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Sunday, January 21, 2001 - Page updated at 12:00 AM

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Conservation's regeneration

Seattle Times staff reporter

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The last time the Northwest ran short on juice, in the 1970s, we reached for nukes: a chain of five plants to power a growing region.

Policy-makers were wrong. The expected demand didn't pan out back then, four plants were never built, and taxpayers ended up with a $7 billion debt and the biggest municipal-bond default in U.S. history.

This time around, as Californians roll with blackouts and precious little rain feeds Columbia Basin reservoirs, leaders are trying to avoid another costly and environmentally risky fix.

Instead, they say conservation must be recharged if the Northwest is to have enough electricity through the next two to three years or even through this winter.

For power companies, conservation is no feel-good program. It's hard-nosed business wired to the cost of power.

Every time the price of electricity jumps, conservation spending by utilities jumps for a simple reason: It's cheaper to use the power already on the grid than to buy or make more.

With a megawatt-hour on the spot market costing nearly as much as a Hawaiian vacation - $750 late last week - conservation hasn't looked this good since Jimmy Carter put on a sweater.

The Northwest Power Planning Council, a watchdog organization established after the nuclear-power-plant fiasco, estimates about 2,400 megawatts are available regionwide through conservation - enough to power two Seattles.

But the new era in residential conservation alone will include more than just turning out the lights or wrapping the water heater. Conservation will include "shaving peaks," "shedding loads," a state tax exemption for alternative energy sources such as solar power, and paying for power on flexible rates akin to long-distance phone charges.

The goal isn't doing without, it's about being more efficient.

Programs declined in '90s

From 1987 to 1997, the Northwest saved enough electricity to power Seattle and Eugene combined, according to the Northwest Energy Coalition, a Seattle-based consortium of consumer and environmental groups and utilities.

Seattle City Light has long been a leader in conservation.

The utility decided in the late 1970s to use conservation to meet increasing demand for power.

From 1992 to 1998, City Light customers saved an average of 66 megawatts through conservation, or enough electricity to power approximately 58,000 Seattle homes for one year.

The utility has responded to the current power crisis in part with an appeal to its customers to voluntarily reduce demand for electricity by 10 percent through conservation.

City Light has also set a goal of increasing its conservation savings and acquiring about 100 megawatts of renewable energy over the next 10 years from wind, geothermal or solar power.

Gary Swofford, chief operating officer and vice president for energy delivery at Puget Sound Energy, remembers that utility's conservation heyday.

It started in the late 1970s, when the cost and slow pace of building power plants to meet increasing demand made conservation the more affordable option.

"You are always comparing the cost of conservation against what it is costing the utility to provide energy another way, whether it's purchasing electricity or building a new plant," Swofford said. "As long as conservation was cheaper, it made sense to do that."

Puget Sound Energy, which serves more than 900,000 customers, became a full-service energy-conservation company.

It hooked customers up with contractors to help wrap water heaters with insulation; pack walls, floors and attics with insulation; install double-paned windows; seal up drafty electrical outlets; insulate hot-water pipes; and caulk doors and windows. In the early 1980s, the utility even began providing financing for the work, through loans or grants to customers.

"We pretty much saturated the area with everything you could do to older homes," Swofford said.

State utility regulators allowed Puget Sound Energy to charge rates that would cover the cost of those conservation investments, he said.

In 1991, the state also adopted an energy code that required much higher standards of energy efficiency in new homes, from double-pane glass to thicker insulation.

Federal regulators set new standards for energy efficiency in appliances, including big power eaters such as refrigerators.

The federal government also invested heavily in alternative energy research, said Denis Hayes, president of the Bullitt Foundation, an environmental philanthropic organization.

Hayes headed the National Renewable Energy Laboratory, a kind of Manhattan Project for alternative energy during the Carter administration.

In its prime in the late 1970s, the laboratory had an annual budget of $135 million and a staff of 1,000, as well as a cadre of contract researchers working on alternative-energy sources - from solar cells to ways to turn biological waste into energy.

But federal interest in conservation dropped along with the price of oil in the 1980s.

Newly elected President Reagan cut spending on the laboratory within the first four months of his presidency and had solar panels erected by Carter removed from the West Wing of the White House.

The dynamics of deregulation

A flood of cheap energy in the Northwest - due to falling natural-gas prices - set off another crash in conservation spending. Natural-gas turbines provided a new source of electricity that in some cases was cheaper than hydropower.

