Peak Load Reduction Program Program Opportunity Notice (PON) No. 733-02 Revision June 9, 2003

The Peak-load Reduction Program is one of the programs offered under the umbrella of the New York Energy $mart^SM program. The New York State Energy Research and Development Authority (NYSERDA), as administrator of the New York Energy $mart^SM Program, requests applications from Eligible Contractors (as defined herein) to identify and implement one or more Project(s), as defined herein, which will result in reduced peak electric demand in New York State, particularly New York City, for the summer of 2003 through four distinct program components: Permanent Demand Reduction Efforts (PDRE), Load Curtailment/Shifting (LC/S), Dispatchable Emergency Generator Initiatives (DEGI), and/or Interval Meters (IM).

Eligible Contractors are facility owner/operators or service providers capable of both developing electric demand-reduction Projects and implementing all necessary measures. Facilities eligible for PDRE, LC/S, and IM are limited to electric distribution customers of New York State's investor-owned utilities that pay into the System Benefits Charge (SBC). Facilities eligible for DEGI are limited to electric distribution customers only within the Con Edison service territory which pay into the System Benefits Charge (SBC).

APPLICATION SUBMISSION: Applications must be clearly labeled and mailed to:

Lee L. Smith, PON No. 733-02
New York State Energy Research and Development Authority
17 Columbia Circle
Albany, New York 12203-6399

Technical questions should be directed to Christopher Smith (866-NYSERDA, ext. 3360, cjs@nyserda.org) or Peter Savio (866-NYSERDA, ext. 3334, or pps@nyserda.org). Contractual questions should be directed to Mary Sauvie (866-NYSERDA, ext. 3229, or mks@nyserda.org).

For questions regarding the New York Independent System Operator's (NYISO's) Demand Response Programs, contact Dave Lawrence at NYISO (518) 356-6084, or dlawrence@nyiso.com, or go to www.nyiso.com.
________________
* Faxed or e-mailed applications will not be accepted. Applications will not be accepted at any other NYSERDA location other than the address specified above. Applications will be processed on a first-come, first-served basis through October 31, 2003, 3 PM Eastern Standards Time or until funds are fully committed, whichever comes first. Table of Contents

I. INTRODUCTION

A. OBJECTIVE
B. AVAILABLE FUNDS
C. INCENTIVES
D. LIMITATIONS
E. APPLICATION PROCES
F. DEFINITIONS

II. PROGRAM REQUIREMENTS

A. PERMANENT DEMAND REDUCTION EFFORTS (PDRE)
1. Eligibility
2. Minimum Project Size
3. Incentives

B. LOAD CURTAILMENT/SHIFTING (LC/S)
1. Eligibility
2. Minimum Project Size
3. Incentives

C. DISPATCHABLE EMERGENCY GENERATOR INITIATIVES (DEGI)
1. Eligibility
2. Minimum Project Size
3. Incentives
4. Required Mitigation Measures

D. INTERVAL METERS (IM)
1. Eligibility
2. Minimum Project Size
3. Incentives

III. PROJECT IMPLEMENTATION PROCESS

A. PDRE, LC/S, AND DEGI PROJECTS
B. INTERVAL METER PROJECTS

IV. METERING REQUIREMENTS

V. REPORTING REQUIREMENTS

A. INTERMEDIATE REPORTS
B. FINAL REPORTS

VI. PROGRAM EVALUATION

VII. NON-COMPLIANCE

VIII. DISCLAIMER

IX. APPLICATION REQUIREMENTS

X. GENERAL CONDITIONS

APPENDICES

APPENDIX A - APPLICANT CHECKLIST

APPENDIX B - FACILITY DATA SHEETS

B1 Permanent Demand Reduction Efforts
B2 Load Curtailment/Shifting
B3 Dispatchable Emergency Generator Initiatives
B4 Interval Meters

APPENDIX C - SAMPLE PURCHASE ORDERS

EXHIBIT A PROGRAM COMPONENT DETAILS
EXHIBIT B STANDARD TERMS AND CONDITIONS
EXHIBIT C PROMPT PAYMENT POLICY STATEMENT

APPENDIX D - TECHNICAL ASSESSMENT OUTLINES

APPENDIX E - CONTRACTOR CHECKLIST

APPENDIX F - INVOICE COVER SHEET

I. INTRODUCTION

A. OBJECTIVE
The objective of PON 733-02 is to offer an integrated program to improve electric system reliability and system load factor, as well as to reduce electric costs by providing incentives that result in system coincident electric summer peak demand reduction in New York State, particularly in New York City. Incentives are offered to Contractors to develop and implement peak load reduction project(s) that meet this objective. Measures installed under PON 733-02 must perform as an integrated function without compromising applicable building codes or occupant health, comfort, or safety. All measures must exceed efficiency requirements contained in applicable codes or regulations. For the purposes of the application, the baseline for estimating kW reductions will be determined from the current load profile for each Facility. The customer baseline load profile and strategy for accomplishing peak load reductions must be clearly delineated in the Technical Assessment (see Appendix D).

The integrated program consists of four components: (See Section II, Program Requirements for a complete description of eligibility requirements and program administration.)

Permanent Demand Reduction Efforts (PDRE) result in reduced peak demand, through the installation of equipment that provides long-term (expected to be in place and operational for at least five years), overall system coincident peak demand reduction. Capital improvements requiring design and installation periods of greater than 8 months are strongly encouraged to investigate the Commercial/Industrial Performance Program, and/or other NYSERDA funded programs.

