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Utilities should seek energy efficiency first

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Stacy Gloss Stacy Gloss
Cathy Kunkel Cathy Kunkel

Stacy Gloss is project manager for Energy Efficient West Virginia, a project of WV-CAG. Cathy Kunkel is president of Kunkel Energy Research and consultant to WV-CAG.

It may seem odd for electric utilities to offer energy efficiency programs — after all, they are in the business of selling electricity. However, from a customer's standpoint, it makes a lot of sense. What we pay to the electric company reflects the utility's costs of generating electricity or buying it from other generators. If the utility can find cheaper sources to generate electricity, those savings are passed through to their customers. Utilities around the country have found that it is cheaper to invest in saving electricity than it is to generate that same amount of electricity. 

West Virginia's electric utility companies have just begun to invest in energy efficiency over the past few years. Mon Power and Potomac Edison, FirstEnergy's subsidiaries in West Virginia, have been ordered by the Public Service Commission to submit, on or before Sept. 1, their plan for the next phase of their energy efficiency program implementation in West Virginia.

Over time, the savings from energy efficiency programs can really add up. In the Pacific Northwest, for example, energy efficiency has met half of the growth in electric demand that otherwise would have occurred since 1980, and there is still plenty of untapped potential. In other words, utilities in that region have avoided the need to build about 5,400 MW of generating capacity — the size of nearly two John Amos power plants, for comparison. The savings achieved by avoiding the cost of new generation are spread among all utility customers. 

Utilities can invest in energy efficiency at a cost around 2 to 3 cents per kilowatt-hour saved, which is less than half the cost of building a new power plant. Energy efficiency investments are also less expensive than generating electricity from existing power plants. Here in West Virginia, Mon Power and Potomac Edison propose to purchase the Harrison plant. where electricity generation costs an estimated 7.4 cents per kWh. 

Utilities can invest in energy efficiency in many ways. In Ohio, for example, American Electric Power offers more than a dozen different programs that range across residential, commercial and industrial customers. A handful of examples include recycling old, inefficient refrigerators and freezers at no cost; providing low-cost home energy assessments with rebates for improvements; providing businesses with incentives for more efficient lighting, HVAC, motors, food processing equipment and refrigeration; and providing training and technical assistance for large industrial customers.

In West Virginia, Mon Power and Potomac Edison began offering two energy efficiency programs in 2012. Only low-income residents may qualify for a program that provides free installation of CFLs, faucet aerators, low-flow shower heads and possible refrigerator replacement. Businesses can apply for incentives for more efficient lighting. It's a pretty bare bones set of programs when compared to what utilities are offering in other states. 

In its order approving the utilities' efficiency programs in 2011, the Public Service Commission stated that it was "not overly impressed" with the utilities' proposal and the commission ordered the utility to file a "Phase II" plan by Sept. 1 of this year. The commission also ordered Mon Power and Potomac Edison to convene stakeholder meetings prior to the Sept. 1 filing. 

West Virginia Citizen Action Group is one stakeholder group participating in this process. WV-CAG has argued, in the context of Mon Power and Potomac Edison's proposal to purchase the Harrison power plant, that utility customers would benefit by greater utility investments in energy efficiency and that the utility should have considered expanded investments in energy efficiency as part of its planning for meeting its long-term resource needs. WV-CAG believes that utility customers would spend less money on their electric bills with a strong energy efficiency program resembling programs of American Electric Power and FirstEnergy subsidiaries in Maryland, Ohio and Pennsylvania. WV-CAG's recommendation is for the utilities to be required to adopt targets for ramping up their energy efficiency program, then issue a request for proposals from a more experienced third-party administrator whose core business is designing and implementing energy efficiency programs. There's no need to reinvent the wheel when it comes to common practices in energy efficiency program delivery in the electric utility industry across the U.S. 

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