By Dick Munson

All around the country, we are seeing signs of innovation when it comes to the electricity industry. The state of New York is performing a comprehensive review of related technologies and business practices, Illinois is modernizing the electric grid and empowering customers to save energy by creating transparency around smart meter data, and the wind industry in Texas continues to set new records. The U.S. grid is truly beginning to evolve from the system Thomas Edison created 100 years ago, moving toward a more flexible grid that runs on clean, renewable resources.

Yet some players – with significant revenue and power – are not on board. FirstEnergy, the Akron-based utility giant, has been clinging to the past and waging war on clean energy in Ohio, as I explain in my op-ed published today in the Akron Beacon Journal. The Beacon Journal is the hometown newspaper of FirstEnergy’s headquarters.

While some utilities are beginning to understand that clean energy resources like renewables and energy efficiency can become a valuable part of the electric system, FirstEnergy has held fast to the status quo. The utility has strategically attacked and eliminated clean energy competition by lobbying against Ohio’s renewable energy and energy efficiency standards. Although these standards created tens of thousands of jobs and saved Ohioans more than $1 billion, they were hurting FirstEnergy’s profits and had to go.

Now, the utility is asking the state to guarantee further profits from their bad investments, sticking Ohioans with the costs – $3 billion over the next 15 years – all because FirstEnergy chose fossil fuels instead of considering alternatives.

As our electricity industry continues to innovate and move forward, FirstEnergy wants to protect the status quo, regardless of the financial impact on their customers. Edison would not be pleased.

My full op-ed is available on Ohio.com.

Photo source: Wikimedia Commons/Angelo DeSantis

By Dick Munson

All industries use acronyms, but anyone who reads this blog can attest the electricity sector seems to have more than its fair share. One of these acronyms – TRC – stands for Total Resource Cost and represents the key means by which utilities measure the cost effectiveness of energy efficiency. Another – DR – is demand response, or a voluntary energy conservation tool that rewards people who use less electricity during times of peak, or high, energy demand.

Getting each of these acronyms – and their associated clean energy resources – right is critical if we are to run our electric grid as efficiently as possible. Fortunately for the Pennsylvania’s clean energy economy, the state’s Public Utility Commission (PUC) last week took a commendable step toward more fairly valuing both energy efficiency and demand response.

Why is the TRC important?

When a utility is considering whether to invest in anything from new transmission lines to smart meters, it needs to assess the potential costs and benefits of each investment. For those specific to energy efficiency, the analysis is done according to terms set by the PUC – otherwise known as the TRC. Previously, doing so meant measuring only energy saved, essentially ignoring all of the non-energy benefits like savings from the reduced need for fuel, water, and operations and maintenance. By underestimating these benefits, as a result, utilities have been discouraged to adopt efficiency programs, particularly comprehensive ones that go beyond simply replacing incandescent lightbulbs.

Pennsylvania gives #cleanenergy not one, but two boosts @PA_PUC
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Fortunately, Pennsylvania Commissioners James Cawley and Pamela Witmer saw there was an opportunity to more accurately calculate all the benefits of energy efficiency, in addition to costs. The two proposed an amendment to allow non-energy benefits to be included in the TRC calculation – and it passed unanimously. The commissioners cited comments by Environmental Defense Fund and its coalition colleagues, including PennFuture, Keystone Energy Efficiency Alliance, Clean Air Council, Sierra Club, and Natural Resources Defense Council.

Demand response gets a leg up

This wasn’t the only recent win for clean energy at the Pennsylvania PUC. Commissioner Cawley and Chairman Gladys Brown introduced a separate amendment that allows demand response efforts to participate in both Pennsylvania’s alternative energy initiative (which seeks to reduce energy consumption and demand through establishing efficiency programs for utilities) and PJM’s Emergency Load Response Program (which provides a means to compensate people and businesses that reduce energy demand during emergencies).

Essentially, the measure makes it easier for people and utilities to trim electricity use during periods of peak demand when costs and pollution are high – a win-win for peoples’ pocketbooks and the environment. This amendment also passed unanimously, five to zero.

By more accurately measuring energy efficiency’s benefits and helping demand response get on a level playing field with other energy resources, these decisions advance Pennsylvania’s clean energy economy and accelerate the use of each in the Commonwealth. Furthermore, they put the state in a better position to comply with the Environmental Protection Agency’s proposed Clean Power Plan, scheduled for release this summer with the goal of cutting carbon pollution from existing power plants. As proposed, the plan will encourage the integration of more clean energy resources like energy efficiency and demand response, and states with forward-thinking approaches will be well-positioned to meet the requirements.

While the electricity industry may still be muddled with diverse and confounding acronyms, it’s clear Pennsylvania has a solid understanding of two of its most important ones: TRC and DR. And the unanimous PUC votes on each measure signal Pennsylvania recognizes the clean energy future and is working to ensure the state takes advantage of the opportunities at hand.

Photo source: Pennsylvania PUC

By Dick Munson

Source: Green Button

Data may be the most promising and powerful tool to advance energy efficiency, but we’ve barely begun to scratch the surface of its potential. Fortunately, more and more customers across the country are obtaining access to information on their electricity usage and pricing data, and Pennsylvania may be one step closer to harnessing this resource.

EDF and Mission:data – a national coalition of technology companies that advance the use of energy data – recently encouraged the Pennsylvania Public Utility Commission (PUC) to empower customers with data in an electronic form. Specifically, we are proposing the PUC adopt the Open Access Data Framework, which clarifies the type of electricity usage data all Pennsylvania customers and authorized third-parties have access to and how the data should be provided. Based on widely-adopted national standards, the Framework can help Pennsylvania effectively utilize and get the most out of its energy data.

Data, technology, and potential savings

Data access is central to customers realizing value from a utility’s investments in advanced energy measurement, and technology can further unlock the potential. But most people do not have the time to become an expert energy analyst simply to identify cost-effective efficiency opportunities. Therefore, most of us will rely on technologies, such as smart thermostats, and third parties to digest and synthesize meter data into actionable steps that increase efficiency, save money, and cut pollution.

That’s why EDF worked with diverse stakeholders to develop the Open Access Data Framework, which sets standards for:

• customer authorization,
• types of data utilities should collect and share,
• data format,
• methods of delivery,
• timeliness, and
• data security.

The proposed framework protects individuals’ privacy as people can choose whether or not to share their information with third party companies who process this data and provide related services. Rather than assume a person will adjust their energy usage in response to smart meter data, companies like Bright Power, Nest, and Bidgely help automate the process for them.

Why focus on the people side of the energy equation? By some estimates, up to 40 percent of the benefits of smart meters lie in demand-side customer savings enabled by data access. A study by the American Council for an Energy Efficient Economy demonstrates providing customers access to their electricity data in electronic format, combined with technology tools to interpret and manage that information, can yield household savings of 12 percent or more.

Some third party companies are already taking advantage of the possible savings in commercial buildings. Lucid Design Group, for example,40 percent has used interval data to achieve energy savings of 27 percent. Similarly, a study from the Lawrence Berkeley National Laboratory shows 17 percent median savings in commercial buildings from "energy information systems" among 28 individual sites.

Empowering #Pennsylvanians through increased energy data access
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Green Button Connect

The Open Data Access Framework serves as a complement to the Green Button Connect My Data, part of national standards developed by the U.S. Department of Energy “to provide utility customers with easy and secure access to their energy usage information.” Such standards help avoid a divided, inconsistent market that would impede innovation and competitive solutions. Essentially, Green Button sets the technical standards for sharing data, while the Framework adds agreements about data authorizations for sharing, timeliness, and ownership.

