# Annual Report to the Oregon Public Utility Commission April 15, 2003

# Table of Contents

Executive Summary ...............................................................................................1

1. Introduction .......................................................................................................3

2. Background .........................................................................................................3

3. Summary of 2002 Activities .......................................................................3

4. Energy Efficiency Program Accomplishments ..................................5

5. Renewable Energy Program Accomplishments ...............................8

6. Outreach and Communication Accomplishments .........................9

Appendices

Appendix 1 Audited Energy Trust of Oregon Financ ial Statements for the Fiscal Period October 1, 2001 – September 30, 2002

Appendix 2 Unaudited Energy Trust of Oregon Inc ome Statement for the Fiscal Period October 1, 2002 – December 31, 2002

Appendix 3 Energy Trust 2002 Program and Project Descriptions

Appendix 4 Energy Trust Progress in 2002 Toward Goals for 2002 and 2012

Appendix 5 Energy Trust Board and Ad visory Council Rosters

Appendix 6 Energy Trust 2002 Board Development Guidelines

Appendix 7 Partial List of Energy Trust Peer and Partner OrganizationsEnergy Trust 2002 Annual Report to the Oregon Public Utility Commission April 15, 2003

1 

## Executive Summary

The Energy Trust of Oregon, Inc., fulfills a visi on held by a coalition of over one hundred community and social service organizations. In partnership with utilities and large Oregon industries, the coalition persuaded the 1999 Oregon legislature to set aside 3% of Portland General Electric and Pacific Power utility bills fo r energy-related “public purposes.” The measure is part of Oregon’s electric en ergy restructuring legislation.

Starting March 1, 2002, three-quarters of thes e public purpose funds were directed to the nonprofit, independent Energy Trust under an agreement with the Oregon Public Utility Commission. The Energy Trust was created to st reamline and stabilize en ergy conservation and renewable energy programs across PGE and Pacific Power service territories, delivering benefits to 1.3 million electricity users.

In only 10 months of operation, the Energy Tr ust of Oregon, Inc., has initiated award-winning programs and delivered money-saving serv ices to thousands of Oregonians.

Energy Efficiency Results

Total energy efficiency savings for 2002 exceed the Energy Trust’s 2002 goal by 7% and represent 4.5% of the Energy Trust’s go al to save 300 average megawatts by 2012. The 2012 goal would meet nearly a third of the projecte d growth in Oregon’s el ectricity needs over 10 years – enough to power a city twice the size of Bend.

The Energy Trust invested $13.7 million in partne rship with PGE and Pacific Power to continue efficiency services for their customers. These pr ograms saved 9.0 average megawatts by year’s end. In addition, $519,344 was used to launch fo ur initial Energy Trust quick-savings programs, achieving a savings of .3 average megawatts. The investment of $2.7 million in a market transformation partnership with the Northwes t Energy Efficiency Alliance saved 4.1 average

megawatts.

While efficiency services to electric customer s continued without pause, two of the Energy Trust’s quick-savings programs won national recognition from the American Council for an Energy Efficient Economy as example s of energy efficiency best practices. Two other major longterm programs were designed. By year end, on e had been awarded to a competitively selected

program management contractor.

Renewable Energy Results

Total 2002 renewable energy commitments exceed 2002 goals by 13% and represent 4% of the Energy Trust’s goal to provide one-tenth of Oreg on’s electric energy from renewable energy resources by 2012. The 2012 goal represents an ei ght-fold increase in the amount of renewable energy available to Oregonians.

Between March and December 2002, the Energy Trus t approved six renewa ble energy projects expected to generate 18.1 average megawatts of clean energy. Three other projects were recommended for funding.

In addition to funding solicitations and de cisions, the Energy Trust began design of a comprehensive program to promote the widespread application of solar energy technology in Oregon homes and businesses.Energy Trust 2002 Annual Report to the Oregon Public Utility Commission April 15, 2003

2 Benefits to Oregonians from Energy Trust 2002 Programs

• 12,567 homes and 1,583 businesses enjoy impr oved electric energy efficiency and related power bill savings

• 13 Oregon communities received energy-saving green light-emitting-diode traffic lights

• Nearly 1,000 manufactured home owners and residents in 23 Oregon communities save an average of 6 percent on their power bills

• An Oregon restaurant saves 12% annually through a new energy management system

• Funding is committed to increase Oreg on energy from wind power by 20%

• Solar power helps run the laundry in a Sutherlin affordable housing project and supplements a downtown Portland office building’s energy supply

• Eight Habitat for Humanity-built homes in Bend use solar hot water systems

• $7.8 million in wages, $1.5 million in new bus iness income and creation of 204 new jobs related to energy efficiency investments in 2002, assuming these investments would not

have occurred in the absence of the Ene rgy Trust and public purpose collections

• 166.2 thousand tons less carbon dioxide output , the equivalent of taking 33,244 cars off the road or planting nearly 45 thousand acres of trees

A Transparent, Responsive Approach

Meetings of the Energy Trust’s independent boar d of directors and its two standing advisory councils are announced in advance and open to the public. Meeting minutes and discussion documents are posted on the organ ization’s easy-to-use website, www.energytrust.org . Wideranging public outreach solicits participat ion by a variety of consumers, community representatives, trade organizations, unions, ut ilities, nonprofit organizations and government officials. Virtually all aspects of the Energy Tr ust’s operating framework, policies, strategic direction, programs, contracting, budgeting and other activities are developed with public input

and review from diverse advisors.

The Energy Trust’s commitment to open, access ible decision making led a journalist to note: “This organization is putting the public in public purposes.” 1

1 Mark Ohrenschall, editor of ConWeb on-line newsletter, writing in the May 2002 newsletter of the Northwest Energy Efficiency Council.Energy Trust 2002 Annual Report to the Oregon Public Utility Commission April 15, 2003

3 

## 1. Introduction

The mission of the Energy Trust of Oregon, Inc., is to change how Oregonians produce and use energy by investing in efficient technologies and renewable resources that save dollars and protect the environment. In its initial year of op eration, the Energy Trust maintained services for PGE and Pacific Power customers while designing its own energy efficien cy programs, approving major renewable energy projects and implementing severa l award-winning “quick savings” efficiency initiatives. The organization set up an offi ce and hired a small staff. It created operating policies, principles and program desi gns in an open, public forum. It achieved significant results.

This annual report was prepared to meet requirements of the Grant Agreement between the Energy Trust and the Oregon Public Utility Commission (OPUC).



## 2. Background

The nonprofit Energy Trust of Oregon, Inc., wa s established in March 2001 in keeping with Oregon’s electric energy restructuring law, SB 1149. The law, adopted by the Oregon legislature in 1999, directed the Oregon Public Utility Commi ssion to select an organization to manage the investment of public purpose funds in programs that save electricity and develop renewable energy resources. In November 2001, OPUC si gned an agreement with the Energy Trust for

these services.

OPUC and others shared the vision that an in dependent, nongovernmental organization could streamline management of conservation and re newable programs across the two utility service territories and provide stable funding over the 10-year life of the public purpose charge. Operating efficiencies and a market-based approa ch would maximize electricity savings and clean power production.

Initial members of the Energy Trust citizen bo ard of directors were named by the OPUC in

March 2001. An interim executive director worked under contract to establish two advisory councils, draft an interim strategic plan and hire a permanent executive director. Margie Harris, selected as executive director in November 2001, began hiring staff and negotiated transition agreements with the two electric utilities collecting public purpose funds, Portland General Electric and PacifiCorp. Under these agreements , PGE and Pacific Power continued their energy conservation programs while the Energy Trus t designed and began implementing its own

programs.

The Energy Trust officially opened its doors on March 1, 2002, the day designated by SB 1149 for the start of public purpose charge collection. This annual report covers the period starting March 1 and ending December 31, 2002. Audited fi nancials in the report cover the period from March 1 through September 30, 2002, then the desi gnated end of the Energy Trust’s fiscal year. (Starting in 2003, the Energy Trust fiscal year shifts to a calendar year. The audit for 2003 will include the last three months of 2002.)



## 3. Summary of 2002 Activities

The new organization hired a small staff. The board of directors met monthly to develop operating policies and oversee program investments.Energy Trust 2002 Annual Report to the Oregon Public Utility Commission April 15, 2003

4 As required by its agreement with the OPUC, the Energy Trust created an action plan to guide its initial months of operation from March 1 thro ugh September 30, 2002. This initial action plan outlined an extensive process of public outrea ch to shape a five-year strategic plan and companion two-year action plan for the period starting October 1, 2002. The outreach effort included public meetings in 12 communities from Coos Bay to Enterprise. In addition, the Energy Trust met with stakeholder organizations an d individuals, and held monthly meetings of two advisory groups, the Conservation Adviso ry Council and the Renewable Energy Advisory

Council.

