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Climate Action Team PresentationClimate Action Team PresentationPeggy Duxbury

Seattle City LightSeptember 12, 2007

(206) 615-0538peggy.duxbury@seattle.gov

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I. Overall objectives: Seattle City Light’s views

II. Leading By Example: Seattle’s voluntary carbon reduction strategy

III. Fed / Regional Action & NW

Climate Change: Seattle City LightClimate Change: Seattle City LightClimate Change: Seattle City LightClimate Change: Seattle City Light

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• Climate change is real & action needed

• Mandatory reductions needed

• Flexible ways to reach goals: “harness market forces”

• Recognize cost to inaction

I.I. Views of City LightViews of City LightI.I. Views of City LightViews of City Light

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Seattle Times, Nov 1, 2006

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City Light’s carbon reduction path

Conservation: Almost a silver bullet

667 Mayors in US / 28 in WA Support Mayor Nickels’ Climate Protection agreement

II.II. Leadership Through ExampleLeadership Through Example II.II. Leadership Through ExampleLeadership Through Example

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Step 1: Conservation: 580,000 tons avoided annually

Step 2: Divest of Centralia coal plant: 611,000 tons eliminated

Step 3: Purchased new renewables (Wind) 230,000 tons avoided annually

Step 4: Purchase Offsets: 200,000 tons annually

Success! 2005 / 2006 Seattle City Carbon Neutral – First and only in US

The Path to Carbon NeutralityThe Path to Carbon NeutralityThe Path to Carbon NeutralityThe Path to Carbon Neutrality

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Wall Street’s Favor: Moody’s improved recommendation for SCL bonds based upon low carbon emission profile

First-mover advantage: Locked in long term wind before west coast mandates = higher costs

Cost effective for customers: Conservation = lowers bills / Offsets cost less than $1 per year for residential customers

• Catalyst for Change: Biofuels / Port Electrification

Benefits of Climate NeutralityBenefits of Climate NeutralityBenefits of Climate NeutralityBenefits of Climate Neutrality

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SURE! If all utilities reduced carbon emissions 10% (proxy for City Light’s program) CO2 would be reduced 250 million tons

= 46 million cars!

Can this work for other utilities?Can this work for other utilities?Can this work for other utilities?Can this work for other utilities?

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Characteristics of NW Power

• WA Over 70% hydro

• Large Role of Public Power & BPA

• Conservation achieved 40% load growth

• Major investments in new renewables

• Diminished reliance on coal

III:III: Voluntary Not Enough: NW Issues Voluntary Not Enough: NW Issues around Cap and trade around Cap and trade III:III: Voluntary Not Enough: NW Issues Voluntary Not Enough: NW Issues around Cap and trade around Cap and trade

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Northwest Efficiency AchievementsNorthwest Efficiency Achievements1978 – 20051978 – 2005

Northwest Efficiency AchievementsNorthwest Efficiency Achievements1978 – 20051978 – 2005

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Avera

ge M

egaw

att

s

1978 1982 1986 1990 1994 1998 2002

BPA and Utility Programs Alliance Programs State Codes Federal Standards

Since 1978 Utility & BPA Programs, Energy Codes & Federal Since 1978 Utility & BPA Programs, Energy Codes & Federal Efficiency Standards Have Produced Efficiency Standards Have Produced OverOver 3100 aMW of Savings. 3100 aMW of Savings.

SOURCE: NW Power and Conservation Council, 2007

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Highest ranking states: VT, CT, CA, MA, OR, WA, NY, NJ, RI

Lowest ranking states (number higher due to ties): ND, WY, MS, SD, AL, MO, AR, OK, TN, AK, IN, LA, GA, VA, KY, WV, NE

Source: The State Energy Efficiency Scorecard for 2006, ACEEE, June, 2007

Energy Efficiency Scorecard

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55021

4925

18

1

48

9

27 15

4424

11

35

15

38

4330

35

30

38

33

2741

35

45

46

12

2613

41

34

23

4049 46

29

Maine 15

New Hampshire 18

Vermont 1

Massachusetts 4

Rhode Island 9

Connecticut 1

New York 7

Pennsylvania 14

New Jersey 8

Delaware 30

Maryland 20

Dist. Columbia 22

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1,500 lbs/MWh

2,000 lbs/MWh

1,000 lbs/MWh

LOWEST EMISSION RATES IN USLOWEST EMISSION RATES IN US(lbs of CO(lbs of CO22 per mwh of electricity produced) per mwh of electricity produced)

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• “Coal generation has diminished in utility IRPs to the point where only one utility has a coal plant in its plan.” - IRP Status Memo, Michael Schilmoeller, Power Division, NW Power and Conservation Council, July 31, 2007

• I 937 & HB 6001 along w/ similar standards in CA & OR, favor renewables, conservation & natural gas over coal

Coal Not Key to NW Resource PlansCoal Not Key to NW Resource PlansCoal Not Key to NW Resource PlansCoal Not Key to NW Resource Plans

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• Allocation Matters! Historic Emissions penalize the NW more than any region in US

• R&D money must focus equally on non coal technologies to better fit NW planning

• Encourage (or don’t penalize) conservation

• When CA Sneezes, NW catches cold

Federal / Regional PrioritiesFederal / Regional PrioritiesFederal / Regional PrioritiesFederal / Regional Priorities

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Emission-Based Gives Many Allowances to Few Emission-Based Gives Many Allowances to Few Source: “Benchmarking Air Emissions of the 100 Largest Electric Generation Owners -2004”

*CO2 allowance allocation based on total electricity output, including fossil, renewable, and incremental nuclear output (relative to 1990).

0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

400,000,000

NM UT OR AZ WA CA 6-stateregion

CO2 based allocation

Output based allocation

Load based allocation (electricity sales)

Tons

0%

25%

50%

75%

100%

6 producers

18 producers

50 producers

(

100 largest producers

all others

AEP TVASouthern XcelDuke Ameren

MidAmericanDominion Edison InternationalProgress EnergyTXU

FPLE.ON First EnergyAllegheny EnergyAES

DTE EnergyTexas Genco LLC

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CO2 Allocation Comparison: Emissions-Based vs. Output-Based* vs. Load-Based Source: EIA 2004 & 2005 data

*CO2 allowance allocation based on total electricity output, including fossil, renewable, and incremental nuclear output (relative to 1990).

Tons-

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

WA ID OR 3-state region

CO2 based allocation

Output based allocation

Load based allocation (electricity sales)

Difference between emission and

performance/output approaches

@ $5/ton = $479 million

@ $7/ton = $671 million

@ $10/ton = $959 million

avoided emissions due to conservation of 3100MW (coal) in 3-state region

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• Hydro most vulnerable power system from unchecked climate change

• Wall Street beginning to see financial value of utilities w/ low carbon emissions

• Time for mandatory action & regulatory certainty

CONCLUSIONCONCLUSIONCONCLUSIONCONCLUSION