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Governors Plug Efficiency, Generation by Michael Burnham NW Current, October 31, 2005

A coalition of Western governors aims to increase energy efficiency 20 percent throughout the region by 2020.

The Western Governors' Association (WGA) -- a policy group of governors from 18 states, including Oregon, Washington, Idaho and Montana -- proposes that significant investments in regional transmission and electric utility efficiency programs be made to offset electricity demands increasing by almost 2 percent a year.

The recommendations come in a series of draft reports released in September by WGA's Clean and Diversified Energy Advisory Committee. The committee, led by William Keese, former chairman of the California Energy Commission, and Bill Real, senior vice president of Public Service Co. of New Mexico, is scheduled to make final energy conservation and production recommendations by the end of the year.

"Rapid growth in electricity demand presents a number of challenges for the region, including the high investment requirements in new generation, transmission and distribution facilities, increasing risk of power shortages, and increasing water consumption and pollutant emissions by power plants," states the committee's draft conservation report.

The conservation report, which was shaped by electric utilities, policymakers and advocacy groups, concludes that widespread adoption of best practice policies and programs would not eliminate energy load growth during the next 15 years. However, such policies and programs -- including dedicated efficiency investments by electric utilities and conservation mandates from states -- would cut load growth by about three-quarters, the report notes.

Among the committee's key conservation recommendations is a call for all Western states to require utilities to integrate energy-efficiency options into resource planning and procurement decisions, and to pursue energy efficiency whenever it is the least cost resource option. At a minimum, electricity distribution companies should dedicate at least 2 percent of revenues for ratepayer-funded energy-efficiency programs, the committee concludes.

In addition to calling for dedicated utility investments in efficiency, WGA recommends Western states establish minimum energy savings requirements or targets. States should set a goal of saving 3-5 percent of projected energy sales in 2010 through demand-side management (DSM) programs, according to the report; and by 2020, states should set a goal of saving 10-15 percent of projected sales from such programs.

Finally, in order to stimulate effective utility efficiency programs, WGA says it's critical to remove "financial disincentives" that utilities have toward promoting less electricity use by their customers. To do so, WGA recommends decoupling electricity sales and revenues, as well as creating performance incentives that reward utilities for implementing demand-side management programs. Oregon, for example, has already adopted such a policy.

"As part of DSM program implementation, states should require utilities [or alternative DSM program implementers] to undertake thorough energy savings monitoring and verification, and program cost effectiveness analysis," the report concludes.

Other key conservation recommendations include:

• States update energy codes regularly and adopt the 2004 International Energy Conservation Code, at a minimum;

• State and local agencies establish energy savings goals and track progress with a benchmark system, such as the U.S. Environmental Protection Agency's Portfolio Manager;

• States collaborate to ensure that the potential for and effects of energy-efficiency efforts are incorporated in regional transmission planning;

• States create a regional working group to quantify the air emissions benefits of energy efficiency and renewable energy programs and foster inclusion of such programs in state and regional air quality improvement plans.

Outside of the realm of conservation, WGA recommends the region develop 30,000 megawatts (MW) of new energy by 2015. The additional power should come from advanced natural gas, biomass, coal, geothermal, solar, wind and other resources, according to the Denver, Colo.-based organization.

WGA estimates that biomass and solar power will be the largest drivers of new energy production.

A preliminary analysis by WGA's Biomass Task Force suggests that 12 gigawatts (GW) of generating capacity could be produced from biomass. That total could achieve about a third of the association's goal of 30,000 MW of new generation capacity, according to the draft biomass report.

Likewise, the association's Solar Task Force estimates as much as 8 GW of capacity could be installed with a combination of distributed solar thermal and electricity systems and central-concentrating solar power plants by 2015. At that point, the cost of electricity from future concentrating solar power plants will be on a par with that from natural gas plants, the report suggests. The draft report envisions that half of the new solar power would come from central concentrating solar power plants, the other half from distributed photovoltaic generation.

"At a time when natural gas prices are skyrocketing and consumers are feeling the pinch from high energy bills, the WGA ... has provided a clean, cost-effective path forward: solar energy," said Rhone Resch, president of the Solar Energy Industries Association, a Washington, D.C.-based trade group.