LETTER from the EXECUTIVE DIRECTOR and CHAIR
Looking Back 1997—1998 Regional investments in conservation continue to drop from a high of about $330 million in 1994. ■ Six of the Northwest’s investor-owned utilities and the Bonneville Power Administration form the Northwest Energy Efficiency Alliance to focus on encouraging markets to favor energy-efficient products and services. ■ First International Energy Conservation Code is issued. ■
NEEA turned 10 in 2006. Our funders and others who have supported the organization during the past decade deserve a lot of credit for taking a chance so many years ago on the unproven concept of regional market transformation.We’re pleased to report that their commitment is paying off with substantial development and adoption of energy-efficient products and services by the marketplace. Some examples that indicate a market shift in favor of energy efficiency in 2006 include: Sales of ENERGY STAR® qualified compact fluorescent light bulbs in the region topped 10.7 million, just shy of the ENERGY STAR Consumer Products program sales goal for 2009 three years early. ■ Hospitals and hospital systems that have adopted or committed to adopting a Strategic Energy Management represents about one-third of the region’s hospital beds. ■ Computer giant HP became the first major computer manufacturer to join 80 PLUS, a program to improve the energy efficiency of desktop computers and servers. In addition, the Environmental Protection Agency (EPA) issued its ENERGY STAR specifications for desktop computers, which included the higher efficiency power supplies. ■ Northwest food processors are beginning to integrate efficiency into regular business practices with ■
10 companies in various stages of adopting Continuous Energy Improvement plans. Last year, these and other market changes resulted in 30 average megawatts (aMW) of cost-effective energy savings for the region. In all, energy savings from market effects total 160 aMW since 1996*. Market transformation is a regional asset Now more than ever, energy efficiency plays a critical role in utility resource portfolios. Issues of global climate change, restrictions on new power plant development, transmission and distribution system constraints, and increased customer demand are driving energy efficiency investments. Market transformation, as part of these investments, is a regional asset that leverages utility incentives and other local efficiency program offerings as well as activities in the marketplace. The result is lower-cost energy savings for Northwest utilities and their customers. As Northwest electric utilities have been significantly reinvesting in local resource acquisition programs over the past few years, NEEA staff and Board of Directors have had to grapple with how to ensure alignment between local energy efficiency efforts and regional market transformation activities.We took a hard look at this issue in 2006 and now are working to more actively collaborate with our funders—Northwest electric utilities and public benefits administrators—not compete.
*Energy savings resulting from market effects are exclusive of savings directly from local utility and public benefits incentive programs.
Idaho Public Utilities Commission
Oregon Public Utility Commission
Robert Balzar Seattle City Light
This will mean more deliberate and frequent communications and joint planning so that regional and local programs are truly in sync. Alignment will allow seamless opportunities in energy efficiency for the region’s consumers and businesses.
Betty Merrill Oregon Department of Energy
Beyond the diamond anniversary With 10 years of experience behind us, NEEA’s Board of Directors is now looking ahead and making the strategic decisions today that will allow regional market transformation to continue to deliver value in the future.The Board developed and adopted an updated strategic plan and five-year business plan in 2006.These plans will take us through the current funding cycle, which ends in 2009. By then, we expect market transformation will have delivered additional opportunities for energy efficiency in the region and look forward to sharing with our partners many future milestones of progress.
Columbia River Public Utility District
Consumer Representative, Providence Health and Services
Grant County Public Utility District
C. Norman Beckert
Eugene Water & Electric Board
Clark Public Utilities
Montana Public Service Commission
John Bushnell, Secretary Northwest Power and Conservation Council
Sincerely, MIKE WEEDALL NEEA Board Chair Bonneville Power Administration MARGIE GARDNER Executive Director Northwest Energy Efficiency Alliance
Cal Shirley, Chair-elect Puget Sound Energy
Mike Weedall, Chair
Idaho Power Company
Bonneville Power Administration
Energy Trust of Oregon
Northwest Energy Coalition
Idaho Department of Water Resources—Energy Division
Cowlitz County Public Utility District
Emerald People’s Utility District
Snohomish County Public Utility District
Doug Kilpatrick Washington Utilities and Transportation Commission
Elizabeth Klumpp Washington Department of Community,Trade & Economic Development
Deb Young NorthWestern Energy
Margaret Gardner, Executive Director Northwest Energy Efficiency Alliance
ALLIANCE BOARD (as of June 2007)
and EXECUTIVE DIRECTOR
Compact fluorescent lighting (CFL) sales reach new highs ■ The region’s consumers purchased more than 10.7 million ENERGY STAR qualified compact fluorescent light bulbs (CFLs) in 2006, nearly hitting the region’s 2009 sales goal three years early. ■ Specific factors driving the high CFL sales included successful promotions and targeted utility incentives, increased market adoption of the product including the entry of mega-retailer Wal-Mart (see story), and improved consumer awareness of the environmental benefits of CFLs. ■ Savings with a Twist successfully reach new distribution channels in 2006 with sales statistics showing 50% of the stores participating represented new retailers and included grocery, variety and independently owned hardware stores.The two-month promotion, that partnered the region’s utilities with lighting manufacturers and retailers to buy down the cost of qualified products, resulted in 1.15 million bulbs sold.