Within the past several months, Green Button Connect My Data has been implemented by three of California’s largest utilities across their entire service territories, as well as by PEPCO in Washington, D.C. for commercial and industrial users. The Illinois Commerce Commission is advancing the Open Data Access Framework, and both Commonwealth Edison and Ameren Illinois have publicly committed to implement Green Button Connect My Data by the end of 2015. By the end of this year, data access standards will be enabled for approximately 40 percent of the 60 million smart meter customers in the U.S., signaling much progress has been made but there is still a ways to go.

In addition to these state efforts, President Obama issued a Presidential Memorandum directing the implementation of Green Button for exchanging energy use data of federal facilities. The Memorandum requires agencies to coordinate with local utilities to use Green Button and, in regions where Green Button is not available, the General Services Administration and Federal Energy Management Program are required to conduct business internally using the Green Button format.

Clearly, standardizing access to energy use data has made significant strides in the U.S. recently, and Pennsylvania would do well to join the trend. The full potential of energy efficiency cannot be realized until people can obtain access to their data and work with third parties to advance data-driven energy management solutions. Energy data can – and should – be provided to customers in ways that empower them to save money and cut pollution, without sacrificing their privacy and security. The Open Access Data Framework can help us get there in Pennsylvania.

By Dick Munson

At the start of the 2015 Illinois legislative session, a diverse coalition came together to introduce and support the Illinois Clean Jobs bill – legislation which would strengthen Illinois’ energy efficiency policies, as well as update and extend the state’s Renewable Portfolio Standard (RPS). The bill would also create a market-based strategy to meet new federal carbon regulations to limit carbon emissions from existing power plants, otherwise known as the Clean Power Plan (CPP).

So now that the regular legislative session has ended, where does the Clean Jobs bill stand?

A victory for the little guy

Initially, the Clean Jobs bill was far from the energy legislation spotlight. Two deep-pocketed companies also introduced bills. Exelon proposed a bailout for three of its uneconomic nuclear reactors. And Commonwealth Edison (ComEd) wanted to restructure its rates to ensure a profit because efficiency and clean energy had reduced the demand for power.

Most political observers felt Exelon and ComEd – which employ teams of lobbyists and enjoy substantial political clout – would quickly obtain what they asked for. Yet neither went anywhere, and it was actually the Clean Jobs legislation that obtained more co-sponsors than the Exelon and ComEd bills – combined.

Despite delay, support remains high

None of the energy bills passed because several factors encouraged legislators to postpone consideration of energy legislation until the veto session in the fall. Most prominent, Illinois is currently facing a $3 billion budget deficit, and budget discussions have taken the wind (pardon the pun) out of Clean Jobs and other energy bills – for now. Some politicians also wanted to wait until after the release of the final CPP late this summer.

Yet we remain optimistic. The Clean Jobs bill would provide thousands of renewable energy jobs, lower electricity bills through increased energy efficiency, and use money saved to invest in initiatives like workforce development, low-income bill assistance, and research and development of new clean energy technology. It presents an economic opportunity that would benefit the state, people’s pocketbooks, and the environment.

For this reason, the bill has reached across the aisle and seen support from a wide array of groups, including faith-based, business, environmental, and labor organizations. Leaders from all of these areas even formed the official Illinois Clean Jobs Coalition to endorse the legislation – of which Environmental Defense Fund is a proud member. 26 sponsors in the Illinois Senate and 58 sponsors in Illinois' House are behind the bill, demonstrating the bipartisan appeal. Mayor Rahm Emanuel is on board and even Chicago high school students have banded together to voice their desire to see the measure pass.

Despite the lag in timing, the intense display of support “puts us way ahead of where we have been in these discussions in the past," said Rep. Elaine Nekritz (D-Northbrook). She created the bill along with Sen. Don Harmon (D-Oak Park).

The Clean Power Plan and Illinois

The Environmental Protection Agency (EPA) intends to release the final CPP regulations in August. The plan, as proposed, allows states maximum flexibility to craft an implementation plan that will take advantage of state-specific resources.

Thanks to previous moves to advance clean energy in the state, Illinois is already more than 75 percent of the way to meeting the 2020 benchmarks. The Clean Jobs bill directs the Illinois EPA to develop a market-based approach to meeting the requirements, ensuring the state can easily achieve the remaining reductions.

Thanks to the thousands of EDF members who have asked their legislators to co-sponsor and advance the Clean Jobs legislation. We have momentum on our side for Illinois to be a leader in energy efficiency and clean energy, and to craft a CPP implementation plan most beneficial to our state.

Photo source: Flickr/Oregon DOT

By Dick Munson

In the past few weeks, I have written extensively on the $3 billion bailout proposed by FirstEnergy, the giant utility that provides electricity across Ohio and multiple other states. For those of you who want to catch up on what FirstEnergy is up to and why the proposal is such a bad idea, take a look at our recent blog posts on the topic.

But we haven’t just written about FirstEnergy’s nefarious antics. A few weeks ago, Environmental Defense Fund (EDF)began running online ads in local Ohio markets and on some of the web’s most influential financial news sites. Since we launched, our ads have generated more than 2 million impressions on computers, tablets, and phones across the country. And, we’re just getting warmed up.

Thank you to the nearly 1000 EDF members who have already urged the Public Utility Commission of Ohio to reject FirstEnergy’s proposed bailout. If you see one of the below ads online, we hope you consider taking the same action!

By Dick Munson

FirstEnergy, the giant Ohio-based company that owns power plants and transmission lines in several midwestern and northeastern states, is running out of arguments for its proposed bailout.

The Public Utility Commission of Ohio (PUCO), which is currently considering the proposal by FirstEnergy for substantial, customer-funded subsidies to bail out its uneconomic power plants, has suggested the utility must prove four points.

1. Financial need

As we all know, need is different than want. And with a balance sheet showing $12.4 billion in shareholder equity, clearly the giant utility is able to keep these plants open. But FirstEnergy and its shareholders are reluctant to subsidize their own risk – instead, they want Ohio customers to take on the cost and associated risk. Strike one.

1. Reliability

Since FirstEnergy can’t prove financial need, it must demonstrate its plants are necessary to maintain sufficient and reliable power in the areas they provide electricity. Yet the reliability issue is a red herring – FirstEnergy’s subsidiaries are not responsible for resource adequacy. Instead, PJM – the regional grid operator – oversees this task. If PJM determines these plants are needed for reliability reasons, it can implement a must-run arrangement to keep the plants open. But the arrangement would be available only for so long to alleviate any reliability concerns. That decision would not (and should not) lock Ohioans into long-term support of an uneconomic facility. Strike two.

1. Environmental compliance

Next, First Energy must suggest the generating plants are needed to comply with environmental regulations. Yet in its own testimony, the utility asserts environmental and market conditions are so uncertain that it cannot be determined whether its plants will be compliant with federal environmental regulations, or even profitable, over the long term. Strike three (but FirstEnergy hasn’t struck out yet).

1. Economic health and rate stabilization

Finally, FirstEnergy must argue plant closures would have a negative impact on electricity prices and economic development. Yet any subsidy would harm the regional wholesale market by stymying competition. Driving away other plant operators that do not receive subsidies for their plants would likely result in higher prices over the long run. Moreover, FirstEnergy’s customers would pay higher prices anyway, because they would have to subsidize the plants in the first place.

