel Voucher program 
also may have a positive impact on people's 
wallets. SAFER predicts the resulting increase 
in disposable income would be $328 million 
over a two-year period. According to SAFER, 
this additional income could indirectly result 
in nearly 1,200 new jobs. 

As a next step, DOER will develop plans for a 
Green Travel Voucher pilot program to include 
several Massachusetts businesses. The 
information obtained from the pilot program 
will aid in the design of a Green Travel 
Voucher program for Massachusetts. 

For more information on the Green Travel 
Voucher program, contact DOER'S SAFER 
Project Director John Murphy at 
(617) 727-4732, ext. 142. 



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NEW PROGRAM: Frompagel 

Examples of improvements include: energy 
management systems and controls, lighting 
technologies, heating and air conditioning 
system upgrades and conversions, swimming 
pool covers, high efficiency motors and 
pumps, heat recovery systems, cogeneration 
systems and building envelope upgrades. 

EEP services will be provided in two forms: 

Review of New Facility Design 

EEP engineers will review building design 
plans to ensure that new construction meets 
the energy requirements of the state building 
code. Design services will also help 
municipalities take advantage of new 
technologies and funding packages to 
increase efficiency beyond current code 
requirements. 



Third-Party Financing 

Program experts will advise municipalities on 
how to develop innovative financing packages 
using private sources. Third-party investors 
will finance the purchase, design, installation 
and maintenance of energy and water 
efficiency improvements at no up-front cost to 
facility operators. Investors will be paid a 
percentage of the actual cost savings that 
result from the installed improvements. 

EEP falls under DOER's larger Public 
Buildings Initiative to reduce energy con- 
sumption costs in the state and municipal 
building sector. The program is intended to 
save taxpayers money. It does so by helping 
cities and towns with effective building 
management teams apply their expertise to 
energy and water efficiency projects. 

For more information on EEP, contact Teresa 
Civic, Public Buildings Program Manager, 
(617) 727-4732, ext. 137. 



CLEAN REFUELING: From page 2 

energy and transportation agencies, Bay State 
Gas Co., Mobil Corp., Brooklyn Union Gas 
and fleet operation and administration 
companies. State energy offices, including 
the Massachusetts Division of Energy 
Resources, and regional offices of the U.S. 
Department of Energy and the General 
Services Administration, will play a key role in 
government fleet information and tracking. 

The Clean Fuels Corridor project is designed 
to help meet 1992 Energy Policy Act and 
Clean Air Act requirements for alternative 
transportation fuel use. The project is 
scheduled to be completed by the end of 
1995. 

For more information, contact DOER's 
Senior Policy Analyst Irving Sacks at 
(617) 727-4732, ext. 132. 




U.S. DOE HEARS FROM 
REGION ON NATIONAL 
ENERGY POLICY 

To solicit regional input in the 
development ot the President's 
1995 National Energy Policy 
Plan, the U.S. Department of 
Energy held a public meeting at the Massa- 
chusetts Institute of Technology in Cambridge 
on September 12. Hosted by U.S. Deputy 
Secretary of Energy Bill White, this was one of 
eight meetings scheduled nationwide. 

In both town meeting format and roundtable 
discussion, regional industry leaders and 
policy makers, including Commissioner of 
Energy Resources Stephen Remen, discussed 
the relationship of energy policy to the 
environment and to industrial competitive- 
ness. Massachusetts, long recognized as an 
established leader in energy policy, was an 
ideal location to address these topics. 

Sustainable development — meeting the 
needs of the present without compromising 
the ability of future generations to meet their 
own needs — will provide the framework for 
the National Energy Policy Plan. In develop- 
ing its policy, the Administration will also 
evaluate the interdependence of economic 
growth and environmental progress. 

Topics to be covered at other regional 
hearings include energy and sustainable rural 
and urban economies, nuclear power, 
domestic energy production and international 
trade issues. Discussions will also cover 
electric power competition, science and 
technology, transportation, and the future of 
coal, natural gas, oil and petroleum in the 
domestic economy. 

The U.S. DOE welcomes written comments on 
any energy-related subject to assist in the 
formulation of the National Energy Policy 
Plan. 

For more information, contact Duane Day, 
DOE Public Affairs Officer, at (617) 565-9705. 



ENERGY FACT: 
MASSACHUSETTS USES 
AN AVERAGE OF 1 5.3 
MILLION GALLONS OF 
OIL EVERY DAY. 



$841,359 AWARDED TO SCHOOLS AND HOSPITALS 
UNDER ICP - NEW CYCLE OPENS 



STATE 



Fourteen schools and three 
hospitals in Massachusetts 
were recently awarded a total of 
$841,359 in matching grants 
for energy conservation measures under Cycle 
16 of the federally-funded Institutional 
Conservation Program (ICP). Energy 
Conservation Measure (ECM) grants were 
awarded by the U.S. Department of Energy 
(DOE) on August 15, 1994 based on 
recommendations made by the Division of 
Energy Resources. Under the grants, DOE will 
fund 50 - 90% of the cost of energy conserva- 
tion measures. The measures will increase 
the energy efficiency and decrease the annual 
operating costs of 28 buildings in Massachu- 
setts. 

Institutional Conservation Program grants to 
public and private non-profit schools and 



hospitals fund the purchase and installation of 
cost-effective energy efficiency measures such 
as new lighting systems, heating and 
ventilation improvements, computerized 
energy controls and insulation. Grants 
awarded in Cycle 16 ranged from $8,850 to 
$90,245. 

Cycle 17 of the Institutional Conservation 
Program opens in October. DOER will hold 
two informational workshops for interested 
parties, one in West Springfield on November 
15 and the other in Boston on November 18, 
I994. Application materials will be available at 
the workshops. They also may be obtained by 
calling DOER. 

To find out more, call DOER's ICP Program 
Manager Laura Merrill, (617) 727-4732, 
ext 146 



NICE 3 INDUSTRIAL EFFICIENCY SOLICITATION DUE 
OUT NOVEMBER 1 




Innovative technology 
demonstration proposals are 
being sought from companies 
interested in becoming state/ 
industry partners for the National Industrial 
Competitiveness through Energy, Environment 
and Economics (NICE 3 ) grant program 
operated by the U.S. DOE and EPA. State 
partners include the Division of Energy 
Resources, the Office of Technical Assistance 
of the Executive Office of Environmental 
Affairs, the Executive Office of Economic 
Affairs and the Industrial Services Program. 

Up to $5.5 million in federal seed money will 
be available for projects that will advance 
competitiveness through industrial energy 
efficiency, waste reduction and pollution 



prevention. The formal solicitation period is 
expected to open November 1, 1994. 

The Commonwealth of Massachusetts and the 
Erving Paper Company in Erving, MA recently 
won the state's first NICE 3 grant. With its 
$425,000 cost-sharing grant award, Erving 
Paper Company will undertake a unique $2.7 
.million project to increase the use of post- 
consumer waste paper by 35-40% in its 
manufacturing process, and significantly 
reduce energy consumption, waste generation, 
toxic chemical use and air emissions. 

If your company has a project to propose, 
please call DOER at (617) 727-4732 to 
reguest a NICE 3 program information package. 
Proposals will be accepted by the state only 
through Friday December 2, 1994. 



U. S. DOE SEEKING AWARD NOMINATIONS 



The U.S. Department of Energy (DOE) is 
seeking applications for its 1995 National 
Awards Program for Energy Efficiency and 
Renewable Energy. Any individual or non- 
federal organization that has implemented an 
outstanding energy efficiency or renewable 
resource technology measure since January 1 , 
1990 may apply. Projects must have been 
operational for one year to allow for documen- 
tation of the projected energy savings or the 



program results. Applications must be 
submitted to the state energy offices, who will 
review and submit them to DOE. Applications 
are due to the Division of Energy Resources 
by March 15, 1995. 

For more information, contact Rosemary 
Mape, DOE, at (717)-783-9981. For an 
application, contact DOER's Public Informa- 
tion Officer, Susan Gedutis, at 61 7-727-4732, 
ext. 134. 



CALENDAR/FALL 1994 



OCTOBER: 
MONTH 



ENERGY AWARENESS 



> 

H 

x at 

«>- 
m O 

JZ 

Ml 

iEo 



Application Deadline for 1995 Green 
Lights Partner and Ally of the Year Awards. 
EPA's Green Lights Program promotes the use 
ot energy efticient lighting in private, non- 
profit and government facilities Call the 
Green Lights Hotline. (202) 775-6650. 

NOVEMBER 

1-2 National Electricity Forum. Washington, 
DC Sponsored by DOE and the National 
Association ot Regulatory Utility Commission- 
ers Contact Jim Fremont. (202) 586-5727. 

2-3 Fundamentals of Energy Management, 
Washington. DC Sponsored by DOE. 
Contact Michael Farr. Association of Energy 
Engineers, (404)447-6415 



/ / 12 1 ith Annual Quality Building 
Conference, Springfield. Sponsored by the 
New England Sustainable Energy Association. 
Call (413) 774-6051 

/ / Conference on Canadian-Northeast 
Energy Trade, Boston Sponsored by the New 
England-Canada Business Council, New 
England Governors' Conference, Inc. Call 
Kathy Giroux, (508) 458-9668. 

15 New England Energy Task Force Meeting, 
Boston. At DOE, One Congress Street, 1 1th 
Floor, 1:30 p.m. Contact Duane Day, 
(617)565-9705 

15 Institutional Conservation Program Grant 
Workshop, West Springfield. 
(See article, p. 7.) 

18 Institutional Conservation Program Grant 
Workshop, Boston. (See above.) 



18- 19 National Innovation Workshop, 
Louisville, KY. Sponsored by DOE. Contact 
Kenneth L. Blanford, (502) 852-7854. 



DECEMBER 

20 New England Energy Task Force Meeting, 
Boston. At DOE, One Congress Street, 1 1th 
Floor, 1:30 p.m. Contact Duane Day, 
(617)565-9705. 



CORRECTION 

In the last issue, we mistakenly printed the 
phone number for the Massachusetts 
Strategic Envirotechnology Partnership 
(STEP) as 727-3200. The correct contact 
is Todd Fernandes, at 727-3206. 



The Energy Report is published by 
The Massachusetts Division of 
Energy Resources 



Suggestions, calendar submissions, questions and input are invited. Send to Editor, Energy Report, 
The Massachusetts Division ot Energy Resources, 100 Cambridge Street, Room 1500, Boston, MA, 02202 
DOER staff members can be contacted at (617) 727-4732. 
Energy Report is printed on recycled paper using soy ink. 



COMMONWEALTH OF MASSACHUSETTS 
DIVISION OF ENERGY RESOURCES 

100 Cambridge Street, Room 1500 
Boston, MA, 02202. 



BULK RATE 
U.S.POSTAGE 
PAID 

PERMIT NO. 
55324 
BOSTON, MA 



' « n z>~> . z~ 



rs. / 



7 



HHM 



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FEATURES: 

New Renewable Facilities/1 Governor's Energy Award/7 

NEWS: 

Reformulated Gasoline/2 Tunnels Safe for CNG Vehicles/3 Landfill Methane Outreach Program/6 

EVENTS: 
Sun Day/6 Calendar/8 
DEPARTMENTS: nn pulU\fN"f$ 
Legislative Update/3 Guest Column: pmWCDMfrtfirfi s6&Wsy5 "Utility Policy Update/5 

b COLLECTION 



MftY 1 5 1095 



New Renewable Jj^ 
On Line In Massachusetts 



A PUBLICATION OF 
THE MASSACHUSETTS 
DIVISION OF 
ENERGY RESOURCES 

Vol.3/ No.2 
Winter 1994/95 



The Commonwealth 
of Massachusetts 

William F.Weld, 
Governor 

Argeo Paul Cellucci, 
Lt Governor 

Gloria Cordes Larson, 
Secretary 
Economic Affairs 

Stephen J. Remen, 
Commissioner 
Energy Resources 



STATE 



While some folks in Massachusetts 
complain about the weather, others put 
the elements to good use. In three new 
renewable energy developments, 
researchers and businesses across the state are using 
the state's wind, water and sun to generate electricity. 
Two facilities in Holyoke and one on Peddocks Island, 
in Boston Harbor, recently began operation, adding to 
the growing list of renewable energy projects in the 
state. These projects contribute valuable information 
on the siting, construction and operation of renewable 
energy technologies. 



■ November 10, 1994 marked the formal dedication 
of the largest existing wind turbine installation in New 
England. (Photo, right.) The 250 kW wind turbine, 
perched on an 80-foot tower on Mt. Tom in Holyoke, 
was installed by the University of Massachusetts 
(UMass)-Amherst Renewable Energy Research 
Laboratory. The project is an important demonstration 
of the practicality of wind power in New England. It 
will be a useful research and education tool for the 
nationally-renowned UMass Wind Energy Program. 
The wind turbine powers the Mt. Tom Ski Area, and 
any surplus power is sold to the Holyoke Gas and 
Electric Department. UMass purchased and rebuilt the 
wind turbine: DOER provided funding for installation. 

■ Also in Holyoke, the City recently completed the 
rehabilitation of a 790 kW hydroelectric generating 





Tom wind turbine in Holyoke. 



Photovoltaic arrays on Peddocks Island, in Boston Harbor. 



station. The 
generating 
station, built 
in 1931, is 
located in a 
former mill 
building and 
uses water 
from Holyoke's 
unique 19th 
century canal 
system. DOER, 
the City of 
Holyoke and 
the project 
contractor, 
O'Connell 
Engineering 
and Financial, 
funded the rehabilitation. Initially, the contractor will 
operate the generating station and sell its power to the 
Holyoke Gas and Electric Department. After 10 years, 
Holyoke Gas and Electric will assume direct responsibility 
for the station's operation. (See diagram, p. 3.) 

■ In October, a DOER-funded 3.2 kW photovoltaic 
power station was completed on Peddocks Island in 
Boston Harbor. (Photo, left.) Peddocks Island has no 
electric power connection to the mainland, so the 
installation of a modular mechanism to produce 
electricity is especially appropriate. The photovoltaic 
power station, with battery storage and diesel generator 
backup, uses the sun to power the lighting, communica- 
tions and safety equipment in five buildings at Fort 
Andrews on the island. The site is a former World War I 
military installation, now managed by the Metropolitan 
District Commission as part of the Boston Harbor Islands 
State Park. The photovoltaic system helps make 
Peddocks Island a more attractive destination for the 
100,000 visitors that come to the Boston Harbor Islands 
State Park annually. 
Renewable Resources: Continued on page 3. 



