Category Archives: General

Cream Cheese And Time-Of-Use Electricity Pricing

By | Bio | Published: May 7, 2013

This commentary was originally posted on EDF's California Dream 2.0 blog.

“The cream cheese just fell off the roof of the car,” my 7-year old daughter said as I turned into my driveway after a trip to the grocery store. Right now you might be asking yourself, “What does this have to do with time-of-use pricing?” Allow me to explain.

We live in Alameda, CA, where plastic bags are prohibited and stores must charge for a paper bag. Alas, I had forgotten to bring a reusable one. To teach my children a lesson and avoid the public scorn (not so much the $0.05 per bag), I carried our groceries and asked the kids to lend their hands. And yes, I put the cream cheese on the roof of the car to free a hand to unlock it.

Once home, I realized that, in addition to almost losing my cream cheese, I’d been making potentially risky tradeoffs. After all, exiting the supermarket with full hands prevented me from holding my children’s hands while crossing a busy – and dangerous – parking lot.

Don’t get me wrong; I’m not lamenting the ban on plastic shopping bags. I think it makes perfect sense, but it takes time to start making the adjustment and the risk tradeoffs aren’t always obvious.

This scenario– making adjustments that may seem inconvenient and a bit scary, but are well worth the effort– plays out in other areas of life as well. Particularly in rethinking how Americans use and pay for electricity.

Source: Union Atlantic Electricity

Most of us don’t think about how the time of day affects the cost of serving us power. In California, we aim to change that by moving to Time-of-Use (TOU) pricing – which will make electricity more expensive during times of peak, or high, energy demand and cheaper off-peak. In fact, just yesterday, the Sacramento Municipal Utility District (SMUD) recommended moving all residential customers to time-of-use rates by 2018 in an effort to give customers more control over energy costs.

EDF believes that TOU pricing will be best for people and the environment, just as banning plastic shopping bags effectively reduces their environmental impact. This approach can encourage conservation and reduce peak energy use while providing customers with more choices that can ultimately lower their monthly bills. Switching to TOU electricity pricing may feel to some like being thrust into a busy parking lot with an armload of groceries and two children to monitor. When should I use my dishwasher? Do I need to reset my air conditioner? Well, yes and no. You can choose to do nothing, or you can exercise a choice you don’t have with our current pricing structure: shifting energy use to times of lower electricity prices. It’s quite doable.

Read More »

Also posted in California, clean energy, Renewable Energy, Smart Grid, Solar, Utilities, Wind | Tagged , | Comments closed

Nest Labs: Proof Life Exists In The Smart Grid Ecosystem

By | Bio | Published: April 23, 2013

This commentary was originally posted on EDF's California Dream 2.0 blog.

There are many conceptions of the smart grid; what it is and what it should do for us – the “ratepayers” – who will finance the necessary upgrades to California’s electrical system. I find the concept of a “smart grid ecosystem” — with smart customers, smart utilities and smart markets — to be a helpful guidepost as we seek to evaluate what should be accomplished by the utilities trusted to deploy our smart grid.

Ecosystems achieve resiliency through diversity. We want a variety of clean energy resources on the supply side – hydropower, wind, solar photovoltaic, solar thermal – spread across a variety of locations (but never too far from customers). Similarly, on the demand – or customer – side, Californians, buildings, appliances and electric vehicles create an intricate, synergetic web that can be made more efficient and flexible with customer education and empowerment, customer-focused energy pricing policies, and demand response (which allows customers to voluntarily reduce peak electricity use and receive a payment for doing so in response to a signal from their electric utilities).

There are other ways to contemplate diversity in the energy context: Unlike some other states, most Californians can’t choose their power providers, though they can choose among rate “plans” (which are payment schemes, not plans to help manage energy use and costs). EDF recognizes that a smart energy marketplace will thrive with a greater variety of competitors, products and services, and would like to see “3rd party energy service providers” able to participate (that catch-all term includes organizations that deliver energy services and products to customers at a variety of levels throughout the smart grid ecosystem).

