Conservation or energy creation?

Jeff vonKaenel

It was over 100 degrees and I was wearing a suit when I pulled up to SMUD. As I made the small trek from the parking lot of the new, energy-efficient Sacramento Municipal Utility District building to the older, less efficient building where the top brass still reside, I developed an ever-increasing appreciation for the inventor of the air conditioner and for the 2,000 SMUD employees who deliver the electricity that powers those heavenly inventions.

I was there to meet with SMUD’s new CEO, Arlen Orchard, who took over the reins in April after serving 13 years as SMUD’s general counsel (he’s been with the company for a total of 24 years), spending, in his words, “all of my time on the fourth floor,” where the top officials have their offices. Wearing a polo shirt this morning, Orchard explains that he was outside at 6 a.m., meeting with utility-line workers. Clearly enjoying his new job, Orchard told me that one of his goals was to meet individually or in small groups with all 2,000 employees.

SMUD employees have told me that Orchard is having an impact, especially by holding senior managers more accountable. And Orchard has a deep appreciation for the SMUD workforce. I worked with SMUD staff when SN&R took a 19,000 square foot former grocery store on Del Paso Boulevard and converted it into our green-friendly headquarters. SMUD’s staff is a regional treasure. SMUD is nationally recognized as being one of the country’s most forward-thinking utility companies.

But the future is uncertain. Will SMUD need to generate more energy because of population growth and increased energy-sucking devices such as computers and televisions? Or will there be less demand because of increased energy-efficiency and more consumer energy generation such as solar rooftops? Will smart meters help reduce energy use and lower peak demand, thus reducing the need to build more energy plants? Will there be a major technology breakthrough, dramatically changing the cost of energy creation? Will electric cars catch on more, requiring more electricity? These are all good questions with unknowable answers.

Certain things we do know. New energy sources, like solar and natural gas, are more expensive than old ones like hydro. Energy conservation, especially on older residential units, makes more financial sense than creating new energy sources. SMUD’s rates are around 25 percent less than neighboring PG&E. SMUD’s excellent staff has the knowledge to run a communitywide energy-conservation campaign.

A communitywide energy-conservation and energy-creation campaign could bring a whole new sector of conservation-related employment opportunities. While this might cost more in the short term, it could ensure that rates stay low for the long term.

So, the question is: Does it make sense to increase our rates a few percentage points now to fund a communitywide residential and commercial energy-conservation effort? There is a lot of pressure not to increase rates, even for conservation measures that will ensure that rates stay low in the future. But is this shortsighted? Orchard told me that it is a question of balance. That is true.

How do we find the right balance?

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About the Author

Jeff vonKaenel
Jeff vonKaenel is the president, CEO and majority owner of the News & Review newspapers in Sacramento, Chico and Reno.