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Florida Utilities Throw Shade on Energy Efficiency Programs

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During recent hearings in Florida, the state’s major utilities asked regulators to lower their energy efficiency goals to near zero over the next decade.

Under the Florida Energy Efficiency and Conservation Act (FEECA), the Florida Public Service Commission (PSC) must set conservation goals for each FEECA utility at least every five years. Seven Florida utilities are subject to FEECA: Florida Power & Light Company (FPL), Duke Energy Florida Inc. (DEF), Tampa Electric Company (TECO), Gulf Power Company (Gulf), Florida Public Utilities Company (FPUC), Orlando Utilities Commission (OUC) and Jacksonville’s public utility JEA.

Ahead of the August hearings, the utilities laid out their own goals for the next decade, and they were lower than past goals, published reports said.

“The findings of JEA’s market potential analysis indicates there are no achievable savings for energy efficiency, demand reduction, or demand side renewable energy measures for JEA,” said Donald Wucker, who manages the utility’s demand side management (DSM) portfolio. “JEA urges the commission to remain consistent with its past principles of managing upward pressure on rates and preventing cross subsidies by establishing JEA’s FEECA goals at zero, as it's done in the past.”

He reportedly said that doing so would give JEA’s board the “flexibility to determine the appropriate level of investment in non-DSM measures based on our community's needs and values.”

In written comments submitted to regulators before the hearings, FPL acknowledged that conservation is an “important aspect of every utility’s portfolio,” but said that “the importance of pursuing conservation programs must be balanced against the cost and the impact of such cost on ratepayers.” It urged regulators not to overlook rate impact as it evaluates conservation goals and programs.

Florida utilities that offer energy efficiency programs may recover their costs through rates. The utility commission’s goal is to ensure that the programs are cost effective for ratepayers.

Disagreement exists over whether conservation programs are cost effective or not.

To gauge cost effectiveness, a handful of tests are used:

The societal cost test considers a wide range of factors, including environmental impacts, and asks the question: is society as a whole better off with or without conservation programs?

The total resource cost test looks at how conservation programs will impact energy costs in general.

And the rate impact measure (RIM) test focuses on how conservation programs will impact rates.

Analysts were quoted as saying that the Florida PSC has tended to give a more weight to the rate impact measure. That may be misleading, according to some, because every time a customer uses less electricity, the utility loses revenue and counts it as a cost. The counterargument is that customers pay bills and not rates. As a result, if the rates go up but electricity usage falls, then customers are saving money.

But higher utility bills may impact for some customer groups who are less able to take advantage of efficiency programs.

For example, renters may not be able to benefit from a program. And if the landlord doesn't pay the electricity bill, then she or he may not have an incentive to invest in energy efficiency measures.

The PSC is expected to make a final decision on utility conservation goals during a conference this fall. Utilities will then use those goals to build the types of energy efficiency programs they would like to offer.

DW Keefer's picture

Thank DW for the Post!

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Matt Chester's picture
Matt Chester on Aug 23, 2019 6:39 pm GMT

The utilities in Florida are not doing a good job at instilling confidence to their ratepayers that the customer is at the center of their focus and intentions, it's no wonder there's a groundswell to move towards deregulation and competitive energy markets-- the customers are fed up

Gary Hilberg's picture
Gary Hilberg on Aug 27, 2019 2:00 pm GMT

DW - good post and a very real issue.  When many consumers do not own their residences, there is little incentive to invest in energy efficiency.  This dislocated agency also occurs in the commercial building space.  Overlay this with the utilities not wanting to reduce their revenue, there are many factors that limit energy efficiency programs.  This maybe one area where the government, in the form of the public utility commissions, should be pushing these programs as a public good.  

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