Delmarva 2010 IRP Workshop - DSM Integration

1. Delmarva 2010 IRP Workshop -DSM Integration October 22, 2009

2. Overview of Delmarva IRP Status Previous Plans and Demand Side Management Approach Next Plan Current IRP DSM Requirements Statutory and Regulatory Mandates Role of Delmarva Role of Sustainable Energy Utility IRP DSM Modeling Options Alternative Modeling Approaches Timeline and Path Forward – Consensus on DSM Modeling Approach Agenda

3. December 1, 2006 - IRP filed under Electric Utility Retail Customer Supply Act of 2006 (EURCSA). January 8, 2007 - Supporting Documentation filed February 2, 2007 – filed the Blueprint for the Future laying out Company’s vision for AMI, DSM and DR programs and the BSA. June 28, 2007 - SEU was created by the General Assembly; July 24, 2007 - RPS requirement doubled requiring Delmarva to obtain RECs in increasing amounts up to 20% by 2019. March 5, 2008 - Filed IRP update at Commission’s request to, among other things, update the results of the resource plan and Standard Offer Service procurement strategies resulting from the Generation RFP process Delmarva IRP Activities

4. May 15, 2008 – Filed Addenda at Commission’s request for, among other things, more information about the specific resource composition of the proposed portfolio and the nature of demand response options. November 5, 2008 – Third Update to IRP filed. July 29, 2009 – Delaware’s Energy Conservation & Efficiency Act of 2009 passed. § 1500(6) The Delaware Sustainable Energy Utility (SEU) combines public funding sources and consumer savings with private sector funds and management skills to provide all Delaware energy users with assistance for all their energy efficiency and renewable energy needs. Delmarva IRP Activities con’t

5. August 18, 2009 – Commission promulgated new set of rules and regulations governing the preparation of future IRPs. September 22, 2009 – Commission Order closing current IRP docket 07-20, and directing Delmarva to file a new IRP in compliance with new IRP regulations promulgated in Reg. Docket 60, which incorporates results from the procurement process as well as the new load forecast. Delmarva IRP Activities con’t

6. 5.0 Resource Portfolio Options Delmarva shall: identify and evaluate all reasonable resource options including. . . DSM, DR and customer sited generation. The IRP must show an investigation of all reasonable opportunities for a more diverse supply at the lowest reasonable cost, including consideration of environmental benefits and externalities.(5.2) describe its EE activities in accordance with 26 Del. C. §1020 and shall first consider DR and DSM and cost-effective renewable strategies for meeting base load and load growth needs before considering traditional fossil fuel-based electric supply services to meet retail electricity supplier obligations as defined in 26 Del. C. §352. (5.6 ) DSM - EE&C and DR Requirements – Section 5.0

7. Where non-Company evaluations of DSM and Conservation are available through the Sustainable Energy Utility (“SEU”), Delmarva shall summarize the results/actions taken. Delmarva shall collaborate and may contract with the SEU to provide services to accomplish the SEU’s Demand Side Management plans. The Company may recommend in the IRP any DSM program first offered to the SEU but rejected by the SEU. Where DR programs are new, the Company shall summarize the anticipated benefits with respect to load reductions and provide supporting material to justify a new program. (5.7) Collaborate with the SEU and State Agencies evaluating Customer-Sited Generation resource options. Delmarva may contract with the SEU or other energy service providers to implement a Customer-Sited Generation resource option strategy. (5.8) DSM - EE&C and DR Requirements – Section 5.0 con’t

8. 6.0 Plan Development In integrating its supply- and demand-side resources, the Company shall: Evaluate the cost-effectivenessof the options from the perspectives of the utility and the different classes of ratepayers. Any cost evaluation should be based on real prices, the Company, may also elect to provide a cost evaluation using nominal prices. DSM - EE&C and DR Requirements – Section 6.0

