By Brad Copithorne

This commentary originally appeared on EDF's California Dream 2.0 Blog

Last week, the California Public Utilities Commission (“CPUC”) issued a proposed decision with the final implementation rules to create the nation’s first On-Bill Repayment (“OBR”) program for commercial properties.  If properly constructed, the program is expected to allow building owners to finance clean energy retrofits with third party capital and repay the obligation through their utility bills.

The good news is the CPUC’s proposed decision contains the vast majority of the program elements necessary to create a flourishing financing market for energy efficiency and renewable projects.  The CPUC ordered robust disclosure to tenants and property owners of any OBR obligation in place, required a centralized program administrator to reduce expenses for market participants, required an equitable share of partial payments between the utility and the lender and agreed that nonpayment of an OBR obligation will result in the same collection procedures from the utility as nonpayment of an electricity charge.

Unfortunately, constructing a successful financing program is much like building a boat.  A boat with 90% of its hull in place will not travel very far.  The proposed decision appears to also have a potentially fatal flaw.  The CPUC has required all subsequent owners and tenants of a property to provide consent to ‘accepting’ the OBR obligation, but does not specifically state what will happen if the consent is not given.

OBR can work for lenders when it significantly reduces risk and simplifies the underwriting decision.  ‘If the lights are still on, then the lender is getting paid’ is a simple rule that will provide significant comfort to ratings agencies and credit committees.  Downtown office buildings and suburban shopping malls are foreclosed on a regular basis, but in almost all cases the lights stay on.  If an OBR obligation is sure to be paid — even after a foreclosure — the availability of investment and cost of financing will improve dramatically.

On the other hand, if repayment is somehow dependent on the next owner and tenant providing consent, then the bank will have a new and unknown underwriting risk.  Furthermore, the bank will likely assume that, given a choice, most new owners would choose not to provide consent.

Based on numerous conversations with financial institutions, EDF believes an OBR program that allows future tenants or landlords to change the nature of the OBR obligations will not generate any meaningful interest from lenders and investors.

Fortunately, the CPUC still has time to get it right.  EDF will be working closely with several financial institutions and project developers to make sure that the CPUC clarifies that a lack of consent will not affect the nature of the OBR obligation.

Assuming we get a good OBR program in place, there is a large group of project developers, lenders, ESCOs, solar investors and other vendors that are expected to participate in the program.  The CPUC proposed decision indicates an effective date near the beginning of 2014.

By Jamie Fine

This commentary originally appeared on EDF's California Dream 2.0 Blog

When was the last time you really gave a lot of thought to your electric bill?

If your answer is “not very often”, then you’re not alone. In fact, the typical household thinks about their electric bill only six minutes a year.

The California Public Utilities Commission (CPUC) now has the opportunity give people another way to control household energy bills by creating a system where changing the time you use electricity can save money. This won’t mean you’ll need to invest more time thinking about energy use, but you’d be well-served to think about the timing of it.

Last week, the CPUC held a public workshop inviting stakeholders — PG&E, SCE and, SDG&E, along with consumer, industry, and environmental groups — to present and discuss their proposals for revising the system of charges for residential electricity use. I had the pleasure of presenting EDF’s proposal for a time-of-use (TOU) pricing system: For customers looking for another option for saving money on their monthly bill, EDF sees TOU as the best pricing policy for both people and the environment; customers uncomfortable with this option would be able to “opt out” and choose another pricing structure.

Currently, the standard “tiered” rate charges customers higher prices for higher electricity usage. The approach is intended to send the message: “The more you use, the more you pay.”

Yet, current rates hide the true cost of electricity service at certain times of the day – and most customers don’t know where their usage falls until they actually see the bill at the end of the month. Ultimately, this lack of information prevents customers from making informed decisions about their energy use, limits their options for keeping bills within budget, and makes the overall energy system in California dirtier and more expensive.

As detailed in our proposal, EDF has found that updating the current pricing policy to be based on the timing of actual energy use will empower consumers to save money, dramatically lower overall system costs, facilitate more efficient usage of electricity generation assets, lower peak energy demand, provide more accurate and effective energy conservation incentives, and more equitably share energy system costs amongst customers. Here is a short list of what TOU can do for you, and California:

• Dramatically Lower System Costs.  Using the utilities’ own data on the costs of serving electricity to customers, EDF estimates that if half of residential customers adopt the optional TOU rates available already , we’d reduce the cost of service by around $500 million each year.  If translated directly into savings for residential electricity customers, electricity rates could be reduced significantly: a roughly 15% rate decrease would be enjoyed by all customers. How can this be so?  Simply put, it is most expensive to provide customers with electricity at times when demand for electricity is highest.  If customers paid for energy based on actual costs of electricity service, they would see higher prices at peak times and thus be motivated to shift energy use to cheaper times of the day.  This shifting is better for overall system costs, and better for your wallet.

