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Pennsylvania Governor Rendell Unveils Energy Independence Strategy to Save Consumers $10 Billion Over 10 Years, Reduce Reliance on Foreign Fuels

Source: Press release Posted :01 Feb 2007
Author : Pennsylvania Office of the Governor
http://www.earthtimes.org/articles/show/news_press_release,54090.shtml

HARRISBURG, Pa., Feb. 1 /PRNewswire-USNewswire/ — Citing the urgent need to cut energy costs, move toward energy independence and stimulate the economy, Governor Rendell today released his Energy Independence Strategy. The plan will push Pennsylvania into the top tier of states taking steps to cut consumer energy costs, and significantly expand the alternative fuel, clean energy and conservation sectors. “This plan will cut Pennsylvanians’ energy bills by $10 billion over the next 10 years,” said Governor Rendell. “It will give us the ability to produce enough homegrown fuel to replace every gallon Pennsylvania currently imports from the Persian Gulf.

“With smart policies and aggressive leadership, we have attracted hundreds of millions of dollars of new investment and created thousands of new jobs, making us a leader in the clean energy sector. The new policies I am proposing will grow our competitive edge in clean energy even further and move us dramatically closer to energy independence.”

The enactment of new laws, regulatory policies and the creation of the $850 million Energy Independence Fund will enable Pennsylvania to achieve three key goals:

* Save consumers $10 billion in energy costs over the next 10 years; * Reduce Pennsylvania’s reliance on foreign fuels and increase Pennsylvania’s clean energy production capacity; and * Expand Pennsylvania’s energy production and energy technology sectors to create more jobs. Cut Consumer Utility Bills

The first priority for this new energy initiative is to cut energy costs for Pennsylvania consumers. Electric generation rates can swing wildly during the course of the day and at different times of year. A recent study by PJM, the independent electricity grid operator that covers Pennsylvania, showed that cutting power consumption by just 3-5 percent during peak rate periods saves consumers across the state up to $230 million annually.

“At times of high energy use, such as the hottest days of the summer and coldest days of the winter, energy costs can be five- to seven-times higher than during times of moderate use,” said Governor Rendell. “Today we do not have the tools to cut our energy bills by shifting energy use to times when costs are lower. I want to help consumers save money through smart metering and time-of-day rate structures.” The Governor’s initiative enables consumers to be smart about energy use by providing new tools to empower consumers and $244 million in new funding to help them install state-of-the-art energy technology.

Smart Metering:
The Energy Independence Strategy would give consumers the right to get smart meters installed in their home to give them a new tool to reduce energy spending. Utilities would be required to prove they have aggressively pursued this strategy before getting approval to build new generating plants. Increase Household Energy Efficiency and Lower Bills: Rebates would be provided for customers turning in old, inefficient air conditioners and refrigerators – two of the biggest energy-using appliances in the home – for new models that use at least 15 percent less energy. The creation of a “Pennsylvania Sunshine” program will help residents pay for up to 50 percent of the cost of installing solar panels on their home or small business. At current electricity rates, the average household could save about $600 a year with a 5 kW system, or solar panels that generate about two-thirds of the electricity consumed in the home. Make Pennsylvania Businesses More Competitive: To stay in business in our state, industry needs affordable electricity and rates that remain relatively stable. Soaring or dramatically fluctuating electricity costs make it difficult to manage and grow a business. That is the situation manufacturers in Pennsylvania face as rate caps end and they are left to deal with rapidly changing, “spot market,” electricity prices. The Energy Independence Strategy addresses this problem for Pennsylvania by enabling large energy consumers to enter into longer-term contracts with stable, cheaper prices with their electricity provider, or through “microgrids” to generate their own power. Second, electricity providers would have to demonstrate they sought to keep prices down by buying a portfolio of electricity resources at wholesale through long and short contracts, instead of just spot market deals. Power generators and distributors also are required to invest in conservation first – initiatives that help customers cut energy consumption – rather than in costlier options like building new generation or buying power at peaking rates.”Investing in conservation is critically important and the alternative is unacceptable,” said Governor Rendell. “Without this initiative, Pennsylvanians will need to build the equivalent of five large nuclear or coal-fired power plants at a cost of over $10 billion to meet our growing demand for electricity over the next 15 years.” Reducing Reliance on Foreign Sources of Fuel

“Every year, Pennsylvanians send some $30 billion out of our state just to buy gas and liquid fuels,” the Governor said. “We need to keep those dollars at home and put our own people to work building our state’s energy independent future.

“I have made a priority of investing in farm land and open space preservation, and I am proud to say Pennsylvania now has the biggest program in the country. But even with this effort, we still lose three acres of farmland for every acre we save. If we give our farmers a chance to grow our energy, we can turn that around and help our farming families while we bolster our energy security.”

