Energy efficiency in the national energy strategy: NRDC and PG&E find common ground

The Natural Resources Defense Council is a 20-year-old national

nonprofit organization chartered to promote energy conservation and the

wise stewardship of natural resources. NRDC's membership now exceeds 135,000. NRDC is based in New

York, with offices in San Francisco, Los Angeles, Honolulu, and Washington, D.C.

Pacific Gas and Electric Co. is the largest investor-owned utility in the

U.S., serving more than 10 million customers in northern and central

California. PG&E is the largest utility investor in energy

efficiency improvements. This article was adapted from joint

comments of the NRDC and PG&E on the U.S. Department of Energy's

National Energy Strategy.

Energy Efficiency in the National Energy Strategy: NRDC and PG&E Find Common Ground The Natural Resources Defense Council and Pacific Gas and Electric Co. find themselves in close agreement on U.S energy policy priorities. Removing regulatory obstacles to efficiency, adequate support for research, development and demonstration, and support for government efficiency standards lead the list.

Natural Resources Defense Council and Pacific Gas and Electric Company

A s a result of a recently con-

cluded collaborative process

in California, the Natural Re-

sources Defense Council (NRDC)

and Pacific Gas and Electric

(PG&E) have forged a unique partnership on energy-efficiency issues. 1 In this article, we draw

on our collective experience with

such efforts to make a number of

recommendations regarding en-

ergy efficiency in the Department

of Energy's National Energy Strat- egy. Our ability to prepare and

endorse these recommendations

jointly is perhaps symbolic of a

growing national consensus on

how to meet our future energy

needs at the lowest economic and

environmental costs.

I. Goal of a National Energy Strategy

One of the clearest lessons of

the last 15 years is that energy supply can be expanded either by

finding more fuel supplies or by

using more efficiently the sup-

plies we already have. For pur- poses of meeting the needs of a

growing economy and popula-

tion, energy savings created in

38 The Electricity Journal

large quantity on a predictable

schedule are energy resources, just like oil fields or gas wells. If

we see a need for increased supply or for replacing output from

obsolete facilities, we should weigh our conservation options

against our production technologies and pick the best buys first.

This crucial principle has yet to guide national energy polic}a

T he equivalence of conserved

power and produced power

is, however, now well under- stood. Methods for comparing

the two resource options have evolved under the rubric of "least- cost energy planning," and many states and utilities have jointly ac-

quired extensive experience in ap-

plying such techniques. To its now numerous practition-

ers, least-cost planning implies in

part that the public should not be asked to invest in new energy production until its representatives have explored and exploited less-

costly energy savings. If electrical demand threatens to outstrip pres-

ent resources, for example, least- cost planners investigate whether

efficiency improvements in resi- dences, commercial buildings and

industries could meet these needs at a lower cost per kilowatt-hour

delivered than additional power generation. Costs are evaluated

over the anticipated life cycles of the competing conservation and

power plant options, from design through construction and opera- tion to retirement.

In least-cost planning, it is not

enough simply to identify hypo- thetical savings. We must find the

means to convert opportunities

into tangible efficiency improve-

ments. The last decade has produced a wealth of experience

with the use of efficiency standards and incentive payments to acquire cost-effective conservation. Rather than paying one

group of people to produce electricity or natural gas, utilities in-

creasingly are paying a much

larger group of people to save it. Minimizing society's costs

means more than just comparing

the projected dollar outlays for

various resources, including conservation. Also important are con-

siderations of flexibility: How long does a resource take to com-

plete? How susceptible is it to mid-course corrections if condi-

tions change? Can it be built up

gradually in small amounts, or is it an "all or nothing" proposition? In an era of rapidly changing economic conditions, these considera- tions carry growing weight. And at least some least-cost planners have recognized that environmen-

tal costs and benefits also belong in the balance.

At the national level, least-cost

techniques provide the most promising ways to develop en-

ergy policies capable of winning broad support. This is not a call to produce an intrusive regulatory program out of step with current

political realities. The goal of a national energy policy should be to

help obstructed markets work better--not replace them--and to en-

sure rational allocation of the public resources already committed to

energy development. The Na- tional Energy Strategy should

seek to provide such a framework for accomplishing this goal.

