Advanced Energy Perspectives

Energy Efficiency Delivers Huge Savings for Pennsylvanians. But Some Big Energy Users Want a Free Ride.

Posted by Daniel Bloom

Apr 20, 2017 10:46:26 AM

    

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Pennsylvania’s landmark energy efficiency law – known as Act 129 – continues to deliver huge electricity savings for the Commonwealth’s residents and businesses. In its most recent report on Act 129, the Public Utility Commission’s (PUC) Statewide Evaluator found that residential, commercial, and industrial consumers saved $2.2 billion in the last three years alone. So why the repeated – and so far failed – attempts to jam through legislation that would cripple the Keystone State’s energy efficiency efforts?

Under Phase II of Act 129, from June 2013 to May 2016, more than 80 energy efficiency and conservation programs offered by seven Pennsylvania utilities saved enough electricity to power 330,000 households per year, the Statewide Evaluator found. While Act 129 energy efficiency programs have been saving Pennsylvanians money, reducing energy demand and offsetting costly new power plant investments, a select few companies in the Northeastern part of the state continue to look for a free ride, pushing to get an opt-out for the state’s largest commercial and industrial energy users. Sen. Lisa Boscola (D-District 18) has led this charge for the past two years, on behalf of companies such as Air Products and ALCOA, and she is expected soon to reintroduce her bill to free large commercial and industrial companies from their statutory obligation to contribute funds to Act 129 programs, as all other businesses and households are required to do.

Just what is it these companies want to opt out of? Since Act 129 was implemented in 2009, utility programs authorized under the law have been overwhelmingly cost-effective. During Phase II, Act 129 programs delivered $1.71 in benefits for every dollar invested in energy efficiency and saved 524 MW of electric generating capacity, which is equivalent to a $500 million power plant. Not only have the state’s utilities run cost-effective programs that save Pennsylvanians money, but every one of them has exceeded its energy savings goals, according to the Statewide Evaluator report.

Sen. Boscola’s opt-out bill would upend the success achieved under Act 129. Based on the 2016 version, Senate Bill 805, the bill would allow some of Pennsylvania’s largest companies to withdraw their contributions to a funding pool that finances energy efficiency upgrades for homes and commercial facilities, including their own. In fact, commercial and industrial customers benefited from nearly 50% of the 524 MW of electric capacity saved in Phase II.

Allowing the largest electricity customers in the state to pull out of Act 129 will saddle the remaining small businesses and households with disproportionate responsibility for meeting the law’s energy conservation targets. Those targets vary by utility, ranging from 2.6% to 5% of annual retail electricity sales in Phase III, which runs through 2021.

What’s at stake in meeting those targets is not just customer savings but jobs and the economy. According to the U.S. Department of Energy, Pennsylvania is home to more than 62,000 energy efficiency jobs. Energy efficiency products and services support jobs in manufacturing, construction, craft trades, engineering, architecture, software, and finance. Despite the ups and downs of Pennsylvania’s economy, the energy efficiency sector has seen an average annual job growth rate of 7.5% over the past seven years.

Fact is, the full impact of this job-killing bill remains unknown because it has never been subjected to any sort of scrutiny. Last year, the bill passed the Senate without a single public hearing, without any independent economic analysis, and without opportunity for public and expert input. This, even though the legislation was first introduced in May 2015. 

This is no time to pull the rug out from under Pennsylvania’s successful energy efficiency efforts. Phase III of Act 129, which began in June 2016, is expected to bring billions in savings to the Commonwealth, on top of $6.4 billion in savings achieved under Phase I and II. The PUC has also initiated a proceeding on alternative ratemaking methodologies to investigate new compensation methods to make the state’s investor-owned utilities full partners in saving money for their customers, and all Pennsylvania ratepayers.

For whatever reason, some large energy users feel that Act 129 lacks value for them, and they want out. If that’s the case, they need to bring those concerns to the PUC, not the legislature. If those concerns are found to be legitimate, the PUC should find ways to better tailor the program to meet these companies’ needs, without depriving other customers of the funds needed to support energy efficiency investments that can lower their electricity bills as well. If the benefits of energy efficiency are to be provided to all, all need to stay in Act 129, not drop out.

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Topics: State Policy Update

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