The Challenges of Motivating Utility Ratepayers to Save Energy

NY Times 
July 23, 2012

Save Energy, Win a Prize
Diane Cardwell

This New York Times article reports on the use of social media by utilities to encourage their customers to use less energy. The article reports that the need to find ways to encourage long-term conservation is ever more critical. Although states and utilities have run conservation programs for decades, as a nation we are far from acquiring all cost-effective energy efficiency. At least 25 states have set specific goals for reductions in energy use that in many cases will continue to increase even as electrical demands and the grid’s complexity keep growing. West Virginia has no such energy efficiency targets; although an Energy Efficiency Resource Standard (EERS) was proposed during the 2012 legislative session, it failed to make it through the House Judiciary Committee. As a result, the energy efficiency programs run by the State’s utilities (Appalachian Power and First Energy) are fairly modest. Moreover, utilities in West Virginia do not consider energy efficiency and conservation to be resources in the same sense as “supply-side resources” (e.g., generating plants), as there is no requirement in West Virginia for utilities to engage in integrated resource planning (a process that puts demand-side resources (energy efficiency and conservation) on the same footing as supply-side resources in the utility resource acquisition process).

Nationwide, the total budget for utility customer energy efficiency programs in 2010 was $4.6 billion, up more than four times from the $1.1 billion spent on such programs a decade earlier, according to the American Council for an Energy-Efficient Economy (ACEEE). West Virginia is not following this national trend in boosting investments in energy efficiency; the State, ranks 44th out of the 50 states in ACEEE’s State Energy Efficiency Scorecard. In ACEEE’s analysis of energy efficiency programs nationwide, West Virginia tied in last place with Alaska with respect to utility public benefits programs and policies metrics, scoring 0 out of 20 points. The EERS proposed during the 2012 legislative session by Delegate Mike Manypenny (D-Taylor) would have established long-term energy efficiency targets for electric utilities, requiring reductions in electricity consumption of 5% from 2010 levels by 2018 and 15% by 2025. The bill also would have provided financial incentives for utilities that meet or exceed their targets. According to ACEEE’s analysis, “[t]he utility regulatory business model has been a long-standing barrier to energy efficiency in West Virginia and the presence of an EERS that includes financial incentives for utilities that meet their targets could have moved the state of a much higher rank in the Scorecard.”

Utility customers in West Virginia need access to utility-sponsored energy efficiency programs. The state continues to face dramatic price increases for residential customers and, while customers have little control over the rates charged by utilities, they may have some control over their utility bills if they could avail themselves of utility energy efficiency programs. Policymakers in West Virginia have a number of options to make this happen. First, legislators could adopt an EERS, as proposed by Delegate Manypenny. Second, legislators could adopt integrated resource planning, as proposed by Senator Foster during the 2012 legislative session (S.B 162), which would stimulate investment in energy efficiency by placing demand-side investments on the same footing as generation resources. Third, if the legislature fails to enact either of these measures, the Public Service Commission has all the statutory authority it needs to (1) impose energy efficiency targets on the utilities it regulates, and (2) require utilities to engage in integrated resource planning. It’s time to move West Virginia out of the ranks of the lowest-performing states in the country with respect to energy efficiency.