VERMONT TWENTY YEAR ELECTRIC PLAN, pub 12/94 Pursuant to 30 V.S.A. Section 202(e) Adopted December 28, 1994 EXECUTIVE SUMMARY The Department of Public Service has adopted the third edition of the Vermont Twenty Year Electric Plan. This Plan is state government's public policy document for Vermont's electric utility industry. The Plan lays out long range goals, specific objectives and recommended actions for meeting Vermont's electricity needs. The Plan analyzes the current status of the state's electric utility industry and the primary factors that may influence it over the planning horizon, discussing background and definition of the major issues in detail. This summary provides a brief overview of the Plan's goals and objectives, its recommendations, and the major areas of investigation; current electric energy use, supply resources, transmission and distribution, demand side management, and some of the key issues that will affect our future. Goals and Objectives for Vermont's Electric Energy Plan The overriding goals of this Plan are to meet Vermont's electric energy needs in a manner that is efficient, adequate, reliable, secure, sustainable, affordable, safe, and environmentally sound, accomplished in a manner that is consistent with other state policies. Several objectives have been identified to help direct and measure Vermont's progress in implementing energy policy and striving to reach its goals. 1. Continue to Capture Improvements in Energy Efficiency: Vermont must maximize cost-effective improvements in energy efficiency in all sectors, end uses, and markets. 2. Improve Diversity and Balance in Fuels and Power Supply Resources: Vermont must avoid over dependence on a particular fuel or energy supply resource. In the near term, Vermont might increase the use of natural gas or explore new cleaner coal tech- nologies. In the medium term, Vermont must begin planning for new resources that will be needed when Vermont Yankee's operating license and power contracts with Hydro-Qu‚bec expire. In the long term, Vermont must seek to reduce the consumption of all fossil fuels and accelerate the transition to renewable energy resources. 3. Promote Environmental Quality: Environmental quality can best be promoted by recognizing and taking into account the impact that energy consumption has on the environment, by selecting supply side resources with minimum environmental impacts, and by recognizing that energy efficiency is the single most effective means of reducing environmental impacts. 4. Clarify the Value of Efficiency through Rate Design: Promote rate designs that accurately reflect the cost of providing service and that provide clear signals to customers about the value of energy efficiency. 5. Enhance and Coordinate the Planning Process for Vermont's Electric Energy and Increase Opportunities for Public Participation: Utilities should prepare their integrated resource plans (IRPs) using state-of-the-art models and methods to develop forecasts, supply plans, and assess potential DSM resources. Alternative scenarios should be explored to develop resource port- folios and arrive at a final integrated resource plan that meets the societal test. Utilities should seek public input concerning planning and make information available for public use. 6. Promote Public Health and Safety: Vermont can promote public health and safety by being aware of critical issues in utility operations that affect the public, and by being prepared for possible disruptions to energy supply. 7. Improve the Reliability and Quality of Electric Service: Each utility should follow a consistent, customer oriented standard for assessing outages. The Department should use this data to conduct a thorough and ongoing assessment of utility reliability. 8. Encouraging Economic Vitality: Economic vitality is based on achieving goals related to full employment, annual income, and building a sound infrastructure that includes investments in education, health care, and the environment. Planning for the state's electric energy needs supports this economic vision by continuing to focus on key issues, in particular fair rates for all customer classes, addressing opportunities for retail competition, further efforts to lower costs and improve service, and expansion of innovative regulatory tools. 9. Maximize Positive and Minimize Potential Negative Impacts of Deregulation and Competition: The Department should monitor the impacts of actual and potential deregulation and competition as they affect customers of Vermont's electric utilities and the operation of the electric utility industry in this state. Steps should be taken to promote consumer benefits and choice; to ensure continuing, reliable, high quality service; to protect the public interest; and to preserve a viable and fair marketplace for business. 