ACEEE NEWS RELEASE

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Midwest Region Hit Hard by Natural Gas Prices: Energy Efficiency Policies Needed
New Study Shows Programs Could Save Midwest Consumers Billions of Dollars

WASHINGTON, D.C. -- According to a new study released today by the American Council for an Energy-Efficient Economy (ACEEE), investment in a modestly aggressive energy efficiency campaign could produce billions of dollars in annual net cost savings for residential, commercial, and industrial customers in the Midwest.

Midwest consumers have been hit hard by the recent increases in natural gas costs. Due to the region's cold weather, high saturation of natural gas space heating, and large concentration of heavy industries that rely on natural gas for fuel and feedstock purposes, natural gas price increases have a disproportionately large impact on the Midwest economy.

ACEEE projects that by 2006, in a business-as-usual scenario, customers in the Midwest would spend approximately $40 billion per year on natural gas. This represents about 50% more than Midwest consumers spent on natural gas in 2002. Because the Midwest imports almost 92% of the natural gas it consumes, expenditures of this magnitude would represent tens of billions of dollars being drained from the Midwest economy each year.

According to the study, by 2010, new programs designed to reduce natural gas and electricity consumption could save Midwest consumers approximately $4 billion per year. In addition to these direct bill savings, ACEEE estimates that the effects of the energy efficiency policies and programs would produce over 30,000 net new jobs and $750 million in net additional annual employee compensation in the region by 2010.

"From an economic perspective, it is vitally important that Midwestern states increase their investment in energy efficiency," stated Dr. Martin Kushler, ACEEE's Utilities Program Director and co-author of the study. "The region is literally hemorrhaging money to pay for imported energy. At projected prices, nearly $30 billion per year will be drained from the region each year to purchase natural gas. These circumstances call for strong policy action to improve energy efficiency."

ACEEE's project was based upon its highly successful national study from 2003 that demonstrated that achieving relatively small reductions in natural gas demand could achieve large dollar savings for customers. ACEEE launched the current study to examine the potential for energy efficiency to help address the natural gas crisis in the Midwest (Illinois, Indiana, Iowa, Michigan, Minnesota, Missouri, Ohio, and Wisconsin). The body of the report provides extensive data on the natural gas, electricity, and dollar cost savings, by state as well as the region as a whole. The study includes appendices with (1) information on effective legislative/regulatory policies that have been used in various states to produce natural gas energy efficiency programs; (2) examples of exemplary natural gas energy efficiency programs from around the country; and (3) examples of exemplary electricity energy efficiency programs that are focused on saving electricity during times when natural gas fired generation of electricity is most likely.

Examining the Potential for Energy Efficiency to Help Address the Natural Gas Crisis in the Midwest is available online for free at http://aceee.org/pubs/u051.htm or in hard copy for $50 plus $5 including shipping and handling. For more information, contact ACEEE Publications, 529 14th Street, N.W., Suite 600, Washington, D.C. 20045, phone: 202-507-4000, fax: 202-429-2248, e-mail: aceee_publications@aceee.org.

ACEEE would like to thank the organizations that helped fund this research project. They include the Illinois Department of Commerce and Economic Opportunity; the Minnesota Department of Commerce; the Ohio Office of the Consumers' Counsel; the Ohio Department of Development; the Wisconsin Department of Administration; the Wisconsin Energy Conservation Corporation; and the Energy Foundation.

About ACEEE: The American Council for an Energy-Efficient Economy is an independent, nonprofit organization dedicated to advancing energy efficiency as a means of promoting economic prosperity, energy security,  and environmental protection. For information about ACEEE and its programs, publications, and conferences, contact ACEEE, 529 14th Street N.W., Suite 600, Washington, D.C. 20045 or visit www.aceee.org.