• Avoid Adverse Environmental Impacts. TOU will: (1) reduce the need for “peaker” power plants that tend to be fossil-fueled, expensive to operate and among the most polluting resources on the system, (2) reduce the environmental impacts and costs of siting, operating and building power plants and transmission lines, and (3) help to integrate increasing quantities clean, renewable resources.

• Attract Clean Energy Investments for Residential Consumers. TOU will spur innovation in the electricity marketplace, promoting the development of new services and technologies that enable utilities and customers to better manage electricity production and use through distributed, resilient, clean, and low-cost energy services and products. While the average customer may not think much about how and when they use electricity, service and technology companies live and breathe it. TOU rates provide new value propositions that clean energy innovators will deliver to our doors.

• Reward you for your choices. A recent survey of nearly 5,000 customers by Pacific Gas and Electric and Southern California Edison found that 75 percent have tried shifting their energy use already – even though they receive no financial rewards to do so.

EDF’s proposal is a win-win for people and the environment, and takes us along the path to a cleaner, cheaper, and more resilient energy system. I urge the CPUC to conclude the same with a decision this Fall that will set the direction of California electricity pricing and prompt utilities to provide the robust consumer education and enablement with set-it-forget-it technologies.

While the concept may be complex, TOU will be better for you, for the environment, and the clean energy marketplace.

By Elizabeth Stein

One of the ways you can tell that in idea is gaining real momentum is by looking at the people being tapped to lead it.  Last week, New Yorkers got a good idea how serious their leaders are about clean energy when the State Senate confirmed Governor Andrew Cuomo’s appointment of Audrey Zibelman, an internationally-recognized expert in energy policy, markets and smart grid innovation, to the New York Public Service Commission (PSC).  The PSC regulates the state’s public energy utilities, and once Ms. Zibelman assumes office, Governor Cuomo will designate her as chair of the PSC.

Ms. Zibelman was president and chief executive officer of Viridity Energy Inc., a pioneering smart power company she founded after more than 25 years of electric utility industry leadership experience in both the public and private sectors. Previously, Ms. Zibelman was the executive vice president and chief operating officer of PJM, the Regional Transmission Organization that operates the world’s largest wholesale electricity market and serves 14 states throughout the eastern United States.

Ms. Zibelman’s is not a symbolic appointment.  It is a welcome sign of New York State’s commitment to building a smarter, modernized energy system that enables wider use of renewable energy and energy efficiency and offers greater resiliency to extreme weather events like Superstorm Sandy. Change takes both leadership and expertise, and EDF believes that Ms. Zibelman will provide both.

With her help, the state should work with key stakeholders to enable wider use of clean energy sources and innovative energy technologies that give consumers more flexibility in how they use and produce energy. Doing so will help make the grid stronger and more crisis-resistant, and open up opportunities for new ways to finance the upgrades needed to take full advantage of energy efficiency in New York’s built environment.

This is an exciting time for New York, and EDF looks forward to working with Ms. Zibelman in her new role.

By EDF Blogs

Source: Bulk Transporter

This blog post was written by Jason Mathers, Senior Manager of EDF’s Corporate Partnerships Program.

The International Energy Agency weighed in last week as bullish on the future of natural gas as a transportation fuel.

According to the Wall Street Journal, the IEA “expects natural gas use in road and maritime transportation to rise to 98 billion cubic meters by 2018, covering around 10 percent of incremental energy needs in the transport sector.”

Three factors are behind this increase in the use of natural gas for transportation, according to Maria van der Hoeven, the IEA's executive director. These are the fuel’s “abundant supplies as well as concerns about oil dependency and air pollution." The cost factor is particularly a driver for commercial fleet operators where current fuel prices have become more favorable for natural gas over diesel.

In the U.S., all new trucks fueled by diesel or natural gas must meet the same standards for emissions of particulate matter and nitrogen oxides. Natural gas engines for medium- and heavy-duty trucks have surpassed U.S. Environmental Protection Agency’s stringent standards for particulate matter emissions by as much as 80 percent and for nitrogen oxides by up to 35 percent. Cummins Westport, the leading producer of natural gas engines, is investigating the feasibility of reducing NOx emissions from its spark-ignited natural gas engines to levels significantly below the current federal emissions standard.

Natural gas trucks have the potential to deliver tangible greenhouse gas emissions benefits over their petroleum-based counterparts. This certainty that natural gas vehicles are able to consistently deliver on their potential climate benefits in part depends on minimizing methane leaks caused by vehicle operations, refueling and maintenance.

