This blog was written by John D. Wilson, former Deputy Director for Regulatory Policy at the Southern Alliance for Clean Energy.Guest Blog | October 12, 2017
Duke Energy Carolinas has reached the 1% energy savings benchmark in 2016, a nationally recognized indicator of success in providing customers with energy efficiency programs. Congratulations to all the staff at Duke Energy for that achievement!
Since we last reported utility energy efficiency savings in 2014, we have seen some remarkably good as well as some regrettable changes. Energy efficiency ties in to virtually every energy policy story in the Southeast – from the V.C. Summer / Westinghouse scandal in South Carolina to the unregulated monopoly utility known as Alabama Power. Yet we still remain confounded that while energy efficiency is – by definition – cheaper than building and running power plants, utilities in the southeast continue to under-invest in energy efficiency.
What does it take to build a leading energy efficiency program? Having tracked the growth (and, in two cases, decline) of these utilities’ programs for the past decade, SACE has seen three factors that drive success. Across the broader Southeast region, we’ve seen these three factors most strongly evident in the programs operated by Entergy Arkansas. Entergy Arkansas first rocketed to the top of the Southeastern leaderboard in 2013. Across the region SACE works in, utility management commitment, state regulatory or legislative policy, and stakeholder engagement are the critical factors that determine success.
In today’s blog, we’ll feature “the first and the worst” – Duke Energy and Florida Power & Light.
First in the Southeast: Duke Energy in the Carolinas
Duke Energy operates three utilities in the Southeast. Its two utilities in the Carolinas operate under the same management philosophy, the same regulators and laws, and with the same stakeholder engagement process. Over the past two years, both utilities have averaged about 0.9% of retail sales in savings, with the differences being accountable to slightly different customer profiles and some differences that remain between programs created prior to the Duke-Progress merger. But for 2016, Duke Energy Carolinas brushed up against the 1% energy savings benchmark (achieving 0.974% but we’ll round them up!).
While it might seem like sour grapes to point out the flaws in Duke Energy’s programs in the Carolinas, the region’s leader still has plenty of room for improvement. Both Duke Energy Progress and Duke Energy Carolinas have the same weaknesses in their long term program outlook. Considering that Duke Energy has both the regulatory flexibility and a financial incentive to scale up its programs, we think Duke could achieve much more. Duke Energy’s success is driven by heavy investment in efficient lighting and a residential program that encourages thrifty behavior. There are real questions about whether lighting programs will continue to be effective. Behavior programs like Duke’s have only a one-year measure life, requiring sustained effort to keep them effective. Duke needs a more diverse portfolio.
The two key areas where Duke Energy could improve are in low income programs and large customer (commercial and industrial) programs. There are a number of small programs offered by utilities, state and local governments to help low income customers reduce energy costs. Often they are poorly coordinated and potentially inefficient. Duke Energy is taking steps, notably in a collaborative effort with stakeholders in Asheville, to lead on improved coordination. In both North and South Carolina, large customers are allowed to opt out of energy efficiency programs, behaving in a penny-wise and pound-foolish manner. Shifting to a broadly inclusive, strategic energy management framework could increase impacts and save utility customers money. Duke Energy does a better job at collaboration than most utilities in the Southeast, a resource that will be needed since success in these two areas will require not only leadership by the utility, but also support from its regulators and potentially legislators in both states.
Duke’s third utility, in Florida, achieves only a third of the energy savings impact of its Carolina cousins. Yet it achieves this level of savings in spite of Florida’s regulators who have flouted state law to push the utilities to offer minimal energy efficiency programs. Also the Duke Energy Florida team has failed to implement stakeholder engagement processes similar to those in the Carolinas. As a result, Duke Energy Florida is accountable mainly to itself for the results, and without the commission’s support for a financial incentive tied to energy efficiency savings, Duke Energy’s management isn’t likely to emulate its Carolina cousins.
Worst in the Southeast: Florida Power & Light
Picking the region’s worst energy efficiency utility is a tough call, but Florida Power & Light (FPL) deserves the ignominy. FPL was the driving force behind the 2014 decision by Florida’s utility regulators to slash energy efficiency goals. In contrast to the other three investor-owned utilities, FPL has moved quickly to take advantage of this opening and cut its energy efficiency programs to practically zero.
FPL often claims that it has one of the “leading energy efficiency programs among utilities nationwide.” For example, as recently as 2015, FPL was touting its commitment to energy efficiency in its Corporate Responsibility Report.
Tomorrow’s blog will discuss the rest of the surprising data from Florida and other interesting findings across the Southeast. But for today, here’s a big raspberry for FP&L and three cheers for Duke Energy!