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Geothermal Resources Council
A DETAILED REVIEW OF RETAIL PRICING STRATEGIES, MARKETING EFFOKI'S AND
PERFORMANCE OF THE BOISE CITY DISTRICT HEATING SYSTEM
1983-1985
Charles R. Mickelson, P.E,
City Engineer
City of Boise, Public Works Department
The Boise City District Heating system serving
the downtown area of Boise, Idaho became
operational in 1983. The project has the
capability of delivering 4,000 gallons per
minute under. peak load conditions, or an
equivalent of 2.2 million t h e m in a heating
season. Retail prices are discounted fran
natural gas rates and financing of the project
was through a cdination of public and private
funds. System growth has been steady since the
project became operational.
HISTORY OF PROJECT
Geotheml space heating has been in existence
since the 1890's in Boise, Idaho, The natural
resource was first evidenced by hot springs on
the north side of the city near the base of the
foothills. Two wells were drilled in 1890 to a
depth of 400 feet and this venture eventually
became the Boise Warm Springs Hot Water
District. In the 1930's hot water was provided
to approximately 400 residences, small
comnercial businesses, and the world famus
Natatorium (a swimming and health facility),
The use of the geothermal heat fran this system
began to decline in the late 1930's when low
cost natural gas and electricity became readily
available. In 1974 the State of Idaho initiated
a study for heating ten State office buildings
in downtown Boise. Shortly after that, the City
of Boise in cooperation with the United States
Department of Energy, formed the City Energy
Office and began developing feasibility studies
for a major downtown district heating system.
In 1979, a new agency was created called Boise
Geothermal to coordinate activities between the
City of Boise and Boise Warm Springs Water
District. Through the cooperative efforts of
Boise City, the Boise Warm Springs Water
District, the Department of Energy, and the
Econanic Developnent Administration, a major
refurbishing of the Warm Springs pipeline system
was canpleted and a new district heating system
was built in order to serve downtown Boise,
This paper discusses the Boise City heating
system after successfully completing two full
heating seasons.
39
TRA~SACTIONS~
VOL 9 - PART I, August 1985
Several major steps were required in developing
the Boise City district heating system. Tasks
included geologic and hydrolqical
investigations, market and rate studies,
environmental review, master planning for
distribution system and disposal methods,
engineering designs, securing of federal and
state permits, contract awards and custaner
cmitments for retrofitting and connection.
The Boise City portion of the project
represented just over $5.1 million. Sources of
funds for the project included local support by
Boise City, the Department of Energy, the
Econanic Developnent Administration and a
private partnership, Boise Geothermal Limited
( E L ) . BGL was formed in order to augment
available public agency funds in the development
of the project. BGL secured funds for well
drilling, testing, and canpleting three
production wells.
SUMMARY OF RESOURCE & PROJECT DETAILS
a. Resource temperature - 170°F,
b, Quality of water - meets drinking water
standards with exception of fluoride at 17
ppn, generally aggressive towards brasses
and bronzes.
C. Total Dissolved Solids - 290 p p .
d. Well depths 880' - 2,010' with three
equipped wells.
e. Pumping details:
W l l #2, 125 hp, 1,500 p
Well #3, 200 hp, 2,000 gpn
Well #4, 50 hp, 750 g p
In Line Booster Ebnp, 25 hp, 450 gpm
(used during s m e r low flow periods)
f. System design - closed loop, no direct use,
g - Piping - insulated supply, 18,000 feet
(6"-14")
Uninsulated collection, 23,000 feet,
(6"-12").
h. Disposal - to Boise River. To be
supplemnted with injection wells in future,
i. Piping and pumping system designed to
deliver 4,000 gpm.
1. System operations - pumping facilities -
Boise City Public Works through contract
with EGL.
k. System pressure - remote control sensors
maintain 70 psi at delivery system midpoint,
 TABLE 1

Monthly Monthly
Therms Gallons Req'd Bill @ Savings
TqWol? per Therm to Deliver $.22792/100 Geothermal vs.
thru System Gallon Req'd 750 Therms Gallons Natural Gas