Load Curtailment/Shifting (LC/S) results in reduced peak demand either in response to an electric capacity shortfall, or defined price signal. Each participating Facility must participate in a New York Independent System Operator (NYISO) Demand Response Program (DRP), an Acceptable Load Serving Entity (LSE) Load Management Program, or a Time of Use (TOU) or Real Time Pricing (RTP) Program.

Dispatchable Emergency Generator Initiatives (DEGI) result in reduced peak demand, at times of capacity shortfall, by enabling owners of existing emergency/backup generators in the Con Edison service territory to offload all, or a percentage of their electric capacity requirements to their own generators, in response to a communication from the New York Independent System Operator's Emergency Demand Response Program (EDRP) or a Transmission Owner Load Management Program. Except for specific replacement provisions established herein, the purchase or installation of new generation equipment is ineligible for incentives under this program.

Interval Meters (IM) result in reduced peak demand through the purchase and installation of Interval Meters to enable participation in load reduction programs such as the NYISO's demand response programs, and/or an Acceptable LSE Load Management Program, including a TOU or RTP program.

Eligible Contractors are encouraged to investigate other New York Energy $mart^SM programs, including the Commercial/Industrial Performance Program, the New Construction Program, Smart Equipment Choices, Technical Assistance, Distributed Generation/Combined Heat & Power (DG/CHP) program, and the Loan Program. These programs offer incentives for the purchase and installation of energy efficient equipment. See NYSERDA's website (www.nyserda.org) for more information on each of these programs.

B. AVAILABLE FUNDS
NYSERDA has up to $11 million available for incentives to Contractors under this solicitation. The program terms offered through this PON are effective as of October 2, 2002. Section I.C.(3). addresses program incentive caps by Contractor, Facility and Project.

Applications will be processed on a first-come, first-served basis until all funds are committed, or through October 31, 2003, whichever is earlier. Contractors awarded an incentive will be issued one or more Purchase Orders from NYSERDA.

C. INCENTIVES

TABLE 1 - Project Incentive Caps ^{1, 2}

1 NOTE: Contractors will be reimbursed the lesser of 70% of the Eligible Project Costs or the incentive caps set forth in Table 1. The Facility owner/operator must contribute no less than 30% of Eligible Project Costs.
2 NYSERDA reserves the right to increase program incentives within the Con Edison service territory.
3 NOTE: New York State Public Service Commission Approved Interval Meters will be reimbursed the lesser of 70% of Eligible Project Costs or $2,500/meter, NYISO Compliant Interval Meters will be reimbursed the lesser of 70% of Eligible Project Costs or $1,200/meter. Field Verification is required for certain Interval Meter only Projects.

1. Reimbursement Incentives
Eligible Facilities must contribute to the SBC. In the event the customer pays the SBC on less than 50 percent of the total annual electric consumption (kWh) at the Facility, the incentive will be prorated accordingly.

The Contractor will be reimbursed the lesser of 70% of the Eligible Project Costs or the incentive caps set forth in Table 1. The Facility owner/operator must contribute no less than 30% of Eligible Project Costs and take ownership of all measures funded under PON 733-02. NYSERDA reserves the right to require documentation from the Contractor to demonstrate the Facility owner/operator minimum payment requirement. NYSERDA reserves the right to require canceled checks to verify that Eligible Project Costs have been incurred.

The final incentive payment will be determined, per PON 733-02 and the Purchase Order (PO), including Exhibit A, based on an approved Technical Assessment (developed by the Contractor) and Field Verification of equipment installed and operational, as outlined in the Technical Assessment, and appropriate Facility specific invoices. These incentives may be modified if the approved Technical Assessment and/or approved Field Verification identify changes to the estimated kW demand reduction. Ineligible Project costs include, but are not limited to, Facility labor, or ongoing expenses such as subscription fees, software licensing fees, service/maintenance fees, communications or internet fees, etc.

The Contractor will be reimbursed the lesser of 70% of the Eligible Project Costs or the incentive caps set forth in Table 1. No more than 30% of the Eligible Project Costs shall be for project development. Project development includes administrative costs, overhead, engineering, marketing, development of the Technical Assessment, travel expenses, profit, or other expenses approved by NYSERDA. No less than 70% of the Eligible Project Costs shall be for project implementation. Project implementation includes only direct expenses for the purchase and installation (labor and material costs) of equipment at the Facility, such as on-site operation and maintenance improvements, energy management system upgrades, advanced metering, Direct Load Control (DLC) technologies, disposal fees, or other expenses approved by NYSERDA. Eligible Project Costs must be specifically itemized for each Facility, including materials and equipment expenses, staff names and titles identified, billable hourly rate, tasks performed, and hours applied to specific tasks. Invoice items must be specifically identified as project development expenses or project implementation expenses. All invoices must include a signed invoice cover sheet, included in Appendix F. Invoice requirements apply to all invoices submitted, including Contractor invoices and subcontractor invoices. NYSERDA will inform all Facilities of incentives provided to their Contractor.

