Webinar

John D. Wilson, Research Director

February 2011

1
 About Us
‡ The Southern Alliance for Clean Energy (SACE) has
been a leading voice for energy reform to protect the
quality of life and treasured places in the Southeast for
over 25 years. Founded in 1985, SACE is the only
regional organization primarily focused on developing
clean energy solutions throughout the Southeast.

‡ $VZHORRNWRZDUGVWKHIXWXUH6$&(¶VFRPPLWPHQWWR
preserve, restore and protect our environment through
the use of innovative technology, grassroots and
grasstops education, and pioneer policy work remains
steadfast.

BECOME A MEMBER | TAKE ACTION @ www.cleanenergy.org

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 North Carolina Strategy
Cut Pollution Rate by 60% in Two Decades
3
$IHZUHPLQGHUV«
-> Global warming is caused
mostly by human activities
-> Greenhouse gases trap heat
-> Carbon dioxide is the main
global warming pollutant
-> Human activity increases
carbon dioxide mainly
through burning coal,
oil and natural gas
Recent coal plant retirements announced in the Southeast represent
nearly 35 million tons of global warming pollution . . .
but over 11 million tons will be added by new plants.
Coal Power Plant Million Tons CO2
Tennessee Valley Retirements Emitted in 2005
Authority (TVA)
Tennessee Valley Authority
John Sevier 5.0
Shawnee 1.0
:LGRZ¶V&UHHN 5.0
Progress Energy Carolinas
Sutton 3.5
Lee 2.5
Cape Fear 2.0
Weatherspoon 1.0
Duke Energy Carolinas
Buck 0.4
Cliffside 0.7
Dan River 0.8
Lee 2.4
Riverbend 0.4
Georgia Power
McDonough 3.7
Mitchell* 0.7
Progress Energy Florida
Crystal River 5.2
Total 34.3
New Cliffside Unit 6.3
New Virginia City Plant 5.3
* Georgia Power has received approval to refuel Plant Mitchell
as a biopower plant; plans are currently on hold.

4
5
a) US Environmental Protection Agency

b) US Department of Energy

c) Federal Energy Regulatory Commission

d) State Environmental Agencies

‡ State utility commissions have:
± Directed utilities to establish or expand energy efficiency programs
± Encouraged and approved decisions to retire coal plants
± Encouraged and approved decisions to invest in renewable energy

‡ What are state utility commissions?

± Regulate finances, rates and other aspects of utilities
± Jurisdiction over electricity, natural gas and water (varies somewhat)
± Many aspects of city or member-owned utilities are not regulated

7
‡ Protect Consumers on Rates
‡ Universal Service
‡ Deal with Market Changes and
Aging Infrastructure
± New customers create demand
for new plants
vs.
± Existing customers benefit from
low rates on depreciated plants

8
‡ Clean tech: Opportunities
for public to be owners of
energy resources
‡ A nation of entrepreneurs:
Citizen leaders who can
move our energy economy
forward
‡ Energy efficiency and
renewable energy are key
to affordability and
competitiveness

9
 Commission Jurisdiction Coal Plant Retirements Mean
(includes TVA Board) New Resource Solutions
‡ Electric & natural gas utilities Share of Global Warming Pollution Reductions

‡ Relates to policies needed to

achieve 60-80% of potential Renewable Energy Efficiency
(natural gas & electric)
global warming pollution Energy

reductions
± Includes, for example, indirect role in electric vehicle
Energy CCS, Carbon Offsets
charging infrastructure
Recycling (utility financed)
± 7KHVHHVWLPDWHVDUHEDVHGRQ6$&(¶VCornerstones work
DQGDQDO\VLVRI)ORULGD¶VFOLPDWHDFWLRQSODQ

Other
‡ Are commissioners ready? Jurisdictions

‡ Are their staffs prepared and

adequate to the challenge?
:HFDQ·WORRNWRWKH86(3$«
1
0
Brown, M. et al, Energy Efficiency in the South, Georgia Tech and Duke
University, April 13, 2010. 11
Brown, M. et al, Energy Efficiency in the South, Georgia Tech and Duke
University, April 13, 2010. 12
 Change Needed Coal Plant Retirements Mean
(at commissions & TVA Board) New Resource Solutions
1. Energy efficiency and energy Share of Global Warming Pollution Reductions
recycling cut demand

