# Presentation: 666605

## 
Jacob R. Moser
Director

Presented To:
FUPWG
Oct 2003 

**Jacob R. Moser**
**Director**
**Presented To:**
**FUPWG**
**Oct 2003**

- DEFENSE ENERGY SUPPORT CENTERInstallation Energy CBU (DESC-A)Update

## Installation Energy Mission

**Coal**
- Procurement of coal, testing and delivery for DoD and Federal Civilian Agencies within CONUS.
**Electricity**
- Competitive acquisition support for Department of Defense and Federal Civilian agencies buying electricity in states that have implemented deregulation.
**Natural Gas**
- Centralized procurement support for direct supply natural gas for Military Installations and Federal Civilian Agencies throughout the continental U.S.
**Internal Support**
- Provides technical and contracting support in developing, evaluating and implementing more efficient and streamlined business processes; formulating improved procurement strategies to meet the challenges of a volatile energy market and executing special projects

## Risk Mitigation / Management Support
Partnering w/ IMA to execute strategy for Army customers
Centralized (IMA) risk management philosophy/approach
Managing price volatility, limiting price risk 
Implementing risk mitigation strategy that meets customer needs
Updating process as market evolves
Partnering with other installations as well

**Risk Mitigation / Management Support**
**Partnering w/ IMA to execute strategy for Army customers**
**Centralized (IMA) risk management philosophy/approach**
**Managing price volatility, limiting price risk **
**Implementing risk mitigation strategy that meets customer needs**
**Updating process as market evolves**
**Partnering with other installations as well**

- Natural Gas Program

## Program Highlights of FY2003:
Dyess AFB’s 100% renewable purchase initiative
DOD & Federal Civilian Agency TX purchase
1,366,854,540 kWh to BP Energy (5% - 10% renewable)
32,544,640 kWh to Reliant Energy
84,203,714 kWh to Utility Choice LLC (SB)
Two NJ contracts awarded using Locational Marginal Pricing
Executed several PJM Curtailment Service Provider agreements
Small businesses awards (Small Disadvantaged Businesses)
Utility Choice Electric - $3.5 M over two years (TX) 
Liberty Power - $400K over three years (NY)
Supported EPA Green Tag Procurement

**Dyess AFB’s 100% renewable purchase initiative**
**DOD & Federal Civilian Agency TX purchase**
**1,366,854,540 kWh**** to BP Energy (5% - 10% renewable)**
**32,544,640**** kWh to Reliant Energy**
**84,203,714**** kWh to Utility Choice LLC (SB)**
**Two NJ contracts awarded using Locational Marginal Pricing**
**Executed several PJM Curtailment Service Provider agreements**
**Small businesses awards (Small Disadvantaged Businesses)**
**Utility Choice Electric - $3.5 M over two years (TX) **
**Liberty Power - $400K over three years (NY)**
**Supported EPA Green Tag Procurement**

- Electricity Program

## DESC supported EPA Green Tag/REC buy
Solicitation
Stated $$$ to spend
Described mix (50% wind & 50% landfill gas)
Each type to be evaluated separately
Preference for “local” region
Awards
Awardee: 3 Phases Energy Services
$ Amount: $0.0045/kWh from Algona, IA 
Total $: 45,000
Type of Renewable: Wind Energy
Total kWh of RECs: 10,000,000 kWh
Awardee: Sterling Planet
$ Amount: $0.00235 /kWh from Jacksonville, FL
Total$: 46,600
Type of Renewable: Landfill gas
Total kWh of RECs: 19,829,787
Process was quick & efficient w/ low transaction cost*

- * My Humble Opinion Only (MHOO)

- DESC supported EPA Green Tag/REC buy
- Solicitation
- Stated $$$ to spend
- Described mix (50% wind & 50% landfill gas)
- Each type to be evaluated separately
- Preference for “local” region
- Awards
- Awardee: 3 Phases Energy Services
- $ Amount: $0.0045/kWh from Algona, IA
- Total $: 45,000
- Type of Renewable: Wind Energy
- Total kWh of RECs: 10,000,000 kWh
- Awardee: Sterling Planet
- $ Amount: $0.00235 /kWh from Jacksonville, FL
- Total$: 46,600
- Type of Renewable: Landfill gas
- Total kWh of RECs: 19,829,787
- Process was quick & efficient w/ low transaction cost*

## If buying electrons
NAICS: 221112 (Hydro = 221111)
Commodity (end item of supply) 
Despite NAICS
SBA
GAO
Manufactured = non-manufacturer rule
If buying REC/Tags
NAICS: 221119 
Commodity (end item of supply) 
Not Manufactured = no non-manufacturer rule
Electron = electron
REC is attribute from type of generation/fuel

**NAICS: 221112 (Hydro = 221111)**
**Commodity (end item of supply) **
**Despite NAICS**
**SBA**
**GAO**
**Manufactured = non-manufacturer rule**
**If buying REC/Tags**
**NAICS: 221119 **
**Commodity (end item of supply) **
**Not Manufactured = no non-manufacturer rule**
**Electron = electron**
**REC is attribute from type of generation/fuel**

- Renewable Lessons Learned

## Behind the Curtain (1 of 3)

- What people see:

- End User
- w/ some %renewable

- Source

**Incoming electrons with some % green**

## MHOO

***MHOO***

- 2 of 3

- 1

- 3

- 2

- 4

## Behind the Curtain (3 of 3)

- Path 1 (MHOO)
- End-user “owned”
- “Direct” contract with renewable generator
- Unless resource always exceeds demand, “shaping” from non-renewable
- Some “non-renewable” benefits (long-term fixed fuel cost)
- Paucity of supply, long term approach
- Paths 3 & 4 (HHOO)
- Essentially equivalent
- Differs by:
- Point at which electron and REC are “re-bundled” (prior to or after delivery)
- Contract path from which electron and REC are received
- Market exists now
- Advantages from “contracting” perspective
- Path 2 (MHOO)
- Supply “owns” renewable generation
- Unless resource always exceeds demand, “shaping” from non-renewable
- Usually is, in reality, a REC “accounting exercise” more than physical reality
- Some marketing/perception benefits

## Thanks

- Thanks - Slides should get posted