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From: Jeff Schmidt <jeff.schmidt@sierraclub.org>
Date: Thu, Jan 3, 2013 at 3:44 PM
Subject: 2 articles: U.S. Electricity Use on Wane / Efficiency in New England Saves $260 Million in Transmission Costs
To: CONS-FRED@lists.sierraclub.org
http://online.wsj.com/article/SB10001424127887323689604578217831371436110.html
By REBECCA SMITH
Americans are using more gadgets, televisions and air conditioners than ever before. But, oddly, their electricity use is barely growing, posing a daunting challenge for the nation's utilities.
The Energy Information Administration is projecting that electricity use in the U.S. will rise an average of just 0.6% a year for industrial users and 0.7% for households through 2040.
That's a far cry from the middle decades of the past century, when utilities could rely on electricity consumption growing by more than 8% a year. Even after the Arab oil embargo in 1973, the growth in electricity demand averaged 2% to 4% annually. But those days may be long gone.
In response to tepid demand, electricity production in the U.S. fell in 2008 and 2009, amid the recession, then ticked up slightly in 2010 before falling again in 2011.
For decades, electricity use was viewed as a barometer of economic growth, but the link has become less clear cut in recent years, partly because of a big push to make major appliances and other products, such as compact fluorescent lightbulbs and high-efficiency motors, that use less electricity.
The erosion of U.S. manufacturing also has contributed to the consumption slowdown. Industrial electricity use, which includes manufacturing, accounts for about a quarter of the nation's total. From 1998 to 2010, the electricity used for manufacturing fell 18% as industrial processes grew more efficient and companies produced fewer goods in the U.S.
The slower pace of growth in electricity use may be helping the environment, since most of the nation's electricity still comes from burning fossil fuels. But it has power companies scrambling to trim spending or redirect capital investment, to improve their profits regardless of consumption patterns.
Some companies, including Public Service Enterprise Group Inc. and Northeast Utilities, are pouring money into high-voltage transmission lines—superhighways for electricity—because federal regulators are allowing them to collect above-average returns from customers on those outlays to encourage new investment in the nation's aging power networks.
Others are slashing spending, including Exelon Corp., which is cutting investment in nuclear-plant expansions by more than $1 billion and in renewable-energy projects by $1.3 billion from now until 2015 as it tries to avoid a credit downgrade. The Chicago-based company is even hinting at the previously unthinkable: cutting its dividend.
"Even with all the actions we've taken, our balance sheet is stressed…and we have no other meaningful levers to pull," Chris Crane, Exelon's chief executive, told investors in November. He added that the company may be forced to lower its payout, which offers investors a return of 7%, based on the company's current stock price. Analysts expect it to reduce the return to closer to 5%.
Many utilities with regulated and unregulated operations are redirecting spending to their regulated side, where regulators practically guarantee them a profit. PSEG plans to triple its investment in its fully regulated electricity-transmission business to $2.4 billion in 2014 from less than $866 million in 2008.
Ralph Izzo, the company's CEO, recently told investors that he likes spending on power transmission, because "it's not dependent on [electricity] load growth." Part of his motivation is the return on equity of 11.7% to 12.9% set by the Federal Energy Regulatory Commission.
New Orleans-based Entergy Corp. plans to spin off its power-transmission business into a new company that will join the Midwest Independent System Operator, a regional power-grid operator. Doing so would place it under FERC rules, and make the new company eligible for potentially higher profits.
"They don't see any light at the end of the tunnel and are making adjustments," Daniel Krueger, managing director of power generation for the consulting firm Accenture in Chicago, said of the companies' shifting strategies.
New England's biggest utility company, Northeast Utilities, expects to invest $3.5 billion of shareholder equity in its transmission business by 2017, versus about $2 billion today. It also has said it is planning to cut spending for operations and maintenance by 3% annually at utilities it owns in Connecticut, Massachusetts and New Hampshire from 2013 to 2015.
Nick Akins, CEO of American Electric Power Co., which has the nation's biggest high-voltage transmission network, said he is focused on projects that can be built quickly, mostly connecting utilities it owns in 13 states.