Yesterday’s announcement by Nest Labs (Nest) is more proof that the smart grid ecosystem is alive and well. With utility partnerships in California and Texas, among other places, Nest uses their intelligent, WiFi-connected thermostat to help customers smartly and painlessly trim energy use by learning, and mimicking, their temperature preferences automatically. For example, the Nest’s Seasonal Savings services will alert your thermostat when new rates apply with a change of season and the device will begin slight adjustments to presets to adapt to predictable weather trends. Read More »

Posted in General | Comments closed

New Study Expands Efforts to Understand Climate Implications of Methane Emissions

By | Published: April 11, 2013

New supplies of natural gas are no doubt changing our energy landscape and, of all fossil fuels, natural gas appears to be a smarter choice because its carbon footprint is smaller when combusted than coal or oil. When talking about natural gas as part of a potential climate solution, though, it is important to recognize its unique position as either being a good or bad thing for global warming – depending upon the amount of uncombusted methane emissions that are released into the atmosphere.

No matter what market forces dictate for the future of gas, it’s EDF’s job to ensure that natural gas doesn’t become a detriment to public health or the environment. And, with respect to air quality and climate, getting better data on methane emissions is essential.

Methane can be emitted at various points across the natural gas system. Comprised mostly of methane, natural gas is a potent greenhouse gas. When it enters the atmosphere unburned, it has a higher warming potential than carbon dioxide, the principal contributor of man-made climate change. The more gas released, the more it undermines the climate benefits of using natural gas as compared to other fossil fuels. Yet there is no clear sense of how much and from where methane is leaking out from the system, as my colleague and Chief Scientist Steven Hamburg has explained here.

Over the last year EDF has been orchestrating a large-scale study of methane emissions with leading researchers in the field and industry to better understand the amount of methane emissions across the natural gas supply chain. To date the 30-month collaborative effort, with a $10 million overall budget, is bringing together almost 20 universities and research facilities and about 40 industry partners, collectively, in order to measure methane directly at potentially large emissions sources as gas moves from the formation underground to the wellhead and then on to the consumer.

Yesterday, the third part of EDF’s methane research study was announced, which focuses on the local distribution of natural gas (from city gate to customer meter) Read More »

Also posted in Climate, Greenhouse Gas Emissions, Methane leakage, Natural Gas | Comments closed

EDF, Wyoming Outdoor Council Team To Protect Wyoming Air From Oil And Gas Development

By | Published: January 18, 2013

Wyoming Outdoor Council’s lead attorney on air quality

EDF and Wyoming Outdoor Council are teaming up to protect air and water quality from oil and gas development in the Cowboy State. One of the first efforts in this partnership surrounds strengthening air quality regulation for the oil and gas industry in Pinedale, WY where persistent ozone pollution threatens the health of local residents. EDF’s Natural Gas Media Director, Lauren Whittenberg, recently sat down with Bruce Pendery, Wyoming Outdoor Council’s lead attorney on air quality issues, and Jon Goldstein, EDF’s Senior Energy Policy Manager, to learn more about this partnership.

Lauren Whittenberg: Can you tell me about the pollution problems in Pinedale?

Bruce Pendery: Well, first and foremost, this pollution is a public health issue. Monitoring of air quality in the Upper Green River Basin in western Wyoming near Pinedale started to show dangerous levels of ground level ozone pollution in 2006. Ground level ozone (also known as smog) is created by a complicated interaction between two different forms of air pollution, oxides of nitrogen and volatile organic compounds. Oil and gas development in the Pinedale area is the main source of both. Since the problem was identified, the Wyoming Outdoor Council has been heavily engaged with regulators, local citizens and industry to seek a way to reduce this harmful pollution to protect the local citizens and gas field workers.

LW: What problems does ozone pollution cause?

Jon Goldstein: Ozone is a toxic air pollutant widely known to cause a host of respiratory problems. Exposure to ozone pollution, even in low concentrations, can cause serious health problems, including permanent damage to the lungs. To address some of these concerns, EPA introduced rules – for the first time – that established federal emission standards for natural gas well sites, as well as tightened existing standards for other aspects of gas processing and distribution. EPA’s clean air measures are important to reduce air pollution from the oil and gas sector. It’s also interesting to note that EPA – in part – based these federal standards on state level rules that have been in place in Wyoming for several years. However, a big opportunity exists to further strengthen federal and state regulations and reduce air pollution for communities dealing with poor air quality.