The commonwealth is already a leader in the production of renewable fuels. One of the largest ethanol plants in the east will be built in the state, and approximately 340 million additional gallons of ethanol production are planned. Similarly, companies in Pennsylvania are expected to produce 60 million gallons of biodiesel by the end of 2007, and other new plants being built are expected to produce an additional 170 million gallons within the next two years. To put that into perspective, current national production of biodiesel amounts to 225 million gallons, putting Pennsylvania’s total production near the top of all states.

Enact PennSecurity Fuels Standards: To guarantee that the shift to cleaner alternative fuels occurs, and to bring economic stability to the alternative fuels sector in PA, the Energy Independence Strategy will codify the “PennSecurity Fuels Initiative” by requiring that we grow and use one billion gallons of clean and renewable fuels. One billion gallons of biofuel represents about 12.5 percent of all fuel consumption in the state, and by 2017, would equal approximately the amount of fuel Pennsylvanians buy from the Persian Gulf. Instead of spending $30 billion to pay for foreign sources of fuel, more of these funds will be spent purchasing fuel from Pennsylvania’s companies and farmers. Specifically, the Governor’s initiative would mean that every gallon of gasoline sold in Pennsylvania would include 10 percent ethanol, and every gallon of diesel would include an increasing amount (up to 20 percent) of soy or other renewable oil. Expand Pennsylvania’s Energy Production Companies/Jobs

Governor Rendell has successfully attracted some of the world’s leading advanced energy companies to Pennsylvania. Clean energy is among the fastest growing investment sectors in the U.S. and global economy. In the last five years alone, investors have pumped $24 billion into clean energy projects – a two-fold increase over previous investment levels.

“I am determined to further grow the Pennsylvania economy by attracting energy companies to the state, creating jobs, and by making the commonwealth the ‘destination location’ for clean energy investors,” said Governor Rendell.

“Pennsylvania’s current energy investment programs have created over 2,500 jobs in the commonwealth, but since funding dollars are limited, the state is only able to support 10 percent of requests for energy dollars – losing out on at least $100 million in potential investments every year,” said Governor Rendell.

To ensure that Pennsylvania’s economy and our jobs are benefiting from the national growth in this sector, the Energy Independence Fund will:

* Accelerate the role that Pennsylvania companies play in the production of clean energy components and systems: By making over $100 million available in the form of venture capital, loans and grants so Pennsylvania firms can attract private sector investors and grow their companies. These funds may also assist in attracting cutting-edge energy firms to the commonwealth. All state funds will be matched at least dollar-for-dollar by private sector capital. * Initiate Clean Energy Economic Development Projects: New state resources will target up to $500 million in state funds dedicated for infrastructure improvements, construction, early project development costs and equipment purchases undertaken to attract private investment in energy-related economic development projects, including solar manufacturing; advanced coal technologies; biofuels; and energy conservation, efficiency, and energy demand management projects. * Keep Energy Jobs Close To Home: The plan also makes improvements to the historic Alternative Energy Portfolio Standard already on the books in Pennsylvania. It makes clear that power companies can enter into long-term contracts with the developers of wind farms and solar power arrays so that those new and clean sources of energy can get financed and built. And this strategy also makes clear that those projects have to get built in a place that directly supports the grid that serves Pennsylvanians; renewable projects built in other parts of the country or even Canada would not be used to meet our requirements. Climate Change

“I think everyone now understands that you cannot deal with energy policy without addressing global warming,” said Governor Rendell. “It is the largest environmental problem we face and Pennsylvania needs to do something about it.

“The efforts I am announcing today to save energy and produce more clean energy are a good first step, but they are only a first step. In the next 90 days I will present a comprehensive strategy to make Pennsylvania a leader in addressing climate change.”

The Energy Independence Fund

The Energy Independence Fund will be used to support the following clean energy activities:

* $244 million – Household appliance rebates and PA Sunshine Grants * $106 million – Venture capital, grants and loans for expansion of energy companies * $500 million – Clean energy projects and development or equipment costs for specific energy economic development projects

The Energy Independence Fund will be capitalized by a systems benefits charge on electric power consumers. Charges of this kind are already in place in 15 states and the District of Columbia. At the rate proposed, Pennsylvania’s charge would be lower than all but two of these jurisdictions.

The systems benefits charge is proposed at $0.0005 per kWh of electricity used (five-hundredths-of-a-cent or .5 mills). This charge would cost the average residential customer 45 cents per month, the average commercial customer about $3.00 per month and the average industrial customer $74 per month. For large industrial customers, the fee would be capped at a maximum of $10,000 per year.

By contrast, the Energy Independence Strategy as a whole is expected to save consumers nearly 15 times more than the cost of this fee. The average residential customer is expected to save $73 per year, the average commercial customer $425 per year, and the average industrial customer $10,500 per year.