1. Please state your name.
My name is Douglas Hoffer.
2. Please summarize your education and professional experience.
My resume is attached. In summary, I graduated from Williams College in 1985, with a Bachelor of Arts degree in Political Science. I graduated magna cum laude from the School of Law and Jurisprudence of the State University of New York at Buffalo in 1988. Since 1988, I have worked as a policy analyst. I have worked as a private consultant and as an employee of the City of Burlington. My principal area of professional experience has been analysis of the economic and fiscal consequences of government policy decisions, including energy policy. I was appointed by the Burlington City Council to serve as a Commissioner on the Burlington Board of Electric Commissioners, and served from 1994-2000, including five years as Chair. As a consultant, my work since 1993 has included the following:
&Mac183; Vermont State Treasurer - research on economically targeted investments of public pension funds
&Mac183; Vermont Democracy Fund - research on economic development and tax policy
&Mac183; Renewable Energy Vermont - The Economic Benefits of Wind Farms in Vermont
&Mac183; Windham Child Care Association - The Economic Impacts of Child Care in Vermont
&Mac183; Vermont Housing Council - Between A Rock & A Hard Place: Housing & Wages in Vermont (co-author)
&Mac183; Peace & Justice Center The Leaky Bucket: An Analysis of Vermonts Dependence on Imports
&Mac183; Reconstruction Watch (Good Jobs NY & Fiscal Policy Institute) - research on the Lower Manhattan Development Corp. and funding for the post-Sept. 11th redevelopment of lower Manhattan
&Mac183; Vermont Legislature Act 21 Report to the Special Summer Study Comm. on Livable Income
&Mac183; Peace & Justice Center - Vermont Job Gap Study (Phases 1 through 8)
&Mac183; Vermont State Employees Association - economic research for contract negotiations
&Mac183; Vermont State Office of Economic Opportunity FY 2002 Performance Measures Report
&Mac183; Burlington Electric Department Performance Measures Reports (2000 - 2002)
&Mac183; United Way / Champlain Initiative The History of Sprawl in Chittenden County (editor)
&Mac183; National Wildlife Federation - Report Card for Vermont: Recommended Indicators for Economic, Environmental and Social Well-Being
&Mac183; Intervale Foundation - Enterprise Community Grant Proposal - Farming on the Urban Fringe
3. Have you been the author of any publications?
Yes. Those of my publications that are available on-line are as follows:
Vermont Job Gap Study (Phases 1 - 8, including The Leaky Bucket; Peace & Justice Center)
The Economic Impact of Vermont's Child Care Industry (Windham Child Care Association)
The Economic Benefits of Wind Farm Development in Vermont (Renewable Energy Vermont)
Between A Rock and A Hard Place (Vermont Housing Finance Agency)
Reconstruction Watch (Publications 2 - 6; Good Jobs New York)
Burlington Electric Department - Performance Measures Report
Vermont State Auditor (various Reviews)
&Mac183; June 6, 2000 Economic Progress Council
&Mac183; May 17, 2000 Dept. of Aging & Disabilities
&Mac183; April 10, 2000 Migrant Education Program
&Mac183; July 13, 1998 Dept. of Developmental and Mental Health Services
&Mac183; Jan. 26, 1998 Weatherization Assistance Program
&Mac183; Dec. 18, 1997 Foster Care Licensing
&Mac183; March 12, 1997 Dept. of Banking, Insurance, Securities & Health Care Admin.
4. What analysis did you perform with respect to the Northern Reliability Project?
I was asked to analyze the economic benefits to the State of Vermont and its citizens of investing in the DSM alternatives to the NRP described in the Optimal Energy report for VELCO ("Assessment of Economically Deliverable Transmission Capacity from Targeted Energy-Efficiency Investments in the Inner and Metro-Area and Northwest and Northwest / Central Load Zones"); specifically, Tables 3 and 10. I examined several potential types of economic benefit that were not addressed in the analysis submitted by La Capra Associates. These are: 1) the dollars saved by ratepayers that otherwise would have been spent on electricity; 2) the multiplier effects from the DSM expenditures projected by Optimal (output, earning and jobs); and 3) the added income, sales and excise tax revenues that would accrue to the State of Vermont as a result of the DSM-related jobs and from residential ratepayers spending the savings within the Vermont economy.
