Energy Efficiency:

Rep. Burgess, European Parliament's Ek discuss action on energy, climate in U.S.

With the Obama administration focusing on addressing some of the low-hanging fruit like conservation and energy efficiency to tackle the United States' energy and climate challenges, energy efficiency has become a key issue in policy discussions in the United States. E&ETV traveled to Paris for the annual Energy Efficiency Global Forum and Exposition, hosted by the Alliance to Save Energy, for a series of interviews and panel discussions about the challenges to, and potential of, energy efficiency. Today's segment features remarks by Lena Ek, member of the European Parliament; Rep. Michael Burgess (R-Texas); and John Fielder, president of Southern California Edison. The panelists discuss the progress being made in the United States on energy and climate legislation. They also address the role of energy efficiency in the business sector.

Transcript

Thomas Dressen: Now, it's my distinct pleasure

to introduce our master of ceremonies for this morning session, Ms. Lena Ek, who's a member of the European Parliament from Sweden and she's been instrumental from day one in EE global.

I'm so happy that she's joining us today. She's got a track record of supporting energy efficiency forever and she serves on the European Parliament Committee of Industry Research and Energy.

And she's going to lead us through this morning's plenary session, so without further ado, Ms. Ek.

Lena Ek: Thank you, thank you. Thank you very much and I'm thrilled to be here and thrilled to see you all in Europe and in Paris. France had the presidency of the European Union the last six months and ___.

And I think Paris, the French government is extremely happy to have you all here because France was the lead nation in the negotiations of the European climate package, climate targets and climate package.

And energy efficiency, of course, is one fourth of this very, very hopefully instrumental but important bill that covers 500 million people and 27 member states and three adjoined states to the European Union.

Now, the aim of this session is to discuss energy efficiency from a more practical point of view to see what the industry is doing and the results we can achieve.

And from my point of view, I do hope that there is a good demonstration on a win-win situation with energy efficiency.

And looking out at the speakers of our panel I'm convinced that you will have a lot of information and also very good time these two hours we will spend together. Now, yes, that's not me, but it's my presentation. Okay?

You will see this later on. EU figures, I will start here. Now, one can ask how can 27 member states come together on quite tough targets when it comes to energy and to climate? And, of course, it's not only the climate discussion.

It's, of course, the situation in Europe on the growing demand and the difficulties we will have to face to be sure that the industry and the public get the energy that is needed at the same time as we already experience the difficulties of the climate situation.

We experienced a lot of droughts in southern Europe and last year 30,000 people died because of the heat waves in countries like Romania, Greece, and Spain.

We have had a lot of flooding in central Europe and we do have disease spreading from the south, like African fevers. We do have health problems also up in the very north east Sweden with insects that we didn't have before but we're not prepared for.

So the climate change is already here. We can see the results from that in Europe. We also have a security issue. A lot of our energy is imported from Russia.

And, of course, that poses specific problems for states like the Baltic states and the 10 new member states of the European Union. And even Germany is heavily dependent on Russian gas.

Half of the German industrial production runs on Russian gas. So there is a reason why Angela Merkel first visited Paris and then went to Moscow when she was elected, within the first day after she was appointed.

There is also a problem of a very old-fashioned distribution net, both for electricity and for gas. So there are a number of issues which really underlines the necessity of a new energy policy within the internal market at the European Union.

And, of course, here energy efficiency is instrumental. In Europe, of course, you see that we use a lot of oil, we use a lot of gas, electricity, and renewables are the green small line on top.

And if you look at the sectors, roughly, and I guess this is the case all over, one third is used by the industry, one third in transport, and one third in households.

This is, of course, the same figures that we have if we look at the carbon dioxide emissions, one-third of each of these sectors. That's why we have also to focus the specific sectors and I think that this goes extremely well with the organization of the conference.

And to be able to deal with problems like this, you have to sort of scale them down into a space where you can maneuver and where you can find solutions that are practical. Solutions, this picture is honestly borrowed from the Shell company.

It is four years old or even five maybe, but it illustrates the difference that we're facing if we want to increase the GDP per capita. And if you look at the left, it is energy per capita and the years 1971, 1990, 2004, 2025, and 2050.