In March, EDF announced our work with leaders in vehicle emissions research and the trucking and natural gas fuel industries to determine emissions of methane associated with routine operation of natural gas fleet vehicles fueled by compressed or liquefied natural gas.  Already in progress, this study is the first attempt to directly measure methane emissions at CNG and LNG fueling sites and vehicles. The study includes transit buses, tractor trailers, and vocational fleet vehicles at both public and private fueling location.

Principal Investigator for this project, Nigel Clark said:

“The West Virginia University team is in the data-gathering stage. Some areas we have already explored and have taken measurements of include fuel system leaks from several fleet trucks, tailpipe emissions from over-the-road trucks and refuse trucks and methane loss at CNG fueling stations. We are also defining our field measurement protocol and developing a model and experimental plan to describe LNG station methane loss.”

In an exciting recent development, Clean Energy, North America’s largest provider of natural gas fuel for transportation, signed on as a partner in the study. Clean Energy builds, operates and maintains CNG and LNG fueling stations.

Clean Energy joins a group of industry leaders seeking to understand the scope of methane emissions associated with the refueling and operation of natural gas fleet vehicles. Other industry partners in this study include the American Gas Association, Cummins Westport, PepsiCo, Shell, Volvo Group (Volvo Trucks and Mack Trucks), Waste Management and Westport Innovations.

The International Council on Clean Transportation – an independent nonprofit organization that conducts transportation research and analysis – is also supporting the project.

The WVU study is part of a broader EDF effort involving a number of researchers and companies to better understand and characterize methane leakage rates across the natural gas supply chain. The results of the first study, led by researchers at the University of Texas and that focuses on production emissions at the well pad, will be released in the coming weeks. Results of the WVU study are expected to be published in a peer-reviewed journal in early 2014.

As the IEA projections released last week made clear, natural gas is poised to play an increasingly important role as a transportation fuel – both here in the U.S. and around the globe. Most of this natural gas is likely to be consumed by medium- and heavy-duty trucks, an already significant source of greenhouse gas emissions within the transportation sector. Better understanding the climate impacts of a switch to natural gas in these areas is essential – and is precisely why EDF is involved.

When you’re on the road to someplace new, much like the uncharted path ahead for a growing natural gas fleet market, a map can be the difference between getting where you’re going or ultimately missing your mark. This cooperative study is an effort to ensure that these vehicles live up to their environmental potential. Bringing data to the fore that will provide much needed direction on the actual scope of methane emissions associated with operating a natural gas fleet. This information will be critical to putting solutions in place that minimize leaks and maximize the greenhouse gas benefit of natural gas as a transportation fuel.

By Elena Craft, PhD

This commentary originally appeared on EDF's Texas Clean Air Matters Blog

Last week, the City of Houston announced that it would increase its purchase of renewable electricity to cover half of its energy use.  The city will use almost 623,000 megawatt-hours of electricity from renewable sources per year—equivalent to the energy used by 55,000 residential homes annually.  The purchase makes Houston the largest municipal buyer of renewable energy in the nation.  While Houston’s latest renewable energy purchase may seem at odds with its reputation as an oil and gas hub, it’s exactly the sort of common-sense decision we expect from a city that’s touted as the energy capital of the nation.

Houston is in good company among other Texas cities. The City of Austin already gets 100% of its electricity from renewable sources.  To make the switch, the city leveraged Austin Energy’s GreenChoice program, one of the nation’s most successful utility-sponsored and voluntary green-pricing programs.  The program is part of Austin’s Climate Protection Plan, which establishes a 35 % renewable portfolio goal for Austin Energy by 2020.  In San Antonio, the municipally owned CPS Energy has emerged as a leader in smart power. Through its New Energy Economy initiative, CPS Energy is growing its network of smart meters and expanding its installed solar capacity, among many other sustainable initiatives.  Today, CPS Energy uses more solar energy than any other Texas utility, while still having the lowest electric rates among the top 10 largest cities in the United States.

Beyond its latest renewable energy purchase, Houston is home to a number of other clean energy efforts.  With funding from the U.S. Department of Energy, the city is working to streamline and refine the solar permitting process.  On top of that, the city actively supported SB 385 (Property Assessed Clean Energy Act), which helps break down barriers to financing water and energy conservation efforts. Houston is also exploring how innovative energy technologies can help shield residents from extreme weather events.  The city used grant funding to install 17 emergency solar-powered generation units at fire stations, parks, neighborhood centers and schools.  All in all, Houston’s progressive energy initiatives have helped reduce the city’s building energy use by 30% and its emissions from municipal operations by 26 %.

Earlier this week, President Obama’s landmark climate speech called on America to develop its potential for a clean, low-carbon economy that protects our children from the threat of air pollution and climate change.  What we’re seeing in Houston and other Texas cities is indicative of a larger national movement toward common sense, smart power policies that cut harmful carbon pollution while driving innovation, cutting energy waste and energy bills, creating jobs and protecting public health.  With its latest renewable energy purchase, Houston shows us that it will continue its position as a leader in the new American energy economy.

