Energy efficiency is no longer considered just a "nice thing to do for society" and is now considered "a real resource," even a "fifth fuel," National Association of Regulatory Utility Commissioners (NARUC) President Jim Kerr told Congress last Monday.

"To run today's economy without the energy efficiency improvements that have taken place since 1973, we would need 43% more energy supplies than we currently use -- more energy than we currently generate from any single supply source like nuclear, gas, coal or renewables," Kerr said, citing a U.S. Department of Energy (DOE) study.

Kerr testified before the Senate Energy and Natural Resources Committee, expressing the support of NARUC's membership for the energy efficiency measures specified in the Energy Efficiency Promotion Act, Senate Bill 1115. He thanked committee Chairman Jeff Bingaman and ranking member Pete Domenici.

"NARUC would like to commend you both for your leadership in moving energy efficiency to the forefront of the nation's energy policy debate by introducing bipartisan legislation, S. 1115, and holding this hearing," Kerr said. "We believe that this bill is a generally positive step and there are many provisions in S. 1115 that NARUC can support."

Among other things, the bill would enact new DOE efficiency standards for household appliances; set goals for reducing gasoline usage in vehicles; authorize $2.3 billion for research related to automotive batteries; authorize $60 million for DOE to research and develop lightweight materials for vehicle construction; authorize $15 million for advanced lighting technology; and reauthorize the Weather Assistance Program at $750 million.

Among sections of the bill singled out by Kerr was discussion of revenue decoupling, which is a mechanism for separating a utility's revenues from the volumetric throughput of gas or power on its system. It is intended to remove the natural disincentive that exists for utilities to encourage efficiency and conservation among their customers.

"[T]he decoupling issue is retail by nature and is clearly under state jurisdiction," Kerr testified. "We recognize that the best approach toward promoting energy efficiency programs for any utility, state or region may likely depend on local issues, preferences and conditions. By placing decoupling language under the Public Utility Regulatory Policies Act of 1978, a state may move forward if it is in their best interest, and technical assistance will help where many commissions are currently overburdened with implementation of the Energy Policy Act of 2005."

Kerr noted that in 2006 NARUC began an "ongoing dialogue" with state agencies regarding rate design types and lessons learned from different approaches.

"NARUC is developing additional research on aligning rate designs with demand-side resources, and this summer will release a brief for consumer advocates on decoupling..."

Domenici said the government needs to lead the way if consumers are going to embrace efficiency. "The bill we've introduced requires the federal government to increase its use of renewable electricity and reduce its overall energy consumption in federal buildings, both new and old," he said. "We can't expect consumers to embrace energy-efficient technology if their government does not do the same."

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