2. Aggregation Incentive
Contractors who aggregate greater than 10 MW of Field Verified demand reduction, under PON 733-02, are eligible for a $100,000 aggregation incentive. Upon receipt of applications from a single Contractor equaling or exceeding 10 MW of demand reduction, NYSERDA will issue a purchase order to the Contractor for $100,000. Aggregation incentives will be paid in two installments: 50% after Field Verification, and 50% when the Contractor verifies, by way of final report(s) to NYSERDA, that no less than 80% of demand reductions have been achieved as confirmed by the final report(s) submitted to NYSERDA. Final reports to NYSERDA must use the same demand reduction calculation methodology as required by the specific NYISO DRP. Technical Assessments, Field Verifications, and final reports must confirm that a single Contractor has completed Projects resulting in greater than 10 MW of demand reduction. Demand reductions resulting solely from the installation of Interval Meters are not eligible to receive the aggregation incentive.

The PON 733-02 aggregation incentive is to support the development and implementation of demand response projects that deliver NEW demand response resources. The Aggregation Incentive is limited to technology and infrastructure improvement-based demand response Projects - not behavior-based demand response Projects. The Aggregation Incentive is limited to one award per NYSERDA PON 733 -02 Contractor.

The aggregation incentive is to deliver new demand response resources at a diversity of Facilities, through a diversity of Contractors, to foster a vibrant and competitive demand response market. To this end, we will closely monitor the distribution of Aggregation Incentive awards, and the Facilities, Contractors and CSPs involved. Should we see a concentration, rather than a diversity, the program may be adjusted accordingly.

3. Program Incentive Caps
(a.) Unless otherwise approved by NYSERDA, the total incentive per Contractor under this Program will not exceed 20% of the total funding for this solicitation (initial Contractor cap - $2.2 million), excluding the Aggregation Incentive. (b.) Unless otherwise approved by NYSERDA, the total incentive per Facility for measures under this Program will not exceed 5% of the total funding for this solicitation (initial Facility cap - $550,000). (c.) Program incentives for the NYISO Day Ahead Demand Response Program (DADRP) and Time of Use or Real Time Pricing Projects are limited to $1.5 million. (d.) The total incentive for the DEGI component of the program will not exceed 20% of the total funding of this solicitation. (e.) Contractor and/or Facility caps may be adjusted based on program activity and funding resources.

D. LIMITATIONS
Eligible Project Costs must be incurred between October 2, 2002 and March 31, 2004. Measures for which expenses have been incurred prior to October 2, 2002 are ineligible for incentives. All Purchase Orders expire on April 30, 2004, unless the Contractor provides written justification, by January 30, 2004, acceptable to NYSERDA, for the delay in completing the Project. NYSERDA will not make payment on an expired Purchase Order. Incentives awarded under PON 733-02 cannot pay for measures funded under other NYSERDA programs. Single family residences are ineligible, except for select aggregated Facilities. Demonstration projects and/or new unproven technologies are ineligible.

Participants that received a Purchase Order which expired under PON 620-01 (Peak-load Reduction Program), but did not implement the funded demand reduction measures nor receive funds for the demand reduction measures under other NYSERDA programs, may apply to PON 733-02.

The Contractor is responsible for obtaining all required local, state, and federal permits, and is responsible for complying with all applicable building, health, environmental, and safety codes.

E. APPLICATION PROCESS
The application process begins when the Applicant submits a completed application to NYSERDA (see Appendix A and Appendix B1-B4), on behalf of one or more Facilities. All applications must be submitted by an Eligible Contractor. For aggregated Projects, only one Appendix A per submitted aggregation is required, although one or more Appendix B must be completed for each Facility. Appendix B must describe each Project for a particular Facility and indicate an estimated summer peak kW demand reduction for each Facility. The Applicant Checklist is located in Appendix A, Facility Data Sheets are located in Appendices B1-B4, sample Purchase Orders are located in Appendix C, a Technical Assessment outline is attached as Appendix D, a Contractor Checklist is located in Appendix E, and an Invoice Cover Sheet is located in Appendix F.

F. DEFINITIONS
Acceptable LSE Load Management Program - load management programs, such as TOU or RTP, or NYISO's DRPs, intended to motivate electric consumers to reduce on-peak electric demands. Programs must be offered by Load Serving Entities, or Transmission Owners, and must be acceptable to NYSERDA, and/or the Public Service Commission.

Applicant - Any entity, proposing a Project at an SBC-eligible Facility, submitting an application under this solicitation.

B20 - a blended Biodiesel mixture consisting of 20% (by volume) Biodiesel and 80% (by volume) petro-diesel fuel.

Biodiesel - A fuel consisting of long-chain fatty acid alkyl esters made from renewable vegetable oils, recycled cooking greases, or animal fats that meets ASTM standard D6751with properties similar to No.2 petroleum diesel fuel.

Contractor - Any Applicant, proposing/developing a Project at an SBC-eligible Facility, that is awarded a Purchase Order under this solicitation.

Curtailment Service Provider (CSP) - A CSP is a load aggregator, energy service company (ESCO), or electric utility authorized, but not required, to provide load reductions under the New York Independent System Operator's Emergency Demand Response Program (NYISO's EDRP), or its Day Ahead Demand Response Program (DADRP).

Direct Load Control (DLC) - A load reduction strategy that can interrupt consumer load or modify settings or schedules of equipment at the time of a NYISO or LSE peak demand period, or in conjunction with Time of Use or Real Time Pricing programs. Equipment must be controlled for an aggregated set of Facilities, by way of remote, centrally dispatched communication/control. Notwithstanding any other provisions of this solicitation, DLC Projects are eligible for all building types.

