Presentation to the Staff Subcommittee on Gas 2010 NARUC Winter Committee Meetings Washington, D.C. February 14, 2010

Transcription

1 Presentation to the Staff Subcommittee on Gas 2010 NARUC Winter Committee Meetings Washington, D.C. February 14, 2010

2 CenterPoint Energy, Inc. promotes the direct use of natural gas through energy efficiency programs sponsored by both its electric and natural gas distribution utilities. 2

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4 CenterPoint Energy, Inc., (CNP) headquartered in Houston, Texas, is a domestic energy delivery company that includes electric transmission i & distribution, ib i natural gas distribution, competitive natural gas sales and services, interstate natural gas pipelines and field services operations. The company serves more than 5 million metered electric and natural gas customers primarily in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma, and Texas. Pipeline and field services play a key role in moving onshore natural gas to midwestern and eastern U.S. markets. Competitive natural gas sales and services serves nearly 9,700 customers in the central and eastern U.S. Assets total approximately $19.6 billion. With about 8,800 employees, CenterPoint Energy and its predecessor companies (Houston Lighting & Power, Arkla, Entex, Minnegasco) have been in business for more than 130 years. For more information, i visit i the Web site at 4

5 Five Segments Electric Transmission & Distribution Interstate Pipelines Field Services Natural Gas Distribution Competitive Natural Gas Sales & Services 5

6 Serves more than 2 million metered customers in a 5,000 square-mile area in and around Houston. Electric Transmission and Distribution 47,000 miles of overhead and underground distribution lines. 3,700 miles overhead and 26 miles underground d transmission i lines. 6

7 Serves more than 3.2 million customers in six states. Owns and operates approximately 105,000 miles of main and service lines. Natural Gas Distribution 7

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9 Electricity i generation and capacity issues are a real concern both nationally and in Texas. Natural economic and population growth and new products and services drive increases in consumption. Natural Gas and Renewables Account for the Majority of Capacity additions from 2008 to Capacity Other Renewables, 40, 4% Hydropower *, 99, 10% Nuclear, 101, 10% Other, 119, 12% Coal, 312, 31% 1,008 gigawatts Natural Gas, 338, 33% Capacity Additions 2008 to 2035 Other Renewables, 92, 37% Hydropower *, 1, 0% *Includes pumped storage Nuclear, 8, 3% Other, 2, 1% 250 gigawatts Coal, 31, 13% Natural Gas, 116, 46% Source: EIA Annual Energy Outlook

10 One solution to demand and capacity issues: Build more power plants. This solution creates new issues: Upward pressure on electricity rates. Increased environmental impacts (air and water). 10

11 A Better Solution: Direct use of natural gas (site) maximizes efficiency and environmental gains. Natural gas emits about 45% less CO2 per MMBtu than coal and 30% less than fuel oil. Dual fuel homes have about half the carbon footprint of all electric homes. 9% of Energy Is Lost Water Heating Electric Natural Gas Site Efficiency.93 EF.62 EF Source Efficiency.25 EF.56 EF 11

12 Natural gas is not part of the problem... it is part of the solution Natural gas is... Clean Economical Efficient 12

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14 Direct use of natural gas is more efficient when the total energy cycle (source energy) is considered. Policy decisions typically introduce programs to the market that use site efficiencies as the standard d for energy codes and appliance ratings. Natural gas equipment is disadvantaged and subject to market share erosion in favor of electric equipment, which is less efficient and has a higher operating cost. The result is wasted energy, greater cost to the consumer, and far more harmful emissions released into the atmosphere. Source: EPA Greenhouse Gas Equivalencies Calculator UPDATED February 17,

15 Policy decisions that encourage the direct use of natural gas offer significant savings. Example: Assume a 500 lot residential subdivision with natural gas for water heating (versus electricity): Estimated cost savings of $129, annually for residents Enough estimated electricity energy savings to serve the electrical needs of 68 homes using 1,500 kwh per month Reduced d emissions i of approximately 1,668,24 lbs./yr*. Equal to planting 161 acres of trees Equal to removing 145 passenger cars from the road *Source: EPA Greenhouse Gas Equivalencies Calculator 15

16 Direct Natural Gas Use Reduces Greenhouse Gas Emissions 7 6 OF CO 2 /YEAR TONS Electric Water Heater - Coal-Based Generation Electric Water Heater - Gas Boiler-Based Generation Electric Water Heater - Gas Combined Cycle-Based Generation Natural Gas Water Heater 16

