Practice Areas: Climate Change

Efficiency and Demand-Side Management

Pricing carbon will fundamentally change the competitive landscape of business, facilitating the need for an integrated and responsive approach to energy conservation, load management, and energy efficiency. The convergence of climate-related drivers – putting a price on carbon, regulations, investor attention, and technology innovation – are shaping value creation and risks for the energy sector. McGuireWoods’ targeted legal services catalyze value creation and mitigate risk in this carbon-constrained environment. An integrated and forward-leaning approach to DSM – through saving electricity instead of trying to sell more of it – will serve as a key competitive differentiator.

Our group believes the cost of saving electricity should be evaluated alongside the cost of producing more of it. Efficiency creates openings to invest $170 billion a year from now until 2020 – with a projected 17% internal rate of return. Capturing energy efficiency’s remarkable potential requires an understanding of the drivers and risks to value. A thorough understanding of the regulatory framework of Demand-Side Management (DSM) is central to capturing this opportunity. The potential to profit – through a deep understanding of regulations and policies that influence customers’ end-use demands – cannot be understated.

An evolving framework of incentives, cap-and-trade regimes, renewable portfolio standards, and energy efficiency regulations will shape the DSM policy framework. This will accelerate the divergence between the winners and losers. Cost uncertainty – undergirded by carbon risk – will accelerate in light of an evolving framework of energy efficiency polices.

More importantly, capturing energy efficiency’s remarkable potential requires an understanding of the drivers and risks to value in light of the evolving regulatory framework: How will regional asymmetries in carbon prices impact operating cost variables? How will municipal regulations impact DSM programs? However, depending on the design and interaction of regimes, the potential for increased costs is significant. Policy insight is critical to recognizing and adapting to these risks. Regulatory costs, in addition to the acquiring the license to operate, will increase as climate-related drivers take hold.

Our services:

• reviewing, drafting, and negotiating agreements that are used to implement energy conservation and demand-side management programs;
• monitoring developments in the key areas of regulation, technology, and consumer behavior;
• development and advocacy of proposed amendments to and interpretations of model, state, and local energy codes and regulations;
• advise on financing implications of Demand-Side Management (DSM)Incentive Program regional asymmetries;
• analyze emerging state and local regulatory developments in order to effectively structure plans as soon as new standards are implemented;
• development of compliance approaches, strategies, and tools regarding regulatory requirements;
• advice and representation regarding product energy efficiency testing, certification, and labeling;
• development and advocacy of tax incentive proposals for energy efficient products;
• development and advocacy of proposals regarding energy efficiency, energy conservation, and demand-side management programs by utilities, independent energy efficiency and environmental groups, and national, state, and local governments; and
• negotiation of federal or state mandatory product energy efficiency standards