II.Energy Efficiency: Our Larg- est, Least-Costly Resource

By extracting more work and

wealth out of less energy, Ameri- cans expanded their economy by

more than 35% from 1973 to 1986 without increasing energy consumption. 2 If energy needs had kept pace with economic growth,

more than 40% of our energy consumption would have had to be

met with imports by 1986, com- pared with 26% at the height of the 1973-1979 "energy cr i s i s . ' '3 In-

stead, total energy imports for

1986 were lower in relative terms than those for 1973. 4 California's

efficiency record was even stronger than that of the nation as a whole. 5

B y the federal government's reckoning, an uninflated dol-

lar of U.S. economic growth re- quired 27% less energy in 1986 than in 1973. 6 A 1988 Scientific

American analysis pegged the resulting reductions in the national energy bill at $150 billion per year,

October 1990 39

or nearly $2,000 for every household. 7 In large measure, the gen- eral abundance of energy supply and weakness of energy prices reflect that achievement.

l 'n spite of these gains, NRDC .and PG&E agree that the larg-

est cost-effective efficiency gains lie in the future for California and, most likely, the entire nation. This prospect is encouraging because, since 1986, total U.S. energy consumption has once again grown in lockstep with gross national product--9% in just three years-- as energy-efficiency efforts have flagged throughout much of the

nation. The efficiency assessment pre-

pared for DOE's National Energy Strategy by several of the Na- tional Laboratories--"Energy Effi- ciency: How Far Can We Go?" ("Assessment')--is a good first step in identifying unexploited efficiency opportunities. But it is simply not possible to determine "how far we can go" in a two- or three-month study, given the time and resource limits that con- strained the work.

G iven these limits, the Assess- ment examined energy-effi-

ciency trends only in selected sectors. Opportunities PG&E and NRDC have iden~ied as ex- tremely promising were ad- dressed superficially or not at all in the assessment. These include commercial lighting 8 (arguably the largest and cheapest efficiency resource), residential lighting, im- proved voltage regulation, trans- portation mode shifts, use of waste heat to generate electricity, energy-supply efficiency in-

creases, and fuel switching options. As for appliances, the Labo- ratories did not go beyond the record compiled in earlier DOE administrative proceedings.

We are also concerned about the Laboratories' use of a relatively high discount rate 7% net of in- flation--in evaluating efficiency improvements, which effectively discriminates against demand- side options. We believe the As- sessment is unsatisfactory even as a measure of current efficiency opportunities, let alone those that may be expected over the next 20 years .9

Most important, the Labora- tories do not attempt to answer what NRDC and PG&E both deem a crucial resource planning question: What mix of efficiency and production investments would minimize the economic and environmental costs of the energy services needed to sustain a

healthy economy? If we took ad- vantage of all feasible options for saving energy more cheaply than producing it, how much would our need for new production facilities be reduced? This is precisely the type of assessment that PG&E is undertaking for its own service territory. The nation awaits a more global inquiry.

III. Needed: a Level Playing Field for Efficiency

There is extensive evidence of an structural bias toward consumption and against efficiency throughout the energy marketplace. 1° That bias leads prospec- tive investors in efficiency rou- tinely to decline or ignore opportunities with returns far better than those energy companies can earn on production facilities.

C onsumers and businesses, for example, typically expect

long-lived efficiency improve-

Consumers need the utilities" help to install the most efficient heating and air conditioning systems.


ments to repay their full costs in

three years or less, a return of

more than 35% per year (some-

times more than 100 %) on the money invested. Such expecta-

tions contrast sharply with those of investors in energy production.

Many large-scale energy projects do not begin earning income for a

decade or more after planning

and construction begins, and in-

vestors typically expect returns of 15% or less. The discrepancy puts

energy efficiency at an enormous and unjustified disadvantage.

T here are many explanations for the apparent stinginess of

would-be conservers. For example, efficiency decisions often are

made by people who will not be paying the ensuing energy bills,

such as landlords or developers of commercial buildings. Other

selections may be made under ex- treme pressure, with little oppor-

tunity for life-cycle cost assess- ments, as anyone knows who has

ever replaced a broken water

heater or refrigerator. Unassisted

"conservation shopping" often in- volves significant time and incon-

venience and is understandably

resisted by those whose primary business lies elsewhere.

