11/11/20051

Energy Efficiency & Conservation

Presentation to SWEEP WorkshopPhoenix, AZNov. 3 & 4, 2006

11/11/20052

Energy Efficiency and Customer Strategy—Department Mission

To be a respected resource of education and information on the efficient use of energy for the benefit of our customers, community, and company.To deliver cost effective and approved Demand Side, Load Management and customer focused programs.

11/11/20053

Who

We have 15 full time employees in two working groups---planning and implementation lead by managers, Larry Holmes and Doug HamptonWe have 6 main implementation contractors employing about 20 people full time working on our projects

11/11/20054

What—Last column is 2006 budget

$ 820,000$ 100,000Sierra Natural Gas Programs

$ 1,750,000$ 1,000,000Company Renewable - PV

$ 42,527,000$ 23,366,000$ 20,866,000Total All Programs

$ 8,740,000$ 5,025,000SolarGenerations

$ 563,000$ 370,000California Program

$ 30,624,000$ 17,991,000$ 15,491,000Total Nevada Resource Planning Programs

$ 725,000$ 225,000Other – Miscellaneous & Technology

$ 1,915,000$ 700,000Refrigerator Collection

$ 2,050,000$ 1,200,000Energy Star Appliances

$ 600,000$600,000Commercial New Construction

$ 850,000$ 850,000School Support

$ 2,800,000$2,300,000Commercial Incentives

$ 15,625,000$4,700,000$2,600,000High Efficiency Air Conditioning

$ 3,600,000$3,450,000Air Conditioning Load Management

$ 1,216,000$ 1,361,000Low Income Support

$ 1,243,000$ 1,205,000Energy Education

11/11/20055

Why

Energy Efficiency and Conservation Programs are done for several reasons:– Cost Effective

total benefits exceed costs-avoiding power plant construction and expensive power purchasesInvestment opportunity—5% above authorized ROERegulatory and political coverCustomer expectations

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Regulation for cost recovery

NAC 704.9503– A utility may recover all prudent and reasonable costs incurred

in implementing programs for conservation and load management that have been approved by the Commission as part of the action plan of the utility, including, without limitation, the costs for labor, overhead, materials, incentives paid to customers, advertising, marketing and evaluation.

– To calculate the revenue requirements, the utility must base the rate of return to be applied to the balance in the sub accounts of Account 182.3 for each program that the utility has carried out on the authorized return on equity plus 5 percent.

11/11/20057

Avoided Cost of Energy

N evada P o wer A vo ided C o sts 2006

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

HOURS ( 1- 8760)

2 0 0 6 A v o i d e d

c o s t s$50/Mwhr

11/11/20058

What’s Next---

Nevada Special Legislative Session AB3– Allows energy efficiency measures to count for 25% of our

“portfolio standard” of renewable power and now conservation

– Portfolio Standard is 6% in 2006, 9% in 2007 and increasing to 20% in 2015

– 50% must come from residential customers– Roughly 1,000,000 Mwhrs in conservation in 2010---we

currently capture about 150,000 Mhwrs– Significant property tax relief for commercial buildings that

are “green”– We need to grow our conservation business accordingly

11/11/20059

Renewable Energy Sources

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

10,000,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Year

MW

h

2005 RFP Tier 2Conservation2005 RFP Tier 1Company Owned FacilitiesPlanned ProjectsProjects Under ConstructionExisting ContractsRenewable Energy Requirement

11/11/200510

What’s Next

Federal Energy Act of 2005– $2000 tax credit for builders of new homes designed to use

50% less energy– Up to $500 for homeowners for energy efficiency upgrades

to their homesAC units, appliances, water heaters, window

– 30% tax credit for solar pv and solar hot water for homeowners

– $1.80 per sq. ft for commercial buildings designed to exceed ASHRAE standards 90.1-2001 by 50% or more

– We are positioning ourselves to be the experts in Nevada

11/11/200511

DSM Budgets through 2010

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

$45,000,000

$50,000,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Sierra PacificPowerCompany

NevadaPowerCompany

11/11/200512

Program Highlights—Energy Star Appliances and CFL

Program is designed to provide rebates and point of sale incentives on high efficiency– Refrigerators– Clothes Washers– Ceiling Fans– Light fixtures– Compact Fluorescent Lamps

11/11/200513

11/11/200514

Program Highlights---Refrigerator Collection Program

Program is designed to collect second refrigerators– Often operating in the garage at very inefficient

performance– Fully dispose of all refrigerants and CFCs– All other useable materials recycled

11/11/200515

11/11/200516

Program Highlights—Commercial Rebates--SureBet

SureBet is our Commercial Incentive programDesigned to assist commercial customers develop and implement energy savings measuresPrescriptive and custom rebates

11/11/200517

11/11/200518

Program Highlights--ACLM

Residential Air Conditioning Load Management– 18,000 residential customers using condenser

switches and programmable thermostatsAnother 6000 in 2006—total 24,000 under control

– This equates to almost 30 Mw of load controlInstantaneous response during peak and power supply problems

11/11/200519

ACLM--Continued

0

1

2

3

4

5

6

7

8

0:00 4:00 8:00 12:00 16:00 20:00

Electric Load per

Home (kW)

