Enclosed are answers to questions submitted for the record to Manager-Electric Supply, of Pacific Gas and Electric Company in U.S. Senate Committee on Energy Regulation and Conservation QUESTIONS FOR MR. GREGORY RUEGER (PG&E) Re: Federal role 1) On page 5 of your testimony, you suggest that the best role for the Federal government is in information, research and where appropriate, standards, while you suggest utilities are better suited to provide financial assistance and to commercialize new products. a) Other witnesses today, and many existing Federal programs, focus on expanding the Federal role in commercialization and providing financial assistance. How would you suggest --specifically -- that the Federal government meet these objectives by supporting utility efforts? Answer: In addition to the Federal role of information, research, and standards cited in my testimony, there are several ways in which the federal government can work together with utilities to speed commercialization of energy efficient products. Federal facilities, which have a substantial potential for improving efficiency, could be valuable in demonstrating commercially viable, state-of-the-art technologies. In addition, federal purchasing power could play an important role in lowering the costs and speeding the widespread availability of advanced technologies for refrigeration, lighting, and other uses. PG&E would support the various proposals for encouraging the GSA to highlight purchases of high-efficiency products through approved federal product lists. The federal government also could help support various utility programs that encourage the purchase of advanced technologies. For example, PG&E is working with a group of utilities to promote the early production and sale of highly efficient refrigerators--those that exceed even the 1993 standards by 25 percent or more. The effect of these efforts on the marketplace will be enhanced if several utilities participate and if federal purchasing power could be added. A federal role would be useful in coordinating these efforts. b) Are there existing or proposed Federal programs to which you believe the Federal government is ill-suited? Answer: Generally, PG&E does not have a quarrel with the appropriateness 2a) Section 216 of the National Energy Conservation Policy Act currently prohibits utilities from the supply or installation of conservation measures for its residential customers. Is PG&E one of the utilities "grandfathered" out of this prohibition? Answer: No. b) Do you believe that this prohibition hinders utility conservation efforts, and should the Committee consider recommending its repeal? Answer: In certain circumstance, the prohibition may hinder utility conservation efforts and its repeal may be appropriate. PG&E would not oppose repeal, but the company does not consider it necessary. PG&E uses contractors for the installation of utility conservation devices and has no plans to supply or install any of these measures, itself. The use of outside contractors has not hindered the company's utility conservation efforts. However, PG&E's circumstances may be different from other utilities in that the company has a long history of energy conservation and has developed a stable, experienced independent contracting force. 3) You state that most renewable technologies are 20 percent more expensive on a life cycle basis than similar fossil sources. Does that figure include the cost of fossil fuel extraction and environmental externalities? How would these factors be likely to change the cost ratio between renewables and conventional fossil fuels? Answer: First, let me explain the 20 percent cost differential. This Now, let me answer your specific question. The 20 percent cost Including environmental externalities in cost comparisons would reduce the 20 percent cost difference. However, there is substantial uncertainty regarding the magnitude of this reduction because it is hard to determine dollar values for environmental externalities. States that have tried do so have come up with widely divergent results. For example. New York has determined a "social cost of $1/ton of carbon dioxide emissions, compared to $22/ton in Massachusetts. Social costs adopted by different jurisdictions for SOX, NOx, and particulate emissions span a similarly broad range. The low-end of the range has little impact on the 20 percent cost difference, whereas the high-end of the range for air emission values entirely eliminates the cost difference between renewables in good solar and wind areas as found in California and conventional fossil plants. Faced with today's uncertainty in evaluating residual emissions, PG&E has proposed to the California Public Utilities Commission a temporary alternative to quantifying the environmental cost of fossil fuel. Specifically, we propose to hold auctions for new supply-side resources where up to 50 percent of the new resource needed would come from renewables if their costs are less than 20 percent higher than the cost of the lowest winning fossil bid. We feel paying such a premtum on behalf of our resource acquisitions is justified by the environmental benefit and by creating a "market pull" for renewables which will help bring their costs down further. 4) Could you comment on "spot-pricing" or the practice of charging time of day rates for electricity usage. Is this one of PG&E's demand-side management techniques and if not what are the barriers to adoption? Answer: PG&E has had a substantial and innovative program of time-of-use rates for many years. And these programs are attractive and acceptable to a great number of our customers, particularly the larger ones. Historically, time-of-use rates have been carefully analyzed for their effects on customer demand. These effects have been incorporated into PG&E's load forecasts for electricity planning. Expanded use of TOU rates is not currently part of PG&E's demand-side management planning. The plans to achieve 2500 megawatts of new demand-side management by the year 2000 does not include any credit for TOU rate programs. 5) You state in your testimony that Federal and state governments have enormous capabilities for information development and transfer. What can you tell Mr. Watson here that would help improve your company's access to info and technology? Answer: The federal government can play a significant role in QUESTIONS FOR GREG RUEGER (Wirth) 1. Mr. Rueger, thank you for your excellent tastimony. On paga 4 of your written testimony, you mentioned that the retail availability of many energy efficient technologies is poor. As one who looked for compact fluorescent for six months, I understand what you are saying. Now those products are in hardware stores and manufacturers are hard-pressed to keep pace with demand. Do you have any recommendations for the Committee about how to remedy this problem? Can the Department of Energy do more in this area in terms of providing information or a hotline for consumers? And wouldn't it make sense for the General Services Administration to make that information available to federal energy managers in the listing of the federal product schedule? Answer: The introduction of new products is a slow process in any market, particularly where the alternative product is already well-supplied and considered essential. Customers are reluctant to try new variations on currently effective technologies, often because the initial price is greater than the alternative. Examples are energy efficient lighting and refrigerators. Conversely, the risk for manufacturer development and production is high in certain consumer product sectors. One approach tried in California was to set appliance and building efficiency standards, which in turn accelerated the production of new energy efficient products. And, as mentioned before, the federal government can require well-designed product labels which will give customers credible information to base rational, life-cycle purchase decisions about energy equipment. Federal purchases also make attractive markets and should be encouraged. The General Services Administration can be helpful and the DOE may be able to provide a forum for utility and other interested parties to coordinate methods of promoting rapid penetration of new products with manufacturers and retailers. The GSA could pull together lists of where to find particular energy efficiency products at a regional and national level and make them available. 2. Mr. Rueger, you mention in your testimony your support for renewable energy development. Looking 10 years into the future, from a utility perspective, what is the most promising renewable energy technology under development? Answer: From a utility perspective, there are many promising renewable technologies. The most economic "new" (excluding hydro) renewable technology for California and many regions of the United States in the 1990s is the wind turbine. The key reason for the attractive economics is the vast improvement in the technology since the 1980s. Third and fourth generation machines, such as that now being developed by PG&E and U.S. Windpower, should be available in the mid-1990s. Wind farms using these technologies in good wind areas are expected to produce power at costs fully competitive to new fossil plants. However, wind generation |