CALIF MANDATES MARKET-BASED EFFICIENCY

In light of the UN expert's call for mandatory efficiency standards (see above), it should be interesting to see how California's market-based plan turns out. California's idea is to give the utilities a reason to partner with consumers.

A third concept would be rewarding the utilities for installing efficiency. The utilities cover purchase and instalation for new appliances, thermostats, bulbs, insulation, weatherization, etc., and then bill for the ugrades, earning what they otherwise would for larger amounts of energy sold.

Energy Efficiency Plan Will Save Californians Billions, Says NRDC; Utilities Get New Incentives to Help Customers Save Energy, Reduce Global Warming Pollution
Craig Noble, September 20, 2007 (Natural Resources Defense Council press release)

WHO
The California Public Utilities Commission (CPUC), California investor-owned utilities (Pacific Gas & Electric, Southern California Edison, San Diego Gas & Electric, Southern California Gas), Natural Resources Defense Council (NRDC)

NRDC calculation: Utilities, who partner with the consumers, continue to reap rewards from Public Goods Charges (PGC) paid by consumers even as consumer savings rise. (click to enlarge)

WHAT
The CPUC has given unanimous approval to a plan to reward the utilities for maximizing customer efficiency, incentivizing what would otherwise be self-defeating: getting customers to buy less of the utilities’ goods (power).

WHEN
The program will run for a 3-year cycle, 2006-2008.

WHERE
Applies in California.

WHY
- Efficiency, more work from less energy, is a cornerstone of the state’s Global Warming Solutions Act, which requires California to cut greenhouse gas (GHG) emissions to 1990 levels by 2020.
- The plan: Each utility can earn up to $150 million (before taxes) for exceeding specified efficiency levels and pay the same in fines for falling too low in efficiencies.
- Consumers can save $2 billion if the utilities get their rewards, profiting enormously on the bonuses they pay the utilities.
- CPUC will require the utilities to design and implement programs such as rebates for the purchase of energy-efficient appliances (air conditioners, clothes washers, furnaces,water heaters).
- California and CPUC already require the utilities to implement efficiencies when that is cheaper than building a new power plant.
- This measure follows on California’s “decoupling” program which separates revenues from total energy use.

More savings, despite public goods charges from which utilities earn their due for driving efficiencies. (click to enlarge)

QUOTES
- Audrey Chang, staff scientist, NRDC: “The commission’s plan is a common sense approach that rewards utilities if they do a good job helping consumers save energy…It makes it in the utilities’ best interest to help their customers use less energy, reducing their energy bills and cutting global warming pollution.”
- Chang: “This decision will put more cash in Californians’ pocketbooks and less pollution in the air we breathe…”