Save-A-Watt

“Save-a-Watt” and North Carolina’s Energy Future

Energy efficiency programs should save consumers money and curb emissions. Does Duke Power’s proposed Save-a-Watt program accomplish this goal?

In the view of National Association of Energy Service Companies and several environmental groups including Southern Alliance for Clean Energy and Sierra Club, Duke Energy’s Save-a-Watt proposal, in which the utility proposes to implement major new energy efficiency and load management programs, Save-a-Watt would result in modest energy savings at an unusually high cost to consumers. The fate of Save-a-Watt in NC is expected to influence energy efficiency across the US, so it is crucial that the program is fair and establishes aggressive reduction. As it’s currently designed, NC Sierra Club opposes Save-a-Watt.

NC Sierra Club supports energy saving programs. In fact, we think they’re the fastest, easiest and most efficient path to a new energy future.

But, Save-a-Watt saves too little energy, is too expensive, too secretive, and may not save ratepayers any money at all.

What is Save-a-Watt?

Save-a-Watt is a (so-called) energy efficiency program recently proposed by Duke Energy. In order to compensate the company for not building new plants or producing excess energy, Save-a-Watt calls for a $15/year fee tacked onto consumer bills. The plan is controversial because it compensates the utility for 1) not building power plants and 2) reducing energy output - which NC Sierra Club believes should reduce consumer rates.

Critics have pointed out a slew of problems with the program.

Not Enough Energy Savings

The current Save-a-Watt proposal is over 75% ‘load-shifting’ measures -- steps that may not save energy or significantly reduce customer bills. Although energy demand reduction is a useful objective, Save-a-Watt lacks aggressive incentives for reducing overall energy consumption.

The evidence from other states indicates that NC can reduce its electricity usage by more than 13% in ten years: at a cost of $.05/kWh, less that the current Duke rates.

Too Expensive

Duke’s proposal would allow the for-profit company to receive compensation for 90% of the future “avoided costs” of the electricity it saves by not producing power or building new plants. But energy savings and load management do not cost 90% of future avoided costs – nowhere close. In other states, energy efficiency programs are actually around 50% of avoided costs.

Sierra Club cannot support a policy where North Carolina consumers pay more for energy services than ratepayers in other states.

Why So Secretive?

Duke Energy has taken the highly unusual position in claiming that its avoided costs are confidential, so the public has no way of knowing the difference in Duke’s investments in efficiency programs and its profits. We do know, however, that low-cost, successful energy efficiency programs in other states are not included in the Save-a-Watt program.

NC Sierra Club does not believe this level of disclosure is adequate for a long-term program that will invest millions in ratepayer funds.

Is it Fair?

Programs like Save-a-Watt make sense for consumers only if less expensive and less risky energy efficient systems are substituted for the construction of new plants and/or the retirement of old, polluting, inefficient plants. As it stands, Duke’s proposal does not demonstrate that its energy efficiency programs will replace power from coal-fired power plants. What’s more, Duke proposed system of compensation is at odds with consumer interests. It fails to include successful energy efficiency programs that have saved customers billions in other states.

Recommendations for NC

The NC Utilities Commission should provide utilities strong incentives to pursue efficient energy, but also to give ‘shared savings incentives,’ wherein consumers receive greater savings as well.

To do this, the NC Utilities Commission should ensure that Duke Energy’s Save-a-Watt:

- Contains aggressive, defined goals for reducing energy use.

- Delivers long-term savings to customers.

- Reveals the offset costs, benefits and profits of the plan (no confidentiality), so the utility and customers get a fair deal.

- Assures that the optimum, low-cost energy efficiency programs are used, so that consumers save as much as possible.

Only then would the NC Sierra Club support such an ‘energy efficiency’ plan.