10. Promote Implementation of Actions for Meeting the Goal and Objectives of this Plan: The Department should pursue regulation and legislation to promote implementation of the recommendations in this Plan; strengthen coordination with other state agencies, as well as regional and municipal organizations, on all matters related to energy; and provide opportunities for greater invol- vement of Vermont citizens in the energy planning process. Recommendations Listed below are some highlights from the Plan's recommended actions. They are listed mainly by topic rather than by priority. Additional recommendations are presented in Chapters 1 and 8 of the Plan. Continue and refine least cost planning following the guidelines of this Plan, Public Service Board Orders, and Vermont statutes. Improve the design of energy efficiency programs to make them more comprehensive, aggressive, standardized, cost effective, open to new technologies and methods, dynamic and flexible, and properly monitored and evaluated. Emphasize lost opportunity programs that take advantage of windows of opportunity to acquire energy efficiency cheaply and pursue strategies such as building and appliance standards that institutionalize energy efficiency. Ensure that utility energy efficiency programs present clear consistent messages, and that they are cost effective and efficient for all customer groups and markets. The focus for energy efficiency programs should be on market transformation, special designs for new hookups, standardized programs, and statewide coordination. Overcome barriers that inhibit participation of low income customers in energy efficiency programs. Improve current utility generation portfolios, particularly through new resource decisions, to achieve greater diversity as well as greater balance with need and among source types and commitment lengths. Seek cost-effective agreements to restructure deliveries of power from Hydro-Qu‚bec. Avoid any self-dealing in utility transactions with independent power producers. Assess the effects of potential early shutdown of Vermont Yankee. Call on Vermont Yankee to submit for review a contingency plan for the possible absence of federal spent fuel acceptance. Develop and use renewable generation, integrating it into traditional supply planning, particularly high efficiency wood systems and cold weather resistant wind systems. Promote flexibility and dispatchability in generation sources. Improve reporting of utility power transactions. Account for the unpriced environmental costs of energy production and use (including non-combustion impacts) in least cost planning for both existing and future sources. Continue Vermont's policy of setting rates that reflect long term costs. Make uncertainty analysis an integral part of utility least cost planning. Better reflect causal linkages in load forecasting. Improve public participation opportunities in utility least cost planning. Use standard geographic information system (GIS) formats for spatial data in utility permit applications and other appropriate activities. Adopt a prudent avoidance policy for transmission and distribution line electromagnetic field effects and other public health and safety issues. Adopt policies on stray voltage that meet the needs of utilities and dairy farmers. Emphasize greater use of existing power line corridors for transmitting power. Protect key scenic resources when constructing or moving power lines. Adopt practices that will provide cleaner, more reliable and more efficient transmission and distribution of electricity. Use the full range of seasonal, time-of-use, demand, and other rate structures to encourage efficient use of energy and reassess the cost effectiveness of existing rates. Make disciplined use of economic development rates. Encourage retail utilities and VELCO to seek redefined, more beneficial relationships with customers, reflecting increased customer choice. Seek fair and efficient solutions to the industry restructuring and retail competition issues facing Vermont utilities and consumers, solutions that the broad public interest and the goals of Vermont statute. Major Areas of Investigation in the Vermont Twenty Year Electric Plan The Vermont Twenty Year Electric Plan contains sections describing and analyzing the major components of the electric energy market, their current status, how they are expected to evolve over the planning horizon if no major changes are imposed, and how they may be affected by enhanced, cost-effective energy efficiency activities. A very abbreviated summary of several of the Plan's major components follows. Current Electric Energy Use Vermonters required 5,559 GigaWatthours (GWh) of electricity during 1992 including roughly 5,067 GWh in sales, with transmission losses of roughly 8.9% making up the remainder. (A GigaWatthour is 1,000,000 kiloWatthours.) Sales in Vermont account for roughly 4.8% of the New England region and less than 0.2% of sales nationally. Vermont's residential customers account for the largest share of sales, with more than 40% of the total. (See Figure 1.) The commercial class accounts for roughly 30% of sales, and the industrial class accounts for roughly 28% of sales. Sales growth, however, has been strongest in the commercial and industrial sectors. Between 1987 and 1992, sales to the commercial and industrial classes grew roughly 10.7 and 14.9% respectively, while sales to the residential class grew only 4.6%. Since 1989, a sluggish economy along with mild weather patterns and emerging DSM programs has held peak demand in check. The state's annual peak demand for the 