And these bowls really illustrate the change that we're facing in society. This is the problem we have to deal with. We have to use less energy per person and we have to change the kind of energy that we are using and the emissions that we produce.

And this, of course, is really, really a difficult task, but I'm fairly optimistic actually. And I think we all are that have taken part in the decision-making process in the European Union.

And on energy and environmental issues, half of the power lies with the governments within the European Council and half of the power lies with the European Parliament.

So we have to work it together, very much like in the U.S. with the Senate and Congress, to get the decisions going. But this is what we face.

And I think one of the reasons why I think we can do this is actually the triple crisis that we experienced right now, the financial crisis which is growing into a jobs crisis and the climate crisis.

Because historically, if we look at old times like this we have always, after a big financial crisis, we had a breakthrough in new technology.

If you look after the first world war and after the second world war new technology coming through massively. And I think that is what we are seeing right now and the first sector to really experience this is, of course, transport and cars.

Now, the solutions that we're looking for, and this is what the 27 governments predict will be the solutions, and you see energy savings or energy efficiency on top, the prime priority and also huge possibilities, huge possibilities.

And then we're looking for some fuel switch, renewables that will grow, and I personally think they will grow more. Nuclear is of course there, but it's extremely expensive and it's always longtime projects.

So I think, well, this is the prognosis of the 27 governments and I think it's accurate. Nuclear will be there, but it's not the full solution at all. Carbon sequestration, you listened to Claude Turmes yesterday, he negotiated this also for Europe.

Of course, carbon sequestration will grow and is important. The possibilities as we see them in the end-use sectors in the European Union is massive and it's around 30 percent for all sectors.

And this is what we have to achieve and this is also where the new technology lies. So this is also where the new jobs lie. So that's why we are now trying to combine sticks and carrots, both in the European policies and the international policies.

And also try to work closely with the industry to position the European industry where the new technology is and where the jobs are. I know you will hear more about that later.

The climate package, of course, is vital, 20/20/20 by 2020. And here we see that we have decided on a target on energy efficiency with 20 percent, but the potential is much, much bigger.

There are four corners of the European climate package. There's the emission trading system, we will hear more on that from an American point of view in a few minutes.

One part of renewable energy sources and then it's sometimes called the burden sharing or, as optimists, the effort sharing part and capture and storage of CO2. The European emission trading system is, of course, cap and trade. It creates a price.

We try to keep it close to the market, but you will see, interestingly enough, the European industry does not want full auctioning. It wants more of handing out free allowances, another point of view on this in the U.S.

CDM, that is clean development mechanism, meaning energy, climate projects within the U.N. system and I would delve further into details here. Shares of renewable energy, the blue is what we have in 2005 and the yellow is 2020.

And if you look at my country, Sweden, it's the highest figure third from the right and why is that? That is because we have water power, but we also invest heavily in biomass. And here I would like a more vivid transatlantic link on the biomass issue because I think the possibilities are there.

Carbon capture and storage will be important not only for the industry producing energy, but also for the steel industry, the paper and pulp industry and all the energy intensive industries that release CO2 in the production.

We're looking at the technology map for Europe, where the areas to the left down are the easiest ones. You have challenges, the lower the less challenge, the higher up the more the challenge is. Timing going to the right.

So energy efficiency buildings is the very first thing that we should address because this is extremely easy. The technology is there. There's no rocket science and it's a win-win situation.

And if you are a CO looking for a savings, this is where you should go, energy efficiency in transport and energy efficiency in industry.

We have, in Sweden at the University of Linköping, by now 52 doctoral degrees on energy saving in industry. We've had an energy crisis.

We have dedicated legislation, which ever government has been in place in Sweden, and still there is a possibility, looking at 500 industrial plants to save if between 40 and 50 percent of the energy use in the production.

So we're looking at massive figures and a lot of money in these techniques. What are we doing specifically? I would like to end this by giving you three good examples.

The first is what we are negotiating right now, that is energy efficiency labeling on household appliances. This is a system that was used for consumers. You have to put it on washing machines, on refrigerators and on television sets from now on.

And when the system was introduced into the market there were categories between A and G and the appliances were spread in all categories. Now, 10 years later, 98 percent of the refrigerators and washing machines sold in Europe are in category A.

