2015G1162 PARTICIPANT S GUIDE Electricity Management Systems Hydro-Québec, Vol. 5, No. 1 Aug 2015
Contents Overview of the Industrial Systems Program... 3 Each component has its own Participant s Guide that sets out its specific terms and conditions.... 4 Scope of the Participant s Guide... 5 Electricity Management Systems Component Description... 6 Important notice on the scope of the Participant s Guide for the Electricity Management Systems component... 7 Glossary... 8 Section 1. Conditions and Undertakings... 10 Section 2. Electricity Management Systems Component - Eligibility... 16 Section 3. Electricity Management Systems Component Financial Assistance... 20 Section 4. Electricity Management Systems Component Procedure... 23 Section 5. Electricity Management Systems Component Overview of Steps and List of Deliverables... 30 Appendix 1 Activity Sectors Eligible for the Industrial Systems Program According to the North American Industry Classification System (NAICS Codes)... 34 Appendix 2 Specific Terms and Conditions for Certain Off-Grid Systems... 37 Appendix 3 Municipal and Cooperative Systems... 38 Appendix 4 Continuous Measurement and Electricity Management Component Standard Contract. 39 Appendix 5 Electricity Management Systems Component of the Industrial Systems Program* Revision List... 46 Appendix 6 To Contact Us... 51 Participant s Guide Electricity Management Systems 2
Overview of the Industrial Systems Program An energy efficiency culture affects all aspects of corporate life. Supported by an overall vision, it goes beyond improving the efficiency of procedures, systems, equipment or processes. It involves a series of practices that all members of an organization are encouraged to adopt, and which quickly become habit, within a framework informed by standards and electricity consumption data. Hydro-Québec offers a number of services, including considerable financial assistance under its Industrial Systems Program, to help industrial customers make energy efficiency part of their corporate culture. Here is an overview of the Program s multiple components: Assistance for Analysis These components are used to determine energy efficiency measures concerning both operation and investment projects with the installation of efficient electrical equipment. Electricity Consumption Analysis Customers may obtain financial assistance to perform an analysis of their electricity consumption. Eligible types of analysis include design review, analysis of electricity consumption in existing facilities, and control systems and process optimization. Electricity Management Systems Customers may obtain financial assistance to purchase and install continuous measurement equipment and implement an electricity management system aimed at continuous improvement, in compliance with ISO 50001 standards. ISO 50001 certification is however not a requirement under this component. Assistance for Investments These components are used for investment projects to implement efficient electrical equipment. Retrofit Customers may obtain financial assistance for projects designed to reduce specific electricity consumption while maintaining or increasing production volume as part of a plant modernization or retrofit project. New plant, Expansion or Addition of Production Lines Customers may obtain financial assistance for projects designed to reduce specific electricity consumption when expanding a plant, adding production lines or building a new plant. Prescriptive Measures Customers may obtain financial assistance for projects involving the implementation of certain predetermined energy efficiency measures relating to lighting, variable-frequency drives rated between 1 and 200 hp (for ventilation systems and centrifugal fluid pumps), air compressors, water chillers with a capacity of up to 200 tons of refrigeration, and industrial refrigeration units. Choosing equipment that is more energy-efficient, as opposed to standard or regulation equipment, leads to higher levels of energy efficiency. The amount of financial assistance for each eligible measure on a project is automatically calculated using tools provided by Hydro-Québec. Participant s Guide Electricity Management Systems 3
Each component has its own Participant s Guide that sets out its specific terms and conditions. ASSISTANCE FOR ANALYSIS ASSISTANCE FOR INVESTMENTS ELECTRICITY CONSUMPTION ANALYSIS Examples: design review, analysis of consumption in existing facilities, and control system and process optimization RETROFIT ELECTRICITY MANAGEMENT SYSTEMS NEW PLANT, EXPANSION OR ADDITION OF PRODUCTION LINES PRESCRIPTIVE MEASURES Compressed air, lighting, variable-frequency drives (VFDs), water chillers and industrial refrigeration Presentation of the project under the appropriate component Once Hydro-Québec has provided preliminary approval for a project under a given component, participants cannot request to have their project reviewed under another component in the Program. Furthermore, Hydro-Québec reserves the right to determine the appropriate components for all submitted projects. Technology and Business Demonstration project submission On May 1, 2015, the Technology Demonstration component was removed from the Industrial Systems Program to be replaced by the new activity, Technology and Business Demonstration. For more information about the new activity and about how to submit a demonstration project (www.hydroquebec.com/business/energy-efficiency/programs/technology-businessdemonstration). Participant s Guide Electricity Management Systems 4
Scope of the Participant s Guide This guide explains the objectives, eligibility criteria, procedures and special requirements for the Electricity Management Systems component of the Industrial Systems Program. However, all new terms or conditions announced in the Program newsletter take precedence over those described in this document. The newsletters can be found on the Industrial Systems Program Web site, at www.hydroquebec.com/industrial. Participant s Guide Electricity Management Systems 5
