Boulder Creek Room – Main Floor
Join Clean Energy Action and the Colorado Renewable Energy Society (CRES) for an explanation of the latest science about climate change and what we can do about it, featuring:
Director of the Buildings and Thermal Systems Center
National Renewable Energy Laboratory
Discussion will focus on:
– How we know our climate is changing
– Why it’s clear that we are causing climate change
– What we can do to address climate change
– How we can respond with the needed solutions today
This meeting is free for CRES members and $5 for non-members.
Utility revenue decoupling is often seen as an enabling policy supporting “demand side management” (DSM) programs. DSM is a catch-all term for the things you can do behind the meter that reduce the amount of energy (kWh) a utility needs to produce or the amount of capacity (kW) it needs to have available. DSM includes investments improving the energy efficiency of buildings and their heating and cooling systems, lighting, and appliances. It can also include “demand response” (DR) which is a dispatchable decline in energy consumption — like the ability of a utility to ask every Walmart in New England to turn down their lights or air conditioning at the same time on a moment’s notice — in order to avoid needing to build seldom used peaking power plants.
For reasons that will be obvious if you’ve read our previous posts on revenue decoupling, getting utilities to invest in these kinds of measures can be challenging, so long as their revenues are directly tied to the amount of electricity they sell. Revenue decoupling can fix that problem. However, reducing customer demand for energy on a larger scale, especially during times of peak demand, can seriously detract from the utility’s ability to deploy capital (on which they earn a return) for the construction of additional generating capacity. That conflict of interests is harder to address.
But it’s worth working on, because as we’ll see below, DSM is cheap and very low risk — it’s great for rate payers, and it’s great for the economy as a whole. It can reduce our economic sensitivity to volatile fuel prices, and often shifts investment away from low-value environmentally damaging commodities like natural gas and coal, toward skilled labor and high performance building systems and industrial components.
The rest of this post is based on the testimony that Clean Energy Action prepared for Xcel Energy’s 14AL-0660E rate case proceeding, before revenue decoupling was split off. Much of it applies specifically to Xcel in Colorado. However, the overall issues addressed are applicable in many traditional regulated, vertically integrated monopoly utility settings.
There are several barriers to Xcel profitably and cost-effectively scaling up their current DSM programs. Removing these impediments is necessary if DSM is to realize its full potential for reducing GHG emissions from Colorado’s electricity sector. Revenue decoupling can address some, but not all of them.
Revenue decoupling can play an important role in overcoming some, but not all, of these limitations. With decoupling in place, we’d expect that the utility would be willing and able to earn the entire $30M performance incentive (which they have yet to do in any year) so long as it didn’t make regulatory compliance in future years more challenging by prematurely exhausting some of the easy DSM opportunities.
This case was originally filed June 17, 2013 and is a strategic demand side management issues matter. Demand Side Management (“DSM”) refers generally to policies that aim to reduce energy consumption overall (through energy efficiency and other programs) and moving certain loads from peak to off peak periods.
Although taking the same consumption and moving it to a different time might not seem like it will make a huge difference in energy use and consumption, it’s a very important resource. Certain generating units called “peaking plants” (or “peakers” burning methane) operate only when there is a larger than usual demand for energy, such as a really hot day when everybody is running their air conditioners at the same time. In those instances, the peaking plant kicks on and saves the day. Peaking plants are more expensive to operate and are typically much less efficient than fossil baseload resources (if those resources are operating properly, but that’s another chapter). If there’s a large manufacturing plant that can temporarily suspend their operations or reduce their consumption in other ways to a large enough degree, Xcel won’t have to turn that peaker on at all. Peaking plants generally operate about 100 hours or less per year. By moving a large load from the middle of the day to the middle of the night when loads are lighter, we’re still using the same amount of energy, but it won’t come from that inefficient peaking plant. Energy efficiency and demand response are great programs that change the picture of energy consumption and can make a huge difference in reducing emissions stemming from fossil generation.
Xcel’s DSM program is in response to legislation passed in 2007. The Legislature declared in HB 07-1037 that “cost-effective natural gas and electricity demand-side management programs will save money for consumers and utilities and protect Colorado’s environment.” Through this legislation the PUC was “encouraged” to “reduce emissions or air pollutants and to increase energy efficiency.” The goal is for electric utilities to reduce peak generation by 5% from the 2006 levels by 2018. The bill allowed for utilities to recoup their investments in DSM programs at a higher rate of return than other generation investments. Continue reading Worth watching at the CO PUC – upcoming hearing on DSM Docket 13A-0686EG
By: Alexandra Czastkiewicz
The social cost of carbon might not be a conversation that comes up at the dinner table, but realize it or not the implications of global climate change are far reaching and daunting. How important is the fate of the future generation? When your children grow up, what kind of world do you want them to experience? Putting a numeric value on the future is difficult, but it must be done if we are to change the direction of our energy future, and introduce cleaner energy technologies that produce less harmful pollution and emissions.
Coal is perceived as a more economic energy source then many renewable technologies. The Journal of Environmental Studies and Sciences recently published an article about the implications of modernizing our electricity systems. The US government needs an official cost estimate associated with the production of CO2 from fossil fuels. According to report, without counting pollution and carbon emissions, coal, on average, costs 3.0 cents/kWh versus wind energy (8.0 cents/kWh) or photovoltaics (13.3 cents/kWh) (Johnson et al. 2013). The government is now trying to take into account the environmental costs of using fossil fuels such as coal or natural gas. This includes adding a cost of potential damages caused by the emission of CO2 into the atmosphere. These potential and already realized costs include damages and deaths incurred from drought, floods, heat waves, hurricanes and other natural phenomenon that have been exacerbated given human induced climate change. Additionally, the social cost of carbon has serious public safety and health implications. Increased pollution has led to increases in asthma, water contamination, and rises in climate sensitive diseases. Every day our health and wellbeing are being compromised and if we do not change our current energy practices, and it will only continue to worsen for our futures. Continue reading What Value Should We Place on Our Future?