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19 TYPICAL SITE-USE AND FULL-FUEL CYCLE ENERGY REQUIREMENTS FOR A NEW HOME (MMBtu per year) NATURAL GAS ELECTRICITY OIL PROPANE Space Heating Water Heating Cooking Clothes Drying Total Site Use Energy Losses Full-Fuel-Cycle Use It was assumed that electric appliances for these applications were used in the oil homes. 2 Includes energy used or lost in extraction, processing, conversion, transportation, and distribution of energy. 3 Sum of Site Use and Energy Losses. Source: American Gas Association s Energy Analysis , October 20, 2009 A Comparison of Energy Use, Operating Costs, and Carbon Dioxide Emissions on Home Appliances 19

20 EPA Water Heater CO2 Analysis Example: Electric and Gas Water Heaters Site vs. Source Energy Comparison 45,000 6,000 Site Energy Comparison of site energy, source energy, and CO 2 emissions for comparable electric and gas water heaters operating at minimum federal efficiency levels. kbtu per year 40,000 35,000 30,000 25,000 20,000 15,000 10, ,000 4,936 lbs CO 2 12,372 kbtu 41,323 kbtu Source Energy CO2 Emissions (assuming national average electricity generation mix) 2,278 lbs CO 2 19,570 20,490 kbtu kbtu 5,000 4,000 3,000 2,000 1,000 per year Pounds of CO Electric Gas Type of Water Heater (both producing output of 31,025 Btu/day) Source: EPA Presentation to National Academy of Sciences February

21 DOE site-specific energy ratings are misleading. While DOE rates an electric appliance with a more efficient energy rating than a similar gas appliance, in reality that electric appliance consumes more source energy, pollutes more, and costs the consumer more to operate. DOE NAECA Efficiency Rating 1 :.90 EF.59 EF.82 EF Source Energy Consumption (MMBtu/yr): Energy Cost 2 /yr: $636 $282 $203 CO2 Emissions (tons/unit/yr) 3 : Shipments (Sales) 4 : 4,792,000 Equipment Cost: $340 $415 $ Energy factors based on DOE EF ratings 2. Energy Cost is based on 2009 EIA Representative Average Unit Cost of Energy.114 cents/kwh; gas rate is $11.44 MMBtu 3. Emission estimates are based on DOE s electric power emission estimates for all generation energy sources from Electric Power Annual 2005 data 4. Gas Appliance Manufacturers Association EF=Energy Factor 21

22 2009 Total Gas Tank Sales 360, , ,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2009 Total Electric Tank Sales 330, ,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2009 GAMA Tankless Sales 37,000 27,000 17,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2009 GAMA Tankless + Navien Est. Sales 10,000 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 22

23 Instantaneous or tankless water heaters have higher EF ratings than storage gas water heaters. There are no standby energy losses associated with hot water storage. Tankless gas water heater in commercially available models suitable for residential applications showed ranges in EF ratings from 0.63 to 0.82 compared to 0.59 to 0.63 for comparable storage gas water heaters. Source: AGA Fact Sheet: Instantaneous Gas Water Heaters 23

24 Texas Emissions Profile for Natural Gas vs. Electric Water Heating 24

25 RESOLVED, That the Board of Directors of the National Association of Regulatory Utility Commissioners, convened at its 2009 Summer Committee Meetings in Seattle, Washington, urges DOE to consider the Recommendations of the National Research Council s Committee on Point-of -Use and Full-Fuel- Cycle Measurement Approaches to Energy Efficiency Standards. Adopted by the NARUC Board of Directors, July 22,

26 The committee s primary general recommendation is that DOE/EERE consider moving over time to use of a full-fuel-cycle measure of energy consumption for assessment of national and environmental impacts, especially levels of greenhouse gas emissions, and to providing more comprehensive information to the public through labels and other means, such as an enhanced website. For appliances for which there is a choice of fuel, such as storage water heaters and heating equipment, efficiency ratings should be calculated using the extended site measure of energy consumption... Recommendation of the National Academies 26

27 National Academies Recommend DOE Include Carbon Footprint on Energy Guide Label Department of Energy (DOE)/Energy Efficiency and Renewable Energy (EERE) should consider moving over time to use of the full-fuel-cycle measure of energy consumption for assessment of national and environmental impacts, especially levels of greenhouse gas emissions, and to providing more comprehensive information to the public through labels and other means including an enhanced web site. Recommendation of the National Academies 27

28 Vent for a Gas Water Vent for an Electric Water Heater Heater 28

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30 Public Utility Commission of Texas (PUCT) Substantive Rule implements the energy efficiency goals of Senate Bill 7 (1999). The Railroad Commission of Texas (RCT) has initiated a rulemaking to consider energy efficiency i rules. 30