35OF .00285 750 263,158 $600 0

5O0F .00407 750 184,275 420 $180
65OF 000529 750 141 171 323 277

PRICING STRATEGIES Heating system efficiency - 75%

Gas bill: 1000 t h e m x $.60 = $600/month
In 1980 the City and 3GL negotiated a mtraet
for water to be wholesaled at the wells to the The Owner contemplates converting to geothemal.
City. Water would be metered by voltnne and the Three options are evaluated with respect to
City would ultimately be charged for therms geothermal retrofit. They are based upon a
delivered by the partnership, assuming a water temperature drop of:
temperature drop of SOOF. This provision was
renegotiated in 1983 to provide that 90% of a. 35OF
retail revenue goes to BGL. In return, BGL b. SOOF
agreed to pump the necessary water to keep the c. 65OF
pipelines hot during mn-peak periods in ctr;der
to satisfy custaner needs. The City sells the What will monthly geothermal bill be after
water to end-use custamers through volumetric conversion, given the above assumptions?
measurements. Retail rates are set in
accordance with the following basic assumptions, Geothermal rate = $.56/them
Geotheml heating requirements: (1000 therm of
a, Geothennal price discount: thirty percent natural gas)(.75) = 750 geothermal therms,
(30%) below the Intermountain Gas Canpany (See Table 1, above)
natural gas schedule GS-1 (general service.)
b. Efficiencies: The conclusion to be drawn from this analysis
Natural gas - 75% is:
Geothermal - 100%
c. Temperature utilization: building customer The greater the temperature drop from a
needs to drop water temperature 5O0F in gallon of geothermal water, the greater the
order to save 30% of natural gas bill. savings.
Exanple: If an existing heating system is less than 75%
efficient, the percent and dollar savings will
a. Natural gas retail price $.6O/therm. increase proportionately as shown in the
b. Existing fumace/boiler 75% efficient. following example.
c. Geothermal 100% efficient.
Natural gas consumption = 1000 therms
What is effective geothermal rate per them? Monthly bill = $600
Efficiency = 60%
Geothermal rate = $.60/them x (1-0.3)
.75 Geothermal required heat
= ($.80)(.7) lOOOT x .6 = 600 therms
= $.56/them Temperature Drop = 50°
Gallons required
This would be the published rate converted to 600- = 147,420
$/lo0 gallons of geothermal watsr. One hundred .00407
gallons of geothermal water @ 50 F drop contains
.407 t h e m , therefore rate per LOO gallons, Monthly bill:
$.56 X ,407 = $,22792/100 gallons. 147,420 x $,22792 = $336
100
Customers' costs per mnth are determined by the ~ n t h l ysavings $600 - $336 = $264
volume of water utilized.
Engineers analyzing a building for
Example: potential conversion need to clearly understand
the pricing issues and the efficiencies of
Assume a cumercial building utilized and paid existing building heating systems in order to
for 1000 natural gas therms in a month. fairly evaluate the potential for retrofit to
-
Natural gas price $.60/therm geothermal. Buildings where chestic water use

