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by Barbara Crane


As the second largest publicly-owned electric utility in California, the Sacramento Municipal Utility District (SMUD) is an active player in the state's greenhouse gas reduction efforts. But SMUD's concern for conservation and energy efficiency dates back to the days before terms like "climate change" and "global warming" entered the energy vocabulary.


"Over 20 years ago, we were fortunate in having a very progressive and visionary board. Being a customer-owned organization, they always were concerned about what was good for the environment and good for the community," says Paul Lau, deputy assistant general manager over customer distribution and operation. "They realized early that fossil fuels would be depleted, so we had to diversify and use the resource wisely."


SMUD serves a 900-square-mile territory that takes in most of Sacramento and a small section of Placer counties-nearly 600,000 customers. The utility was founded sixty years ago as a public utility overseen by a board composed of seven directors, each elected to represent a geographic area, or ward. The board takes its position as environmental stewards seriously: a statement, drafted in 2004, pledges, "SMUD's vision is to empower our customers with solutions and options that increase energy efficiency, protect the environment, reduce global warming, and lower the cost to serve our region."


SMUD's early efforts to diversify its power supply include a nuclear power plant at Rancho Seco (decommissioned in 1989 and now the site of a conventional electric power plant) and hydroelectric power from a dam on the upper American River. Today, the utility's prime supply focus is on renewable forms of energy, such as solar and wind. The utility's board of directors have taken very assertive steps in setting policy goals, says Mike DeAngelis, manager of advanced renewable and distributed generation. "We said that 20 percent of our retail sales in 2010 will be supplied by renewables. Our target is 30 percent by 2020."


To further emphasize the importance of reducing greenhouse gases, the board recently adopted the goal of a "sustainable energy power supply," defined as one that reduces SMUD's long-term greenhouse gas emissions from generation of electricity to 10 percent of its 1990 carbon dioxide emission levels by 2050. That results in a 90 percent reduction in emissions.


Emphasizing Renewables


The utility has adopted several innovative approaches to encourage the use of renewables. The Greenergy® program enables customers-both business and home-to buy all or a portion of their energy needs from sustainable sources. A residential customer who wants to buy 100 percent of his power needs pays $6 each month over the total cost of their monthly electric bill. To purchase 50 percent from renewable sources, he would pay $3 extra.


Each month the energy required by Greenergy participants is purchased as part of a special energy buy purchased only from renewable energy suppliers. Greenergy boosts renewable targets to 23 percent in 2010 and 37 percent in 2020, which are more stringent than AB 32 goals of 20 percent and 30 percent, respectively.


Like other California electric utilities, SMUD offers financial incentives to customers who install solar energy systems. SMUD went farther, however. When a customer survey revealed the desire of renters to be involved in renewable energy efforts, SMUD designed the SolarShares program, which will receive a  Green California Leadership Award at the 2009 Green California Summit, in the category of Energy Innovation. 


The first program of its kind and the largest in the nation, SolarShares enables participating customers to pay a fixed monthly fee to "buy into" a local solar farm. "They don't need to own a home or install solar photovoltaic panels to be involved," says Jim Parks, program manager for energy efficiency, customer research and development. The amount of power generated per share shows as a credit on the customer's bill-and reduces the amount of non-renewable power the customer pays for.

"Customers pay a little more for electricity using the SolarShares program," he says, "But they're locking in a rate for 20 years, so if energy prices go up, they will save money."


SolarShares benefits the region, as well. Sacramento is located in a valley where summer temperatures often soar to over 100 degrees, producing a spike in power use. "SMUD has a peak load of 3,300 megawatts. In a normal year we need 400 of those megawatts for only 40 hours. Four hundred megawatts represents a good sized power plant," Parks says. "Expanding the capacity of solar energy to supply some of that power reduces the need for the increased use of fossil fuels and the air pollution that goes with it."


Being involved in energy efficiency measures for the last 30 years, "we've picked a lot of the low hanging fruit," Parks says. For that reason, the utility is investing in research to hone new technologies that will help meet its goals. One research-based initiative already in operation is the Dairy Digester program (affectionately called the "poo to power" program).

Milk cows produce about 120 pounds of waste each day, which converts into methane. Released into the atmosphere, the waste becomes a greenhouse gas 22 times more potent than CO2. SMUD is partnering with a local dairy to install a specially designed lagoon where waste is channeled. The lagoon is lined with high density polyethylene plastic and hermetically sealed. As the manure decomposes, biogas is produced, funneled to a generator and used as a source of renewable energy.