1992 calendar year occurred between 12 and 1 P.M., Friday, January 17th. Peak demand reached 951 MW. The state's all time record peak demand of 968 MW occurring between 5 and 6 P.M. on December 27, 1989. The 1989 peak was driven by extreme cold weather that occurred at a time when the economy was relatively strong. The recent cold of January 1994 produced a peak demand that was only 942 MW, well below the record levels of 1989. (In 1993, electric sales to ultimate consumers in Vermont were essentially the same as 1992; with residential sales, including NYPA, declining, industrial sales increasing slightly, and commercial sales declining.) Vermont consumes less electricity overall than any state except Alaska. Even on a per customer basis, Vermonters consume less electricity on average than residents of most states. In 1992, Vermont residential customers ranked 12th lowest among the states consuming roughly 7,751 kWh per year, significantly below the 9,326 kWh that was the average for the nation as a whole. Among neighboring states, however, Vermonters typically consume more electricity. The average residential customer in New Hampshire purchases 6,979 kWh annually, in Massachusetts only 6,628 kWh and in New York 6,085. The pattern of consumption can be explained in part by the relative price of electricity in Vermont and the U.S. Vermont's rates, while low for the region, are high relative to the nation as a whole. The combination of high rates and low consumption patterns, however, results in average residential bills that approach the national average. RESIDENTIAL USE. Over half of residential electric energy is for just two end uses, electric water heaters and refrigeration, including freezers. (See Figure 2.) Space heating (primary use) is also significant and accounts for roughly 8% of energy demand, but this is still lower than in the rest of New England. Less than 10% of Vermont's year round residential customers use electricity as their primary source of heat. However, many electric space heating customers rely on other fuels to provide some heat. In contrast, the penetration of electric water heating is quite high. In Vermont between a third and one half of the residences have electric water heating. Electric water heating is by far the single most significant component of residential use, representing roughly a third of the residential sales. COMMERCIAL USE. The bulk of electricity consumed in this sector is for three purposes -- lighting, electric space heat (ESH), and refrigeration. Lighting alone accounts for over 41% of the electricity consumed by the commercial sector. ESH and refrigeration account for about 11% and 8% of commercial consumption, respectively. Other significant uses include air conditioning, water heating, automated office equipment. INDUSTRIAL USE. Manufacturing processes account for around three-quarters of total industrial electricity used. While it is difficult to precisely characterize the electricity uses of the wide variety of manufacturing processes, most of that electricity is used to run motors (approximately 66% of total energy demand by the industrial sector). Lighting accounts for most of the remainder, with cooling, space heating, and office automation accounting for the rest. Supply Resources Power costs account for more than half the expenses of Vermont utilities. The decisions utility managers and regulators have made and will make about Vermont's electricity sources profoundly affect future electric bills and rates, as well as other important characteristics of the power supply mix of Vermont, including reliability, stability, and environmental effects. All Vermonters, as electric utility ratepayers, are now experiencing the positive and negative effects of decisions made over the past 30 years and more, as utilities now face hydroelectric relicensing, nuclear waste disposal, and clean air laws. The impacts of today's decisions are likely to extend at least as far into the future. KEY ISSUES FOR CONSIDERATION IN SUPPLY PLANNING. The challenge of utility supply planning is to develop a diversified and balanced resource portfolio to meet the utility's forecast demand over the long term at lowest societal cost. The concept of societal cost takes into account not only financial costs, but the unpriced costs to society of the environmental effects of fuels and processes used to generate power, as required by Public Service Board (PSB) Orders and 30 V.S.A. 218c and 248(b). Vermont must continue to evaluate and adjust its mix of supply resources so that it approaches an optimum supply portfolio, including resources that are diversified and balanced with respect to the following: - size of the generating facility, entitlement, or contract; - fuel type and fuel price; - location of the source and transmission path to Vermont; - age of the generating facility and remaining life of the contract or entitlement; - operating cycle, i.e., an appropriate mix of baseload, intermediate, and peaking sources with adequate operating reserve capabilities; - contractual provisions and lengths of new contracts; and - other uncertainties such as exposure to environmental and safety risks, or increased regulatory requirements. Overall, Vermont