Avram Patt

1
A Co-ops Road to Energy Independence and Rate
Stability, or

• Avram Patt
• General Manager

2
A Funny Thing Happened on the Way to the Dump

• Avram Patt
• General Manager

3
A Marketing Position

• In 2007 WECs power supply is approximately 65
  from renewable generation sources. That percent
  will increase over the next several years.

• This does not include large hydro (HydroQuebec
  and NYPA) which account for an additional 25 of
  our supply.

• WEC has no long-term contracts for nuclear, coal
  or fossil fuel

• WECs recent long-term renewable commitments are
  our most economic and most secure supply options
  compared to others.

• Sale of renewable energy certificates (RECs) is
  an additional major economic benefit to our
  members, creating extended rate stability in
  volatile times. (Sale of RECs affects labeling of
  supply in our portfolio.

4
About WEC

• over 10,000 members in 41 towns (98 residential)
• procures power supply independently (no G T or
  joint action agency)
• strong concern for environment in Vermont, among
  WEC members and board
• historic commitment to conservation and
  efficiency programs
• high rates in a high rate region

5
BECOMING A GREENER CO-OP

• WEC was already green
• --15 renewables prior to 2001 (small hydro and
  woodchip biomass)
• -- support for residential net metering
• -- over 60 participation in efficiency programs
• Vermont Yankee supply (3 MW since early 1970s)
• ending in 2002
• WEC board management began analysis process
  in
• 2000 with our power supply consultant

6
Strategy adopted by WEC Board in 2001

--meet future power supply needs with renewables
at economic cost --long term commitments,
ownership --preference for sources close to
home --avoid price volatility

• Ending of Vermont Yankee nuclear supply was prime
  motivator

7

• Analysis showed that

• --cost of renewables coming down
• --willingness to make long term commitments is an
  advantage
• --low-cost financing is an advantage (ownership)
• --renewables offer stable, predictable costs with
  little volatility risk
• --under the right circumstances, renewables could
  meet or beat market forecasts
• --"green pricing" programs might not be needed
• --for WEC, landfill methane offered same baseload
  characteristics as nuclear

8

• In 2002

-- WEC pursued a LFG development project that
didnt happen
-- was awarded a federal grant for wind energy
development
-- ended Vermont Yankee supply in February
-- replaced most of Vermont Yankee nuclear with
interim 3-year contract with a LFG project in
Connecticut, at less cost
9
(No Transcript)
10

• In 2002

-- WEC pursued a LFG development project that
didnt happen -- was awarded a federal grant for
wind energy development -- ended Vermont Yankee
supply in February -- replaced most of Vermont
Yankee nuclear with interim 3-year contract with
a LFG project in Connecticut, at less cost

-- signed letter of intent for development of LFG
project in Vermont -- was over 40 green (not
including large hydro) -- made renewables our
Annual Meeting Theme
11
(No Transcript)
12
In 2003
--Announced that we were going to build our own
Landfill Methane Project in Coventry, Vermont
--The landfill is the largest in Vermont and is
owned and operated by New England Waste Services
of Vermont, a subsidiary of Casella Waste Systems
13
(No Transcript)
14
In 2003
--Announced that we were going to build our own
Landfill Methane Project in Coventry, Vermont
--The landfill is the largest in Vermont and is
owned and operated by New England Waste Services
of Vermont, a subsidiary of Casella Waste Systems
-- Began investigating potential wind project
with local developers -- Stayed open to other
opportunities -- Continued commitment to
conservation, support of net metering -- Kept
educating and communicating with our members
15
(No Transcript)
16
(No Transcript)
17
Landfill Methane???

• Methane is produced by the decomposition of
  material in the landfill
• Methane is a potent greenhouse gas that
  contributes to global warming
• Modern landfills such as in Coventry have
  elaborate gas collection systems to keep the
  methane from entering the environment
• Unless there is a use for the gas, it must be
  flared off
• Landfill gas is a renewable energy source when
  used to generate electricity

18
(No Transcript)
19
In 2004

• --WEC focused in on participation in a specific
  wind project and began negotiations with
  developer
• --Took active role in public debate and education
  on wind siting
• --Got state regulatory approval for building our
  landfill

20
(No Transcript)
21
In 2004

• --WEC focused in on participation in a specific
  wind project and began negotiations with
  developer
• --Took active role in public debate and education
  on wind siting
• --Got state regulatory approval for building our
  landfill
• --Got our own members approval

22
(No Transcript)
23
In 2004

• --WEC focused in on participation in a specific
  wind project and began negotiations with
  developer
• --Took active role in public debate and education
  on wind siting
• --Got state regulatory approval for building our
  landfill
• --Got our own members approval
• --Began construction
• --and renewed our Connecticut landfill contract
  for one more year.