Looking Back 1999-2000 Poor water conditions in the Northwest reduce available hydro electricity supply. ■ California power market begins to implode due to lack of supply and market manipulation. ■ Energy crisis hits with peak wholesale power prices reaching $1,400 per megawatt-hour in June 2000. ■ Investment in energy efficiency hit a low of $55 million in 2000. ■
CFL sales in the Northwest 10 8 Millions
Northwest ENERGY STAR
NORTHWEST ENERGY STAR is NEEA’s market transformation initiative in the residential sector.The twopronged initiative leverages the resources of our local utility partners to have a regional impact on consumer products and new home construction. Highlights for 2006 include:
6 4 2 2001
Best of the Best washers garner ENERGY STAR Partner of the Year ■ The U.S. Environmental Protection Agency and the U.S. Department of Energy named NEEA ENERGY STAR Partner of the Year for its 2006 promotion of premium-efficiency ENERGY STAR qualified clothes washers. ■ NEEA and the region’s utilities worked with more than 600 appliance retailers and 12 washer manufacturers that offered special discounts and tiered rebates for the purchase of the highest efficiency washers with a modified energy factor (MEF) of 1.8 or better. ■ The campaign—the Best of the Best—resulted in a 4% increase in overall market share, with more than 50% of the rebated machines being rated 2.0 MEF or better. ENERGY STAR Homes Northwest gains momentum ■ About 2,300 homes in the Northwest were certified as ENERGY STAR in 2006, compared to 988 in 2005. A downturn in the housing market slowed home construction in the region. However, ENERGY STAR homebuilders found they could differentiate themselves in the tighter market as offering a higher quality product. ■ About 237 builders were active in the program at year-end. In addition, more than 30 verifiers and 65 performance-testing technicians were added to the network in 2006 after attending regional trade ally training. ■ The Portland-area and Puget Sound-area Multiple Listing Services agreed in 2006 to include the ENERGY STAR Homes Northwest designation and green building in general as search options in its listings, reflecting a market demand for homes with these features. 4
The Wal-Mart story Wal-Mart aims to sell one compact fluorescent light bulb (CFL) to each of its regular customers—some 110 million bulbs—in 2007. The new focus by the giant retailer resulted in a significant boost in bulb sales in the Northwest in 2006. So why did Wal-Mart decide to enter the market for energy-efficient bulbs now? The company says it wants to help the environment and its customers save money on electric bills. Wal-Mart’s ability to stock and sell CFLs at all is largely due to years of groundwork laid by the federal ENERGY STAR program, electric utilities, market transformation organizations and others. Since 1997, market transformation efforts through NEEA and Northwest utility programs have worked together to build a retail market here for ENERGY STAR qualified CFLs. During that time, many of the barriers preventing the bulbs from finding a place in the market such as size, price and light output were addressed.