The economic development argument is especially unpersuasive because FirstEnergy’s analysis only accounts for the alleged benefits of keeping the plants open. In doing so, the utility fails to account for:

• the economic harm caused by forcing customers to pay higher electricity prices arising from the subsidies;
• the economic harm caused by distorting the wholesale market, and driving away competitors who choose not to participate because of the subsidies available to certain favored companies; or
• the economic benefits which would arise from new clean energy resources – such as energy efficiency programs – that could be used in place of the old coal plants, if they shut down due to market forces.

Put simply, FirstEnergy can’t pass any of PUCO’s tests for justifying its power plant subsidies. Even with four opportunities to prove its case, FirstEnergy strikes out.

This is one of a group of posts that examines FirstEnergy’s proposed bailout for its again coal fleet and other market manipulations. Stay up to date on FirstEnergy by visiting EDF’s website, where we’ve published helpful resources and will host a series of newsletters. If you would like to receive our FirstEnergy newsletter directly, please click here.

By Dick Munson

Utilities across the country offer energy efficiency programs, many of which obtain good results simply by replacing incandescent light bulbs with compact fluorescents (CFLs) or light-emitting diodes (LEDs). In Pennsylvania, however, Environmental Defense Fund (EDF) and other environmental groups are going further by seeking more comprehensive and longer-term efficiency measures.

Compared with neighboring states, Pennsylvania’s efficiency programs tilt heavily – 65 percent – toward the residential sector. Since residents account for only 37 percent of the state’s total electricity, environmental groups see substantial efficiency opportunities exist in the commercial and industrial (C&I) sectors.

Also, compared with other states, Pennsylvania’s Public Utility Commission (Commission) has proposed a relatively modest efficiency goal of 0.82 percent reduction per year in total electricity use. The median electricity savings target for the country is about 1.4 percent per year. Neighboring Maryland approved an annual 1.6 percent reduction, while nearby Michigan set a target of 1 percent.

Environmental groups call for higher savings from commercial and industrial sector

Environmental groups are calling on the Commission to set a higher savings target for the C&I sectors. Costs are typically lower in these sectors, in part because electricity use tends to be concentrated at a small number of facilities. C&I customers also tend to use a proportionally larger amount of electricity than residential customers.

The groups – EDF, Citizens for Pennsylvania’s Future (PennFuture), Sierra Club, Clean Air Council, and Natural Resources Defense Council – are proposing measures that in some cases would help new commercial buildings exceed the state’s energy savings standards. Other measures focus on large commercial retrofits.

The groups also emphasize the efficiency benefits of combined heat and power (CHP) units, which simultaneously produce heat and electricity from a single fuel source. Since these units integrate the production of electric and thermal energy, they are significantly less wasteful than producing each separately.

Such non-lighting programs might incur initial costs but they can result in greater lifetime energy savings than lighting measures on their own, transform energy efficiency markets, and drive new technologies. Without support from the environmental community, these advanced energy efficiency measures are unlikely to be implemented.

Third phase of clean energy legislation

EDF, along with its environmental partners, submitted comments calling for more comprehensive energy efficiency measures as part of the third phase of clean energy legislation that set standards and goals for energy efficiency, initially passed in 2008. The third phase of this legislation, called Act 129, is currently under review by the Commission and is scheduled to launch a year from now.

Under the first two phases, Pennsylvania utilities ran successful efficiency programs that exceeded initial energy savings targets. However, Act 129 imposes a cap on spending that says utilities don’t have to spend more than two percent of their annual revenue on efficiency programs. This limit forces power companies and regulators to rethink how best to achieve the most benefit for a wide range of market segments.

EDF and its environmental partners argue energy efficiency programs need to go beyond the simple and low-cost measures such as lighting or behavioral changes – though such initiatives are very critical to lower energy use. Comprehensive measures may initially be more complex and expensive, but offer higher savings and better returns over the long term.

By Dick Munson

FirstEnergy, the giant Ohio-based company that owns power plants and transmission lines in several midwestern and northeastern states, is ready to raise electricity prices for its customers. This is in part because three of its oldest coal-fired power plants are set to close, but also because of a few bad business bets.

Though finally shuttered this week, the three plant closures were announced in January 2012 so FirstEnergy could take advantage of a power auction planned by PJM Interconnection, the power grid operator in the Mid-Atlantic region. That auction determines the most efficient power plants to serve this region for the next three years.

By taking these old and dirty units out of the auction, FirstEnergy was able to push up prices for its other power plants.

At the time, environmentalists argued FirstEnergy should account for the efficiency gains that would result from state-mandated programs. Lower demand for electricity caused by efficiency improvements would have reduced the auction price for power. Although such energy efficiency is typically “bid” into PJM auctions in the same way coal or nuclear energy is, FirstEnergy refused.

A coalition of environmental groups complained to the Public Utility Commission of Ohio (PUCO), the state agency that regulates power companies. PUCO eventually ordered the utility to include energy efficiency – .

FirstEnergy then launched a successful multi-year lobbying campaign to freeze and gut the state-mandated efficiency programs. Meanwhile, FirstEnergy was still cashing in on these old power plants because, though they were not bid into the PJM auction, they were still technically open.

Since the 2012 closure announcement, FirstEnergy was allowed to collect up to $300 million a month with the assumption these units generated power all the time. But they didn’t run continuously.

Finally, FirstEnergy spent millions of dollars to build new transmission lines along the Ohio River. Federal regulations allow utilities to recoup such costs by hiking up electricity prices. According to John Funk of the Cleveland Plain Dealer, “So far the company has budgeted $263 million on the transmission projects — just the beginning of a $4.2 billion re-building effort, which will be reflected in future rates, which will increase annually.”

Part of the underlying problem is a lack of “corporate separation.” FirstEnergy’s power plant company, FirstEnergy Solutions, operates in competitive markets. That means it should operate separately from its distribution companies (Illuminating Company, Ohio Edison, and Toledo Edison). Under state law, the companies are not supposed to share information or give each other preferential treatment. The company’s lack of separation is now the focus of a PUCO investigation.

Regulators also need to review how market manipulations – ignoring energy efficiency and timing the closure of power plants – are resulting in rate hikes for FirstEnergy’s customers. Rather than bail out the company’s bad bets, we need markets that reward innovation. And instead of allowing FirstEnergy to expand its monopoly, we need to expand competition, for the benefit of both customers and the environment.

Photo source: Flickr/Rennett Stowe

This is one in a series of posts that examine FirstEnergy’s proposed bailout for its aging coal fleet and other market manipulations. Stay up to date on FirstEnergy by visiting EDF’s website, where we’ve published helpful resources and will host a series of newsletters. If you would like to receive our FirstEnergy newsletter directly, please click here.

By Dick Munson

Source: via Wikimedia Commons

Microgrids are getting a lot of attention. Yet how they’re developed could dramatically alter today’s electricity system.

At the most obvious level, microgrids could disrupt today’s utilities and their regulated-monopoly business model, because they challenge the centralized paradigm. In a nutshell, microgrids are localized power grids that have the ability to disconnect from the main, centralized grid to operate independently when the main power grid experiences disturbances. This significantly boosts grid resilience. For almost a century, large centralized power plants have generated electricity and delivered that energy over high-voltage transmission lines to customers. But with microgrids, all that could change.

Less obviously, microgrids challenge the basic assumption that the power grid must be controlled by a monopoly electric utility. Multiple microgrids on the south side of Chicago, for example, could be owned by different entities (not just a utility or even a platform provider, which would provide an exchange between customers and distributed energy generators) with contract arrangements among them controlling the sharing of power. Put another way, microgrids open the distribution system to some level of competition and, thereby, engage entrepreneurs and advance innovation.

