03/18/2010 05:12 am ET | Updated May 25, 2011

New Energy Economy -- Next Steps for Colorado and the Nation

Kudos to Governor Bill Ritter
for making Colorado a leader among states in tackling our nation's
energy-related problems. These include excessive reliance on polluting,
non-renewable fossil fuels; carbon emissions causing climate change; an antiquated electric transmission
infrastructure; dependence on fuel imported from other often unstable
nations, and the military expenditures in the form of money and lives
required to ensure that supply. There are many obstacles to transition
our dependency on traditional fossil fuels to cleaner energy solutions,
and Governor Ritter has demonstrated the courage and foresight to confront
those obstacles.

The Governor's
stated mission

for Colorado's New
Energy Economy
a now-popular
is credited for introducing, is to "advance energy efficiency and
renewable, clean energy resources." Colorado is the first state
whose voters passed a renewable portfolio standard mandate (RPS) by
popular vote, which has subsequently been increased by the state legislature.
For all its focus on it, Colorado now has solid grounds to boast that
clean energy is good
for an economy

since companies have chosen to locate new
and jobs in the state.

Over the past year, the Governor
has been touting an addendum-of-sorts to his New Energy Economy plan
by advocating the importance
of natural gas

in America's long-term energy future. Natural gas in the short-term
may serve to reduce per capita carbon emissions as a substitute for
coal and oil to produce heat and electricity, however, it is still a
non-renewable fossil fuel that requires drilling
and chemicals
its extraction, requires transport to end-users, and that will cause carbon dioxide emissions to increase. This is not comforting
when considering that many believe that a stabilization level for greenhouse
gas emissions in the atmosphere has already
been exceeded
yet in forty years our world energy consumption is forecasted to more
than double from today's levels by a world population expected to
increase by almost 3 billion people. This population includes
our own nation of citizens with ever-increasing energy appetites, and developing nations with many more people who strive to
be just
like us

A more direct and less intrusive strategy that the Governor and residents
of Colorado and the nation are encouraged to consider is to support
and implement strong policy measures based on the approaches of energy
efficiency and conservation. There is significant untapped energy
savings from efficiency related measures when one considers that typically
over 90% of energy from electricity generation has been wasted by the
time is it used in a home or building. Colorado is already making
strides in improving its energy efficiency, as it recently upped its
from 24th
to 16th in performance among the states. However, the full
potential for these approaches to contribute in a lasting manner to
the serious reform needed to confront the very real energy issues facing
us has barely been tapped.

Some efficiency and conservation
related regulatory steps that are proven to be cost-effective and clearly fit within the stated
New Energy Economy paradigm include:

- "Decoupling" profits
from the sale of energy to reward a utility's efforts to save energy.
Currently, an investor owned utility (IOU) such as Xcel Energy which
sells power to the majority of Colorado residents is primarily motivated
by a duty to maximize profits to their shareholders, and thus is obligated
to sell lots of its product -- Energy. Under a full decoupling
structure, utilities are encouraged to: a) install processes and technology
that make their energy production and distribution processes and equipment
more efficient, b) include clean, renewable energy generation such as
from wind, solar and geothermal as a part of their energy portfolio
mix, and c) encourage distributed renewable generation installations
by consumers at their homes and businesses, such as solar PV, thermal
and rooftop wind turbines. The utilities are then compensated
for the reduction in energy sales achieved by their actions, and their
expenses are lowered as the need for new power facilities decreases.
Consumers' energy bills would likely also decrease as efficiency measures
implemented by the utility cause energy consumption levels to decline.
Over a dozen
have an active or pending decoupling structure in place. Colorado
and the rest of the nation should be included to this list.

- Establishing varying "time
of use" (TOU) electricity rates for consumers based on the time of
day the energy is consumed. The price variances are based on the
cost required by the utility to generate that energy (or purchase it
wholesale). During peak power periods of the day, such as on summer
days at 5pm when many folks are returning from work and turning on their
TVs, stereos, and computers and ovens, a utility sees high demand.
They must purchase power from expensive "spot" power sources that
only operate at these peaks to provide additional power than the more
efficient and less expensive power production facilities operating at
full capacity are able to generate. A properly designed TOU program
would be priced to provide the opportunity for consumers to lower their
energy bills if they are willing to switch some of their normal power
consuming activities such as dishwashers and laundry to off-peak periods
when energy is less expensive for the utility to supply. Again,
utility expenses are lowered by reducing the need for those expensive
spot power sources and new power facilities. Implementing a TOU pricing
structure would be complementary to the transition
to a smart grid

and smart meter infrastructure currently underway throughout the state
and nation.

Shades of these measures have
been introduced in Colorado and are being discussed with respect to
the national energy bill currently being crafted in Congress.
However Colorado should not wait to fully implement these steps since many forces are sure to chip away at the effectiveness
of a national bill. Instead, it should join the pack of states
who have already successfully implemented these and other strong measures.
For example, California has had decoupling in place since
the 1980s, and combined with strong energy efficiency standards for
appliances and buildings has kept energy use per capita at a flat rate over three
while the
rest of the nation has increased about 50%. Further, enacting
real efficiency measures will ensure the state is well positioned for
the inevitable time when carbon emissions have a price tag attached.

Some will maintain that these
measures are inadequate, anti-capitalist, too complex and expensive
to implement, or too much of an inconvenience to our personal freedoms
to do and consume whatever we want, whenever we want.
On the contrary, efficiency
been shown to be the low hanging fruit in the energy solution that have
the most potential for meaningful
energy reduction

at the lowest cost. For example, in a traditional power plant
only about 35% of the energy released from the coal ends up as electricity
leaving the power plant. Another 7-10% is lost during transmission
and distribution of that electricity to the end-user. An incandescent bulb's poor efficiency (10% of electricity
going into the bulb becomes light) will then cause the final energy
produced from that lump of coal to decrease to less than 3% of its original

It is estimated that the U.S.
could reduce its projected energy consumption 23% by 2020 by making economically beneficial
investments in energy efficiency. It's unfortunate that more of this
ripe fruit has not already been picked. But how could it? The
regulatory structure in place for many utilities in the U.S. encourages
growing sales of energy, building more power plants to satisfy that
ever-increasing demand, and a guaranteed profit for those sales.
This arrangement pairs in near-perfect harmony with the strong forces dominating the energy scene that profit
from greater
sales of fuel
of the polluting effects.

In contrast, if these suggested
next steps to the New Energy Economy are implemented in a meaningful
way in conjunction with a continued increase in use of renewable energy
(Colorado ranks 4th in the nation for its solar and geothermal
resources, and 11th for its wind resources, yet only 21st
for non-hydro renewable
much energy reduction could be accomplished without increasing energy
bills. With small contributions in our behavior, such as changing
out incandescent bulbs to CFLs or LEDs, running dishwashers and laundry
machines after 9pm, turning off computers when not using them, hanging
some clothes to air-dry, and installing programmable thermostats, even
greater energy savings could be achieved. The only fuel required
to accomplish these next steps is human