South Carolina with the gift of energy efficiency

Joining its northern neighbor, South Carolina has taken a bold step forward for clean energy this week when the Palmetto State’s public utilities commission approved a “shared savings” program to compensate Duke Energy if its investments in energy efficiency programs can save money for customers.

Six weeks ago, North Carolina took the same action, so the southern states are in tandem in pushing Duke Energy toward greater efficiency. It’s exciting that the utility commissions decided to have the company meet with interested parties to develop programs to help low-income customers and promote on-bill repayment. Elsewhere, these programs have offered valuable energy efficiency savings, and we’re glad to work with Duke Energy to help design and integrate the programs through their system.

The “shared savings” mechanism is based on similar successful approaches in other states that encourage energy efficiency: A utility earns a percentage of the measured energy savings it delivers for customers. In North Carolina, for example, Duke Energy’s customers will keep close to 90 percent of the savings, and the utility earns the rest. The South Carolina mechanism will mirror the North Carolina one, giving Duke a strong financial incentive to achieve savings for its customers.

Through the “shared savings” program, Duke Energy will receive additional incentives for meeting a more aggressive goal of 1% energy savings. “Shared savings” should simplify the process for Duke Energy to invest and profit in energy efficiency. That should encourage the company to invest in all cost-effective energy efficiency going forward and achieve savings for ratepayers.

Across the Carolinas, more investment in energy efficiency will reduce the need for dirty power generation and cut the health dangers that this pollution creates. The program could entice Duke Energy to look to efficiency as the first resource tapped to meet energy demands in the two states.

With a greater emphasis on energy efficiency ultimately comes more jobs, since we need people to manufacture and install energy-savings measures such as insulation, better windows and efficient lighting. In fact, the 2013 South Carolina Clean Energy Jobs Census, released in October, shows that employment in the state’s clean-energy sector went up 3.6 percent over the year before – more than double the state’s overall rate of employment growth. The sector also generated nearly a billion dollars in annual gross revenue, a jump of nearly 12 percent from the year before.

The “shared savings” program will succeed the Save-A-Watt program, which ends Dec. 31. But the utility commission’s decision to embrace this new program is a good sign for clean energy in the Carolinas. The Save-A-Watt program aimed to reward the utility for investing in energy efficiency programs, and Duke Energy Progress achieved savings slightly below 0.45 percent of all retail sales. But leaders in energy efficiency across the nation get more than 2 percent savings, and more than 14 states save at least 1 percent of retail sales a year.

NRDC, with our partners the Southern Environmental Law Center, the Sierra Club, the Southern Alliance for Clean Energy and the South Carolina Coastal Conservation League, worked hard to make sure we could continue to build on the progress energy efficiency has made in the Carolinas. And we’re pleased by the actions by the utility commissions.