Coast to Coast and Across the Electric System, #Microgrids Provide Benefits to All from @DickMunson
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Types of microgrids

Interest in microgrids grew substantially after Hurricane Sandy wiped out much of the centralized infrastructure and power lines throughout the Northeast. Even before that major storm, however, concerns were increasing about power grid failures, 80-90 percent of which start at the distribution level, or with local lines. These outages cost the U.S. economy $336 billion between 2003 and 2012.

Microgrids are attractive since they offer the ability to isolate outages and increase reliability. Yet they also have the potential to reduce pollution, embrace clean energy sources, beef up cyber security, and cut costs for utilities and their customers.

These small-scale versions of today’s centralized power grid come in numerous shapes and sizes. Most frequently they are organized around a single campus, such as a hospital or university (e.g., Illinois Institute of Technology), but they could be within an industrial park (e.g., Eastman Business Park) or a mixed-use community (e.g., Chicago’s Bronzeville neighborhood).
Difference of opinions, benefits for all

Stakeholders have different views on microgrids, but most agree, microgrids offer tangible benefits. Environmentalists, for example, tend to see them as opportunities to enable clean, distributed generation, such as community solar farms, yet they want to ensure the microgrid isn’t fueled by dirty, diesel-fired units exclusively. Third-party developers tend to have a similar perspective and hope microgrids offer new business opportunities. Municipalities and rural communities think microgrids enhance reliability, as well as expand local economic development.

Even a growing number of utilities see microgrids as complements to their business models, particularly as they roll out smart meters and advanced wires infrastructure. Commonwealth Edison (ComEd), for instance, just introduced legislation that would allow it to invest $300 million to build several microgrids, including at the Illinois Medical District, the Aurora FAA facility, and the Chicago Heights water pumping and treatment facility.

Yet ComEd, not surprisingly, wants to control the microgrids and own the distributed generators (e.g., solar arrays and cogeneration units) within them, thereby expanding its monopoly to these decentralized power plants, as well as wires. And, utility interest in building, owning, and operating microgrids is spreading across the country: from Central Hudson Gas & Electric in New York to Duke Energy in North Carolina, DTE Energy in Michigan, and Southern California Edison.

While microgrids can advance clean, distributed energy, resiliency, and innovation, their future depends upon policies that ensure market signals advance such goals and minimize monopoly barriers. Microgrids, in fact, force us to confront certain questions: will we support the status quo of centralized, monopoly-owned power plants or embrace innovation and competition? Will we rely solely on regulation or also on contracts to advance clean energy?

By Dick Munson

$5 billion is a lot of money, yet that’s the difference in cost estimates between an Ohio-based, consumer advocacy group and FirstEnergy for the utility’s proposed bailout plan.

FirstEnergy, the giant Akron-based company that owns power plants and transmission lines in several midwestern and northeastern states, calculates its proposed plan to raise electricity rates will eventually save Ohio customers $2 billion. The Ohio Consumers’ Counsel, in contrast, estimates the subsidies will cost Ohioans $3 billion.

To appreciate the differences, consider a little history.

Several years ago, FirstEnergy thought it could profit in emerging regional electricity markets, so it convinced regulators to allow it to set up a separate subsidiary that would generate and sell electricity. That unit was to be independent from another subsidiary company, which managed the power wires and delivered power to customers. This partial step toward free markets, however, didn’t work out too well for FirstEnergy. Now, it’s asking regulators to abandon competition.

In an effort to shift risk from its shareholders to its customers, FirstEnergy wants regulators to approve a non-competitive purchase agreement whereby its sister company will buy the output of another subsidiary’s three, old coal-fired power plants and a nuclear reactor that are not able to compete in regional power markets.

The Ohio Consumers’ Counsel thinks the arguments for such a deal are “unpersuasive, highly speculative, [and] … onerous.”

Even FirstEnergy admits its proposal will cost customers a lot of money – a bit more than $400 million – during the three-year period of the proposed rate increase. Yet the utility decided to base its proposal on a 15-year period. Over the same period, OCC found FirstEnergy’s proposal would cost about $3 billion instead of the utility’s calculation of a $2.021-billion benefit.

The FirstEnergy bailout also raises fundamental questions about the future of the power industry. Because the utility is proposing a return to the days when its distribution or “wires” subsidiary (which is a regulated monopoly with virtually guaranteed profits) could give preferential treatment to its power-generation subsidiary (which is supposed to compete with other power plants), the plan would be a blow to corporate separation, competition, and innovation.

The Public Utility Commission of Ohio (PUCO), the state agency that regulates Ohio’s power grid, is charged with reviewing the cost-estimate differences and deciding on FirstEnergy’s request. PUCO’s hearings are scheduled to begin on June 15, 2015. In the past few months, the Commission has decided against similar proposals by AEP and Duke, but the FirstEnergy case involves more money.

This is one in a series of posts that examine FirstEnergy’s proposed bailout for its aging coal fleet and other market manipulations. Stay up to date on FirstEnergy by visiting EDF’s website, where we’ve published helpful resources and will host a series of newsletters. If you would like to receive our FirstEnergy newsletter directly, please click here.

By Dick Munson

America’s electricity landscape is changing dramatically. Clean energy resources like solar and wind are becoming cost competitive with conventional coal, global corporations like Walmart, Google, and Facebook are pressuring utilities to increase their share of renewables, and the cost of investing in energy efficiency measures is now under half the cost of building dirty, coal-fired power plants.

While some in the utility industry are adapting their business models to accommodate these changes, others are fighting it. Nowhere is this more apparent than in Ohio, where Akron-based power company, FirstEnergy, recently gained regulatory approval to abandon its energy efficiency programs. While this move is expected to raise electricity rates for FirstEnergy customers and increase harmful emissions from the coal-fired power plants that will be needed to “fill the gap” of previously offset energy demand, FirstEnergy has much more in store for the Buckeye State. In fact, they are waging an all-out war on clean energy in a last-ditch effort to protect their inefficient, polluting, and unprofitable fleet of coal-fired power plants.

.@EDFEnergyEX is launching a campaign to stop @firstenergycorp’s all-out war on #cleanenergy
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Greed versus efficiency

FirstEnergy, which owns power plants and distribution utilities in five states, is burdened by its heavy reliance on coal, a strategic decision accelerated back in 2011 when it acquired Allegheny Power – an energy company whose fleet was comprised of 78 percent coal-fired plants. With gas prices at an all-time low, an increased use of renewable energy, and weak energy demand resulting from customer energy efficiency improvements, this decision continues to have major financial repercussions for the company. As a result, FirstEnergy’s stock price has plummeted and financial analysts have downgraded the company.

In an effort to remain competitive in an evolving industry, FirstEnergy is now requesting that the Public Utilities Commission of Ohio (PUCO) authorize substantial, customer-funded subsidies to bail out its uneconomic power plants. This deal would lock in what EDF’s Cheryl Roberto, in testimony before the PUCO, called “non-competitive purchase agreement.” This type of agreement would ensure a substantial portion of FirstEnergy’s power comes from its failing coal plants for years to come – regardless of their profitability and an evolving energy market that’s already trending toward cleaner energy resources. Customers, moreover, would be forced to pay the subsidy whether the plants deliver power or not, bearing the operational risks for these plants.

Customers, of course, will face higher bills if the PPA is granted because the utility wants to receive more for the electricity its coal-burning plants produce than the current market price for power (which is already being driven down by clean energy market players like solar, wind, demand response and energy efficiency). In other words, people who choose to buy clean energy will also be forced to buy dirty, fossil-fueled energy as well – unnecessarily paying twice for power.