According to analyses commis-

sioned by the National Associa- tion of Regulatory Utility Com- missioners, energy prices would have to increase more than seven-

fold to close the gap that between the perspectives of investors in energy efficiency and investors in production, n But price strategies

alone will not yield a least-cost national energy future, even assum-

ing substantial changes in current

policies regarding rate structures

and internalizing environmental

costs. Regulatory and market bar-

riers must be removed before more accurate price signals can

work to ensure a fair competition between energy efficiency and en-

ergy production options. The following seven sections

outline ways to ensure that en-

ergy efficiency and energy production compete on equal terms.

A. Remove Regulatory Barriers The National Energy Strategy

should include initiatives to over-

come existing regulatory barriers which inhibit utility pursuit of en-

ergy efficiency and should provide incentives which make en-

ergy-efficiency investments at least as attractive to utilities as tra-

ditional supply investments.

S everal aspects of the regula-

tory system in most states im- pede active utility involvement in

energy efficiency. The most important is that, for most utilities, reducing demand through efficiency runs counter to the short-

term interests of shareholders by

reducing net revenues. These net revenues decline because they are

tied to total sales as an unin- tended but inevitable conse-

quence of traditional ratemaking

practice.

Decouple Profits From Sales. The first step in improving the

regulatory system, therefore, is to

decouple net revenues and profits

from total sales. This step was taken in California beginning in

the late 1970s, and it has been es-

sential to PG&E's renewed commitment to efficiency programs.

Under this system, the company's

net revenues are insulated from

fluctuations in sales, whether due

to efficiency improvements,

weather, or unexpected demand

growth. This is accomplished

through accounting methods called the Electric Revenue Ad-

justment Mechanism (ERAM) for electricity, and the Supply Adjust-

ment Mechanism (SAM) for gas. Because of adjustments made

through ERAM and SAM, the util-

ity is largely indifferent to either

increases or decreases in total

sales of electricity or gas.

But the ERAM/SAM system

alone is not enough. Some incen-

tive mechanism is needed to provide the strong signal that will

lead utility planning in the right direction, Unfortunatel~ the tra-

ditional regulatory system has re- warded utilities only for supply investments by allowing a rate of return on capital invested in gen-

eration and transmission facilities. Utilities can, of course, be re-

quired to carry out customer effi-

October 1990 41

ciency programs, and expenses from these programs can be fully recovered through rates. But, as in any private enterprise, the at- tention, enthusiasm and expertise of the company's management will be focused on those activities that provide clear benefits to shareholders. We cannot expect the creativity and marketing skills of utilities to stay focused on areas where there is no return for their owners.

Make Conservation Profitable. The answer is to develop an incentive for demand-reducing programs which can begin to match the incentives already available for traditional generation. If such incentives are structured properly, the utility will invest in customer efficiency improvements which reduce its long-run utility costs and ratepayer bills.

No single incentive system will work best for all utilities. But recent experience in California sug- gests that to be successful in the long term, an incentive system for the utility needs regulatory stabil- ity and legislative support. Fre- quent changes in the approach will undermine the management commitment needed to make utility efficiency programs successful.

The particular incentive mechanism which PG&E has proposed to the California Public Utilities Commission (CPUC) will provide substantial benefits to customers, shareholders and the environ- ment. The proposal has two com- ponents. First, for programs providing concrete resource value, PG&E proposes that the expected

savings be shared between customers and the utility. Using assumptions fixed in advance, the net value 12 of the energy-efficiency measures actually installed through utility programs will be calculated. Of the resulting net dollar savings, 85% would be passed on to the ratepayers in the form of reduced rates, and 15% of the savings would flow to share-

The answer is to develop an incentive

for demand-reducing programs which can match the incentives already available for

generation.

holders. Not only would this mechanism begin to redress the balance between supply and demand programs within the company, it would also provide an incentive to the utility for vigorous marketing and careful cost control.