The utility is also working with the University of California, Davis, surveying commercial food processors and institutions in efforts to understand the availability of food waste for use in generating renewable energy. Grease waste and forest waste will also be considered as possible sources of energy in future programs.


Changing Customer Behavior


Over the last few years, SMUD has made a name for itself in a new area: market research. The utility is employing sophisticated market segmentation tools to change customer behavior. "We've been very successful at encouraging people to buy energy efficient lights, appliances and equipment, although there is still much room for improvement," says Bruce Ceniceros, project manager. "But we can achieve significant additional energy savings if people became more attentive to turning things off or turning them down." Using that premise, SMUD embarked on a yearlong pilot program in April 2008, the Home Electricity Report, to discover what motivates customers to become more energy efficient.


The program targeted 35,000 randomly selected customers to get a broad cross section of ages, incomes, sizes of homes and other factors. A control group of 55,000 customers was also randomly selected. Both groups were exposed to the same general marketing about SMUD's energy efficiency programs and services, but only the target group received detailed Home Electricity Reports. The reports compared the monthly and annual energy use of each target household to 100 of its neighbors with homes of similar size and the same heating fuel type.


SMUD designated the top 20 percent of each group as "energy efficient" and showed customers what they could save if they were in the "energy efficient" category, rewarding them with "smiley-faces" and words of encouragement on their Home Electricity Reports. The reports also recommended specific energy-saving opportunities for each customer.


At the six-month mark, the target group had lowered consumption by two percent more than the control group. "They saved three gigawatt hours total over the control group," says Alexandra Crawford, program manager. "That's equivalent to taking 700 homes off the grid. People saved mostly by making small changes like turning off lights and lowering their thermostats." Analysis of the data also showed that "if people knew they were in the top 20 percent of energy savers, they still kept trying for additional savings," Crawford says.


 "This is a case study on how to apply social science principles to try to induce customer actions that align with social good. That's why utilities all over the country have been calling us." Ceniceros says. "The Home Electricity Report uses the scientific tool of leveraging social norms: the premise that people don't want to be seen as behaving outside the ordinary. If they see their energy use is greater than average, they try to get average; if they're doing better than average, and they receive positive feedback, like the smiley faces, they're motivated to work harder.


Another behavioral tool that SMUD is using is the Power Cost Monitor, a device that connects to electric meters. The monitor transmits instantaneous energy-usage information to a wireless monitor inside the home, showing customers how many kilowatts they're consuming at any given moment-and how much their use is costing them per hour. "Studies at other utilities, which have provided these displays, have shown energy savings ranging from 5 to 15 percent," Ceniceros says. "Later this year, SMUD will be evaluating the savings for our customers and analyzing which customers tend to respond the most to this type of feedback. The more we learn now, the more effectively we can leverage the full capabilities of the system.", a social networking site, is a SMUD initiative with content driven by users. "Sacramento-based nonprofits can leverage blogging, email blasts, forums, calendars and other features that likely aren't found on their own websites," Crawford says. "The site will undoubtedly transform as concerns about global warming change and customers find new ways to use the site to satisfy their needs." Similarly, the marketing campaign, "Save Today, Save Tomorrow" uses the Internet to motivate customers and offers no-and low-cost energy saving tips, as well as access to information about SMUD programs that can help them save energy, money and the environment. "It's not just about what we do today, it's also about what we can do for future generations," says Farres Everly, SMUD Advertising and Promotions Supervisor.


SMUD looks seriously at its own energy use as well as its customers'. "Our concern is embedded in our culture," says Lau. "Dave Freeman, our general manager in the 1990s, coined the phrase, the ‘conservation power plant,' to remind us to use energy as wisely as possible." This mantra continues to play a part in SMUD's planning. Last year SMUD upgraded three combustion turbines in its South Sacramento cogeneration plant, improving their efficiency while reducing the rate of greenhouse gas emissions per megawatt produced. Lau highlights other in-house initiatives, such as environmentally-friendly power poles, hybrid bucket trucks and a hydrogen-fueling station.


Given its "green consciousness," innovative programs and several decades of commitment to energy efficiency, can SMUD reach its goals for reducing greenhouse gases? "We face huge challenges, and our rates probably won't decline," DeAngelis says, "but if we want to do it, we can."





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