Organizational accomplishments during the Energy Trust’s first 10 months of operation, from
March 1-December 31, 2002, include:

• Assured utilities would continue providing en ergy efficiency services while the Energy Trust ramped up its own programs.

• Hired core staff of 18 by December 31 (t oward a maximum of 25 through the end of 2003).

• Established policies and procedures that:

- Balance the risk of innovative approaches against the need for reliable results

- Assure equitable distribution of benefits to residential, commercial and industrial electricity users

- Assure funding goes toward cost-effe ctive energy conservation and abovemarket costs of renewable power, as required by SB 1149

- Define approach to evaluation, monitori ng and verification of program results

• Created initial action plan for first seven months.

• Conducted wide-ranging public outreach to understand needs and seek ideas for Energy Trust programs.

• Created a website and call center to share information.

• Completed studies of energy efficiency “best practices” and renewable energy “innovative practices.”

• Initiated an interim assessment of en ergy efficiency resources in Oregon.

• Commissioned an analysis of the economic and multiplier effects of Energy Trust expenditures in 2002 and budgeted expendit ures in 2003 to capture job creation and other non-energy benefits of Energy Trust activities.

• Adopted a five-year strategic plan for 2002-20 07 and two-year action plan for Oct. 1, 2002 - Sept. 30, 2004.

• Presented quarterly reports to the OPUC in May, September and December of 2002.

• Conducted an independent audit of financial re cords and internal controls for the period from October 1, 2001 to September 30, 2002. See Appendix 1. (Note: financial reportEnergy Trust 2002 Annual Report to the Oregon Public Utility Commission April 15, 2003

5 for the additional fiscal period October 1, 2002, to December 31, 2002, is also attached

– Appendix 2 .)

• Maintained average administrative costs at 3.4% of revenue for the 15-month period October 1, 2001 through December 21, 2002.



## 4. Energy Efficiency Pr ogram Accomplishments

By law, 56 percent of public purpose funds suppo rt energy efficiency in homes and businesses. Efficient buildings, lighting, appliances, manuf acturing and farm equipment help businesses perform better with less electricity. Energy cons ervation programs in the Northwest began in the late 1970s. Over the ensuing 25 years, utilit y investment in conservation rose and fell in cycles. By helping stabilize investment levels , the Energy Trust and public purpose funds strengthen and help develop the energy efficiency service sector. In turn, they also strengthen the overall economy by helping businesses opti mize their resources retain jobs and remain
competitive.

Goals

The Energy Trust established a goal to he lp consumers save 300 average megawatts of electricity by 2012, emphasizing results from long-lasting energy efficiency measures. Accomplishing this goal would meet more th an 30% of the projected growth in Oregon electricity needs for the next 10 years – enough to power a city more than twice the size of

Bend.

Two related goals would extend Energy Trust programs to consumers who historically have not benefited from such programs, and help create a stable economy in which businesses promoting energy efficiency (and renewabl e energy) succeed and thrive.

2002 energy efficiency program results

1. Utility transition programs: To assure energy savings and to sustain service to electricity users, the Energy Trust contracted with PGE and PacifiCorp to continue their energy efficiency programs. By the end of Dece mber 2002 these “transition programs” had saved 9.0 average megawatts of electricity (79,116,826 million kilowatt hours) at a cost
of $13.7 million.

2. Quick-savings programs: Additionally, the Energy Trust im plemented four “quick-savings” programs of its own design. By the end of December 2002, the $519,344 invested in these programs had saved .3 average megaw atts of electricity (2,674,019 kilowatt hours). The quick-savings programs included green light-emitting-diode traffic lights, duct-sealing for mobile homes, restaurant energy management systems and low-interest energy efficiency loans fo r government buildings. 2

3. Market transformation: The Energy Trust invested $2.7 million in market transformation activities through the Northwest Energy Effi ciency Alliance. These efforts saved 4.1 average megawatts of electricit y (36,177,950 kilowatt hours).

2 The American Council for an Energ y-Efficient Economy (A CEEE) selected the duct-sealing and green light-emitting-diode streetlight programs to receive national recognition as two of America’s best energy efficiency programs.Energy Trust 2002 Annual Report to the Oregon Public Utility Commission April 15, 2003

6 (See Appendix 3 for descriptions of Ener gy Trust programs and projects in 2002 .)

2002 Energy Trust efficiency program benefits to Oregonians

• 12,567 homes and 1,583 businesses improved their electric energy efficiency and enjoyed related reductions in their power bills.

• 13 Oregon communities received 2,781 green light-emitting-diode traffic lights at onethird the typical cost. The bulbs use 90.6% less electricity and last 3.5 times as long as conventional incandescent green traffic lights.

• Owners and residents of 967 manufactured homes in 23 Oregon communities saved an average of 6% of their home electric bills after the Energy Trust provided free duct sealing.

• One Oregon restaurant had a newly insta lled energy management system, saving an estimated 12% annually. At least 59 other restau rants are eligible for the same benefit in

2003.

• A low-interest loan program (2%) was availa ble to governments and other institutions for energy efficiency improvements. One co mmitment for a project at Oregon State University will install a chiller with lifet ime energy savings estimated at 6,231 megawatt

hours.

• Oregon businesses and residents benefited from programs of the Northwest Energy Efficiency Alliance to promote energy effici ent appliance sales, green building design, energy control systems and other progra ms to make affordable, energy-efficient products and services availa ble in the marketplace.

• A study of Energy Trust energy efficiency investments in 2002 by Eco Northwest concluded that these efforts generated $7 .8 million in wages, $1.5 million in new

business income and the creation of 204 ne w jobs, assuming these investments would not have happened in the absence of the Energy Trust and public purpose collections.

• Energy Trust energy efficiency prog rams reduced carbon dioxide (CO 2 ) output by nearly 70.9 thousand tons, the equivalent of taki ng 14,180 passenger cars off the road or planting 19 thousand acres of trees to sequester CO 2

.

Energy Trust energy efficiency savings in 2002

Below is a breakdown of 2002 electric energy savi ngs by service territory and market sector.Energy Trust 2002 Annual Report to the Oregon Public Utility Commission April 15, 2003

7 Energy Trust progress in 2002 toward energy efficiency goals

Together, Energy Trust energy efficiency initiati ves saved 13.5 average megawatts of electricity (117 million kilowatt hours) between March 1 and December 31, 2002. This savings represents 4.5% of the Energy Trust’s 2012 goal of 300 av erage megawatts of elec tricity saved through energy efficiency measures, and 107.2% of our 2002 goal. See Appendix 4.

Evaluations

The Energy Trust established a policy and plan to evaluate all efficiency and renewable energy programs. Evaluations will establish reliable esti mates of savings and suggest improvements in marketing and delivering programs. Evaluations of the green light-emitting diode streetlight and duct-sealing programs were begun in 2002, al ong with an evaluation of market status of residential energy-efficient windows. Evalua tion results will be available in 2003.

Status of Energy Trust efficiency program designs

By end of 2002, the Energy Trust had defined our program approach to serving existing commercial facilities. A competitive request fo r proposals for the Building Efficiency program management contractor was issued in October. It attracted five respon ses, from which Aspen Systems Corporation was selected to run the program, set to start February 1, 2003.

The Energy Trust also complete d the program design for existing residences. A request for proposals for the Home Energy Savings progra m was issued in November. It drew six responses, and by year end th e proposals were being reviewed . The program was set to start
March 1, 2003.

Planning for three more major energy efficien cy programs began. Service delivery for the New Building Efficiency, Industrial Process Efficiency and New Home Energy Savings programs will begin by summer 2003.

Status of NW Natural gas programs

A decoupling settlement between the OPUC and NW Natural Gas (02-634, September 12, 2002) directed NW Natural to fund the new ener gy efficiency programs and transfer existing energy efficiency programs to th e Energy Trust or another independent entity approved by the

OPUC.

The Energy Trust and NW Natural entered into negotiations to fund new and enhanced programs, and define a Memorandum of Unde rstanding to broadly govern the working relationships between the two parties in th eir efforts to promote energy efficiency. 2002

kWh aMW kWh aMW kWh aMW

Residential 28,132,332 3.211 10,905,952 1.245 39,038,284 4.456

Commercial 42,621,949 4.866 18,781,635 2.144 61,403,584 7.010

Industrial 8,158,369 0.931 9,368,558 1.069 17,526,927 2.001

All sectors 78,912,650 9.008 39,056,145 4.458 117,968,795 13.467 PGE territory Pacific Power territory Combined

Note: Figures include energy savings for transition, quick savings and market transformation

programs.Energy Trust 2002 Annual Report to the Oregon Public Utility Commission April 15, 2003

8 Additional funding will cover Energy Trust “succe ssor programs” to take the place of existing NW Natural gas programs. That funding will be determined through settlement of NW

Natural’s rate case with the OPUC and will become available late in 2003.