LW: What is the plan to address this harmful pollution?

BP: On January 10, the Wyoming Department of Environmental Quality (DEQ) announced its plan to address air pollution issues in the Pinedale area’s Upper Green River Basin. This plan is based on recommendations the department received from the Upper Green River Basin Air Quality Citizens Advisory Task Force,  a broad group of local citizens, elected officials, oil and gas industry and environmental representatives brought together by the department. I served on this task force and helped formulate the ten consensus recommendations we provided to the DEQ.

LW: What were the recommendations?

BP: These are very practical, common sense efforts to reduce emissions from oil and gas operations. Things like monitoring, investigating and plugging leaks from faulty oil and gas production equipment, reducing emissions from produced water tanks and ponds, and developing legal efforts to better regulate existing sources of pollution.

LW: You mentioned that these recommendations were “consensus.” What does that mean?

JG: That is what is so encouraging about this effort. Each of the ten recommendations has the buy in of every member of the task force – a very broad group of local citizens and elected officials as well as industry and environmental groups like Wyoming Outdoor Council. These practical recommendations followed nine months of deliberations by the task force and six lengthy meetings.

That such a broad group could reach consensus on ten methods to improve local air pollution is a testament to their dedication. This hard work will be well worth it when these ideas are made a regulatory reality, and air quality issues in the region begin to improve.

LW: What’s next?

JG: This action plan is a key first step; the DEQ has offered an outline that, if implemented quickly and completely, will help put us on the path toward cleaner, healthier air. But now is a crucial time in this process. It is now up to the DEQ to make these ideas a reality and implement them through regulatory processes as quickly as possible.

And we aren’t stopping with these ten items. We have advocated for additional efforts to improve air quality, including better measures to monitor maintenance activities such as liquids unloading, extending the state’s strong Presumptive Best Available Control Technology (P-BACT) requirements throughout the ozone nonattainment area, and ensuring that existing and grandfathered emissions sources are controlled.

A lot is at stake. Inaction or inadequate action will not improve air quality or protect the health of local residents.

LW: How will Wyoming Outdoor Council and EDF keep this momentum going?

BP: We will remain involved in this process to ensure that the DEQ follows through as quickly as possible. We plan to be very active in the formal regulatory development and adoption processes that will kick off in the coming months. And we hope that all Wyoming citizens will stay involved in this effort. Wyoming has a strong history of leadership in regulating air emissions from the oil and gas sector. Our plan is to defend this hard-earned reputation and protect people and our air quality in the process.

LW: What other efforts are on tap in Wyoming?

JG: Because of both the strong regulatory tradition that Bruce mentioned, and Wyoming’s status as one of the largest sources of domestic oil and gas resources, Wyoming is one of our target states for EDF’s natural gas work. We are working on a number of opportunities to raise the bar on air and water quality regulations and also improve drilling protections on federal lands. This includes adoption of strong new federal rules around the venting and flaring of natural gas. You will hear more about these efforts in coming months, but we are very happy to have a partner as well respected and experienced as Wyoming Outdoor Council  to help us make them a reality.

LW: Thank you both.

 

 

Posted in General | Comments closed

A Red Flag On Disclosure Of Hydraulic Fracturing Chemicals

By | Bio | Published: December 12, 2012

It’s not often that a new regulatory idea becomes so popular that one or more states per month climb on the bandwagon. But that is precisely what has happened with the push to disclose which chemicals are pumped into the ground to stimulate oil and natural gas production during the process known as hydraulic fracturing, or "fracking."

A year ago, only three states (Arkansas, Montana and Wyoming) required oil and gas producers to tell the public what chemicals they were using. Two other states (Colorado and Texas) were actively developing such rules. Today, just twelve months later, statutes or regulations mandating “frack” chemical disclosure are on the books in no fewer than 18 states, and proposals are pending or under consideration in several others.

FracFocus, an online registry that compiles information on hydraulic fracturing chemicals both for states where disclosure is voluntary and required, has been up and running for just 20 months, but already it houses approximately 800,000 records that include ingredients data. As of December 5, 2012, this data represented 33,606 wells. The amount of information on the site continues to grow rapidly.

