Prepared Remarks for Secretary Bodman
NEW YORK, New York - Thank you, Jim, for that kind introduction. I am glad to be with you all again. As regulators of the nation's electric and gas utilities, you have a crucial role to play in advancing U.S. energy security.
We have made progress since we last met 2 years ago, but important work remains.
I don't think I have to convince you all that we have a great challenge before us in terms of meeting future energy demand. You have heard the projections. By 2030, global energy consumption is expected to grow by over 50 percent, with 70 percent of that growth coming from the world's emerging economies. As for electricity, U.S. demand is expected to increase by about 50 percent by 2030, with global demand nearly doubling.
Clearly we need to find ways both to produce more energy --- and to use existing energy more efficiently. At the same time, we must recognize the realities of global climate change and work to reduce the growth of greenhouse gas emissions, while not stifling economic growth --- particularly in the developing world.
This complex scenario presents a significant challenge. But we can meet this challenge, provided we work together to develop and implement realistic solutions.
The Administration is firmly committed to this task. As you know, the President has made energy security a priority since the early days of his Administration. The President's Countrywide Energy Policy identified problems and suggested solutions for achieving energy security while, at the same time, protecting and preserving our environment. Through the Advanced Energy Initiative, the President has committed substantial resources to further increasing U.S. energy security through greater reliance on renewable and alternative energy sources.
Similarly, the President's Twenty in 10 Initiative aims to reduce U.S. projected gasoline consumption by 20 percent in ten years through increased efficiency and greater reliance on clean alternative fuels. And many of the scientific and technological advances behind these new energy sources are possible in part because of the President's American Competitiveness Initiative, which calls for substantial backing for research in the physical sciences.
There is no doubt that new energy sources must be developed. But there is also a clear and growing recognition of the role that prioritizing energy efficiency must play. As most of you know, the biggest source of immediately accessible "new" energy is the energy we waste every day. Indeed, it is the cheapest, most abundant, cleanest, most readily accessible source of energy Americans can access, and your work --- your leadership --- is the key to unlocking its widespread use.
As regulators of electric and gas utilities, you have perhaps the most important role to play in securing access to this valuable energy source. The importance of energy efficiency has long been acknowledged by NARUC, going back to at least the 1980s. But I think it's fair to say that interest has risen significantly in the last few years. The Countrywide Action Project for Energy Efficiency that you and many other partners --- with the help of the D.O.E. and the Environmenta l Protection Agency--- have launched is evidence of this growing commitment.
The measures supported by this Project could allow us to save nearly $20 billion annually on energy bills, improving energy security and reliability while at the same time reducing costly damage to our environment. I applaud all of you and all of our partners, particularly the group's past and current co-chairs: Diane Munns, Marcia Smith and Jim Rogers --- for your ambitious work on this plan.
I also applaud individual state efforts in the area of energy efficiency. Since the release of the Countrywide Action Project here last year, a number of state legislatures have strengthened energy efficiency policy statements and raised the bar on expected energy efficiency results. Similarly, state commissions have been pursuing energy efficiency-related dockets.
States like California and Minnesota have been particularly visionary and forward-leaning, and many other states are on the cusp of setting policies to enable great changes. New York, for example, has issued an energy Project that calls for energy efficiency to meet 15 percent of forecasted electricity use by 2015.
Utility companies are responding to these state efforts with innovative programs of their own. Many are introducing online calculators, advanced electric meters, in-home displays, remote-control devices that manage or control end-use loads, and innovative pricing plans. Across the country, the combined efforts of state regulators and utility companies are empowering consumers to make their buildings and homes use energy more wisely and efficiently.
We need to work together to build upon and expand these efforts. In the utility arena, you as state regulators obviously have the most critical and indispensable role to play. But I'm here today to tell you that we, at the federal level, intend to be pro-active partners in helping to shape the dialogue among states to reconcile best practices, accelerate accessible technology, and pursue policies that make the nation stronger, cleaner and more competitive.
Each state is obviously very different, and you are the ones who best understand your states --- and your customers' --- needs. As such, I'm not here to lecture or tell you how to go about this important work. But I would like to highlight some initiatives that are working well in states and also opportunities for your states and the D.O.E. to grow our collaboration together.
For example, the Countrywide Action Project recommends: "modifying policies to align utility incentives with the delivery of cost-effective energy efficiency and ratemaking practices to promote energy efficiency investments." This is among the most important and urgent principles for each state to consider.
It is quite obvious that our current utility ratemaking structure provides incentive for investor-owned utilities to sell more electricity and gas, not less. Encouraging efficiency by definition means selling less, which is counter-intuitive to the present business paradigm. So the recommendation to realign incentives is fundamentally crucial to making significant progress in the area of energy efficiency.
We need to begin thinking about utility customers --- our citizens --- and what they are purchasing a bit differently: what customers are really buying is service, rather than the actual product: electricity or gas. Thinking in these terms makes it easier to conceive of energy efficiency as an enhanced service. Fortunately, some states already have experience on how to do this that we can all gain from.
For example, some states provide various types of financial awards for superior performance by their electric and or gas utilities in delivering energy efficiency. Other states allow a "decoupling" between utility sales and profit or some other form of removing financial disincentives. Still others allow cost recovery of utility efficiency spending.
