New approach to energy efficiency


Jim Rogers,
Chief Executive,
Duke Energy
Charlotte, NC, U.S.A. — (METERING.COM) — February 6, 2008 – The Save-a-watt program that rewards the company – and ultimately customers – for saving watts through energy efficiency programs has been developed by U.S. utility Duke Energy, and is close to receiving regulatory approval.

Duke Energy’s approach recognizes energy efficiency as the fifth fuel’ – complementing coal, nuclear, natural gas and renewable energy. These are all part of the overall portfolio for meeting customers’ growing need for electricity. The fifth fuel will help customers meet their energy needs with less electricity, lower cost and reduced environmental impact.  

Duke Energy’s role becomes one of managing energy efficiency as a reliable fifth fuel. The company will also provide customers with access to innovative technologies such as smart meters that enable the energy efficiency programs to be highly effective.

The challenge is to find an equitable way of compensating the utility for reduced revenues because customers are using less power. Duke Energy proposed that it be compensated for meeting customer demand, whether by saving a watt or generating a watt. With energy efficiency, the company is compensated for the results it produces – so it will be rewarded for driving program costs down and customer participation and innovation up. The utility believes this is a progressive approach to expanding cost-effective energy efficiency programs.

New energy efficiency programs will cost customers about 10 percent less than the cost of building and operating new power plants. The utility’s filing asks for a return of and on 90 percent of the costs avoided, based on the watts saved through energy efficiency. This percentage would automatically produce savings for customers given the supply alternative, and provide the company with enough revenue to cover all program costs, including education, awareness and administration costs; measurement and verification costs; research and development costs; and lost profit margins – while providing an appropriate return on the investment.

The company has negotiated a compromise with opponents of its program in South Carolina, and hopes soon to receive regulatory approval in that state. Instead of allowing Duke Energy to charge customers 90 percent, the figure has been reduced to 85 percent of the amount it would have cost to produce the watts saved. If finally approved, the program will be reviewed in two years’ time.