But there was a twist to the old boom-and-bust cycle that accelerated the drop in conservation spending: federal deregulation. Under a law that went into effect in 1995, utilities for the first time were required to open their transmission lines to anyone who wanted to sell electricity.

Competition increased dramatically. Companies cut costs in a scramble to keep customers.

As electricity prices fell in Washington state, utilities' spending on energy conservation dropped by 75 percent from 1993 to 1998.

Puget Sound Energy was saving 30 to 40 megawatts a year through conservation in the late 1970s through the early 1990s. Those savings have dropped to about 10 megawatts, Swofford said.

The Bonneville Power Administration let its investments in conservation crash from $200 million in 1994 to $41 million in 1998, with spending budgeted to drop to $15 million a year in 2002 and beyond.

Public- and investor-owned utilities cut costs to keep rates low so they wouldn't lose customers to other electricity providers.

The new competition and climate of uncertainty lies at the root of the present crisis in two ways: To reduce short-term costs and remain competitive, utilities slashed long-term investments in conservation. Utilities also shied away from investing in construction of new power plants, even as demand grew along with the region.

Shortages were the result.

Factor in dry weather that has reduced water available for hydroelectric generation, and a region wallowing in a glut of cheap juice just a few years ago finds the party is over.

In recent months, electricity prices on the open market have shot from $40 a megawatt-hour last year to at least as high as $1,200.

Residential ratepayers around the Puget Sound area have seen monthly increases ranging from 10 percent in Seattle to 43 percent in Tacoma. More increases are likely on the way.

And the conservation bust is about to go boom again.

A new conservation era

Mike Nelson is ahead of the curve.

An energy specialist for Washington State University Cooperative Extension, Nelson said he hasn't bought electric power since 1979.

He powers his houseboat on Seattle's Lake Washington Ship Canal with a windmill, solar panels and a propane stove that turns heat into electricity. The ingenuity of it all, and the ability to do something concrete for the environment, delight him.

"So much of environmentalism is a defensive action," Nelson said. "With energy conservation you are doing something on the positive side of the equation."

In Olympia next week, Gov. Gary Locke is expected to unveil legislation to attack the energy crunch on several fronts.

A state sales-tax exemption for investments in renewable energy would be expanded to include efforts that generate as little as 200 watts. The program is intended to help people such as Nelson who want to put a few solar panels on their homes.

The legislation could also help more people take advantage of a bill passed last year. It allows residential and commercial users who generate more electricity than they need to trade it back to their utility for a credit on their electric bill.

Locke also wants state buildings to meet a tougher energy-efficiency standard and implement the first energy audits in 20 years at state buildings.

In a separate effort, the Northwest Energy Coalition wants the Legislature to pass a law requiring utilities to spend at least 3 percent of their revenues on conservation, low-income energy assistance and low-income weatherization.

Power watchers also hope to make the latest era in conservation about shifting loads and shaving peaks, industry buzzwords that mean using electricity at times of the day when fewer people are.

If consumers knew the difference in the price of electricity between 6 and 9 a.m. vs. 6 and 9 p.m., they might pay attention to when they fire up the dishwasher or hot tub.

In a new four-month program, Puget Sound Energy is sending 400,000 customers a supplemental statement that shows how much electricity they are using and at what times of the day. Utility spokesman Grant Ringel said the "personal energy management" program will educate consumers about their own power habits.

The utility's customers are currently on a fixed rate, but that could change. Puget Sound Energy wants state regulators to allow it to charge different rates for use at peak and off-peak times, as telephone companies do.

"With anything else, you know the price when you purchase it, and that has a lot to do with whether you want to purchase it," Swofford said.

"Electricity isn't like that. You get the bill 30 or 60 days later. But if you knew, you'd make choices. And that could shift usage."

If Puget Sound Energy's 920,000 customers shifted just 10 percent of their peak-hour electricity use to off-peak times, that would free up enough power for 200,000 homes.

That, in turn, could eliminate the need to build power plants just to serve peak need. It's potentially an innovative way to wring more juice out of the same power grid.

"We can't just stack more insulation in the attic. We've done a lot of that kind of work," Swofford said. "We are looking for that next thing that could be important."

Lynda V. Mapes covers energy and environment for The Seattle Times. Her phone message number is 206-464-2736. E-mail: lmapes@seattletimes.com.

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