August 29, 2014 – An economic study sponsored by the Arkansas Advanced Energy Foundation proves that relying aggressively on energy efficiency to meet carbon emission guidelines would have a net positive effect on the Arkansas economy, AAEF leaders said yesterday following a presentation by local economist Jim Metzger to Arkansas stakeholders planning the state’s response to the EPA’s Clean Power Plan.

Metzger, the author of the report and CEO of HISTECON Associates, gave preliminary findings that demonstrate the net positive economic impact of energy efficiency policies in Arkansas.  The stakeholder group met at the headquarters of the Arkansas Department of Environmental Quality in North Little Rock.  AAEF was one of six presenters that gave varying perspectives on the economic impact in Arkansas of the EPA guidelines on reduced carbon emissions from existing power plants. 

Metzger said the study, “The Economic Impact of Energy Efficiency Programs in Arkansas”, reports the first-ever attempt to identify and contact the hundreds of individual companies that work as energy efficiency (EE) contractors throughout the state as part of the state’s Energy Efficiency Resource Standard (EERS) administered by the Arkansas Public Service Commission.  Based on survey data, the study estimates that 9,000 jobs and $1 billion in sales have been generated by companies doing business in the EE sector.  In addition, the indirect impact of this work is another 3,500 jobs in related sectors and output of more than $550 million.  Total impact of energy efficiency spending in the state comes to $1.5 billion and 12,500 jobs.

AAEF Policy Director Ken Smith introduced local economist Jim Metzger with a brief summary of a report by the American Council for an Energy Efficient Economy showing that Arkansas can achieve more than 40 percent of its carbon reduction target through energy efficiency measures. 

“Energy efficiency is Arkansas’s lowest cost solution to carbon emission reduction,” Smith said.  “It is more labor intensive than energy supply industries and it keeps Arkansas dollars at home.  We have to address energy supply alternatives to coal but the economics of energy efficiency make it clear that an Arkansas solution must rely significantly on energy efficiency.”

Importantly, the AAEF study shows that EERS programs have boosted sales for all Arkansas energy efficiency contractors by 44% during and through the end of 2013.  This figure is much higher for smaller, Main Street companies that have experienced an 86% sales growth as a direct result of utility EE programs.

“We already knew that energy efficiency programs had the potential of having a positive effect on the overall economy in Arkansas,” Metzger said.  “With this report, we are able to document for the first time that the potential is already being realized and even more positive impacts have taken hold in Arkansas.”

In addition, the benefits from the EERS program continue to produce increased energy savings for the state.  The annual reports filed at the APSC by Arkansas utilities document that the EERS program is having tangible results on energy demand in communities throughout the state, which in turn means that family and firm budgets will have more to spend on other goods and services, and these expenditures will help local economies grow faster than before.

Following Metzger’s presentation, AAEF was asked what could be done in Arkansas to make access to energy efficiency programs easier.  Smith replied that there is an inequality across the state with programs not being offered by municipal and rural electric cooperatives. If all utilities would participate in similar energy efficiency programs, more customers would have access to benefits and energy savings would increase “dramatically.”  

Metzger added that there are many more jobs out there in the energy efficiency sector that were not included in this study because they do not contract through the public utility companies participating in EERS programs.  “There are 20 [of Arkansas’s 75] counties (largely in service areas of electric cooperatives) that do not have contractors on the list used in the study, but who are doing energy efficiency work.”  He said there continues to be more potential for EE to grow the economy in the state.  

Additionally, Metzger said there is “some lack of confidence among business owners” that these programs will be around indefinitely.  This instability is a barrier to even more accelerated growth in the energy efficiency sector.

AAEF distributed an executive summary of the report at the Arkansas stakeholder meeting, and the final report is scheduled for release on September 3, 2014.  At that time, the full report will be available on the AAEF website.

AAEF’s presentation, along with the other five presentations can be found on AEDQ’s website.