What’s worse – as recently reported by Midwest Energy News – is FirstEnergy’s attempt to hide these cost increases, “citing confidentiality claims to prevent public disclosure of large amounts of cost data and projections related to the plans.”

But FirstEnergy’s desperate attempts to prop up their failing business model do not stop here.

The company recently said that demand response, which pays people to conserve energy when the electric grid is stressed, is “starving” traditional generation out of its rightful revenue in wholesale energy markets. As a result, FirstEnergy is attempting to get demand response kicked out of the PJM (mid-Atlantic) energy market. As it stands now, conventional sources of energy like coal compete on the basis of price with non-traditional energy sources like demand response and renewables for a chance to power millions of homes and businesses across Ohio. Since demand response is a low-cost, zero-carbon energy resource, eliminating it as an option in the competitive energy market would be a detriment to Ohioans health, environment and pocketbooks. In 2013 alone, for example, demand response saved customers in the mid-Atlantic region $11.8 billion.

These attempts to stymie clean energy growth (and pass the cost on to customers) comes on the heels of another attack by FirstEnergy earlier this year, in which the utility successfully lobbied for legislation (S.B. 310) to freeze Ohio’s efficiency and renewable standards. This is the same law that allowed FirstEnergy to request an end to its energy efficiency programs last month – the first Ohio utility to do so under this new law. FirstEnergy won this fight by arguing that efficiency programs would raise electricity rates. However, in previous filings before the PUCO, the company admitted the initiatives saved families millions of dollars. In more honest (but less public) presentations to investors, the company's executives admitted low-cost, clean energy efforts were interfering with their power sales and profits.

FirstEnergy is grasping at straws

Despite these efforts to weaken the competitiveness of clean energy resources in Ohio, FirstEnergy has not succeeded in improving its financial situation, and these new tactics – eliminating energy efficiency programs, pleading for a bailout, and attempting to kick demand response out of the energy marketplace – aren’t expected to solve their financial woes. FirstEnergy is grasping at straws. They’re working from a model that’s on its way out, and attempts to fight against this change will likely only yield more disappointing results.

It is EDF’s belief that PUCO should reject FirstEnergy’s proposal and ensure full corporate separation so a utility can no longer cross-subsidize or favor its affiliate companies in order to block competition. Doing so would send a clear message to clean energy businesses, entrepreneurs, investors, and customers that Ohio is ready for a new era – one in which utility profits are not placed ahead of Ohioans’ best interests and electricity is clean, reliable, and affordable.

Stay up to date on FirstEnergy by visiting EDF’s website, where we’ve published helpful resources and will host a series of newsletters. If you would like to receive our FirstEnergy newsletter directly, please click  here.

By Dick Munson

Source: flickr/Vattenfall

In Dublin, Ohio, the Community Recreation Center decided to reduce its energy waste. Rather than rely on an electric utility to burn more coal or natural gas to provide electricity, as well as its own boilers to burn more fuel to provide heat, the facility decided to install a combined heat and power (CHP) unit.

The CHP or “cogeneration” project produces both electricity – allowing the Center to keep its lights on during power outages – and heat – keeping offices and swimming pools warm. The CHP unit is financed with private capital and will allow the Center to save roughly 10 percent on its energy bills.

“It’s pretty simple,” said Patrick Smith, a co-developer of the Dublin project. “It’s a generator, and we happen to capture the heat.”

Technology of the past…

Cogeneration is not a new concept or technology. In fact, Thomas Edison’s first power plants sold both heat and electricity to nearby buildings and factories. Yet to electrify America quickly in the early 20th century, policymakers and power companies created monopoly electric utilities that were protected from competition and guaranteed profits based on how much money they spent. As a result, for many decades, utilities favored larger and larger power plants that were placed far away from the buildings and factories that could have used their wasted heat.  

From @DickMunson: A Two-in-One #Energy Solution: Capturing Waste Heat for Electricity
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America, of course, has long been electrified, but the model of monopoly-owned and electric-only power plants persists. And the waste is substantial. The typical power plant burns three units of fuel to generate just one unit of electricity. That 33 percent efficiency rate has not improved by a single percentage point since the late 1950s. Can you imagine if our cars wasted two-thirds of gasoline we put in them every time we filled up?

…Innovation for the future

The typical power plant burns three units of fuel to generate just one unit of electricity. That 33 percent efficiency rate has not improved by a single percentage point since the late 1950s.

CHP units, in contrast, achieve efficiencies of 60 to 90 percent. When designed and engineered appropriately for the facility in which they're installed, they also significantly reduce on-site emissions of carbon dioxide and other pollutants, such as nitrogen oxides (NOx) and sulfur oxides (SOx).

Fortunately, lawmakers and regulators are beginning to pay attention to CHP. The U.S. Environmental Protection Agency, for instance, identified efficient cogeneration as a means to meet the proposed Clean Power Plan, the nation’s first-ever limit on carbon dioxide pollution from existing power plants. That’s why the Ohio Environmental Council and Environmental Defense Fund recently asked the Public Utility Commission of Ohio to support Ohio Power Company and Kraton Polymers’ joint application to use a new CHP project to help the utility meet its energy efficiency goals.

Currently, CHP provides 12 percent of U.S. electricity, virtually the same as solar, wind, biomass, and hydropower combined, but, according to the Oak Ridge National Laboratory, CHP could supply as much as 20 percent of U.S. electric capacity by 2030. If CHP reaches this threshold, it would:

• create nearly one million new, highly-skilled technical jobs across the country;
• save the U.S. more than 5 quadrillion Btu (Quads) of fuel annually, the equivalent of nearly half the total energy used by U.S. households; and
• reduce carbon dioxide emissions by more than 800 million metric tons per year, the equivalent of removing more than half of the passenger vehicles from the road.

The Dublin and other CHP projects demonstrate the need for a broader definition of efficiency. Rather than just focus on how residents and businesses can reduce their electricity use, perhaps by adding insulation or installing modern appliances, utilities and other power companies also need to look at new (and old) technologies, like CHP, to obtain substantial efficiency gains for their power plants.

By Dick Munson

Source: flickr/thomashawk

Imagine homeowners and businesses saving millions of dollars – and cutting pollution – without needing to do anything. Magic? No, but it does require electric utilities to take advantage of new technologies that better provide customers with just the right amount of voltage to their electrical outlets.

Many appliances, including incandescent lighting, work just as effectively, yet consume less energy, when the flow of electricity to them is reduced. Put another way, higher voltages generally make individuals and businesses needlessly use more energy, driving up electricity bills and air pollution. Therefore, if voltage was “right-sized,” residents would get enough power to run their appliances efficiently, but not so much that they use more electricity than needed.

What we’ve described above is “voltage optimization,” and a new study by Commonwealth Edison Company (ComEd) looking at this technology’s potential within Chicago and northern Illinois found it could reduce the need for almost 2,000 gigawatt-hours of electricity (enough to power 180,000 homes) each year at an amazingly low cost of less than two cents per kilowatt-hour – more than is achieved now from the utility’s other efficiency programs. This translates to $240 million per year in savings for ComEd’s customers, of which 90 percent could potentially benefit. The study also suggested full deployment of voltage optimization would only take about five years.

