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Rebuttal to Ochs Center Study on Energy Efficiency

The study by the Ochs Center for Metropolitan Studies, “Energy Efficiency as an Alternative Strategy for the Power4Georgians EMCs,” published in March 2010, is nothing more than a speculative and highly flawed analysis whose conclusions are hypothetical and border on intellectual dishonesty. Rather than providing a fact-based analysis grounded in scholarship, sound engineering principals and scientific method, this study relies on elementary extrapolation and mischaracterization of data that are neither accurate nor applicable to the circumstances being studied.

Like other studies produced by this organization and funded by opponents of Plant Washington as well as those of other coal-fired power generation facilities – a conflict of interest the authors fail to disclose – the Ochs Center study is a policy advocacy document that describes outcomes the authors believe could be achieved under a set of idealized economic, financial and regulatory conditions that currently do not exist.

Most egregiously, in order to achieve the job and revenue projections in this study, the authors assume zero growth in electricity demand and population among the Power4Georgians EMCs for the next 14 years. This is a fatal assumption for which there is simply no evidence in local, state and federal energy or census data, and which undermines the credibility of the report’s arguments and conclusions.

Other flaws in the methods, assumptions, analysis and conclusions of this report are detailed below.

Conflicts of interest
  • The Ochs Center is a left-leaning think tank that opposes coal in general, a bias the authors fail to disclose.
  • The Ochs Center was commissioned by opponents of Plant Washington to develop this report.
  • The individual that authors claim “peer reviewed” the report is also an employee of the organization that supplied the data set for the study. This conflict of interest does not allow an objective standard of peer review to be met.
  • When claiming that Plant Washington would not create permanent local jobs, the report references a study from its own think tank. This sort of incestuous relationship in the literature review would not be accepted by any serious academic journal. Not surprisingly, the report referenced was funded by the Fall-line Alliance for a Clean Environment (FACE) and GreenLaw, both of which are active and vocal opponents of Plant Washington.
Dishonest assumptions
  • The Ochs Center report assumes no population growth in Georgia during the next 14 years. This ridiculous assumption is the foundation on which the authors build the argument that no new generating capacity is necessary if energy efficiency measures are adopted instead.
  • The report assumes no growth in electricity demand among members of the Power4Georgians EMCs for the next 14 years, an assumption not supported by any available data.
  • The report estimates carbon emission prices based upon outdated figures in proposed legislation. These estimates significantly overstate – by up to a factor of four – any realistic premium that could be added for carbon emissions or non-renewable energy based on more recent iterations of climate change or renewable portfolio standard legislation.
  • The authors acknowledge that they do not include financing costs when estimating the cost of purchasing and installing the energy efficiency measures they describe. However, considering the fact that the residential efficiency programs they advocate are projected to cost $1.35 billion, it is extremely unlikely that such a project could be implemented without debt financing.
  • Additionally, it appears the authors failed to include the cost to manage, market and operate the programs and activities necessary to get the measures installed.
  • The authors assume that the co-ops would go into all of their members’ households and make significant updates to increase energy efficiency, an action that is hypothetical and something EMCs have no legal authority to force upon homeowners.
Flawed and dishonest analysis
  • When estimating cost savings, the report acknowledges that proposed efficiency measures mostly reduce peak demand. The authors therefore apply much higher prices – representative of peak power – to savings estimates. However, Plant Washington is replacing expiring baseload contracts as well as meeting the growing baseload need due to population growth. This comparison of baseload to peak power is clearly an “apples and oranges” comparison.
  • The report estimates a job number associated with implementation of the energy efficiency measures the authors advocate, but provides no methodology for this estimation.
  • The report projects economic impacts of proposed efficiency implementations using a methodology that captures supposed direct, indirect, and induced economic impacts. In the Ochs Center’s previous economic impact evaluation of Plant Washington, they evaluated only direct impacts. This is yet another “apples to oranges” comparison.
