EnergyBiz - November/December 2007 - (Page 20)

The state california on the Leading edge IN PUR SUIT Of A N INNOvATI v E ENERGY fU TUR E BY A L SENI A deregulation and a significant future challenge to meet growing energy needs, California is clawing its way to the forefront of national energy efficiency. Under prodding from state officials, including the California Public Utilities Commission and Gov. Arnold Schwarzenegger, who has pushed for greater solar energy use and a dramatic cut in greenhouse gas emissions, the state has embarked on a dramatic reinvention of its energy future that may well set a model for the nation. Under California’s still-emerging future energy framework, state officials will play a more central role in energy planning; utility companies will emerge as more innovative in their energy use; and consumers will become much more cognizant of the cost of the energy used at different times of the day. It’s all part of a dramatic effort to bring the issue of energy consumption to the center stage of California’s consciousness. Proponents believe that’s a path much of the nation will soon be forced to follow as energy consumption grows, prices rise, reserves dwindle and the environment degrades. “There are big challenges for the state, but there’s no question that California’s utilities are truly in a leadership position in trying to meet future energy needs,” says Michael Peevey, chairman of the California PUC. “We’ve given them a pretty big plate to fill.” He adds that the state’s utilities are redefining their activities and becoming more innovative at a time when they need to develop adequate energy transmission facilities, as well as meet new energy efficiency goals and renewable energy use mandates. Skeptics like Arno Penzias, a venture partner with venture capital firm New Energy Associates, warns there could be negative consequences to relying on utilities to carry the torch for energy efficiency and innovation. “It’s not so easy for them to innovate,” Penzias says. Others recall that California pushed its utilities into an ill-conceived deregulation effort seven years ago that led to a disaster for the industry and the state’s ratepayers. Could the state’s recent forays into energy efficiency, smart metering and alternative energy create future problems? Circumstances today are different, industry leaders in California say. Despite its past problems with energy native energy. “People want to have a decision on how to use their energy. They want to be able to do things that make a difference and maybe have an opportunity to lower their bills.” That ratchets up the pressure on California’s private and public utilities to develop a host of innovative initiatives that encourage energy efficiency, alternative energy use and greater customer choice. SMUD, for example, works with individual homeowners, new builders and a local foundation in its service area to plant free shade trees that help lower energy demand. More than 400,000 such trees have been planted. “This program is one of the most popular with our customers,” Patterson notes. In northern California, Pacific Gas & Electric launched a voluntary Climate Smart program earlier this year that lets customers make additional payments on their monthly bills with the money allocated to tree-planting projects and other efforts to offset carbon dioxide and greenhouse gas emissions. While the National Renewable Energy Laboratory estimates more than 600 utilities in the United States sponsor programs that encourage customers to pay extra to support wind, solar and other renewables, the PG&E program is believed to be the first that addresses the global-warming effects of daily energy use. San Diego Gas & Electric is embarking on an aggressive smart utility-metering effort designed to encourage energy efficiency by tying energy consumption to time-of-day use. According to Debra Reed, president and chief executive of the utility, all the utility’s customers by 2011 will have the option of using smart meters for information about what energy is costing them at particular times. The smart-meter effort is voluntary for consumers, but not for businesses that are already involved in a one-year trial program designed to measure the financial impact of peak-energy use. Reed notes that the state is pushing smart-meter use with a short-range goal of minimizing new power-plant construction and a long-range goal of creating a “smart grid” that would provide energy information to customers on a regular basis, create a two-way communications network between customers and the utility, and allow customers to remotely control appliances and other household functions. Reed adds that San Diego, with its relatively mild year-round climate, maintains a fairly stable energy load. However, when a heat spell strikes and air conditioning use spikes, about 20 percent more energy is needed during about 100 hours each year. To meet that peak demand, two new power plants would need to be built. However, if that demand could be better managed through greater efficiency “you could level demand and you wouldn’t need the two plants,” Reed says. The “smart grid” which could be in place across the state by 2020 would also function as a “self-healing grid” which Reed says would be used to gather intelligence from the network and “tell you when components are going to fail” so that preventive maintenance could be performed. “You could really define where a customer’s problem is or where it is going to be and become much more proactive in dealing with that,” Reed explains. new era “This is a new time here in terms of energy,” adds Susan Patterson, who chairs the Sacramento Municipal Utility District, one of the nation’s largest municipal utilities and a pioneer in the use of alter- state mandates All of these actions spring from a number of recent mandates from the state that are forcing utilities to become much more innovative in planning for future energy needs. Among the initiatives: 20 E n E rgyB i z November/December 2007

Table of Contents Feed for the Digital Edition of EnergyBiz - November/December 2007

EnergyBiz - November/December 2007 Contents Continental Grid Vision Needed Readers’ Views and Opinions Next for National Grid Clearing the Air The Need for Nuclear Energy Trade Status Report The Innovators California On The Leading Edge FERC Sparks Change Getting Coal Right Leadership in Times of Turmoil Innovation Delivers Return A Tale of Two IPOs LNGs Bright Prospects Generation Techologies The Age of Superconductors Leaders with Vision Get Ready for Plug-in Hybrids Betting on Batteries Cost of Decarbonizing Nuclear Helmsman – A chat with Dale Klein, Chairman of the U.S. Nuclear Regulatory Commission Global Energy Snapshot; Low-Income Energy Help; IT Spending Robust; The Greening of State Regulators; Generating Support Simplifying Offshore Wind Regs Chasing Construction Costs Energy Agency Sets New Course Deregulation Means Higher Rates Go-To Staffer Nightmare in Manhatten

EnergyBiz - November/December 2007

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