## 5. Renewable Energy Program Accomplishments

SB 1149 dedicates 17 percent of public purpose f unds to generating electricity from renewable energy resources like wind, solar, animal and plant waste, and underground hot water (geothermal).

Goals

The Energy Trust established a goal to provide 10% of Oregon’s electric energy from renewable resources by 2012. This represents an eight-fold increase in the amount of renewable energy available to Oregonians. At least 450 average mega watts of new clean powe r is needed to meet the goal, enough to meet more than half of Or egon’s anticipated electricity growth over the

next decade.

2002 renewable energy programs

There were no ready-to-go renewable energy programs for the Energy Trust to support on March 1, 2002. Central power stations that pr oduce electricity for many thousands of homes and businesses can take months or years to site and build. Advance planning is needed to ready technologies like solar electric for widespread a pplication. Installer networks must be trained. The benefits, in terms of renewable power generate d, typically follow the initial investment by months or years.

The Energy Trust approved several renewable energy projects in 2002:

1. Combine Hills Turbine Ranch: In June the Energy Trust issued a request for proposals for one or more large wind turbine developments. By the end of the year negotiations were moving forward on a 41-megawatt (14.25 average megawatt) wind central station near Milton-Freewater. The developer, Eurus Oregon Wind Power, plans to begin generating power by December 2003, pending a power purchase agreement with PacifiCorp.

2. Three-Mile Canyon Farms Biogas Project: In June the Energy Trust approved funding for a 4.1-megawatt (3.85 average megawatt) biogas project at a large dairy farm near Boardman. An unexpected delay in the po wer purchase agreement between the farm and PGE had not been resolved by the end of 2002.

3. Unsolicited Proposals: The Energy Trust sets aside a po rtion of its renewable energy budget for unsolicited proposals. Nineteen uns olicited renewable energy proposals were
received in 2002, of which four had been a pproved for funding by the end of 2002. The approved projects were:

• 22.4 kilowatt photovoltaic installation on an office building in Portland’s Brewery Blocks development.

• Solar hot water systems for eight Ha bitat for Humanity homes in Bend.

• Wind anemometer loan program to measure and test suitability of wind for

small to mid-sized wind turbines.

• 3.9 kilowatt solar photovoltaic system in Sutherlin to produce 4,700 kilowatt hours per year to power laundry facilit ies in an affordable housing projectEnergy Trust 2002 Annual Report to the Oregon Public Utility Commission April 15, 2003

9 Other unsolicited projects reco mmended for funding in 2002 were:

• A small hydro project with the City of Albany to revive 511 kilowatts of generation, producing 2,561,000 kilowatts per year at their municipal water

facilities.

• 60-kilowatt microturbine demonstration project using waste biogas from the Durham Water Treatment facility in Tiga rd to produce 442,000 kilowatt hours

per year

• 25-kilowatt small wind turbine to help power an irrigation system for an orchard in Hood River producing 40,000 kilowatt hours per year

See Appendix 3 for descriptions of Energy Trust programs and projects in 2002.

Energy Trust progress in 2002 toward renewable energy goals

For the most part, renewable energy projects do not begin generating power for months or years after financing is approved. Looking forw ard, Energy Trust renewable energy projects approved in 2002 are expected to generate 18. 1 average megawatts of electricity. This achievement would represent 4% of our renewa ble energy goal for 2012, and 113% of our 2002 goal for renewable energy generation. See Appendix 4.

2002 Energy Trust renewable energy benefits to Oregonians

Projecting forward, Energy Tr ust renewable energy projects approved in 2002 will benefit Oregon’s economy and environment.

• Energy Trust renewable energy programs reduced carbon dioxide (CO 2 ) output by nearly 95.3 thousand tons, the equivalent of taking 19,064 passenger cars off the road or planting nearly 26 thousand acres of trees to sequester CO 2

.

Status of planning for more Energy Trust renewable energy programs

In fall 2002, the Energy Trust conducted statewid e focus groups with representatives of the Oregon solar energy industry as a first step in designing a comprehensive program to promote widespread application of solar technology in Oregon homes and businesses. The program was being readied for launch in spring 2003. A baseline analysis of the solar industry and market in Oregon was launched in preparation for the final drafting of an integrated solar program for PacifiCorp and PGE ratepayers.

Programs to promote small to mid-sized wind tu rbines, geothermal power and biomass projects are scheduled for implementation in 2003 and 2004.



## 6. Outreach and Communication Accomplishments

Commitment to open, public decision making is a cornerstone of the Ene rgy Trust’s operations, The Energy Trust drew an early characterization by the energy conservation news organization Con-Web: “This organization is putting the “public” in public purposes.”

Goals

One of the Energy Trust’s goals is to encourage Oregonians to integrate energy efficiency and renewable resources into their daily lives. In part this is achieved by effective communications that explain and attract participation in Energy Trust programs.Energy Trust 2002 Annual Report to the Oregon Public Utility Commission April 15, 2003

10 2002 communication tools

The Energy Trust’s chief communications vehicle is its web page, www.energytrust.org . Agendas and pertinent documents are posted there in ad vance of advisory council and board meetings. Minutes, board actions and reports are kept in th e archives section. In formation requests are encouraged and promptly answered.

By year end, the organization had procured a toll-free telephone number, 1-866-ENTRUST. A contract call center was engaged to refer callers to Energy Trust programs as they begin coming on line starting February 2003.

Following a competitive selection, won by a smal l advertising agency base d in Salem, the Energy Trust logo was redesigned and gu idelines developed for the family of print materials to be developed in 2003 and used by program management contractors.

Board and Advisory Councils

The Energy Trust’s two advisory councils, th e Conservation Advisory Council (CAC) and the Renewable Energy Advisory Council (RAC), meet monthly and are open to all. Notice of each
meeting is sent to anyone expressing interest, a list that by year end comprised 46 individuals interested in the Renewable Energy Advisory Council and 155 on the Conservation Advisory Council’s distribution list. Agendas, meeting notes and packet materials are posted on the web.

The two groups reviewed and discussed every ma jor Energy Trust policy and program initiative. The CAC considered proposed en ergy efficiency policies and programs, while the RAC focused on renewable energy policies and projects.

The Energy Trust Board of Directors met nine time s in 2002. Notice of board meetings is sent via email to a growing list totaling several hundred individuals by the end of 2002. Board agendas, minutes and packet materials are posted in advance on the web.

Membership rosters of the board and advisory councils are included in Appendix 5.

2002 outreach

The Energy Trust executive director and lead st aff traveled to 12 communi ties around the state in 2002. In each community, meetings open to th e public were announced in local papers and by advance email and regular mail notice to a list of nearly 2,000 potentially interested individuals.

An initial set of meetings in April and May soug ht to gather ideas for the Energy Trust’s strategic and action plans. Draft plans were discussed at the second round of meetings in September. Communities hosting meetings included Bend, C oos Bay, Enterprise, Hermiston, Klamath Falls, Medford, Pendleton, Portland, Roseburg, Salem, Seaside and Tigard.

Energy Trust staff maintains ongoing communications and working partnerships with a wide range of organizations throughout the state. In addition, we exchange information and participate in a number of national and internatio nal organizations. A partial list is included in Appendix 7

.

# Appendix 1 Energy Trust of Oregon, Inc.

Financial Statements as of and for the Year Ended September 30, 2002 and Report of Independent AccountantsE N E R G Y T R U S T O F O R E G O N , I N C .

TABLE OF CONTENTS

Page

Report of Independent Accountants 3

Financial Statements:

Statement of Financial Position 4

Statement of Activities 5

Statement of Cash Flows 6

Notes to Financial Statements 7

Supplementary Financial Information:

Schedule of Functional Expenses 12

Other Information:

Governing Board and Management 13

Inquiries and Other Information 144 E N E R G Y T R U S T O F O R E G O N , I N C .

STATEMENT OF FINANCIAL POSITION

S E P T E M B E R 3 0 , 2 0 0 2

( W I T H C O M P A R A T I V E A M O U N T S F O R 2 0 0 1 )

2002 2001

Assets: Cash and cash equivalents $ 54,413 7,553

Short-term investments (note 4) 8,950,260 – Accrued interest receivable 8,835 – Advances paid to contractor 225,484 – Prepaid expenses 27,923 1,856 Office furnishings and equipment (note 5) 163,343 4,338 Long-term deposit 10,412 –

Total assets $ 9,440,670 13,747

Liabilities: Accounts payable and acc rued expenses 2,284,468 56,666 Accrued payroll and related expenses 82,271 –

Total liabilities 2,366,739 56,666

Unrestricted net assets: Available for programs and general operations 6,910,588 (47,257) Net investment in capital assets 163,343 4,338

Total unrestricted net assets 7,073,931 (42,919)

Commitments (notes 6, 9, 10 and 11)

Total liabilities and net assets $ 9,440,670 13,747

See accompanying notes to financial statements.5 E N E R G Y T R U S T O F O R E G O N , I N C .

