Citing the urgent need to cut energy costs, move toward energy independence and stimulate the economy, Pennsylvania Governor Ed Rendell released his Energy Independence Strategy on February 1, 2007. The plan will push Pennsylvania into the top tier of states taking steps to cut consumer energy costs and significantly expand the alternative fuel, clean energy and conservation sectors.

At the governor's announcement event, Dennis Wolff (L), Secretary of the Department of Agriculture, discusses the new energy strategy with Andy Hanna, President and CEO of Plextronics, and Kathleen McGinty, Secretary of the Department of Environmental Protection. Plextronics Is a BFTP-funded company specializing in technology that enhances solar power capabilities.

This plan will cut Pennsylvanians' energy bills by $10 billion over the next 10 years," says Governor Rendell. "It will also give us the ability to produce enough homegrown fuel to replace every gallon Pennsylvania currently imports from the Persian Gulf. With smart policies and aggressive leadership, we have attracted hundreds of millions of dollars of new investment and created thousands of new jobs, making us a leader in the clean energy sector."

The enactment of new laws, regulatory policies and the creation of the $850 million Energy Independence Fund will enable Pennsylvania to achieve three key goals:

• Save consumers $10 billion in energy costs over the next 10 years
• Reduce Pennsylvania's reliance on foreign fuels and increase Pennsylvania's clean energy production capacity
• Expand Pennsylvania's energy production and energy technology sectors to create more jobs

Cutting Consumer Utility Bills
The first priority for this new energy initiative is to cut energy costs for Pennsylvania consumers. Electric generation rates can swing wildly during the course of the day and at different times of year. A recent study by PJM, the independent electricity grid operator that covers Pennsylvania, showed that cutting power consumption by just 3-5 percent during peak rate periods saves consumers across the state up to $230 million annually.

"At times of high energy use, such as the hottest days of the summer and coldest days of the winter, energy costs can be five to seven times higher than during times of moderate use," says Governor Rendell. "Today we do not have the tools to cut our energy bills by shifting energy use to times when costs are lower. I want to help consumers save money through smart metering and time-of-day rate structures."

The Governor's initiative enables consumers to be smart about energy use by providing new tools to empower consumers and $244 million in new funding to help them install state-of-the-art energy technology.

Benefiting the Pennsylvania Economy
To ensure that Pennsylvania's economy and our jobs are benefiting from the national growth in this sector, the Energy Independence Fund will:

• Accelerate the role that Pennsylvania companies play in the production of clean energy components and systems: By making over $100 million available in the form of venture capital, loans and grants so Pennsylvania firms can attract private sector investors and grow their companies. These funds may also assist in attracting cutting edge energy firms to the commonwealth. All state funds will be matched at least dollar-for-dollar by private sector capital.
• Initiate clean energy economic development projects: New state resources will target up to $500 million in state funds dedicated for infrastructure improvements, construction, early project development costs and equipment purchases undertaken to attract private investment in energy-related economic development projects, including solar manufacturing; advanced coal technologies; biofuels; and energy conservation, efficiency, and energy demand management projects.
• Keep energy jobs close to home: The plan also makes improvements to the historic Alternative Energy Portfolio Standard already on the books in Pennsylvania. It makes clear that power companies can enter into long-term contracts with the developers of wind farms and solar power arrays so that those new and clean sources of energy can get financed and built. And this strategy also makes clear that those projects have to get built in a place that directly supports the grid that serves Pennsylvanians; renewable projects built in other parts of the country or even Canada would not be used to meet our requirements.

One segment of the new strategy is the Energy Independence Greenhouse, whose goal is to commercialize promising clean energy technologies. If passed, the Ben Franklin Technology Partners would manage the $56 million initiative. Funds would be used for translational research, entrepreneurs-in-residence programs, business incubation and pre-seed funding.

Reducing Reliance on Foreign Sources of Fuel
"Every year, Pennsylvanians send some $30 billion out of our state just to buy gas and liquid fuels," the Governor says. "We need to keep those dollars at home and put our own people to work building our state's energy independent future.

"I have made a priority of investing in farm land and open space preservation, and I am proud to say Pennsylvania now has the biggest program in the country. But even with this effort, we still lose three acres of farmland for every acre we save. If we give our farmers a chance to grow our energy, we can turn that around and help our farming families while we bolster our energy security."

The commonwealth is already a leader in the production of renewable fuels. One of the largest ethanol plants in the east will be built in the state, and approximately 340 million additional gallons of ethanol production are planned. Similarly, companies in Pennsylvania are expected to produce 60 million gallons of biodiesel by the end of 2007, and other new plants being built are expected to produce an additional 170 million gallons within the next two years. To put that into perspective, current national production of biodiesel amounts to 225 million gallons, putting Pennsylvania's total production near the top of all states.

Addressing Climate Change
"I think everyone now understands that you cannot deal with energy policy without addressing global warming," says Governor Rendell. "It is the largest environmental problem we face and Pennsylvania needs to do something about it.

"The efforts I am announcing today to save energy and produce more clean energy are a good firststep, but they are only a first step. In the next 90 days I will present a comprehensive strategy to make Pennsylvania a leader in addressing climate change."

The Energy Independence Fund
The Energy Independence Fund will be used to support the following clean energy activities:

• $244 million—Household appliance rebates and PA Sunshine Grants
• $106 million—Venture capital, grants and loans for expansion of energy companies
• $500 million—Clean energy projects and development or equipment costs for specific energy economic development projects

The Energy Independence Fund will be capitalized by a systems benefits charge on electric power consumers. Charges of this kind are already in place in 15 states and the District of Columbia. At the rate proposed, Pennsylvania's charge would be lower than all but two of these jurisdictions.

The systems benefits charge is proposed at $0.0005 per kWh of electricity used (five-hundredths-of-a-cent or .5 mills). This charge would cost the average residential customer 45 cents per month, the average commercial customer about $3.00 per month and the average industrial customer $74 per month. For large industrial customers, the fee would be capped at a maximum of $10,000 per year.

By contrast, the Energy Independence Strategy as a whole is expected to save consumers nearly 15 times more than the cost of this fee. The average residential customer is expected to save $73 per year, the average commercial customer $425 per year, and the average industrial customer $10,500 per year.

The Rendell Administration is committed to creating a first-rate public education system, protecting our most vulnerable citizens and continuing economic investment to support our communities and businesses. To find out more about Governor Rendell's initiatives and to sign up for his weekly newsletter, visit his Web site at: www.governor.state.pa.us.

 From the January/February 2007 issue