It is impressive that so much information has been made available in such a short time. Still, people have begun to wonder whether the disclosure rules are accomplishing what was intended. The question is important because rules that aren’t working need to be changed. A good regulatory system is based on a process of continual improvement, not a naive idea that the rulebook can be written in a way that will never need changing.

Unfortunately, judging from early press reports, there are quite a few bugs in the system. To be fair, the reporting requirements are quite new and still being implemented — and analysis of the data has barely begun. But  problems are emerging. The issue receiving the most media attention is the sheer number of trade secret claims. Read More »

Also posted in Chemical disclosure, EPA, Natural Gas, Texas, Water | Tagged , | Comments closed

Hurricane Sandy: A Lesson In Risk Planning For The Power Industry

By | Bio | Published: November 5, 2012

Living in New York City through a week of Sandy and her aftermath was a reminder of just how critical electricity is to our lives.

Electricity is the difference between feeling safe in well-lit buildings and streets, or vulnerable in the dark. Between food kept well-preserved in refrigerators and water pumping through pipes, or dinner spoiling and taps gone dry. Between communications and productivity, or isolation and economic losses — which are now forecasted, from Sandy alone, to reach $50 billion.

For some, electric power is literally life or death: heat on

(Credit: Master Sgt. Mark Olsen/U.S. Air Force)

a cold night, access to vital medical services.

The responsibility for providing these essential services rests on utilities. And the gravity of that responsibility – along with a reliance on long-lived and costly assets – has led to a culture of caution. One that has given the power industry pause in moving away from the tried and true methods it has used to generate and deliver power for the past 100 years.

But what the increasingly intense storms rolling across the country reveal is that – sometimes – what seems the cautious path is in fact the most risky.

With an estimated 9.5 million homes and businesses having lost power thanks to Sandy, the utilities faring best at restoring their customers to warmth and safety are those that have begun modernizing their grids with advanced information technologies, and using those “smart grids” to build resilience and reliance on community-based energy resources. I spoke with Bloomberg Businessweek earlier this week to discuss our outdated grid and the crucial need for modernization.

We’re already seeing proof these investments can reduce recovery time, keep crews and customers safer, and save lots of money. Thanks in part to federal stimulus grants, a number of utilities are embedding sensors, communications and controls across their networks. On the power lines that it has helped prevent cascading disasters like the one that knocked out power to 55 million people in 2003, when a single Ohio tree fell on a power line. Automated systems can detect a fault, cordon it off and reroute power flow around it.

Digital “smart” meters, capable of two-way communications, have also proved their worth: providing utilities real-time, granular visibility into their networks, without resorting to (often failing) phones or trucks dispatched on wild goose chases.  Programmed to send a “last gasp” signal when they lose power, those meters have enabled rapid diagnostics – pinpointing exactly which homes or blocks were out, where the break had occurred – and expedited repairs.

Baltimore Gas and Electric, for instance, has installed about 10 percent of its planned 1.3 million smart meters. Linked to a “smart command center” borrowed from sister utility ComEd of Illinois (with whom EDF has been working on developing a set of performance metrics for its grid investments), the meters are telling them when their power restoration efforts have been successful or when further troubleshooting is needed. Without smart meters, they’d have to phone customers to ask if the power is back on. In storm conditions, according to Jeannette Mills, BG&E’s VP of Customer Operations, two-thirds of those calls go unanswered, which means they have to dispatch crews block by block across the region. This time, they’ve been able to ping the meters, asking “are you on?” Mills reports “a much higher rate of success getting through to smart meters than we do reaching customers by phone” enabling far more efficient dispatch of crews.

Utilities with smart grids have also kept customers better informed. A Pennsylvania Power and Light customer described to Smart Grid News how the real time tracking enabled by smart meters allowed him not only “to check on repair status for my own home (with crew on site info and estimated time to repair) … but also remotely online check the status of our two rental houses without having to physically drive to each to check them out."

