Effective energy efficiency plans are critical for Iowa’s clean energy future

Above:  Energy efficiency efforts really add up.  In 2010, Iowa utilities saved an amount of energy equal to what this coal plant located between Muscatine and Davenport, Iowa, produces in a year, meaning a similar plant will not have to be built.  According to utilities’ own analysis, it is possible for Iowa to make almost twice as much progress each year through cost effective energy efficiency initiatives.

This year, the Iowa Utilities Board will be making big decisions about how much energy utilities in Iowa will attempt to save in the next five years. Iowa’s energy efficiency policy requires MidAmerican, Alliant, and Black Hills to make energy efficiency plans every five years for review and approval by the Iowa Utilities Board.

Historically, Iowa’s use of electricity and natural gas grows a little each year. Reducing use of energy in Iowa helps offset the need for building new power plants, reduces reliance on imported fossil fuels, and achieves a cleaner environment. The plans utilities create must identify annual goals for saving electricity and natural gas and describe individual programs to achieve those goals.

Nathaniel Baer

Baer

The Council, in partnership with the Environmental Law & Policy Center and Iowa Policy Project, will be closely engaged in this review and approval process. We will make proposals on a range of specific programs – from use of LED light bulbs in homes to more efficient industrial processes – but one of the most important issues is the overall savings goals utilities will meet for each of the five years in their plans.

Last year, the utilities hired a consultant to do a comprehensive study of what could be accomplished with energy efficiency in Iowa. The study, known as an energy efficiency potential study, showed that there is, frankly, big potential for energy efficiency in Iowa—so much so, in fact, that that the utilities could save about 2% of their retail sales every year with new energy efficiency measures. And fortunately, these measures are cost-effective because the economic benefits they produce are greater than their cost.

Two percent a year might not sound like a lot, but the savings grow over time. Each year, new measures are adopted to equal 2% of retail sales, on top of the measures installed in each previous year so that after five years of saving 2%, for example, the total saved is 10%.

Since most measures stay in place for a number of years – such as an LED bulb that will last 10 years or a more efficient furnace that should last longer – the savings really grow over time. The potential study indicated that over 10 years, utilities could meet 20% of their retail electric sales with efficiency measures. That is more electricity than Iowa gets from natural gas, hydropower, and nuclear combined.

In fact, over time doing energy efficiency is a lot like building – and operating – small piece of a power plant every year. Each year we add to the power plant and keep what we added in previous years. After 5 or 10 years, the power plant becomes quite a significant resource in the overall energy mix. By operating what amounts to an efficiency power plant, we can use our existing coal-fired power plants less and delay or eliminate the need to build new fossil fuel generation.

Unfortunately, just because we have the opportunity to use energy more wisely and it is highly cost-effective does not guarantee it will actually happen. MidAmerican and Alliant have proposed plans that do not take nearly take advantage of all the cost-effective savings, and are also in the process of proposing to build more expensive power plants. Our task is to convince policy makes and other stakeholders that the utilities should take advantage of every cost-effective efficiency opportunity in Iowa. The technical and economic case is there, but the political will to do this remains an open question.

 The author is energy program director at the Iowa Environmental Council.

Special update: Some large industrial users are attempting to ‘opt out’ of Iowa’s efficiency programs, meaning they would stop contributing to the efficiency funds and stop using the programs. The Council’s view is that energy efficiency benefits all ratepayers, so all ratepayers should contribute. The first attempt by these companies to opt out has failed after they withdrew a petition at the Iowa Utilities Board to determine whether the IUB had the authority to allow an opt out. The Council, working with ELPC, strongly opposed this petition. We will be closely monitoring this issue at the IUB in future proceedings as well as at the legislature.

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