2. Environmental regs & carbon

Renewable Energy Efficiency
policy drive regulators to favor Energy (natural gas & electric)

clean energy resources and

retire coal plants
Energy CCS, Carbon Offsets
Recycling (utility financed)
3. Build capacity to adopt
renewable energy (and other
Other
safe, low-carbon solutions) Jurisdictions

:HFDQ·WORRNWRWKH86(3$«

13
14
 Utility integrated resource plans already show over
Other (Net)
7,000 MW of efficiency and load management,
40,000 Renewable
compared about 9,000 MW of nuclear through 2021.
Coal

Efficiency &
30,000 Load Management
Megawatts (MW)

20,000 Nuclear

10,000 New Plants

Natural Gas

0
Gas & Oil

Retirements Coal
-10,000
2012 2015 2018 2021

Source: SACE analysis of selected utility resource plans in the

Carolinas, Georgia, Florida, Virginia and Tennessee Valley Authority. 15
 Electric Utility Resources in the Southeast
2021
Planned
2000 2009
1990 Efficiency
Renewable & Other
Nuclear

134 GW Coal 257 GW

Oil

Natural Gas

Most power plant development since 1990 has been

natural gas. Over the next decade, however, nuclear and
efficiency are planned to be a major part of regional
resource development. Coal retirements are also notable.

Source: SACE analysis of selected utility resource plans in the

Carolinas, Georgia, Florida, Virginia and Tennessee Valley Authority.
Historical information from Energy Information Administration. 16
 Total capital cost.
Efficiency cost: see prior slide. Does not include load management.
40,000 Nuclear cost $5,000 / kW (various public sources). Does not include
operating costs.
Efficiency:
30,000 ~ $8 billion
Nuclear:
Megawatts (MW)

20,000 ~ $53 billion

10,000 New Plants

Retirements
-10,000
2012 2015 2018 2021

Source: SACE analysis of utility resource plans in the Carolinas, Virginia,

Georgia, Florida and Tennessee Valley Authority. 17
 National Average Resource Price
Build and Operate (per kWh)
0¢ 5¢ 10 ¢ 15 ¢ 20 ¢ 25 ¢

Coal
Utility
Nuclear
Gas - Combined Cycle
Solar - Utility Scale
Gas - Peaking

Efficiency
Customer
Rates
Biopower
Solar - Thin-Film
Solar - Rooftop PV

Source: Lazard, Levelized Cost of Energy Analysis ± Version 4.0 (May 2010).
Third party power based on 2011 rates offered by major Florida utilities as represented in 18
dockets 100164, 100167, 100168, and 100169.
19
‡ North Carolina REPS driving 3-4% energy efficiency savings
by 2020, spillover into South Carolina
± Duke likely to exceed significantly ± up to 8%
‡ SCE&G planning for 5% efficiency by 2020
‡ SC Coops & Santee Cooper
‡ TVA committed to 3% efficiency by 2020, considering Æ 8%
‡ Florida committed to 3% efficiency by 2020
± GRU already over 1% per year
‡ Georgia Power committed to 3% efficiency by 2020
± Programs will ³KHOSWROHDG*HRUJLDRXWRIWKHERWWRP´
‡ Dominion planning for approximately 3% efficiency by 2020
± Virginia has statewide savings goal of 10% by 2022
:HOOQRW$ODEDPDRU0LVVLVVLSSL«\HW 20
Percentages are rough estimates of cumulative savings over 10 years based on differing plan metrics.
Duke Energy Smart $aver® Georgia Power Commercial EE
HVAC incentives to homeowners and builders Lighting, HVAC and other efficiency incentives

