Will the Florida Public Service Commission Stick with the Status Quo on Efficiency?

This blog was written by John D. Wilson, former Deputy Director for Regulatory Policy at the Southern Alliance for Clean Energy.

Guest Blog | October 15, 2009 | Energy Efficiency, Utilities

The Florida Public Service Commission staff have just issued their recommendation for the next decade of energy efficiency programs in Florida. Their recommendation, see document 10584-09, is to stick with the status quo, burdening Florida with billions of dollars in unnecessary energy costs and the construction of unnecessary power plants costing tens of billions of dollars.

The staff recommendation is to help reduce energy use in Florida by 1.2% over 10 years. At least 25 states (see below) have recently adopted more aggressive goals: five, ten, and even twenty times more aggressive than the staff of the Florida Public Service Commission feel are in, well, someone in Florida’s interests.

In rejecting our recommendations to adopt national best practices on energy efficiency, the Commission’s staff have advised that only energy efficiency programs that lower rates are acceptable, and have advised rejecting all efforts to promote energy efficiency that might raise rates, even if the overall result is to reduce the total cost of energy to the Florida economy.

It’s as if a public university blocked a tuition increase by requiring students to attend one more year to get a degree. It’s wasteful, and shows bad vision, poor reasoning, and greater concern for the growth of utility profits than the ultimate cost of energy to Florida consumers.

The staff absolves itself from abandoning these measures by advising greater “education” efforts.  They wrote, “Staff, therefore, recommends that the Commission direct the utilities to expand their educational programs to include measures that failed the two-year payback screening and measures offering significant savings that passed the TRC Test but failed the RIM Test.” However, by excluding these educational programs from the goals, the utilities are essentially unaccountable for the results of these “educational programs.” More bill inserts anyone?

Furthermore, the staff rejected the plain intent of the 2008 Florida Legislature and advocated ignoring the potential impact of energy efficiency in reducing global warming pollution. This is somewhat unsurprising, considering the mismanagement of the Florida Energy and Climate Commission. In so doing, the staff actually recommended goals below those requested by Progress Energy, Tampa Electric (TECO), and Gulf Power.

And finally, the staff decided to adopt a minimal spending goal for utilities to encourage customers to install renewable energy on-site. Solar hot water, solar photovoltaic (PV) panels, etc. spending will amount to 5% of that allocated to energy efficiency. If renewable energy were as cost-effective as energy efficiency (the staff maintains that these programs cost far more), this would amount to an impact of 0.08% of Florida’s energy needs being met in this way. The staff maintains that this will “maintain the momentum of the Legislature’s efforts,” which seems like a pretty backhanded compliment.

Bottom line, the staff of the Florida Public Service Commission seem completely unaware of what literally dozens of states are achieving in terms of energy efficiency. Florida is not so special that what can be done elsewhere is not practical in the Sunshine State.

The Public Service Commission staff recommendation doesn’t come close to realizing the governor’s stated goal of a more consumer-friendly commission, nor his leadership towards a cost-effective solution to the global warming crisis in Florida. There are other solutions to global warming besides energy efficiency, it is just that energy efficiency happens to be the only one that is widely recognized to save money, create jobs and help slow climate change.

Update: Coverage of the staff recommendation includes:
+ The St. Petersburg Times / Miami Herald focuses on the weak goals: Despite pressure from both Gov. Charlie Crist and the Florida Legislature, state regulators on Thursday recommended that electric utilities not be required to give customers new incentives for saving energy and reducing electrical consumption.”

+ The Jacksonville Times-Union focuses on the recommendation to set goals for municipal utilities (who had wanted the Commission to leave it up to local decisions), but also gets to the heart of the  matter with this insightful explanation, “Measuring conservation costs is complicated by the fact that successful conservation, even if expensive up front, can delay or eliminate the need to build new power plants, saving utilities and customers hundreds of millions of dollars in construction costs.” The article quotes from this blog post as well.

+ The South Florida Sun Sentinel answers the question, “If customers of Florida Power & Light use less power, would they pay less?” The point-counterpoint in the article pits George Cavros, of Natural Resources Defense Council (George also consults for SACE) against FPL spokesman Mayco Villafana. Cavros makes the point that high levels of efficiency will lower total costs. Villafana responds that if you do that, then some people won’t take advantage of the opportunities to save energy using the utilities’ efficiency programs, and they might face higher energy costs as a result. In the trade, that’s what’s often called the “no winners test” – we can’t help people out because someone might be harmed.

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