So this is, by consumer information and transparency, how we moved the market just by informing consumers. That is one way of doing things.

If we look at technologies in the industry, I'm a member of the board of a paper pulp industry in Sweden called Södra, which is the second-largest on the global market on long fiber pulp and employs 5000 people.

And this industry has an energy performance of 117 percent, using waste heat and waste gases and waste from the mills by producing green electricity and selling.

And by now it's one third of the yearly revenue is derived from green electricity. So this is two examples. A third example and the last one I will give you is the Volvo trucks company.

Volvo has designed now seven different vehicles or engines for seven different alternative energy uses, but has, at its production plant in Gent in Holland, an industrial plant that is CO2 neutral.

And the last they did was introducing two windmills on the actual facilities. So there are ways, means of doing this.

If we look at competitiveness, which is one of the main issues and responsibilities for me as a group leader in the committee of industry and energy in the European Parliament, the way that I can see that European industry is positioned in a competitive part of the market is by going into these technologies.

And I'm very happy to introduce speakers that will inform you and tell you some of the success stories in this area. The first one is, I would say, a wonder that he's here after having like 60 hours of hearings on energy issues last week.

And that is the U.S. Congressman Michael C. Burgess, who was originally practicing medicine in North Texas and was elected to the Congress 2002 and has then been reelected a number of times.

And during his time at the Capitol Hill has earned a reputation as a problem solver. I know this is real important, who seeks sensible solutions to the challenges Americans face.

And he is serving on the prestigious House Energy and Commerce Committee and three of its subcommittees, health care, energy, and environment, and oversight and investigations.

And as a member of the House Energy and Commerce Committee he is grateful for what he calls robust discussions on both sides of the committee, particularly on the issue of cap and trade and carbon sequestration.

And this will be a major global issue because we are facing the preparations, right into the preparations of the big UN conference on climate in Copenhagen in December.

And so the preparations in these areas are extremely and please help me to welcome Senator Burgess, and you have the floor.

Michael Burgess: Thank you, thank you Lena. Do I have to give this in French or can I speak English? Thank you for letting me be here this morning and certainly thank you to the alliance, the board and the staff.

And especially to the staff for having been so flexible with my staff during this past week where we had so much going on at the Washington.

In fact, because of the juxtaposition of the conference that's to take place in Copenhagen at the end of this year, my committee chairman, Henry Waxman, has resolved to get this cap-and-trade bill through his committee by the end of May, which is a fairly daunting task.

Now, last week, as you heard, we did hear probably 60 hours of testimony from various panels. The plan had been to vote that bill out of subcommittee this week.

Had that occurred, I would not be with you because it would have been necessary for me to be…am I changing something? Okay, it would have been necessary for me to be in Washington, but that got pushed back a little bit.

And it got pushed back a little bit because the broad consensus necessary from Chairman Waxman's own party, his own side to get that bill through committee does not exist.

Now, Congress and the United States House of Representatives, as you know, is comprised primarily of two parties. We have a couple of independence, but essentially Democrats who are in the majority party of Republicans.

I am a Republican, so I am in the minority party. That doesn't mean though that we don't play a role during the development of legislation such as we've had come before the committee in the past several months.

But it also means that the actual burden of passing the legislation falls to the majority.

And if the majority cannot keep its numbers together in this situation, I'm pretty hard pressed to see that they have enough members of the minority to pull that legislation across the finish line.

So what that means is in spite of 60 hours of testimony and, in fact, it goes even back into the last Congress, we've had at least one hearing a week on this subject for as long as I can remember.

So in spite of all of the information that has been out there, there still is not, if you will, the majority party has not closed the sale with some of its more conservative members on why this is important for the United States to do at this time.

Now, my prospective as a Republican is perhaps a little bit different from some of the political perspectives that you've already heard and that you'll hear during the balance of the committee.

Let me just first stipulate that there's no question in my mind that climate change is occurring.

The perspective that I bring is that the cause for that climate change may not be, may not be human derived, but there may be other forces at work over which we, quite frankly, have no control.

Now, does that mean that we don't study…does that mean that we don't study the problem? Does that mean that we don't work together? Of course it does not.

