By - Michael Drost

Winter efficiency programs saved New England ratepayers $1.5 billion: Report

Energize Weekly, April 22, 2015

Energy efficiency programs lowered New England electricity bills by 24 percent this past winter, saving the equivalent output of two large nuclear plants, according to a new report by the energy advocate group Acadia Center.

The report says that investments in efficiency since 2000 helped lower demand by nearly 14 percent from January to March this year, with payments to generators lowering by about $1.46 billion. Efficiency savings were achieved at a cost of $0.04 per kilowatt-hour (kWh), about a quarter of the average winter 2014 wholesale electricity supply price of $0.16/kWh, the report said.

Prices in New England were unusually high during the previous winter due to below-average temperatures as well as an over-reliance on natural gas for power generation, which also is used for heating. During the winter 2013, wholesale electricity prices rose to an unbearable $137.60 per megawatt-hour (MWh), according to electric system operator ISO New England (ISO-NE). In order to prepare for this year’s winter, ISO-NE instituted a series of incentives to diversify fuel sources for the region’s power plants, including paying for unused fuel and paying for demand response resources.

These reforms combined with investments in efficiency helped keep wholesale electricity prices significantly lower from December through February compared to last year, averaging $76.64/MWh.

“Without efficiency, winter costs would have been much higher. Saving electricity through efficiency costs about 4 cents per kilowatt-hour, while the regional average wholesale price of electricity was about 4 times that in winter of 2014,” said Jamie Howland, director of Acadia Center’s Climate and Energy Analysis (CLEAN) Center. “When weather and market forces cause electric prices to rise, efficiency becomes even more valuable.”

The report comes as states try to determine the best course of action in order to comply with the Environmental Protection Agency’s (EPA) Clean Power Plan, which calls for a 30 percent reduction in carbon emissions from 2005 levels by 2030. The EPA plan will allow each state to come up with its own strategy to comply with the emission standards, and efficiency investments are one of many options states have available to them.

Northeastern utilities are also looking to make long-term investments in electric transmission and natural gas pipelines in order to shore up the region’s power supply. Knowing how much demand can be reduced via efficiency programs will be useful as state regulators look over rate increase proposals and develop spending plans for the 2016-2018 fiscal years.

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