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Missouri Utility Proposes Major Ramp-Up in Efficiency

2011-12-23T15:33:36Z

Rebecca Stanfield, Senior Energy Advocate, Chicago

Late yesterday, Kansas City Power and Light (KCPL) asked state regulators for approval to offer more and better energy efficiency programs to reduce electricity demand and lower energy costs for its customers. Under the plan, KCPL will invest about $25 million per year over the next three years to help their customers save energy. For every dollar invested, they will avoid spending about $4 dollars on generating, transmitting and distributing power, which will save customers hundreds of millions of dollars in energy costs over the lifetime of the efficiency measures installed.

This is a big step forward for Missouri, where, despite widespread agreement on the value of energy efficiency, utilities and regulators have had a difficult time agreeing on rules and business models that will deliver savings in a way that is a win for the public as well as for utility shareholders. The Missouri legislature passed the Missouri Energy Efficiency Investment Act in mid-2009 directing the utilities and regulators to work together to capture all of the cost-effective potential for saving energy. It was not until spring of 2011 that the commission issued final rules to implement that law. KCPL is the first Missouri utility to offer a specific proposal that meets the requirements of those rules, and by the time the plans are approved and the program are made available to customers, three years will have passed since the law was adopted.

Today’s proposal represents a five-fold increase in efficiency investment by KCPL. The measures installed (ranging from lighting and appliances to weatherization of buildings and new industrial equipment) in year one will save more than 116,000 megawatt-hours of power every year. This is about the amount of power consumed in 11,000 homes over the course of a year. Additional measures installed in year two will double the annual savings, and the savings will compound again in the third year.

The Commission is expected to issue an order in response to this plan within the next 120 days. Over the course of those 120 days, many details about the plan will be debated and adjusted. We hope that through the course of this proceeding, everyone involved will keep at the top of mind the enormous value to Missouri that accomplishing these goals will bring, and will work toward an outcome that maximizes the benefits to customers and the environment.

Tenaska: Gold Plated Answer to Nonexistent Problem

2011-11-07T17:31:42Z

Rebecca Stanfield, Senior Energy Advocate, Chicago

In its desperate bid to secure massive subsidies from ratepayers for its proposed coal power plant, Tenaska, the company proposing the Taylorville Energy Center, is flinging around all kinds of dubious and discredited “facts” about its costs, emissions, and most recently, about the need for “base load” generating capacity in Illinois.

The company’s leading tactic is to scare legislators into believing that Illinois is facing a shortfall in base load generating capacity – in other words, they want us to believe that we’re going to run out of power plants, and they point to upcoming federal air pollution regulations as the reason. Specifically, their latest paid ad says: “Industry analysts expect Illinois to lose up to HALF of its coal plants, which currently provide 45% of Illinois electricity.”

To be clear, this is flatly untrue. We have ample generating capacity and that is not expected to change as a result of proposed environmental regulations.

Illinois is in no way is in danger of having too few baseload power plants. In 2009, Illinois power plants generated 30% more electricity than its citizens used to power their homes and businesses. Put another way, Illinois plants generated 50 million megawatt hours over and above what we need here in the state. And, that's with much of the capacity we have standing idle.

In addition, state law requires that our utilities make investments in energy efficiency sufficient to lower sales by about 1% annually. The upshot of this is that most if not all of the growth in demand you would otherwise expect will be address through efficiency, and sales of power will remain relatively constant or may even decline.

Even more to the point, Illinois is part of two regional power markets, both of which have ample generation capacity and neither of which are in danger of resource inadequacy due to plant retirements. Study after study has found that we are not facing a shortfall in resource availability. For example:

65% of Illinois electricity consumption is within the PJM power market. PJM issued a report this August which concluded that even with the expected coal retirements, the region would have excess (reserve) electric generation capacity of more than 15.3%. The report concludes that, “resource adequacy does not appear to be threatened.”
Charles River Associates found that all of the regional transmission organizations (RTOs) in the eastern U.S. would have sufficient capacity to maintain reliability without ANY new resources beyond those already under construction, even after projected coal retirements were taken into effect.
The Bipartisan Policy Center issued a report projecting that EPA regulations would cause less than 2% of national electric generation to retire.

Why does Tenaska say that half of the plants in Illinois are going to close? It’s not clear what “industry analysts” they’re relying upon, but it may well be a discredited January, 2011 study by the Edison Electric Institute. The Congressional Research Service says of these reports, “The studies sponsored by industry groups (EEI and NERC) were written before EPA proposed most of the rules whose impacts they analysis, and they assumed that the rules would impose more stringent requirements than EPA proposed in many cases.” The CRS further states, “There is a substantial amount of excess generation capacity at present, due in part to the recession and also due to the large number of natural gas combined cycle plants constructed in the last decade, muting reliability concerns.”

The purported reasons to vote for the Tenaska bill have, one-by-one, been thoroughly rebutted. Billed as clean, its permit shows that it will be among the biggest polluters in the state. Billed as economic, the Illinois Commerce Commission estimates that it will cost us twice as much as the same amount of power from wind energy. And finally, billed as needed to replace older power plants, the overwhelming consensus is that we are not facing a shortage of electric generating capacity. We urge legislators to vote against this plant once again.