is in a reasonable position regarding its committed supply sources. Current baseline forecasts do not show a need for capacity until 2001, and then in small annual increments until larger resources are needed after the scheduled license term of Vermont Yankee and the end of the current Hydro- Qu‚bec contracts. Cost-effective DSM programs can extend this date. Although Vermont's current resource mix appears to be adequate for the rest of the decade, it would be a mistake to do nothing. Opportunities continually present themselves to improve upon the current mix of supply resources through market purchases and sales. But the current buyer's market for energy and capacity should not translate into a wholesale shift from long term to shorter term commitments by utilities. Planning for long term acquisitions must continue even when new additions are years away. Moreover, the lead time for power plant construction is long, and a changing environment may necessitate action by utilities on a more rapid timetable. Transmission and Distribution In 1992, Vermont Electric Power Company (VELCO), the company that owns most of the bulk transmission system in Vermont, completed a study that analyzed the adequacy of that system. The study indicated that in its present configuration, Vermont's transmission system will adequately provide reliable service to Vermont's customers in the near future. Low load growth forecasts and the accompanying lack of expansion in generation resources have postponed the need for new transmission facilities in Vermont for the next five to six years. In addition, VELCO has recently completed several transmission studies for a number of geographic areas in Vermont. As a result, Vermont is well positioned to upgrade and expand its transmission system if the need arises. Continued involvement of VELCO with the subtransmission and distribution systems in Vermont will help provide reliable, least cost service. There is room for significant improvement in Vermont's distribution systems, particularly in the areas of reliability and efficiency. While providing reliable service can be difficult, given rural service territories with long distribution lines and exposure to severe weather, a number of measures are available that could markedly improve reliability. The most effective of these measures may be the adoption of formal vegetative management programs, the consistent fusing of distribution laterals, and tracking of outage data on a standardized basis. Significant efficiency gains are also possible on the existing distribution systems. The electric utility industry has identified numerous distribution efficiency measures that can be cost-effective for a given utility including the adoption of conservation voltage regulation (CVR), strategic placement of capacitors, and the installation of high efficiency transformers. Utilities must give distribution system improvement significant attention in their IRPs. Two issues that may affect the future development of transmission and distribution in Vermont are electromagnetic fields (EMF) and the arrival of competition in the electric utility industry. At this time, many questions remain regarding the nature and existence of EMF effects. With the ambiguities that exist at this time, a policy of prudent avoidance of risks may best strike a reasonable balance between avoiding potential harm from magnetic fields and the attendant costs and risks. The arrival of competition in the industry may significantly affect the operation and construction of transmission and distribution systems. Passage of the Energy Policy Act has greatly advanced the development of a competitive marketplace for wholesale electricity by creating a class of exempt wholesale generators (EWGs) and by granting FERC the authority to order non-discriminatory transmission access. Regional Transmission Groups (RTGs) may result in a transmission system that is more efficient, one that provides non-discriminatory access, and one that lowers the costs associated with the provision of transmission service. RTGs may provide the framework for the development of a truly competitive market for generation and transmission. Regulatory policy should seek to distill efficiency from competition, while filtering out unfairness and preserving our ability to plan for the future. Power quality has become an important issue for many customers. In order to effectively address power quality concerns, utilities should examine the appropriateness of existing power quality standards, closely monitor emerging power quality standards and technologies, and where appropriate, utilize these technologies to meet the power quality needs of their customers in the most cost-effective manner possible. Nonetheless, with the proliferation of microprocessor based devices, Vermont must meet this challenge if it is to prosper in the information based economy. Technological advances will offer utilities the means to improve the operation of transmission and distribution systems in the state. These advances will make it possible to significantly reduce line losses and in many cases, improve the quality of service. Demand Side Management (DSM) Resources Why DSM, and why