Electricity Management Systems Component Description Hydro-Québec s Industrial Systems Program offers financial assistance to industrial customers located in Québec to help them implement an electricity management system (EMS) and measure the real-time power consumption of their main processes, systems and equipment, as well as to ensure that they have the resources required to see all EMS and measurement related activities through. Electricity management allows industrial customers to more accurately determine the energy performance of their processes, systems and equipment, and to quickly detect and correct deviations using operational control. But to be effective, the monitoring of power consumption has to be embedded in the corporate culture, supported by the joint efforts of staff and management. This Participant s Guide explains the specific objectives, services, eligibility criteria, procedures and requirements for the Program s Electricity Management Systems component. Subject to the Program s terms and conditions, this component consists of: Basic assistance and services Offered to all customers eligible for this component (see section 2). Continuous measurement: Installation of continuous measuring instruments to better control electricity consumption of an entire plant or a significant energy use (SEU) through regular monitoring Implementation of tools for preserving measurement data and turning it into useful information Electricity management: Development, implementation and improvement of an electricity management system, in parallel with continuous measurement, to be carried out by an energy committee coordinated by an energy manager and made up of plant personnel + Additional assistance to encourage quicker implementation of eligible energy efficiency measures* * Eligible measures are listed in section 3. Additional assistance and services Offered to certain customers eligible for this component (see section 2). Examples of services: Plant analysis for identifying electricity savings potential Registration of energy committee members in training sessions or workshops on electricity management systems for industrial plants Drafting of a detailed energy review Technical support at various stages of setting up the electricity management system Continuous measurement is an essential first step in developing an electricity management system. Under this component, your continuous measurement proposal must be accompanied by an electricity management proposal. For more information about our energy efficiency programs and other services, visit our Web site, www.hydroquebec.com/business/energy-efficiency. Participant s Guide Electricity Management Systems 6
Important notice on the scope of the Participant s Guide for the Electricity Management Systems component This guide explains the eligibility criteria, procedures and special requirements for the basic services described in Electricity Management Systems Description. All customers who submit a project under this component must comply with the conditions specified in this guide. Eligibility criteria, procedures and special requirements for additional services, as well as a statement of these services and the financial assistance granted by Hydro-Québec, are described in the contract for these services. The contract conditions apply only to participants receiving the additional services. Participant s Guide Electricity Management Systems 7
Glossary The following definitions are specific to the Continuous Measurement and Electricity Management component of the Industrial Systems Program. adjusted electricity savings electricity management system (EMS) electricity management system (EMS) project Electricity Management Systems component electricity savings payback period energy efficiency measure industrial site Industrial Systems Program management, maintenance or operational measure measurement Difference between electricity consumed before and after the implementation of energy efficiency measures, adjusted to take into account: discrepancies between production at the time of measurement and baseline production, or one or more independent variables used for calculation purposes. Systematic improvement process which continuously establishes electricity savings goals and means to ensure measure implementation and follow-up. Specific electricity consumption reduction project submitted or completed under the Electricity Management Systems component. Electricity Management Systems portion of the Industrial Systems Program. Note: This guide also uses the abbreviated form component. Time it takes for the eligible electricity savings on an energy efficiency project to equal the project s eligible costs. Measure that requires an investment and is implemented, or action that is carried out, in order to improve the energy efficiency of equipment, systems or buildings and reduce their specific electricity consumption. Site with one or more buildings, including annexes, intended for the production of goods and operated by a single business customer. Assistance program composed of five components to assist eligible customers who wish to implement energy efficiency projects in an industrial building.* Note: This guide also uses the abbreviated form Program. *The eligibility of an industrial building is determined by its NAICS code. As a general rule, the building where the project is to be carried out must have a goodsproducing NAICS code. Energy efficiency measure involving a change in work procedures and processes by means of operational control. For example, measures that generate savings by modulating equipment use (e.g., running time) are eligible. However, measures that generate savings by changing inputs or reducing output quality are not eligible. Action of measuring consumption and productivity using measurement equipment. Note: Measurement requires the collection of consumption, production and all other required data. Participant s Guide Electricity Management Systems 8
