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Who Pays for Energy Efficiency? You Do |
Who Pays for Energy Efficiency? You Do
Gary Pierce, AZ I See It/azcentral.com 4:53 p.m. MST December 9, 2014
Corporation Commissioner: We're looking at rule changes because we want to restore equity and balance.
In 2010, the Arizona Corporation Commission approved rules requiring electric utilities to reach 22 percent energy efficiency by 2020. To date, $371 million has been collected from Arizona ratepayers to fund this requirement. Now is the time to take a step back and evaluate the cost-effectiveness of the rules and ensure they are truly creating a cost savings and benefit for ratepayers.
A number of articles and editorials have been printed in the past few weeks that leave the reader with the impression that if a proposal before the Corporation Commission is approved, the energy efficiency programs offered in Arizona would go away.
Let me be clear, energy efficiency programs in Arizona are not going away. The commission recognizes energy efficiency as the least-costly energy resource for our ratepayers. And our primary responsibility is to look out for the best interests of Arizona's ratepayers.
I looked at the current rules with a few questions in mind:
-- Are the energy efficiency programs we approved working to save Arizonans money?
Yes. We found that the programs are saving money for some ratepayers, and the utilities are selling less electricity.
-- Is the current 22 percent reduction in electricity sales by 2020 an achievable and cost-effective standard for every electric utility?
Maybe yes to achievable, but no to cost-effective for everyone. The current rules require the commission to charge ratepayers for energy efficiency programs even if their utility has excess capacity. The proposed changes to the rules would give your elected commissioners the flexibility to adjust each utility's energy efficiency programs based upon the capacity needs of that utility.
The savings that some ratepayers are experiencing are not really savings. They are a cost shift.
The utility does not fund these programs, you do. There is a fee added to your utility bill that the utility collects. It uses your dollars to provide rebates and incentives to other customers, to pay for the administration and advertising of these programs, and to pay themselves a performance bonus. Those customers who take advantage of these programs save money on improvements to their home through these incentives, and they save money on their electric bill by using less electricity.
It may look like the utility would lose money due to reduced sales, but they are made whole through yet another fee added to your bill, the Lost Fixed Cost Recovery mechanism, or LFCR. Through this fee, Arizona Public Service and Tucson Electric Power have been reimbursed $18 million — at ratepayer expense.
Some have stated that if the proposed rule changes are adopted, it will result in a $9 billion windfall to the utilities. This is, at best, an off-base and ill-informed statement. At worst, it is an attempt to deceive and mislead readers to further their own political ideologies.
The truth is that no money is saved unless and until the cumulative effects of energy efficiency eliminates, or delays, the need to build a new electrical generation plant. And when that happens, it won't be a $9 billion savings.
So, who saves due to energy efficiency programs? Those customers who take advantage of the programs. What is the cost to the utility? Little or nothing. Who pays for the programs? You do. Who makes the utility whole for reduced sales? You do. Who is trying to protect you? We at the Arizona Corporation Commission.
Gary Pierce serves on the Arizona Corporation Commission. He was chairman from 2011-12.
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