through utility efforts? Demand side management is a cost-effective resource available to utilities. Utilities seek to meet the needs of their customers while keeping costs down and meeting other objectives such as environmental protection. Utilities also hold a franchise in a public trust and are in a position to make these long term investments in the homes and businesses of their territories. Cost-effective investment in Vermont's infrastructure, promoted and supported by utilities, will make Vermont itself more competitive. Investments in efficiency strengthen the relationship between a utility and its customers and appear to be a wise strategy for meeting competitive forces in the energy marketplace. DSM PROGRAM EXPERIENCE - GENERAL. Five of Vermont's largest utilities have taken a variety of approaches to meeting the principles outlined in the Public Service Board Order for Docket 5270 and the prior edition of this Plan. Smaller utilities have begun implementing programs, too, some of them of high quality. Utilities' DSM programs fall naturally into two categories. - Lost opportunity programs encourage customers to make the most energy efficient choices possible when they buy or renovate a home, commercial or industrial building, or purchase new appliances or machinery. - Retrofit programs induce customers to modify their existing homes and businesses to reduce their electricity use. In addition, utilities commonly divide both types of programs into customer classes: residential, commercial and, in some cases, industrial. Although much program refinement is needed and a number of utilities have lagged behind, DSM is gradually becoming a serious option that utilities consider in their plans for meeting customer energy needs. As the design and implementation of programs proceed, awareness of the potential of DSM as a resource for meeting customer energy needs must become more sophisticated, and the ability to replace traditional supply resources with DSM resources must improve. MARKET TRANSFORMATION STRATEGIES. Each utility's lost opportunity and retrofit programs have affected, to one degree or another, retail and wholesale markets for energy using products. By creating a demand for energy efficient products, programs have influenced many parties, including suppliers, installers, designers, and builders. The increasing availability, increasing sophistication, and decreasing price of energy efficient products have also influenced the purchases of people not directly reached by the utility programs. This kind of market transformation should become a major focus of utility DSM implementation and could eventually make direct utility investments in promoting energy efficiency less necessary. Efficiency programs, now recognized to have genuine benefits both for utilities and for society as a whole, could actually have greater benefits if they were conducted in a way that was intended to optimize their societal benefits, while still meeting the goals of the utility DSM effort. While it is reasonable and appropriate to require regulated monopolies to undertake cost effective investments in energy efficiency, clearly, other parties have an interest in and a responsibility to help overcome the obstacles to appropriate investment in energy efficiency. Both utilities and the rest of society can benefit from developing an approach to DSM implementation that seeks to maximize its effectiveness and lower its cost to utility ratepayers. Acknowledgement that utilities do not have the sole duty to enhance societal benefit does not release them from their responsibilities under the requirements of least cost integrated planning (LCIP). As utilities proceed aggressively and creatively with their responsibilities, they should be able to count upon state government and others to play a role in efforts to institutionalize efficiency and improve environmental quality and economic well being in Vermont, and to create a situation in which all forms of energy are evaluated and priced according to their real costs and benefits. It is now appropriate to explore new strategies that promote innovative program design, cooperative approaches at a statewide level, and the conscious adoption of market transformation strategies. Key policies that should be pursued include giving priority to lost opportunity strategies in all programs, maximizing statewide coordination of programs, keeping programs flexible and innovative, making specific improvements to retrofit programs to make them more efficient, aggressive and creative, focusing full DSM services on customers with high bill complaints or difficulty paying bills, and finally, pacing and targeting retrofit programs for the most cost effective markets and localities. Changes in the Structure of the Electric Utility Industry In the next 20 years, change will be the watchword in the electric industry, not only in Vermont, but also across the nation. Potential competition at the wholesale, transmission, and perhaps, retail levels suggests dramatic changes in the industry. Consumer pressure for lower rates and improved quality of service will challenge utilities to improve on their traditional methods of operation. In this new competitive