S econd, there are certain programs which are undertaken

for reasons other than efficiency alone, or which have energy benefits which are particularly hard to quantif~ For example, PG&E car- ries out substantial programs for weatherizing the homes of its low-

income customers and provides on-site information and advice to all customers on the benefits of energy efficiency. To assure that these programs retain their priority, the company has proposed that these programs be subject to a second incentive mechanism. As long as those programs meet performance standards agreed upon with the CPUC, the company would recover 105% of the program cost, with the extra 5% flowing to shareholders.

B. Upgrade Government Efficiency Standards

When the builder of a new structure will not be the occu- p a n t - a n d often even when builder and occupant are the same--the primary motivation of the builder is minimum first cost. Even where the eventual occupant is concerned about future energy consumption, information about energy efficiency is difficult to obtain, and a structure's other characteristics will often be more important in the purchase deci- sion.

Similarly, the purchasers of residential appliances tend to place higher priority on product characteristics other than energy effi- denc~ such as color and brand identification. In both cases, the buyer's financial criteria typically emphasize short-term benefits more than would either the utility or society as a whole.

Rational energy pricing and vigorous utility programs can help with this problem, by encouraging the production of efficient new buildings, homes, and appli-


ances. But efficiency improvements not captured at the time of purchase are either much more ex- pensive or not feasible later in the life of the building or appliance. Strong and timely government standards are by far the most effective way--and the most cost-effective to capture what other- wise would be very substantial "lost opportunities."

NRDC and PG&E support and encourage the DOE's efforts to es- tablish and improve economically- justified minimum efficiency standards for residential appliances. We also support the California En- ergy Commission's standards for new construction and encourage other states to adopt equally effective measures. We encourage DOE to include in the National Energy Strategy a commitment to strengthening such standards.

C. Encourage Utility Efficiency Programs

Through national efficiency standards supported by NRDC and PG&E, the federal government has acted to remove the least efficient residential appliances from the marketplace. But technical options abound for sub- stantially improving upon even the most demanding of the federal standards. This creates a dilemma: Until standards become more stringent, manufac~rers have little reason to invest in research and new production facilities to support dramatically higher efficiencies; but until new designs have been demonstrated in the marketplace, the federal government is reluctant to tighten

standards.

U tility efficiency programs can help solve this problem.

These programs can achieve both substantial additional savings and support the long-run standard-setting process by speeding the development and acceptance of new products. They can thus help bridge the gap between existing standards and cost-effective tech-

We encourage DOE to include in the National Energy Strategy a commitment to strengthening appliance efficiency standards.

nological advances that the standards may not yet incorporate.

Appliance Efficiency Standards. With NRDC's strong support, PG&E has assumed a national leadership role in creating market- based solutions to the appliance dilemma. Through its aggressive efficiency programs, PG&E is committed to providing substantial rebates for the first group of super-efficient refrigerators to ap- pear in the marketplace over the next several years. Initially, quali-

fying units would earn a PG&E payment of $300. PG&E's target is a 25% improvement on the federal government's refrigerator efficiency standard for 1993.

Environmental as well as economic values are at stake in a nationwide campaign to promote more efficient household appliances, which account for more than one-fifth of U.S. energy consumption. For example, it is sometimes claimed that replacing ozone-depleting chlorofluorocarbons in refrigerators with substitutes will make them less efficient, resulting in higher electricity needs. 13 Utility

efficiency programs like PG&E's can help induce appliance manu- facturers to look beyond the cheapest but least energy-efficient substitutes for chlorofluorocarbons.

These types of "market-pull" rebates should receive broad utility support throughout the nation. They represent highly cost-effective resource acquisitions and should be an important element of the National Energy Strategy.

Uniform Home Efficiency Rat- ings. In addition to rebate programs for homes that exceed state standards, PG&E is initiating for- mation of the California Home En- ergy Rating System, Inc. (CHERS). This non-profit organization includes major California utilities, regulators, and building, lending, and real estate interests working in partnership to develop a statewide home energy rating system.

