A plan by the state's 20 electric cooperatives sounds too good to be true: Ratepayers save $280 million a year by weatherizing their homes, and the power companies front the cost.
Michael Couick, CEO of the Electric Cooperatives of South Carolina, which provides electricity for a third of the state's population, considers the $750 million price tag to retrofit 225,000 homes "small potatoes compared to (the cost of building) half a nuclear unit."
And he's right.
It can cost $4 billion to build a nuclear reactor - and more than $10 billion when you add in the cost of construction and capital. Half a reactor is seven times more expensive than the efficiency plan. And the energy efficiency route can offset or delay future "new nuclear" rate increases.
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Just six years from now, the new nuclear reactor SCE&G and Santee Cooper hope to build is projected to generate electricity at a cost of 30 cents per kilowatt hour. Energy efficiency can be implemented for as little as 3 cents.
In a period of limited government funding and high unemployment, energy efficiency is seeing increased respect. It requires little additional government money, is not capital intensive - the expenses are primarily labor - and doesn't require new factories. It creates thousands of jobs almost immediately, and the jobs are usually local, not foreign, so most of the money is returned to local communities.
In comprehensive energy reports, energy efficiency is shown to return a $2 savings for every $1 invested. It also produces a huge number of good jobs. One national study projected a reduction in energy usage of 23 percent by 2020, a savings of $1.2 trillion based on an investment of $500 billion over 10 years and creation of 900,000 new jobs.
A report prepared for South Carolina by the American Council for an Energy Efficient Economy projects a reduction in energy usage of 24 percent by 2025, a cost savings of $5.1 billion and the creation of 22,000 new jobs.
When incomes were rising and the relative cost of energy was falling, energy efficiency was seldom a concern. And most people thought it meant sacrificing their standard of living by using less energy simply for the purpose of using less. Not so. The goal is to accomplish the same tasks and functions as before while using less energy in a cost-effective manner.
Consider an average homeowner who has unusually high heating and cooling bills. An energy audit discovers excessive air infiltration, too little attic insulation and a number of badly leaking HVAC ducts. A modest investment of $3,600 covers the cost of necessary repairs and cuts his energy bill by $75 per month. The investment will be recouped in 48 months, after which the homeowner pockets $75 per month ever after.
But suppose the homeowner does not have $3,600 to invest and is reluctant to take out a loan. Chances are he won't do anything, and neither will his neighbors. The result - relatively small energy savings, few new jobs and no way to pay for either. To gain real traction, energy efficiency needs attractive financing.
One answer is Property Assessed Clean Energy Bonds. Municipal financing districts or finance companies can issue PACE bonds, and lend the proceeds to property owners to finance efficiency measures and small renewable energy systems; the loans are repaid over 20 years via an annual assessment on property tax bills.
The electric cooperatives' proposal is an even better twist on that idea: At no up-front cost, our average homeowner gets his efficiency upgrades, pays an extra $50 per month on his power bill and gets to pocket $25 of the $75 monthly savings. After eight years, he keeps the entire $75 monthly savings. Creditworthiness isn't a factor, and the loan payment is charged directly to his utility bill. Should he sell his home in less than eight years, the new homeowner continues the payments, while receiving the ongoing energy benefits.
The proposal, which the Senate is considering, applies only to voluntary participants. With South Carolina considered the Saudi Arabia of energy inefficiency, there should be an abundance of interested homeowners.
Ratepayers reduce their mounting energy bills, utilities better manage their rising costs, and by simply approving the mechanism to allow the utilities to offer this program, the Legislature can create jobs during hard economic times. What's not to like?