Progress Energy has approximately $3.1 million customers in North Carolina, South Carolina and Florida and operates four nuclear power plants. So, when Progress announced recently that it would implement a set of energy-efficiency programs and delay building a new nuclear power plant at the Shearon Harris site until at least 2018, environmentalists were pleasantly surprised. Could it be that consumers' concern about the environment and the need for energy independence had finally made an impact?
Richard Harkrader, policy chair of the North Carolina Sustainable Energy Association, offers some insight into what Progress' plans mean and how they relate to reforms environmental groups have been pushing in North Carolina for years.
What do you make of Progress Energy's announcement?
First, it's great news that they've changed direction. The NCSEA and a group called the Clean Energy Coalition, we've been advocating for a long time for them to do serious energy efficiency.
This is a big change for Progress Energy. There's a yearly filing of utility plans with the N.C. Utilities Commission called Integrated Resource Plan. The one Progress filed in 2006 was the same they'd been filing for years: no new energy efficiency, and renewable energy is a good idea but we don't see it as viable now. So this announcement is their intent to do something that will be all new. We don't really know exactly what it is they're proposing, because they haven't filed that plan yet.
But Progress' proposal to save 2,000 megawatts has to do mostly with load shifting or demand response, which means you shift people's use of electricity from the high peak to low peak time. That's very advantageous to the utilities because it allows them to more efficiently use what they already have. But for the most part that doesn't involve saving energy, just moving it around.
The other thing they can do is what we call energy efficiency, which is actually reducing the number of kilowatt hours people use. Both can be beneficial and lower customers' bills. But the real savings in emissions is going to be in reducing the need to generate electricity, period. Right now, it's 90 percent and 10 percent. We want to see 50-50.
The problem with that, from the utilities' point of view, is that they make money selling electricity—the more they sell, the more money they make. So it's a big disincentive to them to encourage people to use less energy. It works that way because of the way the rates are set. Rolled into that rate is giving them a return on their investment, operations and maintenance, fuel, all the things they need to be profitable. The rates were last set about 15 years ago.
That's been the problem all along, and we're still working under those regulations. I'm not sure we're ever going to get real energy efficiency in North Carolina without changing the way rates are done. One possible solution is to make it so that the utilities' profits aren't based on how much electricity they sell but on how much investment they've made in the infrastructure.
My other concern is, the amount of energy they're talking about reducing in a very short period of time I don't think is very realistic. I wonder if they're setting this up to fail.
If they fail, they can always say, "Well, we tried and it didn't work. Now we really need to build those new power plants."
Right, and we've got to do it quickly, we don't want this to drag out.
I would prefer to say, they've set up something very ambitious. They're basically talking about starting all of these programs and infrastructure from scratch. It involves upgrading the outside of buildings and insulation, changing out light bulbs and water heaters. You have to go out and buy this stuff, find a way to get it out to your customers. It's not an overnight process. And they plan to do this and see savings from it in two years. To me it seems very doubtful.
It's still going to be much faster than building a new power plant, which can take 10 years, or a new nuclear power plant, which can take 16 years. Energy efficiency is cheaper and faster, but it's not that fast.