And, in fact, when you heard from Al Gore and John Warner and Newt Gingrich in our last committee hearing on Friday, in fact, what was talked about was the issue from a security perspective, certainly the issues from an economic perspective, and then the issues from a global climate change perspective.

And all I would suggest to you is that if you, in fact, concentrate on the security issues which are significant, if you concentrate on the economic issues that are significant, and, in fact, even the people on my side who believe very firmly in that there is a problem with the peak oil phenomenon.

That we've already achieved the maximum amount of fossil fuel that can be derived, regardless of what is happening on the climate change side, if you simply concentrate on the security, if you simply concentrate on the economic, our goals are very much aligned and very much in sync with each other.

Let me just share with you my own perspective. I have not been in Congress that long. My wife is an architect. A few years ago we built a home in North Texas.

We had recently come through, before I went to Congress, California had been in a great deal of difficulty because of pricing in energy futures and energy markets.

And I became very concerned that at some point in the future it might be difficult to purchase power. It may be very difficult to purchase energy or the price may go up so high that it's beyond what I would be capable of providing my family.

So I began to look into things like residential solar, residential wind. In my part of Texas we live right on the borderline as to whether or not wind is an economical choice or not.

But as I looked into those things, my wife the architect brought to my attention that, you know, there are off-the-shelf things that we can do today in regards to energy efficiency that would reduce our energy consumption and, in fact, would save us money in the future if the things that you're worried about indeed came to pass.

So, as she designed and constructed this new house that we've been built in the year 2005, we invested in the ultrahigh efficiency air conditioners, although they were more expensive.

Even going above and beyond what was required by the regulations in our area, we invested in the low-E glass. We invested in tankless water heaters.

In Texas of course our primary problem is air-conditioning, not heating. Although we can have some very cold winters it is very hot in the summertime.

And if you do what's called an efficient attic system where there's constant ventilation through the attic, light-colored shingles on the roof, in fact, you can lower your air-conditioning bill significantly.

And that's exactly what we found. Moving from a house that was just a little bit across town, so not in a different climatologic environment, our electricity bills from one summer to the next, and the summers were comparable in the number of degree heating days, our electricity bills fell over 40 percent.

So I am a believer. I am a believer in what energy efficiency can indeed bring to the table in regards to solving problems. Whether it be from a security, whether it be from an economic or whether it be from a climate change perspective I am a believer in what energy efficiency can bring to the table.

And one of the things that concerns me, when you look at the draft legislation that Congressman Waxman and Congressman Markey had before our committee, is that we put in that legislation, in my opinion, an undue emphasis on renewables at perhaps the expense of other technologies.

And one of the values in sitting through 60 hours of hearings is you do get a lot of information.

But one of the pieces of information that came to us last week is that we in fact may miss some opportunities as far as developing the low carbon technologies that are the most cost-effective by Congress ending up picking the winners and losers in that environment.

And it was Dr. Jay Apt who's a professor at Carnegie Mellon Institute who I think had some of the most telling testimony last week when he told us that it was important to develop low-carbon technologies to keep the cost low.

But if you pick winners and losers you may shift that curve so that you're not actually developing the least expensive low carbon technologies.

But because of subsidies and because of government influence, I almost said interference, but because of government influence you may push the curve in a direction that may not make the most sense in which for it to go.

Now, again, the bill before us in the House of Representatives will likely change some over this week.

I very much suspect that there probably aren't a lot of discussions going on with my side right now, but there are discussions going on among the Democrat's with their more conservative members.

There are members from coal states. There are members from states that don't have the ability to develop a lot of solar and wind because these are the states that are going to be most profoundly affected by the bill that will be before Congress.

The very heavy emphasis on renewables may be something that we see shift over the coming weeks. Now, make no mistake about it, Texas has been a leader in renewable energy.

My district in particular has a robust renewable component. We manufacture, not the wind turbines, but the very precise blades that go to turn these turbines. Interestingly enough, 20 years ago we had a very serious economic downturn in my area.

The price of oil fell from $40 a barrel to $4 a barrel literally overnight. And many of the support industries for oilfield exploration subsequently went out of business.

In Gainesville, Texas, a city that I've represent, two very large oilfield suppliers went broke literally overnight and their warehouses stayed vacant for almost 20 years.

