Our Perspectives on the Latest Issues
In 2008, Pennsylvania’s legislature was concerned about the impacts of rising electricity prices on ratepayers and, in response, adopted the Act 129 energy efficiency program.
Under this program, the Public Utility Commission (PUC) sets targets that are both achievable and cost-effective and electric utilities develop and implement plans to reach those targets. Consumers pay for these efficiency programs through their bills, but the programs are designed to provide more benefits than they cost.
Through Act 129, homeowners and businesses can take advantage of LED lighting, programmable thermostats, energy efficient appliances, home energy audits, and other measures at reduced prices. Sometimes, these options can end up being free for the consumer as a result. These measures also will often lower their electricity bills for years to come.
In February, the independent Statewide Evaluator (SWE) released its final report on Phase II of Act 129, which was the three-year period ending in June of 2016. They found that the program returned $1.73 in benefits for every dollar spent. That is actually a very conservative number, which doesn’t include fuel and water savings that often go hand-in-hand with electricity savings.
It also doesn’t include health and environmental benefits from avoided pollution, or what is known as wholesale price suppression, because most of our electricity is purchased at auction, lower demand means lower wholesale prices for everyone.
It’s an old saying that “the cheapest kilowatt of electricity is the one you never use,” but it remains true.
In spite of being highly cost-effective, Act 129 is in jeopardy.
It’s natural to expect that companies adopt the low-cost measures first, so it’s no surprise to see a gradual decline in the benefit to cost ratio. This problem is compounded because the Act caps investment in the program to two percent of a utility’s 2006 sales. There are plenty of cost-effective efficiency measures available, but without an adjustment for inflation, the investment in real dollars declines over time. So, while the available measures cost more, we are investing less.
We also have folks in the legislature attempting to further cripple the program by allowing certain large businesses to opt out. These businesses may have already taken advantage of the program, and they will continue to benefit from wholesale price suppression, but they would also like to have someone else pay for it.
At a time we should be investing more and not less, this would be a move in the wrong direction.
Contact your state senators and let them know that you support Act 129 and oppose attempts to let large industrial customers opt-out. Together, we can make a difference