One of the first utilities to demonstrate a smart grid’s resilience was Alabama Power, which was slammed in April 2011 by 30 tornadoes across 70 miles with winds up to 190 mph. The twisters left 400,000 without power and thousands of poles, wires and substations damaged or destroyed. But by using its 1.4m smart meters to locate the outages and prioritize repairs, the utility restored all of its customers within a week. It also drives 4 million fewer miles each year.

The security benefits of a smarter, more resilient grid have caught the attention of the U.S. military. It has begun installing smart grid technologies on bases so they can function as “microgrids”: decoupling from the commercial grid in the case of a natural or manmade disaster and maintaining vital homeland security operations. The bases will also become reliability resources themselves, capable of supplying power to the grid, or reducing demand, at times when the grid is stressed.

Most importantly, these smart grids will enable the military to meet its aggressive goals for shifting to low-carbon, domestic energy resources, particularly renewable energy on or near bases. Secretary of the Navy Ray Mabus has set a goal for the service to get half its power from renewable resources by 2015. A smart grid will be absolutely critical to enabling the integration of millions of smaller, regional resources, and for managing the on-again, off-again character of the wind and sun.

The Secretary’s leadership reflects his recognition of the greatest risks that come from sticking to our tried and true ways of making and delivering power:  the national security threats posed by climate change. These include the threats we’ve seen this last week, again, from rising seas and extreme weather, as well as the casualties incurred by troops having to protect vulnerable fuel supplies, and the acceleration of instability and conflict warned of in a 2010 DOD report. When it comes to power, the greatest risks will come from failing to be bold.

Posted in General | Comments closed

Demand Response Means Big Money for Big Users

By | Bio | Published: August 22, 2012

After a full week of triple digit temperatures in central Texas, the forecast this weekend for highs in the mid-90’s seems like a blessing both for our thermostat and for the unending topic of this blog series: our electric grid.  Officials from the Public Utility Commission (PUC) and the Electric Reliability Council of Texas (ERCOT) have been worried about the strain on our electric grid all summer long, but they aren’t just worried about this summer.  The energy crunch is an issue that we know will be with us until we deal with it; we can’t rely on dancing cats to ease the crunch. We need real solutions to avoid real problems in the future. 

It doesn’t have to be that way though, and it doesn’t need to cost as much as some worry it will, but that’s assuming that the PUC and ERCOT are able to move quickly and decisively to encourage demand response.  In our blog post last week we focused on the benefits of demand response for residential customers and small businesses, and that’s probably where the greatest overall potential lies.  But the quickest return – and the most financially savvy electric customers – might lie in the commercial and industrial markets today.  Fortunately two great examples in other parts of the country show how we could be doing more for those markets in demand response as well.

 “Making the Most of Your Energy” in NYC

Large commercial buildings typically face a number of hurdles when trying to upgrade their energy systems – particularly those with multiple tenants.  In New York City, the Rockefeller Group Development Corporation saw these hurdles as an opportunity for a new approach to energy management.  By selling their demand reductions to the grid, in the manner we’ve proposed for ERCOT, they managed to reduce energy usage by 60,000 kWh per month and reduced peak demand by 1.4 MW.  McGraw Hill now receives a net income (after payments for the financed upgrade) of $500,000 annually.

Rules in ERCOT might allow for this kind of savings already in some small ancillary services markets, so long as their metering system complies with ERCOT protocols.  Those ERCOT demand response markets are capped and already oversubscribed; leaving developers who want to build smart buildings or upgrade older ones are looking to other markets for their business.

Meanwhile, in the heartland….

We mean Warrick County, Indiana specifically. Alcoa, one of the world’s leading aluminum producers has worked with their grid operator Midwest ISO (MISO) to develop a completely new approach to industrial demand response that has blown the doors off of the possibilities for Texas’ industrial sector.  The market for aluminum is ruthless, and Before Alcoa anything that gives Alcoa a leg up helps them preserve critical jobs and tax income in their communities around the country. 

With this new market, Alcoa has managed to maintain international competitiveness for their Warrick County plant and is looking to expand demand response to their aluminum smelters in other parts of the country.  In Texas, where Alcoa's Rockdale smelters are were not able already struggling to maintain international competitiveness and have been idled as a result, , new markets like the pilot project announced by ERCOT on Monday could mean the difference for other industries between staying profitable and shutting down operations.

