Energy efficiency and conservation [The Price of Power studio session]

Transcript: Efficiency and conservation

Doing more with less (efficiency) or doing less, period (conservation) don't usually stir the passions as much as discussions of other energy sources do. Perhaps they should. If our houses and buildings, our appliances and lights, our cars, trucks, trains, and airplanes used less energy, then we wouldn't have to drill as much oil or gas, dig as much coal or uranium, produce as much nuclear waste, or dam as many rivers. Or so the advocates of efficiency and conservation claim.

These are selections from the whole transcript. Some comments will also occur on other themed pages because they cover more than one topic.

Ralph Cavanagh: Well there's a, we run a risk here, which with Peter Johnson in the room I can't let us run here, because I remember some things he did. If we distinguish sharply, if we say, well we talk, first we'll talk about how we produce it and then we'll talk about how we use it, as if those were completely independent, and it was Senator McClure I think who had a hand in the first legislation in the United States that said we are going to treat energy efficiency -- ways of getting more work out of less energy -- as a resource equivalent to production, and we're going, we're going to weigh them against each other and we're going to pick the best buys first. Peter of course you had to do it for the first time. And I just got to say we cannot talk about electric generation in isolation from decisions about use; we ought to be looking at them together. And the philosophy of the northwest and the legislation Senator McClure got through in 1980. I think it came down to a fundamental philosophy of let's just buy only what we need, pick the best buys first, treat energy efficiency options on equal terms with generation, and, you know, the leading resource developed in the Pacific Northwest over the past 25 years wasn't gas, wasn't coal, wasn't nuclear. It was energy efficiency.
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Ralph Cavanagh: Uh and so let's just keep that on the table, continue to look for the best buys, my optimistic view of this is that, that in fact we have a lot more options on the table than we had 20 years ago when Peter started this out. And we have them for both transmission and for energy production. And I just want to say one of the things Bonneville's doing that I think is great with transmission, putting all the options on the table. It's not, not viewing new transmissions lines, Jude, you wrote the story about this. Not saying that the only way to solve a transmission problem is a new line, there's a host of technology options; let's pick the best buys first.
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Corbin McNeill: But the, the reality is, is that we are going to have to produce more energy in a growing economic environment and clearly we have to balance environmental concerns with price concerns, with other social aspects that we have. If energy prices continue to rise as the Senator has indicated then in fact we're going to have to subsidize some people of low income in order to provide them the same quality of living that everybody else has. And while conservation can in fact and should be a part, green power should be a part, we need a diversity of energy sources that meet environmental concerns, that meet national security concerns, which may not be a regional problem here, but clearly a national energy policy is one thing that national politicians have to concern themselves with and we must have economic, a system that supports the economic advantage that the United States has in the world environment because we have low energy costs and its one of our competitive advantages in the world economy.
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Jude Noland: Well I think that also reinforces what we're also saying about the importance energy efficiency because if you do the right kind of weatherization and build housing stack to super efficient standards those folks at the lower end of the economic spectrum will be spending a lot less of their money on energy because it won't cost as much to run their household.
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Ralph Cavanagh: But of course the solution to that is your own Northwest Power bill, which requires that the cost of the conservation be compared to the savings delivered.
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Michael Grainey: Well, I, I'd like to address that because in Oregon we've seen a lot of public acceptance and a lot of individual decisions by individual businesses, consumers, homeowners, individual schools, . . . conservation and renewable resources. They've had over 5,000 business invest over $100 million dollars in each of the last two years on energy efficiency measures. That helped them weather the enormous price fights [hikes] we had in the power market and stay in business and keep people employed, keep their jobs. We've had over 100,000 energy efficient appliances replaced in Oregon through our State Tax Credit program. We did upgrade our building code, but in both residential and the commercial code with the upgrades we've made over the last 20 years series of time the residential code is helping consumers save $100 million dollars a year in energy costs and our businesses through the commercial codes $75 million a year. And in total Oregon consumers are saving over $400 million dollars in energy bills. Energy bills that otherwise go out of the state and in some cases go out of the country. We have no coal in Oregon, we have no petroleum, we have a little bit of natural gas, we have no uranium, well we do have a little bit of uranium and we're still cleaning it up from the mining experience 50 years ago. So all of these sources of energy that play a role will continue to play a role, we think it's very important in Oregon that they be used wisely and efficiently and it doesn't mean doing without, but it means doing better with what we have. Even with the new energy code that we built we have new schools being built now with the design being built in right to new sustainability standards they use less than half the energy that buildings built to the new energy code can do, there's an awful lot that can be done through energy conservation, energy efficiency.
