Florida PSC should look to North Carolina

Guest Blog | July 26, 2011 | Energy Efficiency, Energy Policy, Utilities
A version of Susan Glickmans commentary appeared in the Tallahassee Democrat.
Susan Glickman

North Carolina is increasing energy efficiency, cutting waste

I’m a native Floridian and as long as I can remember, there’s always been a special relationship between Florida and North Carolina, especially in the heat of summer when some Floridians retreat to the mountains for milder temperatures. Both states nicely combine the gracious hospitality of Southern charm with an embrace of modern thinking, invention and entrepreneurship.

When it comes to energy, however, North Carolina swiftly has overtaken Florida in finding ways to cut energy waste and enhance productivity. In 2007, North Carolina became the first and only state in the Southeast to adopt mandatory utility targets for renewable energy and energy efficiency. The Sunshine State could take a few lessons from the Tar Heel state.

Lesson one: Energy efficiency is a very, very good deal for customers.

North Carolina’s two major utilities, Duke Energy and Progress Energy, are in the news recently because of a proposed merger that would create the country’s largest utility.

These Carolina utilities just reported on the first full year of energy-efficiency program savings. They achieved more gains than anticipated, at less cost than planned. After years of inaction, when offered broad-based energy efficiency programs, Carolina customers responded!

Analysis shows that the lifetime cost of saved energy will be about 1 cent per kilowatt-hour for Duke Energy, about 2 cents for Progress. Building a new power plant costs at least 12 cents per kilowatt-hour.

Utilities cut fuel costs. Participants save money. For consumers, incentives to save energy are even cheaper than running existing power plants.

On the other hand, Florida utilities’ energy-efficiency program plans are far more expensive. For example, Progress Energy Florida’s plan forecasts a cost of 8 to 9 cents per kilowatt-hour, more than four times its sister utility. What’s more, Progress — along with Florida Power & Light — plan to build new nuclear power plants costing at least twice that.

Florida utilities could learn a lesson in customer value from North Carolina’s experience.

Lesson two: Standards drive performance.

Ground will be broken soon on the 100th renewable energy project in North Carolina. Over the next decade, at least 700 MW of renewables will be added.
When North Carolina passed clean energy targets, it included a cap on costs. The good news is that the cost will remain significantly below that cap. By setting a standard, but providing flexibility to utilities, North Carolina is diversifying its energy resources.

State standards translate to economic growth for the Carolinas. More than $3 billion in investment is anticipated, most spent locally. Air-conditioning contractors, solar installers, biopower fuel providers are all seeing more business.

And in Florida? It’s business as usual with billions of dollars leaving the state for coal, natural gas and uranium from other states or countries.

Lesson three: Politicizing regulation is a disaster.

North Carolina’s energy policy development couldn’t be more different than Florida’s. Florida legislators have deadlocked over the kind of policy being implemented in North Carolina.

Energy efficiency should have fared better because it saves customers money as demonstrated in other states, but three years after reforming state energy conservation policies, most Florida electric customers still are being provided programs that date back to 2005. Despite the many parties involved — utilities, legislators, and the Florida Public Service Commission — promised reform has yet to be delivered.

What’s Florida doing about it? Oddly enough, too much. At least four independent energy initiatives are in the works, including efforts by the Governor’s office, Senate energy committee staff, and the Department of Agriculture and Consumer Services. In addition, Senate President Mike Haridopolos has teamed up with Houston-based Consumer Energy Alliance — which represents industries such as trucking, oil and gas and nuclear — to develop energy policy recommendations.

But unless some policy entrepreneur steps up and breaks the deadlock, opportunities to save money and create jobs will remain elusive. Major energy consumers will continue looking for short-term rate breaks lacking the confidence that longer-term cost controls will work. Agriculture and solar interests won’t be allowed into the energy market by Florida’s monopoly utilities. Customers will watch their utility bills go up and struggle to find good options for saving energy.

Florida often likes to go its own way. Other than Texas, Florida is the state with the most isolated electric grid. While at times, leadership means daring to be different but in the case of energy, Florida should look to other states for answers. We should take a hint from our friends in North Carolina, and immediately scale up low-cost energy efficiency and homegrown renewable energy for Florida’s energy future.

— Susan Glickman is a policy consultant to Natural Resources Defense Council and Southern Alliance for Clean Energy. This post originally appeared in the Tallahassee Democrat.

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