New Post from @DickMunson: It’s Not Magic. It’s Voltage Optimization. #energyefficiency
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Costs and benefits

Like ComEd, a few utilities and regulators are beginning to realize voltage optimization is a lot less costly and risky than building new power plants and power lines. The introduction of smart meters and advanced meter infrastructure – including microprocessor-based controls, modern sensor technology, and advanced software algorithms – enables utilities to virtually measure electricity use and vastly improve the efficiency of its flow. Combining this meter technology with voltage optimization allows utilities to reduce electricity demand at peak times (like during a heatwave), improve efficiency throughout the power grid, cut harmful air pollution, improve electric reliability, and integrate more renewable generation resources, like wind and solar.

Environmentalists also support voltage optimization, but don’t want it to take away from other energy efficiency programs. ComEd, unfortunately, has proposed legislation that would allow it to profit from voltage optimization while reducing its commitment to existing programs that encourage residents and businesses to switch out inefficient light bulbs and appliances and to install insulation.

That debate will play out over the next couple of months within the Illinois General Assembly. Yet, there’s no doubt modern technologies are giving electric utilities new tools to substantially cut costs and pollution without asking anything of its customers. Maybe not magic, but voltage optimization is one attractive investment.

By Dick Munson

Source: flickr/bobchin1941

Clean energy advocates tend to maintain a bi-coastal focus. No doubt my California and New York colleagues often see their states as the bellwethers when it comes to new policy initiatives. But, real innovation is taking place in Illinois, a state that national clean energy advocates tend only to fly over.

For the next couple of months, Illinois’ legislative session will be in full swing, giving lawmakers the chance to craft policies that redefines an electric utility, establishes markets that reward clean energy, and sets the foundation for the Environmental Protection Agency’s proposed Clean Power Plan, which will set the nation’s first-ever limits on carbon pollution from existing power plants.

The best opportunity to achieve these goals is through legislation called the Illinois Clean Jobs Bill. This legislation is backed by a broad coalition of groups that, in the past, have found themselves at odds, but are now pulling in the same direction.

#CleanEnergy Legislation in the Heartland Promises Jobs @dickmunson #CleanJobsIL
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Not all policies are created equal

Three different policy proposals are currently vying for attention. In broad terms, the three broad policy outlines can be described as:

1. The Exelon-only, nuclear-rescue bill;
2. The preserve-ComEd’s-bottom-line legislation; and
3. The Clean Jobs future-investment proposal.

For a side-by-side comparison of these bills click here.

Exelon, one of Illinois’ largest utilities, began the bidding by proposing subsidies for its uneconomic nuclear reactors. Its proposal, however, landed with a resounding thud, as lawmakers, policy experts, and others correctly saw this bill as a bailout for a profitable company. ComEd, an Exelon subsidiary, weighed in with several measures to ensure the utility can continue to profit even as the power system increasingly relies on energy efficiency and clean distributed generation, such as rooftop solar panels.

Meanwhile, the new Illinois Clean Jobs Coalition, of which Environmental Defense Fund (EDF) is a member, has made inroads by promoting a comprehensive bill that enhances renewable and conservation standards while envisioning a market-based framework for reducing carbon emissions.

Although Exelon and its ComEd subsidiary employ scores of high-priced lobbyists and make substantial political contributions, the Clean Jobs proposal has garnered more co-sponsors within the Illinois General Assembly. This is in large part the result of the coalition – composed of business executives, environmentalists, consumer advocates, and faith-based activists –focusing on both the environmental and economic benefits of the Clean Jobs Bill, principally creating a target of 32,000 jobs each year.

It’s all about job-creation

Employment, in fact, has become a key issue within the energy debates – and an area of real contrast. Exelon argues that most of the $300 million it wants to obtain from Illinois residents and businesses through this bill will preserve jobs that already exist at Exelon facilities. ComEd’s proposal promises 400 new full-time jobs. The Clean Jobs Coalition, in contrast, will create new jobs in innovative businesses that bring investment and opportunity to every part of the Land of Lincoln.

More than 100,000 Illinoisans already work in the clean energy industry, and that figure is growing nine to 10 percent annually. Even sharper job growth will result if lawmakers increase the share of power coming from renewable sources, like wind and solar, to 35 percent by 2030; reduce electricity waste through energy efficiency by 20 percent by 2025; and maintain the option of market-based strategies to reduce carbon pollution.

Between now and the legislative session’s end in early summer, Clean Jobs Coalition members, including EDF, will be encouraging lawmakers to not just make do with the old ways of generating electricity, but also to enable an innovative, diverse, and clean electricity system that costs less, delivers reliable power, and creates thousands of long-lasting, well-paying jobs.

Such progress would highlight Illinois’ leadership and might even encourage our bi-coastal, clean energy allies to do more than simply fly over the Heartland.

By Dick Munson

Ohio shot itself in the foot last year and we’re only now learning just how bad the damage is.

In May of 2014, the Ohio Legislature froze the state’s energy efficiency and renewable energy standards as a result of political pressure from Ohio’s largest power company, FirstEnergy, and other groups. This freeze came after efficiency measures led to more than $1 billion in savings for Ohioans, clean energy companies invested more than $660 million in 2012 alone, Ohio boasted the nation’s largest number of wind-component manufacturing facilities, and the state created 43,000 in-state jobs within the clean energy sector.

Needless to say, from 2008, when Ohio enacted its clean energy standards, to 2014, when it froze them, the Buckeye State was a clean energy powerhouse. But, as the Center for American Progress reports, when Ohio put a freeze on its clean energy economy, it hit the pause button on its entire economy.

According to the report, the freeze cost Ohio millions of dollars in energy investment. That equates to job losses, cancelled projects that would have brought sustained tax revenue to Ohio, and shifting operations to other, business-friendly states.

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As an example, 75 wind turbines were planned for installation in the state before the Legislature’s action, now only two are planned. Specifically, the Legislature increased the property setback requirements for wind projects, meaning wind turbines must be a certain distance from property lines, effectively making it harder to develop renewable energy. It also permanently eliminated the in-state requirement for renewable energy all together. Given these energy resources lower the demand for utility-generated electricity, it should come as no surprise that FirstEnergy, the giant utility, led these anti-clean-energy efforts in order to block competition and bolster its uneconomic coal-fired power plants.

Plain and simple, investment and jobs are now leaving Ohio because of the Legislature’s actions (and FirstEnergy politicizing).

The Center for American Progress isn’t the only one shedding light on the economic impact of this freeze. Many clean energy investors and developers have aired their opinions on the unfriendly business environment in Ohio. Here are a few examples:

• “At a certain point, it becomes irrational to continue hitting your head against a wall in Ohio.” – Executive from Iberdrola, a large wind-energy developer, on shifting its focus from Ohio to other states.
• “Our confidence in Ohio has changed and we are developing projects elsewhere in the country.” – Developer with EverPower, a wind power company.
• “We are spending less time on developing projects in Ohio and more in other states that are more serious about growing investment and jobs.” – Representative from Melink Corporation, a solar energy developer.
• “As opposed to hiring, we’re pulling resources out of Ohio and looking at focusing elsewhere.” – Developer with Energy Management Solutions, an energy efficiency specialist.

Ohio can regain its clean-energy powerhouse status, including the investment and jobs that come with it. What the state needs are forward-looking policies that ensure the market places a fair value on the benefits of efficiency and renewable energy, while not subsidizing the status quo.

By Dick Munson

Source: flickr/justinwkern

Energy efficiency may be the Rodney Dangerfield of electricity policy. Compared to bulky power plants, it gets little respect.

Part of the problem is efficiency is hard to visualize. A new refrigerator, even if it uses 50 percent less power, still looks like a refrigerator. And, insulation is buried within walls, whereas it’s hard to miss a nuclear reactor or even a wind turbine.