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Joan Cartan-Hansen: I think even if we do make a massive effort toward conservation we still need to look to the future toward building that base supply, and right now coal and all the fossil fuels are still going to have to play a major part in that. But it also has some real environmental tradeoffs.
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Peter Johnson: I would say that I think the emphasis is on demand side management, efficiency and conservation more today than it's ever been before. And the simple reason is that this exercise in, experiment in deregulation has not worked. It is dismembered; it is, we're, we're in a crisis; most utilities can't even finance their base resources, not at this time anyway. Heaven knows how we're going to get through that as we try to get our feet back on the ground after this experiment in deregulation. But so all the more reason why right now, today? And for the next 10, 20 years demand side management, in other words efficiency and conservation, are going to be at the forefront of how we best deal with this problem that we've created.
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Corbin McNeill: To some extent it is, but it's both a supply and demand supportive bill; there's energy, or let's say it is more probably more production than it is a conservation bill, but there is conservation elements to it and there are renewable energy investments in that bill. But again I think while Peter is right I you know there the Pew Trust in Philadelphia has recently come out with a program that says that many of these programs that environmentalists would like to portray as coming to the fore in the next 20 years don't have as much of a chance of coming to fruition as the environmentalists would have liked to have portrayed them to do. And I would offer that we have had while we have not had, we've had attempts at demand side management, but they have not been overly successful and in part it goes back to what Jude has basically said is individuals find it difficult to try and manage their choices on fractional tenths of a cents differences in energy that they don't see. This is a macro policy problem its one that Ralph is very familiar with because it, this is the sum of millions of people doing business with incremental savings to them and individuals don't get overly concerned about the incremental savings. So you have to have broad policy issues of, of conservation you know better building standards and things of that nature, but to spite all of that and there's been a lot of it and, and in one of the pieces that we saw earlier it talked about cutting consumption from 3% growth to 1 to 1 1/2 % growth. A lot of that did come through some of the conservation measures that we have taken over the years.
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Ralph Cavanagh: But Corbin you wouldn't suggest for a second that we've tried as hard as we could. Look at the utility industry across the country where there are just enormous disparities there are some superstars, but there are a whole lot of people who aren't even trying. And look at the record just if you think sure its hard if the question is how to get people to react to hourly changes and prices nobody's suggesting that's been a roaring success, but if you're talking about base load energy efficiency and centers and standards to do better that same Pew Charitable Trusts you just invoked has written the book on the national success story in energy efficiency. It really has been the fastest, cheapest and cleanest way to take the pressure off both the power and the gas grid and that's what we're talking about here the big base-load programs. Let's get them revived. Let's get the whole utility industry engaged because you know its not now.
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Jude Noland: And that's one of the big problems, that's one of the big reasons that energy efficiency and conservation has, has not it I think going back to what you said Peter I think after the Northwest Power Act passed in the 1980 the '80s was a time of incredible growth in conservation activities a lot of utilities in the northwest were very creative in terms of things that they came up with, programs that they could do. With the start of the move towards deregulation and the Energy Policy Act of the early '90s utilities kind of stopped because they're saying well we don't know if we're going to have to do this. We don't know if we're going to get reimbursed for it. And so a lot of that activity as well as transmission, infrastructure upgrades and new generation all of that was put on hold because no one knew what was going to happen as the industry started down this path towards restructuring. So I think now is the time when we're coming back and conservation is seeing a much bigger emphasis you're seeing utilities get back into least cost planning where they take a look at what all these different resources are going to cost them to provide to their customers. And the other thing I wanted to point out is with the new technologies in terms of meter reading and other things you could take that away, the individual customer doesn't have to think about whether its costing him 5 a kilowatt hour at this point or 2 later you can do direct control of water heaters where people don't even know that the utility has turned the water heater down during a certain period. It can all be done automatically and not affect the lifestyle or the activities of the person in the household.