» 
o> 



5 
1 



FROM 

COMMISSIONER 

REMEN: 

As travelers tly into Logan Airport, they will see photovoltaic panels on Peddocks Island 
Luggage tugs powered by compressed natural gas will transport their bags to the baggage 
claim Travelers may then board airport shuttle buses powered by electricity, natural gas or 
soy-based diesel Some travelers will take public transit to an MBTA station, where their 
electric vehicles, recharged by solar panels, await them They will drive home to an energy 
efficient home, perhaps a home whose electricity is generated by wind power, hydroelec- 
tricity or solar power 

This is not a vision. In Massachusetts, this is a reality. It is the result ol a vision of a 
sustainable future, where energy supplies are adeguate, the environment is clean and the 
economy is growing. A prime example of sustainability in the Commonwealth is the town 
of Princeton, where 40% of the power supply comes from renewable resources from 
numerous suppliers For Massachusetts, sustainability is the central theme that shapes our 
State Energy Plan. To underscore this, and to report on the state's progress in this area, we 
have chosen to dedicate this issue of the Energy Report to sustainability. 

The pursuit of sustainable economic development is not only good economic policy but 
also good environmental policy. The development of technologies for renewable energy, 
alternative fuel vehicles and energy efficiency measures helps provide jobs and improve the 
competitive stature of our industries. 

To promote sustainable development, DOER works with the energy efficiency, renewable 
energy and alternative vehicle/fuels industries to shape state policy that supports their 
growth. DOER supports utility procurement of sustainable resources. DOER is working 
with the public and private sectors to develop technical and financial assistance for new 
environmental and energy technologies, such as fuel cells. Through efforts like the Electric 
Vehicle Demonstration and the recent Tunnel Safety Study, DOER is working with many 
partners to pave the way for the full implementation and widespread acceptance of 
sustainable transportation technologies in Massachusetts. 

To recognize and promote innovative, sustainable energy efforts throughout the Common- 
wealth, DOER created the Governor's Energy Award program. In this issue, we are proud to 
announce the winners of the 1994 Award. We hope that the winning projects will inspire 
and assist others who want to implement their own sustainable development projects. 

Exploration into energy efficient, renewable and alternative energy technologies must 
continue with the momentum established by such forward-looking projects as those 
covered in this newsletter. By supporting innovation in these areas, we can attract new 
businesses and create jobs in the Commonwealth. Look around you: you will see that, 
through our combined efforts, we are already on the way to becoming the most energy 
efficient state in the nation. 



MUNICIPAL EFFICIENCY TASK FORCE REPORT 
AVAILABLE 

As part of the Commonwealth's larger effort to support increased energy efficiency in all sectors, 
DOER and Massachusetts' municipal utilities have issued Resources for Energy Efficiency, a 
series of recommendations to increase energy efficiency in municipal utility service territories. 

Resources for Energy Efficiency is the final product of the Efficiency Task Force for Municipal 
Utilities, which began its work in November of 1993. DOER convened the Task Force to promote 
energy efficiency as a tool to increase competitiveness and economic growth among the state's 
municipal utilities, an action recommended by the 1993 Massachusetts Energy Plan. The Task 
Force report identifies practical ways to improve energy efficiency for municipal utility customers. 

To obtain a copy of Resources for Energy Efficiency call DOER at (6 1 7) 727-4732. 



REFORMULATED GAS AT 
PUMPS 



STATI 



A major Environmental 
Protection Agency initiative to 
reduce air pollution hit the 
streets on January 1, 1995 In 
Massachusetts and other designated areas 
throughout the country, conventional gasoline 
was replaced at retail pumps with a new, 
cleaner gasoline known as reformulated 

il.isuliiu: (HI I,) 

RFG is mandated in the country's nine most 
smog-prone metropolitan areas by the Clean 
Air Act Amendments of 1990, and optional in 
other areas. Massachusetts elected to join the 
program, in part, because RFG is one of the 
least expensive ways to reduce volatile organic 
compound (VOC) emissions. The state must 
cut VOCs 15% by 1996 and 24% by 1999, 
relative to 1990 levels. 

Phase I of the RFG program reguires RFG to 
achieve a 15-17% reduction in ozone-forming 
VOCs and toxic vehicle emissions. Phase II, 
starting January 1 , 2000, will reguire a 25- 
29% reduction in VOC emissions, and a 5-7% 
nitrogen oxide reduction. 

The program will achieve emission reduction 
goals through a gradual change in the 
formulation of the gasoline. From 1995 to 
1997, RFG will contain a maximum benzene 
content of 1 % by volume, no heavy metals or 
lead additives and a minimum oxygen content 
of 2% by weight. In addition, a lower 
volatility, or "Reid Vapor Pressure," will be 
required in summer to reduce ozone-forming 
VOCs. The oxygen content in RFG will be 
increased through the use of ether (MTBE, 
ETBE or TAME) or alcohol (ethanol). On 
January 1 , 1 998 and January 1 , 2000, the 
Clean Air Act requires refiners to further 
reduce the amount of sulfur, olefin and other 
toxic air pollutants in the formulation. 

The Massachusetts Petroleum Council and oil 
industry experts indicate that RFG supplies to 
Massachusetts should be adequate, barring 
unforeseen circumstances. Customers may 
see a slight rise in price at the pump, since 
reformulated gasoline costs more to manufac- 
ture and distribute. However, it is difficult to 
predict actual retail prices, as these are 
determined by a variety of market conditions. 

For more information, contact Joanne 
McBrien, DOER's Senior Policy Analyst, at 
(617) 727-4732, ext. 145. 



LEGISLATIVE UPDATE 

The Division of Energy 
Resources has filed three bills 
for consideration in the 1995 
Legislative Session. The 
following is a brief description of the bills. 



STATE 



■ An Act to Promote the Use of Natural Gas 
Vehicles: This bill would deregulate the sale 
of compressed natural gas when sold for use 
as a motor vehicle fuel. 

■ An Act to Encourage Residential Energy 
Conservation: This bill would exempt from 
the definition of "taxable income" any income, 
rebate or subsidy provided by a utility 
company to a residential customer who 
engages in residential energy conservation. 

■ An Act to Promote the Use of Environ- 
mentally Sound Energy Technologies: This 
bill would modify the manner in which 
existing state energy bond funds are used for 
energy conservation in public facilities. The 
bill is designed to promote energy education 
and awareness, and will more effectively 
encourage the use of new energy technologies 
in public buildings. 

For further information, contact Christine 
Constas Erickson, DOER'S Deputy General 
Counsel, at (61 7) 727-4732, ext 166. 



RENEWABLE ENERGY FACILITIES: From page I 

The Massachusetts Energy Plan recognizes 
that greater use of renewable energy 
technologies will bring substantial environ- 
mental and economic benefits to the 
Commonwealth. For this reason, DOER works 
with utilities, industry, environmental and 
consumer advocates and other government 



agencies to promote renewable energy 
development. 

For more information on renewable energy in 
Massachusetts, contact Nils Bolgen, 
DOER's Renewables Program Manager, 
at (617) 727-4732, ext. 178. 



INTAKE 



Valley Paper Company Building 



■.._■..■. ._■..■. .■.._■ 



CANAL 



WATER 



PENSTOCK 




-GENERATOR 



-TURBINE 



CONCRETE GATE 



CONNECTICUT 
RIVER 



TAILRACE TUNNEL 



HOLYOKE HYDROELECTRIC GENERATION PROJECT 



CNG VEHICLES SAFE FOR TRAVEL THROUGH TUNNELS 



STATE 



Drivers may notice over the 
next few months a blue-and- 
white diamond-shaped decal on 
some vehicles. These decals 
identify vehicles that run on compressed 
natural gas (CNG). The decals are part of the 
safety measures recently recommended by city 
and state decision makers, following a study 
of the safety of compressed natural gas 
vehicles in Boston's tunnels and underpasses. 
The study is part of a larger effort to remove 
some of the regulatory barriers that discourage 
fleet owners from converting some of their 
cars, vans and buses to cleaner-burning fuels 
like natural gas. 

The Boston Fire Department requested the 
study to evaluate the safety of CNG relative to 
other, traditional vehicle fuels. All of Boston's 
tunnels and underpasses were analyzed and 
measured for air flow. The results showed that 
they are all adequately ventilated for safe 
dispersion of a compressed natural gas vapor 
cloud. In fact, given the air flow in Boston's 



tunnels and underpasses, the study showed 
that a CNG fuel accident would actually pose a 
lesser fire and explosion hazard and produce 
a smaller flammable zone than would an 
equivalent gasoline spill. 

The study was conducted by the Center for 
Firesafety Studies at Worcester Polytechnic 
Institute and sponsored by the Massachusetts 
Highway Department. It was endorsed by the 
Tunnel Safety Steering Committee, which is 
comprised of decision makers from various 
city and state agencies, including the Boston 
Fire Department. DOER chairs the Steering 
Committee. 

The Steering Committee has recommended 
that CNG vehicles be allowed to travel through 
tunnels and underpasses in the City of 
Boston. However, the Committee stipulates 
that the maximum fuel capacity of CNG-fueled 
vehicles must be consistent with safe practice 
and national standards. The Registry of Motor 
Vehicles is now incorporating fuel tank and 



fuel line criteria into inspection and mainte- 
nance procedures for all CNG-fueled vehicles. 
Restrictions on tanker trucks and on the 
transportation of other hazardous cargo 
through tunnels and underpasses remain in 
effect. 

The Boston Fire Department will request that 
the Board of Fire Prevention Regulations 
develop and adopt uniform state regulations 
for CNG refueling station design, installation, 
operation and inspection. 

Members of the Steering Committee include: 
the Boston Fire Department, the Massachu- 
setts Turnpike Authority's Tunnel Division, the 
Executive Office of Transportation and 
Construction, the Central Artery/Tunnel 
Project, the State Fire Marshal, the Executive 
Office of Environmental Affairs and DOER. 

For more information, contact DOER's 
Senior Policy Analyst Irving Sacks, at 
(617) 727-4732, ext. 132. 



» 



4 



Renewable Energy: Rea<l\ for Business 

By Howard Ris, Executive Director, and Alan Nogee, Senior Energy Analyst 
Union of Concerned Scientists 




Massachusetts is generally not 
considered an energy 
production mecca. But 
consider: 

• wind energy in the Bay State has the 
technical potential — subject to siting 
constraints — to supply up to halt ot our 
electricity. 

• solar photovoltaics (PV) can be more 
economical in the northeast than in Florida, 
because our electricity use — driven by 
commercial air conditioning — peaks when 
the sun shines brightest; and 

• new technologies, like luel cells, can make 
electricity from gasified biomass (wood or 
other plant-derived matter) or natural gas with 
very low emissions. 

The benefits of renewable energy have always 
attracted strong public support. Massachu- 
setts' utility surveys show that their customers 
want renewables, and most are willing to pay 
somewhat higher rates for them. But, with 
prices down as much as 90 percent from only 
a decade ago, renewables can now start 
contributing to power supplies with almost no 
rate impact. 

The Department of Public Utilities recently 
approved Massachusetts' contract to purchase 
about one percent of its generation with a 
proposed "wind farm" in Maine and small 
landfill gas-burning plants. These purchases 
will cost even less than new natural gas and 
coal-fired plants. Total cost: an extra 36 cents 
per year for typical residential customers. 

More expensive technologies, like PV and fuel 
cells, can also be cost-effective when sited at 
high-value locations that would otherwise 
reguire costly upgrades to transmission or 
distribution systems. Such "distributed 
generation" can increase power quality and 
reliability. 

The Massachusetts Energy Plan encourages 
all Massachusetts utilities to issue Green 
Requests for Proposals. If each utility in the 
northeast acquired one percent of its 
generation from renewables and fuel cells, the 
siting, installation and operating experience 
— along with mass production economics — 
could drive down costs to make these options 



fully competitive and widely available. The 
total rate impact should be only around one 
percent or less, phased in over a number of 
years. 

It will probably take at least five to 10 years of 
sustained orderly development to fully 
commercialize renewables in the northeast. 
Good resource sites must be identified and 
verified. Land-use and other environmental 
issues need to be addressed. Sustained 
operating performance in the northeast climate 
must be demonstrated. High value sites for 
distributed generation must be identified. 
New manufacturing facilities must be built. 
Installation and maintenance forces must be 
developed. Utility grid integration issues 
must be addressed. 



READY FOR 
BUSINESS, IF WE 
ARE READY TO 
DEVELOP THEM. 



That is why we have to start now. We may 
have a power glut today, but by the time 
renewables can be fully commercialized, we 
are likely to need all the power we can get. 
New England utilities currently estimate we 
will need about 1 ,000 megawatts (MW) of new 
power supplies by the end of the next ten 
years. The recent Great Whale project deferral 
creates new uncertainty about whether we can 
rely on Hydro Quebec for 1 ,500 MW, when the 
current contracts expire after the year 2000. 

Then, consider our aging nuclear plants. New 
England utilities are counting on nuclear units 
operating through their 40-year licenses. But 
the longest-lived nuclear plant to date was 
Yankee Rowe which closed after 32 years. 
Nine U.S. nuclear plants retired before that 
age. If all eight remaining New England 



utilities last 32 years, we would need to 
replace over 3,200 MW during the next six to 
10 years. 

Finally, renewables can make it a lot easier to 
meet emission requirements in the years 
ahead — especially if economies of scale are 
realized, making renewables fully competitive 
with scrubbers and other pollution controls. 
They offer the most cost-effective way to 
protect public health and the environment, 
goals that are widely supported by Massachu- 
setts citizens. Renewables not only cut smog- 
producing emissions, but also reduce: 

• C02 emissions at 1990 levels to reduce the 
risk of global climate change; 

• discharges of toxic metals, such as lead 
and mercury; 

• damage to human health and the environ- 
ment from small particulates, S02 and NOx; 
and 

• impacts on dwindling fish stocks from 
hundreds of millions of larvae being trapped 
in cooling water systems. 

By replacing some of the aging coal and oil 
plants that represent a third of our generating 
capacity, renewables will reduce pressure on 
other industries to make additional emission 
cuts. Developing renewables here also retains 
money in the state's economy, helps stabilize 
energy prices, and could attract new energy 
businesses, in the same way that utility energy 
efficiency programs helped create thousands 
of jobs in Massachusetts. In California, 
renewables development drove down costs 
and created an industry that now exports 
worldwide. 

To accelerate the development of renewable 
resources in New England, the Union of 
Concerned Scientists and the Conservation 
Law Foundation have launched a joint project 
to work with utilities, state agencies, legisla- 
tors and other interest groups to overcome the 
barriers to sustainable energy development in 
New England. Renewables are ready for 
business, if we are ready to develop them. 

Facts and opinions expressed in guest 
editorials are those of the authors and not 
necessarily those ol DOER. 



DISPERSED GENERATION 



BUSINESS 



The Massachusetts power industry is exploring a new 
twist in the law of energy supply and demand: dispersed 
generation. Dispersed generation is a relatively new term 
that refers to locating smaller, modular power generators, 
like fuel cells, in areas of high energy demand. It is especially 
applicable in areas where a growing demand for energy would otherwise 
require costly upgrades to the transmission and distribution system. 
Dispersed generation could reduce the costs of long-distance transmis- 
sion and distribution, make utilities more efficient and competitive, and 
ultimately reduce rates for utility customers. 