Providing information on

October 1990 43

whole-house efficiency with a uniform energy efficiency rating will help builders market highly efficient homes and allow lenders to justify higher loans or stretched income/debt loan qualification ra- tios for hemes where fuel bills will be reduced. Utilities benefit through reduced load growth, the state's standard-setting process will be accelerated as new technol-

ogies are given a market, customers benefit from increased efficiency information, and homes are made more affordable. CHERS, Inc. should be consid- ered as a model for voluntary, market-reinforcing cooperation to promote home energy efficiency.

O ne additional role for federal and state agencies is to ad-

vance new technologies through improvements at their own facilities. As with utility programs, federal and state purchases can enhance market acceptance of advanced efficiency technologies and provide a market to sustain early, high-cost production cycles.

D. Expand R&D Support Research and development

(R&D) activities during the 1990s will be critical in determining the energy supply picture across the country in the next century. By the end of the decade, utilities will likely be looking at augment- ing a portion of existing fossil-fu- eled capacity with new generation. The objective of R&D efforts over the coming decade should be to develop new energy-efficiency technologies, as well as supply alternatives that will be cost-effective, environmentally

cleaner and, where possible, renewable.

Energy Efficiency. DOE's collaboration would be welcome on a series of initiatives recently begun by PG&E for demonstration of advanced energy-efficiency technologies.

One initiative is the Advanced Customer Technology Test for En-

ergy Efficiency, which is a joint project of PG&E, NRDC, Law- rence Berkeley Laboratory, and the Rocky Mountain Institute. It will involve installation and eval- uation of state-of-the-art packages of commercial and residential technologies. The list of attractive candidate technologies will quickly exhaust the $10 million now available over the next two years. We believe that DOE shares this project's objectives, and we would welcome the agency's involvement in the con- tinuation of this project.

Several other demonstrations will reinforce our program of customer incentives and promote customer acceptance of new energy-efficient technologies. PG&E is constructing a Customer En- ergy Technology Center to show architects, builders, engineers, and end users the advantages of advanced energy-efficiency technologies. The company is also building 28 highly-efficient show- case homes with advanced efficiency and control technologies. These focused demonstrations provide a useful model for efforts that DOE might promote in other parts of the country.

Renewable Energy. There are now opportunities to accelerate commercial readiness of renewable technologies to position them for widespread utility application at the beginning of the next cen- tur3a Capitalizing on these opportunities depends heavily on the extent of collaboration between government and the utility indus- try. PG&E and others in the in- dustry are committed to support this process, particularly with re- spect to the next generation of solar and wind technologies.

Nationwide application of California's experience with wind is possible, including site identification, technical improvements, and plant design and integration. Further advancements, such as the third generation variable- speed wind turbine currently being developed, are needed over the next ten years. Such progress would improve operational flexibility and energy capture, reduce


levelized energy costs to less than 5.5 cents/kWh in favorable wind areas, and exploit the variety of wind conditions in the United States.

A nother program PG&E has been pleased to support is

the highly successful Photovolta- ics for Utility-Scale Application test initiative. This program may be a model of what DOE, in collaboration with utilities, can achieve.

PG&E is actively interested in these and other emerging renewable technologies whose output generally tracks with California's daily load, providing substantial peaking benefits. To enhance their development for the utility system, we envision uniting wind and solar generation with storage plants, such as compressed air energy storage. Fuel cells, though non-renewable, are a high-efficiency, low-polluting generation option which would satisfy dis- patchability needs and supple- ment systems based on energy efficiency, renewables and storage. Each of these technologies is poised to have an early, significant impact if aggressive steps are taken to address market entry barriers.

There are other emerging technologies where active R&D cooperation between utilities and DOE should be developed or continued. Advanced solid fuel technologies such as biomass combus- tion, municipal waste utilization, and battery energy storage are among those which would advance the objectives of environmental compatibility, efficiency,

safety, and use of indigenous re-

sources.

E. No N e w Taxes on Efficiency We strongly recommend that

the National Energy Strategy in- dude a legislative initiative to assure that utility customers are not penalized through the tax system, as they now are, for efficiency investments encouraged by utility programs. Taxing utility incen-

tive payments to customers adds a substantial additional barrier to expanding acceptance of energy- efficient equipment.