Whether it’s in the city or the country, a big user or a small mom and pop store, demand response markets offer a new benefit to customers if the market rules allow customers to compete with other resources.  As we discussed earlier this week, the potential for these resources in Texas would help us meet 15 percent of our peak demand needs according to ERCOT’s Brattle Report.  That potential stretches across all types of customers, and must be part of the solution to the energy crunch in Texas if we want to keep rates down and maintain reliability.

Also posted in Demand Response, Texas, Texas Energy Crunch | Comments closed

PUC Resource Adequacy Workshop on Friday, July 27

By | Published: July 25, 2012

Source: Brattle Group. “ERCOT Investment Incentives and Resource Adequacy.” June 1, 2012

This Friday, the Public Utility Commission (PUC) will host a workshop to discuss the Brattle Group’s recommendations for Texas’ resource adequacy predicament and how to move towards sustained reliability. This workshop is timely, since the Texas energy crunch continues to be in the spotlight. Just last week, the New York Times reported that Texas ranks last in electrical reliability among all states in the U.S. Texas won’t stay open for business if that remains the case and year after year it seems our state energy policy is based on a hope and a prayer. 

Table 1 of the Brattle report outlines the five policy options to solve the long-term problems.

The report specifically states that "reliance on scarcity prices is unlikely to achieve current reliability objectives.” Therefore raising the price cap is, alone, not going to solve the problem. As mentioned at the Senate Business & Commerce committee earlier this month, this issue was plagued by accusations that the market was being manipulated because of violent price fluctuations on June 25 and 26. It turns out the market is not being manipulated, which is good, but that it is really just dysfunctional in design, which is not so good. Colin Meehan’s blog last week highlights this issue and makes the point that while the PUC is willing to potentially pass the costs of a price cap increase onto ratepayers, it should also consider demand-side resources suggested by Brattle which could positively affect ratepayers. For example, in the PJM market demand-side resources are allowed to participate in energy and capacity markets and over $20 million of the payments went to residential customers.

EDF submitted comments for this workshop and will be in attendance. Other public comments were made from a variety of stakeholder’s including demand response advocacy groups, cities, MOUs, and power companies.

EDF believes that “such reforms must include a substantially increased role for demand response (DR) and other demand-side resources in ERCOT's markets; the report provides ample supporting evidence for this need. EDF requests detail on the level of DR needed to maintain reliability in each scenario [in chart above], what would be required in each scenario to attain those levels, as well as the role of other demand-side resources in meeting future resource needs.”

Also posted in Demand Response, Texas, Texas Energy Crunch | Comments closed

The Texas Electric Market Isn’t Being Manipulated, It’s Just Built That Way (…And That’s Not A Good Thing)

By | Bio | Published: July 19, 2012

Last week, the Independent Market Monitor for the Electric Reliability Council of Texas (ERCOT) released a report showing that the violent prices fluctuations of June 25 and 26 were not the result of market manipulation, as asserted by earlier reports.  Most have greeted this as welcome news, but the finding could spell rocky years ahead with wild swings in electric prices from day to day, which makes it difficult for investors, generators and most importantly customers to plan ahead.  To understand why, let’s back up a second and talk about what these findings mean.

Wild Mood Swings

If the market isn’t being manipulated, it is at least feeling a little bipolar: one hot summer day with high demand prices are up slightly but everything was working fine. The next day however, a 2 percent uptick in demand combined with an unexpected loss of 1.6 percent sent prices soaring.  The peak price on June 25 hit $438/ megawatt hour (MWh), but on June 26 prices maxed out at $3,000/MWh, meanwhile average prices skyrocketed to 640 percent above the average for the 25th. 

In a well functioning market these price swings wouldn’t be so dramatic and unpredictable, and those swings point to fundamental problems with the electric markets in Texas.  In extreme situations prices and profits may increase enough to support new investment but those extremes are so unpredictable that no power company can plan well for them, much less finance new investments.  As Brattle Group says in their report to ERCOT, “reliance on scarcity prices is unlikely to achieve ERCOT’s current reliability objectives.”  The solution?  Reduce our reliability standards or implement reforms that will lead to reliable electricity over the long term without the need for emergency regulatory intervention.