participant Participant s Guide Eligible business customer that enrolls in the Industrial Systems Program. Document presenting the general conditions and requirements of the Industrial Systems Program, plus objectives, services, eligibility criteria, terms and requirements specific to the Electricity Management Systems component. Note: The terms and conditions applicable to the project presented to Hydro-Québec are those of the Participant s Guide in effect when you submit your project proposal form. production parameters service contract significant energy use (SEU) specific (electricity) consumption specific electricity savings start-up total costs Measurable factors (independent variables) that have an impact on the electricity consumption of a process. Note: The parameters may include such things as products, production capacity and seasonal factors. Agreement entered into between two parties for electricity service and delivery. Mode or type of energy use (e.g., process, machine, auxiliary system) representing a substantial portion of electricity consumption or presenting considerable potential to improve electrical energy performance. Average electricity consumption per unit produced or served or per unit of another independent variable affecting consumption. Electricity savings per unit produced or per unit of another independent variable used for calculation purposes. Note: Calculated as the difference between electricity consumed before and after the implementation of energy efficiency measures. Action of bringing a device or machine into production. All costs related to carrying out a project. Participant s Guide Electricity Management Systems 9
Section 1. Conditions and Undertakings This section presents the general conditions and undertakings common to all components of the Industrial Systems Program. Conditions and undertakings that apply exclusively to the Electricity Management Systems component will also be found in this section. 1.1. Hydro-Québec s exclusive rights in relation to the Industrial Systems Program Under the terms of its contracts or agreements with business customers, Hydro-Québec reserves the exclusive right to: amend or terminate the Program at any time without notice; interpret Program terms, conditions and requirements; determine the eligibility of any customer, project, building or energy efficiency measure under the Program; reject any proposal or project if it does not meet Program criteria, or if the budget for the Program has been spent; request changes or clarifications to the proposal or project. 1.2. Signing of contract A contract between Hydro-Québec and you will confirm the specific terms and conditions for the EMS project implementation. If you fail to fulfill the requirements specified in this Participant s Guide and in the contract, Hydro-Québec may terminate its financial assistance for the project and demand repayment of any financial assistance you have already received. 1.3. Hydro-Québec s undertakings Hydro-Québec s obligation is to pay out the amount of financial assistance stated in the acceptance letter or approved under the Program, provided that the project submitted is complete and meets all Program criteria. Payment of the financial assistance is conditional on the participant s compliance with the terms of the Program. Should Hydro-Québec modify or end the Industrial Systems Program, it will only review (on the date the modifications come into effect or the Program is ended, as the case may be) eligible projects for which: an initial contract to complete the work has been signed with a third party (copy of contract required) or a first equipment order has been placed (purchase order or invoice indicating order date required) However, Hydro-Québec cannot be held liable for any damage or harm of any nature whatsoever arising from the Program any error, omission or failure to achieve electricity savings as a result of carrying out the proposed project or, if applicable, using tools required under the Program Participant s Guide Electricity Management Systems 10
1.4. Participant s undertakings 1.4.1. Industrial Systems Program General Conditions and Undertakings As the participant, you: are responsible for your entire energy efficiency project, including selecting and implementing energy efficiency measures, setting your electricity and cost savings objectives and calculating the electricity savings achieved; remain solely responsible to Hydro-Québec for the quality and results of the project, irrespective of any other parties that may have been involved; agree to abide by all terms and conditions stated in this Participant s Guide; in particular, to meet the deadlines for project completion and for any measurements required, and to provide all requested deliverables within the prescribed time frames; are entirely responsible for keeping informed of updates to the terms and conditions of the Program, and therefore agree to regularly check the Program Web site and sign up for the Program newsletter at www.hydroquebec.com/industrial; agree that Hydro-Québec may, at any time during regular operating hours, verify that the energy efficiency project has been completed in its entirety, including depending upon the project type implementation of energy efficiency measures, equipment installation and start-up, and the completion of any required measurements, and that it has been carried out in accordance with the requirements set out in the agreement, as well as with the terms and conditions of the Participant s Guide and the Program; agree to use the money paid out by Hydro-Québec solely for project execution and to repay Hydro-Québec all amounts received and not used for that purpose; acknowledge that throughout the term of the contract, Hydro-Québec is entitled to verify how any amount paid as financial assistance was spent; agree that Hydro-Québec may obtain copies of supporting documents and general vouchers relating to the project; undertake to make these documents or vouchers available to an auditor appointed by Hydro-Québec, during regular operating hours, on at least 24 hours notice, for up to five years from the payment of financial assistance; are responsible for implementing the project and liable for any damage of any kind, suffered by any person, resulting from the project. You agree to take up at your cost the defense of Hydro-Québec, its directors, officers, employees, subcontractors and assigns in all disputes, claims or legal proceedings pertaining directly or indirectly to the project in question; undertake to mention in media releases or advertising materials concerning the project that you have received financial support from Hydro-Québec; however, at no time will you suggest or imply that Hydro-Québec recommends any product, process, or industry provider whatsoever; acknowledge that any false statement, whether intentional or unintentional, may: result in the cancellation or adjustment of any financial assistance granted under the Program or, if applicable, repayment of amounts received; result in your disqualification from the Program; undertake to ensure that your electrical installation continues to meet the distributor s conditions of service and is used and maintained in such a way that it does not cause system disturbances. Since these disturbances (voltage and current fluctuations, flicker, harmonics, etc.) can be caused by many devices associated with energy efficiency measures (electronic ballasts, variable-frequency drives), additional protection equipment must occasionally be installed as part of an energy efficiency project. Participant s Guide Electricity Management Systems 11
