USDA RUS Comments

August 28, 2012

Michele Brooks
Director, Program Development and Regulatory Analysis
USDA Rural Development
1400 Independence Avenue SW
STOP 1522 / Room 5162
Washington, DC 20250-1522

Subject : Proposed Rulemaking – USDA Rural Utilities Service Energy Efficiency and Conservation Loan Program

Dear Ms. Brooks,

GEO – the Geothermal Exchange Organization – thanks the USDA Rural Utilities Service for the opportunity to comment on your Proposed Rulemaking for the Energy Efficiency and Conservation Loan Program.

GEO is a non-profit 501(c)(6) trade association representing the interests of its member companies nationwide, with outreach to government institutions and the public about the economic, national security, and environmental benefits of geothermal heat pump systems for both residential and larger scale commercial applications.

The following points address proposed new policies and procedures by the Rural Utilities Service (RUS) for loan and guarantee financial assistance that support energy efficiency programs sponsored and implemented by electric utilities for the benefit of rural persons in their service territories.

GEO supports RUS efforts to offer an energy efficiency and conservation program that clearly promotes and helps finance residential and commercial installation of geothermal heat pumps (GHPs). We appreciate RUS’ recognition and support for utility ground loop ownership and leasing, on-bill financing, and 30-year loan terms for ground loops.

On close reading of the Proposed Rulemaking in the Federal Register (Vol. 77, No. 144 – 43723-43734), we understand that it is directed at Energy Efficiency and Conservation Loan Program development at the utility level, and not to end-use benefits and decisions by consumers.

However, there appears to be an inconsistency in the position that the RUS takes regarding GHPs. While the Proposed Rulemaking clearly intends to allow GHP installations, it confuses the issue with proposals regarding “fuel switching,” a term that in the past has referred to converting from on-site natural gas heating and cooling to GHP systems that consume electricity as they recover renewable energy from the earth.

The Proposed Rulemaking says: “RUS is considering allowing fuel switching as an eligible activity under this regulation. Fuel switching would not be designed to be a permanent change from one fuel to another, rather a method to handle peak loads during limited time periods.” In other words, RUS has defined the term to mean a method of peak load management by temporarily switching from electricity to natural gas or other fuels during high electric demand periods.

If that is the intention of RUS, then GEO agrees that replacing gas heat and air-source cooling with a GHP system under the program should not be considered “fuel switching.” However, the rule’s language should be clarified to avoid future problems with its intent and how it is applied.

GEO recommends that RUS add an actual definition to Section 1710.2(a) of the Proposed Rulemaking, such as: “For purposes of this regulation, ‘fuel switching’ means the temporary use of non-electric energy sources as a method to limit electric peak loads during limited time periods. The term ‘fuel switching’ does not include the permanent replacement of equipment that uses one energy source with equipment that uses a different energy source.”

On a different topic, Section 1710.404 defines Seasonal Energy Efficiency Rating (SEER), and Section 1710.406(d)(ii) requires “…a SEER increase of not less than 20%….” Since GHPs are not rated for SEER, we are afraid that this requirement might be applied to disallow GHP systems from inclusion in the program.

GEO suggests a solution, which would slightly modify the rule’s definition of SEER by adding the words “air-source” as follows, to clarify that this provision does not apply to GHP installations: “Seasonal Energy Efficiency Ratio (SEER) means the commonly used measure of efficiency of Consumer central air conditioners and air-source heat pumps. It is the ratio of cooling output divided by electric energy input (Btu/Wh).”

The installation, rating and use of GHPs— and their many consumer and environmental benefits—should not be confused or inadvertently precluded under the RUS Energy Efficiency and Conservation Loan Program by any rules or mandates against “fuel switching.” This would in many ways be a self-defeating result that would work directly against other program goals, all of which are fulfilled by ensuring that GHPs remain an integral part of the program:

Increasing energy efficiency at the end user level
Modifying electric load to achieve a reduction in overall load demand
More efficient use of existing distribution, transmission and generation facilities
Attracting new business and creating jobs in rural communities by investing in energy efficiency
Encouraging the use of renewable energy fuels – for demand-side management and to reduce conventional fuel use within service territories.

GEO believes that for rural electric ratepayers, there is no better demand-side management tool for energy efficiency and conservation than GHPs. We are pleased that you will consider our comments on the Proposed Rulemaking, and hope you will contact us for any further information and/or clarification that you might need as you finalize your Energy Efficiency and Conservation Loan Program.

Sincerely,

Douglas A. Dougherty
President and CEO
GEO – The Geothermal Exchange Organization