Public Power - November 2008 - (Page 13)

maximize who saves and how much, so they keep driving the quantity and quality up and the cost down. One obvious case: utilities can bid efficiency mizes barriers to entry, has made Texas a leader in wind power. Local generation should be able to disconnect from the grid, if the grid of the competitive landscape, where the majority of new electricity services are delivered by efficiency and micropower (cogeneration, plus renew- [For public power utilities,] it is equally important to be rewarded for cutting bills and not selling more energy. into the supply option. The city of Cambridge is bidding 50 megawatts of savings into a supply auction, which is cheaper than providing supply, and the city will have money left over. It also will have happier customers. Chances are, your utility in its demand forecast implicitly assumes that your building will use more electricity every year. Suppose you promise the utility that you’re never going to use more electricity than you do now. The reduced future demand has value, and there should be a market in it. In your Forbes article, you say that saving energy requires leadership, learning, metrics, alignment, relentless patience and meticulous attention to detail. This is a pretty tall order. Are electric utilities and their customers up to this? I think so. It’s easier to do it than not to do it. In your May 2008 Mother Jones interview, you say that important energy policies need to happen at the state rather than the federal level. What kinds of policies should states adopt? If I have a factory where I’m paying to get rid of surplus heat, I have to sell it to the utility, which may offer me a low avoided cost. That kind of practice is ridiculous. States should allow private wires where they make sense. For example, Texas led in plugand-play rules for private generation. If I want to generate electricity in my backyard and couple to the grid through an approved inverter, I don’t need to ask or tell the utility what I’m doing. That approach, which miniwww.APPAnet.org 3 4 5 goes down, and still run safely and continue serving load. We now have an IEEE interconnection standard, which should be the norm, and, as a customer, I should only be required to meet that standard and nothing else. We recommended that military bases not rely on the grid, but rather on islandable microgrids that would serve them and the local community using renewables. In a July 2008 interview with the McKinsey Quarterly, you say that decoupling the profits of utilities from their sales volumes is the most important policy innovation to promote low carbon emissions. Are you referring only to investor-owned utilities here? If so, what policy innovation is needed for municipal and other publicly owned utilities? Any utility should look at efficiency as a lot cheaper than running thermal plants. It improves the quality of service delivered and buys the most reliability and risk reduction for the utility. It is a way to provide better service at lower cost and make more money with less risk. That can be seen in the sustained drop of 2 percent in energy intensity in the United States. Imagine what happens if we pay attention and reward utilities for what we want. If customers figure out the efficiency bonanza available to them, they will buy more of it. It is a good idea to sell customers what they want before someone else does. There is no guarantee that customers will continue to buy electricity in the amount they did in the past. Anyone contemplating building a large thermal plant is at risk because 6 ables, minus big hydro). Since utilities are regulated at the state level, that is the biggest leverage point for saving electricity. The most important thing is not to penalize utilities for selling less. If your utility does something smart to cut your bill, let it keep some of that as a small profit. [This approach has support from] the Natural Resources Defense Council and EPRI. [For public power utilities,] it is equally important to be rewarded for cutting bills and not selling more energy. Decoupling means the utility’s profit or surplus does not depend on things it can’t control, like weather or the accuracy of a demand forecast. The way we administer public utilities should follow the same principles as decoupled and shared savings rewarded to private utilities. States should make sure they are they’re not discriminating against small units in favor of large centralized ones. In a report earlier this year, EPRI said the U.S. electric power sector could reduce the need for new generation by 7-11 percent more than currently projected over the next two decades—if key barriers can be addressed. What’s your view of this report? It sounds like a plausible, but conservative, conclusion. I’m disappointed that these savings would be achieved over 20 years, when many smart companies are cutting electricity use by 615 percent every year. 7 In early July, T. Boone Pickens announced a plan to reduce U.S. dependence on oil by substituting NOVEMBER-DECEMBER 2008 13 http://www.APPAnet.org

Table of Contents Feed for the Digital Edition of Public Power - November 2008

Public Power - November 2008 Contents Perspective 10 Questions Capturing Knowledge Before It Retires Jackson’s GIS Search Keeping a Job Journal Japan Tackles the Kyoto Protocol Getting to 20 by 10 Damless Hydro Power Earthquake: The Hidden Disaster For Engineers Safety For Governing Boards DEED Hometown Connections Parting Shot

Public Power - November 2008

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