As the likelihood of electric utility market competition increases, 
dispersed generation may become more attractive to utilities as they 
strive to contain costs, increase reliability and boost quality of service. 
Further, dispersed generation can provide the ideal opportunity to use a 
wide variety of state-of-the-art renewable technologies that are typically 
cleaner and more energy efficient. This includes power generation from 
photovoltaic arrays, fuel cells, wind and a wide variety of other 
renewable technologies. (See also Collaborative Efforts Promote Fuel 
Cells, Photovoltaics and Windpower, on this page.) 

DOER, Massachusetts Electric Co. and others recently entered into a 
settlement agreement to conduct a pilot study to determine cost- 
effective applications of dispersed generation technologies. The pilot 
study is targeted to start in September 1995, pending DPU approval. 

For more information, contact DOER'S Renewables Program Manager, 
Nils Bolgen, at (617) 727-4732 ext. 178. 

COLLABORATIVE EFFORTS PROMOTE 
FUEL CELLS, PHOTOVOLTAICS AND 
WINDPOWER 

Massachusetts state agencies, environmental organizations and 
industry are working together to promote and support the development 
of energy technologies that benefit both the environment and the 
economy. These technologies are ideal candidates for dispersed 
generation applications. A few of the working groups are 
highlighted here. 

Massachusetts Fuel Cell Working Group: DOER has formed this 
group to support the commercialization of fuel cell technology for 
electric power generation. The group, consisting of representatives 
from environmental organizations, DOER and other state agencies, held 
its first meeting in November, 1994. 

The working group has developed a multi-track effort to stimulate the 
use of fuel cells in Massachusetts and to attract fuel cell industry to the 
state. Policy initiatives are underway to encourage utilities and 
industries to take advantage of the benefits of fuel cells, which include 
high power quality, low air emissions and quiet operation. The group is 
also working to identify prime fuel cell installation sites based on site 
characteristics and cost-benefit analyses. Finally, to jump start the 
commercialization process, the group hopes to take advantage of a 
federal subsidy for several fuel cell installations in Massachusetts. 
DOER invites representatives from the fuel cell industry and electric and 
gas utilities to join the Massachusetts Fuel Cell Working Group. 

PV for Utilities: Since 1992, the Massachusetts PV for Utilities State 
Working Group has promoted photovoltaic (PV) technology. The 
working group supports education, demonstration and other initiatives, 
and is one of ten such groups in the United States (see Energy Report, 




DOER COMMENTS ON DPU'S 
INCENTIVE REGULATION INQUIRY 

Change looms on the horizon for utility rate 
regulation, a change that is supported by state 
energy policy makers. In recent comments 
submitted to the Department of Public Utilities 
(DPU), the Division of Energy Resources endorsed the transition, in 
Massachusetts, from traditional cost-of-service, rate-of-return 
regulation to incentive regulation (sometimes referred to as 
performance-based regulation or "PBR"). The comments were filed 
in response to the DPU's investigation into the effects of incentive 
regulation on electric and gas utility customers in the state. 

Under the current regulatory framework, utilities can pass on to 
customers most incurred costs. If a utility reduces its cost, it 
eventually would be required by existing regulation to pass the full 
savings on to rate payers in the form of lower rates. As a result, 
there is little or no incentive for utilities to become more efficient 
and cut costs. To provide such incentive, DOER and many other 
parties called for a system of incentive ratemaking for utilities. 

DOER recommends that reasonable utility price formulas be 
developed that explicitly account for market prices, energy price 
inflation and other factors. Utilities could then charge customers 
based on these prices, and could keep a portion of any additional 
cost savings they achieve for their shareholders. The remainder of 
the cost savings would be returned to rate payers. This sharing 
arrangement would ensure that both consumers and shareholders 
benefit from cost savings. 

DOER also suggests that rate incentives be compatible with other 
regulatory initiatives to open access and increase customer choice 
among energy suppliers. DOER specifically recommends that 
incentive ratemaking be applied on an "unbundled" basis, meaning 
that prices for potentially competitive services provided by utilities, 
namely energy supply, be determined and charged separately from 
transmission and distribution services. In a competitive market, 
this would allow customers to choose between the utility or any 
alternative supplier offering the best energy supply deal. 

DOER supports incentive regulation as a means to help utilities 
reduce cost and improve performance, increase productivity and 
competition, stimulate the economy and create jobs. The DPU is 
expected to make a decision early in 1995. 

For more information contact Ken Blonder, DOER's Gas and Electric 
Analyst, (617) 727-4732, ext. 148. 



Fall, 1994). Massachusetts is fortunate to have especially strong 
representation in the group from the local private PV industry. 

Northeast Utilities Western Massachusetts Wind Evaluation 
Project: Under this effort, DOER, other state agencies and consumer 
and environmental advocates are helping Northeast Utilities to identify 
and assess potential windpower development sites in western Massa- 
chusetts. Sites will be evaluated for feasibility and environmental 
compatibility. DOER recently submitted a funding proposal for the 
project to the National Renewable Energy Laboratory in conjunction with 
Northeast Utilities. 

For more information, contact DOER's Renewables Program Manager, 
Nils Bolgen, at (617) 727-4732, ext. 178. 






z 



ONE PERSON'S TRASH IS ANOTHER'S... ENERGY 




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Use landfill gas to make 
electricity'' What seemed to be 
hed idea twenty I . 
■ ago is now officially 
reed; . ible energy option in 

Massachusetts A recent voluntary agreement 

DOER, the Massachusetts Depart- 
ment ot Environmental Protection and the U. 
S Environmental Protection Agency (EPA), 
under the EPAs Landfill Methane Outreach 
Program, encourages the development ol 
landfill gas recovery projects as a way to 
diversity our energy mix and reduce green- 
house gas emissions. 

All three parties recognize that widespread use 
ot landfill gas as an energy resource will 
reduce emissions of methane, a potent 
greenhouse gas. As organic materials in a 
solid waste landfill decompose without 
oxygen, a combustible gas forms. The gas, 
composed of almost equal parts of carbon 
dioxide and methane, can be dangerous. One 
way this danger can be averted is by capturing 



me gas to generate power. Landlill gas 
recovery can be a profitable way to reduce 
greenhouse gas and meet local environmental, 
energy and economic objectives. 

EPA has developed the Landfill Methane 
Outreach Program to encourage landfill 
owners and operators to install energy 
recovery systems. The program identifies 
landfills with the potential to produce energy 
cost-effectively. The program also provides a 
structure for federal and state governments to 
explore ways to overcome federal, state and 
local barriers to the development of landfill 
gas recovery projects. This includes creating 
incentives for the development of landfill gas 
recovery sites and enhancing public under- 
standing. 

Recovery of landfill gas began in the early 
1970s. One local example is the Chicopee 
Landfill, which currently produces enough 
electricity for the Chicopee Municipal Lighting 
Plant to power some 2,400 homes annually. 



Anyone interested in landfill gas recovery can 
obtain a copy of the Implementation Guide For 
I andfill Gas Recovery Projects in the 
Northeast, recently released by the Northeast 
Regional Biomass Program. The guide 
provides general background information for 
the decision maker, including definitions and 
characteristics, criteria for a successful 
project, barriers to success and recommenda- 
tions to overcome these barriers. The guide 
also examines and evaluates candidate landfill 
sites in the Northeast. To obtain a copy, 
contact the CONEG Policy Research Center, 
Inc. at (202) 624-8454. 

For more information on landfill gas recovery, 
contact DOER's Senior Policy Analyst, Irving 
Sacks, at (617) 737-4732, ext 132 or, 
Sean T. Griffin, Environmental Engineer, Mass. 
Department of Environmental Protection, at 
(617)292-5500. 



- 



1995 SUN DAY CELEBRATION 
PLANNED 

SUN DAY: A Campaign for a Sustainable Future seeks participants 
for SUN DAY 1995 activities, which will be officially celebrated on 
Sunday, April 23, 1995. SUN DAY 1995 is the second annual 
national celebration of energy-efficient technologies and renewable 
energy such as solar, wind, geothermal, biofuels, hydroelectric and 
solar-hydrogen. 

SUN DAY 1995 seeks to educate members of the general public, 
the media, decision makers and others about the status, potential 
and benefits of renewable energy and energy efficient technologies. 
The day will showcase programs and technologies sponsored by 
participating environmental, consumer, labor, student and religious 
organizations, businesses, utilities and government agencies. 
Lastly, SUN DAY 1995 will encourage new public and private 
initiatives to expand further use of renewable energy and energy 
efficient technologies. 

SUN DAY 1995 will feature various one-day educational activities 
such as fairs, tours, seminars, news conferences and exhibits. 

If your organization would like to sponsor or participate in SUN 
DAY 1995, contact the SUN DAY Campaign, at (301) 270-2258. 




ENERGY FACT: 

LAST YEAR MASSACHUSETTS 
SPENT MORE THAN $ 1 1 BILLION 
ON ENERGY. 



ENERGY EFFICIENCY AND 
RENEWABLES ON THE INFORMATION 
HIGHWAY! 

Energy efficiency and renewable energy information is 
now even more accessible through the U.S. Department 
of Energy's new multimedia, Internet-based information 
system, EREN. EREN — the "Energy Efficiency and 
Renewable Energy Network" — is a gateway to worldwide sources of 
maps, images, video, sound, text and information on energy efficiency 
and renewable energy technologies. 

EREN is a World Wide Web site that links to various Internet information 
sites. EREN provides access to bibliographic information, bulletin 
boards, databases, information servers, documents and discussion 
groups. Available information covers alternative fuels, energy efficiency, 
wind energy, photovoltaics, solar energy and many other energy 
efficiency and renewable energy topics. 

EREN can be searched by alphabetical listing, broad subject divisions, 
type of service or organization, WAIS keyword search and other Internet 
search tools. To use EREN, you need an Internet connection and a 
"browser" configuration. (EREN uses the Lynx, XMosiac, MacWeb and 
Mosiac for Apple Macintosh or for Microsoft Windows browsers.) 
EREN is accessed through the network's Uniform Resource Locator 
(URL) http://www.eren.doe.gov. 

EREN was created for the DOE Office of Energy Efficiency and Renew- 
able Energy by Argonne National Laboratory, the National Renewable 
Energy Laboratory and Oak Ridge National Laboratory. 

For more information on EREN, write, call or e-mail DOE's Energy 
Efficiency and Renewable Energy Clearinghouse, PO Box 3048, 
Merrifield, VA, 22116, 1-(800)-363-3732, ENERGYINFO@delphi.com. 



Governors Energy Award Honors 
Innovative Energy Projects 



Lieutenant Governor Paul Cellucci joined 
Commissioner Stephen Remen on December 
7 to announce the winners of the 1994 
Governor's Energy Award. The Award honors 
exemplary Massachusetts projects that help 
the Commonwealth meet its energy goals. 
The Award program is intended to increase 
public awareness ot new and useful energy 
related initiatives so that successes may be 
replicated by others. 

DOER issued a call for nominations through 
the Summer issue of the Energy Report and a 
statewide news release. Nominations were 
judged competitively on outstanding 
attributes, innovation, quantified energy 
savings, environmental and economic impact 
and the ability to promote energy awareness. 
Projects implemented through a partnership 
were favored. 

The 1994 Governor's Energy Award recognizes 
outstanding efforts in four categories: 
Industry and Business, Renewable Energy, 
Transportation and Education. 

We encourage you to find out more about 
these exemplary projects by contacting the 
names listed under each project. 

INDUSTRY AND BUSINESS: 
100 FEDERAL STREET ENERGY 
EFFICIENCY PROJECT 

From the outside, the building at 100 Federal 
Street, owned by 100 Federal Street Limited 
Partnership and managed by Compass 
Management and Leasing, Inc., may not stand 
out from other high-rises in downtown 
Boston. From the inside, however, this 1 .36 
million square foot building models state-of- 
the-art energy efficient engineering and boasts 
annual energy savings of almost $664,000. 
Boston Edison contributed $2.8 million of the 
total $4.6 million invested in the design and 
installation of a variety of energy efficient 
technologies with paybacks of 1-4 years. 
Technologies include lighting, air handling 
systems, cooling tower and pumps, an energy 
management system and energy saving 
window film. The building upgrade, co- 
sponsored by the building owner, was 
completed with the engineering assistance of 
Shooshanian Engineering in 1992. The 




Lt. Governor Celluci, Commissioner Remen 
and 1994 award winners at State House award 
ceremony. 

efficiency measures save more than 7.5 
million kwh annually — enough electricity to 
power the lights and appliances in more than 
1 ,200 homes in Massachusetts for one year. 
Contact: James Bakas of Boston Edison, at 
(617)424-2255. 

RENEWABLE ENERGY: THE RICHARD F. 
WHEELER WIND GENERATION SITE 

The Richard F. Wheeler Wind Generation Site, 
in Princeton, produced its first kilowatt of 
electricity in 1984. Ten years and over 2 
million kilowatt hours of electricity later, it 
remains the longest, continuously operating 
municipal utility wind generation site in the 
United States. The project, created from town 
residents' search for an environmentally 
sound power source, consists of eight 40kw 
turbines mounted on 100-foot towers. For 
many years the only operating wind farm in 
New England, the project has laid a foundation 
for the development of windpower in 
Massachusetts. It provides an excellent 
resource for educators, environmentalists, 
alternative energy proponents, and energy 
providers. Contact: Sharon Staz, 
Princeton Municipal Light Department, at 
(508) 464-2815 



TRANSPORTATION: THE 
CAMBRIDGESIDE GALLERIA SHUTTLE 
BUS SYSTEM 

The Cambridgeside Galleria Shuttle Bus 
System of the Cambridgeside Galleria Mall is 
a creative solution to the unique transportation 
and siting problems of the urban mall. While 
malls normally generate a great deal of traffic, 
the Galleria shuttle, called "The Wave," 
provides a breath of fresh air — almost 
literally. The shuttle, sponsored by New 
England Development and by Lotus Develop- 
ment Corporation, was required by the City of 
Cambridge Planning Board as a condition for 
the Galleria's permit. The shuttle links the 
mall to public transportation on a reliable 
schedule at no cost to the riders. In 1993, 
some 600,000 people used the shuttle, 
reducing both traffic congestion and air 
pollution. The City of Cambridge has 
maintained an active role in the publicity and 
administration of the shuttle system. Contact: 
Susan Goldwitz, City of Cambridge Environ- 
mental Program, at (617) 349-4604. 

EDUCATION: "HOW MANY LIGHT 
BULBS DOES IT TAKE TO CHANGE A 
PEOPLE?" 

