Virginia Gov. Timothy Kaine last Wednesday offered a broad-based energy plan that seeks to promote the state's energy independence and conservation and efficiency efforts.

The plan, which was required by the 2006 General Assembly, calls for a 40% reduction in the rate of growth in energy use by 2017 and a 30% cut in greenhouse gas emissions by 2025, and seeks to boost in-state production of energy by 20%. It was prepared by an advisory group of citizens, consumers, environmentalists and Virginia energy producers.

Virginia residential and commercial gas users currently rely on natural gas and electricity to fulfill 90% or more of their needs, while industrial customers use gas and power to meet about 50% of their energy requirements, according to the plan. Legislation enacted this year set a goal to reduce 2022 electric use by 10% of 2006 retail consumption through conservation and efficiency. Reaching this goal would defer or postpone the need for approximately 3,900 MW of new electric generation capacity by 2022, it said.

Moreover, it estimates that Virginia electricity consumers could save in the range of $200 million to $700 million through 2022 by conserving and using efficient appliances. Similar calculations show that Virginia could realize natural gas savings of about 7.5% over the next decade, the plan noted. This would lower the state's natural gas costs by an average of approximately $125 million annually.

The plan said total savings over the lives of the measures would range from $300 million to $590 million for each yearly investment in energy-efficiency measures. It conceded, however, that achieving these savings would require a substantial up-front investment. "Assuming energy-efficiency measures cost 3 cents per lifetime-kilowatt-hour-saved, utilities and consumers together would have to invest an average of about $300 million annually ($100-120 million by electric utilities, matched by $180-200 million by consumers) over the 15-year life of the program," the plan said.

Because of the high costs involved, the plan recommended that Virginia should increase its incentives for consumer energy efficiency by expanding tax benefits for consumer investments. Specifically, it called for an expansion of the state's sales-tax holiday to include high-efficiency natural gas, fuel oil and propane equipment; the addition of a spring sales-tax holiday weekend for "Energy Star" equipment to provide incentives to buy high-efficiency air conditioning and other equipment not covered in the fall "Energy Star" sales-tax weekend; and tax incentives for energy efficiency and conservation similar to those offered by the federal government for investments in energy-efficiency building improvements, high-efficiency equipment, combined heat and power installations, heat recovery and other technologies. The plan also proposed that Virginia's utilities should sponsor or offer efficiency and conservation programs for their customers.

Two of the state's major utilities, Dominion Virginia Power and Virginia Natural Gas, endorsed the governor's energy plan. "The governor's report and the original legislation sponsored by [state] Sen. Frank Wagner have made a strong case for the need to produce more natural gas domestically -- both in the U.S. and in Virginia -- and it is a recommendation that history will prove wise," said Virginia Natural Gas President Jodi Gidley.

"The plan highlights the importance of conservation and efficiency when it is cost effective and technologically feasible. It also recognizes the essential need for substantial investment in new electric generation and reregulation legislation in implementing the plan," said Dominion Virginia Power, the largest electric utility in the state.

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