Don't Overlook Much-Needed Energy Efficiency Provision in "Smart Grid" Legislation

2011-10-27T13:59:03Z

Rebecca Stanfield, Senior Energy Advocate, Chicago

Yesterday Illinois lawmakers approved a new law allowing Illinois electric utilities to make a major investment in modernizing the electric system, through a combination of smart grid technology, upgraded underground infrastructure, small distributed renewable power and energy efficiency measures.

NRDC fought to ensure that any energy legislation clearing the General Assembly this year would contain a strong mandate for energy efficiency. Not surprisingly, most of the media attention to this issue has centered on the $2.5 billion in smart grid and infrastructure investment. Accordingly, today’s post is mostly to serve as a reminder that the efficiency component of the legislation that passed will create significant benefits for Illinois households and for the environment.

As I wrote in August the legislation contained a provision allowing for the expansion of Illinois’s successful energy efficiency portfolio standard. The expanded energy efficiency policy is designed to ensure that all of the potential for cost-effective savings in the residential market is captured, either by the utility programs which provide customers with incentives to replace lighting, appliances, motors and other equipment, or by third parties who will have an opportunity to bid provide those same energy efficiency services.

Conservatively, we estimate that over the next six years this expansion will result in saving as much electricity as is used in 150,000 average U.S. households (or about 1.5 million mWh of electricity).
This savings will lower Illinois electric bills by $650 million per year by 2015, and that savings will total more than $2 billion annually by 2025.
According to Skip Laitner, Director of Economic Analysis for the American Council for an Energy Efficient, the expanded energy efficiency effort will create 3500 new jobs by 2015, and 10,000 by 2025.

The Illinois General Assembly is to be commended for recognizing the value of efficiency to our wallets and the environment, and making sure that modernizing our electric system includes a big effort to do more with less energy.

Unfortunately, there is still the potential for lawmakers to stumble on energy policy this week by approving legislation to force us all to pay for a big dirty coal plant in Taylorville, Illinois. The last thing our economy needs is to be tied for 30 years to a source of energy that is exorbitantly expensive, and the last thing our environment needs is more mercury and carbon pollution. We urge them to reject this legislation, as they have in previous sessions.

Confused about Tenaska Legislation? It's the same pig, despite the cosmetic surgery.

2011-10-19T20:06:30Z

Rebecca Stanfield, Senior Energy Advocate, Chicago

Having failed multiple times to sell legislators on a scheme to charge Illinois ratepayers for high-priced energy from a proposed coal facility in Taylorville, Illinois, the folks at Tenaska have resorted to not just putting lipstick on the pig, but giving the pig a nose-job, liposuction and botox injections. And as with most cosmetic surgeries – something just doesn’t look quite right about that pig.

A new ad came out Tuesday, suggesting that a good way to “fight rate increases” on our electric bills would be to vote for SB 1653, which requires Illinois ratepayers to foot the bill for a $3.5 billion coal plant in Taylorville, Illinois proposed by the Tenaska Corp. They call the bill the “Comprehensive Energy Efficiency and Investment Act” – although it is in no way comprehensive energy policy, and its energy efficiency provision is utterly dwarfed by its investment in the coal plant. Here’s a look at some of the awesome-but-imaginary benefits of the bill claimed in today’s ad.

Voting for Tenaska will increase, not decrease, electric bills. The ad says that the bill will help “fight rate increases” and “protect consumers.” In reality, the bill allows homeowners electric bills to go up by 2% to pay for the facility and does not set a cap on bill increases for Illinois businesses. The Illinois Commerce Commission estimates that power from the Taylorville plant is expected to cost about 21 cents per every kwh. Generating the same amount of power with wind energy would cost about half as much, and saving the equivalent amount of energy through energy efficiency programs would cost about 3-4 cents per kwh, about one-fifth to one-seventh the cost of the power from Tenaska’s proposed plant.

Tenaska is not a clean power project, as advertised. According to the company’s draft updated state emissions permit, the facility would be permitted to emit five million tons of carbon dioxide pollution each year. While SB 1653 purports to require the facility to sequester half of those carbon emissions, the legislation allows the company to cheaply buy its way out of this requirement. The company refused to commit to sequestration in their permit application, and the draft permit from Illinois EPA indicates only that the plant’s carbon pollution may be sequestered at “some point” in the future.

The ad states that the additional costs will be offset through energy efficiency savings. In reality, the bill sets out a process whereby the Illinois Power Agency must procure energy efficiency rather than load, if a third party makes a bid to provide that savings at a cost that is lower than supply. That’s perfectly fine, but there is no guarantee or requirement that enough savings will be bid into the market to offset the $3.5 billion cost of the coal plant. Moreover, the third party vendor, rather than the energy consumer, is permitted to pocket most of the difference between their cost of saving energy, and the avoided cost of supply. In other words, energy efficiency implementers will benefit, but customers will keep far less of the savings than they would keep if the savings were generated as part of the utility programs that customers are accustomed to.

The ad claims that electricity rates are going up 40-60% because of pending environmental regulations. The ad quotes misinformation that has been thoroughly rebutted by everyone from the Congressional Research Service to a coalition of twelve utilities who have come together to advance common-sense clean air policy.

Requiring ratepayers to foot the bill for 30-year contracts for power from the Tenaska plant has been widely regarded as a bad investment, and it remains so. We urge legislators to vote against SB 1653.