Eligible Contractor - An Eligible Contractor must be capable of, or must retain services capable of developing a summer peak demand reduction Project, and implementing all necessary measures. Eligible Contractors include individual building owners or operators, lease holders, energy services companies, load serving entities, transmission and/or distribution utilities, CSPs, equipment installers, engineering firms, and energy management firms. See Sections VII. NON-COMPLIANCE for additional eligibility requirements.

Eligible Project Costs - Incurred costs associated with the development and implementation of the measures necessary to achieve the Project's objectives, in accordance with the Purchase Order, Exhibits A and B, and as outlined in this Program Opportunity Notice. Ineligible Project costs include Facility labor, or ongoing expenses such as subscription fees, software licensing fees, service/maintenance fees, communications/internet fees, etc.

Facility - The location where the Project is proposed and implemented. To be eligible for this program, a Facility must pay into the System Benefits Charge.

Field Verification - The final site visit, performed by the NYSERDA Consultant, to verify that the measures identified in the Technical Assessment have been installed, are operational, and are capable of delivering the kW reduction as documented in the Technical Assessment.

Interval Meters - The Interval Meters component provides two distinct functions: meters that capture energy use information more complex than mere tracking of accumulated flow; and communication systems that capture, store and communicate energy use information.

PSC Approved Interval Meters - Interval Meter approved by the New York State Public Service Commission, and installed by a Meter Service Provider, in a configuration compliant with the New York State Public Service Commission to be used for billing purposes. Interval Meters installed under this component must be capable of; 1) Supporting Time of Use and Real Time Pricing rate plans and 2) providing read-only access of revenue grade data to the Facility or a designated agent of the Facility.

NYISO Compliant Interval Meters - Interval Meter that is compliant with the NYISO regulations, as they pertain to NYISO's DRP.

Load Serving Entity (LSE) - Any entity authorized or required by law, regulatory authorization or requirement, agreement, or contractual obligation to supply energy, capacity and/or ancillary services to retail end users located within the New York Control Area (NYCA), including NYISO direct customers. For purposes of this PON, eligible LSE's must demonstrate the presence of a New York State office.

Meter Service Provider - Entities approved by the New York State Public Service Commission to install meters to be used for billing purposes in New York State.

NYISO - New York Independent System Operator.*

NYISO's EDRP - New York Independent System Operator's Emergency Demand Response Program.*

NYISO's ICAP - New York Independent System Operator's Installed Capacity Program.*

NYISO's DRP - New York Independent System Operator's Demand Response Programs, including the Day Ahead Demand Response Program (DADRP), Emergency Demand Response Program (EDRP), Installed Capacity Program (ICAP), Special Case Resources (SCR), Unforced Capacity Program (UCAP), and virtual bidding.*

NYSERDA Consultant - An engineering consultant under contract to NYSERDA to provide technical support and field verification services for this program.

Project - The implementation of demand reduction measure(s) at a Facility by an Eligible Contractor.

Qualifying Generators - All customer owned/operated generators, model year 1995 or newer; or all model year 1994 and older generators that demonstrate either by generator specific manufacturer's data or through emissions testing, that NOx emissions do not exceed 35 pounds per megawatt-hour (lb/MWh). Emissions testing methods for test and tune purposes should be conducted consistent with industry established protocols (such as the American Society for Testing and Materials [ASTM] D6522-00) and applicable DEC regulations.

Real Time Pricing (RTP) - A market-based electric rate alternative that regularly informs consumers of dynamic pricing, typically reflecting periods of scarcity with increased prices and periods of surplus with reduced prices.

Summer Peak Demand Reduction Period - May 1 to October 31, during the hours of 11:00 AM to 7:00 PM.

Technical Assessment (TA) - A site specific, engineering or feasibility study describing peak load Permanent Demand Reduction Efforts, Load Curtailment/Shifting, and/or Dispatchable Emergency Generator Initiatives, the methodology for determining kW demand reduction and kWh savings, a summary of pre- and post- installation coincident kW demand and kWh use, and measure costs (see Appendix D).

Time of Use Pricing (TOU) - An electric rate alternative that offers pre-determined, time sensitive rates for defined periods that reflect the costs of providing the energy and capacity to the customer.

Transmission Owner - The public utility or authority (or its designated agent) that owns facilities used for the transmission of energy in interstate commerce and provides transmission service under a New York PSC approved tariff.

Ultra Low-Sulfur Fuel - Distillate fuel oil having a sulfur content less than, or equal to, 30 parts per million by weight.

*NOTE: For more information about programs offered by the New York Independent System Operator, visit the NYISO website at www.nyiso.com

II. PROGRAM REQUIREMENTS

A. PERMANENT DEMAND REDUCTION EFFORTS (PDRE)

1. Eligibility

• Measures implemented under this component are to be installed and operational at the Facility for at least 5 years.
• Measures must be operational and reduce coincident demand at a Facility during the entire Summer Peak Demand Reduction Period, consistent with the measures' normal operating schedules.
• Measures must be activated in an automatic mode as an integrated function of the operation of the building systems or equipment.
• For any project based on control or electric generation strategies (e.g. PV), Contractors must provide a more extensive and detailed TA that assures a higher level of confidence that proposed electric demand reductions are both achievable and persistent.
• Lighting measures must be hard-wired installations. Screw-in lamps and/or screw-in ballasts are ineligible for funding under this solicitation. Power quality and power factor improvements are ineligible for funding under this solicitation.
• Fuel cells and Photovoltaic (PV) installations are eligible for funding under this component of this solicitation.
• Demand reductions resulting from the installation of the following fossil-fuel fired generators are ineligible for funding under this component of this solicitation: microturbines, internal combustion engine-driven electric generation, and combined heat and power equipment. PDRE measures resulting in increased Facility emissions will be considered on a case by case basis.
  