Time of Day

June 24Baseline Day

July 7Curtailment

Average Load July 7, 2004 vs. June 24, 2004

Load ReductionMax 3.0 kW

3-hr Avg. 2.4 kW

Hi Temp 100º F

0

1

2

3

4

5

6

7

8

0:00 4:00 8:00 12:00 16:00 20:00

Average Load ,July 21, 2004 vs. July 12, 2004

Time of Day

July 12Baseline Day

July 21Curtailment

Load ReductionMax 4.0 kW

3-hr Avg. 2.8 kW

Hi Temp 107º F

11/11/200520

ACLM Distribution

11/11/200521

Program Highlights—Residential High Efficiency Air Conditioning Program

Program is designed to provide incentives for installation of higher efficiency residential air conditioning units above standard 10 SEERRebates paid on confirmed installation– $300 for 13 SEER– $900 for 19+ SEER

Available to home owners, builders, ac contractors

11/11/200522

Residential High Eff AC Program--Changes

Background– Jan 2006 Federal Standards for Residential Air

Conditioning Units will increase performance efficiency by 30% from 10 SEER to 13 SEER

– Manufactures are going to “dump” 10 SEER units– Out team worked with 32 of the areas largest

home builders to get in front of Federal Standard and affect this dump

11/11/200523

Builder Commitments

11/11/200524

Market Size & Transformation

New Construction A/C Units

22,525

RetrofitA/C Units

15,869

31,932

Retrofit Units6,000

New Cosntruction

25,932

2006 A/C Unit Market Penetration (70,326)

44%Effected

New Construction A/C Units

36,495

RetrofitA/C Units

17,868

10,448

Retrofit Units4,000

New Construction

6,448

2005 A/C Unit Market Penetration (64,811)

16%Effected

New Construction A/C Units

37,714

RetrofitA/C Units

20,869

Retrofit Units999

New Cosntruction

375

2004 A/C Unit Market Penetration (59,957)

2%Effected

11/11/200525

Rebate Table & Product Information

14

12

10

8

6

4

2

$12.1MRebates31,938$3.3M

Rebates

Growth in Rebate $'s

Non-Rebate$1.3M

Non-Rebates$2.7M

14 SEERNew Construction

$3.3M5,814 Units

2006 $12.1M 31,938 Units (25,932 New Construction Total)

16 & 19 SEER$1M 1,100

Units

Retrofit $2.1M

6,000 Units

13 SEERNew Construction

$5.7M19,018 Units

11/11/200526

AC ProgramBudget Summary & Projections

Budget Summary

2005 2006Units

Retrofit 4,000 6,000New Construction 6,448 25,932

Total 10,448 31,932

RebatesRetrofit $1,353,750 $2,130,000New Construction $1,929,613 $9,878,200

Total $3,283,363 $12,008,200

Administrative & Other Costs $1,329,088 $2,719,286Net Total Costs $4,612,450 $14,727,486

kWh SavingsRetrofit 12,470,825 13,756,772New Construction 10,121,502 61,060,497

Total 22,592,328 74,817,269Total Cost per kWh $0.039 $0.037

kW SavingsRetrofit 7,269 8,592New Construction 8,595 35,972

Total 15,864 44,564Total Cost per kW $290.76 $330.48

2006 Program

SEER 10 Baseline

SEER 13 Baseline Total

Units RebatedRetrofit

SEER 13 2,500 0 2,500SEER 14 1,000 1,000 2,000SEER 16 100 100 200SEER 19 400 900 1,300

Total 4,000 2,000 6,000New Construction

SEER 13 19,018 19,018SEER 14 5,814 5,814SEER 16 100 100SEER 19 1,000 0 1,000

Total 25,932 0 25,932TOTAL UNITS, ALL MKTS 29,932 2,000 31,932

2005 Program

Base Program

Additional Program Total

Units RebatedRetrofit

SEER 13 1,750 750 2,500SEER 14 475 0 475SEER 16 300 0 300SEER 19 475 250 725

Total 3,000 1,000 4,000New Construction

SEER 13 400 5,853 6,253SEER 14 0 95 95SEER 16 0 0 0SEER 19 100 0 100

Total 500 5,948 6,448TOTAL UNITS, ALL MKTS 3,500 6,948 10,448

11/11/200527

SolarGenerations

Utility is implementer of the State’s Solar Energy Systems Demonstration Program– Designed to install small scale photovoltaic

systems in Residential and small commercial Public buildingsSchools

– We are starting year 3– Paying $3 per watt rebate

11/11/200528

Under Construction

11/11/200529

Natural Gas Programs at Sierra Pacific Power Company

Sierra Pacific Power Company provides natural gas service to 300,000 customers in the Reno Sparks area of Northern NevadaYikes---recently approved 26% rate increaseNew Demand Side program for 2006/2007– Weatherization– Water Heater blankets– Efficient Space Heaters

11/11/200530

Natural Gas Programs for 2006

$820,000Total for 2006

------$10,000Customer Outreach

------$50,000Tech Trials

0.471300$395,000Efficient Heaters

1.242000$120,000Water Htr Wrap

0.7200 $245,000Weatherization

B/C# of Units06 Budget

Project