TVA Major Industrial Program GRU Solar Water Heater Program

Facility evaluation & custom incentives Residential or small business incentives

21
 GWh 2005 2010 2015 2020 ³+LJK&DVH´
Duke Energy
Cumulative GWh Saved

Annual Impacts 325 1,450 3,000 1,900

(Other Southern Co)
20,000 Georgia Power

FPL
Carolinas
Progress Energy
10,000 Florida

TVA
Actual data 2005 ±
2008 (Source: EIA) Dominion
Others
-
2005 2010 2015 2020
Cumulative utility program impacts assume:
Includes data from the utilities with public
‡ Achievement of commission goals or resource plan estimates
efficiency data (historic or forecast) from FL,
‡ Continuation of prior annual savings if no goals or resource plan 22
GA, NC, SC, TVA and VA (Dominion only).
‡ Program impacts last 12 years
 ³/HDGLQJ´8WLOLW\
Energy Efficiency Program Impacts

15%
Cumulative Energy Savings

Duke Energy Carolinas

(High Case)
10%
Tennessee Valley Authority
(EE Focused Alternative)

Duke Energy Carolinas

5% (Base Case)
Tennessee Valley Authority
(Base Case)
Florida Utility Goals

0%
2010 2015 2020 2025

Source: Duke Energy Carolinas, 2010 Integrated Resource Plans; SACE

DQDO\VLVRI)ORULGD3XEOLF6HUYLFH&RPPLVVLRQ¶V³)((&$´JRDOV
established for 2010-2019.
 If all SE utilities adopted
79$¶V³(()RFXVHG´*RDO
Cumulative GWh Saved

20,000

10,000

-
2005 2010 2015 2020

Includes data from the utilities with public

efficiency data (historic or forecast) from FL, 24
GA, NC, SC, TVA and VA (Dominion only).
‡ If current utility plans are implemented ...
We expect a 20 million metric ton cut in
carbon dioxide emissions
‡ :LWKDJJUHVVLYHHQHUJ\HIILFLHQF\SODQV«
We could avoid 50 million tons
‡ ,IWKH6RXWKHDVWDYRLGVPLOOLRQWRQV«
It would represent a 1% reduction in total
global warming pollution from the USA
Equivalent to the entire emissions of Denmark or Ireland
25
 Annual Efficiency Investment
$ Billions
‡ 2009 efficiency budgets:
Achieve 8% cumulative
$304 million savings potential
± Plus $345 million for load management $2.0

‡ 1H[WGHFDGH¶VEXGJHWV
~ $1 billion / year $1.0 Announced efficiency goals

± Based on announced goals

± Opportunity: > $2 billion / year
± Plus increased spending on
load management $0.0
2010 2015 2020
Sources, cost and budget data: CEE, The State of the Efficiency Program Industry:
Budgets, Expenditures and Impacts, 2009; 2008 annual energy savings calculated
from US Energy Information Administration data.
Cost forecast assumes constant ~ 31¢ / annual kWh based on 2008 regional saved
energy cost. This cost estimate is relatively high due to relatively high costs 26
reported in Florida.
Ductless Heat Pump
Ray Services Heating and Cooling
Cookville / Crossville, TN
Power Wise Energy Audit
Industrial Pump Efficiency Sensor
North Springs UMC Atlanta
Sentrinsic, Atlanta
27
‡ Lack of information, awareness
‡ Lack of capital
‡ Utility financial regulation
± disincentive to utility support
‡ Utility planning policy
± energy efficiency not equal to supply resources
‡ Efficiency programs not up to date
‡ Transaction costs
‡ ³6SOLW-LQFHQWLYH´RU³3ULQFLSDO-$JHQW´SUREOHP
National Action Plan for Energy Efficiency (July 2006)

28
 Resource Efficiency 2010
% of Target
Plan Plan Preliminary

Energy Savings 116 GWh 234 GWh 578 GWh 247 %

Capacity Savings 800 MW * 368 MW 563 MW 116 %

Cost n/a $ 46 million $ 57 million 124 %

Average Cost of
1.0 ¢ / kWh 0.7 ¢ / kWh 66 %
Energy Savings

Source: Duke Energy Carolinas, 2010 Integrated Resource Plan.