1.4.2. Electricity Management Systems Component Conditions and Undertakings As the participant, you: must submit your completed project to Hydro-Québec along with all required deliverables no later than the date specified in the contract, in accordance with the terms and conditions of this guide and of the contract, if applicable; inform Hydro-Québec of the recommendations (including those related to energy efficiency measures) adopted as a result of the project up to five years after submitting the energy committee s first annual report; maintain the project components in good working order for a period of five years, and provide Hydro-Québec with a minimal follow-up of the project (including continuous measurement) over the four years after the first phase of continuous measurement. 1.4.3. Environmental requirements As the participant, you: shall comply with all laws and regulations governing environmental protection in Québec: shall take all necessary measures to prevent, control or eliminate any contamination or damage to the environment and any degradation in the quality of soil, woodlands, farmlands, waterways, lakes, wetlands or the air, or any danger to wildlife (terrestrial, avian or aquatic); shall obtain all permits, certificates, licenses and authorizations and pay any fees required by law to implement the energy efficiency measures for which financial assistance has been provided; shall be responsible for the management, handling, storage, transportation and disposal of hazardous waste generated, in compliance with legislation in effect: shall transport hazardous waste to a site or a company authorized to receive such waste. 1.5. Compensation Hydro-Québec may deduct from the financial assistance any amount owed to it by you or your partners, associates, shareholders and subsidiaries. This compensation is effected by operation of law in favor of Hydro-Québec only. Enforcement of this provision allows Hydro-Québec to terminate this contract upon written notice. 1.6. Financial position and operating capacity You must guarantee the completion of the project to the satisfaction of Hydro-Québec and operate the project components for at least five years from the date of payment of the financial assistance provided for in the contract. Hydro-Québec may terminate the contract upon written notice if your financial position or long-term operating capacity is insufficient to guarantee the completion of the project or the operation of the project components for at least five years from the date of payment of the financial assistance provided for in the contract. Participant s Guide Electricity Management Systems 12
If Hydro-Québec considers that your financial position or long-term capacity to operate the project components is insufficient to guarantee the completion of the project or the operation of the project components for at least five years from the date of payment of the financial assistance provided for in the contract, Hydro-Québec may also, at its sole discretion: a) refuse to pay you any financial assistance; or, b) if the financial assistance has already been paid out, require repayment, prorated to the number of weeks the project components are not in operation or fail to meet Program requirements, based on a 60-month period starting on the date of payment of the financial assistance; or, c) if the financial assistance has not yet been paid out, require a financial guarantee equal to the total amount provided for in the contract; or, d) if the financial assistance has already been paid out, require a financial guarantee equal to the amount paid, prorated to the number of weeks the project components are not in operation or fail to meet Program requirements, based on a 60-month period starting on the date of payment of the financial assistance. Where a financial guarantee is required, it shall take the form of an irrevocable and unconditional letter of credit issued by a financial institution that fully meets Hydro-Québec s requirements at all times. For these purposes, the financial institution issuing the letter of credit must: be a Canadian financial institution or foreign institution with a Canadian branch; have a minimum of $10 billion in assets; maintain a credit rating of at least A- (S&P), A3 (Moody s) or A low (DBRS) at all times. Hydro-Québec will not accept a letter of credit issued by a financial institution that has been placed on credit watch with a negative outlook, even if its credit rating meets this minimum standard. If all the credit rating agencies do not grant equivalent credit ratings to the financial institution, the lowest credit rating shall be considered. The financial guarantee shall be based on the template provided by Hydro-Québec at the time it is requested and must be approved by Hydro-Québec prior to being officially issued. The financial guarantee shall remain in effect and be renewed, if applicable, until the end of the five-year period starting on the date of payment of the financial assistance. However, with the consent of Hydro-Québec, the amount of the guarantee may be reduced annually, prorated to the number of weeks the project components are in operation and meet Program requirements, based on a 60-month period starting on the date of payment of the financial assistance. Hydro-Québec may exercise the financial guarantees it holds if: you fail to repay, within 30 days of Hydro-Québec s request, the financial assistance, prorated to the number of weeks during which the project components are not in operation or fail to meet Program requirements, based on a 60-month period starting on the date of payment of the financial assistance; you fail to provide or renew a financial guarantee within five business days of Hydro-Québec s request. Participant s Guide Electricity Management Systems 13