Utilities Need A Regulatory Makeover

2011-09-20T16:46:43Z

Rebecca Stanfield, Senior Energy Advocate, Chicago

Perhaps you haven’t spent much time thinking about your local electric utility’s business model. Admittedly, it doesn’t come up much in casual conversation. On the other hand, for those of us who are trying to accelerate a transition to a clean energy economy, adapting the utility business model to serve the needs of our modern civilization is among the highest priorities.

Last week the American Council for an Energy Efficient Economy (ACEEE) weighed in on the subject with a white paper called, The Old Model Isn’t Working: Creating the Energy Utility for the 21st Century. http://www.aceee.org/white-paper/the-old-model-isnt-working In short, the paper points out that the traditional utility regulatory model rewards our electric companies for selling ever more electricity, and penalizes them for reducing sales volumes through energy efficiency . So, while energy efficiency could be used by utilities to make our electric system less costly, more reliable and more sustainable, we should not be surprised to see that utilities in states that have retained the traditional business model are generally reluctant to engage in aggressive efficiency efforts.

Nowhere is this more relevant than in the Midwest, where, after decades of ignoring efficiency, many electric and gas utilities are now required to ramp up their efforts to help their customers save energy. The results have been great so far. In 2010, Illinois electric utilities saved 600,000 MWh of electricity, avoiding more than $2.84 dollars in costs for every dollar spent to achieve the savings. Similar programs in Ohio and Michigan have been equally successful.

This shows that utilities can be very effective at helping residents and businesses become more efficient. But, as the savings targets get more aggressive over time, the financial penalties the utilities face as a result of lower sales that result from the programs will become a serious barrier to progress.

ACEEE endorses a three-pronged approach to changing the financial regulation governing utilities, so that their incentives are aligned with the critical public policy goal of making our homes and businesses as efficient as they can be. The three prongs include ensuring timely cost recovery for efficiency programs, providing financial incentives to reward successful efficiency efforts, and “decoupling” or removing the link between utility profits the volume of energy they sell. According to the ACEEE paper, 30 states have adopted some form of decoupling for at least one utility.

Rewarding utilities for building more power plants and selling more power might have made sense 100 years ago, when the objective was to build out an electric system to serve the nation. Today, we face vastly different challenges and we need our electric utilities to be partners in responding to those challenges. A leaner, smarter, more reliable, more affordable and more sustainable electric system is within our grasp, but as ACEEE points out, the traditional utility business model points in the wrong direction.

Illinois Lawmakers Should Grab Chance to Ramp Up Efficiency, Create Jobs

2011-08-29T20:18:32Z

Rebecca Stanfield, Senior Energy Advocate, Chicago

Today Illinois Senate President Cullerton sent S.B. 1652, the Energy Infrastructure Modernization Act to Governor Pat Quinn who has made it abundantly clear that he plans to veto the bill. Assuming he does, lawmakers may try to override the veto in November, or negotiate changes via a separate “trailer” bill, or both. As they consider the possibilities, it’s worth noting that S.B. 1652 contains energy efficiency policies with the potential to cut consumer energy bills by hundreds of millions of dollars a year, with significant jobs and environmental benefits as well. They should take care to preserve this critical element of the legislation that is a triple win for consumers, the economy and the environment.

NRDC asked economist Skip Laitner, Director of Economic Analysis for the American Council for an Energy-Efficient Economy (ACEEE) to analyze the economic impacts of Illinois’s energy efficiency portfolio standard, passed in 2007, with a particular focus on the job benefits of that policy. Moreover, we asked him to analyze those impacts with and without an expansion as proposed in S.B. 1652. Here are the results.

Under the law as it stands today, the utility energy efficiency programs launched by ComEd and Ameren Illinois after passage of the 2007 energy efficiency portfolio standard will create 3000 new jobs between now and 2015, and 8200 new jobs between now and 2025. The annual consumer savings from these programs will grow from $500 million in 2015 to $1.6 billion in 2025.

However, S.B. 1652 would allow for an expansion of those programs for residential customers. With this expansion,

The energy savings would increase by roughly 30%, from 1.1 million MWh per year to 1.5 million MWh per year. This is the amount of electricity it takes to power about 150,000 homes.
Likewise, the annual consumer savings would swell by about 30% to $650 million in 2015, and more than $2 billion in 2025.
The job creation totals would swell by 16-20% to 3500 new jobs between now and 2015, and 10,000 between now and 2025.

How do consumers save money from these programs? The energy efficiency portfolio standard requires utilities to use efficiency technologies to reduce the amount of electricity they need to sell to satisfy customer needs. The cost of saving power has been substantially lower than the cost of generating, transmitting and distributing power. In the first two year of the programs the utilities have saved customers between two and three dollars for every dollar spent on efficiency. Looking out to 2025, we anticipate a cost-benefit ratio of 1.6 to 1.

How do we estimate the job creation from these programs? Energy efficiency creates three kinds of jobs – (1) Jobs for people who actually implement the programs, doing everything from installing new lighting systems to conducting energy audits; (2) Jobs for people who manufacture new appliances, motors and other efficiency measures; and (3) Jobs that are created when you reduce the amount of money we all pay for electricity, so that we can spend those dollars in other parts of the economy. When our state becomes more efficient, the dollars we spend are shifted from the energy sector, which is less labor intensive, into other sectors of the economy. The total jobs created for each million dollars worth of investment in the energy sector is only 5.2, compared to 12.9 for all other sectors of the economy.