By EDF Blogs

This commentary originally appeared on the EDF Climate Corps Blog

By: Katie Ware, EDF Senior Marketing Communications Specialist

The environmental community is abuzz with reactions to President Obama's wide-ranging Climate Action Plan. His speech introducing the plan Tuesday sparked immediate conversations about the Keystone XL Pipeline, the coal industry, the transportation sector and half a dozen other hot button environmental issues.

For me, his speech hit home in the first minute. Addressing the crowd at Georgetown University, he said he wanted to speak directly to my generation “because the decisions we make now and in the years ahead will have a profound impact on the world that all of you inherit.”

Confident, connected and open to change (says Pew), we Millennials are 95 million strong. We elected and then re-elected Obama looking for precisely this type of bold action on issues we feel passionately about.

“Someday our children and our children’s children will look us in the eye and ask did we do all that we could when we had the chance to deal with this problem and leave them a cleaner, safer, more sustainable world. I want to be able to say yes we did. Don’t you want that?” he asked.

My answer to the President is, heck yes, and my peers are with me.

As we speak, 116 of the nation’s brightest and best Millennials are proving their willingness to do this through participation in EDF Climate Corps. EDF Climate Corps fellows hail from the nation’s top graduate schools and could spend their summer internships working wherever they want. But year-after-year, many of the nation’s most capable MBA and MPP students choose to roll up their sleeves to tackle the energy challenge for some of America’s most influential public and private sector organizations.

Since 2008, EDF Climate Corps has hand-selected, trained and embedded 400 energy efficiency superstars in hundreds of corporations and public sector organizations around the U.S. These young people have found $1.2 billion in energy savings at participating organizations like Google, GM, PepsiCo and Verizon, and they’re graduating with job offers for positions like Director of Sustainability and Energy Manager.

The President reminded us that we can choose to fear the future, but Americans have always taken the path to shape the future. That’s just what EDF Climate Corps is doing – building the next generation of business leaders with the skills we need to shift our nation toward a cleaner, more prosperous future.

He was smart to call us to action. We Millennials are outspoken and online. He knows that. He told us to tell our classmates, our colleagues, our parents and our friends what’s at stake – to remind them “there’s no contradiction between a sound environment and strong economic growth.” That’s what EDF Climate Corps fellows are doing every day in these organizations, in their schools and right here on the EDF Climate Corps Blog.

How do you plan to answer the President’s call to help spread the word?

By Jim Marston

Source: Ethan Miller/Getty Images

Today President Obama took an important step toward meeting the promise of his inaugural address to “respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations.”  The headline, of course, is the commitment to take serious action to address the most significant challenge our generation faces – climate change. And, with it, the extreme weather and public health burdens that are already making life harder for vulnerable regions and people nationwide, and that stand to become so much worse as the root cause remains unaddressed.

In his Climate Action Plan announced at Georgetown University, the President laid out his vision for putting in place common sense policies that will cut harmful carbon pollution while driving innovation, cutting energy waste and energy bills, creating jobs and protecting public health. 

Most Americans would be shocked to know that there are no current limits on carbon pollution from power plants. By setting the first standards in history for carbon pollution from power plants in the United States – which produce 2 billion tons of this pollution each year, or about 40% of the nation’s total – the President will help modernize our power system, ensuring that our electricity is reliable, affordable, healthy and clean.  And we can do this in a way that can give industry the flexibility it needs to make cost-effective investments in clean energy technologies.

A modern, intelligent, interactive electricity system will help minimize problems that arise from extreme weather events and other disruptions and maximize renewables, efficiency and consumer choice.  Since the President took office, our country has seen the beginnings of a revolution in the energy sector – technological innovations have put us on track to energy independence and clean, homegrown energy resources constitute a growing share of electric generation capacity.  Reducing wasted energy and using more clean energy offer enormous potential for our health, economy and climate, including:

-          Little to no harmful pollution = improved public health

-          An unlimited, homegrown energy supply = less reliance on foreign oil

-          Economic development = more jobs

-          Stable energy prices = lower electric bills and improved economic stability  

-          A more reliable, resilient energy system = less costly, scary blackouts

-          A global leadership position in the multi-trillion dollar clean energy economy = reclaimed pride and competitiveness for America’s manufacturers

President Obama’s speech recognized that America must develop this potential, and his plan charts a clear path forward to accelerate the transition to a clean, low-carbon economy.  Thanks to the President, the days of silence and inaction on climate are over. This plan could become an important part of his legacy.  We still have a long way to go.  Now it’s up to all of us to join with the President in confronting the defining challenge of our time.