But now there is a very active windmill blade building business in one of those former oilfield houses and they supply blades literally not all over the United States, but all over the world.

And I just simply would stress that they are well-made blades and if you're in the market for purchasing windmill blades for your wind turbine, regardless of the wind turbine's country of origin, you may want to consider those blades made in Gainesville, Texas.

We have solar research and development in at least two locations in my area, one a private individual who early in his career he focused on what he might do to capitalize on solar technologies with NASA, with space exploration.

But more recently has become interested in the residential component and reducing the size of his solar cells and phased photovoltaic arrays or whatever it is that he builds, so that they may have a residential and commercial development.

And additionally we have a robust solar research and development at two of my universities in my district, University of North Texas, my old college, as well as the University of Texas at Arlington that has a branch in the Fort Worth part of my district.

Twenty-five percent in the current Henry Waxman-Ed Markey bill, 25 percent of the renewable energy standard by the year 2025 will be met by renewable energy.

The problem that I have with the language in the bill as it is drafted today is that only 5 percent of that is capturable by advancing renewable technologies.

And in my own experience, just as a regular guy who built a house and pays the bills, in my own experience I was able to see my bills reduced by 40 percent.

And I promise you, our prices did not go down by 40 percent from one summer to the next because, after all, the summer we built the house and occupied the house was the year that Hurricane Katrina came ashore in the Gulf Coast region of the United States.

So energy bills arguably were higher in 2006 than they had been in the summer of 2005. And yet even with the increase in the per kilowatt hour cost of energy our price significantly reduced.

The bill before us, heavy emphasis on renewables, not much to say about expanding nuclear energy, new, small hydro and I think we heard from Representative Ek the concept of biomass.

Or in our area that means garbage and landfill methane supplies the generators that provide power for large subdivisions and neighborhoods within my district.

So I think this is also an important part to include when you talk about particularly renewable energy, that energy that we're able to capture from landfill methane, which otherwise would just dissipate into the environment.

It is probably arguably a more potent greenhouse gas than carbon dioxide or water vapor. Capturing that landfill methane, using that to power generators, using that to heat and cool homes and light homes only makes sense.

And it only makes sense that that should be included in the renewable portfolio. And then just finally one last word about Texas, we do lead our country in the production of wind energy.

The second state below us is Iowa, California close behind after that, but Texas is over 2 1/2 times the wind energy produced in Texas as produced in Iowa.

The problem that we've had in Texas, we have some very, very windy corridors in the state. The problem that we had is those areas that are blessed with very high, constant, and sustained winds are not places that people like to live.

So the population centers are far removed from those areas where the wind corridors are high.

And it has been only over the last several years that the investment in the transmission capability and, indeed, some of the changes in the technology and transmission that we may hear about as a part of this conference have actually been able to economically deliver that energy from the areas where the wind blows all the time to those areas where the people actually live.

I would also point out that this investment or this concept of Texas being the number one wind generating state in the union of the United States is not something that sprang from the ground in the last hundred days or even the last couple of years.

But this was set in motion 10 and 15 years ago and oddly enough most people are surprised to learn that it was our governor of Texas at that time George W. Bush who had the vision and the insight to begin this investment many years ago that allows Texas to be the nation's leader in the production of wind energy.

We heard from administer at Lisa Jackson, the new head of the Environmental Protection Agency under President Obama.

We heard from the administrator last week that energy efficiency is indeed the low hanging fruit in this discussion and I don't disagree with that.

I would certainly agree and I think we've heard already this morning that the concept of energy efficiency is indeed the common ground.

We may disagree at about other things regarding the world's energy situation. But the common ground, certainly the place that we can all go for refuge is energy efficiency and increases in energy efficiency because we need all hands on deck.

We need the ability to produce or to create energy efficiencies that previously were unavailable to the average person, the average consumer off the shelf. Of course we need renewable energy and we need alternative energies.

We need all hands on deck and all should be allowed to compete on an even playing field to grow the economies in what is becoming an increasingly carbon constrained world. I thank you for your time and attention.

I think I have an opportunity to go into a little more detail this afternoon on one of the panels and look forward to further discussion then. Thank you.

