It may not have the pizzazz of solar cells or wind turbines, but it looks like the first shot in our impending energy revolution will be conservation, which remains the cheapest way to reduce energy demand.
Whether it's airtight homes in Germany that require no furnace to heat, or the simple change from an outdated 60-watt incandescent bulb to a 14-watt compact fluorescent, conservation has a bright new face. Savvy homeowners will be upgrading their fluency on improved EnergyStar appliances and programmable thermostats, as well as old standbys like weatherstripping and insulation, as we slouch toward that carbon-free utopia that will keep us on good terms with Mama Earth.
Riding the green tide is Duke Energy, whose controversial Save-A-Watt proposal is being weighed by the North Carolina Utilities Commission. The plan creates a financial incentive for power companies to help customers cut their energy use. If adopted, it would allow Duke Energy to recoup 90 percent of projected costs for power plants that they will not need to build in the future. Duke Energy CEO Jim Rodgers has famously called energy efficiency "the fifth fuel" and is essentially seeking to charge customers not to build new power plants.
The plan has some influential supporters. Former President Bill Clinton praised the Save-A-Watt model as "a simple, brilliant idea." New York Times columnist Thomas Friedman lauded Duke Energy's Save-A-Watt model as "the mother of all paradigm shifts."
But it sounds more like a corporate dream to a host of critics who point out that Duke Energy's ingenuity will cost North Carolina consumers a bundle, since Duke will earn profits both for the electricity it sells and for the electricity its customers save through conservation. For Duke, it's a no-lose proposition.
Jim Warren of the North Carolina Waste Awareness and Reduction Network (NC WARN) is among Duke Energy's strongest critics. "What Save-A-Watt really is ... is a PR campaign," he says, to "provide cover" for the proposed expansion of Duke's coal-fired Cliffside plant and its William States Lee nuclear plant in Gaffney, S.C. Environmentalists like Warren worry that Duke's conservation plan would primarily consist of inexpensive loadshifting—asking customers to use energy at off-peak hours to improve efficiency—and a re-packaging of already existing minor programs that target efficiency. These sorts of measures, critics say, would cost Duke Energy far less than what consumers would be charged for Save-a-Watt, generating big profits for the company.
Hope Taylor of Clean Water for NC describes Save-A-Watt as "a program that will accomplish so little and will be so expensive." The cost to consumers for energy efficiency will be higher than if the funds were invested in renewable energy, she warns. Clean Water for NC and NC WARN have joined other environmental and social justice groups to formulate an alternative energy efficiency plan called NC SAVE$ that they are promoting.
As preparation for the proposal, Clean Water for NC commissioned a study of six other states that currently have efficiency programs run by independent bodies. New York, Vermont, Oregon, Wisconsin, Maine and New Jersey began efficiency programs years ago through investor-owned utilities, but the states switched over to independently administered programs in the '90s because even the more ambitious programs were ineffective when administered by for-profit companies, according to Taylor.
The study was revealing. Duke's projection of less than 1 percent in savings over the next four years compares poorly with Vermont's independently run program, which saw efficiency gains of 1.8 percent in a single year. Compare Duke's program costs at 5 cents per kilowatt hour with Oregon's 1.4 cents per kilowatt hour. "What [Duke Energy] is doing is making efficiency more expensive for their customers," Taylor says.
"The kind of program we need would be headed up by a governing board of directors—entities who do not represent coal, gas or other energy providers. We feel avoiding that conflict of interest is extremely important." NC SAVE$ also contains a more ambitious goal. Its proposal states: "Research demonstrates that with energy efficiency, renewable energy such as solar and wind, and cogeneration [recouping normally wasted heated from electrical generation], no new power plants will have to be built."
In defending Save-A-Watt's projected cost estimates and possible profit margin, Duke spokespeople note that their figures discount sales lost due to new efficiencies, and they point out that the company only gets compensated when the program produces results. Asked about the idea of an independently run efficiency program, a spokesperson for Duke pointed out that such a possibility was discussed as part of the large 2007 energy bill, Senate Bill 3, but was not included in the package and was not approved by the utilities commission. "We feel we're very well prepared to offer meaningful programs to customers. Also, our plan calls for third party verification, which everyone agrees is a great idea," says Duke spokesperson Paige Sheehan.
The brief submitted by Duke Energy to the state utilities commission elaborates on the company's argument, stating: "The reality is that even today there is not a single investor-owned utility in the entire country for which energy efficiency is an important source of earnings. Indeed, investor-owned utilities have a built-in disincentive to pursue aggressive efficiency programs, because they typically make money by selling more electricity, not by inducing their customers to purchase less electricity. The Save-A-Watt approach seeks to change that paradigm."
Duke Energy also maintains that, even with Save-A-Watt in place, it will need to build new power plants to meet the energy needs of its expanding customer base. NC WARN's Warren disputes these numbers: "North Carolina has a lot of energy—we just use it really badly. We waste half of what we produce."
"Efficiency has to be the first fuel," he adds. "You save energy before you go generating more."
So what happens now? While Save-A-Watt languishes before the utilities commission, the N.C .Save$ plan, rejected by the commission on jurisdictional grounds, is now being considered as a possible bill in the state legislature.
"We think we have a number of legislators very interested in the proposal," Taylor says. She noted that they had also shared the proposal with the Obama administration, believing the program could be funded federally as part of a "Green Recovery" program. Although environmental groups have advocated for efficiency programs before, the fact that Duke Energy dipped its toe into the pool has rekindled interest in the issue. It would be ironic if the company's initiative provides the grist for uniting public support around a publicly run efficiency program.
Gerry Canavan contributed reporting for this story.