American Council fur an Enlergy-Efficient Ecunnmy UTILITY SECTOR ENERGY EFFICIENCY IN MINNESOTA: DOING WELL….MANY REASONS TO DO MORE Presentation to the Minnesota Legislature February 5, 2013 by Martin Kushler, Ph.D. Senior Fellow American Council for an Energy-Efficient Economy
The American Council for an Energy-Efficient Economy (ACEEE) • Nonprofit 501(c)(3) dedicated to advancing energy efficiency through research, communications, and conferences. Founded in 1980. • ~40 staff in Washington DC, + field offices in DE, MI, and WI. • Focus on End-Use Efficiency in Industry, Buildings, Utilities, and Transportation; and State & National Policy • Funding: Foundations (34%), Federal & State Grants (7%), Contract work (21%) Conferences and Publications (34%), Contributions and Other (4%) Martin Kushler, Ph.D. (Senior Fellow, ACEEE) • 30 years conducting research in the utility industry, including: • 10 years as Director of the ACEEE Utilities Program • 10 years as the Supervisor of the Evaluation section at the Michigan PSC • Have assisted over a dozen states with utility EE policies • Minnesota experience: • Advisor to Xcel CIP Advisory Board 2000-2008, 2012-present • Advisor to MN Legislative Auditor on CIP evaluation (2005) • Advisor to MNCEE, 2012-present 2 2 Arnennan Buuncil in: an Eh.er§y-EiF:cier1:Enunumy
TOPICS • Minnesota’s energy disadvantage • Why energy efficiency should be the top priority • Energy efficiency as a utility system resource • Utility economic concerns regarding customer EE • Regulatory mechanisms to address utility concerns • Energy efficiency as economic development • A few current ‘hot topics’ • Grading Minnesota • Opportunities for further progress American Buuncil in: an ffiéréy-ElI:cieni Enunumy
KEY POINT #1: MINNESOTA HAS A BIG ENERGY PROBLEM • Minnesota uses a lot of energy – Total cost $12 billion per year in 2000 By 2010, had increased to $21 billion!!! • Minnesota is essentially totally dependent on fuels imported from other states and countries Minnesota imports: – 100% of the coal and uranium used – 100% of oil & petroleum products – 100% of the natural gas 4 Amman Buuncil in: an £:1er§ge-EiF=cier1:Enunumy
COST OF MINNESOTA ’ S ENERGY IMPORTS • Before the new ‘high energy cost’ era (circa 2000), roughly $7 billion per year was leaving Minnesota to pay for fuel imports • At 2010 market prices, this dollar outflow was over $13 billion per year THIS IS A HUGE ECONOMIC DRAIN ON MINNESOTA’S STATE ECONOMY! 5 American Buuncil in: an ffiéréy-ElI:cieni Enunumy
Economic Burden on Minnesota Homes and Businesses: State Taxes vs. Energy Costs (2010) $25.0 $20.9 $20.0 $14.2 Billions of Dollars $15.0 $10.0 $13 billion drain for imported fuels $5.0 $0.0 Total MN Taxes (2010) Total MN Energy Costs (2010) C E E E - - Q 0 6 0 0 _ mmlmn fiuncll for an Energy-Efflnlam Euannmyr
EFFECTS ON THE STATE ECONOMY This additional $6 billion annual drain on Minnesota’s economy is roughly equivalent to the lost payroll from closing 120 major manufacturing plants . (assuming 1000 jobs @ $50,000 each, per plant) Even the Wall Street Journal has written about the unprecedented transfer of wealth, calling it a “bonanza” and “windfall” for the handful of big energy producing states (i.e., AK, NM, ND, WY and TX) and countries (e.g., OPEC). 7 Amman Buunnil in: an £:12r§5'-EiF:ciel1£Enunumy
KEY POINT #2: MINNESOTA’S FUTURE IS NOT IN FOSSIL FUELS MINNESOTA’S RECOVERABLE RESERVES AS A SHARE OF U.S. RECOVERABLE RESERVES (Source: U.S. EIA) • Coal: 0% • Oil: 0 % • Natural Gas: 0% [also Uranium: 0%] Why would Minnesota support policies that encourage greater consumption of these resources? (At the state OR federal level !) 8 A-'|1ur=.na:1 Buunuil in: an [;'|£F§}'-E€.‘:Ei3l1F.E|3UHUH'|)"
2011 Coal Production by Region Million Short Tons (peroent change from 2010) _ Wstern uncludnsnlaska} 5B?.*1 1-new ' _ Appiaclian . 335.1 ' £11-I1‘!-H Interior ' "IE-9.! _ - {'9.1‘i‘u] Source: LLS. Energy Information Administration, Quarterly Coei Report, October-December 2011 {April 2012), preliminary 2011 date. Production does not include refuse recovery. 9 i1.'nurua'| lluuiuil in’ an ['1arg','-E*"-ci2n'. Euununiy
Figure 9. Oil proved resewes by state/area, 2010 U.S. Total: 25.2 billion barrels of crude oil plus lease condensate [ME Pacific Federal Olfshore WA MT _ 363 369 /*' _ .» VT I-I‘ I 4., NH T? NY: MA 55 3' IA PA ~"' ' ‘ff OH 34 NI C 1|. LN 54 MD —oE 64 wv 302 M01 lg VA N C ‘,4 TN1 AR ‘ 42 SC _.-- MS AL 254 60 GA ‘ll million barrels (statelarea count) I 1,001 16 6,356 (5) - 501161000 (6) "‘\ . 0. ‘ ~r‘,.n¢ M. /. 201 to 500 1 to 200 (16) 6 10 0 (20) I Data withheld to avoid disclosure of individual company data
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As a matter of state policy, Minnesota should be trying to maximize the amount of energy efficiency it can accomplish… … and minimize the amount of additional fuel imports it needs 12 American Buuricil iii: ari tneroii-Eiiscierit Economy
KEY POINT #3 It is much cheaper to save energy than it is to produce it. [We can save electricity for about one-third the cost of producing it through a new power plant …. With no carbon (CO 2 ) emissions] 13 American Buimcil in: arr tiiercii-Ell1cieniEcun0rnir
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