environment, utilities that fail to meet this challenge will feel mounting pressure for reform, perhaps including take over attempts or other kinds of reorganization. Proposals for open access and retail competition are generating great interest and controversy. While it is fairly clear that wholesale competition in the production of electricity can make a contribution to efficiency and cost containment, it is less clear what retail competition would mean, how it would benefit society, and who would reap those benefits. At a minimum, any restructuring of the industry should promote the state's existing energy policy goals and offer sufficient genuine added benefits to justify the transition costs. Furthermore, whatever restructuring proposals arise, they should address the following concerns: - Fair and equitable access for all classes of customers; - Cost shifts between customers only to reflect fundamental differences in the costs they cause; - Cost of stranded investments borne by the beneficiaries of open access, not captive customers; - Continuing to ensure recognition of environmental concerns and costs in resource decisions; - Continuing to ensure acquisition of cost effective energy efficiency resources; and - Continuing economic and reliable service. The Department and Public Service Board should engage with Vermont's utilities, customers, environmental groups, and other interested parties to fashion solutions to these issues, being guided by the criteria listed above. Utilities should strive to understand how their customers use electricity and use this information to develop an integrated resource plan (IRP) that helps their customers use electricity in the most efficient ways possible. Any approval of retail competition should benefit society as a whole. Base Case Load Forecast The Plan includes a base case load forecast that forecasts Vermont's energy demand over a 20 year period and recognizes anticipated changes in key economic and demographic drivers such as prices of competing fuels, income, and population. It also incorporates market driven changes such as the price of electricity and federal laws such as appliance efficiency standards. Utility DSM program activities for the base case only include the savings attributable to program activities through the end of 1993, as reported in utility filings. Vermont's base case demand for electricity is expected to increase over the remaining years in this century and the decade to follow. Increases in population, income levels, employment, and industrial output are the major influences, but changes in the way electricity is used also affect demand growth. The patterns of future demand in these projections stand in sharp contrast to the growth experienced in the past. Key factors affecting the changes include appliance efficiency standards, fundamental changes in demographic patterns driving growth in the housing stock, and changes in relative electricity prices expected in the state. Under base case forecast conditions, Vermont's annual use of electric energy is expected to increase by 13.4% between the forecast's 1991 base year and 2000, an average growth rate of 1.4% per year. The strongest growth is expected in the commercial and industrial sectors, both projected to increase at 2% per year. Sales to the residential sector are expected to grow at only 0.6% annually, due primarily to higher appliance efficiency standards and declining rates of household formation. The DSM programs implemented by Vermont's utilities have suppressed demand in all sectors, although the impact has, to date, only had a small effect on overall sales. Winter peak demand is expected to increase roughly in proportion to growth in energy requirements. By the year 2000, Vermont's peak demand is expected to reach 1,077 MW, 15.3% over the 934 MW peak of 1991. This represents an average growth rate of 1.6% per year. Summer peak demand is expected to grow slightly faster than annual energy requirements. By 2000, it is expected to be 20% higher than in 1991, an average growth rate of 2% per year, due mainly to increases in commercial air conditioning. RESIDENTIAL FORECAST. The categories of residential use projected to increase most significantly are air conditioning, miscellaneous (including washing machines, dish washers, computers and other electronics, and other end uses that do not fall into categories identified within the Department's forecasting model), and drying. Only space heating shows a decline (roughly 10% by 2010 relative to 1991). Use for electric water heating remains relatively flat because of efficiency standards and a lesser market share in new homes. Refrigeration, lighting, and cooking show moderate growth. Increases in the efficiency of appliances are expected to more than offset increases in the percentage of customers owning key appliances, resulting in a gradual decline in forecasted usage per residential customer. New refrigerators, for example, typically consume just over half the electricity of the average refrigerator found in the typical American household. A steep decline in use per residential customer between 1990 and 1993 can be attributed, at least in part, to utility DSM programs initiated