Public Power - July/August 2008 - (Page 10)

PERSPECTIVE Putting Efficiency First By Mark Crisson • President & CEO • American Public Power Association I am pleasedMaude Grantham-Richards, that APPA’s new board chair for 2008-09, has embraced “energy efficiency first” as a key part of her message for public power utilities in the coming year. When a utility faces a need for more electricity to meet customer demand, it should first investigate ways to achieve higher levels of energy efficiency among its customers. Suppose your forecasts show the need for a new generating plant. Before embarking on the land acquisition, fuel supply, cooling water source, permitting and construction, think about how all or part of that need could be met by reducing demand for electricity. What would it cost to install motion-sensors to turn off lights in unoccupied rooms in every commercial building served by your utility? What would it cost to retrofit inefficient lighting with compact fluorescent lighting in your customers’ homes and businesses? What would it cost for the utility to buy and distribute efficient refrigerators to customers and remove old energy-hog refrigerators? When energy-saving measures are implemented broadly and sustained over time, the aggregate effect can equal that of a new generator. Those efficient light bulbs and appliances and motion detectors have huge advantages over a power plant: they don’t burn fossil fuels, they don’t emit carbon, and they use less land. Moreover, a utility’s potential for increased energy efficiency is increasingly at issue during the plant permitting process. It is becoming more difficult to site a new power plant unless you can demonstrate that you have a meaningful commitment to energy efficiency. 10 JULY-AUGUST 2008 The notion of investing in efficiency first is not a new idea. Amory Lovins advocated it in an article published in the journal Foreign Affairs in 1976. Many in public power began to pursue it over 30 years ago, when energy prices escalated rapidly after the 1973 Arab oil embargo. However, at that time, fuel prices and interest rates declined and most utilities fell back into the more familiar mode of building new power plants. When the deregulation frenzy overtook electricity policy, energy efficiency played a more limited role, as customer bases became less stable and more uncertain. But now construction costs of new capacity are rising dramatically, and utilities are the primary targets of national legislation to address climate change. Together, these factors will make electricity production increasingly expensive. We need to act now to reduce demand and foster a culture of energy efficiency. For public power utilities, a policy of investing first in energy efficiency is consistent with our business model. We exist to provide essential energy to our customers at the lowest possible cost in an environmentally responsible manner. We carry out this mandate on a not-for-profit basis. Customer needs, not quarterly stock dividends, guide our mission. So while investing in cost-effective energy efficiency may increase costs, it can be done in a way to minimize overall power costs and maintain rates lower than they would have been with additional purchases of power or investment in generation capacity. For investor-owned utilities, the efficiency-first business plan could run counter to their financial goals. Assets, such as generating plants and power lines, are placed in their rate bases and their regulated rate of return is linked to that rate base. With higher sales, the investor-owned utility earns more profits that can be paid as dividends to shareholders. With energy policies set and carried out at the local level, public power utilities place the needs of customers first. It’s not hard to see the added value of balancing the energy demand-supply equation by investing in measures that reduce demand. Think, for example, about a program to replace old, inefficient appliances with new more efficient ones. For residential customers, the cash outlay might be unmanageable. The customer will want a payback on the investment within a year or two. A utility undertaking a program that aggregates hundreds of appliances could provide discounts and incentives to attract customer participation, and thereby achieve the reduction in load at a considerable savings compared to new generation costs. A more aggressive pursuit of energy efficiency is among the top priorities in APPA’s 2008 work plan, approved last fall by the board of directors. As I write this, the board is preparing to review and approve a memorandum of understanding between APPA and the Natural Resources Defense Council. This document will launch a partnership between our two organizations to support expanded pursuit of energy efficiency measures by public power utilities. APPA is pulling together new resources to help member utilities increase their investment in energy efficiency. We have a new Web site, “Energy Efficiency Resource Central,” with a database and other information on efficiency programs taking place at public power utilities. Visit the site at www.eercnet.org. In a partnership with the Environmental Protection Agency’s National Action Plan for Energy Efficiency, we are offering monthly Webinars on efficiency topics. These are offered the second Tuesday of each month. We’ve also strengthened our partnership with the Alliance to Save Energy, a national organization that offers a wealth of ideas for improving energy efficiency. The information is free to anyone who visits the organization’s Web site, ASE.org. I hope these resources will lead all APPA member utilities to make energy efficiency a fundamental part of their resource mix. ❚ PUBLIC POWER http://www.eercnet.org http://ASE.org

Table of Contents Feed for the Digital Edition of Public Power - July/August 2008

Public Power- July/August 2008 Contents Perspective 10 Questions Solar Energy Rising Sacramento's Solar Shares Gainesville Crowns a Conservation Idol By the Numbers Curbing Costs of Outages Reliability Green Energy Hometown Connections Customer Service Parting Shot

Public Power - July/August 2008

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