"How Many Light Bulbs Does it Take to 
Change a People?" is a comprehensive, 
interdisciplinary student activity package for 
teachers, designed to impress upon middle 
school students the value and techniques of 
energy and environmental conservation. The 
curriculum was developed through a 
collaborative effort of the New England Electric 
System Companies, including Massachusetts 
Electric Company, and the Conservation Law 
Foundation. Materials were written and 
produced by The Writing Company. The 
curriculum involves students in various 
hands-on activities, such as a home energy 
audit, electric demonstrations, reading and 
writing lessons, math and group projects. 
Since 1990, the curriculum has been used by 
more than 290 schools. Contact: Jerry Hanna 
of Massachusetts Electric, at (508) 366-901 1. 



CALENDAR/WINTER 1995 



JANUARY 

\-hnical 
institutional I . ition 

Program Contact: Laura Merrill. Program 
Manager. (617) 727-4732. ext 146 

// New England Energy Task Force Meeting, 
Boston At DOE. One Congress Street. 
1 1th Floor. 130 p m Contact Duane Day. 
(617)565-9705 

19 Health and Energy Work Group. Boston, 
MA At Boston University. Charles River 
Campus. 10:00 a.m. Contact William Costa, 
(617)353-9162. 

FEBRUARY 

9 Health and Energy Work Group, Boston, 
MA At New England Medical Center, 
10:00 am Contact Marcello Ranalli, 
(617)956-6436 

17 Application deadline lor Energy Conserva- 
tion Measures Grants. Institutional Conserva- 
tion Program. Contact Laura Merrill, Program 
Manager, (617) 727-4732. ext. 146. 



2 1 New England Energy Task Force Meeting, 
Boston At DOE. One Congress Street, 11th 
Floor, 1 30 p.m. Contact Duane Day, 
(617)565-9705. 

MARCH 

11-12 1995 New England Environmental 
Network Conference, Tults University, 
Medlord, MA Contact The Center for 
Environmental Management, (617) 627-3486. 

15 Deadline (or submission of nominations 
for DOE's 1995 National Awards Program for 
Energy Efficiency and Renewable Energy. 
Contact Susan Gedutis, Public Information 
Officer, at (617) 727-4732, ext. 134. 

2 1 New England Energy Task Force Meeting, 
Boston. At DOE, One Congress Street, 
1 1th Floor, 1 :30 p.m. Contact Duane Day, 
(617)565-9705. 

27-30 WINDPOWER 95, American Wind 
Association (AWE A) 25th Annual Conference 
and Exhibition, Washington, DC. Contact 
Linda Redmond, AWEA Meetings Coordinator, 
(202) 383-2500. 



26-3 1 1995 Affordable Comfort Conference, 
Pittsburgh, PA. Contact Diane Tirio, Affordable 
Comfort '95, (412)373-0482. 

APRIL 

18 New England Energy Task Force Meeting, 
Boston At DOE, One Congress Street, 
1 1th Floor, 1 :30 p.m. Contact Duane Day, 
(617)565-9705. 

23 SUNDAY 1995, Boston, MA. Contact the 
SUN DAY Campaign, (301) 270-2258. 

28-29 Massachusetts State Science Fair, 
Massachusetts Institute of Technology, 
Cambridge, MA. Contact the Science Fair 
Office, (617)432-2249. 



HAPPY TRAILS... 

The Division of Energy Resources wishes 
a fond farewell to David Dilts, former 
Alternative Fuels Program Manager and 
coordinator for the Massachusetts Electric 
Vehicle Demonstration Program. Dilts, 
who worked at DOER since 1987, has 
taken a position at Boston Edison as 
Electric Vehicle Product Manager. Best of 
luck, Dave! 



The Energy Report is published by 
The Massachusetts Division of 
Energy Resources 



Suggestions, calendar submissions, questions and input are invited. Send to Editor, Energy Report. 
The Massachusetts Division of Energy Resources, 100 Cambridge Street, Room 1500, Boston, MA, 02202. 
DOER staff members can be contacted at (617) 727-4732 
Energy Report is printed on recycled paper using soy ink. 



COMMONWEALTH OF MASSACHUSETTS 
DIVISION OF ENERGY RESOURCES 

100 Cambridge Street, Room 1500 
Boston, MA, 02202. 



BULK RATE 
U.S.POSTAGE 
PAID 

PERMIT NO. 
55324 
BOSTON, MA 



I w i.-y »v • 



n 



A PUBLICATION OF 
THE MASSACHUSETTS 
DIVISION OF 
ENERGY RESOURCES 

Vol.3/ No.3 
Spring 1995 



The Commonwealth 
of Massachusetts 

William F. Weld, 
Governor 

Argeo Paul Cellucci, 
Lt Governor 

Gloria Cordes Larson, 
Secretary 
Economic Affairs 

Stephen J. Remen, 
Commissioner 
Energy Resources 



FEATURES: 

DPI) Docket on Restructuring /1 Holyoke Cuts Energy Costs/1 
Two Guest Columnists Comment on Restructuring/4 

NEWS: 

DOER Wins EV Infrastructure Grant/3 Green Transportation/6 

EVENTS: 

Tour De Sol/3 Grants, Awards and Other Opportunities/7 Calendar/8 



STEP Update/2 



DEPARTMENTS: 

Better Buildings Partnership/2 Nantucket 



ffiiiiy 5 



'. . C0LLECS1UN ~ 

DPU Opens Investigation Ljfq JJfectric 
Utility Market Restraiiw£ o ; t ; as gi usetts 




Is the electric utility industry poised 
on the edge of major change? This 
February, the Department of Public 
Utilities (DPU) opened an extensive 
investigation into the creation of new electric utility 
industry rules to facilitate a competitive electric 
marketplace. 

Electric industry restructuring could allow electric 
customers to choose their energy suppliers in much 
the same way as they now choose their long-distance 
telephone carriers. Restructuring could deregulate 
electric power generation and introduce market 
competition into an industry that has, for years, been 
widely accepted as a natural monopoly. Deregulation 
could be the catalyst to lead electric suppliers to cut 
costs and reduce electric prices in Massachusetts, 
which are among the highest in the nation. 

As presently structured, electric utilities are monopo- 
lies which bundle three important functions. The first 
is generation of electricity at the power plants. The 
second function is transmission, including the high- 
tension lines and supporting system services. Lastly, 
there is distribution: the local wires, poles and utility 
boxes that bring electric power to its final destination. 
Energy efficiency programs and customer services are 
included in the distribution function. The electric bill 
delivered to each customer's mailbox incorporates all 
of these costs. 

The DPU's investigation could potentially lead to the 
"unbundling" of this monopoly. In the restructured 
industry, power generation will most likely be 
deregulated, opening the door for many independent 
power producers and suppliers. Transmission and 
distribution are likely to remain regulated functions. 
Costs of generation and retail supply, as well as 
"wires fees," could be reflected in one electric bill — 
which could be provided to customers through the 
distribution company or by a competitive retailer. 

While the motivation behind restructuring of the 
electric industry is relatively clear cut — to reduce 
power costs — the issues that must be considered 




are complex. A successful market structure must cut 
costs while offering high-quality, reliable and non- 
discriminating service to all electric customers, large and 
small. At the same time, the new structure must ensure 
that companies maintain current momentum in the areas 
of energy conservation, environmental protection and 
services for low income and elderly customers. 

INVESTIGATION Continued on page 5. 

HOLYOKE: LOW 
INDUSTRIAL ENERGY RATES 
BOOST LOCAL ECONOMY 

Thanks to special energy cost 
breaks provided to new or expand- 
ing industrial customers, the 
economy in Holyoke, MA is on the 
rebound. This small industrial city in western 
Massachusetts has attracted 20 new companies 
and 400 new jobs over the past 18 months, 
according to Bob Bateman, director of the city's 
Economic Development and Industrial Corporation 
(EDIC) and the Holyoke Office of Industrial Affairs. 

Under the city's Economic Development Incentive 
Program, EDIC and Holyoke Gas and Electric 
Department offer new or expanding industrial 
customers a power rate discount of 20% in the first 
year, 15% in the second and 10% in the third. In 
return, industrial customers enter into a 10-year 
contract for service with Holyoke Gas and Electric. 
Holyoke Water Power Company, which exclusively 
services industrial customers, offers similar 
discounts. 

On the residential side, Holyoke Gas and Electric 
offers first-time home buyers a three-year break on 
gas and electric bills. New home buyers get a 
30% discount the first year, 20% the second year 
and 10% in the third year. 

For more information, contact Bob Bateman at the 
Holyoke EDIC, at (413) 534-2200. 



FROM 

COMMISSIONER 

REMEN: 

CompeW . industry is giowing With it, activity in regulatory 

help usher m a new i . ice Deregulation ot the 

electric industry otten is compared to (tie breakup ot AT&T. but. while AT&T was a 
regulated monopoly, many ot the is ittendanl to electric industry restructuring are 
unique 

Recurring issues m the electric industry restructuring debate include: the environmental 
impacts ot transitioning trom i to non-regulated sources ot energy supply, the 

potential for loss ot electric company investments previously approved by regulators; the 
continuation ot reliable and sal ic power; and, the preservation of social programs, 

such as lifeline rates, currently offered by regulated utilities. This is a formidable set of 
challenges, but not, in my estimation, insurmountable. 

We can maintain environmental policy and programs in part due to the substantial 
technological progress we have made since competition entered the electric generation 
arena In the last twelve or so years, technological improvements, spurred by a competitive 
marketplace, have dramatically lowered emissions and increased the efficiency of electric 
generation technologies. In addition, support for utility energy efficiency programs has led 
to the development of a competitive efficiency industry that offers cost-effective products 
and services. Continuation of efficiency efforts is essential, as is ongoing support for the 
development and deployment of renewable and other forms of sustainable energy 
technologies 

Another essential ingredient in the restructuring discussion is the recognition of electric 
utilities' past investments, for which government regulators promised recovery. This 
recognition, whether required on legal and/or moral grounds, would facilitate a timely 
resolution of the investment issue. Failure to address these obligations equitably will 
surely doom any restructuring effort to endless equivocation and, perhaps, litigation by 
parties who fear financial harm. 

A variety of options have already been identified to ensure safety, reliability and the 
continuation of worthwhile social programs in a restructured environment. Selection of the 
appropriate options can and should be made once the form and nature of the restructured 
industry is adequately defined. 

Another issue, though of lower profile, is the regional impact of restructuring individual 
states' electric utilities. Due to the regional nature of our electric generation and supply 
system, individual states' action could induce cross-border inconsistencies. Efforts of 
regional organizations and the Federal Energy Regulatory Commission can help prevent 
such inconsistencies. 

Stakeholders will ultimately resolve these issues by working together to fashion a mutually 
acceptable arrangement. We will continue to support these efforts to seek an amicable 
resolution which will allow us to reap the benefits of a competitive electric marketplace. 



STEP PROMOTES NEW ENVIROTECHNOLOGIES 



BUSINESS 



z 

s 



To help put innovative technologies on the road to commercial viability, the state 
has created the Strategic Envirotechnology Partnership (STEP). The program 
combines the resources of the Executive Office of Environmental Affairs, the 
Executive Office of Economic Affairs, the Division of Energy Resources and the 

University of Massachusetts to position the Commonwealth at the forefront of new environmental 

and energy-efficient technologies (See Energy Report, Summer, 1994.) 

STEP offers program clients a variety of services to help bring their new technologies to market. 
These include technology assessments performed by engineers and scientists, product testing 
and monitoring services, expedited permitting and guidance, and business planning assistance. 

For more information on STEP, call MOBD's Envirotechnology Specialist Tom Black 
at (61 7) 727-3206 




NEW PARTNERSHIP TO 
PROMOTE ENERGY 
SAVINGS IN NEW 
CONSTRUCTION 

To ensure that construction 
practices in Massachusetts are 
aligned with state energy goals, a 
consortium of state agencies, 
building professionals, efficiency advocates, 
utilities and other energy suppliers are forging a 
new partnership. The goal is to capture significant, 
long-term energy savings in residential and 
commercial new construction 

Called the Massachusetts "Better Buildings 
Partnership," the program will mean energy cost 
savings to businesses and homeowners. The effort 
proposes to increase energy efficiency in new 
construction through energy building code training 
and technical assistance for the design, construc- 
tion and enforcement communities. It is hoped that 
the Partnership will help transform the market by 
supporting contractors who already build to code 
or exceed code Upgrades to the state building 
code will also be considered. 

The proposed Partnership has already received 
support from utilities, regulators and the building 
community. DOER and the state's Board of 
Building Regulations and Standards, the agency 
that administers the uniform state building code, 
developed the program concept with help from the 
Boston Edison Settlement Board. Funding is now 
being sought from Massachusetts stakeholders and 
the U.S. Department of Energy. 

To establish its foundation, the Better Buildings 
Partnership will first research current practice and 
energy building code compliance in the state to 
identify areas of greatest need. The Partnership is 
expected to be in place by Summer of 1995. 

For more information, contact Diane Daily or Anne 
Gross at DOER, (61 7) 727-4732 



ENERGY FACT: 
THE U.S. DOE 
ESTIMATES THAT 
A 30% IMPROVEMENT 
IN U.S. BUILDING 
EFFICIENCY COULD 
REDUCE ENERGY BILLS 
BY $75 BILLION OVER 
THE NEXT 1 5 YEARS. 




1995 AMERICAN TOUR 
DE SOL TO ROLL 
THROUGH MA ROADS 
AND CLASSROOMS 

Students and electric vehicle 
(EV) enthusiasts can learn more 
about the EVs of today and 
tomorrow when the 1995 
American Tour de Sol rolls through Massa- 
chusetts on May 22-25. This is the seventh 
year for the national electric and solar electric 
vehicle road rally championship, which 
promotes zero emission transportation. The 
race starts May 21 in Waterbury, CT. Stops 
are planned in Northampton, Greenfield and 
Lexington, MA, en route to the finish line in 
Portland, ME on May 26. 

The race is organized by the Northeast 
Sustainable Energy Association (NESEA). 
This year, NESEA, with sponsorship by the 
Division of Energy Resources, is offering 
activity packets and field trips to elementary, 
middle and high-school teachers who would 
like to use the event to teach students about 
electric-powered transportation. 

For more information about the race and its 
educational opportunities, contact the 
Northeast Sustainable Energy Association, 
(413) 774-6051. 