  2. Minimum Project Size
  
  The minimum Project size is 40 kW, although Projects resulting in demand reductions of less than 40 kW will be considered on a case-by-case exception basis.
  
  3. Incentives
  
  
• Eligible Project Costs include engineering services, procurement and installation of capital equipment, metering equipment, or other NYSERDA approved expenses incurred to permanently reduce summer peak demand.
• Capital equipment includes equipment improvements that result in reduced electric demand, such as heating, ventilation and air-conditioning (HVAC) equipment, lighting equipment, controls for HVAC and lighting equipment, motors, PV, and select motor drives.
  
  For Projects in the Con Edison Service Territory:
  The lesser of 70% of Eligible Project Costs or $475/kW of summer peak demand reduction for measures installed, operational, and Field Verified on or before March 31, 2004.

  For Projects Outside the Con Edison Service Territory:
  The lesser of 70% of Eligible Project Costs or $175/kW of summer peak demand reduction for measures installed, operational, and Field Verified on or before March 31, 2004.

B. LOAD CURTAILMENT/SHIFTING (LC/S)

1. Eligibility

• Contractors must show registration or proof of each Facility's participation, for no less than one entire Summer Peak Demand Reduction Period, in a NYISO DRP, an Acceptable LSE Load Management Program, or a TOU or RTP program, and that each Facility is willing and technically capable of receiving, and responding to a communication, or price signal.
• Each LC/S Project, must have the willingness and technical capability to curtail electric load at least 12 times, for a duration of not less than four hours per curtailment, for a total of no less than 48 hours over the Summer Peak Demand Reduction Period.
• Facilities participating only in TOU or RTP programs must control load in an automatic fashion to be eligible for funding under Load Curtailment/Shifting.
• Non-aggregated residential customers are ineligible to receive funding under Load Curtailment/Shifting.
• The Project must be comprised of installed measures that enable curtailing or shifting electric use during the entire Summer Peak Demand Reduction Period.
• Demand reductions resulting from the installation of new microturbines, generation, or co-generation equipment are ineligible.
  
  2. Minimum Project Size
  Notwithstanding DLC Projects, the minimum proposed demand reduction Project shall be at least 100 kW. DLC projects must be aggregated to 100 kW, but have no Facility minimum.

  3. Incentives
  Incentives will be paid to the Contractor regardless of whether or not there is a communication from NYISO or LSE during the Summer Peak Demand Reduction Period.

• Eligible Project Costs include engineering services, procurement and installation of capital equipment, metering equipment, training of Facility staff, and development of a curtailment plan. Capital equipment includes equipment that reduces electric demand, such as controls and improvements to heating, ventilation and air-conditioning (HVAC), lighting, process loads, motors, and motor drives. Other related expenses to develop and implement projects will be considered on a case-by-case basis.

• The expenses for closing of a Facility, loss of revenue due to the closing of a Facility as a Load Curtailment/Shifting measure, or additional staff costs due to shifting operations to off-peak hours are ineligible for an incentive.
  The NYSERDA funded kW demand reduction shall not exceed that which is registered with the NYISO or an Acceptable LSE Load Management Program.
  
  For Projects in the Con Edison Service Territory:
  The lesser of 70% of Eligible Project Costs or $175/kW of summer load curtailment for measures installed, operational, and Field Verified on or before March 31, 2004.

  For Projects Outside the Con Edison Service Territory:
  The lesser of 70% of Eligible Project Costs or $55/kW of summer load curtailment for measures installed, operational, and Field Verified on or before March 31, 2004.

C. DISPATCHABLE EMERGENCY GENERATOR INITIATIVES (DEGI)

1. Eligibility

• Qualifying Generators, within the Con Edison service territory only, are eligible for incentives under the DEGI component. Contractors must show registration or proof of each Facility's participation, for no less than one entire Summer Peak Demand Reduction Period, in the NYISO's EDRP or a Transmission Owner Load Management Program.
• Facilities must have the willingness and technical capability to operate during the entire Summer Peak Demand Reduction Period, but need only operate when it receives a communication from the NYISO or a Transmission Owner. Each NYSERDA approved DEGI Project must have the capability to operate at least 12 times, for a duration of not less than four hours, for a total of no less than 48 hours, and no more than 200 hours, over the Summer Peak Demand Reduction Period.
• The project must be comprised of installed measures that enable emergency generators to be operated solely in response to a communication from NYISO's EDRP or a Transmission Owner Load Management Program.
• Except for the specific replacement provisions covered below, the purchase or installation of new generation equipment is ineligible.
• Eligibility of replacement units is limited to emergency or backup generators within the Con-Edison service territory, that meet emissions criteria for both the new replacements as well as the units displaced. Replacement units must document manufacturer specific equipment NOx emission rates equal to or less than 18 lbs/MWh. In addition, replacement units must emit less than ½ the NOx emissions (lbs/MWh) of the unit being displaced. Replacement units must document manufacturer specific equipment PM10 emissions rates equal to or less than 0.70 lbs/MWh.
• The maximum electric output of the new replacement unit(s) must not exceed 125% of the existing unit(s). Existing units must be removed and de-manufactured or scrapped, and the Contractor must provide proof that this requirement has been met.
• Contractors and Facilities should be aware that DEC is currently in the process of revising regulations applicable to distributed generation resources. Generators that meet the requirements of this solicitation are not assured that such units will meet future regulatory requirements.
• Eligible Contractors may modify or tune emergency generators in order to meet emission requirements of a Qualifying Generator. Generator specific manufacturer's data is considered adequate documentation for the Contractor to demonstrate that the equipment meets the NOx threshold requirement.
• Contractors must self certify that all Facilities with generators have applied for or received all required State and local permits or registrations necessary to operate the generators in a demand response program.
  
