ACEEE'S GRAPEVINE ONLINE

January 17, 2006

NEW REPORT SHOWS NATURAL GAS PRICE SAVINGS ON THE WEST COAST

ACEEE is keeping up the drumbeat on energy efficiency as a response to the nation's continuing natural gas problem by issuing a report on the regional impacts of efficiency and renewables in the Pacific West states (California, Oregon, and Washington). See Impacts of Energy Efficiency and Renewable Energy On Natural Gas Markets in the Pacific West. Like our other reports on this issue since 2003, the Pacific West analysis shows that increased efficiency investment can reduce natural gas prices below forecast levels. This latest report shows that an increased-efficiency-and-renewables scenario would cut natural gas wholesale prices by 38% and retail prices by 20%, saving about $100 billion in gas costs for energy users in the region through 2020.

As in our previous work, ACEEE used the North American Gas Markets Model developed by Energy and Environmental Analysis, Inc. (EEA), the same model used by the National Petroleum Council in its major 2003 study of the nation's natural gas policy future. We developed detailed projections for additional energy efficiency and renewable energy resource acquisitions in the three-state region, which were then used in the EEA model to estimate effects on whole prices, consumption, and other effects.

Realizing the benefits of increased efficiency and renewable investment will require both private and public investment. In the first five years, about $19 billion of direct resource investment will be needed, supported by about $5 billion in public policy and program activity. While ongoing investments beyond year five will be needed to sustain savings at the levels projected in this analysis, we expect that benefits would substantially exceed costs in these out-years. This efficiency and renewables investment scenario would thus be very cost-effective.

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