The D.O.E. will help states looking to initiate, expand or enhance these types of programs. This year, D.O.E. will provide technical assistance to at least 5 state public utility commissions that are considering aligning incentives with cost-effective energy efficiency. We are also working with NARUC to prepare materials for state regulators and their staff both on why realigning incentives is so important and also on how they could go about implementing such programs.
Because this is included as a key recommendation in the Countrywide Action Plan, I know you share my belief that this effort is essential to achieving real progress in the area of energy efficiency. Without taking steps to address the deficiencies and misaligned incentives of the current structure, I'm afraid all other energy efficiency initiatives may meet with only limited success.
Another very promising area to strengthen our Countrywide energy economy and security involves evaluating and strengthening building codes in both the residential and commercial sectors. D.O.E. is partnering with the American Society of Heating, Refrigerating and Air-Conditioning Engineers --- ASHRAE --- to develop model building codes that will be 30% better by 2010 for ALL new commercial buildings. To modernize building codes, we would like to encourage your states' consideration, adoption and implementation of codes at these new levels.
D.O.E. can help by providing state-of-the-art software tools on code compliance and best practices that are being employed by a network of architects, engineers, builders and code officials.
I also encourage you to consider making your states "solar ready," that is, making it easier for customers to sell electricity back to the grid. This may require legislative or regulatory choices to ensure fair metering and interconnection arrangements. And consider enabling transformation in the built environment towards zero-energy homes and offices.
I want to make sure you are aware of energy efficient technologies being developed by D.O.E. labs --- in partnership with the Electric Power Research Institute and others --- that you might encourage utilities in your states to take more aggressive advantage of. Our labs and partners are developing high-efficiency and control technologies, for example, that allow customers to manage their energy use patterns to respond to time-varying pricing.
We are also supporting development and demonstration of high-efficiency and demand responsive technologies that will work in concert with and support advanced metering infrastructure. These technologies will allow residential and small commercial customers access to near real-time information on energy consumption of major appliances and equipment and help them make smart energy choices.
As the biggest energy consumer in the United States, the federal government has both a tremendous opportunity and a clear responsibility to lead by example with smart energy management. The President clearly acknowledged this with his Executive Order issued last January, directing us to take a systems-wide approach to energy consumption throughout the federal complex.
I have committed to him that the D.O.E. will exceed his mandate through the implementation of new technologies and policies that drive energy efficiency for this country. Energy Saving Performance Contracts, ESPCs, are one tool we intend to use. ESPCs are already achieving significant savings in some states, and I encourage you to consider initiating or expanding their use.
Some of your states might also consider working with industry and business partners to increase energy efficiency through building retrofits and industrial efficiency measures. Our Save Energy Now campaign can provide energy savings assessments by sending trained energy specialists to recommend energy improvements. Last year, 200 assessments were completed, identifying over 50 trillion BTUs of natural gas savings, which is equivalent to the energy consumed in 700,000 homes.
Because of the tremendous savings realized, we Project to complete 250 additional assessments this year. We are also actively involved in research and development in this area. In excess of 170 technologies have entered commercial markets through R&D plans that D.O.E. cost-shared with industry.
We also need your help as never before to educate the public about the role they can play in using energy more efficiently. I recently announced that D.O.E. and Disney are cooperating in a first-time nationwide campaign to promote energy efficiency through a TV spot based on the new Disney Pixar film "Ratatouille." The 30-second animated spot encourages viewers --- kids and parents alike --- to switch from incandescent light bulbs to Energy Star compact fluorescent lighting and provides tips on saving energy.
I hope you will join us in educating our citizens and in working with school administrators, architects and contractors to make your state's educational facilities not only models of energy efficiency, but also an educational tool for children.
Finally, I'd like to highlight that your State Energy Office is a great resource to you. D.O.E. supports and works closely with each energy office, providing over $50 million per year in both formula and competitive grants, and partnering with those offices to develop tools, best practices, and expertise accessible to you right now. For example, through these offices, we will be offering in-depth technical assistance to any states seeking to make changes in their ratemaking or energy planning practices.
In addition, we currently have an open solicitation of approximately $4 million, stemming from Section 140 of the Energy Policy Act, to encourage market transformation efforts by State Energy Offices, PUCs, utilities, and others. I want to remind you that the deadline for responses is August 7, so I urge you to work together in your states to get those innovative proposals to us.
We have spent a lot of time today talking about the promise of energy efficiency. Certainly efficiency measures have a large role to play in ensuring an adequate future energy supply for the quality of life our families aspire to. But these measures are not the only solution. Steps need to be taken as well to address the growing strain on our electricity transmission and delivery system.
With this in mind, I recently announced the issuance of 2 outline Countrywide Interest Electric Transmission Corridor designations. Our energy efficiency efforts unfortunately will not reap the benefits we expect unless we address the toll that rising local, regional and Countrywide energy demand is taking upon our infrastructure.
The point I want to leave you with today is that I greatly respect and value the work you are doing to advance the nation's energy security. At the same time, I am extremely proud of the work being done by the D.O.E.. D.O.E. is a leader in transforming the way energy is used. We must expand the work we do together to take advantage of the great opportunities --- and to meet the great challenges --- before us.
I look forward to hearing next from my good friend and colleague, our US Senate Energy Committee Chairman, Jeff Bingaman. Thank you for inviting me to be here with you today.
