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SACE | Southern Alliance for Clean Energy

Carolinas Utilities

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Energy Efficiency

Energy Efficiency Goals for Carolinas’ Utilities

Utilities in North and South Carolina have not operated substantial energy efficiency programs. In 2008, both Duke Energy Carolinas and Progress Energy Carolinas presented new energy efficiency programs in each state.North Carolina state law currently offers more leadership on energy efficiency than South Carolina. In North Carolina, utilities have the opportunity to partially comply with renewable energy goals using energy efficiency. As a result, North Carolina has detailed rules describing how utilities may operate energy efficiency programs – rules that are virtually absent in South Carolina.

Although the two utilities are offering relatively weak programs, our primary concern is that the utilities are requesting to be overpaid for their programs.Duke Energy Carolinas has presented its “Save-a-Watt” energy efficiency program to both the North Carolina and South Carolina utility commissions. A decision in North Carolina is expected in early 2009, but a decision in the South Carolina case has been postponed indefinitely.

In partnership with the Southern Environmental Law Center, Environmental Defense Fund, Natural Resources Defense Council, and the Coastal Conservation League of South Carolina, we have opposed the “Save-a-Watt” proposal in both states. Our concern is that it costs too much, and does too little.

Although Duke Energy has marketed “Save-a-Watt” as a simple and innovative concept, our experts and attorneys persuasively argued that the concept was anything but simple. More important, it was structurally flawed and unlikely to offer Duke Energy an incentive to achieve high levels of energy savings with a fair and sustainable financial model.

In contrast, our opposition to the nascent Progress Energy Carolinas “Save-the-Watts” energy efficiency program is more simple. Progress Energy has proposed to use the widely-accepted “shared savings” approach to fund its energy efficiency program. We agree with this approach, but believe that the level of earnings requested by Progress Energy from North Carolina and South Carolina customers is far too large.

We also believe that both utilities have offered up programs that are too small to fully achieve the opportunity to deliver cost-effective energy efficiency to customers. With the appropriate financial incentives, and with strong encouragement from the state utility commissions, we believe that both utilities have the skills and opportunity to achieve national leadership on energy efficiency.

In addition to Duke Energy and Progress Energy, there are a number of smaller utilities in the Carolinas.

In North Carolina, there are a number of small public utilities, and Dominion Resources also serves a small number of customers. In South Carolina, a state-owned utility (Santee Cooper) and a network of small public utilities provide a significant amount of service, along with SCE&G (a subsidiary of SCANA). In general, these utilities lack effective energy efficiency programs.

Impacts

Energy efficiency is the cheapest solution to our energy and global warming challenges. Leading energy efficiency programs across the country deliver energy savings at a cost of 2 to 4 cents per kilowatt-hour to customers. In contrast, new power plants cost at least 10 cents per kilowatt-hour.

Unlike conventional power sources, energy efficiency isn’t sensitive to price spikes because it doesn’t require fuel. Also, because it doesn’t require fuel, it reduces global warming pollution by 100%.

Solutions

Utilities in the Carolinas should aggressively implement energy efficiency programs to quickly ramp up to at least 1% energy savings per year. This would equal the results achieved by leading utilities in several other regions of the country. A state-mandated energy efficiency resource standard would be the most effective means of reaching this goal quickly. With such efforts, the utilities can cancel plans to build unnecessary power plants.

Another approach would be to establish an independent energy efficiency utility. This could be a state agency, non-profit, or for-profit company that is funded through an efficiency surcharge on electricity sales to partner with customers to reduce energy waste.

Both utility-led and independent energy efficiency programs have solid track records in other parts of the country. The choice between these approaches is largely a matter of political interest and utility leadership (or lack thereof).

What SACE is doing

The Southern Alliance for Clean Energy, in partnership with the Southern Environmental Law Center, Environmental Defense Fund, Natural Resources Defense Council, and the Coastal Conservation League of South Carolina, are participating in commission hearings in both North and South Carolina on these utilities’ energy efficiency programs.

We are also conducting research on the regulatory issues at state in these hearings and engaging experts across the country in the debate about how utilities should be compensated for leading on energy efficiency.