If the expansion of utility programs in SB 1652 would create 30% more energy savings and consumer savings, why is the job growth only 16-20%? Because when you translate the savings into 2009 dollars to account for inflation, the same amount of dollar savings has less impact in later years than in earlier years. In this analysis, all dollar amounts were expressed in 2009 dollars.

What if we expanded the efficiency programs even more, to capture the cost-effective potential for savings in the residential, commercial and industrial sectors? SB 1652 allows for expansion in the residential sector, which covers about 40% of the power sold in Illinois. A full expansion, as NRDC proposed in HB 3055, would result in roughly double energy savings, pocketbook savings and job creation benefits as the provision in SB 1652.

To see the full study, click here.

An Efficient Missouri -- Worth the Effort, but Requires Leadership

2011-08-24T21:40:56Z

Rebecca Stanfield, Senior Energy Advocate, Chicago

The American Council for an Energy–Efficient Economy (ACEEE) reminded us today about the enormous benefits that an aggressive energy efficiency strategy would bring to Missouri. A serious commitment to energy efficiency would, according to the organization's extensively researched new study, reduce the costs that Missourians pay for energy by billions of dollars (more than six billion over the next 14 years), and increase employment in Missouri by 8500 workers.

The study comes more than two years after Governor Nixon signed the Missouri Energy Efficiency Investment Act, designed to encourage the state’s electric utilities to go after these benefits for Missouri customers. New rules adopted pursuant to that legislation allow utilities to earn performance incentives for successful efficiency programs, and to secure more timely recovery of program costs than typical under traditional utility rate regulation.

So, all systems seemed to be a go for efficiency in Missouri, that is, until this spring, when Ameren threw a big bucket of cold water on the process.

Unfortunately, the state’s largest utility, Ameren Missouri, has decided to walk away from efficiency as a resource, in order to invest in a more expensive mix of energy sources that will create higher revenues for its shareholders. They stated as much in their Integrated Resource Plan, filed in February with the Missouri Public Service Commission. NRDC, along with the Missouri Department of Natural Resources and the Office of Public Counsel are working to persuade the commission to reject this plan, and require Ameren to choose a mix of resources that will result in greater efficiency and lower electric bills for customers. Click here to see our comments.

In contrast to Ameren Missouri, the state’s other major utility, Kansas City Power and Light (KCPL), has filed a notice announcing that it will submit a new and more aggressive energy efficiency plan under the new commission rules late this summer.

Neither Ameren Missouri nor KCPL love the new rules, and in some respects we agree that the rules do not accomplish everything necessary to put energy efficiency on a level playing field with other resources like coal and nuclear power. But, the utilities have reacted in very different and notable ways. While KCPL is making the best of the rules to ensure that its customers will see significant savings, Ameren has taken a “my way or the highway” approach, to the detriment of customers and the economy of the eastern half of the state.

What should Missouri policy makers do to ensure that the state’s residents and businesses reap the benefits documented in the ACEEE study? For starters, the Public Service Commission must reject Ameren Missouri’s nonsensical plan, and require the company to meet its obligation to choose resources that will result in the lowest customer costs over time. Even Ameren agrees that the aggressive efficiency scenario is the cheapest choice for Missouri customers.

In addition, Missouri legislators should look across the river at Illinois, where Ameren’s Illinois affiliate has been very successful on the efficiency front. According to independent evaluators, in the second year of programs (2009-2010), Ameren Illinois installed enough efficiency measures to reduce its load by the equivalent of 13,000 homes. If Ameren can do it in the Land of Lincoln, it can do it in the Show-Me State too.

One Step Forward, One Step Back: While Mayor Emanuel Ramps Up Building Efficiency, Governor Quinn Announces 30-Year Coal Binge

2011-07-13T22:04:22Z

Rebecca Stanfield, Senior Energy Advocate, Chicago

Within the last 24 hours two separate announcements set sharply contrasting courses for Illinois’ energy future. It’s worth a look at how these two proposals measure up, both in terms of economic development and environmental protection.

Mayor Rahm Emanuel launched a new plan to cut the city’s annual energy costs by $5.7 million per year by retrofitting major city-owned buildings to use less energy for heating, cooling, lighting and other equipment. The project will cost an estimated $40 million to be financed by private investors who will be paid back out of the net savings, and will create 375 local jobs in the process. Oh, and, of course, by cutting the amount of power we need to run the city, the investment will reduce the power plant pollution that causes everything from asthma attacks to heart attacks, mercury contamination and global warming.

Almost simultaneously, Governor Quinn signed legislation requiring our state’s gas utilities to enter into 30-year contracts to buy coal-derived synthetic natural gas from a new facility to be built on Chicago’s southeast side, in a neighborhood where breathing the air is already a risky proposition, and the community is already living with a the legacy of industrial pollutants like chromium and cadmium. The plant, proposed by a company called Leucadia National, will cost ratepayers $3 billion, and will produce fuel that is dirtier than the natural gas it offsets, at a time when domestically-produced natural gas supplies are ample.

