Multiple New Reports Show Energy Efficiency Can Save Texas Businesses and Families More — Much Less Costly Than New Electric Power Sources

Press Release Contact:
Tod Wickersham 512 680-4379
Cyrus Reed 512-740-4086

Austin – The Texas Coalition for Water, Energy and Economic Security, a coalition of consumer, energy efficiency, church groups, business interests and environmental organizations, noted that filings this month with the Public Utility Commission of Texas indicated that 10 investor-owned transmission and distribution utilities reduced over 415 megawatts (MW) of peak electric demand in 2013, while saving Texas consumers nearly 550,000 megawatt hours (MWh) of energy through energy efficiency programs. The utilities reported that their 2014 program offerings are expected to produce a similar, but slightly lower amount of additional peak energy demand reduction and energy savings.

One MW is enough to power about 200 homes during periods when electric use is highest and about 500 homes during mild weather when less electricity is being consumed.

Furthermore, the 10 utilities only spent $136 million on these programs in 2013, meaning that the average cost per kilowatt of demand reduced was $328 and the average cost per kilowatt hour (kWh) saved was less than 3 cents per kWh, based on the 11-year average lifespan of the programs. Instead of the average home/business having to pay 8 cent to 12 cent for a kWh, these energy efficiency programs enabled the average home/business to avoid using that energy at a cost of less than 3 cents per kWh, while also reducing peak demand at a fraction of the cost to build new generation to meet that peak demand.

The utility reports confirm data from two recent national reports from the American Council for an Energy Efficient Economy and the Lawrence Berkeley National Laboratory that found that statewide utility energy efficiency programs continue to save energy and peak demand at a fraction of the price of generating additional electricity through traditional means. At about three cents per kilowatt hour, Texas programs are in the middle of the cost of programs throughout the nation.

“Year after year, these effective energy efficiency programs demonstrate that they help Texas businesses and families significantly reduce their monthly energy bills, but the PUC has capped the ability of utilities to help their customers realize these savings,” said Tod Wickersham, a business consultant with Beneficial Results LLC. “Now is the time for the Legislature and the PUC to remove the program restrictions that prevent further lowering of Texans’ electricity bills.”

“Once again, the utility energy efficiency programs continue to be a great value for Texas consumers, helping to reduce energy costs while helping meet energy demand through weatherization for working Texans, incentives for green homes, better windows, better air conditioners, better pool pumps and better insulation, as well as demand response to reduce loads during periods of peak demand,” said Cyrus Reed, Chapter Conservation Director of the Lone Star Chapter of the Sierra Club. “The average cost of a peak kilowatt reduced was much less than would be required to build a new power plant, while the average kilowatt hour of energy saved over its lifetime was far lower than the average cost for the same amount of energy that would be generated by a traditional power plant.”

“Our coalition wants to highlight the efforts of larger utilities like Oncor, American Electric Power and Centerpoint, but even smaller utilities like El Paso Electric and Texas-New Mexico Power exceeded their required goals established by statute and the Public Utility Commission” said Karen Hadden, director of the Sustainable Energy and Economic Development (SEED) Coalition. ”In all, only two smaller rural utilities – Sharyland and Xcel – fell short of their demand or energy savings goal, and in both cases, there were mitigating circumstances. Both expect to meet their goals in 2014, according to their filed reports.”

While the utilities’ energy efficiency programs continued to grow slightly in 2013, expected demand reduction and energy savings is actually expected to shrink slightly to about 350 MWs of demand reduction and 545,000 MW hours, in the next two years. Two factors are constricting the ability for energy efficiency to realize its full potential.

First, the Public Utility Commission has set strict cost restrictions on the amount of money utilities are allowed to charge the public for the programs, even though the programs themselves must be shown to be cost-effective and save more money than they cost. Thus, utilities can not raise their “Energy Efficiency Cost Recovery Factor” above the cap – except by inflation – set by the PUC in 2012 to pay for the programs, in essence putting an upper limit on the amount of peak demand and energy savings they can help customers achieve.

Second, a controversial rule established by the PUC in 2012 allows commercial customers who are connected to an industrial facility to opt out of the programs, which means they neither pay for nor participate in any of the programs, even though they benefit, along with all customers, from lower overall prices and increased reliability because of reduced demand and system benefits. However, as the numbers of participants is lowered, the utility budgets and goals for the programs have shrunk.

“Instead of expanding these cost-effective programs – which are already required to be evaluated and verified as cost-effective each year – the PUC is effectively placing a straight jacket on them through artificially constricted cost caps and an opt-out for some commercial customers who clearly benefit from and should be part of the program,” noted Tom “Smitty” Smith, director of Public Citizen’s Texas Office .

Wickersham said, “At a time when the Public Utility Commission has been concerned with how to support Texas’ robust economic growth and keep the lights on, policy makers should consider expanding these cost effective and valuable programs rather than choking them. The Commission and the Legislature should consider raising the utilities’ energy efficiency goal from less than one-half of one percent of peak demand to one percent of peak demand by 2018, remove, or at the very least increase, existing cost caps, and get more customers to participate in the programs, further benefiting all retail electric customers.”

Attachments include two charts and two tables.

Chart 1. Range of Levelized Costs of Energy by Energy Source
Chart 2. Average Capital Costs of Energy Resources
Table 1. Statewide Utility Energy Efficiency Goals, Budgets, Savings and Program Costs
Table 2. Individual Utility Energy Efficiency Goals, Budgets, Savings and Program Costs.

Also see new ACEEE Report: Energy Efficiency Resource Standards: A New Progress Report on State Experience



3 responses to “Multiple New Reports Show Energy Efficiency Can Save Texas Businesses and Families More — Much Less Costly Than New Electric Power Sources

  1. Frank Jamieson

    Ok, please everyone…
    Major generating companies are reducing capacity at the time they have asked to be paid for standby capacity?

    Reduction of lower cost generation when new efficient increased capacity costs more which could mean higher future cost & consumer billing?

    If the capacity is removed ….. Is there an argument to continue to raise consumer billed revenues?

    PUC has allowed the boys too crease wholesale priced revue I by 300%.
    Now, the boys want to be paid for standby capacity generation…..
    Now they have reduced peak demand capacity (could be coal fueled) ….

    Please journalist, connect the dots for me.

  2. Frank Jamieson

    It appears that our comments have been removed?

  3. Sorry didn’t see that you commented. Please send it again!

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