For example, in 2000 folks from the region’s ENERGY STAR Residential Lighting Program approached the Pacific Northwest National Laboratory to figure out a way to reduce the large size of CFLs. Out of those efforts, we saw development of subcompact-size CFLs and twister bulbs. NEEA and its partners also worked with other efficiency advocates to address quality concerns about CFLs by establishing the national Program for the Evaluation and Analysis of Residential Lighting (PEARL). PEARL results are used to influence the U.S. Department of Energy’s specifications and quality control of bulbs carrying the ENERGY STAR label. One of the values that market transformation through NEEA delivers to the region is leveraging the influence, resources and market power of the Northwest to spur the development and adoption of energy-efficient products. Wal-Mart entering the CFL market in 2006 is an indication that these energy-saving lights can now appeal to mainstream consumers and are here to stay. 5
BetterBricks Looking Back
BETTERBRICKS is NEEA’s market transformation initiative in the commercial sector. It targets decision makers in the hospital and healthcare, grocery, and office real estate markets and encourages them to rethink their business practices around energy. In addition, BetterBricks, along with NEEA’s utility partners, leverages relationships with trade allies in the design and construction and building operations markets to enhance offerings for energy-saving products and services. Highlights for 2006 include:
2001 ■ Federal standards are adopted requiring a 22% increase in energy efficiency of all clothes washers by 2004 and a 35% increase by 2007. ■ Ground work laid by market transformation efforts to get retail channels to stock compact fluorescent light bulbs (CFLs) coupled with regional coupons, result in huge increases of CFL sales. ■ Generating consumerowned utilities become direct funders of NEEA.
Hospitals adopt energy management plans Hospitals representing 30% of beds in the region have adopted or committed to adopting a SEMP. For example: ■ Seattle-based Providence Health and Services (PHS) continues implementing its system wide Strategic Energy Management Plan, focusing on implementing integrated design in new construction, enhanced operations and maintenance of existing facilities, and purchasing policies in new construction and major equipment upgrades. PH&S’ adopted integrated design guidelines and is applying these in its building program at St. Peter Hospital in Olympia,Washington.
St. Luke’s Regional Medical Center, Boise, adopted a SEMP projected to save 18% of energy use, adding $650,000 to the bottom line with an internal rate of return of 16%.With BetterBricks’ help, the hospital is now implementing integrated design in its new Magic Valley facility, projected to perform 30% better than energy code. A second new facility in Eagle, Idaho, is now adopting similar features. ■ Legacy Health Systems, Portland, committed to develop a SEMP.To support plan development, BetterBricks conducted assessments of resource-related business practices at Legacy’s four campuses and conducted an on-site assessment of opportunities for enhanced operations and maintenance and building tune-ups. Clark Public Utilities and the Energy Trust of Oregon are increasingly involved in working with Legacy. BetterBricks supports building design and operations service providers ■ BetterBricks began working with several mechanical contractors and building control companies on building performance services. McKinstry, with support from BetterBricks advisors, continues to evolve its service offerings, which includes tune-ups of building systems, and enhanced operations and maintenance services. Puget Sound Energy, Seattle City Light and Snohomish County Public Utility District have participated in planning activities under this effort. ■ The energy-efficient Academic Center at Mount Angel Abbey in Oregon opened and incorporated technologies first tested in a high performance classroom prototype built on campus in 2005. BetterBricks supported development of the prototype and subsequently the architecture firm SRG Partnership in applying the concepts to the design of the academic center. Both are now serving as models for several new school construction projects and major the knowledge of its facilities personnel retrofits. across its hospital system. ■ 2006 saw completion and With the help of BetterBricks hospital occupancy of some leading The PeaceHealth story market specialists, the team began by projects supported by PeaceHealth operates seven hospitals that benchmarking a hospital and a medical BetterBricks.These projects, traditionally operated autonomously, each office building. Based on results they including the Banner Bank managing its own facilities and energy use. developed and are implementing a SEMP building in Boise and But several years ago things changed and that is expected to reduce energy use by OHSU Center for Health PeaceHealth began an effort to operate 10% over three years—saving some and Healing in Portland, are more efficiently by standardizing procure$800,000 a year system-wide. PeaceHealth an achievement in building ment and other policies. will also work with local utilities for techefficiency and operate at Facility managers and regional vice nical support and efficiency incentives on least 60% more efficiently presidents of facilities were gathering regspecific measures. than current practice at the ularly to address operations, such as nurse Strategy energy management planning, time they were designed. call systems, when Lower Columbia Region like the process undertaken by PeaceHealth, Both buildings used an inteCEO Medrice Coluccio heard about Strategic results in energy-efficient products grated design process, which Energy Management Plans (SEMP) from installed in facilities and adoption of resulted in significant energy BetterBricks. He challenged the team to advanced practices. Spurring the adoption savings and LEED-platinum begin addressing energy use. PeaceHealth of new products, services and practices ratings. facility managers and executives quickly saw Strategic Energy Management Planning as an opportunity to save money and apply 7
that favor energy efficiency is an example of a value market transformation through NEEA brings to the Northwest.