STATE OFFICIALS GIVE CNG THE GO-AHEAD 




Pictured, from I to r: Jerold A. Gnazzo, Registrar of Motor Vehicles; Hugh Saussy, Jr., U.S. DOE; 
Commissioner Stephen J. Remen, DOER; Commissioner llyas Bhatti, Metropolitan District Commission; 
Commissioner Laurinda T. Bedingfield, Mass. Highway Department; Boston Mayor Thomas Menino; 
Cathleen Douglas Stone, Boston Chief of Environmental Services; Martin Pierce, Boston Fire 
Commissioner; Secretary James J. Kerasiotes, Executive Office of Transportation and Construction; Kevin 
MacCurtain, Deputy Fire Chief; Secretary Trudy Coxe, Executive Office of Economic Affairs; Chet Messer, 
President, Boston Gas; F. James Kauffman, State Fire Marshall; Alan R. McKinnon, Mass. Turnpike 
Authority; Paul Cook, District Fire Chief. Also pictured, in bus; Linda Dailey Barbo, Director of Public 
Relations, Mass. Turnpike Authority; Phil Johnson, Weston Public Schools. 



LOCAL 



In a Boston City Hall ceremony on January 3, 1995, city and state officials signed 
a resolution to allow compressed natural gas (CNG) vehicles through Boston's 
tunnels and underpasses. The resolution followed a year-long technical study of 
the comparitive safety of gasoline and compressed natural gas. After the 
ceremony, Boston Fire Marshall Martin Pierce and others boarded a CNG school bus for the first- 
ever trip of a CNG vehicle through the Callahan and Sumner tunnels. The bus was provided by 
the Town of Weston. A variety of CNG vehicles from private vehicle fleets were on display at City 
Hall Plaza throughout the morning, along with a full-size model of a CNG refueling station 
provided by Boston Gas. 



STATE WINS GRANT TO DEVELOP STANDARDS FOR EV INFRASTRUCTURE 




While auto manufacturing 
experts work to extend electric 
vehicle battery capacity, state 
regulators are developing 
standards for recharging equipment to ensure 
that the "plugs" will always match the 
"outlets." These efforts recently gained 
momentum when DOER won $66,000 from the 
U. S. Department of Energy (DOE). The grant 
will help fund the Massachusetts Electric 
Vehicle Infrastructure Program, which will 
develop uniform standards for electric vehicle 
recharging stations. 

When electric vehicles or any alternative fuel 
technologies are introduced to the market, 
infrastructure must be developed to support 
them. But even before the widespread 
installation of publicly accessible, multi-user 
electric recharging stations, a variety of 
regulatory issues must first be addressed. 



Under the EV Infrastructure Program, DOER 
will examine zoning, safety regulations and 
the removal of any restrictions on the sale of 
electricity as a transportation fuel. DOER also 
will perform a technical evaluation of various 
recharging technologies. Finally, DOER, with 
technical assistance from utility companies, 
will develop uniform specifications for 
recharging station equipment and create rules 
for the location, installation and long-term 
maintenance of recharging stations. 

The program will also address safety 
concerns. Currently, electric vehicle batteries 
take six to eight hours to recharge, which is 
fine for short trips such as commuting, but 
may not be feasible for longer journeys. 
"Quick charging" is an attractive option, but 
there are obvious concerns about the safety of 
the inherent higher voltage and electric 
current. The program will determine steps to 



ensure the safety of the person at the charging 
station, or "pump." Additionally, the program 
will explore the effect of quick charging on 
battery performance and life. 

Program partners include the Massachusetts 
Highway Department, the Massachusetts 
Turnpike Authority, the Massachusetts 
Department of Environmental Protection, the 
Northeast Alternative Vehicle Consortium, and 
the Northeast States For Coordinated Air Use 
Management (NESCAUM). Private sector 
members of the partnership are the Boston 
Edison Company, Massachusetts Electric 
Company and the Commonwealth Electric 
Company. 

For more information, contact DOFR's 
Director of Programs Jack Bevelaqua at 
(617) 727-4732, ext. 126. 



I low can environmental sustainability be 
assured in a competitive electric market? 

Because of major changes imminent in (he electric industry, this issue of the Energy Report pr ovides a forum for industry stakeholders 
to discuss electric industry restructuring. We invited Annum! Cohen, of the Conservation Law Foundation, and Mark Drazen, of 
Drazen-Brubaker Associates, Inc., to comment on the role of environmental sustainability in a competitive electric market. Fads and 
:'d in guest editorials are those of the authors and not necessarily those ol DOER. 



» 



(A 



Can Industry Restructuring Be "Green"? 

By Armond Cohen 

How Massachusetts and New England restructures its electric power 
industry is the most significant environmental issue the state will face in 
this decade 

The electric industry is the state and region's largest industrial air 
polluter Utilities produce the vast majority of the region's acid rain- 
causing chemicals and a third of its smog. They are the dominant 
emitter of particles which researchers believe cause respiratory disease 
and premature death; of airborne mercury which poisons much of New 
England's fresh water fish; and of carbon dioxide, implicated in global 
warming Research suggests that fossil fuel power plants also endanger 
our forests and aquatic ecosystems through toxic deposition and 
leaching 

The region's power plants, among the largest in- 
dustrial consumers of water, lead to the degradation 
of estuariesand rivers. The region'seight remaining 
nuclear power plants annually generate many tons 
of high level radioactive waste — which is stored 
on-site until "permanent" storage options are se- 
cured. The electric power industry's environmental 
impact far exceeds its economic impact: electricity 
represents only 3% of the state's gross economic 
output, but produces 30-70% of its emissions. 



PROGRESS IS AT RISK 
IF WE RESTRUCTURE 
THE INDUSTRY 
FOOLISHLY. - cohen 



The rules under which this industry operates will determine the health of 
New England's citizens and environment. Foresighted Massachusetts 
utility regulators have taken the lead in cleaning up the region's power 
system. Energy conservation programs, for example, have reduced 
electric demand by 3% and — by displacing the dirtiest plants — have 
reduced utility emissions by twice that amount. Gas repowering of the 
region's aging oil and coal plants has also reduced emissions. And, led 
by New England Electric and supported by the Department of Public 
Utilities, the region has begun to invest in commercial renewable energy 
sources such as wind and biomass — which provide fuel diversity and 
avoid excessive reliance on gas, especially as our nuclear plants are 
likely to shut down well before their licenses expire. 

Environmental progress is at risk if we restructure the industry foolishly. 
Energy efficiency, renewable energy and gas repowering are cost- 
effective in the long run; Massachusetts utility conservation programs 
since 1990 have saved nearly $400 million of electricity. But, often 
these investments exceed the cost of running existing fossil and nuclear 
units in the short run. They will be greatly diminished if we restructure 

Continued next page, column 1. 



How Can a Competitive Electric Industry 
Promote Environmental Goals on Both 
the Demand Side and the Supply Side? 

By Mark Drazen 

The question is really not whethera competitive market structure can 
achieve environmental goals. Rather, ask how industry restructuring 
can be used to remove existing regulatory and business impediments to 
these goals. What is likely to happen, even without restructuring? 

As the industry evolves, I expect that the now-integrated utility 
companies will separate supply (generation) from delivery (distribu- 
tion). "Gencos," which produce power, will compete to supply 
electricity, and "discos," or distributors, will deliver it. Customers will 

negotiate directly with gencos for price of 
supply. All gencos will have access to an 
independent regional transmission grid and 
an independent generation dispatch service. 
Independence means that the grid and 
dispatch pool have no financial interest in 
any genco. This structure would give all 
gencos and users equal and open access to 
one another. New generation could be built 
and bought on a competitive basis, i.e., when 
customers want it, at prices they are willing to pay. 



An inherent tension lies in the current structure, where utilities are both 
suppliers and deliverers of electricity. Energy conservation and load 
management is provided on the delivery end, but most of the money is 
made on the supply end. "Decoupling" revenues from sales is one way 
to remove the conflict, but this also decouples the utility's earnings from 
its efficiency in all areas. 

Will restructuring reduce conservation and load management activities? 
As utilities, regulators and customers try to increase efficiency and 
reduce costs in all other areas, they will become more demanding about 
conservation and load management. Conservation and load manage- 
ment programs are already being re-examined as utilities strive to 
reduce costs. 

How can a competitive structure help? First, the structure would 
produce more market-based rates, so customers would get better 
information. Second, discos would be able to aggressively offer energy 
conservation as an alternative to kilowatt-hours, because they will no 

Continued next page, column 2. 



COHEN, CONTINUED 

our electric industry as a short-term commodity market. The United 
Kingdom has learned this painful lesson, and is now struggling to 
implement the very environmentally-sensitive energy policies that 
Massachusetts has already put in place. 

How can industry restructuring and the environment be reconciled? 
First, acknowledge that there is a conflict, and that specific policies are 
needed to solve it. Massachusetts should not sit on its hands, waiting 
for Congress to enact tougher emissions controls. The wisdom of our 
energy policy to date is that, by commercializing energy efficiency and 
renewable technologies, we avoid creating an expensive mess in the 
first place. 

Second, level the playing field between old, dirtier power plants and 
their new competitors. Older plants were substantially exempted from 
Clean Air Act requirements and so benefit from a significant "pollution 
subsidy." Old plants should be required to 
meet the same pollution standards as new 
ones in the competitive market. 



ENVIRONMENTAL 
SUSTAINABILITY... 
WILL BE THE NATURAL 
BY-PRODUCT OF A 
COMPETITIVE ELECTRIC 
MARKET. - 1 



Third, recognize the continuing importance 
of bringing clean technologies to market. 
Energy efficiency is one of the state's few 
environmental strategies that saves more 
than it costs, and renewable energy is critical 
to diversity and sustainability. Development 
of these resources must continue — through 
modest investment, possibly at the distribu- 
tion company level, as is now being implemented in the United 
Kingdom. 

It is fashionable to argue that pro-environmental energy regulation has 
no place in the "global marketplace." But Massachusetts' competitive 
edge lies in its high quality of life and environment. We will never thrive 
economically by structuring our energy system to produce the cheapest 
possible electricity, which degrades air quality, runs up health care 
costs, and threatens our forests, lakes and oceans. As we restructure our 
electric industry, our health in every sense — physical, economic and 
environmental — depends on whether we adopt strategies to promote 
environmental protection, energy efficiency and clean generating 
technology. 

Armond Cohen is a Senior Attorney and Energy Project Director at the 
Conservation Law Foundation. 



DRAZEN, CONTINUED 

longer have a vested financial interest in the gencos' financial perfor- 
mance. 

Would a competitive structure change the mix of old plants as compared 
to current trends? Does restructuring create an incentive to keep old, 
presumably "dirty" plants running in order to avoid the cost of building 
new, efficient ones? This incentive already exists. The current 
regulatory procedure discourages cost-conscious, competition- 
conscious utilities from building new plants because the cost of new 
capacity increases rates and thereby guarantees battles over the "need" 
for these new plants. 

New generation choices are already driven primarily by cost, with 
environmental considerations further limiting choices. Most new 
supply being planned is gas-fired because that is the cheapest and is 
expected to remain so. Gas-fired plants are also "cleaner." Utilities are 
already using competitive bidding for new 
supply, which emphasizes low-cost power. What 
would change is that it would actually become 
easier to replace old plants with new, cleaner 
plants, because full competition would allow 
customers to choose whether and when to pay 
for a new plant. Environmental, land use and 
other siting restrictions would continue to apply 
to new plants. 



What about renewables? Cost pressures on 
utilities will likely keep this sector small (limited 
to "set-asides") until renewable resources become truly cost-competi- 
tive. Competition — more access — may help by promoting techno- 
logical improvements, reducing the cost of alternate technologies. Next, 
people who are willing to pay a bit more for "green" power will actually 
have that option. With integrated utilities, customers cannot control 
where their dollars go. Retail competition will assure customers that 
their preferred gencos get the dollars. 

Environmental sustainability, in the form of energy conservation and 
load management programs, will be the natural by-product of a 
competitive electric market. Increasing efficiency will be an important 
catalyst to help cut costs and increase profits. 

Mark Drazen, CEO of Drazen-Brubaker & Associates, Inc., is a 
consultant on utility competition and restructuring issues throughout 
the United States and Canada. 



INVESTIGATION: From page! 

Another concern is how, in the restructured industry, utilities will 
recover the costs of already-existing investments in power plants. These 
investments were made in expectation of long-term paybacks from a 
relatively permanent customer base. In the new structure, however, 
large industrial customers might choose to leave the system for lower 
rates from competitive suppliers. Transition rules must ensure that 
utilities can fairly recover these potentially "stranded" investments 
without inflating rates for the remaining customers. 

To open its investigation, the DPU sought public comment on a list of 
43 questions. These questions consider how a restructured industry 
could promote competition and benefit customers, whether and how to 
allow some or all customers to shop for their own power supplier, how 
restructuring could be implemented, and what rules should govern the 
new market. 



Initial comments were due to the DPU by March 31 . To allow all 
viewpoints to be heard, the DPU may hold public hearings in mid-April. 
Second-round comments must then be filed by Friday, May 5. After 
comments have been reviewed, the DPU will determine whether to hold 
further discussions or hearings, or issue an order on the results of the 
investigation. 

To complement these activities, DOER in late February briefed the 
Massachusetts legislature on electric industry restructuring. The 
briefing provided information on many of the key issues. Presenters 
represented the Joint Committee on Energy, the Executive Office of 
Economic Affairs, the Executive Office of Environmental Affairs, the 
DPU, the Office of the Attorney General, DOER, the Associated 
Industries of Massachusetts and New England Electric Company. 

For more information on the DPU inquiry or on restructuring, call 
DOER's Director of Policy Fran Cummings or General Counsel Robert 
Sydney at (61 7)727-4732. 



MASS. SEEKS TO CONSOLIDATE SUPPORT FOR GREEN TRANSPORTATION 




In an effort to boost alien ■ 
fuel vehicle (AFV) techno! 
and further its compliance with 
federal air quality requirements, 
the state early this year called together 
interested stakeholders to an Advanced 
Vehicle Technology Incentive Workshop 
State legislators, policy makers and represen- 
tatives from more than 35 private companies 
and private non-profit groups attended to 
brainstorm strategies to increase the use of 
AFVs in Massachusetts 

In recent years, various legislative bills have 
been proposed to promote a specific fuel or 
AFV technology, but. to date, none has been 
enacted Recognizing that some of these bills 
are consistent with state economic, environ- 
mental and energy policy goals, the state held 
the workshop to consolidate suggestions and 
determine action for government, private 
industry and environmental groups The 
workshop yielded a number of valuable 
recommendations covering industry incen- 
tives, fleet vehicle procurement, government 
action, consumer incentives and technology 
development. These recommendations are 
now under consideration by state agencies. 

The workshop was hosted by the Executive 
Office of Environmental Affairs, the Executive 



Office of Economic Affairs and the Division ol 
I nergy Resources (DOER) with the Northeast 
States toi Coordinated Air Use Management. 
It is hoped that increased understanding ol the 
issues surrounding AFVs, coupled with 
Significant infrastructure development in the 
next tew years, will create a favorable climate 
lor the wide-scale integration of AFVs into 
government and private fleets. 