Lena Ek: Thank you, thank you Congressman Michael Burgess for a very inspirational talk. I think we are both politicians nowadays.

Michael Burgess: Public servants.

Lena Ek: Public servants, not only energy efficiency, but also the common ground is that we can point at the growth and creation of jobs that are enlocked and enshrined in this area and we have to release the forces here.

I'm waiting for the time when people will call me and say, "Look, I wanted to buy or to rent a new home, but the bank asked me not only about the mortgage and can you pay the rent, but also can you pay the energy bill?"

So this is a problem we have to face and I think your example on your private home is so extremely good because it's those examples that we need.

If you're buying shares in the buildings industry, which kind of houses are development do you think is the future? And that is, of course, energy-efficient housing.

Now we are going to connect between Europe and U.S. and we're going to Southern California and it was interesting because we talked about solar and gas and alternatives.

Siemens, who is one of the main sponsors, produces its biggest solar gas turbines very close to where I live in Sweden. And the last three they sold was one to Spain and two to California.

So our next speaker is John Fielder. He is the president to Southern California Edison, which is one of the nation's largest electric utilities.

And in this role Mr. Fielder was responsible for developing and implementing regulatory policies and managing proceedings before the California Public Utilities Commission and other regulatory agencies.

And in that role was also responsible for the utilities of environmental affairs organization. And in October of 2005 John Fielder was elected president of the company.

And it is really interesting to see how you do it in California. Please welcome Mr. Fielder.

John Fielder: Well, good morning. I'm going to try something a little different. We've been sitting here for over an hour. I want to take 15 seconds, everybody stand up, stretch it out, get a little energy going.

So energy efficiency, this doesn't take a lot of electricity to do this and nobody leaves. Get the doors Kateri. So great, thanks very much. It really is a pleasure to be here.

I've been on the board of the Alliance to Save Energy for about four years and I just am amazed at the effort and the amount of results that Kateri and her team get with such a small budget.

And I'd just like to recognize Kateri for her leadership and let's give her a round of applause. I am going to kind of shift gears a little bit.

We've been talking about a lot of policy and potential and so forth and I want to talk from a utility standpoint on somebody that is actually trying to deliver and implement all these solutions across the board, whether it's renewables, bringing new technology to the grid, certainly energy efficiency which we've been doing for a number of years.

A little bit about Southern California Edison. We serve about 5 million customers in the southern and central California area, have about 16,000 employees and a peak demand of about 22,000 last year, but the year before was about 23,000 megawatts.

We have one of the largest portfolios of renewable energy in the country, if not the world. We've been doing energy efficiency since the mid-1970s and we have more electric vehicles in our fleet than any other utility in the country, which we're proud of.

I want to start with just kind of talking about our vision and where we see the electricity business going at least in our service territory over the next several years.

And I want to spend some time on this chart because it kind of captures all the elements that we see going forward. And I want to start with what I think is the center of what we see going forward, which is a new meter and we call it Smart Connect.

So what these new meters are is they're basic little computers that are going to replace the old meters that have been on your wall for the last 50 years.

And this meter has two-way communications, both on the utilities side of the meter as well as on the customer side of the meter. And the idea is that with this communications technology we're going to be able to better control the grid, get better information to our customers.

And the idea is to become more efficient in the way we deliver electricity and even more importantly in the way customers use electricity. So these Smart Connect meter is kind of the hub.

On the utility side of the meter what we see is a huge need to reinvent the grid if you will and people talk about the smart grid and there's a lot of talk going about that.

What we're trying to do is actually implement that both on the distribution system as well as on the transmission system.

And it involves putting communications technology in place, faster communications between substations and generation between substations and the Smart Connect meters.

We're just starting to invest in that technology. I think it will be a long-term proposal to actually bring the smart grid vision into being.

And of course on the generation side of the business what we see is much more penetration of renewable energy and low carbon generators.

So that vision on the utility side, it calls for a tremendous investment and over the next five years we plan to invest $20 billion primarily in new grid technology. That's including the smart meters.

And about a quarter of that, $5 billion or so is in new transmission, because as somebody mentioned this morning if you're going to have renewable energy, wind and solar, it's usually where people don't live.

And one of the barriers to having renewable energy in any portfolio is building transmission. And we have some transmission projects.

