New study finds potential savings of $1.2 trillion in energy efficiency

Strategies could eliminate 1.1 billion tons in annual greenhouse gas emissions

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Hanan Eisenman

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        WASHINGTON, D.C., July 29, 2009 – The United States has the potential to save more than $1.2 trillion in energy costs and cut consumption by 23 percent by 2020, according to a report released today by global management consulting firm McKinsey & Co., co-sponsored by Sempra Energy and 11 other organizations.

        The comprehensive energy-efficiency strategy cited in the report could produce savings that exceed California’s total annual energy consumption, while, at the same time, removing approximately 1.1 billion tons of greenhouse gas emissions annually -- the equivalent of taking the entire U.S. fleet of passenger vehicles and light trucks off the roads. 

        The report also outlines methods required to attain the energy savings, including education, incentive and grant programs, and nationwide standards for energy efficiency.  The complete report, entitled “Unlocking Energy Efficiency in the U.S. Economy,” is available online at www.mckinsey.com/USenergyefficiency

        According to J. William Ichord, vice president of governmental relations for Sempra Energy, the McKinsey & Co. report demonstrates what Californians have learned over several decades of experience – smart investments in energy efficiency should be a primary weapon in the battle against climate change.

        In fact, in California, per-customer consumption of natural gas has dropped by about 50 percent since 1970, when the state’s regulators and utilities began their aggressive push in energy efficiency.  Similarly, per-customer consumption of electricity has remained relatively flat in California, although increasing significantly in the rest of the country.

        “Energy efficiency is a cornerstone of any sound energy strategy because the most cost-effective and environmentally friendly kilowatt of electricity is the one that doesn’t have to be generated,” said Ichord, who joined representatives from McKinsey & Co. and other sponsors today at a launch event for the report in Washington, D.C. 

        Ichord said California regulators have led the way by taking a progressive approach to utility ratemaking, “de-coupling” utility profits from energy usage.  Under this policy, utilities receive incentives for encouraging energy conservation, rather than earning profits based on increased energy sales.

        Since 1990, Sempra Energy’s utilities – San Diego Gas & Electric (SDG&E) and Southern California Gas (SoCalGas) – have saved enough natural gas to supply more than 800,000 homes and electricity to power nearly 600,000 homes for one year.  The utilities’ energy-efficiency programs also reduced peak electricity demand by more than 800 megawatts, the equivalent of nearly two large power plants.

        SDG&E and SoCalGas have achieved these savings by providing millions of dollars in incentives and rebates, including $60 million in 2009, to Southern California businesses that upgrade equipment and become more energy-efficient.  In 2008, the utilities helped customers exchange more than 4 million standard light bulbs for efficient compact fluorescent light bulbs and weatherized 73,000 homes. 

        Sempra Energy (NYSE: SRE), based in San Diego, is a Fortune 500 energy services holding company with 2008 revenues of nearly $11 billion.  The Sempra Energy companies’ 13,600 employees serve more than 29 million consumers worldwide.

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San Diego Gas & Electric , Sempra Energy , Southern California Gas Company