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ClimateWire: U.S. utility programs result in widely varying levels of energy efficiency

By Julia Pyper
ClimateWire
A study of 50 electric utilities across the United States shows wide disparities between the amount of money invested in energy efficiency and how much energy those programs are saving.

A study of 50 electric utilities across the United States shows wide disparities between the amount of money invested in energy efficiency and how much energy those programs are saving.

"We've felt for a long time that energy efficiency really needs to be invested in more heavily," said Dan Bakal, director of electric power programs at Ceres, a national coalition of investors and environmental groups. "A step further is that we think electric utilities and natural gas utilities should have a role in this."

The report, released today by Ceres, the Energy Foundation and M.J. Bradley & Associates LLC, offers a benchmark assessment of energy efficiency programs at U.S. electric utilities. Utility companies have been evaluated on customer service, reliability, cost and safety, said Bakal, but never before on the basis of efficiency. As upgrades become more prevalent amid concerns over rising electricity prices and rampant greenhouse gas emissions, he said, the need to judge their performance will increase, too.

A total of 26 states have made investments in some form of energy efficiency resource standard. According to Edward White Jr., a vice president of National Grid, an international electricity and gas company, these types of programs can save $3 to $4 per dollar spent -- making them a cheap and smart investment in troubled economic times.

Large-scale utility Pacific Gas and Electric and National Grid subsidiaries Massachusetts Electric and Narragansett Electric are among the leaders in energy savings. These companies invested up to $4.80 in efficiency programs per megawatt-hour of retail electricity sales -- 50 times more than some other utilities spent -- according to the Energy Information Administration.

United Cooperative Services in Texas and Southern Co. subsidiaries Alabama Power and Georgia Power were on the low end, having spent less than 10 cents per megawatt-hour of retail electricity sales in 2009.
Viewing energy efficiency as a resource

According to Ralph Cavanagh, energy program co-director at the Natural Resources Defense Council, getting a utility to aggressively implement energy efficiency programs involves three important policies: "[a] commitment to pursue all cost-effective energy savings, decoupling of utilities' financial health from increases in electricity use, and performance-based financial incentives for utilities to achieve energy efficiency gains."

A company's commitment to energy efficiency depends largely on directives from state regulatory agencies, said Bakal. Utilities need clear direction from state leaders so they can be confident they'll see a return on their energy efficiency investments. Setting specific efficiency targets could take the process even further.

But guidelines are only part of the challenge. Utilities also need to figure out the best way to implement energy efficiency programs. Offering customers an audit to identify cost-effective ways for homes and business to reduce energy use is an important first step, said Bakal. A variety of other offerings, such as targeted rebates for washers and dryers, can also encourage the cost-effective use of resources.

Designing programs so they get used is an "art and a science," said Bakal. Utilities need to evaluate technical information, but also devise a plan based on the unique characteristics of their consumers.

A successful program comes with multiple benefits, from energy bill savings and job creation to air pollution and emissions reductions. "As many studies have indicated, it's an incredibly cost-effective way to reduce emissions of all kinds -- greenhouse gas emissions, but also all the other pollution that comes from a power plant," said Bakal.

Continued reporting on utility performance will further encourage these kinds of benefits by giving regulators, consumer groups and environmental advocates the information they need to push for low-cost efficiency resources.

With energy prices expected to rise -- as highly polluting coal-fired power plants are affected by U.S. EPA regulations, for instance -- efficiency improvements will become increasingly attractive, said Bakal. But first, he added, "we need to start recognizing energy efficiency more as a resource."

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