Mr. Akins said he wants to avoid the bruising battles that delayed or doomed big projects in the past, like the 275-mile Potomac-Appalachian Transmission Highline project from West Virginia to Maryland. AEP and partner FirstEnergy Corp. dropped development plans for the complex project in 2011.
"Sometimes, we were just dreaming" that the companies could get enormous power lines built across multiple states, Mr. Akins said. He said AEP now is focusing on shorter projects blessed by federal regulators that eliminate grid bottlenecks. "It's where you want to put your money," he said.
Write to Rebecca Smith at rebecca.smith@wsj.com
Copyright ©2012 Dow Jones & Company, Inc.
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http://cleantechnica.com/2012/12/27/energy-efficiency-saves-new-england-260-million-in-transmission-costs/
Silvio Marcacci
Energy efficiency represents the biggest potential to cut consumer costs and reduce power demand – one report has found America is just 43.8% efficient. While individual projects show small results, when they accumulate across a regional grid, efficiency savings add up quickly, as New England’s grid operator recently discovered.
State and private programs designed to reduce consumer energy demand have recently cut the need for $260 million in planned transmission system upgrades across the six states within the ISO-New England (ISO-NE) region. The announcement was made during ISO-NE’s energy-efficiency forecast, the first multi-state outlook in the U.S.
Big Investments = Big Energy Savings
ISO-NE is one of the nation’s largest grid operators, managing electricity supply and demand for 14 million people in 6.5 million households and businesses across 8,000 miles of high-voltage transmission lines and 350 generators. The system has more than 32,000 MW of capacity, including more than 2,000 MW of demand response resources.
Roughly $1.2 billion was spent across the ISO-NE region from 2008-2011, resulting in a total reduction of 3,502 gigawatt-hours (GWh) in electricity use. The average state reduced electricity consumption 876 GWh annually, with total summer peak demand savings of 514 megawatts (MW).
The overall effects of these savings are hard to ignore. Regional peak demand is only forecast to grow .9 percent from 2012–2021 (roughly 2/3 the previous estimate), with a flat annual growth in energy consumption over the same period, and winter peak demand actually projected to decline nearly .5 percent.
Lower Demand Leads To Lower Infrastructure Costs
In the long term, this consumption decline will have a major impact. >From 2015–2012, ISO-NE estimates annual savings of 1,343 GWh from energy efficiency — roughly the same amount of electricity used by 2 million average homes in the region. New England will spend an estimated $5.7 billion on energy efficiency program over the same time period, according to the report.
As a result, ISO-NE was able to lower long-term planning needs for the system’s grid beyond 2020. “Revised analysis shows that the region can actually defer 10 transmission upgrades that earlier studies showed were needed to ensure system reliability,” said Stephen Rourke, vice president for system planning. “By deferring these upgrades, the region will save an estimated $260 million.”
Energy efficiency programs across the region were comprised of relatively simple steps, like encouraging consumers to swap out incandescent light bulbs for efficient lighting like CFLs or LEDs, upgrade HVAC systems and building insulation, purchase Energy Star appliances, or integrate more efficient industrial processes and motors.
Diverse Funding Streams Foot the Bill
Funding for the 125 different individual programs has come from four main sources: state-designated funding, revenue from the system’s Forward Capacity Market (long-term capacity sales), a designated “systems benefits charge” on ratepayer bills, and revenue from the Regional Greenhouse Gas Initiative (RGGI).
Energy efficiency programs have been the largest recipients of RGGI investments by far, garnering 66 percent of all carbon auction revenue to date, according to the RGGI 2011 Investment Report.
Given all this, it’s no surprise New England leads the U.S. in the energy efficiency economy, with Massachusetts, Vermont, Connecticut, and Rhode Island all listed in the annual ranking of the top ten most energy efficient states.
Image Credits: electricity demand chart via ISO on Background presentation
About Silvio Marcacci
Silvio is Principal at Marcacci Communications, a full-service clean energy public relations company based in Washington, D.C.