DOER has already acted on one key recom- 
mendation from the workshop. On February 
28, the agency convened state fleet operators 
and alternative fuel suppliers to identify steps 
to bring all state vehicle fleets into compliance 
with the National Energy Policy Act mandate. 
According to the mandate, 10% of all new 
state fleet vehicle acquisitions, beginning in 
model year 1996, must be alternative fuel 
vehicles Purchases must increase to 15% in 
1997, 25% in 1998, and 75% in the year 
2000 and thereafter. 

State fleet managers and representatives from 
the natural gas, propane and electric vehicle 
industry attended the meeting to discuss the 
mandate, penalties of non-compliance, types 
of fuels and vehicles available, and funding 
options. A number of questions were raised 
that require resolution before the state can 
comply with federal law. A follow-up meeting 



to address these questions will be held In 
mid April. 

Foi more information, contact DOER's Deputy 
General Counsel Christine Constas Erickson 
at (617) 727-4732. ext. 166. 



NORTHEAST SUPPORTS 
ENERGY CONSERVATION 
AND RENEWABLES, 
POLL SAYS 

A recent national poll reveals strong 
bipartisan support for continued federal 
funding of energy efficiency and renew- 
able energy programs. The poll showed 
that, in the Northeast: 75% believe 
resources should be redirected to 
uliii.iency and renewables; 63% believe 
nuclear and fossil fuel research and 
development funds should be cut; 89% 
support the development of public/private 
research partnerships; and, 81% favor tax 
incentives for conservation and renewable 
energy. The poll was commissioned by a 
coalition of energy groups in response to 
potential DOE budget cuts. 



WIND POWER A WINNER ON NANTUCKET 




» 



The island town of Nantucket may have found a new 
solution to an old problem. Because the island lacks 
space to expand its landfill and the cost of off-island 
disposal is prohibitive, Nantucket decided to build a 
solid waste processing facility. However, costs to power 
the facility using existing energy sources on the island threatened to 
increase to the municipal operating budget, so Nantucket turned to 
DOER for help in finding a less expensive energy alternative for the 
planned facility. 

Nantucket asked DOER to fund an analysis of a variety of electricity- 
generating resources. DOER chose to study three indigenous re- 
sources: wind, biomass and landfill methane gas. The evaluation of 
biomass and landfill gas potential found that, while these resources are 
available in quantities sufficient to generate some electricity, the town's 
landfill is too small to make either application cost effective. Wind 
power surfaced as the cleanest, least expensive option for the island. 

Wind data gathered at the island's airport and other locations show that 
the wind resource is uniform across the island and comparable to some 
of the best sites in the country. To test this at the landfill site, wind 
monitoring equipment was installed in August 1994. 

The study found no major physical, environmental or regulatory 
obstacles to development of a wind power plant at the landfill. However, 



to maintain the unique aesthetic and historic characteristics of 
Nantucket, the study recommended the use of less obtrusive, tubular 
wind towers for a more pleasing appearance. 

Depending upon the number and size of wind turbines installed at the 
landfill, preliminary cost estimates for the wind power range from 4.50 
to 80 per kilowatt-hour. According to Jeffrey Willette, superintendent of 
the Nantucket Department of Public Works, "Right now, our retail 
electric rates are 130 per kilowatt hour. The lower rates are good news 
to us." 

Wind power is a win-win energy option for Nantucket. This renewable 
resource will help the island preserve its natural beauty and clean air, 
while producing less expensive energy. DOER's study estimates that, if 
six wind turbines are installed at the landfill, the sale of surplus 
electricity to the Nantucket Electric Company could net the town up to 
$200,000 annually. Typically, this money would leave the local 
economy to pay for non-indigenous fuel resources. The wind genera- 
tion will also spare the island some 100 tons of emissions that would 
otherwise result from the use of fossil fuels. 

For more information, contact DOER's Dispersed Generation Program 
Manager Nils Bolgen at (617) 727-4732, ext. 178. 




U. S. DOE INVITES AWARD NOMINEES 

The U.S. Department of Energy invites nominations of 
outstanding individuals for the 1995 Sadi Carnot Award 
in energy conservation and the John Ericsson Award in 
renewable energy. The awards recognize significant 
scientific and technological achievements in energy conservation and 
renewable energy. Each award consists of a citation, a gold medal and 
$10,000. 

The awards recognize either a single noteworthy achievement or a 
sustained level of lifetime accomplishment. Candidates may be at any 
stage in their professional careers. Nominations will be judged 
primarily on the basis of scientific and technical merit and achievement. 
Managerial ability and innovative talents will also be considered. 
Nominations are due May 15, 1995. 

For more information, contact the U. S. DOE's Mary Pitt 
at (202) 586-9114. 



U. S. DOE TO SPONSOR SATELLITE 
TELECONFERENCE ON EFFICIENT 
MOTOR SYSTEMS 



FEDERAL 



The U.S. Department of Energy (DOE) estimates that 
industry can save up to $13 billion in energy costs 
annually simply by increasing the efficiency of electric 
motor systems (see Energy Report, Summer, 1994.) To 
this end, DOE will broadcast a national teleconference for large 
industrials on Tuesday, May 23, 1995. DOER will host a teleconference 
site at the Massachusetts Institute of Technology (MIT), Boston, MA. 
The teleconference is sponsored by DOE's Motor Challenge Program. 

Dubbed "Efficient Motor Systems: Strategies for Success," the 
teleconference will update participants on electric motor system 
efficiency management and evaluation techniques. It also will show 
large industrials specific examples of commercially available technolo- 
gies and decision making tools to increase profitability and productivity, 
and reduce downtime and operating costs. A panel of industry 
experts will be on-line to answer participants' questions during the 
teleconference. 

To find out more about the DOE Motor Challenge Program in Massa- 
chusetts, contact DOER'S Senior Engineer George Miller at (617) 727- 
4732, ext. 168. For more information on teleconference sites, contact 
Public Information Officer Susan Gedutis at ext. 134. 



EDUCATION MATERIALS READY FOR 
THE CLASSROOM 

The U. S. Department of Energy's Energy Efficiency and Renewable 
Energy Clearinghouse (EREC) is now offering "Hands On" Energy 
Education Kits for elementary, middle and high school teachers. To 
receive a free kit, contact EREC at 1-800-DOE-EREC (363-3732), or 
EREC, P.O. Box 3048, Merrifield, VA 22116. 

Contact: Sharron Brown, 1-800-DOE-EREC. 




NICE 3 : DOER SEEKS INDUSTRIAL 
EFFICIENCY PROJECT ABSTRACTS 

In preparation for the next round of the National Industrial 
Competitiveness through Energy, Environment and 
Economics (NICE 3 ) grant program, DOER is again 
seeking 2-page abstracts on innovative technology 

demonstration project proposals. The next NICE 3 solicitation is 

anticipated to be announced next Fall. 

NICE 3 is an innovative, cost-sharing grant program operated by the U.S. 
Department of Energy and the Environmental Protection Agency. The 
program provides a one-time grant to help offset start-up risks for 
innovative technology demonstration projects that significantly 
conserve energy and energy-intensive feedstocks, reduce industrial 
waste and improve industrial cost-competitiveness. NICE 3 awards up to 
$425,000 and requires a cost-share of at least 50% of the total project 
cost. Projects must partner the efforts of industry and a state agency. 

If your company has an innovative, technology demonstration project to 
propose, please contact DOER for instructions on preparing the project 
abstract. Abstracts will be reviewed by DOE/EPA for technical feasibil- 
ity, innovation and program eligibility. DOER will return the feedback on 
these abstracts to applicants within 3 weeks. Companies that propose 
eligible projects will also receive further application instructions. 

For more information, contact Dan Sardo at (617) 727-4732, ext. 130. 



DISTRIBUTED UTILITY WORKSHOP 
SLATED FOR SPRING 

The Boston Edison Settlement Board, the Massachusetts 
Photovoltaics for Utilities Working Group (PV4U) and DOER will host a 
workshop on Least Cost Distributed Utility Planning in late April or early 
May. The workshop will provide information to Massachusetts utility 
companies and policy makers on the distributed utility concept, and 
identify opportunities to implement distributed utility planning. Date and 
location will be announced. 

For more information, contact DOER Public Information Officer 
Susan Gedutis at (617) 727-4732, ext. 134. 



ENERGY FACT: LIGHTING UPGRADES TO 

STATE BUILDINGS IN MASS. GENERATE 

SAVINGS OF 217,756,621 KWH EACH 

YEAR, ROUGHLY 

EQUIVALENT TO 

400,000 BARRELS 

OF CRUDE OIL. THIS 

AVOIDS EMISSION 

OF APPROXIMATELY 

217,756 TONS OF 

C02, A GREENHOUSE 

GAS. 




EPA 



M Green 
Lights 



PARTNER 



SPRING 1995 



> 

So 






APRIL 

/J Tte/a/V Wheeling and its Impact on 
Sustainable Energy Development. " Cam- 
bridge, MA Armond Cohen, Conservation 
Law Foundation, will speak as part ot a 
continuing lecture series. Contact the Boston 
Area Solar Energy Association, 
(61 7) 49 SOLAR 

18 New England Energy Task Force Meeting, 
Boston, MA At DOE, One Congress Street, 
1 1th Floor, 1 30 p.m Contact Duane Day, 
(617)565-9705 

18- 19 "Mergers and Acquisitions in the 
Electric Utility Industry Exploring Your 
Options in Today's Electricity Marketplace, " 
New York, NY. Contact AIC Conferences, 
(800) 409-4AIC 

20-21 2nd National Electricity Forum, 
Providence, Rl. Sponsored by the National 
Association of Regulatory Utility Commission- 
ers (NARUC) and U.S. DOE, this conference 
will address electric industry restructuring and 
its implications for state and federal regula- 
tors. Contact Jim Fremont, (202) 586-5727. 

22 Earth Day 1995. Check local listings for 
activities in your area. 



23 SUNDAY 1995, Boston, MA. Second 
annual national celebration of energy-efficient 
technologies and renewable energy. Contact 
the SUN DAY Campaign, (301) 270-2258. 

28-29 Massachusetts State Science Fair, 
Massachusetts Institute of Technology, 
Cambridge, MA. Contact the Science Fair 
Office, (617) 432-2249 

MAY 

9- 1 1 New England Environmental Expo. 
Boston, MA. Contact Russ Ryan, 
(617)489-4199. 

/ / "SERP and Other Golden Carrot Programs 
to Promote the Development ot Energy 
Efficient Appliances, "Cambridge, MA. 
Lawrence Alexander, Consortium for Energy 
Efficiency, part of BASEA's continuing lecture 
series. Contact (61 7) 49 SOLAR. 

16 New England Energy Task Force Meeting, 
Boston, MA. At DOE, One Congress Street, 
1 1th Floor, 1 :30 p.m. Contact Duane Day, 
(617)565-9705. 



19 The 5th Annual Northeast Power Market 
Conference: The Future of Electric Power in 
the Northeast, Boston, MA. Sponsored by the 
Northeast Power Report and Independent 
Power Report. Contact (800) 223-6180. 

21-27 7th Annual Tour De Sol and Electric 
Car Championship begins in Waterbury, CT 
and ends in Portland, ME. Contact Northeast 
Sustainable Energy Association, 
(413)774-6051. 

JUNE 

5-6 "Power Transmission: Access, Pricing 
and Policy, "Washington, DC. Contact Cary 
Cordova of Infocast, (818) 609-9145. 

19-29 "Risk Management for Utilities, " World 
Trade Center, New York, NY. Contact Cary 
Cordova of Infocast, (818) 609-9145. 

20 New England Energy Task Force Meeting, 
Boston, MA. At DOE, One Congress Street, 
11th Floor, 1:30 p.m. Contact Duane Day, 
(617)565-9705. 



The Energy Report is published by 
The Massachusetts Division of 
Energy Resources 



Suggestions, calendar submissions, questions and input are invited. Send to Editor, Energy Report, 
The Massachusetts Division of Energy Resources, 100 Cambridge Street, Room 1500, Boston, MA, 02202. 
DOER staff members can be contacted at (617) 727-4732. 
Energy Report is printed on recycled paper using soy ink. 



COMMONWEALTH OF MASSACHUSETTS 
DIVISION OF ENERGY RESOURCES 

100 Cambridge Street, Room 1500 
Boston, MA, 02202. 



BULK RATE 
U.S.POSTAGE 
PAID 

PERMIT NO. 
55324 
BOSTON, MA 



Att: Betty 
Document Dept. 
COPY 8 
St. Library 
State House, #442 
Boston MA 02133 



n az»> 



i\j ■ » 



yn 



FEATURES: 

EVDemo/1 New Commissioner/1 
Two Guest Columnists Comment on Restructuring/4 

NEWS: 

New Energy Education Coordinator/7 

EVENTS: 

Summer Workshops and Internships/7 Calendar/8 

DEPARTMENTS: 

■S'lty Cf MaSSaCnUSett^ e | ecommutin g /2 ECS Program/3 Public Buildings Initiative/6 

Dep ository Copy 1 

Electric Vehicle Demo Finishes 



Inment documents 
collection 

NOV 08 1995 



Promising First Year 



STATE 



This spring, the Massachusetts 
Electric Vehicle (EV) Demonstration 
Project marked the end ot a successful 
first year. Data and driver satisfaction 
surveys from the first of this multi-year project show 
that EVs can perform well in New England, and, with 
technological refinement, can gain widespread 
acceptance by the motoring public. The EV Demo 
Project is a public/private partnership run by the 
Division of Energy Resources. 

Twenty commuters now commute daily in their leased 
Solectria Force EVs from home to MBTA parking 
facilities at Braintree, Alewife or Newburyport. While 
drivers may use the vehicles for personal use, they 
must include public transit in their commutes. The 
goal: keep the air cleaner and roadways less 
congested. 

MBTA stations at Alewife and Braintree now feature 
solar photovoltaic panels installed atop the subway 
parking garages. The panels were installed by the 



EV Demo Project to convert sunlight to pollution-free 
electricity. The energy replaces power used to charge 
the EVs parked in the garages during the day. 

In ten of the vehicles, on-board computers measure 
everything from outside air temperature to battery 
discharge rates. Information is sent daily to a central 
location, where data on vehicle performance, energy 
use and power loss is recorded for analysis. DOER 
also collects data through written surveys and analyzes 
it for vehicle performance characteristics. 

Each driver is reguired to complete a monthly 
performance log. Drivers rate ride quality, noise level, 
driver comfort and perceived dependability and safety. 
Drivers also rate the performance of specific functions 
including braking, acceleration, heat, air conditioning 
and instrumentation. At the conclusion of the first 
year, drivers rated the cars at an average of 7.6 on a 
scale of 10. 

EV DEMO: Continued on page 6. 



