ENERGY YESTERDAY, TODAY, AND TOMORROW J. MICHAEL LOVE President of J. Michael Love Consulting We are Going To Talk About Saving Money and Energy Today • If you have money you don’t want then consider donating to Haiti instead of wasting the money. • As an orphan who was adopted myself, I wish to point out to you that prior to the most recent earthquake there were 300,000 orphans in Haiti. • Now there are many more after the Earthquake. Maybe as many as 20,000 more. Thank You Gov. Rendell • Bringing 54 orphans to Pittsburgh was a wonderful humanitarian gesture. • Many if not most of the children were already adopted. Now You Need to Adopt a wise Energy Strategy • PPL has been urging people to shop for generation suppliers to offset some of the increase in their generation rates for years. • The Public Utility Commission, the Consumer Advocate, and the Secretary of the DEP have all urged the same action: Namely shop for a new generation supplier to save money. • The Patriot News, WGAL, the Central Penn Business Journal and Capitolwire have all run stories on the reasons to shift. Indeed these Efforts Have Been Rewarded • While Chairman Cawley will have more recent numbers, somewhere between 18% and 20% of PPL’s customers have switched Generation Suppliers away from PPL. • It is a tribute to PPL, the PUC Commissioners , The Consumer Advocate and the DEP Secretary and the media that this dwarfs the usual 2% to 3 % found in other states. • The multiple suppliers have brought down generation prices from what one would have paid. How much money can people save? • Depending on the offer, the length of the offer, the source of the generation, you can all save at least 5%, more likely 10% and possibly as much as 15%. Why Electric Restructuring of Generation • Retail customers had experienced both significant and often steady rate increases. • Both in PA and elsewhere there were cost overruns associated with generating station construction. • Generating Stations had relatively poor operational experience. • Higher fossil fuel increases, little to no alternative energy. • Increased pollution control measures and ever increasing demand for electricity. 1996 Electricity Generation Customer Choice and Competition Act • Ratepayers are no longer bearing the risk of generation construction overruns, rather those that construct units bear all risks. • Owners of generating plant assets are paid when the generating units run which has led to significant operating ratios and improved efficiency. • Diversity of supply options with offerings including alternative energy , demand side management and demand response. Quantifiable Benefits • Nuclear Plants under regulated generation ran about 59% of the time, now in the competitive world 93.5% of the time. $125 Million. • Consumer demand side management programs have flourished under PJM. $650 Milliom. • Our generation mix has greater diversity, and thus more competitive. • Wind construction, solar and natural gas encouragement, biomass economics , nuclear rated capacity and hydroelectric expansions. Poor Comparisons Between So Called Restructured and Regulated States • States are assigned incorrectly • Other Factors are at work such as Gas Prices, coal % of generation, environmental policies, • State Policies on Hydroelectric, Rate Design, Assignment of low cost coal plants • Fossil Fuel Prices went up significantly • Generation Mix • Tax Policies on Energy New Construction of Generating Units is expensive. • Nuclear • Solar • Coal • Hydroelectric Demand Response , Energy Efficiency, and Conservation Make $ense • Go To Vendors at this conference. • Get an Energy Audit. • Energy as it reflects new costs will be more expensive and measures to use less or use energy more efficiently become more economic with the passage of time. Just Around The Corner • Home and business sales will need an energy audit to move the property to a sale. • Smart meters and two way communication between utility and consumer will lead to a greater diversity of rates and energy efficiency incentives. • Residential Class is a huge unknown. • Old customer classes of industrial, commercial and residential are too general in this new data driven world. Market Driven Price Signals Will Lead to more Economic Decision Making • Rate Caps discouraged conservation and energy efficiency. • Price of Natural Gas is the Wild Card. • Rate Caps discouraged hiring. • Federal and State Tendencies to Tax energy is a concept worthy of being revisited. Challenges Lie Ahead • We say we want Wind as an alternative energy source yet local authorities are shooting down projects with greater frequency. • We say we want Hydroelectric as an alternative energy source yet Pennsylvania leads the nation in the retirement of hydroelectric facilities. • We say we want conservation and energy efficiency but elimination of analog signal TV’S, 7 hours and 38 minutes of children used electric powered devices and 3-D TV offerings all say no. THE PUC HAS DELIVERED • Ridge and Rendell appointed strong, smart energy policy Commissioners that has allowed us to avoid the mistakes found in California ,Michigan, Delaware, Maryland, Illinois and elsewhere. PUBLIC EDUCATION CHALLENGES • 20% is better than other states 2% • 20-40 Competitors is a good sign • Time of Use Rates, Smart Meters, Automated Demand Reduction, Behavior Switch on Energy and also Demand Usage requires an attentive public. • Voluntary measures will not be enough. Goals • We need to educate the young like we did with smoking and seat belts. All energy does not cost the same. • With our wind resources, our gas resources , our governmental encouragement of conservation ,solar, and demand response, our coal resources, there is no way we should still have oil fired electric generation in this state. Electricity Markets • We have seen favorable response and dollar savings from PJM demand curtailment. However, the residential class is yet to be seriously engaged. • Electricity Storage is a great unknown. • Fuel Substitution has both plus and minus. • Environmental and Tax policies are an unknown. Price of Natural Gas • The greatest unknown and biggest factor impacting the price of electricity is the price of natural gas. Rate Caps Coming Off Elsewhere • Met Ed and PECO and Allegheny will all be different from each other and PPL. • Act 129 as discussed by Chairman Cawley is a game changer. • The more informed, the more energy efficient our population is , the better we all are. • The vendors at this wonderful event are a place to start. Exercise of Sound Judgment and Reduced Consumption =Energy Diet • 5% energy reduction could make a world of difference. • We have been adding energy pounds for years. • We need to review all programs for their impact on energy consumption. • We have an old housing stock. • Paddy is a good example.
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