The power industry truism that the cheapest kilowatt is the one you don't use may be even truer for consumers than it is for suppliers, so why are there still utilities and businesses that resist investing in energy efficiency?

This question has implications that extend beyond the energy market to the economy, the environment and national security. The Department of Energy and the Environmental Protection Agency are sponsoring an initiative to find answers and develop an Energy Efficiency Action Plan.

The goal of the action plan is to identify key barriers limiting greater U.S. investment in energy efficiency. The next step will be to develop strategies to address the barriers and compile business cases to demonstrate the value of energy efficiency. Once the plan is completed, participants will look for opportunities to put recommendations into practice and to promote the measures to others in their fields.

"This process encourages regulators to take a fresh look at cost-effective energy efficiency resources as a means to provide necessary utility services to the customer today and in the future," said Diane Munns, an Iowa Utilities Board member and president of the National Association Regulatory Utility Commissioners. Munns co-chairs the leadership group with Jim Rogers, chairman and chief executive officer of Cinergy.

Experts from throughout industry

A leadership group drawn from different energy industry sectors is spearheading the effort. Members include representatives from utilities, state regulatory agencies, energy services providers and consumer and advocate groups. An observers group culled from energy-related associations such as the American Public Power Association is also providing input and comment on plan development.

The common denominator for participation is expertise in energy efficiency, said EPA Program Manager Stacy Angel. "We looked for people who have been leaders in energy efficiency for several years," she said. "Those people also referred us to others who could provide different points of view on the issues."

As sponsors, DOE and EPA provide the leadership group with general guidance on national energy and environmental policies and plans, along with other support and resources. The sponsors also hired a facilitation team of experts to contribute administrative, logistical and analytical support.

"The diversity of agencies involved shows how broad and how important this issue is," said Energy Services Representative Ron Horstman. "The industry is coming to understand one of the guiding principles behind Western's Energy Services program—that energy efficiency is a resource."

Sub-groups address specific issues

At its first meeting last December in Washington, D.C., the leadership group formed four working groups to develop specific work plans and products:

• Energy Efficiency Program Best Practices – One reason businesses are slow to adopt energy efficiency is a lack of knowledge about effective and affordable measures. This group will examine successful state and utility program models for residential, commercial, industrial, low-income and small business sectors. Approaches may include public information and training, financing and financial incentives, energy savings bidding and performance contracting.
  
  
• Utility Ratemaking and Revenue Requirements – Power suppliers, particularly investor-owned ones, may resist energy efficiency because it reduces their earnings. This group will identify cost-recovery strategies that have successfully removed financial disincentives to energy efficiency. Incentives that make energy efficiency investments as rewarding as capital investments will also be considered.
  
  
• Planning Processes – Resource acquisition planning processes rarely incorporate energy efficiency and other customer-side resources. This group will evaluate utilities' planning approaches and metrics for integrating energy efficiency resources into the process.
  

• Rate Design – Rates do not encourage customers to conserve. Some regions are successfully using rate designs such as time-of-use or seasonal rates that more accurately reflect the cost of providing electricity and encourage customers to conserve. This group is collecting information on strategies such as time-of-use rates to identify rate designs that motivate customers to save energy.

Plan to answer growing interest

The December meeting resulted in working group plans that set goals, outlined study methods and established a timeline. Facilitation teams will work with each group to prepare a report explaining the barriers to energy efficiency within its topic area and offering strategies to overcome those challenges. Reports will provide business cases for those approaches and resource lists of libraries and experts. Summaries and recommendations will provide direction for the next steps and completing the action plan.

The facilitation teams presented draft reports to the leadership group at a March 23 meeting. The partnership expects to complete the action plan by summer. "Companies that weren't asking about energy efficiency a year ago are starting to express an interest," said Angel. "The sooner the action plan gets out there, the sooner the leadership group can reach out to those parties."

Horstman looks forward to seeing the final plan. "An effort that brings so many energy professionals together should create some great resources. Energy Services will welcome new ideas and strategies to help Western customers increase their energy efficiency," he added.