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Jim McClure: And I think that's a legitimate question that needs to be discussed and decided or at least acted upon I don't suppose it'll ever decided. But one of the reasons why that was done is there's, there are other policy reasons to be concerned about as a conservationist, as a person interested in, in the utilization, efficient utilization of our natural resources. It's offensive to me to believe that we take natural uranium, we mine it, produce yellow cake, put it through a process and build fuel rods and then at the end of the life of the fuel rods we throw it all away and we've utilized 7% of the potential energy in that uranium ore and thrown 93% away. Now, is that waste of a resource good public policy? I think not.
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Michael Grainey: You know utility programs have been a big part and as part of the issue was raised earlier about how utilities can finance conservation and be against their own interests, one of the ways we dealt with that was with the public purpose charge that was imposed on all utility customers regardless of who your utility is it's a 3% charge on your utility bill that funds energy conservation and renewable resources. And that replaces it's about the level of the utility programs that they were in the past and that's about $50 million a year. So that's an important part although its just one piece of the effort for energy conservation and renewable resources in Oregon.
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Peter Johnson: When nuclear was first approved the Congress was behind it solidly, reprocessing of the fuel rods and one thing another, there were a number of other technologies that were taking a great deal of money. But I think what we have to look at today is the fact that we've run out of money. Our federal government's run out of money. I think our utilities have run out of money; they can't even finance, for heavens sake, what they need today. There's going to have to be a selection made of the premier options and again I believe that demand-side management, conservation, efficiency has to be right up at the front because I think there is, that's one of the best ways we have. The title of our program, the Price of Power, if we want to keep the price down I think it will do a better job of it by putting a great emphasis right now. We can buy some time until the money catches up with those three or four technologies that should lead us into the future, but I think that, that one of the reasons we haven't gotten very far with several of 'em is simply because we were trying to do too many and we don't have the money to do that anymore.
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Ralph Cavanagh: Well, see I think this is, this is precisely the wrong way to look at it because then you have quotas for everybody, like in the relative level of enthusiasm and political clout and I still think we are best off if we have an honest process that has all of us theologians in there. I'm going to push for all efficiency and Corbin is going to be in there with every nuclear plant he can muster. But Peter is right there isn't, the fundamental problem is one of economic scarcity, and my biggest concern right now is the, the institutions that are most important in making these decision are our utilities. We haven't talked enough about them. Because they have one fundamental problem if you want to take Peter's advice that efficiency and demand side solutions are the best it is a problem as Corbin mentioned that most utilities profits are tied to increasing sales. The good news is we know how to fix that. Like you know Oregon pioneered rate reforms that break the link between utilities profits and the amount of electricity and natural gas they sell. The problem is those reforms have not been executed across the west and in fact virtually every utility in the west now has its profits tied directly to increases in the use of gas and electricity and that throttles investment inefficiency in demand side. The most important message for me to leave with folks is we know how to fix that problem, it is not inherent in the utility business. There are utilities that have solved that problem and become international leaders in energy efficiency and an overriding priority for the west right now ought to be solving that problem so the financial interests of the utility system are aligned with the interests of their customers in greater efficiency.
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Michael Grainey: No, I agree with that. I think two things are a mistake. One is wasting energy, because then that puts pressure on making bad energy choices and secondly the replacing one form of imported dependence for another makes no sense either and I know the chairman of the Federal Reserve has called just for that and I think he, he's dead wrong on that. And we have had a history of federal support and subsidies of energy fossil fuels have received 100 years of federal support, nuclear 50 years. I think we need to make the choices for transition to cleaner resources that don't have as much environmental impacts or as much risk. And as part of that though during that transition I think energy efficiency is a fundamental element of a sound energy policy.
