March 2001 issue

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Conservation: It's back to the future for the most efficient energy resource

To paraphrase Benjamin Franklin, who once said, "a penny saved is a penny earned," a megawatt conserved is a megawatt generated. It's a homely adage, perhaps, but one that serves as an apt reminder that wise management is as much about conserving power as generating it.

When the Northwest Power Planning Council was created in 1981 through the Pacific Northwest Electric Power Planning and Conservation Act, one of its principal mandates was for the development of conservation and renewable energy as the region's first means of meeting future electric needs. Conservation was to be considered a source of new energy, replacing the need for the construction of additional generating facilities. The Act defines conservation as "any reduction in electric power consumption as a result of increases in the efficiency of energy use, production, or distribution."

Besides being the least expensive resource available, it is also the most flexible. Its generation is incremental, thereby avoiding large surpluses, and it has a relatively short lead time to "construct." Most conservation programs can be put in place within three years, producing electricity immediately and throughout the entire implementation program. If power demand does not materialize, conservation programs can be stopped with no loss of the investment already made. There is little risk of "over-building" conservation because as soon as it becomes clear that too much conservation resource is being implemented, the program can be scaled back.

Throughout the 1980s and much of the '90s conservation programs in the region produced an average of 1,440 megawatts of energy savings, the equivalent of what as many as five combustion turbines would produce, and enough to power the cities of Seattle, Washington and Eugene, Oregon. Nearly 50 percent of this was made possible through programs funded by the Bonneville Power Administration. By the mid-'90s, the prospect of deregulation had changed people's outlook on the energy situation, and the prevailing opinion was that in a competitive market the cost of electricity would remain low. It was believed that the free market, through the forces of supply and demand, would provide its own mechanism for maintaining the low cost and reliability of power to consumers.

But as we have seen over the last several months, and most recently during the summer and winter, when skyrocketing prices, unexpected brownouts, and shortages produced anxiety and doubts about deregulation, expectations and reality are two very different things. In 1998, the Council estimated that more than 1,500 megawatts of cost-effective conservation were still available, and the current high prices for power mean even more is available today.

"The biggest factor that's changed is the expectation of what electricity will cost and its availability," says Tom Eckman, the Council's manager of conservation resources. And with that uncertainty over cost and availability comes a renewed interest in conservation as a means to acquire power.

"A principal change is that Bonneville, contrary to what some thought would happen with deregulation, has remained a low cost provider," continues Eckman. "As a much more attractive power option, they need to fill the gap and acquire capacity to serve just their existing utility and industrial customers."

One way to acquire conservation is through rate credits that customers receive when they invest in conservation, renewables, or low income weatherization. This past year the Council's Regional Technical Forum (RTF), an advisory committee established in 1996 to develop standardized protocols for verifying and evaluating conservation savings, was requested by Bonneville to assist it in the implementation of a conservation and renewable resource rate discount program (C&RD). The committee was asked to identify and recommend a list of qualifying measures that Bonneville can consider for use in the C&RD program. Those recommendations were subsequently developed and have been submitted to Bonneville for its consideration (see the RTF webpage, "Recommendations" link).

In the past several months, Bonneville has held several meetings on re-starting conservation efforts. Later this fall they plan on releasing a request for proposals on conservation programs from utility customers, efficiency firms, and other third parties. According to Eckman, by next fall people should begin to see more marketing on the need for, and opportunities to participate in, conservation programs and rate discount opportunities.

In addition to these activities, the Council has been actively participating in the Department of Energy's rulemakings to update the efficiency standards for water heaters, air conditioners and heat pumps, clothes washers, and fluorescent light ballasts. All of these standards are expected to be finalized by the end of the year.

Through Oregon's Senate Bill 1149, the Restructuring Public Benefits Charge, a private non-profit entity was established that will contribute 3% of its retail revenue of electricity sales (estimated to be $60 million annually) towards low income weatherization, conservation and renewables. And the Northwest Energy Efficiency Alliance is another private non-profit that allocates $100 million towards market transformation initiatives to promote electricity efficiency.

With the continuing uncertainty about the electricity market come opportunities to reexamine how we can maintain its affordability and availability. And as in the past, the practice of conservation may well play an important role in achieving those goals.