Edison Electric Institute promotes energy efficiency

Consumer Reports News: July 17, 2008 12:09 AM

Just as consumers are getting socked by skyrocketing energy costs, the nation's power companies are paying more for fuel. The Energy Information Administration's recent short-term energy outlook, for instance, noted that escalating fuel costs are making it more expensive for utilities to generate electricity.

But you could end up footing the bill. "Within the past few weeks," the EIA report stated, "a number of utilities have requested permission from State regulators to raise electricity rates in response to rapidly increasing delivered fuel costs for power generation." Residential electricity prices are projected to rise by an annual average of about 5.2 percent in 2008 and 9.8 percent in 2009, up significantly from the 2.2 percent increase in 2007.

The electric utilities are aware of the challenges facing themselves and their customers. So on July 10, the Edison Electric Institute hosted a lunch at the Waldorf-Astoria Hotel in New York City. A six-member panel of EEI representatives addressed journalists to discuss "the effort underway to transform the role that energy efficiency plays within the electric power sector," according to the event program.

The EEI is the association of U.S. shareholder-owned electric companies, and its agenda is to ensure that its members turn a profit. So when EEI President Thomas Kuhn talked about the pressure the industry is under to "meet the growing demand for electricity in an affordable and reliable manner, and to supply it with minimal impact on the environment," I took his comments with a grain of salt.

Still, whatever their motive, many  power companies are pushing energy efficiency, largely by teaching their customers how to use less electricity. That puts them in an interesting pickle, because every kilowatt that customers don't consume affects their bottom line. It's akin to the tobacco industry being forced to tell smokers that its products will eventually given them cancer or kill them. Of course, that didn't exactly end cigarette sales.

Similarly, the electric industry is hardly on life support—nationwide consumption is projected to climb 30 percent by 2030. But the power companies try will need to find a model that sustains their own growth and the planet.

"Utilities are profit-making entities," acknowledged Diane Munn, executive director of retail energy services for the EEI, during her portion of the presentation. "If they aren't making money on electricity, you cant expect them to keep delivering it." Munn described two profit-preserving plans that are currently in the works:

• California, a bellwether state where energy conservation is concerned, has experimented with shared-saving mechanisms, whereby utilities get to keep a percentage of the savings that result from fewer kilowatts being delivered to households.

• A similar model, called Save-A-Watt, has been proposed by Jim Rogers, CEO of Duke Energy, which serves customers in the Carolinas and parts of the Midwest. Rogers' program would measure how much energy is saved through Duke-led education initiatives and let the company reap 10 percent of the savings. That would seemingly motivate the company to educate rather than build more power plants.

It was encouraging to hear industry leaders speak frankly about the challenges they face. And of course, you don't have to wait for your utility to climb on board the conservation bandwagon to reduce your electricity consumption. Your first moves are to learn 10 ways to cut your energy costs, understand smart-meter technology, and figure out how to buy green power.—Daniel DiClerico

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