REMARKABLE NUMBERS AND MISSING NUMBERS – WHAT ENERGY EFFICIENCY CAN DO FOR NO. CAROLINA OR LOS ANGELES

Energy Efficiency Can Create New Jobs, Save Consumers Billions of Dollars, and Meet Nearly One-Quarter of North Carolina's Energy Demand
March 18, 2010 (American Council for an Energy Efficient Economy)
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North Carolina’s Energy Future: Electricity, Water and Transportation Efficiency
Maggie Eldridge, R. Neal Elliott and Shruti Vaidyanathan, March 2010 (American Council for an Energy Efficient Economy)

THE POINT
The City of Los Angeles is engaged in a fight over whether to increase the price of power and a new report on power and efficiency in North Carolina reflects interestingly on the debate.

Due to fossil fuel price fluctuations, uneconomic management and past politics, the LA Department of Water and Power (DWP) is in the hole financially. Antonio Villaraigosa, LA’s popular and dynamic young Mayor, proposes to get the municipal utility out from behind its debt with a Carbon Reduction Surcharge that adds 2.7 cents per kilowatt-hour to each ratepayer’s bill. A provision to put 0.7 cents per kilowatt-hour of that increase into a trust fund dedicated to the building of New Energy (NE) and Energy Efficiency (EE) is intended to somewhat assuage the hurt.

The Mayor's hope is to turn LA DWP’s financial crisis into an economic opportunity for NE and EE. The Mayor is backed by a coaliton of LA environmentalists for 2 reasons: (1) They know how important it is to alter the city’s current dependence on fossil fuels, and (2) they know how much money DWP ratepayers will cumulatively save in the long run by investing in NE and EE infrastructure. The environmentalists are willing to give three-fourths of the rate hike money to the Old Energies (coal, natural gas and nuclear) now powering much of the city in exchange for ~$150-to-$180 million for NE and EE over the next 10 years and a voice in how it is spent.

But, even armed with city-commissioned polls showing how popular New Energy and Energy Efficiency are to Angelenos, can the Mayor convince his currently tax-averse City Council to approve the rate hike?

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Investing in Energy Efficiency is of enormous value. It not only creates jobs and saves money, it specifically saves money that can be reinvested in New Energy, so that it doubles or triples the value of the spending.

The LA City Council, however, is a politically ambitious bunch and and insiders say they are likely to be unwilling to raise utility rates on citizens to whom they will soon be going for votes, no matter how much macroeconomic sense it makes. They know that ratepayers are not well versed on the ways NE and EE will save them money in the long run but are keenly aware of how much a $2.50-to-$3.50 per month addition to their utility bill will hurt this and every month.

North Carolina’s Energy Future: Electricity, Water and Transportation Efficiency, from the American Council for an Energy Efficient Economy (ACEEE), is relevant to the LA debate because it so powerfully makes the macroeconomic case for the benefits of efficiency with – like so many other ACEEE reports on the subject – big, impressive numbers: North Carolina is one of the fastest growing states in the country and its growing energy needs will soon be burdensome but with spending now on EE the state can meet ~25% of its electricity needs, ~11% of its transportation fuel needs, create 38,000 net jobs and save consumers $3.6 billion by 2025.

The ACEEE report is a fine piece of work but if, like the LA City Council, North Carolina politicians were going to ratepayers with a concrete proposal and a specific rate increase, what they would need is not a big macroeconomic perspective. They would need a very simple report assuring ratepayers they will get at least as much back as they are being asked to spend.

LA’s Mayor is asking people in a state with 12%+ unemployment and an irresolvably dreadful budget deficit to invest in their future but aside from promises about getting off coal he is not saying much in specific terms about what’s in it for them. Instead, he is trading on their inclination to see the inherent logic of New Energy and Energy Efficiency.

They see it. They also see their savings accounts floundering, their home values plummeting, their health care costs skyrocketing and their jobs disappearing. Out of work North Carolinians are not interested in 38,000 jobs and out of work Angelenos are not interested in the 18,000 jobs promised by the Mayor’s proposal. They are each interested in 1 job. They are not in an altruistic mood and if the charismatic Mr. Villaraigosa and the high-thinking ACEEE don’t understand that, the hardworking, baby-kissing glad-handers on the LA City Council do.

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THE DETAILS
The proposed LA Carbon Reduction Surcharge promises to create 18,000 jobs in the city over 10 years with an estimated $150-to-$180 million investment in Energy Efficiency implementation and a feed-in tariff that will spur the growth of solar installations. It will impose a 0.8 cents per kilowatt-hour increase on LA DWP ratepayers quarterly for the next 4 quarters. Insiders say the Mayor has promised the local environmental community a seat at the table when specifics are decided about how the money is spent.

