Public Utility Commission to
increase Energy Efficiency Goal
Backs off more
The Public Utility Commission released this week the
latest version of its “Energy Efficiency” rule
package, with Commissioners set to approve the rule
at its meeting on Friday, July 30th. Under the latest
version of the proposal, major “Transmission and
Distribution Utilities” (TDU) such as Oncor, American
Electric Power and Central Power and Light would
be required to meet at least 25
percent of “load
growth” in energy demand by 2012 and 30 percent
of “load growth” by 2013 and each year thereafter.
While the rule represents a slight increase from
the current requirement of 20 percent, it is a significant
step back from the PUC’s original proposal, which
called for utilities to meet a 50 percent goal by
2014. Most utilities met the 30
percent goal in 2009. The new rules should lead
to some growth in energy efficiency programs overall,
particularly if utilities want to qualify for a bonus.
Commissioner Smitherman said by eliminating the 50
percent goal the PUC would
give the Texas Legislature “at least two bites at the apple” to
see if they wanted to raise the goal to 50 percent of
load growth, or beyond, and to also evaluate the effectiveness
of the programs. Both Commissioners Nelson and Anderson
have signed onto the latest version of the rule, assuring
its adoption this Friday.
The Commissioners principal concern was
the cost of the ratepayer funded programs. Under
the energy efficiency programs, TDUs (sometimes called “wires” companies), charge a
small surcharge on commercial and residential
customers. The surcharge is collected and paid to
third-party energy efficiency companies to invest
weatherization of low-income
commercial lighting programs and
onsite solar rebates,
all designed to reduce
both peak demand and overall energy use.
Energy efficiency programs have existed since 2001. In 2007
the Texas Legislature doubled the goal from 10 percent
of the average growth in demand to 20 percent
in 2010. In 2009 the Legislature considered raising it to 50 percent in a bill that
passed both houses.
the goal requires utilities to increase the cost
of the surcharge, but the overall benefits to
consumers outweight the cost of the programs in
terms of energy savings and avoidance of running
additional generation and constructing more transmission
lines. In fact, a PUC 2009 study found
the benefits outweigh costs three-to-one.
Under the proposal published this week, utilities will
be required to meet the goal and keep the cost
of the programs under a “Cap” of $1.30 per
month per residential customer in 2012 and $1.60
in 2013. Currently, utilities are spending between
60 cents and 92 cents per customer per month on the
energy efficiency programs.
A coalition of Retail
Electric Providers (REP) called
for a $1 cap per month maximum, while utilities charged
with meeting the goals insisted the cap would limit
their ability to meet the goals. The rule proposed
for adoption appears to be a compromise between the
REP position and the TDUs request.
The Sierra Club Position
The Lone Star Chapter of Sierra Club submitted extensive
comments on the proposed rule, and while agreeing that
the 50 percent goal by 2014 was very ambitious, suggested
that the 50 percent goal could be delayed until 2015
and 2016, while allowing the program to continue to
grow over time. While agreeing that some kind of a cost
cap was needed, Sierra Club suggested a higher cap to
encourage more spending, such as $2.00 per customer
in 2012. In addition, the Sierra Club suggested adding
an incentive for those utilities which used part of
their funding for onsite solar or other renewable technology,
and encouraging utilities to work with cities and other
state agencies to coordinate energy efficiency funding.
The Sierra Club will continue to advocate for higher
goals, and better coordination of energy efficiency
funding between TDUs, municipalities and state agencies,
including advocating the creation of a “Texas
Energy Efficiency Coordinating Council.”
In addition to the Energy Efficiency Rule, the PUC
is expected to publish a proposed rule on implementation
of the 500 MW target for non-wind renewable energy resources.
Under Texas statutes, retail electric providers are
expected to meet a 2015 target for resources such as
biomass, solar and geothermal energy, but the PUC has
yet to publish rules on how those targets would be met.
Earlier this year, the PUC published a “Strawman” and
held an informational meeting to receive further comment
in June. A proposed rule is expected in September or
October according to PUC staff.