40

is high are excellent candidates for geothennal
conversion. Initially heat is extracted for
space heating and then waste water is used for
preheating of danestic water.
Many older hot waterosystems have been designed
to only take a 20-30 F temperature drop. Since
bise's retail prige structure requires a
customer to take 50 F temperature out of the
water in order to save 30%, sane retrofits may
not be financially attractive if building owners
can only achieve a 3OoF drop. The break-even
point with natural gas in tern of geothermal
temperature drop is 35OF. However, Boise has no
limitation on the temperature drop that a
custmer may take out. In order to encourage
extensive utilization of the resource, Boise
encourages custmrs to take as much temperature
out as possible. If a custcmr is able to take
70°F temperature drop out of the system, then
savings will exceed 50% of the cost of natural
gas.
The geothermal system is operated by Boise City
as an enterprise fund. Ordinance provisions
provide that maintenance expenses, capital
expansion and replacement of facilities be
provided from user funds, A connection fee was
also established to recapture local tax dollars
originally dedicated to the project, The
connection fee is set at $40 per gallon of peak
demand, or $60 per 1,000 square feet of building
space
MARKETING EFFORTS
The general marketing strategy utilized to
secure retail custaners follows:
a. An initial survey of buildings was done to
deternine heat loads and Isation of
appropriate service areas.
b. A letter was transmitted to all potential
building owners indicating to them that they
had an opportunity to be included in system
planning
C. After evaluation of preliminary data a
second letter was sent to all building
owners indicating to them that plans had
been campleted and that connection
agreements were being requested.
d. Upon capletion of the distribution system,
application forms were transmitted along
with various sales material to obtain
specific cmitments for connection to the
system
e. Contracts for service were prepared and
transmitted for those buildings located
reasonably close to the service line but of
sufficiently great distance away to merit
the expenditure of separate funds.
f. Supplemental grant funds were obtained for
retrofit to augment the existing project
41
MICKELSON
funds, The Wise project did not include
any funding to retrofit buildings.
Approximately 60 signed connection agreements
(item e) were returned during the early phases
of the project, and these signed connection
agreements were then used to establish a layout
for the overall pipeline system within the
constraints of the budget monies available.
Initially, a fairly high canmitment of public
and institutional buildings were secured. Thus,
many of those buildings began retrofitting in
anticipation of an operational date for the
Boise City pipeline system. No budget amount
was allocated in the Boise project for detailed
building retrofit analyses. As the project
progressed, it became more and more apparent
that a greater cmitment of resources was
required for marketing.
There were several factors affecting the lack of
cmitted connections fran building owners in
the early stages of the project, such as exact
retail price, unknown retrofit costs for
accurate financial analyses, and a period of
stable - even declining - energy prices.
Eventually, the City, through the use of
consulting engineers, offered to do a brief
engineering analysis for any of the building
owners who appeared to be interested in
utilizing geothermal and who had not yet
cmitted. These analyses and letter reports
varied from two ( 2 ) to 3 0 (thirty) hours of
engineering time, depending on the size of the
facility and the cmplexity and/or the
likelihood of that building eventually being
converted to geothermal. These reports were
very helpful in detailing the existing heating
systems and the potential for retrofit.
Unfortunately the engineering estimates for
retrofitting were overstated at times because no
good historical costs were available. This
overstatement of costs increased the simple '
payback periods and discouraged scme building
owners from pursuing the conversion. As the
project engineers and vendors gained more
experience in retrofitting, more detailed
studies were made and more time was spent in
obtaining accurate cost estimates for building
owners.
After an engineering study was done for a
particular building, a sumnary of the data was
extracted from the reports in the following
fonnat (see Table 2, next page).
This matrix format was used to establish
priorities for marketing purposes. Staff and
marketing efforts are applied to those buildings
where the annual geothennal revenue potential is
the greatest and the offsite costs the least.
Major potential users are a local hospital,
university, and large office camplexes,
One must be prepared to be flexible in pricing
of the retail water in that the larger
c m r c i a l and institutional users such as the
MICKELSON

TABLE 2

City
Heating Annual Net Ntrofit Tax Tax Simple Cost
Dollars oeothenwl Annual Cost b COM. Totdl Credit Credit Net Payback Vault
Building Displaced Revenue Savings Enqr. Fee Cost % $ Cost (Years) & Ext

Non-Profit 26,940 14,350 12,590 98,600 4,000 102,600 0% 0 102,600 8.1 20,000
Health Club
Printing Facility 2,707 1,282 1,425 27,500 660 28,160 25% 7,040 21,120 14.8 3,000