So let’s assess the costs and benefits of these two investments in spurring job creation, reducing energy costs, and protecting public health and the environment:

1. Jobs.

There is no disagreement on the need to spur job creation in Illinois. But let’s look at the cost-effectiveness of how the two proposals seek to accomplish this goal. The Governor’s press release touts the creation of 1500 jobs (165 of them permanent) for the $3 billion investment, working out to a whopping $2 million per job from the Leucadia project. Meanwhile, the Mayor’s plan would create 375 jobs for a $40 million investment, working out to more like $10,000 invested per job created. So, the Leucadia plant will cost 200 times more per job created compared to the City’s energy efficiency investment. Were Governor Quinn to have invested that $3 billion of ratepayer money into a statewide efficiency ramp-up program rather than the Leucadia plant, a heck of a lot more Illinoisans would be donning the hard hats and heading to work.

2. Costs.

The City’s energy efficiency ramp up comes at a net negative cost to the economy. In other words, the cost of purchasing and installing the energy savings measures is lower than the cost of doing nothing and continuing to pay for wasted energy. The upfront investment is to be fully paid for by the savings, with additional savings left over to reduce taxpayer burden.
The costs to be passed on to Illinoisans to construct and purchase gas from the Leucadia plant are less clear. In response to well-founded concerns from consumer advocates, the legislation included a cap to ensure that rates will not rise more than 2% in any year as a result of the plan, and requires a commitment from the plant owners that they will guarantee an overall 30-year savings to Illinoisans of $100 million. This gamble bets on natural gas prices rising in the later years of the contracts, to make up for the higher costs that Illinoisans will pay in the early years for plant construction and for synthetic natural gas that will likely be more expensive than the natural gas it offsets. By the time we know if this gamble pays off, we will have already sunk the $3 billion investment into the facility.
Let’s assume the plant does save Illinoisans $100 million per year over 30 years – suspending disbelief. That’s about $3.3 million per year in savings – still less than the $5.7 million per year that will be saved in energy costs through the city’s much smaller initial investment. Again, the City is investing $40 million to save $5.7 million per year, while the Leucadia plant costs $3 billion to save $3.3 million per year.

3. Pollution.

The City’s energy efficiency plan will reduce emissions compared to current levels, period. The electricity saved will reduce the amount of power we need to purchase from coal and nuclear facilities, while the reduced heating demand will reduce the amount of natural gas we need to extract, transport and burn as heating fuel.
The Leucadia plant is a new source of air pollution, toxic heavy metals like mercury, and carbon dioxide. Chicago’s air quality already violates federal public health-based air quality standards, partly as a result of existing coal facilities. Leucadia would add air pollution to areas that are already subjected to elevated levels of pollution from coal-fired power plants and other industrial sources. The pollutants that would be emitted by the plant – sulfur dioxide, nitrogen oxides, carbon monoxide, fine particulate matter and other harmful chemicals – are known to trigger asthma attacks and cause respiratory emergency room visits, heart attacks, and premature deaths. Additionally, despite the much-touted lower levels of CO2 emissions from gasification technology as opposed to traditional pulverized coal burning, the Leucadia plant would nonetheless pump substantial additional CO2 into the atmosphere. Moreover, the purported carbon capture requirement for the plant is illusory because the legislation provides only a small penalty for non-compliance, which may well end up being economically preferable to compliance. The facility would displace an environmentally preferable fossil fuel, natural gas, from Illinois pipelines, and divert resources away from developing truly clean fuel and energy sources. And beyond all this, there are serious land, water and public health consequences of coal extraction, transportation and disposal of byproducts from that process.

It’s disappointing that Governor Quinn supported the Leucadia plant. Three billion dollars over 30 years (or $100 million per year) is a lot of money to pour into such a poor investment, when we have abundant opportunities to put our money to work while putting more Illinoisans to work, reducing harmful emissions and lowering our energy bills.

Unfortunately, we know that similar proposals to build more gasification facilities in Illinois are either waiting for his approval or being debated by the General Assembly. We hope that he will make a better choice for Illinois next time.

ComEd's Smarter Electric Grid Must Maximize the Potential for Cost-lowering Energy Efficiency

2011-02-23T17:54:04Z

Rebecca Stanfield, Senior Energy Advocate, Chicago

In case you missed it, Commonwealth Edison has proposed legislation in the Illinois General Assembly that would allow the company to move full speed ahead in modernizing the grid, at a modest cost of $2.6 billion dollars. The legislation would radically change traditional regulatory process for setting electricity rates which has been in place for decades to provide safeguards to consumers. With an initial hearing on Tuesday, lawmakers in Springfield have begun the process of considering this proposal.

Now, of course, there’s a fair amount of agreement that the electric grid needs to be modernized. Moreover, a recent decision in an Illinois appellate court created a serious barrier to modernization. The court found that the Illinois Commerce Commission violated state law when it allowed ComEd to use a special mechanism known as a rider to recover its costs to run a pilot project for so-called smart meters. Without the use of a rider, ComEd cannot gain advance approval for capital improvements to the grid, and faces the risk that any such investment will be disallowed during a subsequent rate case.

Yet, ComEd’s legislative response to that decision fails the laugh test. ComEd wants to spend its ratepayers’ money, and lots of it, but also wants to dramatically depart from traditional regulatory process for setting rates. In addition, the bill fails to incorporate common-sense energy efficiency measures that can entirely offset the cost of the infrastructure upgrades.