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Jude Noland: I think the other thing, something that Mark started to talk about that we really neglected to discuss is a problem of getting energy generated at a distant site -- a coal plant in Montana for example -- to population centers in Boise and Seattle and Portland. That takes transmission and as Mark said we haven't done much with the transmission system in a long time and part of the reason is because nobody wants you to build a transmission line in their backyard and that, to me that's the, that's the big issue that we're all ignoring. That you've got to move the power somehow and the more transmission you have to build the harder its going to be and so that to me makes smaller scale generation, energy efficiency, distributed generation makes a lot more sense because you don't need as many of those high voltage transmission lines to move that. Certainly the situation that we've seen here in the Northwest over the last few weeks with the sabotage or attempted sabotage of transmission towers makes it even more important. The more that we can site energy smaller sources of generation, less intrusive sources of generation, closer to load, closer to where the people are using the energy, the better off we're going to be, and we haven't even started talking about that.
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Ralph Cavanagh: A final constraint that certainly bears mention and here I might actually drag Corbin along with me. I think we are all increasingly concerned about the gigantic experiment that we're collectively conducting with the atmosphere in terms of increased concentrations of greenhouse gases. I'm sure this panel is all over the place is terms of how it feels about climate science, but it has to be cause for at least alarm that in our lifetimes the atmosphere is changing in ways that we have reason to think have, have significant implications for the climate of the country and the earth. And I think all of us would like to see that climate experiment suspended if it could be done at a reasonable cost. That will enter into the equation about what to do and it will influence the development portfolios. It will help nuclear, but it will also help energy efficiency and renewable and my own view is that they will end up prevailing, but that's part of the competitive equation that we haven't mentioned yet. And I think for the public and for policy makers an increasingly important part.
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Ralph Cavanagh: Or dependent on utility contracts to do anything and so I think as, as the public tries to sort out how is this going to play out, what's going to happen the big utilities of the west -- the Idaho Powers, the PacificCorps', Pacific Gas and Electric when it emerges from bankruptcy in the wreckage of the California restructuring -- what decisions they make, what incentives they face and how they figure out to bring their customers into some of this, that's why this is really going to play out and happily everybody has a hometown utility and sometimes the hometown utility's policies are a whole lot easier to influence as you know Senator then a distant capitals on the east coast. And I think all of us would encourage folks who care about these issues to learn more about what the local utility's doing, what is it investing in energy efficiency, what efforts is it making to tap into those opportunities that Peter Johnson identified. What renewable energy options is it seeking. What's its long-term perspective on nuclear and fossil? These issues are being played out in every hometown utility in the west and that's where the real action will be for the foreseeable future on all of this.
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Michael Grainey: Well and I think that the largest failure in the energy legislation coming before Congress is the failure to increase vehicle efficiency standards.
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Peter Johnson: You say they should be better educated. I come back to Mark. At the Bonneville Power Administration we weren't getting anything done until we began to consult with the public, and then we could do just about anything that was worthwhile and necessary. But to try to move without keeping the people who were going to be the beneficiaries of efficiency and conservation and energy -- they've got to be involved and that comes from the utility, it comes from the federal government, it comes from all of us around this table because I think once you commit to that process of decision-making you have unbelievable earned power, earned power people would put a trust in you. We've got to do that with the nuclear option. Absolutely essential, essential. If it is disengaged from the public in its advancement, you know it will be just what Senator McClure says -- if the public doesn't want it, we're not going to have that.
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Ralph Cavanagh: But of course we don't want to have to rely solely on volunteers to solve national environmental problems and so the other, if you read your utility bill and can't understand it, if you don't know where the power is coming from and don't see the energy efficiency investments then the hometown utility remains a crucial point of leverage as an investor for all of us.
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