1.7. Cessation of participant s business activities Should you partially or completely cease business activities in the buildings targeted by the project, Hydro-Québec may: if the financial assistance has not yet been paid out, refuse to pay it; or, if the financial assistance has already been paid out, require repayment, prorated to the number of weeks the project components are not in operation or fail to meet Program requirements, based on a 60-month period starting on the date of payment of the financial assistance. The exercise of Hydro-Québec s right to repayment of the financial assistance is grounds for termination of the contract. 1.8. Confidentiality You agree that it is necessary to disclose to Hydro-Québec confidential information (be it in writing, verbally or visually) including, without limiting the generality of the foregoing, data, formulas, processes, models, photographs, plans, drawings, specifications, reports, studies and ideas and Hydro-Québec undertakes to keep such information confidential. However, the following information is not considered confidential: Your name, the cost of the project, the amount of financial assistance granted, the energy efficiency measures recommended and their field of application (described in general terms), and the subsequent electricity savings; Any information that was in the public domain at the time of disclosure; Any information that, after being disclosed, entered the public domain through no action on the part of Hydro-Québec; Any information that Hydro-Québec can prove it had in its possession before it was disclosed; Any information disclosed to Hydro-Québec without restriction by a third party legitimately entitled to disclose it. Any disclosure to the public or to a third party of your confidential information shall be the subject of a prior written agreement. You agree to authorize the disclosure of confidential information provided that such disclosure does not adversely affect your competitive position. Consequently, Hydro-Québec undertakes to consult you prior to disseminating any information (other than that necessary for Program follow-up) that could adversely affect your competitive position. 1.9. Tax implications This section sums up the main tax implications of the Program. It is included for reference only. Payments by Hydro-Québec under the Program are normally subject to the goods and services tax (GST) and the Québec sales tax (QST), unless your organization does not conduct business activities under the terms of these tax regimes. As a result, you must first produce an invoice that includes those taxes before Hydro-Québec can make a payment under the Program. Participant s Guide Electricity Management Systems 14
For income tax purposes, the financial assistance granted under the Program is an inducement that should, depending on your case, reduce the cost of property or capital expenditure, reduce the amount of outlay or expense, or count as income. Unless your organization is exempt from paying tax, Hydro-Québec will issue a Relevé 27 Paiements du gouvernement [government payment information] slip, as required by the Québec Taxation Act, as a record of the financial assistance paid. The section on invoicing of financial assistance provides further details to help ensure that all tax requirements are met. However, you should consult a tax advisor or the tax authorities, if necessary. Determining the full extent of income and other tax implications is your sole responsibility. Hydro-Québec cannot be held responsible for participants who incorrectly determine their tax status, as applicable taxation usually depends on the specific situation of each participant. Participant s Guide Electricity Management Systems 15
Section 2. Electricity Management Systems Component - Eligibility Customers wishing to obtain financial assistance for a project under the Electricity Management Systems component of the Industrial Systems Program must meet all the terms, conditions and requirements in this Participant s Guide. 2.1. Eligible customers Any individuals or legal entities that own, operate or occupy one or more of the sites eligible under the Electricity Management Systems component (see subsection 2.2) and meet all of the other eligibility criteria described in this section are eligible for this component. Notwithstanding the foregoing, Hydro-Québec reserves the right to reject an eligible customer s project if: the customer or one of its partners, associates, shareholders or subsidiaries owes any amount to Hydro-Québec; or the customer is unable to demonstrate to Hydro-Québec s satisfaction that its financial position or long-term operating potential is sufficient to guarantee completion of the project or operation of the project components for a period of at least five years from the date of payment of the financial assistance.* * Nonetheless, Hydro-Québec may approve such a customer s project if the customer provides a financial guarantee equal to the amount initially requested on the project proposal form, at the start of the financial assistance procedure. Where a financial guarantee is required, it shall take the form of an irrevocable and unconditional letter of credit issued by a financial institution that fully meets Hydro-Québec s requirements at all times, as detailed in Financial position and operating capacity (see Industrial Systems Program General Conditions and Undertakings). 2.2. Eligible buildings The Electricity Management Systems component of the Industrial Systems Program is intended for all eligible industrial buildings. As a general rule, the building where the project is to be carried out must have a goods-producing NAICS code (see appendix 1 for more details and exceptions). An eligible building must use electricity to manufacture, assemble or process goods or foodstuffs, to extract raw materials, or to handle or transport materials. Exceptionally, buildings that are used primarily for commercial, institutional or agricultural purposes may be eligible for their industrial activities. In addition, the facility or building where the continuous measurement and electricity management project is to be carried out must be located in Québec, and its electricity bill for the past 12 months must exceed $750,000. The project must involve a single industrial site. For an EMS project to be considered eligible for additional assistance and services (see Project Description for an overview of these services), the building where the project will be implemented must be subject to Hydro-Québec s L rate. Participant s Guide Electricity Management Systems 16
