Public Service Commission approves SCE&G’s energy efficiency programs

Guest Blog | December 3, 2013 | Press Releases

Columbia, S.C. – Last week, the South Carolina Public Service Commission affirmed its support for energy efficiency by approving the South Carolina Electric & Gas (SCE&G) company’s energy efficiency programs and a financial incentive for the utility to pursue energy efficiency.

The utility plans to offer 11 energy efficiency programs for residential and commercial customers, all of which will create energy savings at a lower cost than energy generated by power plants. Through these programs, SCE&G anticipates that it will save 378 GWh and 75 MW over three years of program implementation. That is enough electricity to power about 27,000 households, and enough power to displace a small natural gas combustion turbine.

Energy efficiency keeps costs down for all customers, and is the best way to reduce energy waste, all while decreasing the need for utilities like SCE&G to run power plants responsible for producing air and water pollution. “The energy efficiency programs that SCE&G provides to its customers is an excellent start to reducing customer bills and keeping electric costs down in South Carolina,” said Natalie Mims, Energy Efficiency Director for Southern Alliance for Clean Energy (SACE).

Mims also noted, “SCE&G’s efficiency programs, while valuable, are modest compared to what national leaders on energy efficiency are achieving.” Leading states use energy efficiency to meet more than 2% of their electricity needs each year, and 14 states in the U.S. meet more than 1% of their electricity needs with efficiency. SCE&G’s programs, on the other hand, are expected to provide only 0.5% of the annual electricity needs for SCE&G customers.

The Commission also allowed SCE&G to continue to receive a financial incentive for pursuing energy efficiency. The utility will continue to receive 6% of the benefits of energy efficiency, with customers receiving the remaining benefits of the resource. The utility will also be permitted to recover its costs on energy efficiency programs over the course of five years, and amortize the program costs at the Company’s weighted average cost of capital.

SACE and the South Carolina Coastal Conservation League (CCL) support the utility’s ability to receive an incentive of 6% of the program benefits, but disagree with the use of SCE&G’s weighted average cost of capital in the recovery of energy efficiency program costs. Allowing the utility to earn a percentage of its program costs effectively creates an additional, and unnecessary incentive.

“We support SCE&G receiving a fair incentive to encourage them to pursue energy efficiency,” said Kenneth Sercy, Utility Regulation Specialist at South Carolina Coastal Conservation League. “However, receiving an incentive and amortizing program costs at the utility’s weighted average cost of capital may create mixed signals for the Company.”

The Commission also allowed large commercial and industrial customers to opt out of SCE&G’s energy efficiency programs, and therefore receive the benefits of the programs without paying the costs.

“While we applaud the Commission’s continued support for energy efficiency, we are disappointed that industrial and commercial customers are allowed to opt out of the efficiency programs without providing any verification that they are implementing their own efficiency measures,” said Blan Holman, Managing Attorney at the Southern Environmental Law Center.

The utility will implement its energy efficiency programs for the next six years, providing consistent program offerings for customers for years to come. In the utility’s annual cost filing, the Commission supported SACE and CCL’s efforts by requiring the Company to respond to the recommendations that these organizations made in their testimony.

“These programs offer valuable energy efficiency savings for customers, and I am glad to see that the utility continue to work with its customers to save money as winter comes along,” said Mims.