Utilities Shouldn't Abandon Programs
oo many electric utilities are abandoning programs to help their consumers save energy and save money," said Howard Geller, Executive Director of the American Council for an Energy-Efficient Economy (ACEEE). Commenting on a new study, Geller called for actions to reverse the slide in investment in energy-saving programs and technologies. "As the production of electricity gets more competitive," Geller noted, "there is a race to the bottom as many utilities slash their expenditures on energy efficiency, renewable energy development, and assistance to low-income households."
ACEEE applauds the Environmental Working Group and World Wildlife Fund for highlighting a troubling trend -- deep cuts in electric utility support for energy efficiency programs. The nearly 50% cut in funding for these programs nationwide in the past five years means higher energy bills for consumers and more pollution from power plants, as the Unplugged report points out.
But this trend need not and should not continue. "By adopting 'public benefits programs' in conjunction with utility restructuring, states and the federal government can revive utility energy efficiency programs, thereby benefiting consumers, businesses and the environment," Geller said. Public benefits programs, funded by a small surcharge on all electricity sales, typically support energy efficiency efforts, renewable energy development, other R&D, and assistance to low-income households. Without explicit adoption of public benefits programs, all of these areas will suffer as competition increases in the utility industry.
Two recent ACEEE reports document the critical role that public benefits programs can play. One report, An Updated Status Report on Public Benefits Programs in an Evolving Electric Utility Industry, reviews the status of utility restructuring and public benefits programs in the 50 states. It finds that of the 20 states that have acted on restructuring (via legislation, utility commission order, or regional action), 16 states have adopted public benefits programs that support energy efficiency efforts. However, the size, scope, and quality of these programs varies considerably among states. States such as California, Massachusetts, Connecticut, Rhode Island, and Vermont are devoting one to three percent of total utility revenues to maintain comprehensive and effective energy efficiency efforts. Other states, such as Illinois and New York, are devoting significantly less money to improving energy efficiency.
"Because not all states are adopting public benefits programs and because some state like Illinois are adopting minimal programs, federal direction is needed to ensure that all states carry out adequate public benefits activities as utility industry restructuring unfolds. However, the detailed design and implementation of these programs should be left up to the states," Geller continued.
The Clinton Administration's utility restructuring plan would do this by creating a $3 billion per year public benefits trust fund. This fund would provide matching dollars for state-based public benefits activities. "The Administration's public benefits proposal could triple or quadruple utility funding for energy efficiency programs nationwide compared to actual funding as of 1997," said Geller. ACEEE strongly endorses this proposal and urges members of Congress to include it in any utility restructuring bill introduced in the 106th Congress.
Another recent ACEEE report, Approaching the Kyoto Targets: Five Key Strategies for the United States, analyzes the potential economic and emissions benefits of the Administration's public benefits proposal as well as four other major energy efficiency initiatives. ACEEE estimates that the public benefits trust fund by itself could save consumers $40 billion net (energy bill savings minus the cost of energy efficiency measures) while cutting U.S. carbon emissions by nearly 70 million metric tons in 2010.
All five energy efficiency initiatives proposed and analyzed in the ACEEE report could cut U.S. carbon emissions in 2010 by 310 million tons per year -- over 60 percent of the carbon emissions reduction necessary for meeting our Kyoto Protocol target. The initiatives include policies for increasing appliance efficiency, vehicle efficiency, power plant efficiency, and stimulating greater use of combined heat and power (cogeneration) systems, in addition to the public benefits trust fund. ACEEE estimates that these five initiatives could save consumers over $160 billion during the life of efficiency improvements made during 1999-2010, in addition to the substantial emissions reduction.
"Utility investment in well-designed energy efficiency programs can help all customers save money and minimize the air pollution they cause," Geller said. "But decisive actions--like the establishment of a national public benefits fund--are needed to serve the public interest in an increasingly competitive electricity marketplace."
For copies of An Updated Status Report on Public Benefits Programs in an Evolving Electric Utility Industry or Approaching the Kyoto Targets: Five Key Strategies for the United States, contact the ACEEE publications office at 202-429-0063 or e-mail firstname.lastname@example.org.
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