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Valuing Efficiency

Energy efficiency is just like all the other technologies. But it’s not free.

At the American Public Power Association Public Power Expo in June in Minneapolis, The Energy Times gathered together four of the country’s leading lights in public power for a roundtable discussion on issues facing not only public power, but all electric utilities today and in the future. What follows are their ideas and commentary, edited for style and length. The discussion was sponsored by Burns & McDonnell. 

Participating were Sue Kelly, American Public Power Association president and chief executive officer; Doug Hunter, Utah Associated Municipal Power Systems chief executive officer and general manager; Scott Miller, City Utilities of Springfield general manager; and Decosta Jenkins, Nashville Electric Services president and chief executive officer.

The Energy Times: How do you view energy efficiency initiatives?

Sue Kelly:
  Well that is a very hot topic inside Washington now. While we support strong energy efficiency standards, they have to be cost effective for the consumer that’s buying that particular appliance.  You can reach a point of diminishing returns where you don’t recover the additional energy efficiency savings over the life of a product. Att that point you’re just forcing the customer to pay more.  There is a balance that needs to be struck. We’re working with the Department of Energy on a variety of standards. We believe strongly in both energy efficiency and demand/response; but one thing I would note is being units of state and local government, we believe in those decisions being made at the state and local level as to what is the best mix of energy efficiency and demand/response, and how those programs will be run. 

 Sue Kelly

Scott Miller:  Energy efficiency is just like all the other technologies. But it’s not free. Those who can afford to install efficient technology will. Those who cannot afford it are in some ways left carrying some of the fixed cost of the utility.  There’s a cost shift there.  We just have to watch how it gets implemented and make sure that the fixed assets that are out there — the wires, the poles and the transformers – gets paid for.  As you continue to drive down costs with efficiency, the customer is saving money and using less energy. We’re using less resources. That’s not a bad thing.  But our models, our rates, and our systems were not based upon that.

Doug Hunter

Doug Hunter:  Efficiency is somewhat built into the fabric of society now. It’s just there.  We don’t necessarily have to incentivize new refrigerators any more. We’re more interested in getting the old refrigerator out. We’re using energy efficiency as a way to get closer to our customer.  We’re interviewing with our customers on how well these efficiency programs are working. 

Decosta Jenkins:  When TVA produced its integrated resource plan in 2011, it had an energy efficiency target of 3,300 megawatts, and the thought was that that would replace three generation units.  How should you value energy efficiency in that plan?  During the polar vortex you couldn’t call on energy efficiency to make up the load.  If customers become more energy efficient, it would reduce demand and it would reduce our need for additional capacity.  But right now, TVA is struggling with its  integrated resource plan. The question is, how do we value energy efficiency in the model?

Editor’s Note: This is the final part of a weekly series of articles on public power in America. Earlier in The Energy Times:

Public Power Reimagines the Future

$2 Trillion Build

Teaming With Government on the Cyber Front

Microgrids Mean Freedom

Finding Generation Options



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