The reason for these swings is pretty simple, and outlined in the Brattle Report: the ERCOT supply curve does not efficiently reflect current or upcoming scarcity conditions in the market.  The supply curve is dominated by low price resources like wind, efficient natural gas power plants, along with nuclear power and some cheaper coal, all of which come in at or under about $30/MWh.  But as the chart shows, when you start getting near the 100 percent peak demand level there’s a sharp “hockey stick” curve upwards in price.  This means that when we’re in that high demand territory, a single power plant going offline or an unexpected spike in demand can send electric prices from $30/MWh to $3,000/MWh without warning, like we saw in late June.  Other regions have a more gradual supply curve of price increases during scarcity conditions, providing a kind of ‘warning’ to the market that the Brattle Report suggests as part of its suite of recommended market reforms.  That gradual curve is important because it allows demand-side resources to help stabilize prices and at the same time it provides potential investors with the kind of predictable certainty that allows them to consider investing in Texas.

Solving the Problem

As we said above scarcity pricing by itself, especially when it’s so dependent on weather extremes, is not enough to keep the lights on in Texas.  To do so, regulators and stakeholders will need to roll up their sleeves, put politics aside and find a solution that works for all Texans.  As a many have pointed out, the Public Utility Commission (PUC) made the decision to raise the offer cap without even a cursory analysis of the impact on ratepayers, an oversight that hopefully won’t happen again. 

If and when ratepayer impacts are taken into account, demand-side resources will be seen as playing a key role not only in maintaining reliability, but also in reducing the impact to ratepayers.  According to the Brattle Report we can reduce our peak demand needs 15 percent with such demand-side resources, with residential customers and small businesses making up 72 percent of the reduction during the hottest days of the year, but only if serious changes are made to the market.  In PJM (another grid operator) , where demand-side resources are allowed to participate in energy and capacity markets, participants have received over $174 million for over 10,000 MW of customer provided demand-side resources, over $20 million of the payments went to residential customers. In Texas, as we consider implementing new policies that improve reliability and provide stable predictable market signals it will be critical to include demand response, and to tap into growing residential and small business markets.

Also posted in Demand Response, Texas, Texas Energy Crunch | Comments closed

The Missing Link: Energy Efficiency Data And The Capital Markets

By | Bio | Published: May 30, 2012

EDF And Bloomberg New Energy Finance Host A Successful Conference

Last week, Environmental Defense Fund (EDF) and Bloomberg New Energy Finance (“BNEF”) hosted 150 property owners, energy efficiency project developers, ESCOs, banks, institutional investors and other thought leaders to discuss how improved datasets could spur the market for energy efficiency (EE) investment.  Dan Doctoroff, Bloomberg’s CEO, kicked off the morning by discussing the company’s plans to provide this data and how similar efforts have spurred financial innovation in the past.

Three types of energy efficiency data were the basis of most of the conversation:

Project Performance Data – Accurately forecasting the energy savings from a retrofit project remains an elusive goal due to wide variance in benchmarking and forecasting standards.  Chris Lohmann of the Department of Energy discussed a large database that he is developing that will attempt to provide comparisons to historical projects.  Elizabeth Stein of EDF discussed a project that she is leading to develop a standardized methodology for estimating savings and pointed out that robust standards for comparing projects will substantially enhance the value of an EE project performance database.

Benchmarking Data – New York, San Francisco and other cities have taken steps to benchmark energy usage for commercial tenants.  Riggs Kubiak of Honest Buildings discussed how his company is publishing this data on the web and believes it will allow prospective tenants to compare properties and spur landlords to invest in EE projects.

EE Loan Performance Data – While several EE loan programs have shown strong repayment performance to date, the rating agencies will need a far longer history in order to provide the best terms for securitizations.  On-Bill Repayment (OBR) may be able to benefit from the long history of utility bill payments to create a data stream for the rating agencies.

EDF looks forward to working with Bloomberg and other market participants on each of these initiatives.

Also posted in Energy Efficiency, New York, On-bill repayment | Comments closed