Why Efficiency and Why Now

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Why Efficiency and Why Now?

• Kateri Callahan
• President, Alliance to Save Energy
• Utilities and Energy Efficiency The Fifth Fuel
• November 28, 2006

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Presentation Outline

• A Word About the Alliance
• Why Energy Efficiency Why Now
• State Policies Prescription for Energy
  Efficient Kentucky!
• Building Codes and Standards
• Tax Incentives
• Consumer Education Outreach
• Regional Initiatives
• Utility and State Energy Efficiency Programs

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What is the Alliance?

• NGO coalition of prominent business, government,
  environmental and consumer leaders who promote
  the efficient and clean use of energy worldwide
• Mission To advance energy efficiency world-wide
  through policy, education, research, technology
  deployment, market transformation and
  communication initiatives.
• Chaired by Senator Mark Pryor (D-AR) and James
  DeGraffenreidt (CEO Washington Gas) with strong
  bi-partisan congressional, corporate public
  interest leadership

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Growing Gap between Production Capacity and
Demand for Energy
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Why Energy Efficiency?

• Energy Efficiency is an Energy Resource
• CHEAPER
• Each 1 invested in Energy Star program 75 in
  energy cost savings and 15 of investment in new
  efficiency technologies
• Average Cost of DSM Programs .02 -.04 cents/kWh
• QUICKER
• In 2001, California cut peak electricity use by
  10 in less than a year
• CLEANER
• Negawatt produces NO ENVIRONMENTAL FOOTPRINT
• EHANCES SECURITY
• Energy efficiency is a homegrown resource!

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Greatest Energy Resource
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Energy Efficiency Savings

• Avoiding roughly 2.5 billion tons of CO2 annually
  
• Roughly 400 billion energy savings per year

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KY Per Capita Energy Use on the Rise
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State Action Can Make a Difference!
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State Policies

• Building Codes
• Tax incentives
• Consumer Education Outreach
• Regional Initiatives
• Utility Energy Efficiency Programs

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What to do?

• National Action Plan for Energy Efficiency
• EEI, NARUC, EPA, DOE,

• EPA Clean Energy-Environment Guide to Action

• Western Governors Association Energy Efficiency
  Task Force Report

• State Policies that Encourage Utility Energy
  Efficiency Programs
• DOE, NARUC, NASEO, ASE, RAP

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Migrating Best Practices

• WGA CDEAC EE Task Force Recommendations
• Migrate Best Practices to ALL western states
• Institute Electric Natural Gas DSM Programs
• Update Enforce New Building Codes
• Government Leadership in Facilities/Practices
• Financial Incentives
• Pricing Policies (Pay more for the more you use)
• Education Outreach
• Technology RD and Transfer
• Form Regional Initiatives
• Feasible to reduce electricity use 20 in 2020

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State Policies Tax Incentives

• Property tax abatement for green buildings (NV)
• Income tax credit for building upgrades (MT)
• Excise tax exemption for hybrid vehicles (NM)
• Sales tax holiday for Energy Star appliances (GA)

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Motivating Consumers Works!

• California Cut Energy Use and Peak Demand
• Flex Your Power Campaign
• Retail promotions
• TV, Print Radio Advertising
• 20/20 Utility Rebate Program
• Automatic Enrollment Simple Requirement
• Executive Order All Investor-owned Utilities
• Results
• Reduced energy consumption at peak by 14
• 32 of residents businesses cut energy use by
  at least 20
• Per capita energy use lower than any
  industrialized nation
• Cost of savings lower than contract or spot
  market purchases

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Southeast Energy Efficiency Alliance (SEEA)

• The Southeast Energy Efficiency Alliance
  builds regional partnerships to promote and
  achieve energy efficiency for a cleaner
  environment, a more prosperous economy, and a
  higher quality of life.

• SEEAs role in the 11 state region
• Regional champion for energy efficiency
• Modeled on other regional alliances (NEEP, MEEA,
  etc.)
• Information clearinghouse
• Education and programs (e.g. tax incentives
  workshop)

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State Policies for Utility Programs

• Planning Use energy efficiency as a priority
  resource
• Funding and Incentives Provide stable funding
  and appropriate incentives
• Performance Requirements Adopt energy savings
  requirements or targets
• Break Sales-Profit Link Decouple revenues from
  sales by fixing revenue rather than rates

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Funding Public Benefits Charge

• Dedicated funding for energy efficiency,
  low-income assistance, renewable energy, and/or
  RD
• Usually 0.01-0.3 cent/kWh surcharge on electric
  bills in restructured markets
• Avoided 24 GW of Peak Load in 2004 (80 Power
  Plants)
• Reported Cost of Saved Energy at .02 -.04
  cents/kWh

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Performance Standards

• Energy efficiency performance standard (TX, CT)
• Clean energy portfolio standard (PA, NV, HI)
• Regulatory performance requirements (CA)

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Decoupling

• Throughput incentive When a regulated utility
  sells more energy, revenues usually go up more
  than costs.
• Anticipate sales loss in setting rates
• Compensate for lost revenues
• Decouple revenues from sales by fixing revenue
  rather than rates.

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Final Words

• Our greatest national energy resource is the
  energy we currently waste.
• Former Energy Secretary Spence Abraham

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For more information

• DOE report coming soon
• National Action Plan www.epa.gov
• EPA Guide to Action www.epa.gov
• WGA Energy Efficiency Task Force www.westgov.org
• ASE State Index www.ase.org
• ACEEE reports www.aceee.org
• RAP Policy Toolkit www.raponline.org

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Contact Us!

• Alliance to Save Energy
• 1850 M Street, NW
• Washington, D.C. 20036
• Phone [phone]
• Website www.ase.org
• Kateri Callahan, President
  kcallahan_at_ase.org