An opportunity disguised as a problem

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An opportunity disguised as a problem

This week, the EPA released the long-anticipated standards for the reduction of emissions from coal-fired plants. The proposal calls for a 30% cut of carbon emissions from the power sector by 2030.

The importance and impact of these standards cannot be understated. If you doubt this, just look at who else besides the mainstream media is reporting on this rule: science and weather organizations, political blogs, financial groups, etc. Many recognize the far-reaching implications of such a ruling, since about 40% of America’s electricity is generated from coal.

As we have noticed before with press releases from the EPA relative to this topic, health is a key message point. In fact, when listing the benefits of the “Clean Power Plan” in the first paragraph of the press release, health is mentioned prior to “cleaner environment” or “fight climate change.” Additionally, the EPA states the new rule will avoid up to 6,600 premature deaths by 2030 and provide other health benefits; it estimates the value of the climate and health benefits to be as much as $93 billion.

A recent Washington Post/ABC News poll found strong support for emissions limits on power plants. Strong enough, in fact, that the majority were willing to pay an extra $20 per month in their electricity bill for a significant reduction in greenhouse gases. However, the potential impact on an electric bill is unknown, and will likely be greater in states with a greater share of coal-fired production. And of course, dissatisfaction with higher rates will be directed at the utility and will most likely result in falling J.D. Power scores.

While it is a fair assessment to believe this rule will be challenged vigorously in the courts by some states and utilities, it is just as prudent to believe that coal generation is on its way out. Utilities will have to develop more aggressive plans for the partial or full elimination of coal plants and get ready for the high bill complaints.

There are two ways utilities can address this eminent surge of unhappy customers.

One is to more aggressively promote energy efficiency. We know, from our 2013 Utility Pulse study, that Americans who are aware of and participate in energy efficiency programs are significantly more satisfied with their utility than others. Yet less than 30% know that their utility offers any energy efficiency incentives or rebates.

The other is to truly embrace renewables. American support for solar energy, in particular, is growing, and the installation numbers bear this out. Between 2012 and 2013, residential PV installations grew from 494 MW to 792 MW, a 60%+ growth rate. Much of this growth can be traced back to new leasing models, which help customers install solar for little or no financial investment.

Utilities that will facilitate distributed generation by offering a variety of rooftop solar ownership/leasing options, develop favorable net-metering plans, partner with skilled firms for installation and maintenance services, and promote advanced energy storage options can, in essence, act as an energy concierge.

This once-in-a-lifetime opportunity could shift the dynamic for the whole industry, with utilities becoming a true mentor and trusted partner. It offers a win-win solution for meeting new carbon reduction mandates while better engaging and satisfying customers.

Skills

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Posted on

June 3, 2014

About the Author

Jim Lyza

Jim is a former contributor to Shelton Insights.

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