Report ranks power companies’ pursuit of renewables, efficiency gains

Source: Debra Kahn, E&E reporter • Posted: Friday, July 25, 2014

A report from investor activist group Ceres is gauging the nation’s major utilities’ embrace of renewable energy and energy efficiency with an eye toward encouraging compliance with upcoming federal electricity rules.

The study ranked 32 of the country’s largest investor-owned utility holding companies on their renewable energy and energy efficiency performance. The companies and their 80 utility subsidiaries accounted for about 70 percent of U.S. retail electricity sales in 2012.

The report argues that utilities should find it in their interests to capitalize on clean energy investments. It cites U.S. EPA’s proposed greenhouse gas rule for existing power plants, as well as predictions by Barclays that solar and energy storage could hurt traditional utilities’ prospects, as distributed generation chips away at grid sales (EnergyWire, July 2).

“Utilities making significant and increasing investments in clean energy resources and infrastructure are arguably better positioned for greater profitability as public policies to reduce carbon emissions take hold,” the Ceres report says.

But not all utilities have gotten the message. The report found “wide disparities in the extent to which electric utilities currently earn revenues from renewable energy and energy efficiency, the cornerstone resources of a sustainable 21st century electric power sector.”

Pacific Gas and Electric Corp. and Edison International got top marks in renewables as well as efficiency, while Dominion Resources Inc. and Entergy Corp. were among the worst-scoring in both categories.

Xcel Energy Inc. and Sempra Energy were also top performers.

The largest utilities — Duke Energy Corp., Exelon Corp., Southern Co., FirstEnergy Corp. and American Electric Power Company Inc. — performed similarly to one another, coming in on the lower end of both renewables and cumulative efficiency savings as a proportion of retail sales.

Companies that provide distributed renewables or energy efficiency solutions could use the report to target regions with poor utility service, said former Federal Energy Regulatory Commission Chairman Jon Wellinghoff, who wrote the foreword to the report.

“Solar, co-gen, CHP [combined heat and power], energy efficiency services; I think any of those entities could take advantage of this from the perspective there’s a vast amount of opportunity there,” he said in a call with reporters this morning. “To the extent [consumers] are not being provided these services … there’s going to be other people moving in and providing them.”

Not surprisingly, utilities that did well tend to be located in states with aggressive policies on efficiency and renewables, like California, Massachusetts and Oregon. The Southeast region, which “historically has had weak state-level support for clean energy,” had the lowest proportions of renewables, the report found.

Utility representatives concurred. “We are lucky to be in a region of the country where we’ve got legislators and regulators who are very forward-thinking,” said Tilak Subramanian, vice president of energy efficiency for Northeast Utilities, which serves customers in Connecticut, Massachusetts and New Hampshire.

Renewable energy and energy efficiency are two of the “building blocks” that EPA identified in its proposal last month for regulating CO2 from existing power plants, the report points out.

“Our bottom line message is this,” said Dan Bakal, Ceres’ director of electric power programs. “We’re not really here to criticize the utilities with lower rankings, but we hope they see this moment as an opportunity.” Ceres, a nonprofit aimed at raising investors’ awareness of climate change and resource scarcity, also advises a group of 110 institutional investors with combined assets of more than $13 trillion.

The report also identifies a side benefit of embracing efficiency policies: By making them more central, they will become more standardized, thus making them easier to quantify.

It also argues for better data, including that collected by the federal government. The U.S. Energy Information Administration should put out new annual reports on renewable energy sales, types and capacity at the holding company and subsidiary levels, it says.