STATEMENT OF ACTIVITIES

Y E A R E N D E D S E P T E M B E R 3 0 , 2 0 0 2

( W I T H C O M P A R A T I V E T O T A L S F O R T H E P E R I O D F R O M M A R C H 1 , 2 0 0 1 ( D A T E O F I N C E P T I O N ) T H R O U G H S E P T E M B E R 3 0 , 2 0 0 1 )

2002 2001

Revenues, gains and other support: Public purpose funding (note 7) $ 19,160,688 395,216 Private contributions 6,998 – In-kind contributions 99,191 3,145
Interest income 31,650 37

Total revenues, gains and other support 19,298,527 398,398

Expenses (note 8) : Program services: Energy efficiency 10,923,304 47,653 Renewables 211,976 20,774 Communication and outreach 323,652 – Capacity building – 225,618

Total program services 11,458,932 294,045

Management and general 722,745 147,272

Total expenses 12,181,677 441,317

Increase (decrease) in net assets 7,116,850 (42,919)

Net assets at beginning of year (42,919) –

Net assets at end of year $ 7,073,931 (42,919)

See accompanying notes to financial statements.6 E N E R G Y T R U S T O F O R E G O N , I N C .

STATEMENT OF CASH FLOWS

Y E A R E N D E D S E P T E M B E R 3 0 , 2 0 0 2

( W I T H C O M P A R A T I V E T O T A L S F O R T H E P E R I O D F R O M M A R C H 1 , 2 0 0 1 ( D A T E O F I N C E P T I O N ) T H R O U G H S E P T E M B E R 3 0 , 2 0 0 1 )

2002 2001

Cash flows from operating activities: Cash received in public purpose funding $ 19,160,688 395,216 Interest received 31,650 37 Cash from contributions and other sources 29,813 – Cash paid to contractors, suppliers and employees (9,966,613) (383,107)
Interest expense (61,952) –

Net cash provided by operating activities 9,193,586 12,146

Cash flows from investing activities: Capital expenditures (164,816) (4,593) Net purchases of short-term inve stments (8,950,260) – Reinvestment of interest income (31,650) –

Net cash used in investing activities (9,146,726) (4,593)

Net increase in cash and cash equivalents 46,860 7,553

Cash and cash equivalents at begi nning of year 7,553 –

Cash and cash equivalents at end of year $ 54,413 7,553

See accompanying notes to financial statements.7 E N E R G Y T R U S T O F O R E G O N , I N C .

NOTES TO FINANCIAL STATEMENTS

Y E A R E N D E D S E P T E M B E R 3 0 , 2 0 0 2

1. Organization

The Energy Trust of Oregon, Inc. (the EnergyTrust) began operations as a nonprofit organization in March of 2001 to fulfill a mandate to invest “public purpose funding” for energy efficiency and renewable energy resources in Oregon.The mandate emerged from 1999 energy restructuring legislation (Oregon Senate Bill 1149) that included a 3.0% public purposes investment to the rates collected in Oregon by the two largestinvestor-owned utility companies. Subsequent action by the Oregon Public Utility Commission encouraged the start-up of a new nonprofit organization to administer the energy efficiency and renewable resource portions of these funds.

On November 20, 2001, the Energy Trust entered into a grant agreement with the Public Utility Commission of Oregon to control the manner in which the Energy Trust will receive and expendfunds for the statutory purposes and in conformity with the requirement and intent of the Oregon Senate Bill 1149. The agreement is effective as of March 1, 2002 for a term of three years fromthe effective date, with provisions for an automatic extension for one additional year for a rolling three-year commitment through 2012.

When fully operational, the Energy Trust expects the public purpose funding described above to generate approximately $45 million annually. 2. Program Services

The Energy Trust seeks a future that includes reliable and affordable power for all consumers, informed energy consumers whose consumptionpatterns are efficient and responsible, energy supplies that have the lowest possible environmentalimpacts, and increasing reliance on renewable resources and corresponding reductions in greenhouse gas emissions. The Energy Trust willevaluate efficiency and renewable programs to ensure reliability of energy savings and renewable
generation estimates. The evaluation functionwill also aid in enhancing the management, marketing, and overall effectiveness of all programs.

To that end, during the year ended September 30, 2002 the Energy Trust incurred development costs to guide future investment in the following major
categories:

Energy Efficiency – Investments in cost effective energy efficiency, including programs that include all classes of electrical consumers; that stimulate innovation and quality service in the development and delivery of efficiency products and services; that make “state-of-the-art” energy technology commonplace; that integrate direct use energyapplications into energy efficiency efforts; that reduce peak loads and transmission and distribution costs; and that include partnership opportunities for energy efficiency activities with other energy providers.8 Renewables – Programs to diversify Oregon’srenewable energy resources, including investments that reduce the production costs and eliminate other barriers of ge nerating renewable energy by and for Oregon consumers; that demonstrate technologies and opportunities for distributed generating systems; that promote innovation and quality service within the renewable industry supporting Oregon; that promote the integration of renewable resources with sustainable buildingsand other energy efficiency projects; and that attract new private investment to renewable technologies.

Communication and Outreach

− Programs to provide the public with general information,

awareness and outreach ac tivities associated with communicating about the Energy Trust and the purpose and benefits of its mission. This includesthe timely involvement of key citizens and stakeholders in program development, the coordination of messages and marketing strategies to promote energy efficiency and renewable energy programs, and the development of a centralized information energy clearinghouse function.

Management and General

− Management and general expenses, sometimes referred to as administrative and general e xpenses, represent supporting services costs that are not identified with a single program activity, but that are indispensable

to the conduct of those activities and to the organization’s existence. They include oversight, business management, general recordkeeping,budgeting, and all management and administration except for the conduct of program services. 3. Summary of Significant Accounting

Policies

The significant accounting policies followed by the Energy Trust are described below to enhance

the usefulness of the financial statements to the

reader.

Basis of Accounting – The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles.

Basis of Presentation – Net assets and all balances and transactions are presented based on theexistence or absence of donor-imposed restrictions. Accordingly, the net assets of the EnergyTrust and changes therein are classified and reported as follows:

• Unrestricted net assets – Net assets not subject to donor-imposed stipulations.

• Temporarily restricted net assets – Net assets

subject to donor-imposed stipulations that will be met either by actions of the Energy Trust and/or the passage of time.

The Energy Trust did not receive or hold any temporarily restricted net assets during the year ended September 30, 2002.

Use of Estimates – The preparation of financial statements in conformity with generally accepted accounting principles requi res that management make estimates and assumptions that affect thereported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported

amounts of revenues and expenses during the reporting period. Actual re sults could differ from

those estimates.9 Investments – Investments are carried at marketvalue. Net appreciation in the fair value of investments, which consists of the realized gains orlosses and the unrealized appreciation (depreciation) of those investments, is shown in the statement of activities. Interest income is accrued as

earned.

Grants and Contributions – During the yearended September 30, 2002, the Energy Trust received $6,998 in contributions restricted for the underwriting of interest costs, and $99,191 in various in-kind contributions (see the followingparagraph). Grants and contributions, which include unconditional promises to give (pledges),are recognized as revenues in the period the commitment is received. Conditional promises to giveare not recognized until they become unconditional, that is when the conditions on which they depend are substantially met. Contributions of

assets other than cash are recorded at their estimated fair value.

In-Kind Contributions – Significant services received which create or enhance a non-financial asset or require specialized skills that the Energy Trust would have purchased if not donated are recognized in the statement of activities. During the year ended September 30, 2002, contributedservices valued at approximately $43,525 were recorded.

In-kind donations of equipm ent and other materials are recorded when there is an objective basis upon which to value the contribution and where the contribution is an essential part of the EnergyTrust’s activities. During the year ended September 30, 2002, $55,666 in contributed software and

other materials were recorded.

Capital Assets and Depreciation – Equipment iscarried at cost, and at market value when acquired by gift. Depreciation is provided on a straight-line basis over the estimated useful lives of the respective assets, which is generally 3 to 5

years. Revenue Recognition – All contributions and grants are considered available for unrestricted use unless specifically restricted by the donor. Public purpose funding is accounted for on the cash basis. Other service revenues are recognized at the time services are provided and the revenues

are earned.

Advertising Expenses

− Advertising and promotional costs are charged to expense as they are incurred.

Income Taxes

− The Energy Trust is exempt

from federal and state income taxes under Section501(c)(3) of the Internal Revenue Code and comparable state law.