Industrial Efficiency Alliance
THE INDUSTRIAL EFFICIENCY ALLIANCE (IEA) is NEEA’s market transformation effort in the industrial sector. It is designed to work in partnership with industry and others to help control costs and improve operational performance through Continuous Energy Improvement, the practice of making energy efficiency an integral part of ongoing business decisions. IEA focuses on two market segments—pulp and paper and food processing—as well as the systems that serve them. Highlights for 2006 include: Industries move toward Continuous Energy Improvement Four pulp and paper mills and 10 food processing companies in the Northwest proceeded through the various stages of adopting Continuous Energy Improvement plans to better manage energy use in 2006. For example: ■ After an assessment of systems focused primarily on refrigeration and boilers, New Season Foods reduced its energy costs by more than 25% and adopted Continuous Energy Improvement as a business strategy. ■ Norpac Foods of Stayton, Oregon, committed to instituting Continuous Energy Improvement in all five of its plants after a pilot project at its Brooks, Oregon, plant confirmed a cumulative energy savings equal to a half-day’s operation of all five plants. ■ Twenty-two mills representing 85% of the region’s production in pulp and paper are reporting to IEA high-level key performance indicators on a quarterly basis. The confidential data is used to track progress in energy efficiency and the industry’s overall commitment to Continuous Energy Improvement. IEA addresses improving industrial systems ■ Pump Systems Matter™, an organization to help pump system users better manage energy and enhance pump system performance, began operating in earnest in 2006. NEEA played a key role on behalf of the Northwest in forming the organization and IEA began work in 2006 to bring training and other opportunities offered by Pump Systems Matter to the region. ■ Based on earlier market transformation efforts in industrial efficiency, a number of Northwest motor service centers formed the Green Motors Practices Group. Its objective is to promote higher performing motor service centers committed to producing rewinds to a standard that retains or improves reliability and efficiency in motor-driven systems. ■ More than 75 employees from North Pacific Paper Corporation (NORPAC), attended an IEA-sponsored training on evaluating the pump system at the company’s mill in Longview,Washington, which led to the identification of improvement opportunities. ■ IEA held two additional cluster trainings in Washington and Idaho in 2006 that allowed food processors and supporting service companies to work together on solutions that could improve efficiency of operational systems at the plants of participating companies.
Looking Back 2002-2003 A major power outage in the Northeastern United States calls attention to the need for improved power reliability. ■ The International Codes Council adopts the 2003 International Energy Conservation Code. ■ The Double Your Savings promotion with Northwest utilities and clothes washer manufacturers result in the sale of more than 13,600 ENERGY STAR qualified washers. ■ Natural gas prices double. ■
The NWFPA story Food processing is the third largest industrial electrical load in the Northwest and plays a significant role in the region’s economy. Today, the industry faces enormous competitive pressure from overseas producers and already slim profit margins are shrinking. Many experts believe energy savings achieved by applying Continuous Energy Improvement practices to operations could be a silver bullet of sorts in a company’s strategy to remain profitable. Continuous Energy Improvement is the practice of making energy efficiency an integral part of ongoing business decisions. For its work in this market, IEA collaborates with the Northwest Food Processors Association (NWFPA), an industry trade group. In supporting the NWFPA, IEA and its utility partners have leveraged existing relationships held by the trade organization to assist corporate decision makers in setting
energy efficiency goals and finding the resources to achieve them. NWFPA has embraced energy efficiency as a strategy for keeping Northwest food processors competitive in a global market, ensuring a lasting commitment by this industry to improving operational efficiency. The NWFPA partnership also offers utilities a forum to offer educational opportunities to their customers and to partner on specific projects at plants in their service territories. For example, IEA co-sponsors the NWFPA’s Food Manufacturing & Packaging Expo, one of the largest such events in the country. Here utilities and their food processor customers have been able to meet for consultation, training and information on best practices. A value that market transformation through NEEA delivers to the region is providing effective customer market strategies and training platforms. IEA’s partnership with the NWFPA is an example of the market connections and resources utilities can use and offer to their customers.