Another issue is power companies see efficiency as competition and want to limit its development. FirstEnergy, for instance, lobbied to freeze Ohio’s energy efficiency standards, abandoned its own conservation programs, and led efforts to do away with demand response, an innovative energy management program that rewards people and businesses for conservation.

So, the Illinois Power Agency’s (IPA’s) recent decision to put efficiency and generation on the same level provides some much needed respect.

Illinois Steps Up and Gives #EnergyEfficiency the Respect It Deserves from @DickMunson
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The IPA is a rather unique government agency, tasked with procuring electricity on behalf of customers for Illinois’ two main utilities, ComEd and Ameren Illinois. Beginning in 2014, EDF and the Citizens Utility Board (CUB) began advocating for IPA to include energy efficiency in its proposed procurement plan. If such negawatts (a wonky term for the avoided electricity achieved through efficiency) were treated on par with generation resources, i.e. power plants, we argued that the costs of supplying electricity would fall, as would greenhouse-gas emissions.

The IPA recently adopted our plan, calling it “Energy Efficiency as a Supply Resource,” and proposed conducting a separate auction to capture peak energy efficiency. Specifically, these are the negawatts that reduce the need for “peaker” generation plants, which only run during the most high-demand (and expensive) times of the day and are typically the dirtiest to operate. Not surprisingly, the utilities and power companies objected. Thankfully, the Illinois Commerce Commission, the agency charged with regulating electricity in the state, upheld the IPA’s approach. The agency is requiring the state’s major utilities to include the specific price of electricity at all hours of the day, in order to calculate the true value of energy efficiency programs.

Third-party energy efficiency programs, as part of their cost-benefit tests, will now be able to calculate how much efficiency trims energy use, when that shedding occurs, and the value of that avoided electricity. This change will be particularly beneficial to homes with smart thermostats, which can be programmed to temporarily reduce air conditioning during the hottest part of the day, and small businesses with energy-efficiency equipment that runs during high-cost, ‘peak’ hours.

By giving energy efficiency the respect it deserves, Illinois will be able to take advantage of its ongoing deployment of smart meters in order to advance more energy-saving innovations. Such procurement will help alleviate stress on the power grid, especially during ‘peak’ times, in order to reduce overall energy demand, cut pollution, and trim the price of electricity for Illinoisans.

By Dick Munson

Illinois is two-for-two on clean energy wins. Today, Illinois legislators introduced a bill to spur significant new growth in the clean energy industry, creating an estimated 32,000 jobs annually across Illinois once proposed clean energy standards are fully implemented. Already a leader in America’s clean energy economy, Illinois, with this bill, would help boost the 100,000 clean energy jobs that already exist in the state, protect our children and future generations from the impacts of climate change, as well as maintain a reliable and affordable electricity system.

Illinois Bill Pledges More Clean Energy Jobs, Boost to Economy, and Cleaner Air #CleanJobsIL
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The bill, endorsed by the recently-formed Illinois Clean Jobs Coalition, of which EDF is a member, contains three main components:

• Strengthening Illinois’ energy efficiency policies

The bill would increase standards to reduce electricity use in Illinois by 20 percent by 2025, a 50 percent increase in savings compared to what would otherwise occur based on current trends. The bill also improves on-bill financing and real-time pricing programs to help more Illinoisans save money.

• Updating and extending the state’s Renewable Portfolio Standard (RPS) to enable solar and wind energy projects to flourish.

The bill would revise the current RPS to increase the share of power coming from renewable sources to 35 percent by 2030, up from the state’s current standard of 25 percent by 2025. The bill also makes technical fixes to the RPS that energy experts say have become necessary since more customers and municipalities have started purchasing energy from alternative suppliers rather than from utilities.

• A market-based strategy to meet new federal carbon rules

The bill directs the Illinois Environmental Protection Agency to develop a market-based approach to meet the proposed Clean Power Plan, which would set the first-ever national limits on carbon pollution from existing power plants. The bill contemplates a cap on emissions coupled with an auction of carbon dioxide emission allowances. The revenues generated by the auction would then be invested in areas such as workforce development, low-income bill assistance, and research and development of new clean energy technology.

Broad Consensus

With job-creating numbers like these, it’s no wonder representatives from both sides of the aisle are lining up to pledge their support for this bill. Here are a few comments from those who have already signed on:

“This bill benefits people in every part of Illinois, in our biggest cities, in suburbs, in farming communities– anywhere where people would gain from new jobs, better health and a cleaner environment,” said Sen. Don Harmon (D-Oak Park), who added that it was urgent that lawmakers act quickly to pass the bill. “As strong as the clean energy economy is today, with 100,000 clean energy jobs throughout the state, Illinois is at a tipping point. There is no time to waste,” he said.

Rep. Elaine Nekritz (D-Buffalo Grove) agreed. “We urge our colleagues to act now and join us in passing this bill,” she said. “In the race to build a long-term, sustainable and profitable clean jobs economy, too many states are beginning to outpace us.” In recent weeks, for example, it was reported that Oklahoma had surpassed Illinois as a generator of new wind energy. More than 600 megawatts of new wind energy had come on line in Oklahoma during 2014; Illinois registered zero.

Sen. Dave Koehler (D-Peoria) explained that the bill offers sizable benefits to the labor community. “The chance to create tens of thousands of new jobs—and add to the ranks of organized labor—is one that we shouldn’t pass up, and that is why I support this bill,” said Sen. Koehler. “It is union members who have built the big solar arrays and wind farms we see across central Illinois, and who carry out retrofits in downtown high-rises and homes across the state every day. Supporting these fields means more jobs for building trades and other union workers, now and into the future.”

Rep. Marcus Evans (D-Chicago) said the bill “will mean more jobs in every neighborhood, a healthier environment across Illinois, and diverse investments– from job training to low-income energy assistance– through a market-based approach to carbon. This bill works for virtually every district and every community that we serve, and I urge members of both parties to join us.”

EDF is proud to join the Illinois Clean Jobs Coalition, which comprises Illinois companies and organizations representing the state’s environmental, business, labor, and faith communities. Currently, more than 33 businesses and 26 organizations have formally joined the coalition to improve the Illinois environment, help consumers, improve public health, and create tens of thousands of new jobs across the state. As the Illinois legislative session continues on, EDF urges the Illinois Legislature to vote “yes” on the Clean Energy Bill to solidify Illinois’ lead in the race to the clean energy economy.

By Dick Munson

Labor, business, and environmental leaders have formed a unique coalition that will urge Illinois lawmakers to pass new standards for energy efficiency and renewable energy, leading to tens of thousands of new, local jobs.

Members of the Illinois Clean Jobs Coalition, including Environmental Defense Fund, argue that the state should not settle for an old stagnant energy system – one that struggles to meet new Environmental Protection Agency clean energy standards, raises electricity prices for families and businesses, and fails to create new jobs. Instead, we should move decisively toward a cleaner, more reliable, and affordable energy future that increases employment right here in Illinois.

More than 100,000 individuals across the state already work in the clean energy industry, exceeding the number employed in the state’s real estate and accounting sectors combined. That figure is growing at an impressive rate of nine to 10 percent annually. Coalition members predict even sharper job growth if lawmakers embrace their recommendations for spurring a clean energy economy in Illinois, including:

• Revising the Renewable Portfolio Standard (RPS) to increase the share of power coming from renewable sources, like wind and solar, to 35 percent by 2030;
• Increasing energy efficiency standards to reduce electricity use in Illinois by 20 percent by 2025, creating tens of thousands of new jobs for people who design efficiency measures, weatherize buildings, and upgrade appliances and technologies in homes and businesses;
• Supporting market-based strategies to reduce carbon pollution. Members said that a new revenue stream could be used to invest in areas such as workforce development, low-income bill assistance, and research and development for new clean energy technology.

