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Energy Efficiency and Demand-side Management in Oklahoma
In 2007 the Oklahoma Sustainability Network and Sierra Club requested (petitioned) the Corporation Commission for a rulemaking on Demand-side Management (DSM) and Energy Efficiency programs for our regulated electric utilities. We believe that these programs, if aggressively pursued, could save a significant amount of energy in the state, while reducing environmental impacts and deferring the need for expensive new coal, gas, or nuclear power plants.
In order to write these rules, OSN is working in a collaborative process with the Commission, the Attorney General, the Secretary of Energy, numerous utilities (both electric and gas, including OG&E and PSO, of course), the Industrial Electricity Consumers, Quality of Service Coalition, ClimateMaster, Wal-Mart, Oklahoma State Home Builders Association, AARP, Lennox, and various DSM expert consultants. We meet formally about every 3-4 weeks. The rules language will be due by October 1st, with a Public Hearing scheduled for October 15th.
OSN's goal: To elicit a final set of rules from the Corporation Commission that requires ambitious, verifiable, and sustainable demand-side management programs that will substantially reduce the growth of energy consumption in Oklahoma. This type of program is well established in a number of states around the country and we believe that the time is right for Oklahoma to follow this example.
Broadly speaking, DSM is based on the established fact that it's generally less expensive to save a unit of energy than to generate it. Obviously DSM also has some significant environmental benefits, with the utilities able to burn less coal and gas. So how do you motivate the utilities to sell less of their own product? One way is to remove the regulatory barriers that prevent them from recovering the costs and earning a reasonable profit from their investments in energy efficiency.
How does the ratepayer benefit? Ratepayers can pay the utility to build a new coal-fired or gas-fired power plant to meet our growing demand for more electricity, or we can pay the utility to implement DSM programs to help improve the energy efficiency in our homes and businesses. The cost of new fossil-fuel generation is at least 8 cents per kilowatt hour, and possibly as high as 10 cents or more. In contrast, the cost of the most extensive DSM programs in the country: 3.5 cents per kilowatt hour (many programs cost less).
A good DSM program should be targeted at all three major customer groups: industrial, commercial, and residential. It might include elements like incentives or rebates for newer high-efficiency equipment, including air conditioning units, chillers, pumps, motors, compressors, Energy Star appliances, industrial processing units, and lighting. It might also include educational programs, energy audits, technician training programs, incentives for Energy Star homes and weatherization, and load management programs to reduce demand at peak hours (e.g., hot summer afternoons). There are plenty of smart, proven programs in other states from which we can draw our ideas.
With the recent painful increases in our electric rates in Oklahoma, due primarily to increased costs for fossil fuel, DSM looks more important every week. It's the best possible deal for ratepayers.
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