NEEA continued in 2006 to identify and promote the development of new energyefficient technologies. Advancing new technologies—in the form of products, services and practices—that are in early commercialization sets the stage for future energy savings and is one of the values regional market transformation through NEEA brings to the region. Accomplishments in 2006 include: PAPER STIFFNESS SENSOR TECHNOLOGY—In 2006, the Industrial Efficiency Alliance, along with the U.S. Department of Energy’s Lawrence Berkeley National Laboratory and the Institute of Paper Science and Technology at Georgia Institute of Technology, began piloting a laser ultrasonic stiffness sensor at the Boise Cascade paper mill in St. Helens, Oregon.The sensor would allow operators to measure and make adjustments to achieve correct paper stiffness on-line, reducing the amount of waste, pulp and energy used in the papermaking process. ■ 8O PLUS—Last fall computer giant HP became the first major computer manufacturer to join the program. In addition, the Environmental Protection Agency (EPA) issued its ENERGY STAR specifications for desktop computers, which included 80 PLUS criteria for power supplies. By the end of 2006, 105 power supply models from 30 manufacturers had been approved as meeting the 80 PLUS criteria.Thirteen utility sponsors were participating in the program along with 20 different computer manufacturers. ■ DISTRIBUTION EFFICIENCY INITIATIVE—Early results of this initiative show positive energy savings can be attained by reducing the operating voltage of electricity delivered to customers without adverse effects. It appears that selected improvements can save energy both at the customer’s meter and on the distribution system itself. More than 400 customers and nine Northwest utilities are participating in the initiative. ■ DESERT COOLAIRE—Technical assessment of the Desert CoolAire hybrid packaged HVAC units continued with field-testing in 2006. Estimates are that the Desert CoolAire system design could potentially cut energy use by 50%. Currently five commercial sites are being tested in Boise, Nampa,Vancouver, Portland and Seattle. In addition, two units are being tested in Sacramento, installed in collaboration with the Sacramento Municipal Utility District. ■ DUCTLESS MINI-SPLIT HEAT PUMP—In partnership with Grant County Public Utility District, NEEA is conducting a demonstration project to test the viability of this technology in the residential market. Systems began to be piloted in retrofit applications in 2006. Findings from this demonstration will help determine further market research needs. ■ LED LIGHTING—NEEA began to fund research in 2006 to better understand how to spur development of light-emitting diode (LED) technology. On behalf of its partners, NEEA joined the Alliance for Solid State Illumination System Technologies and is working with the U.S. Department of Energy to apply the lessons learned in transforming the compact fluorescent lighting market to LEDs. NEEA also sponsored the 2006 Lighting for Tomorrow competition with the Consortium for Energy Efficiency, the American Lighting Association and the Pacific Northwest National Laboratory to identify successful applications of solid-state lighting in the market. ■
Looking Back 2004—2005 NEEA introduces the ENERGY STAR® Northwest Homes program with specifications that are higher than in the national program and at least 15% more energy-efficient than Washington and Oregon state energy codes. ■ Funding for regional market transformation through NEEA is renewed through 2009. ■ Northwest market share for ENERGY STAR qualified clothes washers grows from 33% to 38%. ■ Congress passes Energy Policy Act of 2005. ■
Statement of Financial Position December 31, 2006
Assets Cash and cash equivalents Funder and other receivables Prepaid expenses Property and equipment TOTAL ASSETS:
$6,840,451 105,290 237,124 47,851 7,230,716
Liabilities and net assets Accounts payable and other liabilities Advances from funders Net assets TOTAL LIABILITIES AND NET ASSETS:
2,858,925 2,015,112 2,356,679 $7,230,716
Statement of Activities Year ended December 31, 2006
Revenues Contributions Interest income Contract and other revenues TOTAL REVENUE: Expenses Project costs General operations TOTAL EXPENSES: Change in Net Assets
$19,095,885 322,319 41,254 19,459,458
19,078,789 1,825,375 20,904,164 ($1,444,706)
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The Northwest Energy Efficiency Alliance (NEEA) is a non-profit organization working to encourage the development and adoption of energy-efficient products and services. NEEA is supported by the regionâ€™s electric utilities, public benefits administrators, state governments, public interest groups and efficiency industry representatives. Printed on environmentally friendly 100% recycled paper. 50% FSC certified sustainably harvested wood, 40% post-consumer waste, 10% flax. Photo credits: Benjamin Benschneider, Eckert and Eckert Photography, Molly J. Curry, Portrait Expressions, SRG Partnership Inc., Tree Top, Inc.