Restaurant 10,400 6,900 3,500 24,760 240 25,000 15% 3,750 21,250 6.1 4,000

Motel 7,100 3,500 3,600 22,700 2,400 25,100 25% 6,275 18,825 5.2 10,000
School 45,800 26,800 19,000 51,300 8,200 59,500 0% 0 59,500 3.1 55,000

h o s p i t a l are on a large-volume n a t u r a l gas rate OTHER USES

which is s u b s t a n t i a l l y less than the g e n e r a l
s e r v i c e rate to which the mise rates have been Much of the sewer systan i n Boise c onstru cted
tied. I n order to induce c e r t a i n large prior to 1930 ha s seen massive tree mot
c u s t a n e r s t o use geothermal heat, price i n t r u s i o n due to d e t e r i o r a t i o n of t h e p i p e l i n e
concessions over a fixed period of t h e may be joints. Through experimentation have found
necessary. Negotiations are taking t h e form of tha& carglete submergence of t h e root mass with
guaranteeing a c e r t a i n payback to t h e c u s t a n e r 160 F geothermal water f o r a pe riod of 45
and subsequent to having achieved t h e payback, minutes to one hour w i l l k i l l t h e l i v i n g t i s s u e .
t hen t h e c u s t a n e r w i l l be guaranteed by c o n t r a c t I n one t o two months the roots w i l l becane soft
a 30% d i s c o u n t from t h e p r e v a i l i n g price o f a t which time they can be e a s i l y removed with
n a t u r a l g a s which t h e geothennal has displa c e d. hydra ulic c le a ning equipnent . T his treatment
does not have any apparent e f f e c t on t h e trees
SYSTEM PERFORMANCE and is e f f e c t i v e f o r t h r e e t o f i v e y ears.
S e ve ra l hundred-thousand f e e t of sewer pipe have
The Boise C i t y s y s t e n became t o t a l l y o p e r a t i o n a l been t r e a t e d i n t h i s fa s hion.
i n October 1983 with s i x ( 6 ) retail custa ne rs .
Twenty-one b u i l d i n g s were connected by March, D uring t h e w i n t e r of 1983-84 e x t r e m e l y c o l d
1985. These b u i l d i n g s represent 830,000 square weather coupled w ith s m blocked t h e street
feet. Connected square footage is repre s e nte d inlets. Underground dra ina ge c u l v e r t s became
i n Figure 1. The 21 b u i l d i n g s are ccmprised of frozen. Our local highway d i s t r i c t used
offices, a library, a hospital, several public g e o t h e r m a l water f o r a b o u t a month t o c l e a r
bui l di ngs, a v e t e r a n ' s hane, and a ccmnercial i n l e t s and d r a i n s . Water was loaded i n t o
laundry. The c u r r e n t c u s t o m e r mix is n i n e conventional f l u s h e r t r u c k s and as d r i v e r s
p u b l i c b u i l d i n g s and 12 p r i v a t e building s . The a pproa c he d f r o z e n or b l o c k e d i n l e t s t h e h o t
system has t h e capacity to s e r v i c e four to f i v e water was used to m e l t t h e s n m and ice. Th is
times t h e connected square footage. The system was extremely e f f e c t i v e i n s o l v i n g a p o t e n t i a l l y
is also oper ated during t h e sumner. Year-round s e r i o u s flooding problem. G e othe m a l water was
u s e r s i ncl ude a laundry, a h o s p i t a l , a v e t e r a n ' s also used to melt ice a t stream undercrossings.
hane and a r e c r e a t i o n a l f a c i l i t y . Water is loaded i n t o t r u c k s frcm a conventional
f i r e hydrant which was i n s t a l l e d on t h e
Retail b i l l i n g s are s m a r i z e d belm: geothermal p i p e l i n e .
Equivalent
them
assuming 50°F coNculs1oN
Billinqs drop
10/1/83- The Boise p r o j e c t is c l e a r l y a t e c h n i c a l su ccess
9/30/84(Actual) $102,821 195,990 having c a nple te d two ( 2 ) he a ting seasons.
Buildings formerly he a te d w ith o i l , n a t u r a l g as
10/1/84- and electricity have been converted to
9/30/85(Projected) $143,000 282,000 geothermal. T his renewable resource has a
tremendous f u t u r e i n the C i t y of Boise.
10/1/8 5-
9/30/86(Projected) $150,000- 296,000-
$250,000 490,000

42
 MICKELSON

ACKNOWIXDGEMENTS

P h i l l i p Hanson, Project Director, 1979-1984

Boise Geothermal Limited

1000

E 900
i
3
W
800
z
0
0 700

w 0-
P;
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

43