Concentrations of Credit Risk

− The Energy Trust’s investments generally consist of money

market funds and other investments in cash equivalents. These financial instruments may subject the organization to concentrations ofcredit risk as, from time to time, balances may exceed amounts insured by the Federal Deposit Insurance Corporation, the market value of securities are dependent on the ability of the issuer tohonor its contractual commitments, and the investments may be subject to changes in market values. However, the Energy Trust strictly limits the banking institutions holding its funds to large money center banks and considers the attendant

risks to be minimal.

Conflict of Interest Policies – Included among the organization’s Board members, committee members, and executives are volunteers from the community who provide valuable assistance to the Energy Trust in the development of policiesand programs, and in the evaluation and oversight of services. The Energy Trust has established a conflict-of-interest policy whereby Board

and committee members must advise the Board of Directors of any direct or indirect interest in any transaction or relationship with the Energy Trust,and do not participate in discussions and decisions regarding any action affecting their individual, professional, or business interests.10 Summarized Financial Information for 2001 – The accompanying financial information as of and for the period from March 1, 2001 (date ofinception) through September 30, 2001 is presented for comparative purposes only and is notintended to represent a complete financial statement presentation.

Other Significant Accounting Policies – Other significant accounting policies are set forth in the financial statements and the following notes.

4. Short-Term Investments

At September 30, 2002, the Energy Trust held$8,950,260 in funds invested in money market instruments.

5. Office Furnishings and Equipment

A summary of office furnishings and equipment at September 30, 2002 is as follows:

Computer equipment and software $ 18,065 Leasehold improvements 88,460 Office equipment and furniture 62,885

169,410

Less accumulated depreciation (6,067)

$ 163,343

6. Line of Credit

At September 30, 2001, the Energy Trust has

available an unsecured line of credit in the amount of $4,000,000. Interest is at prime rate less 0.25%. The line matures on April 1, 2003.As of September 30, 2002, no balances were outstanding under the line of credit. 7. Public Purpose Funding

Public purpose funding received during the yearended September 30, 2002 is summarized as follows:

Portland General Electric: Energy efficiency $ 9,005,606 Renewables 2,774,138

11,779,744

PacifiCorp: Energy efficiency 5,657,037 Renewables 1,723,907

7,380,944

$ 19,160,688

The above figures are net of advances received for start-up costs incurred during the period ended September 30, 2001 and repaid.

8. Expenses

The costs of providing the various programs and other activities of the Energy Trust have been

summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among the programs and supporting

services benefited.11 9. Operating Lease Commitments

The Energy Trust leases its administrative offices under an operating lease agreement which expiresin August of 2007. At September 30, 2002, the aggregate annual commitments under the terms of this lease are p ayable as follows:

Years ending September 30,

2003 $ 109,323
2004 109,323
2005 110,624
2006 124,940
2007 114,528

$ 568,738

Rental expense for the ye ar ended September 30, 2002 totaled $30,594.

10. Retirement Plan

The Energy Trust provides all employees with aqualified profit sharing retirement plan as described under Section 401(k) of the Internal Revenue Code. Generally, employees who have completed at least three consecutive months of work may elect to make voluntary contributions to the plan on a pre-tax basis, up to the limits allowedby law. Employees select from various investment options. On a disc retionary basis as determined annually by the Board of Directors, the Energy Trust may make matching contributions to the plan. During the year ended September 30, 2002, the organization accrued an amount equalto 6.0% of the compensation of each eligible employee earned for the ni ne-month period ended September 30, 2002. Contributions to the plan from both the employees and the Energy Trust

vest as accrued. Reti rement plan expense recorded by the Energy Trust totaled $25,047 for the year ended September 30, 2001.

11. Contractual Commitments

As of September 30, 2002, the Energy Trust had entered into contract commitments totaling$29,136,674. Of this total, $20,872,184 is expected to be paid during the year ended September 30, 2003. 12. Statement of Cash Flows Reconciliation

The following presents a reconciliation of the increase in net assets (as reported on the statementof activities) to net cash provided by operating activities (as reported on the statement of cash flows):

Increase in net assets $ 7,116,850

Adjustments to reconcile increase in net assets to net cash provided by operating activities:
Depreciation 5,811

Reinvestment of interest
income 31,650 Net changes in: Accrued interest receivable (8,835) Advances paid to contractor (225,484) Prepaid expenses (26,067) Long-term deposit (10,412) Accounts payable and accrued expenses 2,227,802 Accrued payroll and related
expenses 82,271

Total adjustments 2,076,736

Net cash provided by operating activities $ 9,193,586

13. Subsequent Event

Pursuant to an order by the Oregon Public Utility Commission in September of 2002, Northwest Natural filed a tariff implementing public purposefunding from residential and commercial customers with an effective date of October 1, 2002. Part of this funding will be forwarded to the EnergyTrust for the creation of enhanced energy efficiency programs. A funding agreement between Northwest Natural and the Energy Trust will bedated October 1, 2002 for the purpose of establishing the transfer of funds and initial expenses.The first receipt of public purpose funds is expected on November 20, 2002. A program implementation and transition agreement regardingthe programs to be funded is planned for execution in the first calendar quarter of 2003.Communi- Mana g eEner gy cation and ment and

efficienc y Renewables outreach Total g eneral Total 2001 Payroll and related

ex p enses $ 190,057 67,155 141,279 398,491 213,164 611,655

− Professional services 482,737 85,775 90,649 659,161 378,339 1,037,500 19,314
Contract services 1,887 1,887
− 3,774 11,684 15,458 387,542 Grants and contracts 10,137,966 17,385

− 10,155,351
− 10,155,351
− Su pp lies 3,395 1,343 4,851 9,589 5,170 14,759 448

Posta g e and shi pp in g 609 229 731 1,569 691 2,260 399
Communications 3,722 1,379 2,782 7,883 3,835 11,718 600

Printin g 1,613 548 4,571 6,732 1,548 8,280 6,388

Occu p ancy 12,347 4,882 9,543 26,772 13,584 40,356
− Insurance 1,119 443 865 2,427 1,232 3,659 279

E q ui p ment 38,006 15,030 29,378 82,414 42,691 125,105 5,462 Travel 3,964 1,253 5,321 10,538 4,102 14,640 3,395

Meetin g s 10,485 4,568 13,736 28,789 5,921 34,710 10,515

Trainin g 3,009 241 471 3,721 1,026 4,747
− Interest 18,954 7,495 14,651 41,100 20,852 61,952
− De p reciation 1,778 703 1,374 3,855 1,956 5,811
− Other 11,656 1,660 3,450 16,766 16,950 33,716 6,975

Total ex p enses $ 10,923,304 211,976 323,652 11,458,932 722,745 12,181,677 441,317

12 E N E R G Y T R U S T O F O R E G O N , I N C .

SUPPLEMENTARY FINANCIAL INFORMATION -

SCHEDULE OF FUNCTIONAL EXPENSES

Y E A R E N D E D S E P T E M B E R 3 0 , 2 0 0 2

2002 ( W I T H C O M P A R A T I V E T O T A L S F O R T H E P E R I O D F R O M

M A R C H 1 , 2 0 0 1 ( D A T E O F I N C E P T I O N ) T H R O U G H S E P T E M B E R 3 0 , 2 0 0 1 )

Program services13 E N E R G Y T R U S T O F O R E G O N , I N C .

GOVERNING BOARD AND MANAGEMENT

Board of Directors

Steven Schell, President Attorney, Black Helterline

John Klosterman, Vice-President Vice-President of Manufacturing
Rejuvenation Inc.

Tom Foley, Treasurer Tom Foley Consultants

Christine Ervin, Secretary President and Chief Executive Officer US Green Building Council

Jason Eisdorfer Legal Counsel and Energy Program Director Citizen’s Utility Board

Cheryl Perrin

Executive Director Campaign for America

John Reynolds Professor of Architecture Emeritus University of Oregon

Lynn Kittilson, ex-officio Senior Economic Analyst

Electric & Natural Gas Division Oregon Public Utility Commission Management

Margie Harris

Executive Director

Fred Gordon Director of Planning and Evaluation

Steven Lacey Director of Energy Efficiency

Peter West Director of Renewable Energy

Jan Schaeffer Director of Communications and Marketing

Monica Gruher Director of Finance and Operations14 E N E R G Y T R U S T O F O R E G O N , I N C .

