March 18, 2010
Overwhelming Support for Raising Energy Efficiency Goals
The majority of comments submitted by environmental groups, utilities, retail electric providers, and consumer groups supported proposed rules published by the Public Utility Commission (PUC) to raise the energy efficiency goal to one percent of total peak demand by the end of 2014.
While virtually all of the comments supported the more aggressive goals, there were significant differences among respondents on whether or not utilities should be able to earn higher performance bonuses should they exceed the goals, whether a lost revenue adjustment should be included in the rulemaking and what kind of cap should be implemented to keep the costs of the energy efficiency programs from rising too sharply, impacting residential and commercial customers.
Supporting the Higher Goal
The vast majority of the comments supported the need to move toward higher energy efficiency goals. Currently, nine major distribution and transmission utilities must meet 20 percent of the growth in demand through energy efficiency programs, but the proposed rules would raise that amount to 50 percent of growth in demand, or one percent of total demand, whichever is higher, by 2014. Calculations indicated that the higher goal would increase energy efficiency
programs in Texas from about 130 MWs per year to nearly 550 MWs by 2014 and total expenditures from roughly $100 million in 2010 to $400 million in 2014.
In its comments, Centerpoint, the second largest wires company in Texas (behind ONCOR), supported the increase to 50 percent, but argued that the one percent demand reduction goal was significantly greater and would be difficult to meet, especially with proposed cost caps.
Other submitters, such as Reliant, a major retail electric provider, argued that the goals could be raised, but only with a cost cap limiting the average amount of the programs to $1 per Megawatt Hour, approximately the amount an average resident uses in a month. The cap proposed by Reliant, however, would be only slightly higher than most companies are currently spending, making meeting the goals potentially difficult with such a limited cap.
Other submitters, including Good Company Associates, Sierra Club, EDF, and Public Citizen, supported the increased goals, including the change to percentage of peak demand.
Cost Caps and Lost Revenue Adjustments
With the exception of the major utilities, none of the submitters supported the concept of implementing a lost revenue adjustment. The Lone Star Chapter of the Sierra Club opposed the idea, but said future legislative sessions may want to explore whether this might make sense as the goals continue to be expanded.
All of the submitters supported some sort of cost caps. While the proposed rules would set a cost cap of 300 percent of current program costs in 2014 to allow for the expanded goal, Sierra Club supported an increased cost cap of 400 percent, Centerpoint said it might need an increase of 700 percent to meet the new goals, and Reliant called for the $1 per MWh cap, roughly equivalent to 200 percent of current program costs. Other entities also called for slightly smaller cost
caps than under the currently proposed rule.
The proposed rule would allow utilities to use energy efficiency to set aside up to 10 percent of their required goal to be met by the use of solar rebates or other programs designed to encourage onsite renewable energy. Sierra Club suggested continuing to make the set-aside a voluntary program but providing an incentive bonus to those companies which actually set up such a program. Others, like the Texas Renewable Energy Industries Association, called for making the 10 % set-aside a mandatory provision.
Several entities were opposed to the increased bonuses, since they would allow up to a 40 percent increase in payments to utilities which exceeded their goals significantly. Sierra Club supported the bonuses, but suggested further conditions to make the performance bonus more rigourous, while both Reliant and a coalition of cities served by ONCOR opposed the increased bonus as overly
There were multiple comments about making the energy efficiency programs much more transparent so that the public can actually learn about how to access the programs and how contractors can also seek to take part in running the programs. The Sierra Club suggested requiring that each utility have a centralized website where their annual plans and programs are listed, and where the public can also provide comments on the programs.
Following response to the comments within the next 45 days, the PUC is expected to call for a public hearing and approve new rules for publication in May.
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