State Panel Confirms Energy Efficiency Achievable

In a report to the General Assembly, the State Corporation Commission confirmed Monday that reducing Virginia’s electricity consumption through energy efficiency and other demand-side management techniques is realistic and achievable. In its report, the commission sticks with an existing legislative goal of cutting electricity consumption by 10% of statewide use in 2006 by the year 2022, relying solely on voluntary energy efficiency measures.

As a cause for concern for pushing beyond the 10% target, the report cites recent rate hike increases for residential customers. Yet, none of those increases are associated with energy efficiency programs. Instead, they are tied to rising fuel costs, investments in infrastructure for transmitting and distributing electricity, and generation facilities, such as Dominion’s Wise County coal-fired power plant under construction. Energy efficiency programs help avoid these types of costs.

As the report says, reducing energy consumption beyond the 10% goal through energy efficiency investments could potentially mean higher electricity rates for consumers. However, the SCC said it lacked sufficient data – including the financial benefits of energy efficiency and demand-side management it sought from the utilities which only provided the SCC with the costs of such programs – to fully analyze how reduced consumption through energy efficiency might offset higher rates and lead to lower monthly bills.

Studies show that energy efficiency can be “generated” at far less the cost than conventional sources – about 3-cents per kWh compared with, for example, the 9.3-cents per kWh for the Wise County plant. Impending regulatory controls on carbon emissions from coal-fired power plants will substantially raise energy costs, while implementing energy efficiency programs will reduce use, and therefore keep costs under control.

SELC, on behalf of Appalachian Voices and the Virginia Chapter of the Sierra Club, submitted expert testimony during the SCC proceedings showing that, based on analysis of state law and time-tested examples in others states, Virginia can meet 12% of our energy demand in 2022 using utility-sponsored energy efficiency measures.

Following is a statement from Frank Rambo:
“Virginia is heading in the right direction, but we have a ways to go before we fully realize our potential for achieving energy efficiency and for creating the jobs in the clean energy sector that come with that effort. It’s critical that our leaders stay the course and continue to transition to efficiency and other clean sources of energy to promote jobs, economic growth, energy security, and a healthy environment.”

Background:
In 2006, Virginia utilities ranked 45th in the U.S. in the percentage of revenues they spend on energy efficiency – a total of just $84,000 statewide that year, according to a study by the American Council for an Energy Efficiency Economy (ACEEE). (By comparison, utilities in Alabama and Mississippi spent more than $400,000, and North Carolina energy providers spent $3.8 million that year.)

Last December, the Governor’s Commission on Climate Change recommended Virginia set a goal of 19% energy efficiency to meet demand by 2025, a mid-range target suggested by ACEEE. That target, which includes utility-driven and consumer-driven measures, would create over 9,800 in-state jobs, and some $11 billion in investments into Virginia.

SELC’s filing with the SCC in this proceeding made the following points about energy efficiency:

• It’s abundant. Virginia utilities can realistically meet 12% of their demand by 2022 by efficiency alone, which would yield approximately 3,900 megawatts savings of peak demand.
• It’s reliable. Virginia utilities can develop programs that deliver substantial, direct kilowatt-hour reductions from permanent energy efficiency improvements.
• It’s affordable. Energy efficiency can be “generated” at far less the cost than conventional sources – about 3-cents per kWh compared with, for example, the 9.3-cents per kWh for Dominion’s Wise County coal-fired power plant under construction.
• It’s ready. Virginia utilities can achieve 1.3% savings of base load demand yearly within just four years of launching energy efficiency programs.

See the full report here (pdf)

Read SELC’s brief here (pdf)