2.2.1. Details for industrial buildings connected to the Hydro-Québec grid Only buildings subject to an electricity rate regulated and approved by the Régie de l énergie (such as general rates L, M, G or G-9) are eligible. In calculating financial assistance, the only electricity savings and eligible costs taken into consideration are those related to equipment, systems or processes whose consumption is subject to an electricity rate regulated and approved by the Régie de l énergie. 2.2.2. Specific terms for off-grid and municipal systems Special terms and conditions apply to buildings connected to certain off-grid systems (see appendix 2). The list of eligible municipal systems is given in appendix 3. 2.3. Eligible projects For your project to be eligible, you must submit all the deliverables listed in section 4. If you already have an electricity management system that you wish to improve, you should highlight the planned improvements and their objectives. 2.4. Eligible costs The engineer in charge of your project may request information about the types of activities included in the detailed breakdown of project costs before deciding on their eligibility. Eligible costs related to continuous measurement equipment Purchase of electricity consumption measurement equipment needed to monitor electricity-specific energy performance indicators Installation of measurement equipment (including used equipment) by outside and in-house specialists Purchase and installation of the tools required to preserve measurement data and turn it into useful information Eligible costs related to the electricity management system In-house specialists (including the energy manager and other energy committee members) assigned to develop, implement and improve the electricity management system (number of hours and hourly rates) Consulting services for initiating electricity management within the organization and ensuring that the organization s specialists are in full command of the electricity management system activities 2.4.1. Details regarding the eligibility of certain costs 1) Development or improvement of tools and models for monitoring electricity consumption The only eligible costs are those related to the purchase and installation of tools and models for collecting and monitoring electricity consumption measurement data. If the tools and models are also used for measuring energy consumption from other sources, only the portion of the costs related to electricity consumption is eligible. Costs related to tool and model design, development and improvement are eligible, under certain conditions specified in point 3. 2) Daily real-time monitoring of machine consumption (supervisor, director or other) Costs associated with this type of monitoring are eligible, under certain conditions specified in point 3. Participant s Guide Electricity Management Systems 17
3) Electricity consumption monitoring meetings Only costs related to the meetings held by the energy committee (which is composed of the director and the energy manager among others) are eligible. Concerning in-house labor: costs associated with the activities required to implement and maintain the energy committee and to develop and monitor the electricity-specific energy performance indicators are eligible, provided that these activities are justified by the energy efficiency measure implementation plan included in the energy committee s annual report, which must be submitted to Hydro-Québec before the second installment is paid out. Concerning outside labor: the only eligible costs are those associated with electricity management implementation (such as the preliminary energy committee meetings) and with supporting internal resources in taking full command of electricity management operations. 4) In-house labor (number of hours and hourly rates), on the following conditions: You must fill in the Main-d œuvre interne par type de métier (in-house labor costs by trade) section of the Grille détaillé des coûts totaux admissibles (detailed breakdown of total eligible costs), indicating the cost centre assigned to your project; If your accounting system does not provide the option of isolating in-house labor hours allocated to the project, you must provide Hydro-Québec with a letter to this effect signed by your controller, accountant or the retrofit project applicant, in addition to the breakdown sheet. A letter template is available on request. Eligible costs are total costs, before taxes. Only costs incurred after Hydro-Québec s confirmed date of receipt of your proposal are eligible. Moreover, some organizations are entitled to partial GST and QST refunds. The nonrefundable portion of these taxes is considered an eligible cost under the component. Participant s Guide Electricity Management Systems 18
2.5. Ineligible costs In general, all costs not specifically identified as eligible shall be considered ineligible. The following are examples of ineligibles costs for an EMS project: Ineligible costs related to continuous measurement equipment Purchase of measurement equipment without the implementation of an electricity management system in the zone where the equipment is installed Purchase of measurement equipment installed for purposes of load shedding or off-peak heating Purchase of measurement equipment installed for the purpose of spreading out your electricity bill Production losses, waste, or other losses stemming from the project Purchase of used equipment Labor costs incurred prior to Hydro-Québec s confirmed receipt of the proposal and the costs of equipment for which purchase orders were issued prior to that date Costs incurred as well as services and work including engineering carried out prior to Hydro-Québec s confirmed receipt of the proposal Ineligible costs related to the electricity management system Costs incurred as well as services and work including engineering carried out prior to Hydro-Québec s confirmed receipt of the proposal 2.6. Justification of eligible costs If an eligible cost exceeds the average market values, or if there is no average market value for a given piece of equipment or type of work, you must provide the appropriate justifications, upon request, failing which, Hydro-Québec reserves the right to reduce the amount of eligible costs. All other costs not specified in this guide must be approved by Hydro-Québec. Participant s Guide Electricity Management Systems 19