T he Internal Revenue Service currently treats rebates paid

by utilities for energy-efficiency equipment as income to the customers, rather than consider- ing them to be price reductions (as is done with, for example, car rebates). This interpretation adds yet another hurdle to national efforts to promote energy efficiency; it also penalizes consumer actions that benefit society as a whole,

and effectively raises the cost of conserved energy to utilities. We endorse legislation currently before the Congress (H.R. 4249 and S. 2312) which would overturn this IRS interpretation.

E Integrate Bidding, Least- Cost Planning, and Environmen- tal Costs

NRDC and PG&E have exten- sively analyzed proposals for using competitive mechanisms such as auctions in utility acquisitions of new electricity supplies. According to a recent survey, as of the end of 1989, 27 states have adopted or are developing competitive procurement systems that, together with the access already granted by federal law, are restructuring the nation's electric power markets. 14

We agree that utilities should use all-source bidding to meet any residual system needs for electricity that remain after accounting for the contributions of government efficiency standards, utility-financed efficiency programs, and utility "niche" resources that lack any plausible in- dependent supplier. Any untapped conservation should have the opportunity to compete with new generation in these auctions, and credits should be as- signed to resource characteristics having demonstrable value to the utility system. In addition to characteristics such as resource operat- ing flexibility, project location and fuel diversity, these credits should reflect environmental impact, though this may be difficult to quantify.

October 1990 45

I

G. Hedge Our Bets on Global Warming

The largest potential environmental impact of power production is global warming. The costs of committing to a fossil fuel strategy would escalate significantly under a scenario in which global warming becomes pronounced. It is, therefore, important to factor into national energy policy the en- viromnental and economic uncertainty associated with continued dependence on fossil fuels. It is too early to be sure of the economic value of avoiding green- house emissions, but it is certainly not too early to develop and pur- sue a hedging strategy against this uncertainty.

N 'on-fossil resources such as customer energy-efficiency

programs and renewable and al- ternative electric supply technologies are all key to reducing risk in our national energy portfolio. These technologies diversify the resource base and reduce our ex- posure to potential cost increases associated with increased fuel demand, emission fees, emission controls, or mitigation of environmental impacts. One or all of these added costs might be expected under a global warming

scenario. This hedging strategy against

future economic and environmental disruption can be viewed as a bridge to the next century, when better information on global warming and further development of clean technologies will offer us insights and options not currently available. Besides mak- ing sound economic choices by

valuing the diversification of our energy portfolio, this strategy could place the U.S. in a competitive position to meet the market demand for clean technology, should a global warming scenario unfold.

IV. PG&E's Strategic Plan PG&E's current strategic re-

source plan is a least-cost plan which integrates generation and conservation resources. For the 1990s, it relies on customer energy efficiency to provide 2,500 MW of the 3,300 MW expected to be needed. PG&E estimates that its energy efficiency programs have produced savings equivalent to 1,800 MW since the mid-1970s. The company has invested over $1 billion in energy efficiency and load management to date. Spend- ing on efficiency programs will increase to $150 million per year by 1991, an increase of more than 50% from 1989. The company ex-

pects steady expansion of these programs and expenditures for the rest of this century.

At least two elements of PG&E's strategic plan and its development could serve as a model within the National Energy Strat- egy. First, in PG&E's least-cost in- tegrated planning approach, substantial amounts of energy efficiency ~ rned out to be the most cost-effective resources for the company. This efficiency pro- vided substantial environmental and economic benefits for its customers as well.

Second, the details of the energy-efficiency programs were developed in an open, collaborative process of negotiation with a di- verse group of environmental and consumer groups, energy-efficiency experts, and regulators, whose involvement has both as- sured the programs' acceptance and speed their implementation.

