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To Be a Star, Hire an Energy CzarPrint

Clean Energy | July 6, 2010 | By Jim Dulzo

With an efficiency czar, a utility can help customers figure out next steps for saving energy and money.

So far, our answers to Traverse City Light & Power’s questions about our “20-20″ proposal have explained that saving a watt is the same as generating a watt and is much cheaper, so spending on efficiency makes way more sense than spending on new power plants.

We’ve also highlighted something called “decoupling,” which allows a utility to thrive even as it spends money helping customers use less electricity.

But before moving to TCL&P’s other questions about our proposal, 20-20 by 2020: A Clear Vision for Clean Energy Prosperity, let’s look one more time at how best to make efficiency work-for everyone.

The elephant in the room is the fact that decoupling is still rare in the U.S.  California has had it for years, and hasaccomplished amazing things with it. Idaho and Delaware have recently allowed decoupling, and Michigan, thanks to a directive from Governor Granholm, is working on the idea for its utilities.

But the word “decoupling” still draws blank stares from most people, including many utility executives-as does my idea of writing big utility checks to customers to pay for their energy-saving investments.

Even California’s Pacific Gas & Electric, America’s largest decoupled utility, does not just give away insulation, white roofs, or ultra-efficient water heaters. But it does offer generous rebates on almost any energy-saving thing you can think of, and has entire offices devoted to promoting and facilitating efficiency investments.

Happily, bills are being debated in Lansing and Washington that would accelerate a decoupled TCL&P’s generous rebate program and make efficiency a pain-free, money-saving no-brainer for lots of people, starting with homeowners and small businesses.

These bills would make a lot more money available for efficiency-without tightening monthly budgets. Both bills target big energy hogs-leaky homes and businesses that would save lots of watts by zipping up, and often owned by financially strapped people.

That fits well with what MLUI proposes in 20-20-targeting the biggest energy losers as an essential first step toward cutting overall electricity demand by 20 percent in 10 years.

The Michigan bill, known as Property Assessed Clean Energy or PACE legislation, recently zipped through the House. It would allow local governments to raise bonds to fund residents’ energy efficiency improvements at low interest rates. If you could spend, say, $5,000 from the fund to seal and retrofit your home’s insulation, cut your heating and cooling bill by 40 percent, keep some of those savings, and use the rest to pay back the loan via your property tax bill, would you be interested?

How about if a decoupled TCL&P threw in a generous rebate, based on how much juice your project cuts loose?

You’d be well ahead, either when you moved or when the PACE loan was paid off: The loan stays with the house, and you could get a better price because your home is so efficient.

If PACE is a good thing-and it’s legislation that more than a dozen states have adopted-the federal plan, “Cash for Caulkers,” already passed by the House, is a humdinger: The more efficient you get, the more money you get to make it happen.

A complete redo-sealing, insulation, furnace, ducting, doors, windows, lighting fixtures, water heater, washer, dryer, dishwasher-could cut your entire annual home energy bill-not just heating-by 40 or 50 percent.

But it also could cost more than $10,000.

Cash for Caulkers takes this seriously. It would pay up to $1,500 for each efficiency improvement to the building and $275 for each high-efficiency appliance. If you energy-audit your home and cut your energy use by 20 percent, you get $3,000. You earn an additional $1,000 for each additional 5 percent cut in your energy use, up to $8,000 or 50 percent of the project cost.

Hook that up with TCL&P rebates and a PACE loan and suddenly there are hammers swinging and service trucks buzzing all over town. Cash for Caulkers sponsors say their bill would create 170,000 construction jobs nationally. We say it would be a very good thing locally.

But are all these programs really necessary? Some folks argue that, given the big payoffs from well-designed efficiency projects, government money is unnecessary, if utilities decouple and start planning all of their investments in the most customer-, economy-, and earth-friendly ways possible.

I agree: TCL&P can get going on this immediately, without state or federal backup.

The muni probably has the necessary legal power to decouple its rates without Michigan Public Service Commission permission. It could raise the first million dollars of its own efficiency fund with a tiny, rate-based addition to each customer’s monthly bill, and get right to work on its biggest power hogs.

And it could gradually grow the fund through another tiny addition to monthly bills, or make the fund a revolving one, or both.

MLUI knows that cutting TCL&P’s demand by 20 percent from “business as usual” by 2020-the output from two of the three 10 MW biomass plants the company once proposed building-is aggressive. But it is doable. The tools are out there, waiting to be used.

What the company needs is an efficiency czar, like Ann Arbor and some other cities have-someone who knows what and where those tools are. In this case TCL&P, with its dauntingly small 10,000-customer base, could share the czar’s “cost” with regional governments. This regional czar would make saving governments’ and customers’ electricity and money-and pulling in grant dollars-a fulltime job.

The amount of public and private grant money supporting efficiency projects is simply enormous today; support from state and federal programs is accelerating. A good energy czar could quickly save Traverse City and other, surrounding local units significant municipal energy dollars and pull in big grant dollars; it would more than pay for itself.

Jim Dulzo is the Michigan Land Use Institute’s managing editor. Reach him at jimdulzo@mlui.org.