Today Illinois Senate President Cullerton sent S.B. 1652, the Energy Infrastructure Modernization Act to Governor Pat Quinn who has made it abundantly clear that he plans to veto the bill. Assuming he does, lawmakers may try to override the veto in November, or negotiate changes via a separate “trailer” bill, or both. As they consider the possibilities, it’s worth noting that S.B. 1652 contains energy efficiency policies with the potential to cut consumer energy bills by hundreds of millions of dollars a year, with significant jobs and environmental benefits as well. They should take care to preserve this critical element of the legislation that is a triple win for consumers, the economy and the environment.
NRDC asked economist Skip Laitner, Director of Economic Analysis for the American Council for an Energy-Efficient Economy (ACEEE) to analyze the economic impacts of Illinois’s energy efficiency portfolio standard, passed in 2007, with a particular focus on the job benefits of that policy. Moreover, we asked him to analyze those impacts with and without an expansion as proposed in S.B. 1652. Here are the results.
Under the law as it stands today, the utility energy efficiency programs launched by ComEd and Ameren Illinois after passage of the 2007 energy efficiency portfolio standard will create 3000 new jobs between now and 2015, and 8200 new jobs between now and 2025. The annual consumer savings from these programs will grow from $500 million in 2015 to $1.6 billion in 2025.
However, S.B. 1652 would allow for an expansion of those programs for residential customers. With this expansion,
- The energy savings would increase by roughly 30%, from 1.1 million MWh per year to 1.5 million MWh per year. This is the amount of electricity it takes to power about 150,000 homes.
- Likewise, the annual consumer savings would swell by about 30% to $650 million in 2015, and more than $2 billion in 2025.
- The job creation totals would swell by 16-20% to 3500 new jobs between now and 2015, and 10,000 between now and 2025.
How do consumers save money from these programs? The energy efficiency portfolio standard requires utilities to use efficiency technologies to reduce the amount of electricity they need to sell to satisfy customer needs. The cost of saving power has been substantially lower than the cost of generating, transmitting and distributing power. In the first two year of the programs the utilities have saved customers between two and three dollars for every dollar spent on efficiency. Looking out to 2025, we anticipate a cost-benefit ratio of 1.6 to 1.
How do we estimate the job creation from these programs? Energy efficiency creates three kinds of jobs – (1) Jobs for people who actually implement the programs, doing everything from installing new lighting systems to conducting energy audits; (2) Jobs for people who manufacture new appliances, motors and other efficiency measures; and (3) Jobs that are created when you reduce the amount of money we all pay for electricity, so that we can spend those dollars in other parts of the economy. When our state becomes more efficient, the dollars we spend are shifted from the energy sector, which is less labor intensive, into other sectors of the economy. The total jobs created for each million dollars worth of investment in the energy sector is only 5.2, compared to 12.9 for all other sectors of the economy.
If the expansion of utility programs in SB 1652 would create 30% more energy savings and consumer savings, why is the job growth only 16-20%? Because when you translate the savings into 2009 dollars to account for inflation, the same amount of dollar savings has less impact in later years than in earlier years. In this analysis, all dollar amounts were expressed in 2009 dollars.
What if we expanded the efficiency programs even more, to capture the cost-effective potential for savings in the residential, commercial and industrial sectors? SB 1652 allows for expansion in the residential sector, which covers about 40% of the power sold in Illinois. A full expansion, as NRDC proposed in HB 3055, would result in roughly double energy savings, pocketbook savings and job creation benefits as the provision in SB 1652.
To see the full study, click here.