A PUBLICATION OF 
THE MASSACHUSETTS 
DIVISION OF 
ENERGY RESOURCES 

Vol.3/ No.4 
Summer 1995 



The Commonwealth 
of Massachusetts 

William F. Weld, 
Governor 

Argeo Paul Cellucci, 
Lt Governor 

Gloria Cordes Larson, 
Secretary 
Economic Affairs 

David L. O'Connor, 
Commissioner 
Energy Resources 



NEW COMMISSIONER BULLISH ON MA ENERGY PROSPECTS 



In April 1995, the 
Weld-Cellucci 
Administration 
and Economic 
Affairs Secretary 
Gloria Larson 
appointed 
David O'Connor 
Commissioner of 
the Division of 
Energy Resources. 
O'Connor joins 
DOER from the Executive Office of Administration and 
Finance, where he served as Special Assistant to the 
Secretary. In this capacity, he addressed management 
and operational challenges in tax administration, 
budget and infrastructure investment. 




Mr. O'Connor brings with him twenty years of experience 
in successfully resolving public and private conflicts over 
industrial development, power generation, transportation 
infrastructure, and air and water pollution control. In his 
previous appointment as Director of the Massachusetts 
Office of Dispute Resolution, he pioneered governmental 
use of mediation techniques to settle environmental and 
economic development disputes. 

"David O'Connor's excellent mediation and management 
skills in the field of energy policy make him an ideal 
choice for this position," said Secretary Larson. This ex- 
pertise will be crucial to helping DOER confront an energy 
industry undergoing revolutionary change. Massachu- 
setts regulators have embarked on the massive deregula- 
tion of the electric utility industry. Also, aggressive 
environmental mandates have stepped up efforts to 

NEW COMMISSIONER: Continued on page 7. 



FROM 

COMMISSIONER 

O'CONNOR: 

It is imperative to the Commonwealth's economic health that we reduce electric rates. To 
accomplish this. Massachusetts has chosen to introduce competition into the heavily 
regulated electric utility industry This would allow customers to choose their power 
supplier as they now choose their long-distance phone carrier. However, there are major 
risks in this process - - including legal gridlock — it the needs ol all parties are not 
considered At DOER, we leel that successtul restructuring ol the electric market rests on 
the collaboration ol key industry stakeholders 

Deregulation eflorts in other states otter dramatic examples ot what happens when 
negotiation is not used A year ago in California, for example, the Public Utilities 
Commission announced its plan tor restructuring after holding hearings, but without 
negotiating on a face to face basis with the stakeholders The result: a firestorm of public 
criticism and a polarized debate. In May, 1995, after a year-long delay, the Public Utilities 
Commission issued a new order and scheduled a new round of hearings. We would be 
wise to learn from the California experience. 

On the other hand. Rhode Island's recent progress is testimony to the advantages of 
successful negotiation. In a previous restructuring effort, Rhode Island industrial 
customers, consumer advocates, utilities and independent power producers became 
involved in a lengthy adjudicatory case before the Public Utilities Commission. This 
spring, they switched to a collaborative negotiation process and, within two months, 
reached agreement on a set of general principles to guide restructuring. The agreement 
lays the groundwork for customer choice and for incentives to clean up old, "dirtier" power 
plants. The principles address a wide range of interests, including support for renewable 
energy and for utility recovery of past investments. Finally, the joint agreement envisions a 
future industry governed by market competition, not regulation. 

In comments filed with the Department of Public Utilities in late May, DOER recommended 
multi-party negotiations to develop a similar set of principles to guide restructuring in 
Massachusetts, using the Rhode Island agreement as a starting point. Because implicit 
agreement on many principles already exists among the more than 53 parties in the DPU's 
investigation, we are optimistic that the remaining differences can be resolved. In our 
comments, we reaffirmed the importance of customer choice, rate stability for all custom- 
ers, environmental protection measures, recovery of previously approved investments, 
services for elderly and low-income customers, regional collaboration and other protections. 

The Rhode Island experience should serve as a model for all New England states. However, 
for any state's plan to work, it must be harmonious with the market structure of neighboring 
states. New England parties must also negotiate with each other to create a collaborative 
Regional Transmission Group (RTG) that will ensure consistent, fair access and pricing for 
all customers. 

I look forward to working closely with all industry stakeholders, including utilities, 
industrial and commercial customers, residential ratepayers, non-utility generators and 
power marketers, environmental advocates, and energy efficiency and other energy 
businesses. Electric industry transformation is clearly a very complex task, but, I believe, 
achievable with an effective negotiation strategy. 




DOER LAUNCHES 
AMBITIOUS 

MONITORING EFFORT IN 
TELECOMMUTING 
INITIATIVE 

DOER recently began the 
monitoring phase of its 
Massachusetts Telecommuting 
Initiative, with the mailing ol 
more than 500 baseline surveys to participat- 
ing companies. The baseline survey is the first 
of several surveys that will be used to measure 
the impact of telecommuting on participating 
agencies and organizations. To increase the 
reliability of data collected, surveys are 
provided not only to participating 
telecommuters, but also to non- 
telecommuting co-workers and supervisors. 

When the program ends next spring, DOER 
will produce a written report on telecommuting 
in Massachusetts. The report will address 
economic and environmental impacts of 
telecommuting, and cover issues of employee 
morale, productivity and workplace diversity. 
It also will evaluate the impact of 
telecommuting on traffic reduction and air 
pollution mitigation. The Donahue Institute at 
the University of Massachusetts in Boston 
manages the monitoring component. 

The Telecommuting Initiative consists of an 
"at-home" demonstration, in which employees 
work in a virtual office environment within 
their homes from one to three days per week. 
The project involves over 350 telecommuters 
from more than 25 of the Commonwealth's 
largest high-tech and health care companies, 
and 1 7 state agencies. Some of the 
Commonwealth's major employers, including 
Digital, Nynex, GTE and Massachusetts 
General Hospital, participate in the program. 

The Telecommuting Initiative was launched 
last year by Governor Weld. The program is a 
public/private effort administered by DOER 
and the Executive Office of Transportation and 
Construction, and is part of the state's 
comprehensive energy efficiency strategy. 

Companies interested in participating in the 
program should contact William Eddy, 
Telecommuting Program Manager, at 
(617) 727-4732, ext 161. 



ECS HELPS KEEP RESIDENTIAL ENERGY CONSERVATION STRONG IN STATE 



STATE 



55,000 homes and apartments in Massachusetts this 
year have become more energy efficient, through the 
Energy Conservation Service (ECS) home energy audit 
program. 



ECS, administered by DOER and delivered by the 57 Massachusetts 
electric and gas utility companies, provides customized "fuel-blind" 
energy conservation audits and follow-up services to any residential 
utility customer. The comprehensive service helps utility customers 
make their homes more energy efficient and comfortable. Beginning in 
July, ECS services will expand to help customers use appliances more 
efficiently and choose more energy efficient appliances, through a new 
Appliance Efficiency Education Service. 

Since some utilities also offer residential demand-side management 
(DSM) programs, DOER and utilities have worked hard to coordinate 
these with ECS services. In some cases, a utility's DSM services are 
"piggybacked" onto the delivery of the ECS audit. In other cases, joint 
screening of program applicants helps guide customers to the service 
that best meets their need. This coordination results in better customer 
service, reduces duplication, and lowers rate payer costs. 

The ECS program also provides energy conservation information to 
owners, managers, and tenants of multifamily buildings of five or more 
units. Follow-up services help customers install the measures 
recommended in the audits. This year, the program reached a major 
milestone. Mass Save, Inc., one of the program providers, audited its 
10,000th multifamily building. (See photo, right.) 

This year, DOER will undertake a comprehensive evaluation of the ECS 
program to examine how it can better serve utility customers in today's 




The Energy Conservation Service celebrated a major milestone when Woodcrest 
Court Condominiums in South Weymouth became the 10,000th building 
audited by Mass-Save, Inc., an ECS program provider. Pictured (I to r): 
Linda Teagan, Representative (R) Plymouth; John Amoroso, President of 
Business Services, Massachusetts Electric; Beth Greenblatt, Director of Energy 
Management, Boston Gas; Lisa Yarid, Legislative Joint Committee on Energy; 
Steve Gratten, ECS Multifamily Building Manager, Mass-Save, Inc.; Mike 
Plasski, President, Mass-Save, Inc.; Bruce Ledgerwood, ECS Program 
Manager, DOER. 



rapidly changing utility environment. The evaluation will examine ways 
to coordinate the various residential conservation services to provide 
the best and most cost-effective customer services. The evaluation is 
expected to be underway early in FY96. 

For more information, contact Bruce Ledgerwood, at (617) 727-4732, 
ext. 139. 



SUMMER COOLING TIPS TO SAVE MONEY AND ENERGY 



This summer, you can beat the heat and spend less on electricity by 
using some of these simple, practical tips: 

PREVENTION: NATURAL COOLING 

> Block the sun's heat and keep the house cooler by keeping blinds 
and curtains drawn and windows and doors closed during the 
hottest part of the day. 

>■ Proper attic ventilation can release most of the heat in your attic 
before it moves into your living area. 

>• Keep lights off. Replace incandescent bulbs that you leave on for 
three or more hours per day with energy efficient compact 
fluorescent bulbs. They last up to ten times longer, can save up 
to $50 in electricity costs over the life of the bulb, and produce 
almost no heat. 

> During the hottest times of the day, avoid activities that produce 
heat and humidity. Run the dishwasher and the dryer in the 
evening. 

>- Use your microwave oven. It uses up to two thirds less energy 
than a conventional oven and won't turn your kitchen into a 
sauna. 

> Consider buying energy efficient appliances. They cost less to 
run and produce less waste heat. 



AIR CONDITIONING 

> Before turning on your air conditioner, use attic, window, and 
whole-house fans to flush out hot air. Also, when the temperature 
outside is less than 80°, you can save money and energy by 
turning off the air conditioner and turning on a fan. 



Keep your air conditioner thermostat at 78 c 
you use ceiling fans. 



or even higher if 



Instead of air conditioning the entire house, create a "cool" room 
for your family by shutting off a smaller space that can be cooled 
easily and efficiently. Don't air condition unused rooms. 

Install your room air conditioner away from direct sunlight. Be 
sure the air intake is not blocked by shrubbery, which makes the 
unit use more energy. 

Clean air conditioner filters and heat exchangers regularly to 
maximize efficiency. 

Seal cracks and seams in all central air conditioner ducts. 
Insulate ducts that run through basements, crawl spaces and 
attics. 

Consider replacing your old air conditioner with a new, efficient 
model which may use as much as 50% less energy. Choose a 
room air conditioner with an EER (energy efficiency ratio) above 
9. For central air conditioners, look for a SEER (seasonal energy 
efficiency ratio) above 12. 



I low can equitable nates be assured for all ciis 

Once again. Energy ReportoW&s these pages tor a discussion of key issues In the debate about the changing electric utility industry. We invited Elliott Jacobson, ( 
'hout disadvantaging one class ot rate payers to benefit another? Facts and opinions expressed in guest editorials are those of the authors and not ne\ 

Electric utility restructuring: the small consumer perspective 

by Elliott Jacobson 






It we are not careful, letting major Massachu- 
setts electricity customers bypass their local 
utility will raise rates for most residential and 
small business customers It could also result 
in Massachusetts abandoning its nationally- 
recognized energy efficiency programs. 

There is no longer much support for a scheme 
that would permit the industrials to be the first to 
be able to take advantage of retail competition. 
Nor is there support for letting one group of 
customers get out from under the high costs of 
existing power plants, leaving utilities and the 
remaining customers to squabble over who must 
bear these costs The Federal Energy Regulatory 
Commission has proposed rules that would 
prevent this kind of cost-shifting from one class 
to another But under FERC's proposed rules, 
rate payers would have to pay utilities 1 00 cents 
on the dollar for these high-cost plants Under 
this proposal, utilities would bear no risks in the 
transition to a more competitive market. 

There's a big difference between the theoretical 
right of small consumers to buy their power in 
a competitive market, and the practical 
barriers that they will face. For one thing, it 
will cost as much as $500 per house to install 
the metering needed to let customers choose 
their own suppliers Such re-metering would 
increase system costs by 12%, enough to 
fund 24 new peaking plants. 

Even if we solve the metering problem and the 
stranded cost problem, under retail competi- 
tion big customers will still be able to strike 
sweetheart deals, leaving residential and small 
commercial customers to take what rates the 
power suppliers can exact from them. For 
example, when we deregulated the gas 
industry, the cost of gas at the wellhead went 
down 25%, and industrial customers saw a 
33% drop in prices. But gas prices haven't 
gone down for residential customers; in fact, 
they've gone up. 

Retail wheeling will also undermine utility 
conservation efforts. Demand-side manage- 
ment (DSM) has helped Massachusetts 



consumers save millions of kilowatt-hours ot 
power and millions of dollars in power costs. 
Under market pressures, utilities will abandon 
these programs, and planning for energy 
efficiency will wither. 

Low-income customers will feel the brunt of 
these policies hardest. Our poorest families 
use less electricity than the average residential 
household, but electricity costs take three 
times the bite out of the low-income family 
budget. 



IF WE ARE NOT CAREFUL, 
LETTING MAJOR 
ELECTRICITY CUSTOMERS 
BYPASS THEIR LOCAL 
UTILITY WILL RAISE 
RATES FOR MOST 
RESIDENTIAL AND SMALL 
BUSINESS CUSTOMERS. 

- JACOBSON 



To achieve universal service, any restructuring 
package must include an effective package of 
rates and services. Such a package would 
include accelerated and enhanced conserva- 
tion programs for low-income customers, 
protections against abusive billing and 
collection methods, regulations preventing 
utility "redlining," and rate affordability 
programs that enable low-income customers 
to afford utility service. 

Utility conservation programs for low-income 
customers are best delivered in coordination 
with the U.S. Department of Energy's 
Weatherization Assistance Program, which 
has been proven cost-effective. Such services 
must be provided in conjunction with a well- 
designed rate affordability plan, based on the 
amount a customer can realistically pay, to 
enable a responsible low-income customer to 
maintain service, and help utilities avoid 
unnecessary bill collection costs. 



It is possible to restructure the electricity 
industry to get the best of competition without 
all the drawbacks. For example, Senator 
Montigny has introduced a bill that would 
allow municipalities to force utilities to go 
through a competitive bid process to renew 
their franchises. A utility that has not been 
providing quality service at the least cost 
would lose its franchise. We could also divest 
generation assets from the rest of the system, 
and encourage true wholesale competition. 
Finally, there are ways to finance continued 
support for the public obligations of the 
electricity system, such as DSM, low-income 
rates, and the like, under restructuring. All 
providers can pay an access fee for the right to 
sell their electricity over the wires, which will 
remain a regulated monopoly under 
everyone's vision of the future. 

However we move forward, we need to pay 
attention to the specifics, and not trust blindly 
in some theoretical market to achieve the 
goals of lower electricity bills for Massachu- 
setts consumers. 