INQUIRIES AND OTHER INFORMATION

Administrative Offices ENERGY TRUST OF OREGON, INC. 733 S.W. Oak Street, Suite 200 Portland, Oregon 97205-3712

(503) 493-8888
(503) 546-6862 info@energytrust.org

Website

www.energytrust.orgAppendix 2Unaudited Energy Trust of Oregon Income StatementYear to Date by Program/Service TerritoryFor the Three Months Ending December 31, 2002ENERGY EFFICIENCY RENEWABLE RESOURCES TOTALPGE PacifiCorp NW Natural Total PGE PacifiCorp TotalAll ProgramsREVENUESPublic Purpose Funding $5,011,149 $3,291,540 $379,495 $8,682,184 $1,535,882 $1,011,418 $2,547,300 $11,229,484Wind - Restricted226,686 226,686 226,686Revenue from Investments41,064------------------ ------------------ -------------------------------------- ------------------ ------------------ ------------------ ------------------TOTAL PROGRAM REVENUE 5,011,149 3,291,540 379,495 8,682,184 1,762,568 1,011,418 2,773,986 11,497,234------------------ ------------------ -------------------------------------- ------------------ ------------------ ------------------ ------------------EXPENSESProgram Mgmt and Implementation 3,367,676 2,364,032 95 5,731,803 77,000 5,385 82,385 5,814,188Incentives to Participants 96,550 65,996 1,314 163,860 163,860Technical Assistance Subcontractors 4,079 2,680 309 7,068 7,068Utility Incentives-PGE & Pacif 531,000 222,339 753,339 753,339Evaluation and Planning Services 42,674 27,306 3,823 73,803 73,803Outsourced Services 22,377 14,698 2,087 39,161 22,414 14,760 37,174 76,335Salaries & Related Expenses 73,487 48,269 15,034 136,790 17,772 11,703 29,475 166,265Other Program Expenses 40,327 26,488 7,607 74,422 9,912 6,527 16,439 90,861------------------ ------------------ -------------------------------------- ------------------ ------------------ ------------------ ------------------TOTAL DIRECT PROGRAM EXPENSES 4,178,169 2,771,808 30,269 6,980,246 127,098 38,375 165,473 7,145,719------------------ ------------------ -------------------------------------- ------------------ ------------------ ------------------ ------------------ALLOCATION OF ADMINISTRATIVE EXPENSES (Note 5)Management & General 117,141 84,682 896 202,719 4,819 1,259 6,078 208,797Communication & Outreach 53,530 35,319 4,616 93,465 18,370 10,873 29,243 122,708------------------ ------------------ -------------------------------------- ------------------ ------------------ ------------------ ------------------Total Allocations 170,671 120,001 5,512 296,184 23,189 12,132 35,321 331,505------------------ ------------------ -------------------------------------- ------------------ ------------------ ------------------ ------------------TOTAL PROGRAM EXPENSES 4,348,840 2,891,809 35,781 7,276,430 150,287 50,507 200,794 7,477,224------------------ ------------------ -------------------------------------- ------------------ ------------------ ------------------ ------------------TOTAL REVENUE LESS EXPENSES 662,309 399,731 343,714 1,405,754 1,612,281 960,911 2,573,192 4,020,010========= ========= ========== ========= ========= ========= ========= =========Note 1) Shared territory expenses have been allocated based on Public Purpose Revenue from each TerritoryNote 2) Shared program expenses have been allocated based on direct labor incurred on each program area, including administrativeNote 3) Management and General (Administrative) Expenses, net of interest income, have been allocated based on total expensesNote 4) General Communication and Outreach expenses have been allocated based on Public Purpose Revenue from each TerritoryNote 5) Mgmt & General and Communication & Outreach are 2.88% of revenueEnergy Trust 2002 Annual Report to the Oregon Public Utility Commission April 15, 2003

1 

# Appendix 3 Energy Trust 2002 Program and Project Descriptions

Energy Efficiency Prog rams and Projects

1. Utility Transition Programs

Portland General Electric and Pacific Power. In its initial year of operation, the Energy Trust

maintained services for PGE and Pacific Powe r customers while designing its own energy efficiency programs. By the end of December 2002 these transition programs had saved 9.0 average megawatts of electricit y (79,116,826 million kilowatt hours) at a cost of $13.7 million. Through the transition program the Energy Trus t funds Pacific Power’s Home Energy Efficiency, Energy FinAnswer and Small and Large Retrofit Incentive programs for existing residential dwellings, new and existing commercial buildings and industrial and agricultural facilities. For PGE, the utility transition program funds th eir Energy-Efficient Equipment and Information, Multi-family Direct Installation, Residentia l Weatherization, Earth Advantage Home and Nonresidential Energy Efficiency programs for ne w and existing residential dwellings, and new and existing commercial buildings and industrial fa cilities. The utility transition programs will be phased out throughout 2003 and 2004 as the Ene rgy Trust launches and implements its own

programs.

2. “Quick Save” Projects/Programs

Green LED Traffic Light. This program offered an incentive of $60 per lamp for installation of green LED traffic lights. The incentive covered approximately one-third the typical cost. Green LEDs use 90.6% less electricity and last 3.5 ti mes as long as conventional traffic lights. Participating municipalities and agencies includ ed Albany, Bend, Corvallis, Cottage Grove, Klamath Falls, Lake Oswego, Lebanon, Medford, Multnomah County, Oregon City, Oregon Department of Transportation’s Region One, Po rt of Portland, Tigard, and Washington County. The program was administered for the Energy Tr ust by the City of Portland Office of Sustainable Development. The 2,781 bulbs installed, at a cost of $205,559, are estimated to save .169 average megawatts for seven years. Addition al LEDs were installed in early 2003; related

costs and results will be incl uded in the 2003 annual report. The Energy Trust Board of Directors approved funding for the program on April 3, 2002.

Manufactured Home Duct Sealing. This program offered free testin g and sealing of furnace/air conditioning ducts for manufactured homes. Leakin g ducts account for a loss of up to a third of heated or cooled air. The program treated 967 manufactured homes in 23 municipalities for a total cost of $307,770. Locations included Be averton, Bend, Benton, Carus, Chiloquin, Clackamas, Fairview, Jacksonville, Keno, Klamath Falls, Medford, Milwaukie, Myrtle Creek, Newburg, North Plains, Phoenix, Portland, Rose burg, Salem, Sutherlin, Talent, Troutdale and Yamhill. Estimated electricity sa vings are .132 average megawatts. Additional homes were treated in early 2003; related costs and results will be included in the 2003 annual report. Funding for the program was approved by the Energy Trust Board of Directors on April 3,

2002.Energy Trust 2002 Annual Report to the Oregon Public Utility Commission April 15, 2003

2 Small-scale Energy Loan Program Buy-down. This program buys down the interest rate on Oregon energy loans for government buildings from 5.75% to 2%. It is available only to projects that do not receive utility rebates. As of the end of 2002, one commitment for a buy-down of $50,200, with expected energy savings of .047 average megawatts, had been processed through this program. Additional commitments were received in early 2003; related co sts and resu lts will be included in the 2003 annual report. Based on a bud get of $500,000, expected electricity savings are .9 average megawatts. The Energy Trust Boar d of Directors approved the program on April
3, 2002.

Restaurant Energy Efficiency. This program provides an incentiv e of $2,750 for installation of qualified energy management system s in 60 restaurants using at least 250,000 kilowatt hours of electricity per year. Combined with the Oreg on Business Energy Tax Credit, the incentive reduces the installed cost of an EMS by about 50 percent, and lowers electricity used by about 10%. The Energy Trust works closely with th e Oregon Restaurant Association to reach

restaurants with the incentive offer and other information about energy-saving strategies and practices. As of the end of 2002, one system had been installed in a loca lly-owned McDonald’s in Portland, saving an estimated .003 average megaw atts. The program is expected to save 0.21 average megawatts and continues through June 2003. The Energy Trust Board of Directors approved $237,000 in funding for the project on May 22, 2002.



### Renewable Energy Projects

1. Combine Hills Turbine Ranch project

The Combine Hills Turbine Ranch project, to be built by Eurus Oregon Wind Power, is located west of Milton-Freewater, Oregon, at the easter n end of the Vansycle Ridge in Umatilla County. The project would generate up to 41 megawatts in the approved first phase and could be expanded to produce an additional 63 megawatts. Turbines are likely to be sized at 1 megawatt, probably with 195-foot towers and 90-foot blades . The project is planned to be operational by the end of 2003. A power purchase agreement with PacifiCorp is pending. The project will provide as many as 120 constructi on jobs and permanently employ up to 6 full-time operators. The project originated from a request for proposal s issued by the Energy Trust on July 12, 2002. Out of seven proposals received, two finalists we re selected. One finalist dropped out when it could not assemble financing. The Energy Trust Board of Directors approved up to $4.15 million in funding for the Eurus Oregon project on December 12, 2002.

2. Three-mile Canyon Farms Biogas project

The Three-Mile Canyon Farms project in Board man will generate 4.1 megawatts of electric power from biogas. It will convert animal wast es from three dairies with 21,000 cows into electric energy. An anaerobic digester facility will generate methane gas for recovery from the waste stream. The methane will be captured and combusted in reciprocating engines to produce electricity. The project is e xpected to operate 95% of the time, providing 3.85 average megawatts per year for 15 years. It is planned to begin producing electricity in 2004. PGE will be the turn-key developer and will operate the co mpleted project. The Energy Trust Board of Directors approved $1.5 million in fund ing for the project on May 22, 2002.

