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Texas Sierra Club Lone Star Chapter State Capitol E-Report
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July 29, 2010:

  • PUC's Modest Increase in the Energy Efficiency Goal
    The state Public Utility Commission (PUC) is expected to adopt a modest increase in the energy efficiency goal for the State of Texas on Friday, July 30.
    The current proposal would require major “transmission and distribution utilities” (TDUs) – such as Oncor, American Electric Power (AEP), and Central Power and Light – to meet at least 25 percent of “load growth” in energy demand by 2012 and 30 percent by 2013 through implementation of energy efficiency measures. The rule represents a slight increase from the current requirement of 20 percent, but 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, in fact, already met the 30 percent goal in 2009, although the new rules should lead to some growth in energy efficiency programs overall, particularly if utilities want to qualify for a bonus.

    In discussing this latest proposal, PUC Chairman 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. The other two PUC Commissioners have signed onto the latest version of the rule, assuring its adoption this Friday.

    The Commissioners' principal concern was the cost of utility energy efficiency programs, which are funded by ratepayers. Under the energy efficiency programs, TDUs (sometimes called “wires” companies) place a small surcharge on commercial and residential customers. That surcharge is then collected and given out to third-party energy efficiency companies to invest in projects ranging from
    weatherization of low-income homes, to
    commercial lighting programs and even to
    onsite solar rebates,
    all designed to reduce both peak demand and overall energy use.

    While the utility energy efficiency programs have existed since 2001, the Texas Legislature in 2007 doubled the goal from 10 percent of the average growth in demand to 20 percent in 2010, and came close to raising it to 50 percent in the 2009 legislative session (the bill passed both houses in different forms but failed to make it through the process before the session ended).

    A series of studies have shown that while increasing the goal does require utilities to increase the cost of the surcharge, the overall benefits to consumers are well above the cost of the program. The benefits come from energy savings and the avoidance of running additional generation and constructing more transmission lines. In fact, a 2009 study conducted by the PUC found that the benefits outweigh costs by a three-to-one margin.

    Under the proposal published this week, utilities will be required to meet the goal while keeping 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 – which actually send bills to the public – had 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 respective positions of the retail providers and the utilities.

    The Sierra Club will continue to advocate for higher goals, and better coordination of energy efficiency funding among utilities, municipalities, and state agencies, including advocating the creation of a “Texas Energy Efficiency Coordinating Council.”
  • The State Capitol E-Report is a monthly electronic update from the Lone Star Chapter of the Sierra Club reporting on Texas environmental policy issues of statewide interest. Contact us at: lonestar.chapter@sierraclub.org ...Header photo copyright Susan Heller
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