Elliott Jacobson is Director of Resource 
Affordability and Quality Programs at Action, 
Inc., Chairman of the New England Commu- 
nity Action Association Energy Committee, 
and Member of the Executive Committee of 
the DOE Energy Advisory Board for Efficiency 
and Renewables. 



mers in a restructured electric market? 

i, Inc., and Robert Ruddock, of the Associated Industries of Massachusetts, to discuss one of the most difficult issues of restructuring: how can these changes 
f those of DOER. 

How can equitable rates be assured for all customers in a competitive market? 

by Robert Ruddock 



Concern about inequitable rates among 
electricity users in a deregulated electricity 
system is an important one, no less for the 
business community than for residential 
electricity users. Two facts must not be lost in 
considering the question. 

The purpose of restructuring the electric 
industry in Massachusetts, New England, or 
nationally is to achieve a competitive electric 
marketplace for electricity. This purpose is 
not served if restructuring, as implemented, 
arbitrarily benefits one type of user over or 
against another. 

A competitive market structure, whatever its 
final form, should reward risk taking, 
efficiency, innovation and good customer 
service, deliver real world cost signals to 
suppliers and customers, increase customer 
choice, and tend to moderate or reduce costs. 
There is justification based on analogous 
situations, where industries regulated as 
monopolies have been restructured as 
competitive systems, to believe that electricity 
deregulation would work the way proponents 
assert. If so, positive benefits accrue to all 
users. These benefits include choice of 
services, control of costs and reliability of 
service. The first fact, therefore, is that 
restructuring is a way to benefit all groups of 
users. 

The second fact is that no individual firm and 
no business organization actively engaged in 
the policy discussion of restructuring is 
advocating inequality or cost shifting among 
user groups as a goal for changing the 
system. The diversity within the business 
community itself makes such an idea clearly 
unacceptable. In any event, cost shifting is, in 
the final analysis, economically counter- 
productive and politically impossible. 

Notwithstanding these facts, the notion 
persists that there will be user groups who are 
disadvantaged by deregulation — electricity 
users who for arbitrary reasons will pay more. 



If restructuring is to occur, this must be 
addressed in the short term. A phased 
transition to competitive markets, with 
appropriate controls on costs for those user 
segments still within the monopolistic system, 
could ensure that cost shifts do not take place 
and that user groups coming later to the 
competitive marketplace do not subsidize 
lower costs for earlier-in users. After the 
transition, if analogous situations are 
indicative, market forces will themselves 
appropriately reconcile costs within and 
among user groups. 



THE GROWING CONSENSUS 
IS THAT THE BENEFITS OF 
COMPETITION OUTWEIGH 
THE RISKS, AND THAT THE 
TRANSITION PERIOD FOR 
CONSUMERS AND ELECTRIC 
COMPANIES IS OF 
PARAMOUNT IMPORTANCE. 

- RUDDOCK 



Will individual electricity users and groups of 
users have different costs for electricity in the 
end? The answer is yes — but not because 
the system is stacked for or against a 
particular individual user or group of users. 
Differences will exist because choices by the 
users, individually or collectively, will 
determine final costs. Will residential or 
business consumers be left with arbitrary 
costs, inequitable costs, or subsidizing costs 
of others? The answer is no, if competitive 
markets work and market forces are allowed to 
unleash efficiencies for each and every 
consumer. 

While equitable rates for all customers in a 
restructured electricity market are important, 



no business, no industry, and no residential 
customer should lose sight of the fact that a 
restructured market, by its very nature, 
demands taking responsibility for making 
choices. It also removes the government as a 
buffer between the user and marketplace 
consequences of these choices. As Associ- 
ated Industries of Massachusetts was asked 
recently, is the business community prepared 
for an electricity marketplace where costs can 
go up as well as down? The same can be 
asked of all electricity consumers, including 
residential users. The growing consensus is 
that the benefits of competition outweigh the 
risks, and that the transition period for 
consumers and electric companies is of 
paramount importance. 

Robert Ruddock is an attorney and Senior Vice 
President for Energy and Environment 
Programs at Associated Industries of 
Massachusetts, a 3400-member state-wide 
organization of employers. 



PUBLIC BUILDINGS INITIATIVE: ENERGY ENGINEERING PROGRAM 




Massachusetts taxpayers will soon reap the benetits ol 
energy savings procured through DOER'S Energy 
Engineering Piogram (EEP) To date, EEP has helped 
eight Massachusetts municipalities develop energy and 
. ition projects in then facilities 

EEP helps cities, towns, counties and local housing authorities develop 
energy and water upgrades trom start to finish The program pairs private 
energy engineers with public building management otticials to identify 
specific improvements, solicit bids, and provide technical guidance during 
implementation The service is especially important in helping building 
owners correctly describe and advertise projects, evaluate bids and moni- 
tor the performance ol the improvements 

EEP also helps municipalities find much-needed financing. More than two 
hundred private firms have expressed interest in investing in municipal 
energy and water conservation projects in Massachusetts. EEP provides 
the expertise municipalities need to take advantage of this "third party" 



financing. Since an investor reaps returns through the savings generated 
by the project, both investor and municipality win. EEP also helps 
municipalities finance projects through utility rebate programs. 

EEP provides the critical support necessary for those municipalities 
which lack the financing or technical expertise to implement energy and 
water cost-saving projects on their own. With the assistance of EEP 
engineers and model procurement documents available from DOER, 
municipal staff do not need to "reinvent the wheel" to take advantage of 
existing market opportunities to cut energy and water costs. 

DOER invites the participation of municipalities that meet specific 
criteria. To qualify, a facility's energy and water consumption costs must 
be above average for its building type and exceed $250,000 per year. 
Buildings must require capital investments in excess of $200,000 and 
have a stable consumption record. 

For more information on EEP, contact Teresa Civic, Public Buildings 
Program Manager, at (617) 727-4732, ext. 137 



o 

> 



<>- 

< m 



EV DEMO: 



>/qge 



•o 

o 



2 



The project has revealed important information on EVs. First year 
performance results indicate that work is needed to improve the life, 
dependability, cold weather performance and maintenance of the 
batteries But the industry is still young and small — much rests on 
the technological refinements and price cuts that come with larger scale 
production. 

To date, the program's EVs have cost the drivers an average of 3 cents 
per mile to fuel, about the same as a conventional gasoline-powered 
compact car. The data shows that electric vehicles get a comparative 
100 miles-per-gallon, but current battery technology only provides 
storage capacity comparable to less than a one-gallon gas tank. 

The biggest and most well-known hurdle to tackle is battery life and 
dependability In this first year, the demonstration used two types of 
batteries — lead acid and nickel cadmium (NiCad) — and found mixed 
results The vehicles' range on full charge using lead acid batteries 




Program participant Amy Weinstock, husband Michael Coin and their Selectria 
Force electric car. "It's a great commuting vehicle," says Weinstock. 



spanned 26-42 miles, on average. Vehicles using NiCad batteries ran, 
on average, for 35-47 miles, somewhat less than the 30-60 miles 
projected. 

Another issue is the maintenance requirements of nickel cadmium 
batteries. Water levels in these batteries must be constantly monitored, 
but due to the location and complexity of these batteries, this procedure 
requires a service technician. This regular maintenance requirement 
may be troublesome for time-constrained commuters. 

This coming year, DOER will purchase additional EVs, and participants 
will be allowed to carpool from home directly to work using state-of- 
the-art, longer range batteries. The program will continue to explore 
why earlier batteries did not perform as expected and, with the help of 
vehicle manufacturer Solectria and program partner Boston Edison, will 
implement technical solutions. New vehicles purchased will be required 
to incorporate these solutions, and existing vehicles will be retrofitted. 
By acting on the lessons learned in this first year, DOER hopes that the 
Electric Vehicle Demonstration Project will help steer electric vehicles 
into near-term acceptance. 

The Massachusetts Electric Vehicle Demonstration Program is funded 
by the Federal Highway Administration through the Massachusetts 
Highway Department, the Division of Energy Resources, Boston Edison, 
Commonwealth Electric and New England Electric Service Company 
Additional members of the steering committee include: the Metropoli- 
tan Area Planning Council, the City of Boston Traffic and Parking 
Department, the Northeast States for Coordinated Air Use Management, 
the MA Department of Environmental Protection, the Department of 
Procurement and General Services and the MBTA. 

For more information on the EV Demonstration Program, contact 
DOER's Director of Programs, Jack Bevelequa, at (617) 727-4732, 
ext 126. 



SUMMER WORKSHOPS/ 
INTERNSHIPS FOR ENVIRONMENTAL 
EDUCATORS 

This summer, teachers of grades PreK-12 can update their 
environmental education methods and curricula in three week-long 
teacher workshops offered by The Solar Now Project at Endicott 
College in Beverly, MA. Solar Now is also offering summer 
internships at a variety of sites across the state to college students 
studying environmental education, engineering and management. 
The Solar Now Project recently won a $250,000 grant from the U.S. 
Department of Energy to fund these projects. 

The three teacher workshops will offer multi-level, interdisciplinary 
instruction on renewable energy, with an emphasis on solar energy. 
All workshops will include a site visit to the solar array adjacent to 
Beverly High School in Beverly, MA. The site is one of the largest 
operating photovoltaic arrays in the nation. At the site, student 
interns will demonstrate various solar applications, including 
photovoltaics for the generation of electricity and for solar water 
heating. Educators can earn professional development points for 
completing the workshops. 

This fall, Solar Now will host a two-day Photovoltaics Conference 
for teachers and students of all ages. The event will feature the 
latest information on technology, education and the economics of 
renewable energy from sources around the world. 

Solar Now was founded in 1994 by environmental educator Carmel 
Valianti-Smith to educate and promote renewable energy. The Solar 
Now Project is a collaborative effort of the Beverly Public Schools, 
Beverly Hospital, a student organization known as Help Save Our 
Environment and Endicott College. 

For more information, call The Solar Now Project at 
(508) 927-0585, ext. 2140 



DOER WELCOMES NEW ENERGY 
EDUCATION COORDINATOR 



STATE 



In May, Dick Leonard joined DOER as Energy Education 
Coordinator. Leonard will lead the agency's initiatives to 
increase and enhance energy education for students and 
professionals in energy-related fields. 



Leonard brings more than fifteen years of energy education experience 
to the position. Leonard was responsible for establishing an effective 
energy education program for Central Hudson Gas and Electric in 
Poughkeepsie, NY. During his tenure there, he was appointed as the 
business representative to the New York Education Commissioner's 
Advisory Council on Equity and Excellence in Mathematics and Science 
Education, and served as chairperson of the New York Power Pool's 
Education Committee. On the local level, he supported the formation of 
the Dutchess County Children's Museum and became its Board 
President . Since 1988, Leonard has run his own energy education 
consulting business out of Pittsfield, MA, supporting the energy 
education needs of utilities, colleges and state energy offices. Mr. 
Leonard began his career as a science teacher for grades 4-10. 

Over the next year, Leonard will help DOER identify energy education 
needs in schools and energy-related professions, and will work with 
public and private sector interests to meet those needs. Leonard will 
also oversee the creation of a computer-based energy education referral 
and information center, and a grant program to support innovative 
energy education projects for students. 



NEW COMMISSIONER: Fromp3ge1 

advance technologies for clean, efficient transportation and power 
generation modes. 

"We must do all we can to identify opportunities to reduce costs," said 
O'Connor. "We should be increasing the role of competition and 
opening doors for choice among energy users in all sectors." O'Connor 
cites the introduction of market competition into the electric utility 
industry as a key instrument to facilitate customer choice and reduce 
energy prices over time. 

"We also want to identify and foster the growth of promising technolo- 
gies to help ensure a clean future for Massachusetts," O'Connor said. 
"For example, our alternative fuel vehicle demonstrations provide 
firsthand knowledge of the performance of emerging vehicle designs. 
We will support new transportation and other energy industries in many 
ways — through funding, new vehicle safety and performance 
standards, streamlined regulations and by alerting potential customers 
to the benefits of new technologies." 

O'Connor points to a double agenda on this front. While at the DOER 
helm, he hopes to diversify the state's vehicle fuels and create jobs 
through the expansion of the energy industry. O'Connor added, "Some 



of the brightest job prospects for manufacturing and assembly are in 
compressed natural gas and electric-powered vehicles, solar technolo- 
gies, waste-to-energy plants and fuel cells." 

O'Connor believes that the state's high tech work force and intellectual 
capital make this growth not only possible, but imminent. He hopes to 
encourage venture capitalists to invest in clean technology production 
facilities in Massachusetts. Putting these facilities in close proximity to 
future markets is a strategy he believes will be successful if government 
and industry work together. 

O'Connor also looks forward to continuing DOER's programs in the 
commercialization of conservation services and renewable fuels. He 
sees these as excellent near-term strategies to help achieve the long- 
term goals of cheaper electric rates and fuel supply diversity and 
security. O'Connor wants to work closely with other industry members 
toward this end. 



SUMMER 1995 



JULY 

5-8 Into the' lury Harmonizing 

Energy Policy. Environment and Sustainable 
Energy Gro\: mgton, DC Sponsored 

by the International Association tor Energy 
Economics Contact Conterence Headquarters 
at (216) 464-5365 

10- 14 Regional Energy Planning Project 
Modeling Conterence. Newport. Rl Contact 
Stephen Leahy. New England Governor's 
Conterence. (617)423-6900 

18 New England Energy Task Force Meeting. 
Boston. MA At U S Department of Energy 
(DOE) Region I Ottice, One Congress Street, 
1 1th Floor, 1 30 p m Contact Duane Day, 
(617)565-9705 



AUGUST 

/ -I 1995 Summer Study on Energy Efficiency 
in Industry. Grand Island, NY Sponsored by 
The American Council lor an Energy Efficient 
Economy. Contact Katherine Gallagher, 
(510)549-991 I 

15 New England Energy Task Force Meeting. 
Boston, MA. At DOE, One Congress Street, 
1 1th Floor, 1:30 p.m. Contact Duane Day, 
(617)565-9705. 



SEPTEMBER 

19 New England Energy Task Force Meeting. 
Boston, MA At DOE, One Congress Street, 
11th I loot, l 30 p.m. Contact Duane Day, 
(617)565-9705. 

28-29 Reclaim '95, conference on landfill 
mining/reclamation, Albany, NY. Co- 
sponsored by Resource Recovery and the 
Solid Waste Association of North America. 
Contact Richard Will, (800) 627-8913. 



The Energy Report is published by 
The Massachusetts Division ot 
Energy Resources 



Suggestions, calendar submissions, questions and input are invited Send to Editor, Energy Report. 
The Massachusetts Division of Energy Resources, 100 Cambridge Street, Room 1500, Boston, MA, 02202. 
DOER staff members can be contacted at (61 7) 727-4732. 
Energy Report is printed on recycled paper using soy ink 



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DIVISION OF ENERGY RESOURCES 

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