The Rural Electric Managers Development Council (REMDC) has issued a white paper on energy efficiency, “The Energy Innovation Paradigm,” calling on cooperatives to consider new approaches to cooperative management to meet some of the most pressing challenges facing the electricity sector.

The white paper is the fruit of a year-long effort begun by a task force in early 2008 to examine energy efficiency and its implementation throughout the cooperative network.

In the face of an expected generation capacity shortage, the task force argues that cooperatives need to rethink their views of energy efficiency. To begin this process, the white paper lays out an “Energy Innovation” platform that includes the following:

• Conservation—changing behavior to reduce energy use
• Energy Efficiency—reducing energy use without changing behavior
• Demand Response—shifting energy use to different times
• Distributed Resources—generation on the distribution side rather than the supply side

The paper addresses one of the long-standing barriers to efficiency: rate structures that reward consumers for high usage.  The authors challenge distribution cooperatives to rethink rate structures in response to a changing energy landscape.

Distribution cooperatives have always marketed electricity to increase kWh sales. To move to a new consumer paradigm, cooperatives need to change how they operate and consider new ways to develop revenue streams. Distribution cooperatives provide a service and should not have to worry about recouping costs through energy sales. Energy Innovation could cause reduced sales and negatively impact a distribution cooperative’s financial situation. Therefore, it will be vital for distribution cooperatives to work even more closely with their G&Ts on rates and technology to send the proper signals to their members.

Similarly, the task force strongly recommends that G&Ts to treat Energy Innovation as a capacity resource:

Some G&Ts have discomfort with Energy Innovation as it is viewed as a supply-side resource “capacity” option that cannot be depended upon.  We challenge G&Ts to treat Energy Innovation gains on a par basis with traditional supply-side generation resources.  Rigorous evaluation of costs associated with energy innovation opportunities must be compared with the costs of building or buying additional capacity.

The task force sees the white paper as a starting point.  In order to make appropriate investments in Energy Innovation, the cooperative utility industry now needs to develop metrics that can help cooperatives evaluate the impact of efficiency measures.

The REMDC was created in 1958 to explore ways to improve the effectiveness of management at rural electric systems.