Florida Utilities’ Energy Efficiency Goals are Weak

Guest Blog | July 23, 2014 | Energy Efficiency, Utilities

Update: Click here to listen to an in-depth interview with SACE’s Florida Director, Susan Glickman, about how Florida’s giant private utility companies are pushing to cut back on their energy conservation programs this week at the Florida Public Service Commission hearings.

Today is day three of the energy efficiency goal-setting proceeding in Florida. If you have not already seen our press release about the hearing, or one of the many articles published in the news, I can summarize it for you in a single sentence: SACE is advocating for increased energy efficiency as the electric utilities in Florida are proposing to eliminate energy efficiency goals and all of the benefits they generate for customers in Florida.

Yesterday, I testified on behalf of SACE regarding why the energy efficiency goals should be increased. As I outlined in my testimony, Florida’s largest utilities proposed goals that, if approved, would dramatically roll back energy efficiency efforts in Florida by 87-99% at precisely the time when we should be ramping them up.  Secondly, the basis for the utilities’ proposed goals is flawed on numerous grounds. Finally, SACE’s proposed goals represent an achievable level of efficiency that is in alignment with the savings reported in many states across the country, as well as the Environmental Protection Agency’s (EPA’s) proposed targets in the Clean Power Plan, and the NAACP’s 2014 “Just Energy Policies” report for Florida.

The utilities’ proposed goals effectively eliminate efficiency offerings to Florida customers, including for lower income customers who have the greatest need for access to the cheapest energy resource we have – energy efficiency. The utilities claim that they are hindered from capturing more efficiency due to their implementation of energy efficiency for over 30 years, increases in energy efficiency building codes and appliance standards, and low natural gas prices.

However, these factors – building codes and low natural gas prices – have not eliminated efficiency potential in other areas of the country that have had long-standing energy efficiency programs. For example, the Pacific Northwest, like Florida, has been implementing energy efficiency for over 30 years. In fact, the Pacific Northwest has been meeting half of its electricity growth with energy efficiency. Additionally, federal building energy codes, appliance standards and low natural gas prices affect utilities across the country; however, the Pacific Northwest has continued to find efficiency opportunities. The Northwest Power Planning Council’s Sixth Power Plan found that energy efficiency could meet 85% of load growth over the next 20 years, which is a far cry from the Florida utilities’ proposed efficiency goals. Florida’s proposed goals, if approved, will invariably lead to programs that are dramatically reduced in scope.

Second, the reasons that the utilities’ goals are so low is that there are errors in every step of their analysis that constrict the number of measures that can compete against supply-side options. For example, the technical potential screen did not include all sectors of the economy, as I noted in my testimony. The economic potential contains an arbitrary two-year payback screen, which eliminates between 3,000 and 13,000 gigawatt-hours of efficiency from the utilities’ analysis. In addition, FPL assumes that customers will do 25 – 100 times more efficiency than what FPL can motivate the customers to do with efficiency. FPL makes this egregious assumption without any information on whether customers are actually adopting these energy efficiency measures.

Further, the utilities rely on the Ratepayer Impact Test  (RIM) – the most restrictive of all of the cost-benefit tests – to determine their proposed energy efficiency goals. This is fundamentally flawed because lost revenues are included on the cost side of the RIM cost-benefit equation. Not surprisingly, when the utilities assume that the customers pay for both their energy efficiency technology, AND then pay the utility for the kilowatt-hours they saved, the cost-benefit equation result is not lucrative.

Finally, the efficiency goals that SACE proposes ramp up from 0.75% of sales to 1.5% by 2020. In 2011, 14 states were saving 1% of sales or better. SACE proposes that Florida utilities achieve that level of savings by 2016. This is in alignment with EPA’s proposed Clean Power Plan efficiency reduction for Florida.

I provided three recommendations for the Commission regarding this docket. First, reject the utilities’ proposed goals and adopt SACE’s recommended level of energy efficiency for the utilities. Second, use the Total Resource Cost test to determine system-wide benefits of energy efficiency, not the RIM test. Third, eliminate the two-year payback screen and move to using actual data from evaluation, measurement and verification to determine free riders, just as neighboring states like North Carolina, South Carolina and Georgia do.

As I write this, I am listening to the third and final day of the FEECA hearing. Currently, FPL is in the rebuttal phase of the hearing, where it argues that, contrary to every authoritative source on the topic, efficiency is expensive, unreliable and a bad deal for consumers. I am struggling not to roll my eyes, and to remember the expression, a man does not see what he is paid not to.


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