February 26, 2013
Kentucky’s legislators are turning over rocks searching for new sources of economic development and good jobs. Yet they appear to be ignoring a great opportunity to grow new jobs in every Kentucky community through policies that promote energy efficiency and renewable energy. Instead, those opportunities are flowing to surrounding states. To make matters worse, legislative inaction is leaving Kentuckians vulnerable to rapidly rising energy costs.
House Bill 170, the Clean Energy Opportunity Act (CEOA), deserves their support. The bill could serve as a powerful economic driver while helping Kentuckians save energy and money in our homes and businesses. The CEOA asks utilities to gradually ramp up the amount of energy saved through efficiency efforts and generated from renewable energy sources. One provision, called a feed-in tariff, would also ensure that those who install renewable energy systems such as solar panels or windmills get paid for the energy they generate for a certain number of years.
Electricity rates in Kentucky have risen 68 percent over the past decade and are expected to keep climbing. The question now is how to minimize the rate of growth. A recent study estimates that HB 170 would reduce average utility bills by 8-to-10 percent over the next decade, compared to a do-nothing scenario. Those savings are due in large part to the bill’s emphasis on energy efficiency. Energy efficiency efforts cost about 3-to-4 cents a kilowatt hour (kWh) saved, while energy from new power plants costs 7-to-11 cents per kWh generated. And Kentuckians who take measures to use less energy will also reap the benefit of lower bills.
The renewable energy diversification called for in HB 170 will also help protect against the steeply rising costs and volatility of traditional fuels. The costs of renewable sources are rapidly and reliably falling. Wind power is fast approaching grid parity – the cost at which it is equivalent to traditional power generation. Solar cell costs have fallen 60 percent in the last year and continue to drop.
A 2012 analysis of the CEOA, commissioned by the Mountain Association for Community Economic Development, projected that over 10 years it would create an additional 28,000 job years. Workers would be needed in every corner of our state to weatherize homes and install more efficient heat pumps, lights, refrigerators, motors and more. These are local jobs that cannot be outsourced. And, as our commonwealth encourages more renewable energy, more industries that manufacture renewable energy components will be drawn to our state. That trend is already evident in Ohio, North Carolina, and other states whose legislatures have already acted.
Some electric utilities will argue that they are already doing all they can to increase their customers’ energy efficiency. If so, one has to wonder why the grand total of energy savings achieved by Kentucky’s utilities in 2010 was a mere .15 percent of their annual retail sales. Utilities in leading states did 20 times better. According to the American Council for an Energy-Efficient Economy, Kentucky ranks 37th out of 50 states for utility energy efficiency savings.
Some political leaders argue that we should leave it to free market forces to decide on the build-out of energy efficiency and renewable resources. They overlook the fact that our commonwealth and regulated utilities have entered into an agreement: utilities get a monopoly with protected territories and a guaranteed rate of return. In exchange, they are regulated by the Public Service Commission, which must approve their rates and generation choices, and efficiency programs.
Still others may argue that this policy is a threat to the coal industry. The truth is that Kentucky’s electricity generation will continue to be heavily dependent on coal for decades to come. However, ratepayers, including many significant industries, are at risk if we continue to put all our energy eggs in one basket and ignore the benefits of diversifying our energy resources. However, though the CEOA has gotten hearings, it has not been allowed a vote.
We cannot afford to work from the “business as usual” script that was written almost 100 years ago. Instead we must look to 21st century strategies and begin now to develop a new, cleaner energy economy. We can produce good new jobs that are immune to outsourcing while making our air cleaner to breathe and our water safer to drink. The Clean Energy Opportunity Act seems like a no-brainer.
Steve Wilkins is a member of the Kentucky Sustainable Energy Alliance Coordinating Committee. He is Kentuckians For The Commonwealth’s representative on East Kentucky Power Cooperative’s Renewable and Demand Side Management Collaborative.