The availability of supply alter-

Utilities must commit to helping their customers use energy more efficiently...


na t ives a n d eff ic iency i m p r o v e -

m e n t s wil l v a r y f r o m one ut i l i ty

to another . But P G & E ' s s t ra tegic

p l a n - - w i t h its carefu l ana lys i s o f

a l t e rna t ives o n a n e q u i v a l e n t

basis , its re l iance o n e n e r g y effi-

c i enc~ a n d i n v o l v e m e n t of in ter -

e s ted ou t s i de pa r t i e s in its deve l -

o p m e n t - i s a n a p p r o a c h the

N a t i o n a l E n e r g y S t r a t egy s h o u l d

take no t e of as it cons ide r s the

n e e d for fu tu re r e sources a n d the

m o s t eff icient w a y s to ob t a i n

them. •

Footnotes

1. The process is described, and its re- sults are summarized; in the REPORT OF THE STATEWIDE COLLABORATIVE PRO-

CESS, AN ENERGY EFFICIENCY BLUEPRINT

FOR CALIFORNIA (Jan. 1990). The report is available from PG&E by calling (415) 973-2092.

2. See testimony of Donna R. Fitzpatrick, Assistant Secretary for Conservation and Renewable Energy, before the Subcommittee on Energy and Power, Committee on Energy and Commerce, U.S. House of Representa-

tives, Dec. 2, 1987, at 1.

3. The calculations assume that consumption would have reached 101 quadrillion BTUs (101 "quads"), ex- ceeding domestic production actually recorded for 1986 by 37 quads• See U.S. Energy Info. Admin., Monthly En- ergy Review, May 1989, at 3, 12.

4. Id. at 3. Import shares for 1973 and 1986 were 20% and 19% of total energy consumption, respectively.

5. CAL. ENERGY COMM., CONSERVATION

REPORT 24 (1988). For example, from 1973-85, the amount of energy re- quired to produce a dollar of Califor- nia goods and services dropped by 35%.

6. Id. at 12.

7. Rosenfeld & Hafemeister, Energy-Ef- ficient Buildings, SCIENTIFIC AMERICAN,

Apr. 1988, at 78.

8. "Improvements to lighting may also yield substantial savings, but these were not estimated for either the residential or commercial sectors because of modeling limitations."

OAK RIDGE NATL. LABORATORY, EN-

ERGY EFFICIENCY: HOW FAR CAN WE

Go? 16 (Jan. 1990).

9. According to the Oak Ridge analysis, supra note 8, efficiencies for refrig-

• .. from agricultural to residential, commercial and industrial applications•

erators and electric water heaters top out at 590 kWh per year and 97%, respectively. We believe those figures should at minimum be halved and doubled, respectively (heat pump technology would readily allow 200% efficiencies for water heating). The electric clothes dryer projections ex- clude microwave and heat pump clothes dryers, and the treatment of electric ranges and ovens leaves no place for bi-radiant and related technologies. No savings are projected for televisions, computers or gas clothes dryers, where substantial heat-recov- ery savings are clearly available.

10. See, e.g., sources cited in NATL. ASSN. OF REGULATORY UTILITY COMMIS-

SIONERS, LEAST-COST UTILITY PLAN-

NING HANDBOOK, II-1 to II-15 (Vol. 2, 1988); R. Cavanagh, Responsible Power Marketing in an Increasingly Competitive Era, YALE J. ON REG. at 331,342-43 (1988); Mass. Dept. of Pub. Util., Order No. 86-36-F, Nov. 30, 1988.

11. See LEAST-COST UTILITY PLANNING

HANDBOOK, supra note 10, at II-10 to II- 12.

12. The net value is the difference between the costs of new power plants ("avoided costs") and the cost to the utility of the efficiency programs. Both costs are calculated as net pres- ent values per kWh and per kW over the appropriate life cycle. Efficiency program costs include utility administrative and rebate costs.

13. M. Browne, "Saving Ozone May Prove to be Costly, " The New York Times, July I 1990, at 9, col. 1. The Times also reported that "refrigerators will now have to be bulkier and less roomy inside to accommodate the much thicker substitute insulation that will be necessary," overlooking the availability of vacuum-based technologies that should allow for th'inner and better insulated refrigerator doors.

14. NATL. INDEP. ENERGY PRODUCERS,

BIDDING FOR POWER: THE EMERGENCE

OF COMPETITIVE BIDDING IN ELECTRIC

GENERATION 1 (Mar. 1990).

October 1990 47

Energy efficiency in the national energy strategy: NRDC and PG&E find common ground

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