Section 3. Electricity Management Systems Component Financial Assistance Hydro-Québec grants financial assistance to every EMS project accepted, according to the criteria described in this section. As the Industrial Systems Program budget is limited, Hydro-Québec will allocate the financial assistance amounts at the time proposals are received on a first-come, first-served basis. If the project is later turned down, the financial assistance allocated will be canceled. The terms of financial assistance are set out in a contract. 3.1. Project length EMS projects must span a period of approximately five years. In addition to the first round of continuous measurement (lasting approximately one year), Hydro-Québec requires a follow-up of the project for the four subsequent years (see subsection 4.3). 3.2. Calculating financial assistance Continuous measurement Hydro-Québec grants financial assistance amounting to: 50% of actual eligible costs, up to a maximum of $75,000, for the purchase and installation of continuous measurement equipment (per industrial site) Electricity management systems Hydro-Québec grants financial assistance amounting to: 50% of actual eligible costs, up to a maximum of $75,000, for the development, implementation and improvement of an electricity management system that covers at least a one-year period, as well as for the follow-up over the subsequent four years. Additional assistance for the implementation of eligible energy efficiency measures In addition to these amounts, you may be eligible for financial assistance, to be paid out annually, for new energy efficiency measures implemented each year and resulting in measured savings 1, during the twelve-month period prior to the payment of financial assistance, as part of an EMS project. The amount of financial assistance is calculated as set out below: 1 per kwh of eligible savings measured (calculated based on first full year of operation) Eligible measures are described in subsection 3.2.1. 1 To obtain this assistance, you must submit the energy efficiency measures implementation plan and the summary report of the calculation of the project s electricity savings (Step 7 in subsection 4.3 of this Participant s Guide), as well as proof of equipment installation or confirmation of measure implementation. Participant s Guide Electricity Management Systems 20
Total financial assistance per site or service contract You can carry out several projects and receive up to $150,000 in financial assistance, to be granted as follows: If you have one or more service contracts for the same site: $150,000 per site* If you have one or more sites under the same service contract: $150,000 per service contract* * excluding additional amounts. Note: Amounts are cumulative, from May 1, 2015, to the end of the component. To calculate the financial assistance your project may be eligible for, see the project proposal form (Proposition de projet Systèmes de gestion de l énergie électrique, Excel file), at www.hydroquebec.com/industrial. Eligible costs are described in subsection 2.4. The amount of financial assistance granted for the project is set out in the contract. 3.2.1. Measures and savings eligible for financial assistance under the EMS component These are the eligible energy efficiency measures under this component: measures with an electricity-related payback period of less than one year, including those related to management, maintenance or operation; or measures that are eligible under the Assistance for Investments components, 2 but are not submitted under these components. In addition, these measures must result from the electricity management system. To qualify for the 1 /kwh financial assistance, your eligible electricity savings must be measured or confirmed using a method approved by the Hydro-Québec engineer assigned to your project. The International Performance Measurement and Verification Protocol (IPMVP) and the Superior Energy Performance (SEP) protocol are used as references for calculation methods. You can justify your eligible savings by submitting documents verifying the implementation of measures (e.g., proof of implementation of an operating procedure). 3.2.2. Calculating the actual amount of financial assistance After each phase of continuous measurement, Hydro-Québec will calculate the amount of financial assistance to be paid out using the criteria set out in this Participant s Guide. The actual amount of financial assistance will be based on the actual eligible costs, up to the amount of the initially anticipated costs set out in the contract. 3.3. Payment of financial assistance 3.3.1. Terms of payment For all accepted EMS projects that meet the component requirements and respect the eligible project costs and timeline, payment of financial assistance is made at the end of every measurement phase (approximately one year), throughout project implementation and follow-up periods, after all deliverables have been received and checked by Hydro-Québec, as set out in this guide. The terms of payment are described in detail in section 4. 2 1) Retrofit or 2) New Plant, Expansion or Addition of Production Lines. Participant s Guide Electricity Management Systems 21