  2. Minimum Project Size
  The minimum Project size is 200 kW.
  
  3. Incentives
  Incentives will be paid to the Contractor regardless of whether or not there is a communication from NYISO's EDRP or a Transmission Owner Load Management Program during the Summer Peak Demand Reduction Period.
  
  
• Eligible Project Costs include engineering services, procurement and installation of metering equipment, testing and tuning of emergency generators, improvements to reduce environmental impacts, incremental cost of Ultra Low-Sulfur Fuel or Biodiesel (a blend no less than B20), rewiring circuits, installation of transfer switchgear, environmental permitting, selective use of catalytic reduction technologies, stack modifications, operational improvements, implementation of natural gas dual-fuel options, and eligible replacement units. Other related costs will be considered on a case-by-case basis.
• The NYSERDA funded demand reduction shall not exceed that which is registered with the NYISO's EDRP or a Transmission Owner Load Management Program.
  
  For Projects in the Con Edison Service Territory ONLY:
  The lesser of 70% of Eligible Project Costs or $125/kW of dispatchable emergency generation for Qualifying Generators installed, operational, and Field Verified on or before March 31, 2004.
  
  4. Required Mitigation Measures
  To further mitigate environmental impacts of this program, NYSERDA will purchase and retire NOx allowances equal to twice the total calculated NOx emissions generated from this component. NOx emissions will be based on the actual hours of operation of the emergency generators and an average NOx emission rate of 35 lb/MWh for all participants of this component. The allowances will be purchased in one block at the end of the Summer Peak Demand Reduction Period.

D. INTERVAL METERS (IM)

1. Eligibility

• Interval Meters are to be operational at the Facility(ies) for at least two years.
• Interval Meters are to be used to enable/verify kW demand reductions for NYISO DRP, an Acceptable LSE Load Management Program, or TOU or RTP program for non-residential customers. Interval Meters to be used for other purposes must receive prior approval by NYSERDA.
• Interval Meters installed at points other than the main electrical feed(s) or generators must provide a Technical Assessment and must receive prior approval from NYSERDA.
• NYSERDA must be provided read only access, for a minimum period of two years, to all Interval Meters funded by PON 733-02.

  2. Minimum Project Size
  The minimum Project size is 40 kW, but any Interval Meter enabling less than a 40 kW demand reduction will be considered on a case-by-case exception basis.

  3. Incentives

• Contractors must provide proof of participation, for no less than one entire Summer Peak Demand Reduction Period, by each Facility in a NYISO DRP, an Acceptable LSE Load Management Program, or TOU or RTP program.

• Eligible Project Costs are limited to the purchase and installation of individual metering systems that are connected to the following in accordance with PSC regulations: 1) main electrical feeds (i.e. utility service entrance or master meter point), 2) equipment that can reasonably be curtailed, or 3) emergency/backup generator equipment.
  
  For Interval Meters Installed Statewide:
  PSC Approved Interval Meters are eligible for the lesser of 70% of Eligible Project Costs or $2,500/meter. Such Interval Meters must be approved by the New York State Public Service Commission, and installed by a Meter Service Provider, in a configuration compliant with the New York State Public Service Commission to be used for billing purposes. Interval Meters installed under this component must be capable of; 1) Supporting Time of Use and Real Time Pricing rate plans and 2) providing read-only access of revenue grade data to the Facility or a designated agent of the Facility.
  
  NYISO Compliant Interval Meters are eligible for the lesser of 70% of Eligible Project Costs or $1,200/meter. Such Interval Meters must be compliant with the NYISO regulations, as they pertain to NYISO's DRP.

III. PROJECT IMPLEMENTATION PROCESS

A. PDRE, LC/S, AND DEGI PROJECTS
Unless noted otherwise, each of the following steps must be completed to receive payment. A checklist is provided in Appendix E.

1. Eligible Contractor submits application to NYSERDA on or before October 31, 2003. If the completed application meets all program criteria, NYSERDA will encumber funds for that Project, and issue a Purchase Order.

2. Once a Purchase Order is issued, a NYSERDA Consultant will be assigned to the Contractor's Project at no cost to the Contractor. The Consultant is assigned to the Project to review demand reduction measures identified and recommended in the Technical Assessment and to complete a Field Verification. The NYSERDA Consultant will contact the Contractor.

3. The Contractor must submit a completed Technical Assessment to their assigned NYSERDA Consultant for a review of technical accuracy within 70 days of receipt of the Purchase Order, otherwise, the Purchase Order may be voided. The Technical Assessment provides appropriate technical documentation and backup data to support the estimated kW demand reduction provided in Appendix B of the application. See Appendix D for Technical Assessment Outlines.