during this period and captured in the forecasting model. Other factors contributing to this decline are increases in the real price of electricity and the appliance efficiency standards that have taken effect during these years. Moderate winters, at least during 1990 and 1991, were another factor. COMMERCIAL AND INDUSTRIAL FORECAST. The commercial sector is forecasted to show fairly strong growth in each of its end use categories except electric space heating, which is projected to decline 16.4% between 1991 and 2010. The strongest increase in absolute demand comes from the electrical equipment industry which is projected to increase its usage by roughly 110 GWh between 1991 and 2000 or 21%. By 2010, the increase is projected to be over 260 GWh or almost 50% relative to 1991. However, the importance in Vermont of a single customer, IBM, subjects such a forecast to a great deal of uncertainty. (IBM alone accounts for over half of the electricity demand in this industry.) Strong growth in demand is also projected for plastics and rubber products, lumber and wood products, farming, food processing, and paper products. The growth in farm demand for electricity can be attributed to modest growth in the sector along with increasing automation. Base Case Supply Plan Developing the supply resource portion of a least cost integrated plan is an iterative process. The first step is to produce a least cost supply-only plan. This plan meets all future capacity and energy needs solely through acquiring new supply sources. Once this initial supply plan is developed, it is used to determine the statewide avoided costs. DSM planners use these avoided costs to produce a demand side resource plan that is less costly than the supply resources it is likely to avoid. The load forecast is then adjusted using the DSM plan, and a new least cost supply plan is produced. The process of developing the new supply plan also serves as a final check on the cost-effectiveness of the proposed DSM plan. This iterative process produces an integrated mix of supply and demand side resources that meet the state's electric energy needs at least cost. If DSM is able to avoid load for less cost than Vermont's avoided costs, acquiring demand side resources is preferable to building new supply resources since it will reduce the state's total electric bill. In developing the base case supply plan, three generic plants were used to represent future supply resources. These were a coal gasification combined cycle plant for baseload power, a gas and oil fired combined cycle plant for intermediate power, and an oil fired combustion turbine for peaking power. Given those limits, the base case least cost supply plan contained mostly intermediate and peaking plants through 2012, when Vermont Yankee is expected to retire and the first portion of the recent Hydro- Quebec contract expires. After these sources terminate, significant amounts of baseload capacity are needed. By 2014 the least cost supply only mix calls for 300 MW of baseload capacity, 350 MW of intermediate capacity, and 150 MW of peaking capacity to be added to the state's present resources. Conservation Case The conservation case is the product of efficiency measures in Vermont's commercial, residential, and industrial customer classes. It also reflects improvements to the transmission and distribution system, federal appliance standards not already in effect, and DPS projections of utility DSM program activities for calendar year 1994. Using the avoided costs estimated in the base case supply plan, cost-effective DSM programs were identified that lowered Vermont's electrical capacity and energy needs considerably from the base case. This conservation case load forecast was then used to develop a new supply plan that formed the supply element of a statewide post-DSM plan. RESIDENTIAL SECTOR. Almost all of Vermont's 210,000 primary residences present opportunities for acquiring cost-effective DSM resources. The conservation case relied on three conceptual residential programs to acquire these resources: new construction, weatherization and fuel switching for electric space heat and hot water, and direct installation of other measures. Other program approaches that will likely be factors in acquiring DSM resources, but are not included explicitly in this conservation case include appliance and lighting measures, such as retail lighting promotions, appliance recycling, and energy efficient product labeling. The large number of residential customers, combined with generally predictable types of electric load, make this sector well suited for programs that deliver DSM in standardized packages that can be deployed cost effectively at a high volume. New construction program volume, as a lost opportunity program, would depend on the housing and construction market in any given year. COMMERCIAL AND INDUSTRIAL (C&I) SECTORS. The conservation case for the C&I sectors assumes that comprehensive DSM programs would impact nearly all electrical end uses. The conservation case relies on currently available technologies along with established program design and delivery mechanisms to secure cost-effective DSM resources. DAIRY FARM RESOURCES. The estimate