Duke Energy's Save-A-Watt and its opposition

Per Charlotte Business Journal North Carolina’s state advocate for utility customers say Duke Energy Corp.’s Save-A-Watt proposal is too expensive, saves little energy and should be rejected by regulators.

Through Save-A-Watt, Charlotte-based Duke (NYSE:DUK) wants to get a return on its investment in conservation. It proposes a system that would verify how much energy Save-A-Watt conserves. Duke would then charge ratepayers for 90 percent of the costs it avoids by not having to build plants to provide that energy.

The public staff calls on the commission to reject the pricing proposal at the heart of Duke’s program. The staff says the margins Duke would make on energy-efficiency programs could reach almost 50 percent. The staff proposes a more modest pricing system that would provide Duke with a 5.55 percent margin.

The following are the save-a-watt energy efficiency programs Duke Energy Carolinas is proposing:

Residential Assessments – to help residential customers identify opportunities to use energy more efficiently through a mail-in analysis, on-line analysis and on-site energy audit. Participating customers will receive either an energy efficiency kit or compact fluorescent light bulbs at the time of the audit to begin their energy savings immediately.

Non-Residential Energy Assessments – to help commercial and industrial customers identify opportunities to use energy more efficiently through an on-line analysis, telephone interviews and on-site energy audits.

Smart $aver® – to provide residential customers with incentive payments to install more energy-efficient equipment, such as compact fluorescent light bulbs and high-efficiency air conditioners and heat pumps. The commercial and industrial customer program will provide incentives to install high-efficiency lighting, heating, ventilation, and air conditioning equipment, motors and pumps.

Low Income Service – to assist low income residential customers with energy efficiency measures using kits or assistance in purchasing equipment and weatherizing homes.

Power Manager – to enable residential customers to receive a monthly credit from July to October in exchange for allowing Duke Energy to cycle their central air conditioning in times of peak power demand.

PowerShare® – to enable commercial and industrial customers to receive a credit on their bills in exchange for reducing their electric use in times of peak power demand.

Residential Bill Check Pilot – to evaluate the use of new technology to provide customers with a monthly report analyzing their energy use and comparing it to weather patterns and other issues that relate to energy use. The pilot will initially test new technologies in up to 200 homes in the Charlotte area.

Efficiency Savings Plan Pilot – to evaluate allowing residential, commercial and industrial customers to install energy efficiency products with no up-front payment, allowing customers to save money by reducing their energy use. Customer would pay for these products through an added charge to their power bill.

Advanced Power Manager Pilot – to evaluate new technologies and advanced metering to study the feasibility of an energy management system that enables customers to participate in energy efficiency without disrupting their lifestyle or normal business practices.

For months, Duke Chief Executive Jim Rogers has said traditional regulatory policies have given utilities little incentive to save energy. Simply put, the more power a utility sells, the more money it makes.

The business case for EE is fundamentally sound, we'll just have to wait and see how the terms of this negotiation (Duke vs. ratepayers share) shake out.

P.S. I had the pleasure of hearing Jim Rogers speak at Itron's user's conference. He blew me away. Very impressive and inspirational speaker. I think he's genuinely concerned about the environmental issues, however he also needs to answer to shareholders.