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Businesses and homeowners will soon get help in taming their electric bills, and that could make everyone better off. A growing number of states are requiring electric utilities to slow planned growth in power use by 10% over 10 years. The rules don't tell companies how to reach that target, but one of the easiest ways is to aggressively help customers conserve power through energy audits, technical advice and even financial help in buying everything from superefficient equipment to insulated windows for factories, offices and homes. Most utilities already have similar programs in place, so beefing them up shouldn't be difficult.
Consumers will like the idea because they'll pay less. Power companies like it because they won't have to create more capacity that lies unused except during peak periods. And states like the concept because they are under the gun to meet federal clean air standards. They see the so-called negawatt programs as the easiest way to limit power plant emissions. More than half of U.S. electricity is made by burning coal, the dirtiest fuel. Around 20% is produced by natural gas, which burns much cleaner but emits carbon dioxide, which has been linked to global warming.
Texas' negawatt program—the first in the nation—was put in place in 2000. California, Colorado, Connecticut, Hawaii, Nevada, Pennsylvania and Vermont have also instituted programs. Illinois and New Jersey will adopt the program this year, and Florida, Indiana, Maine, Maryland, Massachusetts, Missouri, New Hampshire, New York, North Carolina, Oregon, Rhode Island and Washington are expected to do the same in 2007. A majority of states will follow by 2010. Similar programs for natural gas consumption are likely in the next decade.
Utilities rarely resist because cutting waste is good for their bottom lines. Adding new capacity is very expensive, and generators often sit idle when demand is slack. Costs of building new power plants are passed along to business and residential customers, and many utilities that have taken flak for soaring bills attributable to higher coal and natural gas prices are eager to keep costs in check in the future. Compliance with the programs is certified by private companies such as Summit Blue Consulting and Sieben Energy Associates.
Utilities can opt out of the programs, but they have to pay fees based on assessments of how much they could have cut back on growth by improving customer energy efficiency. Utilities that take part are given flexibility in case they have difficulty meeting the reduction goals, since they can buy compliance credits issued by state regulators from other utilities that actually beat their targets. Credits can be bought and sold only within a given state, but that's likely to change within a few years as most regions set up rules that will allow credit swaps within each region.
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