31 (2) Standard offer programs: (A) shall require energy efficiency service providers to identify peak demand and energy savings for each project in the proposals they submit to the utility; (B) shall be neutral with respect to specific technologies, equipment, or fuels. Energy efficiency projects may lead to switching from electricity to another energy source, provided that the energy efficiency project results in overall lower energy costs, lower energy consumption, and the installation of high efficiency equipment. Utilities may not pay incentives for a customer to switch from gas appliances to electric appliances except in connection with the installation of high efficiency combined heating and air conditioning systems; (C) shall require that all projects result in a reduction in purchased energy consumption, or peak demand, or a reduction in energy costs for the end-use customer; (D) shall encourage comprehensive projects incorporating more than one energy efficiency measure; (E) shall be limited to projects that result in consistent and predictable energy or peak demand savings over an appropriate period of time based on the life of the measure; and (F) may permit a utility to use poor performance, including customer complaints, as a criterion to limit or disqualify an energy efficiency service provider or its affiliate from participating in a program. 31

32 CNP initiated the following fuel substitution programs to help achieve its goal of reducing peak demand Multifamily Water & Space Heating Market Transformation Program Energy Star Program 32

33 The Program promotes the replacement of electric water and space heating with natural gas water and space heating in apartments and condos. This market in Houston was all electric before CNP initiated the Program. 33

34 The Program provides incentives to multi-family project developers who agree to facilitate the installation of non-electric water heating in both market rate and affordable rate multi-family il projects within CNP s electric distribution service territory. The principal target is new construction. 34

35 Since CNP started the Program in 2004, over 7,200 units have been converted to natural gas. Customers see lower energy bills. Developers have a more marketable product. The State of Texas and the City of Houston achieve their energy efficiency and clean air goals. 35

36 The goal of the ENERGY STAR program is to construct and deliver energy-efficient homes to local homebuyers. According to EPA, an ENERGY STAR qualified home uses less energy for heating, cooling, and water heating than a home built to the Texas residential building code. 36

37 These homes earn the ENERGY STAR label after an independent Home Energy Rating Service (HERS) provider completes a verification process of the home's energy use. The Rater conducts a plan analysis to determine that most costeffective energy efficiency measures for the home then during the homebuilding process, the HERS Rater inspects the home and performs diagnostic tests to analyze the home s energy performance. The results of the diagnostic tests determine the home s HERS Index. 37

38 The use of natural gas furnaces and water heating is not only allowed under the Energy STAR program, these natural gas end-use applications can help homebuilders achieve a higher qualifying HERS rating than comparable electric end-use applications. 38

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40 CenterPoint filed its Comprehensive Portfolio with the Arkansas Public Service Commission (APSC) in July 2009, which h consisted of its proposed portfolio of energy efficiency programs to be in effect from January 1, 2010 to December 31, The Comprehensive Portfolio was recently approved by the APSC. 40

41 Existing i Programs: CenterPoint Energy Education Program (CEEP) Energy Efficiency Arkansas Program (EEAP) Arkansas Weatherization i Program (AWP) New Programs: CenterPoint Energy Commercial Natural Gas Energy Audit Program (CNGEA) CenterPoint Energy Water Heating Conservation Improvement Program CenterPoint Energy Space Heating Systems Conservation Improvement Program CenterPoint Energy Low Flow Showerhead and Faucet Aerator Conservation Improvement Program CenterPoint Energy Commercial Boiler Conservation Improvement Program CenterPoint Energy Commercial Food Service Conservation Improvement Program 41

42 Offers financial rebates to residential and small commercial customers that purchase and install high efficiency natural gas tank and natural gas tankless water heaters. The goal of the Water Heating CP is to assist consumers in lowering their overall energy use and cost while simultaneously decreasing their greenhouse gas emission. Our rebate provides a greater incentive to purchase and install higher efficient natural gas water heating solutions in place of less efficient gas and electric alternatives by offsetting the higher incremental purchase and installation cost of more efficient tank water heaters and emerging technologies, such as the tankless water heater. 42

43 Offers financial rebates to residential and small commercial customers that purchase and install high efficiency space heating solutions. The goal of the Space Heating Systems CIP is to assist consumers in lowering their overall energy use and cost and decrease their greenhouse gas emissions. i Our rebate provides a greater incentive to purchase and install higher efficient natural gas heating solutions in place of less efficient gas and electric alternatives, by offsetting the higher incremental purchase and installation cost of more efficient natural gas space heating systems. 43

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45 CNP plans to file its Energy Efficiency Plan with the Oklahoma Corporation Commission in July CNP plans to propose similar programs to its Arkansas CenterPoint Energy Water Heating Conservation Improvement Program and CenterPoint Energy Space Heating Systems Conservation Improvement Program. 45

46 Chuck Harder Director of Regulatory Policy and External Relations CenterPoint Energy, Inc Louisiana Street, Suite 1926 Houston, Texas Tel. (713) Fax (713) Cell (713)