4. The NYSERDA Consultant reviews the Technical Assessment for technical accuracy and provides recommendations to the Contractor concerning the proposed kW savings within ten (10) business days of receipt of the Technical Assessment. It is the Contractor's responsibility to address and resolve all issues raised by the NYSERDA Consultant regarding the technical accuracy and feasability of the Technical Assessment.

5. The NYSERDA Consultant provides its recommendations to NYSERDA. NYSERDA will notify the Contractor whether or not the Technical Assessment is approved by NYSERDA. If approved, NYSERDA will issue a notice-to-proceed, stating the Technical Assessment approved kW demand reduction. Any Contractor proceeding with implementation of the Project before receiving a notice-to-proceed from NYSERDA does so at its own risk.

6. Upon receipt of the notice-to-proceed, the Contractor shall proceed to implement measures, as specified in the approved Technical Assessment.

7. Upon Project completion, the Contractor must contact their assigned NYSERDA Consultant to schedule the post-installation Field Verification. Once the Contractor notifies the NYSERDA Consultant of Project completion, the NYSERDA Consultant must conduct a post-installation Field Verification visit.

8. Upon completion of the Field Verification, the NYSERDA Consultant will provide written documentation to NYSERDA summarizing its technical review of the Project installation and providing a recommended final kW of summer peak demand reduction. If approved by NYSERDA, a notice-to-invoice will be sent to the Contractor, verifying that completed measures have been approved and stating the final adjusted kW demand reduction based on the Field Verification and actual operation of the equipment. If the kW summer peak demand reduction from the Field Verification is greater than the amount estimated in Appendix B of the application, the Purchase Order will be amended to reflect the increased incentive, provided sufficient funds still exist in the program.

9. Upon receipt of complete invoices and documentation, the Contractor receives the incentive. Deliverables required in order to receive the incentive are: 1) Appendix F accompanied by copies of Facility specific vendor invoices and documentation to verify project development and project implementation, 2) the notice-to-proceed from NYSERDA verifying approval of the Technical Assessment, 3) the notice-to-invoice from NYSERDA verifying post installation/operation approval of the summer peak demand reduction measures, 4) documentation from the Contractor demonstrating that the Facility owner/operator has contributed the required minimum payment of no less than 30% of Eligible Project Costs, and 5) for Load Curtailment/Shifting, Dispatchable Emergency Generation Initiative, and Interval Meter Projects, proof of registration in one or more of the acceptable demand reduction programs. NYSERDA reserves the right to require additional deliverable documentation as necessary.

10. Contractor submits all necessary reports to NYSERDA.

B. IM PROJECTS
Each of the following steps must be completed to receive payment. A checklist is provided in Appendix E.

1. Eligible Contractor submits application to NYSERDA.

2. Once a Purchase Order is issued, the Contractor shall proceed to have the Interval Meters installed and made operational.

3. The Contractor may submit an invoice after all meters within a Purchase Order are installed and made operational.

4. Interval Meters installed at points other than the main electrical feed(s) or generators must provide a Technical Assessment and must receive prior approval from NYSERDA.

5. Upon receipt of complete invoices and documentation, the Contractor receives the incentive. Deliverables required in order to receive the incentive are: 1) A description of the specific metering improvements and their locations and installation points, 2) Appendix F accompanied by copies of Facility specific vendor invoices, and 3) proof of installation and program participation in a NYISO DRP, an Acceptable LSE Load Management Program, or other load reduction programs offered by LSEs, including Real Time or Time of Use pricing.

6. Contractor submits all necessary reports to NYSERDA.

IV. METERING REQUIREMENTS
All Projects participating in the LC/S and DEGI must have appropriate metering technology installed. All projects with 100kW or more of summer peak demand reductions are required to permanently install and make operational Interval Meters. Metering equipment meeting the definition of Interval Meters in this PON will be deemed adequate. Hourly metered data must be archived for two years, and be made available to NYSERDA upon request, in appropriate electronic format. If this metered data is provided via website, the data must be made available to NYSERDA in read only format. Metered data must be made available to NYSERDA for a two-year period. Contractors shall obtain written consent from their clients to permit NYSERDA access to this data. This data will be used only for internal analysis, future program development purposes, and verification of demand reductions. All data shall be protected to the fullest extent possible under the New York State Freedom of Information Law.

V. REPORTING REQUIREMENTS
A. INTERMEDIATE REPORTS
For the LC/S, DEGI, and IM components, each time a Contractor or Facility is required to submit a report to the NYISO or an Acceptable LSE Load Management Program for incentive payments as part of a load management program, a copy of that report shall be sent to the Peak-load Reduction Program at NYSERDA within five (5) business days of the submission of the report to the NYISO or an Acceptable LSE Load Management Program.

B. FINAL REPORTS
By April 30, 2004, each Contractor participating in this Program shall submit a final report to NYSERDA detailing:

1. Total kW contracted for this Program,

2. Actual system coincident peak demand reductions realized,

3. Number and duration of each of NYISO's DRP or LSE Load Management Program communications (for Load Curtailment/Shifting and Dispatchable Emergency Generator Initiatives only),

4. Actual demand reduction (kW) achieved in response to each NYISO DRP or LSE Load Management Program communication (for LC/S, DEGI and IM measures only).

