Redefining Regulation | An interview with Kateri Callahan » bio
A: “Overall, save-a-watt represents a true winning regulatory approach. Utility shareholders win with returns earned on investments in energy efficiency. Customers win with lower energy costs. The environment wins with reduced greenhouse gas and other emissions. And our nation wins with a stronger economy and enhanced energy security.”
This is a long version of the interview.
DUKE ENERGY: Why the sense of urgency around energy efficiency?
KATERI CALLAHAN: The urgency to deploy energy efficiency at an unprecedented level couldn’t be greater. Even with the current recession, we are still faced with projections of increased electricity use in the United States of nearly 30 percent between now and 2030 — only 22 years.
To meet that demand, utilities are going to have to put new power plants into their plans. New power options aren’t great and they come with a heavy price no matter what you pick. If by using energy efficiency we can delay building a new power plant, for one, two or three or more years — or perhaps forever if we’re really good at it — that helps us tremendously.
If we are successful in deploying energy efficiency to its fullest, we are going to buy a lot of time, which we can use to develop new technologies like carbon capture and sequestration (CSS). That will allow us to use other resources in a clean and efficient and environmentally sound manner. So the importance of energy efficiency can’t be stressed enough. The more time we buy, the more time there is for the creative minds out there, particularly here in the United States, to develop, test and deploy the new technologies necessary to let us use all of the other resources we have—renewables, nuclear, coal and natural gas.
DE: Do rising then falling energy prices remove that urgency?
KC: I was concerned that the downturn in the price of gasoline would lessen the interest of policymakers and the public in moving forward on energy efficiency and that we would get lulled back into complacency — much as we did after the first energy crisis resulting from the oil embargo in the early ’80s. But I don’t see that happening. I think that there is “steel in the spine” of policymakers now and they understand that we’ve got to tackle our energy-related problems. We just can’t afford to once again slip into complacency.
DE: What do you think of Duke Energy’s save-a-watt model?
KC: The Alliance is one of three national organizations that have actually endorsed the save-a-watt model. We were joined by the Energy Future Coalition, which is an arm of the United Nations Foundation, and also by the American Council for an Energy Efficient Economy in endorsing that proposal.
What we like about save-a-watt is that Duke is committed to do all cost-effective energy efficiency — and to determine what that means with an advisory council comprised of local stakeholders, regional stakeholders and folks at the national level who are committed to energy efficiency.
The second thing is that Duke has agreed through its model, and through a memorandum of understanding with us and other national stakeholders, to invest in state-of-the-art evaluation, measurement and verification programs to ensure that the promised energy savings are actually delivered.
The third, and probably most important thing, is that Duke will be allowed to make a profit on energy efficiency investments just as they do on conventional capacity. That’s really the key to getting utilities to invest in energy efficiency. To have them only made whole or worse still to penalize them for investments in energy efficiency versus investments in capacity simply doesn’t make sense in today’s environment.
DE: What other key benefits do you see from the save-a-watt approach?
KC: In many of the energy efficiency programs being undertaken around the country, there’s not as much transparency as we would like to see. With its proposed third-party review and oversight, the save-a-watt model has that transparency.
Overall, save-a-watt represents a true winning regulatory approach. Utility shareholders win with returns earned on investments in energy efficiency.
Customers win with lower energy costs. The environment wins with reduced greenhouse gas and other emissions. And our nation wins with a stronger economy and enhanced energy security.
DE: how important is a smart grid and other transmission and distribution (T&D) infrastructure improvements to be an enabler for increased energy efficiency?
KC: I can’t stress enough the importance of new technology and keeping technologies in the pipeline. We have been able to become a more efficient economy in large measure because the technologies we use have become more efficient over time. We need to see that continue as well as speed it up to match the growing imperatives for dealing with our energy use and the environmental and economic consequences of it.
The smart grid and other T&D infrastructure improvements are going to be the foundational elements upon which we can become the most energy-efficient economy in the world. We’ve got a long way to go. Right now the United States is the least energy-efficient of all of the world’s industrialized economies, and we need to catch up.
If we don’t develop technologies to improve our T&D systems here at home, others will, and that won’t be a good for our economy. So I’m very hopeful that the federal government will lead the way in providing “seed money” to help make the smart grid a reality, and that the private sector will follow. We must expedite the investments that will let technology be one of the major solutions to the dilemma we face of meeting the growing energy demand for energy while simultaneously tackling climate change.
DE: What should regulators do to encourage the research, development and deployment (RD&D) of new technologies that would benefit energy efficiency?
KC: If regulators would allow utilities to earn a profit on energy efficiency — just as they do already on conventional capacity — this would be incredibly useful in driving utility investments in clean tech and green tech, not only by utilities, but also by technology developers and entrepreneurs.
The Alliance to Save Energy is also pushing hard at the federal level to double federal investment in energy efficiency RD&D. My hope would be that those dollars could spur greater investment by utilities in partnerships between the government and industry, and that the regulatory commissions would see the value of allowing utilities to participate and leverage federal and state dollars.
Investing in energy efficiency will help spur investments in renewable energy and help make it more cost-effective.
DE: How can we better engage utility regulators on this issue?
KC: It’s not necessarily what utilities can do, but what other regulators can do. There’s a great opportunity for getting regulators—particularly in states where there hasn’t been a lot of involvement with energy efficiency—educated and up to speed about what the best practices are around the country. Regulators need to see these benefits on a peer-to-peer basis. We can better engage utility commissions and staff by taking regulators from states who have aggressively pushed energy efficiency in their states and get them talking to regulators in the states who haven’t.
Regulators need to hear about this issue from people who are faced with the same kinds of challenges and issues they are facing in their home state. A regulator-to-regulator outreach campaign could accomplish a lot, particularly in those states where not much progress has been made on energy efficiency in the past.
The Alliance and a number of other advocacy groups are capturing best practices from around the nation. We’re forwarding these to utilities so that when they approach their regulatory commissions about thinking differently on energy efficiency, they are armed with ideas that are proven successes.
DE: What about consumer education?
KC: Consumer education and outreach are keys to unlocking the full potential of energy efficiency. Consumers often do not think about the costs for the energy to power the appliances and electronics that they are purchasing. For example, when someone’s washing machine goes on the fritz or their air conditioner, they go out and look for a replacement. They often, especially in these economic times, look for the cheapest priced product and may not pay attention to the labels that show energy use over the product’s life. If a consumer is shopping for the lowest purchase price only, they may in fact spend significantly more money over time in powering that product, as often, the initial purchase price of the more efficient equipment is slightly higher.
It becomes very important that we educate consumers to look for the ENERGY STAR label, the federal government’s “good housekeeping seal of approval” when buying appliances and electronics. It is a symbol that readily shows a consumer that they are buying an energy efficient product. This symbol helps consumers value and understand the life-cycle cost versus the upfront purchase price.
Consumer education is something utilities can help with as well. Whether it is through rebates for energy efficient products, or a free home energy audit, utilities can help their customers to understand and value energy efficiency.
Federal and state governments can play an important role in this as well. A good example is the energy efficiency tax credits that are currently available to homeowners who make improvements to their home. These are not nearly generous enough, in my opinion, but they’re helpful and they provide financial assistance to people who want to save money by making their homes more energy efficient.
Alliance to Save Energy
Kateri Callahan brings more than 20 years of experience in policy advocacy, fundraising, coalition building and organizational management to her position as president of the Alliance. Under her leadership, the Alliance conducts policy, communications, research, education and market transformation initiatives in the United States and more than a dozen other countries.