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The ACEEE proposal for North Carolina would invest in electricity, water, and transportation efficiency policies to create and retain jobs and spur economic growth. The investments could create 38,000 new North Carolina jobs and save consumers and businesses $3.6 billion through lower energy and water bills by 2025.

Because North Carolina has already initiated NE and EE advances but has enormous untapped potential, ACEEE recommends 3 major concepts to guide and speed the process:

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(1) Enacting an Energy Efficiency Resource Standard (EERS) to set a statewide goal for long-term energy savings. An EERS will drive the development of programs and incentives for residents and businesses to make energy-saving improvements in homes, offices, and industrial facilities that will lower utility bills and create jobs in the NE, EE and smart transmission, manufacturing and retail sectors. ACEEE lists 10 policies and programs that would support an EERS. The combined policies and programs could meet 24%-to-32% of the state’s electricity needs by 2025.

From a continuing commitment to EE, North Carolina will derive savings that can pay for the modernization of its transmission system. This will allow for further efficiencies and savings through smart grid technologies and practices like demand response (DR) management that allow for the retirement of Old Energy infrastructure.

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(2) Enacting a Livable Communities to Reduce Vehicle Miles Traveled (VMT) policy would drive transportation dollar investment in a public transit system with alternative possibilities as various as bike lanes and light rail. It would begin with policies and incentives to grow more compact, transit-oriented communities and reduce statewide vehicle miles traveled. 6 proposed policies and programs would also create benefits for non-urban residents through higher vehicle and vehicle-use efficiencies.

Because of its rapid population growth, North Carolina will benefit in larger proportion from policies and programs that initiate efficient new building, land-use and livable community requirements.

The transportation efficiency policies and programs in ACEEE’s proposal could cut gasoline and diesel fuel consumption 10.8%-to-15.7% beyond projected savings from the 2012-to-2016 federal fuel economy standards by 2025. The policies and programs are tailored to North Carolina’s geographic and demographic diversity. It has vehicle-miles-traveled reduction strategies for metropolitan areas that will deliver only modest short-term savings are “vital” to controlling fuel consumption across the state in the longer term. For rural areas, more rigorous requirements for vehicle efficiency will lower the costs of driving.

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(3) Enacting a water efficiency program to conserve water resources and institute wastewater management and treatment would strengthen the state’s capacity as global, national and regional water constraints emerge to burden the unprepared. 6 policies and programs would improve North Carolina’s use and systems and encourage better behaviors from the state’s public water utilities.

State water efficiency policies, including plumbing efficiency standards, requirements for the replacement of inefficient plumbing and for the implementation of efficient landscape irrigation, can meet 8-to-10% of public water needs by 2025.

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(4) Building a New Energy innovation hub would expand North Caorlina’s position as an international player in energy technology innovation. Encouraging a “hub” concept would stimulate collaboration between the state’s New Energy leaders in industry, academia, research and policy and speed innovations along the research, development, deployment and marketing continuum.

North Carolina has world-class research facilities and an EE business base on which to build an internationally competitive NE and EE technologies sector that will generate a domestic and export market for its products and services. There will be costs but ACEEE foresees positive returns to North Carolina’s residents, ratepayers and businesses in the forms of jobs and lower energy bills.

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QUOTES
- R. Neal Elliott, Associate Director of Research/report co-author, ACEEE: "North Carolina is one of the most rapidly growing states in the nation. Making homes and businesses plus water and transportation systems more energy efficient is the cheapest and most reliable way to meet the state's growing energy needs and create a secure energy future."

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- North Carolina Lt. Governor Walter Dalton: "North Carolina has the potential to be a leader in creating green jobs by investing in energy efficiency initiatives. From the Wright brothers onward, the people of this state have a proven track record as innovators, entrepreneurs, and technological revolutionaries. I'm excited to see how the people of this state can tap into the latest energy technology to keep our state competitive in today's global economy."

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- Maria Kingery, Co-Founder, Southern Energy Management: "This is not revolutionary stuff we're talking about here, it's just plain common sense. In North Carolina alone, if we continue supporting policies that boost energy efficiency we can save more than $3 billion in energy costs, put more people to work in jobs that can't be outsourced, and strengthen our state as a national leader in the clean energy industry. It is important that our state leaders continue working to support initiatives that improve the energy efficiency of our homes, businesses, and water and transportation systems to build a strong foundation for a more sustainable energy future."

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- Maggie Eldridge, report lead researcher, ACEEE: "North Carolina is poised to be become a leader in energy efficiency…Adoption of the energy efficiency policies suggested in this report would put the state on the path to greater economic, energy, and environmental sustainability. Changing the state's energy path can create more livable communities that will be able to accommodate the expected population boom over the next 15 years. Efficiency will allow North Carolina to maintain the vibrant economy and quality of life that have characterized the state over the past half century."