How your utility could help you save energy

Last time you got your electric bill, you probably skipped straight down to the line saying how much you owed.

You might have been shocked that the bill was a little higher than normal (coal and natural gas prices are on the rise, after all). Or, after implementing a number of suggestions in this blog, you might have been pleasantly surprised that the bill was lower than normal.

But your consumption of energy -- the number of kilowatt-hours you used -- probably didn't register.

At RMI, we talk a lot about this disconnect. Most people just understand cold beer and hot showers, not the units of energy it takes to produce those services.

But when we respond to high electricity bills, we usually think about scaling back on services (air conditioning, lighting, etc.), not kilowatt-hours.

The fact of the matter is that most of us are paying for kilowatt-hours, not services. In all but a handful of states, electricity is sold as a commodity: Utilities are financially rewarded for selling us more kilowatt-hours and penalized for helping us conserve.

Getting the incentives right
So what's the solution? How do we align our incentives with the utilities', do more with less, and put fewer greenhouse gases into the atmosphere?

Re-write the rules.

By "decoupling" utilities' profits from the number of kilowatt-hours they sell, utilities are assured a steady revenue stream but no longer stand in the way of energy efficiency programs.

Add a few incentives (like allowing utilities to take a cut of any measured, third-party-verified savings), and the energy provider is inclined to help you use less energy.

Those savings could come in myriad forms, from weatherizing homes to retrofitting office buildings with the latest energy-efficient equipment.

Untapped potential
The potential for efficiency gains is enormous.

When California embarked on a massive efficiency campaign in 1999-2000 that included revenue decoupling, buying efficiency cost an average of 3.9 cents per kilowatt-hour.  By 2004, California's efficiency programs were averaging 1.4 cents per kilowatt-hour. Adding additional power generation would have cost the state 15.7 cents per kilowatt-hour.

Jim Rogers, CEO of Duke Energy, one of the nation's largest utilities, now calls efficiency the "fifth fuel," complimenting the other four main sources of electricity: coal, natural gas, nuclear, and renewables.

His company's "Save-A-Watt" program has galvanized a number of utilities, serving nearly 20 million people, around the idea of providing energy efficiency services and drawn support from non-profits, including the Clinton Global Initiative.

At an RMI forum in Aspen last week, Rogers noted that the main thrust of the U.S. electric industry in the 20^th century was to provide electricity to everyone.

The goal for the 21^st century, Rogers said, should be to make the United States the most energy-efficient economy in the world.

Coming from the CEO of the third-largest CO2-emitting company in the country (and 12^th largest in the world), that's good news for climate protection. 

Noah Buhayar is a fellow at Rocky Mountain Institute.