Is there a way to embark in rebuilding our electricity infrastructure while protecting the people of Illinois? We think so, and energy efficiency has a major role to play in accomplishing this.

Utilities all over the country, including in Illinois, have begun to use energy efficiency to avoid the need for more expensive generation from power plants. The numbers are fairly simple: If a utility spends 3 cents to save a unit of electricity, it typically saves 6 to 9 cents that it would otherwise have spent buying and distributing power, and bills go down as a result. The way in which the utility “buys” energy savings is by offering its customers rebates and programs to reduce the amount of power they need for their homes and businesses through better motors, better windows, better appliances, better lighting, etc. Under a state law passed in 2007, ComEd is already running energy efficiency programs that will actually save its customers $500 million as a result of the energy saving measures installed over the next three years.

But there is a much deeper well of cost-effective energy efficiency to be captured. In fact, ComEd’s own research shows that there is enough to entirely pay for the $2.6 billion in grid modernization projects. A study produced for ComEd by the Cadmus Group, identified an excess of 2 million mega-watt hours per year of cost-effective savings within ComEd’s service territory, of which 1.5 million mega-watt hours per year could be realistically captured. This is 15% more than is necessary to pay utility customers back the costs of upgrading the grid.

State Representative Elaine Nekritz of Des Plaines has proposed legislation to require that when utilities embark on big, new capital plans, they must use energy efficiency savings to offset every dollar of spending. Legislators should insist that this amendment be part of any final utility legislation adopted this year, along with appropriate consumer protections and regulatory oversight for utility spending.

As this new utility battle heats up, the rhetoric will fly, and a serious dialogue about how to solve real energy policy problems might seem unlikely. But at the end of the day, a compromise that spurs investment in our grid, with appropriate consumer protections is the best possible outcome. We need an electric system that uses modern communications technology to enable new services for our homes and businesses, we need reasonable regulatory oversight, and we need to find ways to reduce the burden of high electric bills on Illinois families. We can achieve all three of these goals, but not without a strong commitment to energy efficiency.

Can Chicago be Electrified by Electric Vehicles?

2011-01-28T20:29:32Z

Rebecca Stanfield, Senior Energy Advocate, Chicago

This week President Obama reiterated his goal of deploying one million electric vehicles (EVs) on America’s roads by 2015. On the one hand, this is a pretty modest goal, considering that north of 11 million vehicles are sold each year in the U.S. On the other hand, it is far from certain that the President’s goal will be achieved without serious effort on the part of our utilities and the state regulators who oversee the utilities working collaboratively with customers, the automakers and companies who will operate charging stations.

And it’s even less sure that we in Chicago will be positioned to reap the benefits offered by EVs.

Chicagoans, who routinely face the highest gasoline prices in the nation, stand to benefit tremendously from electrification of the transportation sector, both through lower fuel costs and cleaner air. Unfortunately, ComEd recently submitted an assessment to the Illinois Commerce Commission in which it stated that the most optimistic projection of EV deployment in its service territory at just 20,000 by the end of 2013.

Before automakers will get serious about Chicago as a market for these cleaner vehicles, our regulators need to demonstrate that we’ve worked through the complicated legal and technical issues to ensure that EV drivers can own and operate their vehicles safely, reliably, conveniently, and using the cleanest electricity possible.

The Illinois Commerce Commission has recently launched an initiative, led by Chairman Manny Flores and Commissioner Erin O’Connell-Diaz to do just that. We commend the commissioners for launching this effort, and urge them to put the pedal to the metal to address the barriers to EV ownership here in Illinois. NRDC submitted initial comments on January 21, and will participate in the workshops to come this spring. Hopefully, the process moves along quickly so that we can see some of these beauties cruising down Lake Shore Drive!

Clean Line Energy Moves Forward in Illinois

2010-10-06T17:45:25Z

Rebecca Stanfield, Senior Energy Advocate, Chicago

You might be surprised to learn that clean energy developers in the Midwest are waiting for permission to connect nearly 60,000 megawatts of wind power projects to the electric grid so that the abundant and clean wind in our region can power our homes and businesses. These projects could provide enough electricity for 13 million homes without any of the pollution from dirty power plants that causes asthma, heart problems or global warming.

In that context, and in a capital constrained economy, it is good news that Clean Line Energy is ready to make a much needed investment in the infrastructure to bring clean wind power to our markets cost-effectively. Clean Line applied today to become a utility in the state of Illinois, one step in the long process of gaining approval to build its new transmission line, the Rock Island Clean Line. We look forward to working with Clean Line and Illinois regulators to ensure that this goal is achieved with fairness to landowners, appropriate protections for lands and wildlife, fairness to ratepayers, and in a way that enables truly clean power to flourish in the 21st Century.

Building transmission is a job that must be done carefully and with the input of landowners, wildlife biologists, citizens and electricity customers across the region. There will be regulatory review of the Rock Island Clean Line, and our goals will be to ensure that –

1. Sensitive ecological and recreational areas are protected from the potential habitat damage and degradation that comes with building and maintaining new transmission lines;

2. Lines are sited so as to maximize clean energy transmission, and not extend the lives of old, highly polluting power plants;

3. In determining where and how much transmission is needed, planners fully incorporate the potential for energy efficiency and clean distributed generation sources;

4. Landowners in the transmission corridors are engaged and fairly compensated for the rights of way needed for new transmission.

