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KAI RYSSDAL: There’s a quote from Vice President Cheney that leads nicely into this next piece. Six-and-a-half years ago, April of 2001, he was deep in the workings of his energy task force. And he gave a speech to the annual meeting of the Associated Press. Where he said, among other things, that conservation is a sign of personal virtue but it’s no basis for a comprehensive energy policy. He caught a lot of grief for that. For the task force, too. But six years later some in the energy industry have taken conservation to heart. From the Marketplace Sustainability Desk, Sam Eaton has more.
SAM EATON: For most utilities profits come from selling more electricity not less. So when Duke Energy’s CEO, Jim Rogers, recently endorsed conservation it turned heads.
JIM ROGERS: The most environmentally benign plant, power plant that I can build, is the one that I don’t build.
Rogers says meeting the country’s surging energy demand doesn’t have to come from building new power plants. It can come from efficiency.
ROGERS It’s much cheaper than renewables, much cheaper than a new power plant, coal or nuclear. At the same time it has a zero emissions footprint.
But there’s still that nagging detail: If you’re in the business of selling electricity, efficiency typically doesn’t pay. That’s where regulators come in. More than a dozen states have either adopted or are considering measures that reward utilities for reducing electricity demand rather than boosting it. It’s called “decoupling.”
Ralph Cavanagh with the Natural Resources Defense Council says if fully realized, energy efficiency could more than offset the need to build new power plants.
RALPH CAVANAGH This is not tweaking things at the margins. This is an enormous energy resource.
With an enormous profit potential. In California, which has operated under a decoupled system for more than two decades, utilities are rewarded for investing in conservation. If they reach certain goals, the state lets them charge higher rates. Cavanagh says this allows utilities to grow their profits while energy use levels off or even declines. And he says even though Californian’s use about 50 percent less energy per capita than the rest of the nation, they can still conserve more.
CAVANAGH There is so much low-hanging fruit and when you pick the low-hanging fruit with energy efficiency it grows right back. There is no corner of the economy where you can’t find cost-effective efficiency if you look.
One of those places is California’s Silicon Valley. Warehouse-sized data centers here handle much of the nation’s Internet traffic. These rooms of power-sucking computers require massive amounts of electricity. But instead of building new power plants, California utilities are paying companies like Sun Microsystems to make these facilities more efficient.
GREG PAPADOPOULOS See these are the chilled water supply lines and the hot returns…
Chief Technology Officer, Greg Papadopoulos, shows off a new data center at Sun’s Santa Clara campus. Innovations in cooling have allowed Sun to more than quadruple its computing power while at the same time cutting its electricity use by 30 percent.
PAPADOPOULOS You can take one of our new servers and actually replace a whole rack of old servers with it and not increase the power footprint.
But not everyone is pleased with the utilities getting into the conservation business.
ROBERT RIO: I can tell you who the losers are. The losers will be the people who pay rates.
Robert Rio is with the Associated Industries of Massachusetts. State utility regulators held hearings today in Boston to consider a decoupling plan of their own. Rio says high electricity rates have already burdened the state’s businesses. And he says the only thing that’s going to bring those rates down is to build more power plants.
RIO It is very simplistic to say that we’re gonna conserve our way out of this problem. In fact, I think it’s shortsighted. Because by the time we find out that conservation was not the only answer, we’re gonna be behind two power plants and not one power plant. Because the danger is we don’t have enough power.
By some estimates the U.S. needs to spend nearly a trillion dollars over the next 15 years in order to meet rising electricity demand. But conservation advocates say this only bolsters their case. Investing in energy efficiency is a lot cheaper than building new power plants. And they say in the end those savings translate into much lower electricity bills.
In Los Angeles, I’m Sam Eaton for Marketplace.
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