  • The report estimates commercial and industrial efficiency in the co-op territories by extrapolating from an assessment of industrial and commercial energy efficiency potential developed by the Georgia Environmental Facilities Authority (GEFA), and then applies an arbitrary price to that potential.
    • The GEFA report the authors reference states that an 8 percent reduction in electricity sales would require incentive programs covering 100 percent of the implementation cost. The Ochs Center report uses the 8 percent reduction as the basis for their subsequent estimates.
    • This application of this essentially hypothetical number – a reduction that is technically possible according to GEFA – does not evaluate if such reductions are possible from an economic standpoint or what the economic implications might be.
    • This Ochs methodology would be similar to asserting that it is technically possible for an individual to build a space shuttle and fly to the moon, then arbitrarily assigning an affordable value to that space shuttle (paid for exclusively by a government rebate), and finally concluding that it must mean that it is affordable for an individual to fly to the moon.
    • Furthermore, rather than acknowledging GEFA’s cost estimates, the Ochs Center authors use costs from a report developed by their own think tank to evaluate energy efficiency initiatives in Kentucky. While the flaws in the current report cast substantial doubts on the accuracy of the Kentucky analysis, even if it were accurate, the authors do not address if and why those estimates would be applicable to Georgia.
  • As noted earlier, when claiming that Plant Washington would not create permanent local jobs, the report references a study from its own think tank that also was funded by opponents of Plant Washington (“An Independent Study of the Fiscal Impact of the Proposed Coal Fired Power Plant”).
    • In the referenced report, the only original statistical data presented is a table of populations by county in a region of middle Georgia that was arbitrarily selected by the authors.
    • The report argues that because Washington County has only 19.6 percent of the population in that region, it will not receive as many jobs as other counties, such as Laurens County.
    • This data assumes that the probability of being employed at Plant Washington is the same for individuals in all counties of this region, regardless of distance from the plant. However, any legitimate policy and economic analysis would account for the fact that distance to the plant site becomes a barrier for employment at some point. At some places in Laurens County, for instance, the commute would be more than an hour to the plant site. Removing Laurens County from this arbitrarily designated region, or assigning different probability of employment based on distance and other economic factors would make the conclusions much different. This analysis, like the current one, is a blatant manipulation of a data set in order to induce a desired conclusion.
  • When discussing environmental drawbacks of Plant Washington, specifically mercury, the report references public comments by the Southern Environmental Law Center (SELC) that have repeatedly been proved false. In fact, in addition to other math errors, the SELC put decimals in the wrong place of their calculations, causing mercury impacts to rivers to be overstated by a factor of 269. Accordingly, their analysis should not be considered a credible reference for the Ochs Center report.
  • The data set used for efficiency measures is unavailable for review. The link provided by the authors does not exist and a search of the host website with the name of the report does not turn up any results. As the Ochs report is riddled with references with significant methodology errors, it would be helpful to evaluate this data set as well.
  • In addition, the report fails to acknowledge or account for the fact that all Georgia EMCs, including those in the Power4Georgians consortium, support and encourage energy efficiency. Georgia EMCs offer a wide range of programs that encourage members to use energy responsibly, including custom energy audits (for homes and businesses), online energy calculators, energy efficiency education, and information about financial and tax incentives available for home improvements to increase energy efficiency.

While Power4Georgians recognizes there are parties that will remain opposed to the development of Plant Washington, we have always been willing to engage in open and honest debate about the project, as well as to consider legitimate and economically feasible alternatives to meet our members’ need for affordable and reliable electricity now and in the future. Although we have found it is not uncommon for opponents to employ emotional appeals, questionable data and inaccurate facts in making their arguments against this project, the Ochs Center study is an egregious example of agenda-driven absurdity masquerading as a legitimate report. The authors’ failure to adhere to the most basic principles of scholarship in research, or to employ the intellectual rigor necessary to develop credible, evidence-based conclusions, further undermines both the credibility and integrity of the Ochs Center for Metropolitan Studies, as well as the opposition groups for whom this report was produced.