Clean power from our very own wind-rich plains can replace a large portion of the old, inefficient power plants we currently rely upon, if we build the infrastructure to access it. This is an important ingredient in our new energy future.

Michigan Decision - Retreat to the Rust Belt?

2009-12-29T23:17:04Z

Rebecca Stanfield, Senior Energy Advocate, Chicago

It’s hard to square today’s decision of Michigan’s Department of Environmental Quality to issue a permit to an unnecessary, conventional coal-burning power plant, with Governor Granholm’s push to make Michigan a leader in the clean energy economy. The plant, proposed by Consumers Energy, will tie Michigan’s economy to an electricity source that will be costly, create a massive new source of air pollution and saddle Michiganders with the liability of increased global warming emissions. It’s like investing in typewriters, or dial-up internet service, except this decision is not just an economic loser, it also jeopardizes public health and the environment.

Moreover, the plant simply isn’t needed.

Power demand in Michigan is down, way down, and not expected to be increasing for another decade. NRDC commissioned a study http://docs.nrdc.org/energy/files/ene_09081101b.pdf by Synapse Energy Economics that described the vast potential for Michigan to satisfy the electricity needs of its residents, businesses and industry using cost-effective clean energy resources. That study found that even assuming some existing power plants in Michigan retire, there would be ample clean resources to replace those plants and meet any additional demand without the construction of a new power plant. Moreover, Michigan Public Service Commission largely agreed with that assessment in its own analysis. http://efile.mpsc.state.mi.us/efile/docs/15996/0190.pdf

This permit decision is wildly inconsistent with Governor Granholm’s goals for Michigan. Here’s what she said in her May 2009 submission to the Huffington Post: “Out with the old gas guzzlers of the past. Out with the old thinking of the past. Out with the old politics of the past. Out with the old rust belt. May was the first month of the New: new technology, new ideas, and a new era of cooperation that will purposefully drive Michigan and America into the new clean-energy future.”

These are not just empty promises – until now, the Granholm administration has taken concrete steps to shift Michigan’s reliance on old coal plants to clean energy investments including energy efficiency and renewables.

So why take a major step toward the old rust belt energy economy?

The plant’s proponent, Consumers Energy, points to jobs in construction and operation of the plant. But the research is clear that the same amount of investment in retrofitting homes or wind power will create double the jobs created by investing in a coal plant. http://www.peri.umass.edu/fileadmin/pdf/other_publication_types/green_economics/economic_benefits/economic_benefits.PDF

Consumers Energy also argues that the new plant will allow them to retire older, dirtier coal plants. Retiring old plants is good, but replacing them with another conventional coal plant isn’t good enough. It’s like finally getting around to switching out your 1950-era Packard with a 1973 Lincoln Continental – sure, its better, but you aren’t getting modern safety features or fuel economy. Same thing with the new coal plant---not a good investment, and one that Consumers wouldn’t make if they were paying with their own money. Instead, they’ll pass the costs of the plants, and the risk of the investment, onto Michigan electricity customers.

Michigan can still avoid tying their energy future to this coal plant. The Public Service Commission will have to decide this year whether to issue a Certificate of Need for the plant, which would allow Consumers Energy to pass through the costs of the plant to ratepayers. The Commission’s role is to ensure that bad energy investments are not passed on to ratepayers, and this certainly qualifies as a bad investment. Governor Granholm has pledged that Michigan will lead the way to a clean energy future, and will prosper as a result. Let’s hope that the PSC is truer to Granholm’s vision than the DEQ seemed to be today, so that they can make her vision a reality by rejecting this boondoggle.

Michigan Takes Big Step Forward on Energy Efficiency

2009-11-05T23:16:01Z

Rebecca Stanfield, Senior Energy Advocate, Chicago

Michigan utility regulators have set the stage for a major shift toward a clean energy future in Michigan. They have moved to eliminate a major barrier to capturing the vast potential for energy savings, with multiple benefits to consumers, utilities, the economy and the environment.

Michigan utilities could save 15 million mwh of electricity every year by investing in energy efficiency, enough to cut total electric use by about 14 percent. They would save their customers 2 dollars for every dollar they spent on programs to help people purchase energy saving measures like appliances, motors or insulation. And they would simultaneously reduce global warming emissions by many millions of tons each year.

So, why haven't they already taken advantage of this clean, cheap and abundant resource?

Part of the reason is an obscure artifact of traditional utility rate regulation that rewards utilities financially when they make big capital investments, like building a power plant, and penalizes utilities with lower revenues if sales decline. So, it's no wonder why utilities spend a lot of time trying to figure out how to get their sales to increase, and trying to build big, polluting power plants.

There are fairly easy ways to change this, and Michigan regulators took a big step in the right direction this week. On Monday, the Michigan Public Service Commission approved a measure that would allow Consumers Energy, one of the two large electric utilities in the state, to "decouple" its revenues from its sales. In other words, if they invest in energy efficiency as a priority resource, and sales go down, they will still be able to recover their costs to provide electric service and their shareholders won't take a hit.