3.3.2. Payment schedule Assistance is paid out after continuous measurement is conducted and all deliverables are submitted and approved by Hydro-Québec. More specifically, assistance will be paid as follows: 1 st installment Next 4 annual installments Continuous measurement Electricity management 50% of actual eligible costs, up to a maximum of $75,000 50% of actual eligible costs, up to a maximum of $50,000 N/A 50% of actual eligible costs, until the remaining amount has been exhausted (out of a total of $75,000) until the maximum assistance granted in the contract has been exhausted Additional amount for the implementation of eligible measures 1 per kwh of eligible savings attributable to the implementation of new measures, every year, after the first year of continuous measurement 3.3.3. Invoicing Hydro-Québec for financial assistance before payment To receive the financial assistance, you must prepare an invoice as detailed below. As explained in the section covering tax implications (see Industrial Systems Program General Conditions and Undertakings), payments by Hydro-Québec under the component are subject to GST and QST (with a few exceptions. You must first issue an original invoice indicating the amounts of each of these taxes. The invoice must include the following information: Your organization s business name (acting as supplier in this transaction) Invoice date Total amount of goods or services supplied (amount of financial assistance) GST and QST registration numbers GST and QST amounts, shown separately Name of purchaser (Hydro-Québec) Description of goods or services supplied (financial assistance under Industrial Systems Program Electricity Management Systems component) If you do not need to collect GST and QST, you must indicate Taxes not applicable on your invoice. Note: If you have received financial assistance for additional services, Hydro-Québec may request a separate invoice for those services. Participant s Guide Electricity Management Systems 22
Section 4. Electricity Management Systems Component Procedure The procedure consists of up to nine steps (a detailed description follows). Step 1 Submit EMS project proposal Step 2 Hydro-Québec acknowledges receipt and confirms or denies eligibility of project proposal Step 3 Submit deliverables required for review of proposal Step 4 Hydro-Québec reviews and accepts or rejects project proposal Step 5 Sign contract Step 6 Start up measuring instruments and monitor electrical indicators Step 7 Perform continuous measurement for about one year Step 8 Hydro-Québec pays out financial assistance Step 9 Project follow-up and payment of financial assistance for another four years Participant s Guide Electricity Management Systems 23
4.1. Step-by-step procedure for obtaining financial assistance CUSTOMER/PARTICIPANT HYDRO-QUÉBEC STEP 1 Submit EMS project proposal Include bids received or detailed cost estimates for the purchase and installation of measurement equipment, if applicable, and a summary description of the implementation plan for the electricity management system (objectives, scope and procedures) STEP 3 Submit deliverables required for proposal review Duly completed proposal form Hydro- Québec confirms or denies project eligibility Deliverables STEP 2 Hydro-Québec acknowledges receipt and confirms or denies eligibility of project proposal. Confirms date of receipt and name of engineer assigned to project STEP 4 Hydro-Québec reviews and accepts or rejects project proposal HYDRO-QUÉBEC CONFIRMS ACCEPTANCE OR REJECTION OF PROPOSAL SIGN CONTRACT Contract STEP 5 Sign contract STEP 6 Start up measuring instruments and monitor electrical indicators Contract signed by customer HYDRO-QUÉBEC SIGNS CONTRACT AND SENDS COPY TO CUSTOMER STEP 7 Perform continuous measurement for about one year Purchase orders, invoices and other deliverables STEP 8 Hydro-Québec pays out financial assistance STEP 9 Project follow-up and payment of financial assistance for another four years Participant s Guide Electricity Management Systems 24
4.2. General instructions 4.2.1. Application processing times A Hydro-Québec representative may contact you at any time during the application process to request further details about your proposal. Hydro-Québec reserves the right to stop processing your application and close the file if it does not receive a satisfactory response to its request within two months. In such a case, Hydro-Québec will notify you in writing of its intention prior to closing your file. The time required to process your application, and consequently to pay out the financial assistance, depends on the complexity, completeness and quality of the proposal submitted, as well as how quickly you (a customer and now participant) provide all the required deliverables. 4.2.2. Participant s Guide Applicable terms and conditions The terms and conditions applicable to your project are those of the Participant s Guide in effect when you submit your duly completed project proposal form and all other deliverables listed in Step 1 (see subsection 4.3). 4.3. Step-by-step procedure for obtaining financial assistance Step 1 Submit EMS project proposal Before you start the work, 3 you must submit a proposal in compliance with the component requirements, along with all required documents. To do so, you must: Properly complete all tabs in the project proposal forms (Proposition de projet Systèmes de gestion de l énergie électrique, Excel file) available at www.hydroquebec.com/industrial. If you are eligible and wish to apply for any additional assistance and services, please indicate which ones at this stage; Provide bids received or detailed costs estimates for the purchase and installation of permanent continuous measurement equipment, and a summary description of the implementation plan for the electricity management system (objectives, scope and procedures), taking into account the impact of the financial assistance granted by Hydro-Québec for the project; Identify the significant energy uses (SEUs) targeted by the project, including all relevant SEU-related variables; Note: SEUs must correspond to 20% of the plant s electricity consumption, as it is defined in the project proposal form. Submit the preliminary version of the detailed breakdown of total internal and external eligible costs (Grille détaillée des coûts totaux admissibles, Excel file). Your proposal will be considered on the condition that you submit all required documents and information in the required format. You may ask Hydro-Québec for further explanations when preparing your proposal. The project, along with all required deliverables, must be submitted no later than 24 months after the submission of the complete and compliant project proposal. 3 The start date for work on eligible energy efficiency projects is: 1) the date on which an initial contract is signed with a third party to complete work related to the project; or 2) the date on which a first order for equipment related to the project is placed (purchase order or invoice indicating the order date). Participant s Guide Electricity Management Systems 25