5. What materials did you examine?
I reviewed the relevant sections of the Optimal Energy report for VELCO, especially Tables 3 and 10. I also reviewed portions of the La Capra report for VELCO ("Alternatives to VELCO's Northwest Reliability Project"). In addition, I utilized data from the 2001 DPS Biennial Report, and the Bureau of Labor Statistics' 2002 Consumer Expenditure Survey.
6. What did your analysis reveal?
I found that the DSM scenario developed by Optimal Energy would result in substantial customer savings, in addition to the avoided costs and societal benefits from the aggressive energy efficiency investments envisioned. Specifically, the cumulative customer savings over the term (2003 - 2012) would be $684 million ($503 million NPV). The figures by class are: Residential = $324 million ($282 million NPV); and C&I = $361 million ($221 million NPV). This is money that otherwise would have been spent on monthly electric bills. I also found that the expenditures for the projected DSM measures would have a significant multiplier effect within the Vermont economy. Although the lack of exact input figures made the results somewhat imprecise, they are certainly within a reasonable margin of error. Specifically, Optimal's annual labor costs for the DSM expenditures (average $16 million) would result in average annual new output in the relevant sectors of about $29 million. This economic activity would produce approximately 462 jobs per year with average annual earnings of over $10 million. Although the scope (and timing) of this analysis did not permit a comprehensive review of the economic tradeoffs involved (e.g., reduced utility sales and employment impacts), we can say that the new jobs would produce approximately $254,000 annually in state income taxes. Finally, I found that the State of Vermont can expect to receive an additional $7.6 million in sales and excise taxes over the term from expenditures by residential consumers spending funds saved on their electric bills
7. Are you familiar with least-cost planning and the standards set forth in 30 V.S.A. § 248?
Yes, I reviewed BED staff submissions for least-cost planning while serving as a BED commissioner, and I note that the statute states:
(b) Before the public service board issues a certificate of public good as required under subsection (a) of this section, it shall find that the purchase, investment or construction:
(2) is required to meet the need for present and future demand for service which could not otherwise be provided in a more cost effective manner through energy conservation programs and measures and energy-efficiency and load management measures, including but not limited to those developed pursuant to the provisions of sections 209(d), 218c, and 218(b) of this title;
(4) will result in an economic benefit to the state and its residents
(6) with respect to purchases, investments, or construction by a company, is consistent with the principles for resource selection expressed in that company's approved least cost integrated plan;
8. Does the VELCO NRP meet these standards?
I have not reviewed all of the evidence in the case. I have reviewed the evidence pertaining to Optimal's demand side management model, and portions of La Capra's least-cost planning and economic benefit analysis. My opinion is confined to these issues. Having said that, it is difficult for me to see how VELCO can meet the statutory criteria. VELCOs own submissions show that the alleged reliability problem could be met through the measures set forth in § 248(b)(2). VELCOs own analysis shows a significant net present value advantage to demand side management. My own analysis shows substantial additional economic benefit to the State and its residents that would not be provided by the NRP. The NRP therefore will result in net economic harm to the state and its residents, under § 248(b)(4), when compared to the reasonable alternatives. Moreover, it is fundamental to least-cost planning that the company develop an integrated resource plan, and not address these issues ad hoc for a particular project. Section 248(b)(6) recognizes this. Having engaged Optimal to develop a DSM model for this particular case implies that VELCO had not previously incorporated such aggressive DSM measures into their own Integrated Resource Plan, or worked with Efficiency Vermont and the affected utilities. Based on my understanding of the law and the evidence I've reviewed for this case, it would appear that the statutory criterion has not been met. If VELCO had engaged in least-cost planning with its owner-utilities, it would never have submitted the NRP to the Board because the NRP is inconsistent with least-cost planning.
9. Does this conclude your testimony?