The regulators are allowing this decoupling measure on a pilot basis, and will make it more permanent only if the utilities respond by increasing their energy efficiency goals. This creates critical alignment between the need to eliminate wasteful energy use and the utilities financial interests.

Decoupling is a win-win for electric ratepayers. First, they see lower electric bills because they need less power to light their homes and offices, or power their equipment. Second, the utility is not allowed to "over-recover" its fixed costs, which happens under traditional ratemaking policy. The Lawrence Berkeley National Lab has performed extensive analysis on the effect of decoupling on utility shareholders and ratepayers. http://eetd.lbl.gov/ea/ems/reports/lbnl-1598e-ppt.pdf.

NRDC applauds the Michigan PSC for taking this step to make Michigan a clean energy leader.

Read more about Michigan's clean energy potential here: http://docs.nrdc.org/energy/files/ene_09081101b.pdf

Harnessing the Power of Efficiency in the Midwest

2009-07-10T20:00:13Z

Rebecca Stanfield, Senior Energy Advocate, Chicago

Good old Midwestern pragmatism is on display in Illinois and Missouri this week, as Governors Quinn and Nixon sign legislation expanding the role of energy efficiency as a resource that can lower our gas and electric bills while curbing pollution and creating the kind of jobs that we need in the post-rust-belt reality.

Most Midwesterners wouldn’t leave the refrigerator door standing open, wouldn’t open the windows while the air conditioning is on, and wouldn’t choose to use expensive power plants to do a job that could be done with a portfolio of lower cost, cleaner energy resources. But, for a variety of reasons, our utilities have for decades ignored the availability of a vast reservoir of clean energy efficiency potential and have instead invested in more expensive and more polluting resources.

That has begun to change, and not a moment too soon, as we face the twin challenges of rebuilding our economy and solving the climate crisis.

Today, Governor Quinn signed legislation to expand the successful energy efficiency standards that were adopted in 2007 for electric utilities to also cover the state’s natural gas utilities. Under the new law, Illinois natural gas utilities will be required to use energy efficiency technologies such as more efficient furnaces, windows or insulation to lower demand for natural gas by an increasing amount each year, ramping up to 1.5% by 2019. This measure will lower natural gas use in Illinois cumulatively by 7% over the next 10 years.

Under the 2007 law, Illinois’s electric utilities have already begun to offer energy saving programs that will ramp up over the next 6 years to reducing electricity demand by 2% annually. The Illinois electric utilities have already avoided the emission of roughly 200,000 metric tons of carbon dioxide, and at a net negative cost to electric customers because the energy savings is more than offsetting the costs of power that would otherwise have been consumed.

On Monday, Governor Nixon of Missouri will sign legislation to spur the same kind of investment in Missouri. Under S.B. 376, Missouri utilities will be able to use energy efficiency as a resource, just like they can use supply-side resources like coal, nuclear or wind and solar power, but at lower cost than any of those supply-side resources.

Illinois and Missouri are not the only Midwest states that are taking advantage of the enormous potential of energy efficiency to save money, reduce pollution and create clean energy jobs. Ohio and Michigan have adopted energy efficiency standards for their utilities and are in the first year of offering new programs to help their customers save energy. In the Detroit area, DTE will invest $127 million to save 6.6 billion kilowatt hours of electricity. They will avoid $489 million in cost of generation and transmission of power, and thus will save $362 million over the life of the programs.

Investing in energy efficiency is a Midwestern trend that would make our pragmatist ancestors proud, and one for which future generations will thank us.

Midwest Playing Catch-Up on Energy Saving Building Codes

2009-05-29T17:47:40Z

Rebecca Stanfield, Senior Energy Advocate, Chicago

Yesterday, the New York Times' Green Inc. blog documented the entirely unfounded, and unfortunately somewhat successful, opposition to updating energy efficiency codes for new residential and commercial construction by some Midwestern homebuilders’ associations. A large chunk of the Midwest states are lagging behind the rest of the country where builders are required to incorporate minimum, common-sense energy saving measures, for new homes and commercial buildings.

We’re not talking about building every structure to the super-efficient LEED Platinum level – these codes simply incorporate measures that are so widely available and cost effective that it makes sense to require in every new building. We’re being outdone by states like Georgia, Louisiana, and Kentucky.

Thankfully, not all homebuilder trade associations are quite as shortsighted as the Ohio Homebuilders Association. In a triumph of reason, the Illinois Homebuilders have weighed-in supporting state legislation that would adopt the latest national model energy efficiency codes as the standard for all new construction in the state. If all goes as planned, that legislation will be on the Governor’s desk later this week.

Here’s why this matters. A home built today will last for more than 50 years or more – my home in Chicago is 112 and holding strong. If the builder cuts corners to shave a few hundred dollars off the construction costs, that home can cost its owner hundreds more each and every year in energy bills. A 2007 study showed that the 2006 code would save homeowner more than $400 per year in energy costs compared to the average home built under current practices in Illinois. Going back and retrofitting that home with energy saving measures later is a lot more costly than just incorporating good design practice at the outset.

In addition to saving homeowners money, more efficient building codes have the added benefit of reducing our need to burn fossil fuels, which causes global warming. According to the Building Codes Assistance Project, a statewide residential code in Indiana would cut emissions of global warming pollution by 2.8 million metric tons cumulatively over the next 20 years.