14 Jan Wisconsin Should Create, like Renewables, an Energy Efficient Portfolio
A Golden Age of Energy Efficiency
With deregulation of the retail electric utility industry a distant memory with an exception or two, it appears to be a time to return to regulated utility basics. This means that Wisconsin and its legislators should revisit the original text for the regulation of public utilities to find a blueprint for its future direction. As Wisconsin’s position on energy policy states in WI State Statute 1.112 in the “Priorities” section, “In meeting energy demand, the policy of the state is that, to the extent cost-effective and technically feasible, options be considered based on the following priorities, in the order listed:
(a) Energy conservation and efficiency;
(b) Non-combustible renewable energy resources;
(c) Combustible renewable energy resources;
(d) Nonrenewable combustible energy resources, in the order listed: natural gas, oil or coal with sulphur content of less than 1%, and all other carbon-based fuels.
In other words, energy conservation and efficiency has priority over all energy sources including renewables. The idea was to achieve a balanced portfolio of energy sources and energy usages, not unlike a balanced portfolio of financial assets.
The original and still compelling reasons for an energy efficiency emphasis and for an energy efficiency portfolio are as follows:
(1) Energy efficiency does not have the reliability problems associated with renewables, like windless hours and sunless days;
(2) Energy efficiency does not require transmission and transmission lines;
(3) Energy efficiency can be achieved by individuals and individual companies working with their utilities;
(4) In this “Golden Age of Energy Efficiency,” the results can be measured and verified; and finally,
(5) It is the most cost-effective way to create new electrical supply.
With this in mind, work has begun on developing a plan that will allow Wisconsin to maintain its status as an environmentally responsible state. While there is one state, Colorado, which is contemplating adopting a bill to establish energy efficiency performance standards, Wisconsin and all other states have an opportunity to create a directive for their Public Service Commission that will implement a system of demand reduction by adopting specific target figures for each utility. This “portfolio” approach is not unlike the one already used for renewables. It would require the Public Service Commission to oversee all utilities and their efforts to reduce demand before they are allowed to build new power plants.
The purpose of this energy efficiency legislation is to strengthen the current state statutes regarding energy efficiency, develop a portfolio approach which recognizes verifiable energy efficiency as a supply-side option (renewable portfolio standard approach), and create a financial mechanism which reduces overall energy costs. The following are five basic tenets of the legislation:
(1) Establish energy efficiency goals for all energy providers, both in the context of annual targets plus as an adjunct to any new power plant or transmission line projects. This can be done as a percentage of load, load growth, or stand-alone annual targets. Begin with a two-year goal beginning three months after passage of legislation equal to 250 Mega-watts.
(2) Establish a rate of return criteria, which is reasonable for the utility providers and encourages their involvement, support, and implementation.
(3) Establish the criteria for energy efficiency that is both measurable (to a baseline minimum) and verifiable.
(4) Encourage the inclusion of energy efficiency in the planning process by the Public Service Commission and the Legislature, viewing energy efficiency as an alternative supply-side option.
(5) Administer the program verification through a third party such as Focus on Energy.
We are entering a Golden Age of energy efficiency and conservation where large amounts of energy savings is finally possible. Many believe that this new legislation will assist economic development in Wisconsin; and, at the same time, it will provide the most environmentally sound option for the citizens of the state.
In a recent market study done by Orion Energy Systems, commercial and industrial lighting fixture energy efficient replacements in the United States could reduce demand by approximately 22,000 Megawatts (MW), the Reduced Consumption (also known as Displaced Capacity Energy Model) concept employing well-rounded and robust energy efficient initiatives, including all forms of energy efficiency, could probably deliver over 1500 Megawatts in Wisconsin and 100,000 Megawatts of reduced consumption in the U.S.
Ultimately, the concept would reduce the need for three new 500 Megawatt coal-burning plants in Wisconsin and 200 new 500 Megawatt coal-burning power plants in the U.S. The environmental and economic benefits of such a concept will transform the marketplace for electricity and the future need for new power plants.
With careful stewardship, Wisconsin has an opportunity to conserve its natural resources, reduce pollution, save business and residential consumers money, and enhance the reliability of its electric supply by actively promoting the use of available and cost-effective energy efficiency measures by utilities serving Wisconsin’s population. With a rebalanced portfolio of energy efficiency and renewable energy sources, Wisconsin can provide national leadership at a time when the United States needs a practical energy policy that encourages economic development and environmentalism.
On both a state and federal level, the best place to start is to rebalance the energy assets with the targeted approach found in energy efficiency and renewable energy portfolios.
Stephen Heins, “the word merchant,” is Vice President of Corporate Communication at Orion Energy Systems. He can be contacted at
The opinions expressed herein or statements made in the above column are solely those of the author, & do not necessarily reflect the views of the Wisconsin Technology Network, LLC. (WTN). WTN, LLC accepts no legal liability or responsibility for any claims made or opinions expressed herein.)