© Cleantechnica 2012
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From: Jeff Schmidt <jeff.schmidt@sierraclub.org>
Date: Thu, Jan 3, 2013 at 3:44 PM
Subject: 2 articles: U.S. Electricity Use on Wane / Efficiency in New England Saves $260 Million in Transmission Costs
To: CONS-FRED@lists.sierraclub.org
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http://online.wsj.com/article/SB10001424127887323689604578217831371436110.html
U.S. Electricity Use on Wane
January 2, 2013, 7:39 p.m. ETBy REBECCA SMITH
Americans are using more gadgets, televisions and air conditioners than ever before. But, oddly, their electricity use is barely growing, posing a daunting challenge for the nation's utilities.
The Energy Information Administration is projecting that electricity use in the U.S. will rise an average of just 0.6% a year for industrial users and 0.7% for households through 2040.
That's a far cry from the middle decades of the past century, when utilities could rely on electricity consumption growing by more than 8% a year. Even after the Arab oil embargo in 1973, the growth in electricity demand averaged 2% to 4% annually. But those days may be long gone.
In response to tepid demand, electricity production in the U.S. fell in 2008 and 2009, amid the recession, then ticked up slightly in 2010 before falling again in 2011.
For decades, electricity use was viewed as a barometer of economic growth, but the link has become less clear cut in recent years, partly because of a big push to make major appliances and other products, such as compact fluorescent lightbulbs and high-efficiency motors, that use less electricity.
The erosion of U.S. manufacturing also has contributed to the consumption slowdown. Industrial electricity use, which includes manufacturing, accounts for about a quarter of the nation's total. From 1998 to 2010, the electricity used for manufacturing fell 18% as industrial processes grew more efficient and companies produced fewer goods in the U.S.
The slower pace of growth in electricity use may be helping the environment, since most of the nation's electricity still comes from burning fossil fuels. But it has power companies scrambling to trim spending or redirect capital investment, to improve their profits regardless of consumption patterns.
Some companies, including Public Service Enterprise Group Inc. and Northeast Utilities, are pouring money into high-voltage transmission lines—superhighways for electricity—because federal regulators are allowing them to collect above-average returns from customers on those outlays to encourage new investment in the nation's aging power networks.
Others are slashing spending, including Exelon Corp., which is cutting investment in nuclear-plant expansions by more than $1 billion and in renewable-energy projects by $1.3 billion from now until 2015 as it tries to avoid a credit downgrade. The Chicago-based company is even hinting at the previously unthinkable: cutting its dividend.
"Even with all the actions we've taken, our balance sheet is stressed…and we have no other meaningful levers to pull," Chris Crane, Exelon's chief executive, told investors in November. He added that the company may be forced to lower its payout, which offers investors a return of 7%, based on the company's current stock price. Analysts expect it to reduce the return to closer to 5%.
Many utilities with regulated and unregulated operations are redirecting spending to their regulated side, where regulators practically guarantee them a profit. PSEG plans to triple its investment in its fully regulated electricity-transmission business to $2.4 billion in 2014 from less than $866 million in 2008.
Ralph Izzo, the company's CEO, recently told investors that he likes spending on power transmission, because "it's not dependent on [electricity] load growth." Part of his motivation is the return on equity of 11.7% to 12.9% set by the Federal Energy Regulatory Commission.
New Orleans-based Entergy Corp. plans to spin off its power-transmission business into a new company that will join the Midwest Independent System Operator, a regional power-grid operator. Doing so would place it under FERC rules, and make the new company eligible for potentially higher profits.
"They don't see any light at the end of the tunnel and are making adjustments," Daniel Krueger, managing director of power generation for the consulting firm Accenture in Chicago, said of the companies' shifting strategies.
New England's biggest utility company, Northeast Utilities, expects to invest $3.5 billion of shareholder equity in its transmission business by 2017, versus about $2 billion today. It also has said it is planning to cut spending for operations and maintenance by 3% annually at utilities it owns in Connecticut, Massachusetts and New Hampshire from 2013 to 2015.
Nick Akins, CEO of American Electric Power Co., which has the nation's biggest high-voltage transmission network, said he is focused on projects that can be built quickly, mostly connecting utilities it owns in 13 states.