Duke Energy Carolinas 2010 Portfolio Update provided to the Duke
Energy Efficiency Collaborative (preliminary data).
Notes: Average cost assumes ten-year measure life. Resource plan
target of 800 MW is not directly comparable because of pre-existing 29
resources that are not included in the efficiency plan estimate..
 Annual Efficiency Investment
$ Billions
‡ 2009 efficiency budgets:
Achieve 8% cumulative
$304 million savings potential
± Plus $345 million for load management $2.0

‡ 1H[WGHFDGH¶VEXGJHWV
~ $1 billion / year $1.0 Announced efficiency goals

± Based on announced goals

± Opportunity: > $2 billion / year
± Plus increased spending on
load management $0.0
2010 2015 2020
Sources, cost and budget data: CEE, The State of the Efficiency Program Industry:
Budgets, Expenditures and Impacts, 2009; 2008 annual energy savings calculated
from US Energy Information Administration data.
Cost forecast assumes constant ~ 31¢ / annual kWh based on 2008 regional saved
energy cost. This cost estimate is relatively high due to relatively high costs 30
reported in Florida.
‡ The Averch-Johnson effect: A firm has an incentive to
acquire additional capital if the allowable rate of return
exceeds the cost of capital.

‡ ³,IDXWLOLW\FDQUDLVHFDSLWDODWDFRVWUDWHRISHUFHQWEXWLVDOORZHGWRHDUQ
close to 11 percent returns on
all invested capital, it can
deliver gains to its present
investors by adding capacity
. . . even though the present
investors supply none of the
new capital ´

6RXUFH.LKP6WHYH³:KHQ5HYHQXH'HFRXSOLQJ:LOO:RUN$QG:KHQ,W
:RQ¶W´The Electricity Journal (October 2009). 31
Utility-led Efficiency Third-Party Administrator
‡ Typically relies on ‡ Several states using
legislative or ± VT, ME, OR, WI, IN
commission mandate ‡ Vulnerable to legislative
‡ Sometimes driven by ³UDLGV´
resource plans ‡ 6HHQDV³PRUHJRY¶W´
‡ Key dockets:
± Resource plans
± Portfolio plans / finances
± Program approval
± Annual rider proceedings
32
 Duke Energy Case Study: Comparing Energy Efficiency Profits to Power Plant Profits

Gas Cost of natural gas plant is paid over many years Duke Energy
Cost to
Build

Save-a-Watt
4-Year Impacts
EE Cost of EE is paid in the year it is installed
‡ 845 MW
‡ 1,400 GWh

Gas Recurring annual operating costs of natural gas such as fuel costs
Operate
Cost to

EE Few recurring costs of EE programs

Duke earns an annual profit on its power plant under most circumstances
Allowed

Gas
Profit

EE Duke earns a performance based profit on its energy efficiency programs

$0 $250 $500 $750

Resource Cost ($ millions)
Source: SACE analysis using Duke Energy Carolinas data. 33
 Duke Energy Case Study: Comparing Energy Efficiency Profits to Power Plant Profits

Gas Cost of natural gas plant is paid over many years Duke Energy
Cost to
Build

Save-a-Watt
4-Year Impacts
EE Cost of EE is paid in the year it is installed
‡ 845 MW
‡ 1,440 GWh

Gas Recurring annual operating costs of natural gas such as fuel costs
Operate
Cost to

Typical
Natural Gas
EE Few recurring costs of EE programs Plant Output

‡ 845 MW
‡ 4,320 GWh
Duke earns an annual profit on its power plant under most circumstances
Allowed

Gas
Profit

EE Duke earns a performance based profit on its energy efficiency programs

$0 $250 $500 $750

Resource Cost ($ millions)
Source: SACE analysis using Duke Energy Carolinas data. 34
‡ Home Energy Comparison Report
± Typically 2% savings, virtually immediate
± Links customers to broader offerings
± GRU, plus pilots by Duke & Gulf

‡ Energy recycling (including combined heat & power)

± Tends to fall through the cracks (pushed?)
± New 35% state tax credit in North Carolina

