This past month, Texas’ investor-owned transmission and distribution utilities filed their annual energy efficiency reports with the Public Utility Commission of Texas (PUC) reporting on the savings produced through the state’s energy efficiency program. The results demonstrated that the programs are reaching their potential, but much more can be done.
The filings indicated that the 10 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.
“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 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.”
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.
The Public Utility Commission 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.
The second factor is the result of 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.
“It’s time for the PUC and the Legislature to revisit our cheapest form of meeting our electrical demand, and raise our energy efficiency goals to at least 1 percent of peak demand, raise or eliminate the artificial cost caps and require all commercial and residential customers to participate in the programs,” noted Reed.