24
Development History Summary

• Planning and analysis began in 2002
• Approvals received in 2004

--Vermont Public Service Board Certificate of
Public Good --USDA Rural Utilities Service
financing --WEC member approval

• Construction began Winter 2004

25
(No Transcript)
26
(No Transcript)
27
(No Transcript)
28
(No Transcript)
29
Development History

• Approvals received in 2004

• Planning and analysis began in 2002

--Vermont Public Service Board Certificate of
Public Good
--USDA Rural Utilities Service financing
--WEC member approval

• Construction began Winter 2004

• The plant began generating power on July 1, 2005

• On September 17, 2005, over 300 visitors, guests
  and WEC members gathered to dedicate the new
  power plant

30
(No Transcript)
31
(No Transcript)
32
About the facility

• Raw gas enters the plant at the gas compression
  and scrubbing room
• The gas is chilled and scrubbed impurities are
  removed to prepare it for combustion

33
(No Transcript)
34
About the Facility

• Raw gas enters the plant at the gas compression
  and scrubbing room

• The gas is chilled and scrubbed, impurities are
  removed to prepare it for combustion

• Four caterpillar 3520 engine generators burn the
  gas and create electricity
• The plants original generation capacity was 4.8
  megawatts
• A fourth engine was installed and began operating
  in January 2007, bringing generating capacity to
  6.4 mw over time.

35
(No Transcript)
36
(No Transcript)
37
More About the Facility

• The switch gear room contains control and
  monitoring instruments
• Power leaves the building and goes to a step-up
  transformer in the switch yard

38
(No Transcript)
39
(No Transcript)
40
Benefits to WEC and Our Members

• Coventry is presently supplying over half of the
  Co-ops power needs
• Future expansions are possible
• Coventry is a long-term, dependable power source
  that will be generating for at least 25 years
• The average cost of power will be 50/MWh over
  the entire life of the project, making it the
  lowest cost source of power available
• Supply and cost is predictable and not subject to
  national and world events beyond our country
• WEC members benefit from the sale of Renewable
  Energy Certificates

41
(No Transcript)
42
WEC couldnt have done it without

• Plant design and operatorInnovative Energy
  Systems
• Plant construction general contractorPizzagalli
  Construction
• Line construction and interconnectionVermont
  Electric Co-op VELCO
• Project managementGordon Deane, Palmer
  Management Corp.
• EngineeringStantec (landfill generating
  facility), E-Pro Consulting (transmission
  interconnection)
• Project economistLaCapra Associates
• FinancingRural Utilities Service, USDA (RUS),
  National Rural Utilities Cooperative Finance Corp
  (CFC)
• Vermont State GovernmentDepartment of Public
  Service, Agency of Natural Resources
• Washington Electric Co-opProject Oversight
  Committee, WEC Board, Staff and Members

43
Too Cheap to Meter?

• --WEC is selling Renewable Energy Certificates
  (RECs) in other states in the New England ISO
  region
• ?for Connecticut LFG contract (ended 2005)
• ?for Coventry LFG project
• ?for Wind Project, when developed

--WEC cannot claim renewable attributes in our
portfolio for any RECs sold
--For current and committed RECs sales, WEC is
receiving more for RECs than the cost of the
energy being generated. (Yes, thats right!)
--WEC is deferring surplus revenues resulting
from RECs sales, to be used to avoid future rate
increases (est. through 2012)
--Our members say Not too shabby.
44
Is Renewable Energy only about low cost energy
and avoiding rate increases?

• Cant we talk about anything besides pocketbook
  issues?
• Cant we talk about what were really all about?
• Our values!

Cooperatives are based on the values of
self-help, self-responsibility, democracy,
equality, equity and solidarity. In the
tradition of their founders, cooperative members
believe in the ethical values of honesty,
openness, social responsibility and caring for
others.
45
COOPERATIVE PRINCIPLES
2. Democratic Member Control Cooperatives are
democratic organizations controlled by their
members, who actively participate in setting
their policies and making decisions. 3. Member
Economic Participation Members contribute
equitably to, and democratically control, the
capital of their cooperative. 4. Autonomy and
Independence Cooperatives are autonomous,
self-help organizations controlled by their
members. 5. Education, Training and
Information Cooperatives provide education and
training for their members, elected
representatives, managers and employees so they
can contribute effectively to the development of
their cooperatives 7. Concern for
Community While focusing on member needs,
cooperatives work for the sustainable development
of their communities through policies accepted by
their members.
46
BECOMING A GREENER CO-OP

• In Summary, for WEC, renewable energy is
• --affordable
• --stable and predictably priced
• --a significant source of revenue (RECs)
• --local
• --good for the planet
• --what our members want
• --newsworthy
• --a model praised by politicians and
• regulators
• --for all, not some, of our members
• --a lot of work for a small co-op
• --worth it

47
For more information about

• WEC and the Coventry Project

www.washingtonelectric.coop

• landfill methane to energy process

www.epa.gov/lmop
Thank you.