of the DSM resource available from Vermont dairy farms assumes the efficiency programs (retrofit and lost opportunity) presently being implemented by CVPS, GMP, CUC, WEC, and certain municipal systems will be continued for another three to five years, as planned, and that utilities not presently implementing effective programs will do so in a timely fashion. TRANSMISSION AND DISTRIBUTION (T&D) SYSTEM EFFICIENCY MEASURES. Transmission and distribution circuit efficiency measures present some of the most cost-effective opportunities for reducing the state's energy and capacity needs. For the conservation case, potential savings from T&D efficiency included conservation voltage regulation, amorphous core distribution transformers, and other distribution measures. Effects of the Conservation Case PEAK AND SALES. The conservation case demonstrates that almost all Vermont's growth in peak demand and the vast majority of its growth in energy demand over the coming 20 years can be met in a cost-effective manner through energy efficiency depending on the pace of implementation. Figures 4 and 5 show projected Vermont loads between 1976 and 2020 under this case. In the 20 years between 1993 and 2012, peak demand under the conservation case remains essentially unchanged. The combination of aggressive DSM program initiatives, improvements in T&D facilities, and modest growth in the base case (due to various influences including existing federal appliance efficiency standards and declining growth in household formation and the employment base) result in the potential for a declining peak over the next 7 years reaching a low of 898 MW in 2001. By 2002, the peak demand under this case begins rising gradually, reaching a projected high of almost 1003 MW in 2015. Projected rate increases due to higher power costs, along with continued effects of DSM programs, then stabilize growth under this case between 2015 and 2020. By 2020, peak demand barely exceeds the historical peak. An initial period of declining sales is followed by a period of gradual increases. Sales projected for 1994 are surpassed in 2006. Modest growth then follows until 2015 when the influence of projected increases in retail rates stabilize demand. Total electric energy requirements decline relative to energy sales as the effects of various transmission and distribution efficiency improvements lower the overall requirements of the Vermont system. By 2010, the improvements to T&D efficiency lower the system energy requirements by an additional roughly 3.5% of total system requirements at that time. SUPPLY NEEDS. The most striking feature of the conservation case is the dramatically reduced need for new generation facilities. In the base case, Vermont required 1050 MW of new capacity by the year 2020, in the conservation case this is reduced to 800 MW. In addition the first new supply acquisition is delayed from 2001 to 2008. While the pattern of acquisitions may be similar in both cases, the conservation case generation expansion clearly demonstrates that aggressive, cost-effective DSM can reduce the total need for new supply resources and defer the need to build or buy new plants for a considerable time. EMISSIONS. Estimates of changes in the emissions from electric generation sources were developed for the base case and the conservation case. Air emissions under the conservation case were generally well below base case projections. Reductions in emissions due to the conservation case (relative to base case emissions projections) had the greatest impacts during the initial 20 years as reduced consumption levels displaced older more polluting generation sources. SO2 and NOx emissions reductions improved by roughly a factor of three between 1994 and 2010 relative to the base case. Greenhouse gas emissions, particularly CO2 decline significantly from the base case, fall by over 800,000 tons between 1994 and 2010, dramatically below the base case drop in CO2 emissions of only 72,000 tons for the same period. Vermont's Electric Energy Planning Process The preparation of this Plan began with public hearings held in Montpelier, Springfield, and Middlebury to inform the public about the state's energy policy and electrical energy planning as well as to answer questions and gather input. The state's electric utilities were also invited to offer input on their issues and concerns. Hear ings were held on the Final Draft of this Plan in several locations around the state in 1994. In addition to input from the public and interested parties, Vermont's energy planning is based on extensive research and modeling. This analysis of the state's current situation and projections about alternative situations that could occur during the 20 year planning horizon are described in detail in Chapters 3 through 6 of the Plan. The new version of the Vermont Twenty Year Electric Plan was adopted December 28, 1994. The Department welcomes written comments about the Plan and related issues at any time. DPS can receive comment via its electronic bulletin board or Internet e- mail, as well as through the US postal service. (An instruction sheet providing details on ways to offer on-line comments may be obtained by calling the Department.)