5. The technical approach to secure the kW reductions. Explain any case(s) in which kW reductions either outperformed (greater than 120%) or underperformed (less than 80%) pledged kW reduction when called for by a NYISO DRP or LSE Load Management Program.

Failure to provide all required reports will render the Contractor ineligible for NYSERDA's Peak-load Reduction Program in the current year (2003) as well as for the anticipated 2004 program.

VI. PROGRAM EVALUATION
NYSERDA requires Contractors who participate in PON 733-02 to respond to surveys and to provide feedback through program evaluations to assess program effectiveness. Failure to cooperate with evaluations may result in ineligibility for NYSERDA programs.

VII. NON-COMPLIANCE
Contractors may be deemed to be in non-compliance with this program for any of the following: 1) Contractors fail to meet at least 80% of demand reductions or dispatched emergency generation, as contracted by the final NYSERDA incentive, 2) Contractors fail to submit the final report as required in Section V. REPORTING REQUIREMENTS of this solicitation, 3) Contractors fail to submit copies of NYISO DRP or an Acceptable LSE Load Management Program report to NYSERDA as required in Section V. REPORTING REQUIREMENTS of this solicitation, or 4) Contractors that have not complied with program requirements in a timely manner. Contractors deemed to be in non-compliance shall have their PO cancelled and shall become ineligible for any or all future Peak-load Reduction Programs.

VIII. DISCLAIMER
NYSERDA's receipt and acceptance of the Technical Assessment shall not constitute any representation by NYSERDA as to the economic or technical feasibility, operational capability, or reliability of the information contained in the Technical Assessment. NYSERDA's payment of the incentive to the Contractor shall in no way represent an endorsement by NYSERDA of any findings or recommendations contained in such TA.

IX. APPLICATION REQUIREMENTS
Applicants must fill out the Applicant Checklist (Appendix A) and the appropriate Facility Data Sheet(s) (Appendix B(s)), completely, leaving no blank information. This information will be used to determine the incentive award. For ease of use, the application package is also available on NYSERDA's website. Paper copies of application forms and the application checklist must contain an original signature. Applications aggregating two or more Facilities must list each Facility separately on the application form, identifying the estimated summer peak demand reduction expected at each Facility. A Facility with multiple buildings may be aggregated into one Facility Data Sheet.

X. GENERAL CONDITIONS
Proprietary Information - Careful consideration should be given before confidential information is submitted to NYSERDA as part of your proposal. Review should include whether it is critical for evaluating a proposal, and whether general, non-confidential information, may be adequate for review purposes.

The NYS Freedom of Information Law, Public Officers law, Article 6, provides for public access to information NYSERDA possesses. Public Officers Law, Section 87(d)(2) provides for exceptions to disclosure for records or portions thereof that "are trade secrets or are submitted to an agency by a commercial enterprise or derived from information obtained from a commercial enterprise and which if disclosed would cause substantial injury to the competitive position of the subject enterprise." Information submitted to NYSERDA that the proposer wishes to have treated as proprietary, and confidential trade secret information, should be identified and labeled "Confidential" or "Proprietary" on each page at the time of disclosure. This information should include a written request to except it from disclosure, including a written statement of the reasons why the information should be excepted. See Public Officers Law, Section 89(5) and the procedures set forth in 21 NYCRR Part 501.

Omnibus Procurement Act of 1992 - It is the policy of New York State to maximize opportunities for the participation of New York State business enterprises, including minority- and women-owned business enterprises, as bidders, subcontractors, and suppliers on its procurement Agreements.

Information on the availability of New York subcontractors and suppliers is available from:

Empire State Development
Division For Small Business
30 South Pearl Street
Albany, NY 12245

A directory of certified minority- and women-owned business enterprises is available from:

Empire State Development
Minority and Women's Business Development Division
30 South Pearl Street
Albany, NY 12245

Contract Award - NYSERDA anticipates making multiple, as it applies to this solicitation, award(s) under this solicitation. It may award a contract based on initial applications without discussion, or following limited discussion or negotiations. Each offer should be submitted using the most favorable cost and technical terms. NYSERDA may request additional data or material to support applications. NYSERDA will use the Sample Agreement to contract successful proposals.

Limitation - This solicitation does not commit NYSERDA to award a contract, pay any costs incurred in preparing a proposal, or to procure or contract for services or supplies. NYSERDA reserves the right to accept or reject any or all proposals received, to negotiate with all qualified sources, or to cancel in part or in its entirety the solicitation when it is in NYSERDA's best interest.

Disclosure Requirement - The proposer shall disclose any indictment for any alleged felony, or any conviction for a felony within the past five years, under the laws of the United States or any state or territory of the United States, and shall describe circumstances for each. When a proposer is an association, partnership, corporation, or other organization, this disclosure requirement includes the organization and its officers, partners, and directors or members of any similarly governing body. If an indictment or conviction should come to the attention of NYSERDA after the award of a contract, NYSERDA may exercise its stop-work right pending further investigation, or terminate the agreement; the contractor may be subject to penalties for violation of any law which may apply in the particular circumstances. Proposers must also disclose if they have ever been debarred or suspended by any agency of the U.S. Government or the New York State Department of Labor.

17 Columbia Circle, Albany, NY 12203-6399    Toll-Free: 1-866-NYSERDA or Local: 518-862-1090    Fax: 518-862-1091
New York City and Buffalo Regional Offices

© 2004 New York State Energy Research and Development Authority