9. 145th General Assembly (Signed by Governor July 29, 2009) “Affected Electric Energy Provider” – an electric distribution company, rural cooperative or municipal electric company servicing Energy Customers in Delaware § 1500 (b)(1) - Cost effective energy efficiency shall be considered as an energy supply source before any increase or expansion of traditional energy supplies. § 1500 (b)(7) – The SEU is a critical mechanism for achieving energy conservation and energy efficiency in the State. Electric Goal §1502 (a) 1. – For each Affected Electric Energy Provider, Energy Savings that is equivalent to 2% of the Provider’s 2007 electricity consumption, and coincident peak demand reduction that is equivalent to 2% of the Provider’s 2007 peak demand by 2011, with both of the foregoing increasing from 2% to 15% by 2015; Gas Goal §1502 (a) 2. – For each Affected Natural Gas Provider, Energy Savings that is equivalent to 1% of the Company’s 2007 natural gas consumption by 2011, increasing to 10% by 2015. §1505 (a) Establishes the Sustainable Energy Trust Fund. Delaware’s Energy Conservation & Efficiency Act of 2009

10. 26 Del. C. §1502 (b) Affected Electric Energy Providers shall submit to the State Energy Coordinator a report on April 1, for prior year, demonstrating that it, in cooperation with the SEU and the Weatherization Assistance Program, has achieved cumulative Energy Savings in the previous year that are at least equal to the Energy Savings required by regulations adopted by the Secretary pursuant to 1502(a) of this Chapter. 26 Del. C. §1506(a) Affected Electric Energy Providers will use Energy Efficiency Resource Units obtained from the SEU or Weatherization Assistance Program or created by their own demand response programs to meet the applicable Energy Savings requirements. 26 Del. C. §1020 Energy Efficiency; Load Planning IRPs filed with the Commission pursuant to §1007 of this Chapter shall include a detailed description of energy efficiency activities. Electricity demand response programs shall be directly implemented by the utility. Demand-side management and other energy efficiency activities shall be implemented by the SEU (as defined in §8059 of Title 29), in collaboration with the utility. The contributions of the utility-implemented and SEU-implemented programs shall be considered in meeting the Energy Efficiency Resource Standards required under Chapter 15 of this Title. Delmarva meets frequently with SEU to discuss DSM program development. SEU to provide EE & C program characteristics. Role of Delmarva and SEU

11. Update EE forecasts for current economic conditions. (Staff) More analysis of EE & DR. (DPA) DSM should be modeled in the same way as supply resources and compared in portfolio analysis. (DNREC) Should reflect impacts of SEU & state/federal legislation. (DPA) Develop/coordinate program plans with/and backstop SEU. (Staff)/(DNREC) Maximize stimulus funds. (Staff) Maximize capacity to install dispatchable DLC. (Staff) Have DLC programs participate in PJM programs to lower costs. (Staff) Summary of Issues Raised by Interested Parties from Prior IRP Process

12. Assume DSM Legislative 2015 Targets are Met For Years 2016 -2020 Assume 15% Incremental DSM Savings Sensitivity Analysis around Reference Case DSM Provide Descriptive List of Likely SEU Provided EE&C Programs Provide Descriptive List of Expected Utility Provided Demand Response Programs Provide Description of Delaware Weatherization Program Alternative Modeling Approaches Conduct Ground-up DSM Program Construction Allow ICF IPM Model to Select Least-Cost Resources Pre-Select All Measures that are Cost-Effective under Total Resource Cost Test or Societal Test Sustainable Energy Utility Could Determine Expected EE&C Achievements IRP Modeling Options

13. Distributed Generation Work with SEU and State Agencies to Identify Opportunities and Programs to Encourage Additional DG Consider Increasing Renewable Portfolio Standards Requirements Identify Current Level of DG to the Extent it is Known Distributed Generation

14. Reach Consensus on Final DSM Integrated Modeling Assumptions Identify Future DSM Programs – SEU, Weatherization, and Delmarva Develop Distributed Generation Penetration Rates Continue Ongoing Meetings with SEU and State Agencies File New IRP on May 31, 2010 Path Forward

15. Questions?