by: Eric Skrmetta, Chairman, Louisiana Public Service Commission
March 13, 2013
A recent opinion written in Forbes.com attacked the Louisiana Public Service Commission (LPSC) for overturning the energy efficiency (EE) program that was first voted into place by the LPSC in December 2012. The article published on March 3, 2013 stated, Forty six states have implemented energy efficiency programs similar to the one rejected by Louisiana’s PSC.”
This could well be true. Since adoption though, most of the 46 states have now realized that these programs will cost more than predicted or expected, and the costs of these programs are directly passed along to the consumer and included on each person’s utility bill. Accordingly, many of these states are now working to reduce these programs due to these higher than predicted costs.
The author used an analogy to support his opinion on energy efficiency. He wrote, “Consider my new drying machine. Last year, I replaced the dinosaur-era clothes dryer I had inherited from a previous owner of my home in southwestern Connecticut. The new drying machine cost me about $350 but also reduced my monthly electric bills fell by about $60. In other words, I saved enough money on my utility bills to pay for my new clothes dryer in only six months.”
Congratulations to the author, as that is exactly what most people do. Folks buy appliances that save them money. And they do it all the time without a government program telling them to do it or mandating their participation.
The author also noted, “The DOE’s arithmetic concludes that every dollar spent on energy efficiency creates $0.49 more economic activity than every dollar spent on an electric bill creates in local communities. This makes sense to me and 46 other U.S. states.” That is correct. Every penny you save on any expenditure allows you to spend it on something else of your choice. And every dollar less a consumer spends on his utility bill, on a program that has become suspect, is another dollar saved by the consumers to spend as they choose, not by government mandate.
We should note that the author of the article is William Pentland, Senior Director of Market Development atClearEdge Power, 195 Governors Hwy, South Windsor, CT 06074(860) 727- 2200 | Main: 877-CLR-EDGE (257-3343). Mr. Pentland failed to note that he is also associated with ClearEdge Power. ClearEdge Power is delivering “smart” energy solutions today to improve Energy Efficiency. I wonder why they would be so focused on getting more expensive programs passed into law? I would hazard a guess that they have a dog in the hunt.
Not surprising is that, according to Eric Wesoff of greentechmedia.com, “ClearEdge recently received $2.8 million from the Federal DOE’s Office of Energy Efficiency and Renewable Energy – Fuel Cell Technologies Program to deploy fuel cells in a variety of commercial buildings.” “… the money is intended to defray the upfront cost of the units.” So, the Fed subsidized this transaction, through a federal Energy Efficiency program.
Casey DeMoss Roberts, of The Alliance for Affordable Energy, made the recent comment on nola.com: “What Commissioner Skrmetta did to repeal the energy efficiency law was closed, suspicious, and excluded the public.” Clearly the sour grapes eliminates the facts that the entire process was open for years, numerous comments were made, testimony was taken, and questionable reports were generated all in public. There is nothing “suspicious” or “exclusive” about a previously announced statement that the issue would be challenged in the future. The result is not to avoid an EE policy, but it is to have one that makes sense and is not cluttered by questionable reports, actions and administration.
The EE program that the LPSC approved in December 2012 was proposed through a motion, previously undistributed to the member Commissioners until the time of the vote, except for the Commissioner making the motion. The motion was even made before the contract consultant that was hired by the commission had completed his study of EE programs in other states. The December motion was, in my opinion, railroaded through process and I chose to vote for it; and then publicly stated that I voted for the motion so that, under Roberts Rules of Order, I would be able to bring this matter up again when it would be possible to challenge the EE policy in the future in order to obtain a more meaningful option.
By way of illustration, let’s review what the former LPSC EE policy would have created:
- A bureaucracy spending thirty million dollars ($30,000,000.00) of ratepayer money to be spent over the next four years for unspecific purposes for a “Phase 1” program. The money would be spent to hire third party administrators who would then develop programs on how to spend money on EE through unknown mechanisms. That money had to be paid for by rate payers and would have appeared as an additional charge on consumers’ bills. That was only Phase 1, and there is no knowing how many other phases would be sought to support the groups seeking to manage these poorly developed programs.
- These third party administrators would have selected high efficiency appliances to advertise through your utility bill. I personally question how and under what circumstances these third party administrators were going to “solicit” manufacturers to be selected for the approved list. I find this aspect capable of breeding inherent conflicts of interest at the third party administrator’s level.
- Please note that participation in this program was mandatory! That is, unless you are an industrial user, which were exempt from the EE policy. So users of 78% of the state’s electricity output did not have to participate in, or pay for, the EE policy. Representation of industrial users in other jurisdictions can create conflicts of interest.
So, as a result of the question of potential conflicts having been so clearly raised at that point, all consultants of the LPSC now have to sign a statement under oath that they have no conflict in representing the LPSC.
The LPSC was referenced in the Forbes article as “Luddites” (“Opponents of technological progress.”) Nothing could be further from the truth. What is true is the LPSC is positioned as a watchdog for consumers and exists in part to identify ways that some groups use to try to fleece consumers.
In any future development of an energy efficiency policy in Louisiana there are factors the commission may want to include:
- The program would be voluntary.
- The program would encourage participation from the industrial sector as they consume 78% of the electricity.
- Each utility should manage its own EE policy and save Louisiana ratepayers tens of millions of dollars in the process by eliminating special interest groups from sticking their gob in the trough containing ratepayer money.
- Encourage utilities to take meaningful action to assist residential users in the task of weatherizing homes and educating the public in ways to save electricity. Utilities should bear this cost, not ratepayers.
It’s difficult to understand how groups who seek to make energy affordable for consumers want to work in ways that actually cost consumers more money on their utility bills. As a Commissioner, I am suspect of groups seeking to manage an EE policy when that policy should be dealt with by the utility, at its expense. There is room in the future for an improved EE policy for Louisiana. But, we need an EE policy free of third party conflicts of interest and one that helps reduce the need for future electrical infrastructure, and one that truly helps helping folks save money. I am confident we will get onto this work in due time, but in a way that is reasonable and untainted by financial gain for third party administrators, and in the public interest.