These Utility Execs to Slow Coal With Energy Efficiency

At the Clinton Global Initiative, Jim Rogers of Duke Energy led seven other utility executives to an unusual public commitment: investments of up to $1.5 billion in energy efficiency programs that would reduce power demand and slow down the rush to build new coal plants. It's a project that imitates what California has already been doing successfully, and provides a win-win-win for the utilities, consumers and the environment.

Here's what Clinton had to say:

Eight US Electric companies serving nearly 20 million customers in 22 states join together to help make America the most energy efficient economy in the world.

Goldman Sachs has a study that says: if the United States, China, India and Russia were to reach Japan’s levels of energy efficiency – without adding one new watt of clean energy at all – it would reduce greenhouse gas emissions by 20% across the globe.

[These eight companies] all agree that energy efficiency is the greatest untapped resource in addressing global climate change in the near term. It is the low-hanging fruit.

Here's how they're going to pick it. The utilities will create a system to increase the energy efficiency of the homes of its customers. The utilities will supply the financing, the contractors and the materials and get the job done for homeowners. In exchange, the utilities will be permitted to charge more per kilowatt hour of electricity, to recoup the costs of the program. But even with the price increase homeowners would pay less on their electric bill because they would be using less power.

So for example, if the energy efficiency of a home increases by 30%, the utility can charge 15% more for power, and the homeowner would still save 15% on the electric bill.

The other beautiful part of this mechanism: the utility can continue to increase profits without building new power plants. Called Demand Side Management, or DSM, this approach properly realigns the financial incentives so that everybody comes out a winner, including the environment. Right now, it's only the utilities that are profiting, with consumers paying ever-increasing power prices, and the air filling up with greenhouse gases.

California has been working on this for decades. What does the country's largest economy have to show for it? Its energy efficiency is 55% of the national average.

Bottom line? California and this project are demonstrating that the nation can meet its power needs without building another single coal-burning power plant. All it will take is a departure from business-as-usual, through programs such as this one, buttressed by the regulatory reform needed to smooth the way.

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