These principles and the work of the Clean Jobs Coalition are particularly relevant because of two recent developments. First, the U.S. Environmental Protection unveiled its proposed Clean Power Plan last year, which would set the nation’s first ever limits on carbon pollution from existing power plants. Meanwhile, Exelon is reportedly preparing to seek a bailout funded by Illinoisans for as much as $580 million to prevent threatened closures at some nuclear plants. Instead of watching other states capitalize on the Clean Power Plan and prosper, or stagnating the state’s economic growth by doubling down on aging power plants, this coalition aims to make Illinois the hub of America’s clean energy future.

Fortunately, there’s a lot of clean energy support among Illinoisans that reinforces what the Clean Jobs Coalition is advocating for.

Many Illinois leaders have gone on record supporting changes in energy standards. Before taking office, Gov. Bruce Rauner said that he supports expanded energy efficiency, restructuring the Renewable Portfolio Standard, and “increasing investment in clean energy.” In December, 53 state legislators signed an official comment letter signaling their support for the Clean Power Plan.

Recent polling shows overwhelming support for clean energy to meet Illinois’ future energy needs. Three out of four voters (75 percent) support increased energy efficiency, 67 percent support more solar, and 59 percent support wind. By contrast, just one-fifth support more nuclear power (19 percent) or coal (21 percent).

EDF is proud to join forces with other environmental groups, such as Natural Resources Defense Council and Sierra Club; consumer advocacy groups, including Citizens Utility Board; labor unions, including the Chicago Building Trades; and businesses, including SoCore Energy and Schneider Electric, to spur a clean energy economy in Illinois – one that leaves a healthier environment for future generations and creates tens of thousands of new jobs across Illinois.

Photo source: iStock

By Dick Munson

While the Environmental Protection Agency (EPA) sorts through the more than 1.6 million comments received on its proposed Clean Power Plan (CPP), one group is stepping out to pledge its support of the landmark proposal. 53 Illinois legislators recently signed a letter urging the EPA to finalize the plan, which will set limits on carbon pollution from existing power plants for the first time ever.

Power plants currently account for nearly 40 percent of the nation’s carbon pollution and Illinois’s proposed target would result in a 33 percent reduction in the state’s carbon output by 2030. Fortunately, due to impressive state efforts to invest in clean energy over the past few years, Illinois is well-positioned to meet the challenge.

CPP is an economic opportunity

The Illinois legislators argue the CPP will help the state “achieve even greater cuts in our emissions, health benefits for all our citizens, and will spur further growth in our state’s economy.” The CPP will further the state’s transition to a clean energy economy by attracting investment in innovation, creating more jobs, and keeping electricity prices affordable.

Illinois is already home to nearly 100,000 clean energy jobs, and that number is expected to grow nine percent this year. To put that into perspective, the clean energy sector is roughly equal to the size of the state’s real estate and accounting industries combined.

Furthermore, the state’s energy efficiency standard, established in 2008, has already saved consumers nearly a billion dollars.

Illinois legislators say Clean Power Plan will have health benefits and spur growth in state’s...
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Illinois supports the EPA, clean energy

These members of the General Assembly said the EPA has both the clear authority as well as the responsibility to reduce greenhouse-gas emissions that contribute to global warming. Unlike some states that have reacted to the plan with the-sky-is-falling predictions, Illinois state leaders “pledge to work with both U.S. EPA and Illinois EPA to ensure we have a strong plan that works for Illinois to reduce carbon emissions.”

This kind of support is a clear choice for Illinoisans; clean energy is popular in the Land of Lincoln. Hart Research found a whopping majority of Illinois voters – 71 percent – support EPA enforcing new limits on carbon pollution. A separate poll by Fairbank, Maslin, Maullin, Metz & Associates (FM3), and Public Opinion Strategies found remarkable support for investing in clean energy: 95 percent for energy efficiency, 88 percent for wind energy, and 80 percent for solar energy.

To thank the legislators for their leadership, a coalition of environmental groups produced a short video featuring Tony Award-winning director, Anna D. Shapiro:

EPA’s final rule is expected by June 2015, after which each state must develop an implementation plan to reduce carbon pollution and meet its target. EDF looks forward to continuing its work with legislators and regulators on the development of an effective plan that builds on Illinois’ already substantial clean energy progress.

By Dick Munson

Several states have embraced net metering in order to encourage the adoption of solar energy and other distributed generation. Sometimes referred to as “running a meter backwards,” net metering allows people to generate their own electricity, export any excess electricity to the grid, and get paid for providing this excess energy to the utility who may use it to power nearby homes or manage overall electricity demand.

Net metering leads to lower – or in some cases negative – electricity bills without having to invest in expensive batteries to store excess energy, which can be cost-prohibitive. By generating energy on-site where it’s consumed, net metering also reduces the strain on distribution systems and cuts the amount of electricity lost to long-distance transmission and distribution (estimated at seven percent in the U.S.). Net metering, moreover, tends to reduce greenhouse gas emissions by incentivizing people to adopt renewable energy and become more aware of energy-saving opportunities.

A few states like Illinois are now talking about “virtual” net metering. The term “virtual” may be confusing, but it essentially means customers can receive net metering credits for projects even if they are not on their property. An example would be a group of neighbors receiving such credits for a community solar project.

Virtual net metering offers many advantages, even over its more common cousin, including:

1.     Optimized siting for solar and distributed energy projects

Rather than being limited to a single roof that might be tilted away from the sun or covered by trees, installers, investors, and customers can choose the most productive sites, making for a better investment with higher financial returns.

2.     Additional financing options, plus options for renters

A “virtual” project also enables creative project financing, perhaps through crowd funding or third-party ownership. It also allows renters and other non-homeowners to invest in energy projects. For example, California’s Multifamily Affordable Solar Housing (MASH) Program has led to 20.5 megawatts of solar capacity interconnected across 323 projects that serve 6,371 affordable housing tenant units.

3.     Economies of scale, which lower costs

Virtual net metering enables larger project developments, while also minimizing costs associated with house alterations and project maintenance. Larger projects allows for an economy of scale which lowers costs for everyone involved (i.e. the greater the quantity of a good produced, the lower the per-unit fixed cost because these costs are shared over a larger number of goods). The Lawrence Berkeley National Laboratory (LBNL) calculated that the installed cost of solar drops over 30 percent when moving from a 2 kilowatt system to a 10 kilowatt system. Economies of scale also may allow investors and developers to target construction on cheaper property areas, the value of which may vary widely within a utility service territory, further adding to a project’s financial incentive.

4.     Expedited project development

Virtual net metering can streamline the interconnection application and review process for both utilities and customers. Compared to applications from multiple residents with rooftop solar, a community project would require a single filing, saving both time and money.

5.     More profitable compensation rates

Virtual net metering, particularly for solar projects, allows more customers – not just those with solar panels on their roofs – to take advantage of a utility’s dynamic retail electricity rates that offer higher prices during peak periods in warm summer months, which coincide with maximum solar electricity production.

By adding “virtual” to a tried-and-true concept, we can expand the benefits of solar and other clean distributed-generation projects to more people. This expansion also offers “real” reductions in both costs and pollution.

Photo source: Flickr/Sterling College