Commissioner Grunick from our commission is here and she's been a real champion of building transmission ahead of the renewable generation because we get in this chicken and egg problem about should you build the transmission first?

Should you build the generation first? And we've solved that problem in California and so we're building transmission to where the renewable resources are.

We have a project called the Tehachapi Project to build a transmission line to a wind area where there's 4500 megawatts of potential wind and of course that really requires the investment in transmission.

The little circle here represents our vision about what's going on in the customer's premise. We see plug-in hybrids being a real piece of the future going forward.

You may have seen President Obama visit one of our facilities, our Electricity Vehicle Technology Center, about six weeks ago.

And it was really nice to have him and his whole entourage come through and look at what we're doing with battery research, with vehicle research.

And we have partnerships with all the major auto manufacturers because we think electric vehicles are really going to make a play this time. They won't be abandoned like they were at last time.

And one little factoid you might take away is from a carbon reduction standpoint we can save more, reduce carbon more by having just 10 percent of the cars that are put in service between now and 2020 be electric vehicles than we can by going from 20 percent to 30 percent renewables in our portfolio.

There is tremendous leverage from a carbon reduction standpoint in electric vehicles. And we think the electric vehicle will be a large part of the future.

We also have developed a concept called the home area network which I think a lot of the appliance manufacturers and others in the energy efficiency area are really going to be able to take advantage of.

Where we can use the intelligence that the Smart Connect meter provides to the customers to actually run appliances better, to increase or decrease thermostats automatically, to provide better information for customers to make energy decisions about.

So that's kind of our vision and there's a lot of little pieces that we're working on simultaneously and I think it will take a real evolution for this vision to come about, but we think it is very doable.

From a renewable standpoint, as I mentioned, we've been a leader in renewables. We have more renewables in our portfolio than any other utility in the country.

About 16 percent of the energy that our customers use comes from renewable resources. We have a goal; actually we have a statute in the state to get to 20 percent by 2010. We're working hard to be that.

We may miss it by a year or two, but we'll be there soon after 2010. And maybe it's because we have a European governor, but we also have a commitment now to get to 33 percent by 2020.

And there are bills working their way through the legislature as we speak to raise the goal to 33 percent renewables by 2020 for the electric utilities in California.

And I think before the year is out you'll see that become law and the governor will sign that bill. Most of the new renewables that we are seeing adding to our portfolio today are wind and solar.

We have a lot of desert in the Southern California area where the sun shines. Most of the solar and wind resources are intermittent. Of course you know they only make electricity when the sun shines or the wind blows.

If you have a third of your electricity coming from intermittent resources, it really does create opportunities to keep the lights on.

And a lot of the smart grid technology is going to be needed in order to manage the grid with the variable output from wind and solar tight generators.

So it's really important that we kind of move all these projects together. With respect to energy efficiency I borrowed a slide that some of our energy commissioners use a lot.

And basically what it shows is California has really been committed to energy efficiency before it became fashionable to have conferences like this, back in the 70s.

And I want to make a point that came up yesterday about the incentives that utilities have to do energy efficiency, because in a number of places utilities make money by selling electricity, which is kind of a natural model.

If you think about business, the more you sell usually the more money you make. In California, back in the late 70s, we actually adopted a different model where utilities that are owned by - we're an investor owned utility, so we have shareholders.

We pay dividends. We worry about stock price, but we don't make money by selling electricity. And what that enables us to do is it gives us the incentive to do everything we can to get our customers to use less electricity, not more.

And it's really something I think from a policy standpoint and a regulatory framework standpoint that the more we can do to break that link between utility profits and electricity sales, the more we're going to be able to implement this technology and incent customers to do the right thing when it comes to energy efficiency.

So we've had this model in place for several years which lets us really promote energy efficiency. And, as this chart shows, while in the rest of the United States the kilowatt hour per person per capita has gone up, in California it's remained roughly flat for the last 30 years or so.

There's a number of reasons, we have nice weather in California unlike some places in the country, you know, some places get real hot, but there's a number of other factors.

A lot of it is the commitment that the utilities and the state policymakers have made to energy efficiency.