3. Brewery Blocks Building #4

Solar photovoltaic panels on this office bu ilding in the Brewery Blocks development in downtown Portland will generate 22.4 kilowatts of electricity. The project consists of 192Energy Trust 2002 Annual Report to the Oregon Public Utility Commission April 15, 2003

3 amorphous solar panels on the face of the bu ilding and 77 polycrystalline panels on the roof. The PV panels were procured in partnership with Bonneville Energy Foundation, which packaged the procurement with panels for an installation at White Bluffs in Hanford, Washington. Power production began in early 2003. The system is net-metered into the PGE grid. The project originated in an unsolicited proposal by Gerd ing/Edlen Developers, developers of the Brewery Blocks. The Energy Trust Board of Directors a pproved $167,000 in funding for the project on January 30, 2002.

4. Habitat for Humanity solar hot water systems

In September 2002 the Energy Trust committed $15, 000 to place solar hot water installations on eight Habitat for Humanity homes served by Pacific Power in Bend. Estimated annual energy savings is 2,100 kilowatts per home. Habita t and New Path Renewables, Inc., managed the

installation. Several of the init ial installations were conducted as training sessions for solar installers. The co-developers agreed to prov ide further community marketing, training and outreach to build public awareness of the benefits of solar hot water. The Energy Trust received credit for the green tags from this projec t in return for providing funding support.

5. Anemometer Loan Program

This program partners with the Energy Reso urces Research Laboratory at Oregon State University to install loaned anemometers for 12 months at up to 19 Oregon locations over three years. The anemometers ar e automated wind measurement stations, about 30 feet tall and very slender. OSU maintains the application pr ocess, screens prospective borrowers, evaluates
candidate sites, selects final sites, assists the land owner with installation, performs initial testing, conducts monthly checks of data received, and assi sts in evaluating wind resources at each site. The Energy Trust will establish a program for small- scale wind projects that will be a potential source of funding for wind projects on fa vorable sites. The anemometer loan program originated in an unsolicited proposal by Oreg on State University. The Energy Trust Board of Directors approved $210,000 over three years for the program on July 24, 2002.

5. Calapooia Crossing Affordable Housing Photovoltaic Project

The Energy Trust committed $20,664 in De cember 2002 to help fund a 3.9-kilowatt photovoltaic system for an Umpqua Community Development Corporation affordable housing development in Sutherlin. The project is in Pa cific Power territory. The development, to be completed in May 2003, consists of five single -family homes for first-time homebuyers and 11

rental units for low-income residents. The PV array helps power a community laundry facility and is net-metered. The development has numer ous other energy-efficient elements, including passive solar orientation, active solar water heat ing, radiant in-floor heating, heat recovery piping to capture waste heat from shower drai ns, and heat-recovery air-exchange ventilators.Appendix 4Energy Trust Progress in 2002 Toward Goals for 2002 and 2012KeyEstimate Program Start Program EndaMW 300 aMW 13.47 aMW 4.49%kWh 2,628,000,000 kWh 117,968,795 kWh 4.49%Unless noted all numbers are in kWhProgramsCalendarYearMonth PGE PacifiCorpNEEARestaurantEnergyEfficiencyProgramManufacturedHome DuctSealingProgramGreen LEDTraffic LightProgram SELPTotal ofPrograms byMonthMarch 3,078,060 4,054,779 3,954,514 N/A N/A N/A N/A 11,087,353April 1,345,780 3,902,322 3,954,514 N/A 0 N/A N/A 9,202,616May 2,641,534 1,036,656 3,954,514 N/A 0 0 N/A 7,632,704June 4,173,745 1,093,959 3,954,514 N/A 76,800 0 N/A 9,299,018July 2,167,835 706,764 3,954,514 N/A 247,200 0 0 7,076,313August 3,597,538 1,698,317 3,954,514 N/A 271,200 0 0 9,521,569September 4,743,411 924,672 3,954,514 N/A 290,400 26,674 0 9,939,671October 2,667,078 5,099,586 2,832,117 30,000 223,200 378,774 0 11,230,755November 2,882,418 1,824,924 2,832,117 0 38,400 234,199 0 7,812,058December25,420,585 6,056,863 2,832,117 0 13,200 843,972 0 35,166,737Total52,717,984 26,398,842 36,177,950 30,000 1,160,400 1,483,619 0117,968,795Annual Goal43,800,000 27,604,530 28,344,246 61,320 1,003,418 1,280,362 7,884,000 109,977,876% of AnnualGoal120.36% 95.63% 127.64% 48.92% 115.64% 115.87% 0.00% 107.27%2002 Progress Toward 2012 Energy Savings GoalTo Date/Yearly Total

2002 SummaryEnergy Savings To Date Energy To Date EnergyGoal by 2012 Savings Savings % of GoalVersion 2.0Appendix 4 (continued)Energy Trust Progress in 2002 Toward Goals for 2002 and 20122012 Goal2002 Progress Toward 2012 Energy Savings Goal2002 Program Energy Savings Actuals and Goals2012 Goal ProgressProgram ActualsProgram Goals2002 Progress Toward Goal05,000,00010,000,00015,000,00020,000,00025,000,00030,000,00035,000,00040,000,00045,000,00050,000,000PGE PacifiCorp NEEA Restaurant EnergyEfficiency ProgramManufactured HomeDuct Sealing ProgramGreen LED Traffic LightProgramSELP

kWh0500,000,0001,000,000,0001,500,000,0002,000,000,0002,500,000,0003,000,000,000

kWhVersion 2.0Appendix 4 (continued)Energy Trust Progress in 2002 Toward Goals for 2002 and 2012aMW 450 aMW 18.11 aMW 4.02%kWh 3,942,000,000 kWh 158,606,408 kWh 4.02%CalendarYearProjectsCombine HillsTurbine RanchThreemileCanyon FarmsBiogasBrewery BlocksSolar PVCalapooiaCrossingAffordableHousingSolar PVBend Habitatfor HumanitySolar ThermalTotal ofProjectsAnnual Goal% of AnnualGoal2002kWh 124,830,000 33,726,000 28,908 4,700 16,800 158,606,408 140,160,000 113.16%Unless noted all numbers are in kWh

Key SummarySolicited ProjectsUnsolicited ProjectsRenewable Energy Progress Toward 2012 Generation GoalGeneration Goal by 2012Renewable Energy To Date Approved RenewableEnergy GenerationTo Date Approved RenewableEnergy Generation % of GoalVersion 1.0Appendix 4 (continued)Energy Trust Progress in 2002 Toward Goals for 2002 and 20122012 Goal2002 Progress Toward 2012 Renewable Energy Generation GoalApproved Generation2002 Approved Renewable Energy Generation2012 Goal Progress2002 Progress Toward Goal010,000,00020,000,00030,000,00040,000,00050,000,00060,000,00070,000,00080,000,00090,000,000100,000,000110,000,000120,000,000130,000,000Combine Hills Turbine Ranch Threemile Canyon Farms Biogas Brewery Blocks Solar PV Calapooia Crossing AffordableHousing Solar PVBend Habitat for Humanity SolarThermal

kWh0500,000,0001,000,000,0001,500,000,0002,000,000,0002,500,000,0003,000,000,0003,500,000,0004,000,000,000Version 1.0Energy Trust 2002 Annual Report to the Oregon Public Utility Commission April 15, 2003

1 

# Appendix 5 Energy Trust Board and Advisory Council Rosters

Membership as of December 31, 2003



## Board of Directors

PRESIDENT - Steven Schell is an attorney at Black Helterline focusing on environmental,
land use, real estate and construction issu es. He served on the Land Conservation & Development Commission from 1973-1976 and on the Energy Facility Siting Council from 1990-

1998.

VICE-PRESIDENT - John Klosterman is the vice-president of manufacturing at Rejuvenation Inc., and has been wi th the company for 10 years. As part of a state pilot project, he led his company’s implementation of an ISO 14001-based EMS with the sustainability principles of The Natural Step. His involvement with Business for Social Responsibility includes board membership, along with practical implemen tation of socially responsible policies and programs at Rejuvenation.

SECRETARY - Christine Ervin is president and chief executive officer of the US Green Building Council, a national coalition of 600 leader s from across the building industry to advance buildings that are environmentally responsible, profitable, and healthy places to live and work. She served as assistant secretary for the Clinton Administration’s $1 billion portfolio of energy efficiency and renewable energy programs for build ings, vehicles, major industries and utilities. Christine directed the Oregon Department of Energy from 1991-93 and chaired former

Governor Barbara Roberts’ Livable Communities Task Force.

