Products & Services

Energy Efficiency: Making Progress

Duke Energy is committed to helping customers save power and money through energy efficiency. The environment also benefits when we meet growing customer demand without generating more electricity.

But how does a power company stay in business if it encourages customers to use less of its product? In 2007, we introduced a new regulatory model for energy efficiency. Under this model, Duke Energy earns a return on its investment in products and services that help customers reduce their electric consumption. In addition, we get paid only if our energy efficiency programs actually help customers conserve power, as verified by an independent third party.

Under the traditional regulatory model, utilities are financially rewarded for building power plants and selling electricity. Our model creates the incentive for us to sell less, not more, electricity, and helps place investments in energy efficiency on equal footing with investments in power plants.

In North Carolina and South Carolina, we launched new energy efficiency programs in June 2009 while work continued to determine the appropriate way to compensate us for our efforts. Late in the year, the North Carolina Utilities Commission approved our energy efficiency model. In January 2010, South Carolina regulators approved the model as part of our base-rate case.

We continue to roll out energy efficiency programs in Ohio, where our model was approved in December 2008. In February 2010, Indiana regulators granted us permission to implement energy efficiency programs. However, a December 2009 order that applies to all utilities operating in the state limits the number of energy efficiency offers that are eligible for incentive earnings.

In January 2010, we withdrew our energy efficiency proposal in Kentucky. We based this proposal on data and programs developed a year before we filed our original application in 2008. Since then, we have begun to develop and test new programs in states where we already have approval for our energy efficiency model. Rather than continue to seek approval of an older portfolio of programs, we withdrew our application to update our approach. (Kentucky customers may still participate in basic energy efficiency programs that have been in place for several years.)

We have learned several important lessons in developing and proposing our energy efficiency model. Changing a regulatory framework that has been in place for decades does not occur overnight. Stakeholder education and input is also critical. While everyone agreed on the importance of energy efficiency, some stakeholders felt our goals were not aggressive enough. In response, we increased our energy efficiency program targets. Others expressed concern that we could earn more than a fair return on our investment, so we created earnings caps tied to actual energy savings. In the end, our success depends on our ability to clearly communicate how our programs help customers save energy and money without sacrificing comfort, convenience or reliability.