And we've got the statistics here about how much savings over the last five years our energy efficiency programs have resulted in and what the equivalent carbon reduction has.

So it's low hanging fruit, but it is stuff that you have to work that day in, day out to put technology and programs in place to get customers to do the right thing. I think we all intuitively know this.

This was a slide that we borrowed from a study that was done that shows that from a cost standpoint, if you're interested in reducing carbon output, energy efficiency is the place to start.

It is the least cost way to reduce carbon. In fact, the net benefits actually outweigh the net costs when it comes to energy efficiency. Compared to other alternatives that we talk about they all have a cost to reducing carbon.

California has been a place that really supports energy efficiency and Commissioner Grunick has been a leader in thinking through all the issues around how to deliver energy efficiency to customers in the utilities service territories.

We have, in California, adopted as part of our energy action plan a loading order which is sort of a hierarchy of resources that we look at when we are putting our portfolio together to serve our customers energy needs.

And, of course, at the top of the portfolio or the top of the loading order is energy efficiency followed by demand response, followed by renewables and then fossil generation. So it's something that we take to heart as part of the state's policy, so it's really important.

Maybe again because we have a European governor we have a law on our books that was signed in 2006 called the Global Warming Solutions Act that requires the state to reduce its carbon emissions to 1990 levels by 2020 and 90 percent below that by 2050.

And so the first target is the 2020 target which is about a 30 percent reduction in carbon emissions in the state. The electricity sector in California accounts for about 23 percent of the carbon emissions in the state.

Of course the transportation sector, we have a lot of cars in California, accounts for about 40 percent. So we really have to go out and go after not only the electricity emissions, but also the transportation emissions.

And that's why we think it's so important to focus on the electric vehicles of the future because of the leverage they have in terms of reducing carbon output.

We have a California long-term energy efficiency plan that was adopted just I think a year or two ago and it's got some pretty aggressive goals.

So, for example, in the residential sector this plan calls for zero net energy homes by 2020. So think about that, zero net energy homes by 2020 and zero net energy office buildings and commercial spaces by 2030.

Pretty aggressive targets to go after in a relatively short period of time. So California has been a supportive place to do energy efficiency and renewables.

We spend about $1.3 billion proposed in the next three-year period from 2009 to 2011 and this pie chart shows basically where we would direct these dollars over the three-year period.

And a lot of the focus is going on the business commercial buildings, commercial air conditioning, and for the reasons that we just talked about this is still working its way through the approval process.

But we're hoping that it will be approved in order to actually - this is basically a doubling of the level of effort that we've committed to energy efficiency over the prior three-year period, the 2006 through '08 period.

So a real commitment to do even more than we've been doing with some new programs that basically cover the whole waterfront of all of our customers.

Whether you're an agricultural customer, residential, commercial, small business we really are looking at programs in each of those spaces.

I gave a little flavor here, I'm not going to go through this slide, but just to give you the flavor of the variety and breadth of programs that we offer to all of our customers, a lot of them involve incentives. A lot of them involve performance contracts.

We have a number of partnerships where we partner with cities and counties and other government agencies to leverage our dollars with their dollars so that we can get the most bang for our buck and deliver the right energy efficiency in the right location.

We have programs designed for small customers, large customers, and certainly our residential. Everybody talks about green jobs. We do have green jobs.

We have over 500 jobs at Edison that are day to day, day in day out delivering energy efficiency programs, spreading the word, monitoring and managing and administering the program.

And then we have over 300 contractors that we use to help implement these programs and they have thousands of jobs created with them. We have partnerships with a number of energy service providers.

As we just heard, the services industry is really burgeoning in California and from the basic business standpoint California has lost a lot of manufacturing over the last several years, primarily because of the cost of doing business.

We have a number of programs to help manufacturers lower their costs of doing business and stay in California. So it's been a real effective program from that standpoint. So that's kind of the overview of what we do in California, particularly at Southern California Edison.

And let me just again say how pleased I am to be here and commit that we will continue to do the kinds of things we've been doing to get to this vision that we talked about where by 2020 we will have 33 percent renewables.

Our customers will have the most efficient operations, the most efficient appliances and the kind of technology that will be able to take advantage of all the energy efficiency opportunities that are available and thanks very much.

[End of Audio]

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