Mr. Akins said he wants to avoid the bruising battles that delayed or doomed big projects in the past, like the 275-mile Potomac-Appalachian Transmission Highline project from West Virginia to Maryland. AEP and partner FirstEnergy Corp. dropped development plans for the complex project in 2011.
"Sometimes, we were just dreaming" that the companies could get enormous power lines built across multiple states, Mr. Akins said. He said AEP now is focusing on shorter projects blessed by federal regulators that eliminate grid bottlenecks. "It's where you want to put your money," he said.
Write to Rebecca Smith at rebecca.smith@wsj.com
Copyright ©2012 Dow Jones & Company, Inc.
Back to top
http://cleantechnica.com/2012/12/27/energy-efficiency-saves-new-england-260-million-in-transmission-costs/
Energy Efficiency Saves New England $260 Million In Transmission Costs
December 27, 2012Silvio Marcacci
Energy efficiency represents the biggest potential to cut consumer costs and reduce power demand – one report has found America is just 43.8% efficient. While individual projects show small results, when they accumulate across a regional grid, efficiency savings add up quickly, as New England’s grid operator recently discovered.
State and private programs designed to reduce consumer energy demand have recently cut the need for $260 million in planned transmission system upgrades across the six states within the ISO-New England (ISO-NE) region. The announcement was made during ISO-NE’s energy-efficiency forecast, the first multi-state outlook in the U.S.
Big Investments = Big Energy Savings
ISO-NE is one of the nation’s largest grid operators, managing electricity supply and demand for 14 million people in 6.5 million households and businesses across 8,000 miles of high-voltage transmission lines and 350 generators. The system has more than 32,000 MW of capacity, including more than 2,000 MW of demand response resources.
Roughly $1.2 billion was spent across the ISO-NE region from 2008-2011, resulting in a total reduction of 3,502 gigawatt-hours (GWh) in electricity use. The average state reduced electricity consumption 876 GWh annually, with total summer peak demand savings of 514 megawatts (MW).
The overall effects of these savings are hard to ignore. Regional peak demand is only forecast to grow .9 percent from 2012–2021 (roughly 2/3 the previous estimate), with a flat annual growth in energy consumption over the same period, and winter peak demand actually projected to decline nearly .5 percent.
Lower Demand Leads To Lower Infrastructure Costs
In the long term, this consumption decline will have a major impact. >From 2015–2012, ISO-NE estimates annual savings of 1,343 GWh from energy efficiency — roughly the same amount of electricity used by 2 million average homes in the region. New England will spend an estimated $5.7 billion on energy efficiency program over the same time period, according to the report.
As a result, ISO-NE was able to lower long-term planning needs for the system’s grid beyond 2020. “Revised analysis shows that the region can actually defer 10 transmission upgrades that earlier studies showed were needed to ensure system reliability,” said Stephen Rourke, vice president for system planning. “By deferring these upgrades, the region will save an estimated $260 million.”
Energy efficiency programs across the region were comprised of relatively simple steps, like encouraging consumers to swap out incandescent light bulbs for efficient lighting like CFLs or LEDs, upgrade HVAC systems and building insulation, purchase Energy Star appliances, or integrate more efficient industrial processes and motors.
Diverse Funding Streams Foot the Bill
Funding for the 125 different individual programs has come from four main sources: state-designated funding, revenue from the system’s Forward Capacity Market (long-term capacity sales), a designated “systems benefits charge” on ratepayer bills, and revenue from the Regional Greenhouse Gas Initiative (RGGI).
Energy efficiency programs have been the largest recipients of RGGI investments by far, garnering 66 percent of all carbon auction revenue to date, according to the RGGI 2011 Investment Report.
Given all this, it’s no surprise New England leads the U.S. in the energy efficiency economy, with Massachusetts, Vermont, Connecticut, and Rhode Island all listed in the annual ranking of the top ten most energy efficient states.
Image Credits: electricity demand chart via ISO on Background presentation
About Silvio Marcacci
Silvio is Principal at Marcacci Communications, a full-service clean energy public relations company based in Washington, D.C.
© Cleantechnica 2012
Back to top
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