TREASURER - Tom Foley has over 26 years of experience in the field of energy analysis and management, including 10 years as manager of cons ervation and generating resources analyses for the Northwest Power Planning Council and 10 years at Battelle Northwest. He presently runs Tom Foley Consultants, providing resour ce planning and consultation with utilities throughout the country.

Jason Eisdorfer is legal counsel and energy program director for the Citizen’s Utility Board. He served as the public interest representative in worksessions of the Oregon Legislature’s House Committee on Power Deregulation in 1997, and in 1999 helped author Oregon’s electricity industry restructuring legislation, wh ich passed into law in July 1999. He is on the executive boards of the Fair and Clean Energy Coalition, the Northwest Energy Coalition and the Renewable Northwest Project.

Rick Kroon is the Oregon site corporate services manager for Intel Corporation, where his responsibilities include utility management and ener gy conservation. Prior to moving to Oregon
in 1992, Rick worked in California and New Me xico. Rick has an MBA in addition to an engineering degree from the University of Wi sconsin. He also represents Intel on the
International SEMATECH facilities council, whose membership represents global semiconductor manufactures and scope includes wo rldwide utility/energy management.

Cheryl Perrin is the executive director of Campaign for America, a nonprofit organization focused on campaign finance reform. She served as a senior executive officer with Fred Meyer,Energy Trust 2002 Annual Report to the Oregon Public Utility Commission April 15, 2003

2 Inc., for 22 years, where she was responsible for the company’s government and political activities, news media relations, community and civic activities and environmental programs. She is a commissioner and vice-president of the Port of Portland, and serves on the board of STARS,
the Willamette River Initiative, the Lewis & Clark 2005 Committee, Portland Public Schools

Foundation and the Lewis & Clark Board of Trustees.

John Reynolds is professor of architecture emeritus at the University of Oregon and has been involved in energy issues in Oregon since 1972, when he was elected to the Eugene Water and

Electric Board. Since then he has served as th e president of the Pacific Northwest Solar Energy Association and of the subsequent Solar Energy As sociation of Oregon. He also serves on the Energy Committee of the Building Codes Structures Board.

Lynn Kittilson (ex officio) is a senior economic analyst in the Electric & Natural Gas Division of the Oregon Public Utility Commission. She has worked for the commission on energy-related issues since 1984. Her work experience over the last 10 years has focused primarily on review of investor-owned utility conservation programs . Lynn is also the commission’s non-voting member of the Northwest Energy Efficiency Alliance Board of Directors.

(The following two board members joined the Ener gy Trust in January and Ap ril 2003, respectively.)

Rick Applegate is the superfund coordinator at the City of Portland Bureau of Environmental Services. He has worked for more than 18 year s on energy and environmental issues as an

advocate for salmon and their watersheds. Rick was the Fish and Wildlife Director for the Northwest Power Planning Council from 1987 to 1995. Before that, he was the chair of the US Southern Stakeholders Pacific Salmon Treaty Ne gotiations, a member of the Pacific Northwest Comprehensive Energy Review, on the executive committee For the Sake of Salmon, and on the

board of directors for the Sustainable Fisheries Foundation. Currently Rick serves on the board

of the Pacific Salmon Watershed Fund.

Julie Hammond is the vice president of operations at Sage Insurance Center in Bend. She has over 15 years experience in the insurance industry . Julie currently serves on the Safeco Advisory Council and Deschutes United Way. She brings a customer service orientation, small business perspective and regional representation to the Energy Trust.



## Conservation Advisory Council

Susan Anderson, Portland Office of Sustainable Development Jeff Bissonnette, Fair and Clean Energy Coalition Julie Brandis, Associated Oregon Industries
Carol Brown, Portland General Electric Jeff Bumgarner, PacifiCorp Gary Curtis, D&R International
Thomas Eckhart, UCONS LLC Tom Eckman, Northwest Power Planning Council Terry Egner, Micro Grid Margie Gardner, Northwest Energy Efficiency Alliance Ken Keating, Bonneville Power Association Steve McCoid, Oregon Restaurant Association Bill Nesmith, Oregon Office of Energy Mat Northway, Eugene Water & Electric BoardEnergy Trust 2002 Annual Report to the Oregon Public Utility Commission April 15, 2003

3 Sara Patton, Northwest Energy Coalition Stan Price, Northwest Energy Efficiency Council



## Renewable Resources Advisory Council

Doug Boleyn, Consultant George Darr, Bonneville Power Association Angus Duncan, Bonneville Environmental Foundation Thor Hinkley, Portland General Electric Jeff King, Northwest Power Planning Council
David McClain, Geothermal Consultant Virinder Singh, PacifiCorp Lisa Schwartz, Oregon Office of Energy Sonja Ling, Renewable Northwest Project Frank Vignola, Solar Monitori ng, University of Oregon Alan Zelenka, Emerald People’s Utility DistrictEnergy Trust 2002 Annual Report to the Oregon Public Utility Commission April 15, 2003

1 

# Appendix 6 Energy Trust 2002 Board Development Guidelines

This appendix refers to board development guid elines as specified in the OPUC grant agreement with the Energy Trust, section 5, guideline 'k', referring to the Energy Trust retaining the skills, broad representation, and diversity necessary to achieve its mission. Background of board development is provided.

The initial board of directors included nine 9 members and one ex-officio member from the OPUC. The nine diverse members represented a variety of perspectives on energy matters

combined with business acumen. Of the nine voting members and one ex-officio member, six provided collective strength, insights and expe rience relevant to energy policy and planning, program implementation and evaluation, facility siting, consumer advocacy, renewable energy development and sustainable practices. The remaining four members were all business community representatives, refl ecting a subset of future co mmercial and industrial program participants. This latter group provided comple mentary skills and financial perspectives as marketers, energy consumers and users of an ticipated Energy Trust goods and services.

During the first year, the board evolved from a start-up organization to one focused on program delivery. Two of the four initial business represen tatives resigned for personal reasons. A board

subcommittee initiated a broad recruitment effo rt to attract new members and fulfill board development guidelines. In addition to solicitin g input through advisory councils and at public board meetings, over a dozen individuals and part ner organizations were specifically asked to identify candidates with the fo llowing expertise: business experience and "bottom line" financial orientation, industrial/manufacturing expertise, marketing awareness and sk ills, familiarity with renewable energy and demographic and geographic representation.

At this same time, the board expanded its size to 12 members to allow further diversity and representation. The targeted recruitment effort resulted in the selection of two new board members to fill vacancies, one of whom is employ ed by an international high tech manufacturing firm and brings a user/beneficiary industry perspective. The second member adds analytical skills appropriate to energy efficiency and renewable energy as well as relevant energy policy and program implementation experience.

Additional candidates were iden tified and are being pursued from outlying, smaller communities in eastern, central and southern parts of Energy Trust service territories. Anticipated membership will provide geographic and demogr aphic complements to existing members and further expand and reflect the true diversity of customers throughout the service areas.

All new board members participate in an orient ation session and are provided board handbooks containing historical information, policies, plan s, budgets and program descriptions. The majority of board members also participate on the advisory councils and finance and policy committees. All such meetings are public, with relevant info rmation accessible in advance on the web site. Advisory council and board meetings are well atte nded, with public comment a standard part of all meetings.

In addition, all board members complete and sign co nflict of interest forms, retained on file and updated annually. Once a year, board and staff me mbers jointly participate in a planning session to review and update the strategic direction of the organization and to compare program accomplishments and goals to result s. Board development is a part of this planning session, as

needed.Energy Trust 2002 Annual Report to the Oregon Public Utility Commission April 15, 2003

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# Appendix 7 Partial List of Energy Trust Peer and Partner Organizations

AFL-CIO American Council for an Energy-Efficient Economy American Solar Energy Society American Wind Energy Association Associated Oregon Industries

Bonneville Power Administration Building Owners and Managers Association California Energy Commission Clean Energy Fund Network Community Action Directors of Oregon Efficiency Vermont Florida Solar Energy Center Homebuilders Association of Oregon

IBEW

Industrial Customers of Northwest Utilities Interstate Renewable Energy Council Lane Community College National Renewable Energy Laboratory New York State Energy Research & Development Authority North Carolina University Solar Center Northwest Energy Efficiency Alliance Northwest Energy Efficiency Council Northwest Power Planning Council Oregon Energy Coordinators Association Oregon League of Cities Oregon Office of Energy Oregon Restaurant Association Oregon Solar Energy Industry Association Oregon State University Energy Resources Research Laboratory Oregon Wind Working Group PacifiCorp Portland Energy Conservation, Inc.

Portland General Electric Portland Office of Sustainable Development Remodelers Association of Oregon Solar Energy Association of Oregon Solar Energy Industry Association University of Oregon Solar Re source Monitoring Laboratory U.S. Department of Energy Utility Wind Interest Group