‡ Building recommissioning
± Often missing from efficiency potential studies
± Not yet offered in Southeast
± Offered in many states (examples: AZ, CO, IA)

35
‡ Fact-based arguments extended beyond reason
± Low-income households
± Past / current low electric rates in Southeast
± Rate impacts
± Rebound effect
± Industrial opt-out
± Free riders

‡ Utility management opposition / disinterest

± Progress Energy
± Georgia Power
± FP&L

36
 $12.50
Progress
Energy Efficiency Program Cost

$10.00
(Monthly Bill Impact)

Florida utilities
should be able to cut
$7.50 bill impacts by $3
Progress Gulf
Alternative PSE (WA)
$5.00
FPL TECO National Grid (RI)

Arizona Public Service PSE (WA)

$2.50 Xcel (MN)
Duke Carolinas

Xcel (CO)
Oklahoma G&E
$0.00
0.00% 0.25% 0.50% 0.75% 1.00% 1.25% 1.50%

Annual Energy Efficiency Savings as % of Total Sales

Source: Southern Alliance for Clean Energy, letter to Office of Regulatory Analysis, Florida
Public Service Commission, Docket Nos. 100154-EG, 100155-EG, 100159-EG, and
100160-EG, December 22, 2010.
37
 15 Iowa Efficiency
Impact
10%

Investor-Owned Utility Efficiency Impacts

State Residential Electric Rate (c/kWh)

Energy Savings as a Percent of Sales

Florida Electric Rate

10 Iowa Electric Rate

5%

5
Florida Efficiency
Impact

0 0%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Forecast

Source: Analysis of data from Iowa Utilities Board, Florida Public Service
Commission, and the US Energy Information Administration. 38
 ‡ TVA engaged stakeholders
and responded

‡ Plan improvements:
± Over $6 billion saved
± Price spike risk reduced
‡ From status quo to:
± Vast increase in efficiency ± Less pollution
± Major coal plant retirements ± More local jobs
± Nuclear program somewhat delayed
(Plan is in draft form.)
± More renewable energy

Source: Tennessee Valley Authority, ,QWHJUDWHG5HVRXUFH3ODQ79$¶V

Environmental and Energy Future, Stakeholder Review Group Working
Session Presentation, January 26, 2011.
39
 Navigant
All Biomass Economic
5,000 Upper End
Resources Potential
40,000
Resource Capacity (MW)

Energy Savings (GWh)

TVA
4,000 Draft EIS

TVA/ASU Achievable
& NREL Potential
30,000
3,000

Navigant
79$³'´
20,000
2,000 Lower End
79$³(´
79$³&´

L&M Woody 10,000

1,000 Biomass Only
79$³$%´
79$³(´ 79$³(´ 79$³(´
79$³&'´ 79$³&'´
79$³&'´
Solar In-­‐Valley  Wind Biopower Energy  Efficiency  
Source: Southern Alliance for Clean Energy, Comments LQUHVSRQVHWR7HQQHVVHH9DOOH\$XWKRULW\¶V
Draft Integrated Resource Plan and accompanying Environmental Impact Statement (No. 20100379),
November 15, 2010. 40
Note: Renewable HQHUJ\UHVRXUFHVLQVWUDWHJLHV³$´DQG³%´UHO\SULPDULO\RQRXW-of-Valley wind
UHVRXUFHVDQGDVPDOODPRXQWRIFDSDFLW\IURP79$¶V*HQHUDWLRQ3DUWQHUVSURJUDP.
‡ Non-binding 10-year plan
2004 Efficiency goals reset
submission
± Most resource plans are 15-
25 years 1HZ³QHHG´LGHQWLILHG
2005
Coal and nuclear proposed
‡ Efficiency planning is
separate
2008 Nuclear plants approved
± Efficiency meets leftover need

‡ Staff review 2009 Efficiency goals reset

± No stakeholder engagement
2010 Nuclear plants delayed
‡ No study of in-state
economic impacts
41
 John D. Wilson
Director of Research
Southern Alliance for Clean Energy
wilson@cleanenergy.org

42
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