Beneficial Collaboration Between Army Installations and Energy Utility Companies
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This electronic representation of RAND intellectual property is provided for non-commercial use only. Unauthorized posting of RAND electronic documents to a non-RAND website is prohibited. RAND electronic documents are protected under copyright law. Permission is required from RAND to reproduce, or reuse in another form, any of our research documents for commercial use. For information on reprint and linking permissions, please see RAND Permissions. This product is part of the RAND Corporation monograph series. RAND monographs present major research findings that address the challenges facing the public and private sectors. All RAND mono- graphs undergo rigorous peer review to ensure high standards for research quality and objectivity. Making the Connection Beneficial Collaboration Between Army Installations and Energy Utility Companies Beth E. Lachman, Kimberly Curry Hall, Aimee E. Curtright, Kimberly Colloton Prepared for the United States Army Approved for public release; distribution unlimited ARROYO CENTER The research described in this report was sponsored by the United States Army under Contract No. W74V8H-06-C-0001. Library of Congress Cataloging-in-Publication Data Making the connection : beneficial collaboration between Army installations and energy utility companies / Beth E. Lachman ... [et al.]. p. cm. Includes bibliographical references and index. ISBN 978-0-8330-5849-2 (pbk. : alk. paper) 1. United States. Army—Facilities—Energy conservation. 2. Military bases—United States—Energy consumption. 3. Energy conservation—Government policy—United States. 4. Renewable energy sources—Government policy—United States—21st century. 5. Energy development—United States—Government policy—21st century. 6. Electric utilities—United States. I. Lachman, Beth E., date. II. Title: Beneficial collaboration between Army installations and energy utility companies. UA26.A2.M35 2011 355.7068'2—dc23 2011040658 The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND’s publications do not necessarily reflect the opinions of its research clients and sponsors. R® is a registered trademark. Cover photo by Beth Lachman: Fort Knox hospital boilers, which were funded through a UESC. © Copyright 2011 RAND Corporation Permission is given to duplicate this document for personal use only, as long as it is unaltered and complete. Copies may not be duplicated for commercial purposes. Unauthorized posting of RAND documents to a non-RAND website is prohibited. RAND documents are protected under copyright law. For information on reprint and linking permissions, please visit the RAND permissions page (http://www.rand.org/ publications/permissions.html). Published 2011 by the RAND Corporation 1776 Main Street, P.O. Box 2138, Santa Monica, CA 90407-2138 1200 South Hayes Street, Arlington, VA 22202-5050 4570 Fifth Avenue, Suite 600, Pittsburgh, PA 15213-2665 RAND URL: http://www.rand.org To order RAND documents or to obtain additional information, contact Distribution Services: Telephone: (310) 451-7002; Fax: (310) 451-6915; Email: [email protected] Preface Awareness of energy use and concern over long-term supply are increasing in the United States and with them the demand for ways to reduce energy consumption and to get more energy from renewable sources. Congress has passed significant legislation and regulations in recent years that have established benchmarks and guidelines for energy efficiency and renewable energy implementation. Army installations consume substan- tial amounts of energy, and the Army is seeking ways to meet these federal energy requirements, conserve resources, and save costs. In research sponsored by the U.S. Army’s Assistant Chief of Staff for Installation Management, RAND Arroyo Center researched ways that the Army could improve collaboration with utility companies to reduce energy consumption and help meet other Army energy goals. This document reports the results of that research. This report should be of interest to military energy policymakers and managers as well as those in other federal agencies and utilities. Other organizations, such as state and local governments and nongovernmental organizations that are interested in utility collaboration, decreasing energy consumption, renewable energy investments, energy security, and other energy management topics, should also find it of interest. This research has been conducted in RAND Arroyo Center’s Military Logistics Program. RAND Arroyo Center, part of the RAND Corporation, is the Army’s feder- ally funded research and development center for policy studies and analysis. Questions and comments regarding this research are welcome and should be directed to the proj- ect leader, Beth Lachman, at [email protected]. The Project Unique Identification Code (PUIC) for the project that produced this document is SAIEI08823. iii iv Making the Connection: Beneficial Collaboration Between Army Installations and Energy Utility Companies For more information on RAND Arroyo Center, contact the Director of Oper- ations (telephone 310-393-0411, extension 6419; FAX 310-451-6952; email Marcy_ [email protected]), or visit Arroyo’s website at http://www.rand.org/ard.html. Contents Preface ................................................................................................. iii Figures ................................................................................................. ix Tables .................................................................................................. xi Summary .............................................................................................xiii Acknowledgments .................................................................................xxix List of Acronyms .................................................................................. xxxi CHAPTER ONE Introduction ........................................................................................... 1 Background ............................................................................................. 1 Purpose .................................................................................................. 2 Methodology ........................................................................................... 2 How the Report Is Organized ........................................................................ 3 CHAPTER TWO Background About the Army Energy Program and Installation Energy Investment Mechanisms ........................................................................ 5 The Army Energy Program ........................................................................... 5 Policy and Regulatory Drivers ...................................................................... 6 The Program Goals .................................................................................. 8 Funding Sources for Installation Energy Investments ............................................11 Military Construction Army (MCA) Funds ....................................................11 Energy Conservation Investment Program (ECIP) .............................................12 Installation Operations and Maintenance (O&M) Funds .....................................14 Enhanced Use Leasing (EUL) .....................................................................14 DOE Financial and Technical Assistance........................................................15 State and Utility Public Benefits and Incentive Programs .....................................15 Power Purchase Agreement ........................................................................16 Energy Savings Performance Contract (ESPC) .................................................17 Utility Energy Service Contract ...................................................................18 Types of Utilities ..................................................................................... 22 v vi Making the Connection: Beneficial Collaboration Between Army Installations and Energy Utility Companies Investor-Owned Utilities .......................................................................... 22 Publicly Owned Utilities .......................................................................... 24 Cooperative Utilities ............................................................................... 24 Federal Utilities .....................................................................................25 Historical Rate Regulation and Recent Restructuring .........................................25 CHAPTER THREE How Installations Collaborate with Utility Companies