Energy discount program rapped

An unusual alliance between consumer groups, environmentalists, privately owned utility corporations and the major manufacturers narrowly pushed through a program — over the strenuous objections of two of the five regulators — that could provide discounts for many home improvements.

For instance, homeowners following prescribed — and as yet unwritten — procedures could knock $500 to $1,000 off the purchase of an air conditioner. The goal of the program is to reduce the amount of energy consumers need by using what they buy more efficiently.

“The passage of these rules,” said Jordan Macha, the Gulf States representative of the Sierra Club, a national group pushing environmental causes, “allows Louisiana families to take advantage of a clean energy economy. They’ll be able to reduce their monthly bill by reducing their need for base-load power, and that will reduce the need to build a new power plant.”

But PSC Commissioner Eric Skrmetta, of Metairie, called that theory “total garbage” when it was explained at a Dec. 12 regulatory hearing on the issue. He questioned why most of Louisiana’s 2 million or so electricity customers would have to pay, essentially, to advertise sellers of energy-efficient appliances and services.

A surcharge will be added to the monthly bills of most electricity customers, though not the major manufacturers who were exempted. The argument was that big plants along the Mississippi River, which use enormous amounts of power, already have energy efficiency programs.

The exact charges have not been established, but the program is expected to cost about $25 million to $30 million, according to PSC filings. The typical residential customer, using about 1,300 kilowatt hours of electricity per month, would see a 40-to-60-cents increase on their monthly bills, said Philip Hayet, a utilities engineer based in Roswell, Ga., who served as the PSC’s consultant on the issue.

PSC Commissioner Clyde Holloway, of Forest Hill, said he did not want another charge added onto customer bills.

Down the road, once more-efficient use has knocked down the amount of electricity sold, the Louisiana Public Service Commission order will allow the privately owned utilities to recoup their lost sales in the form of another surcharge. The utilities would have to show the drop in electricity usage, but the exact method for translating that into the rate structure has not been established yet.

“Whether it’s valid or not, this will give us 14 months to a couple years to find out,” said PSC Commissioner Jimmy Field, of Baton Rouge, about the first phase of what is being called “Quick Start” program. His support for creating the state “Energy Efficiency Standard” was the last public vote he cast as the utility regulator representing the Baton Rouge and Lafayette areas. Field retires at the end of the year after 16 years on the PSC.

“If energy efficiency really works, they’ll see a downward trend in usage. Right now, it’s going up,” Field said in an interview.

Any costs on the monthly bill would be offset by the savings from using less power, he said.

The program has not been set up but would probably follow models established in New Orleans and Arkansas a few years ago, said Keith Wood, who as Entergy’s manager of regulatory affairs will handle the planning for the utilities’ two Louisiana subsidiaries that service about half of the state’s electricity customers.

Generally, a homeowner would hire an auditor to come to his house and review the structure’s energy efficiency, Wood said. The auditor would present a list of improvements, such as replacing windows, adding more insulation, upgrading the air conditioning system. The homeowner then would receive rebates for the work or appliances he chose, Wood said.

“The thinking around the ‘Quick Start’ phase is that we’ll look for the most accessible, low-hanging fruit for the first couple years. Then based on those findings, there will be more robust planning and rulemaking,” Wood said, adding that after developing the program with the PSC and customers, the more-comprehensive program will roll out in 2014.

Arkansas had a three-year “Quick Start” program and is entering the second year of its comprehensive program, Wood said. Arkansas customers are using about 40,000 megawatt hours less power, he said.

That’s not a lot. Entergy’s two Louisiana subsidiaries, for instance, sold 4.2 million megawatt hours in October, according to Entergy reports. During peak summer months, the amount or power used is more. Entergy sold 5.1 million megawatt hours in July, for instance.

“Even when you’re looking at some of the more aggressive jurisdictions, you’re talking on the order of 1 to 2 percent avoided power,” Wood said. “But, over time, you could make a significant amount of impact.”

Regulatory consultant Forest Bradley-Wright, of New Orleans, agrees, saying that the energy savings eventually could offset the need to build a new power plant.

When looking at the increased demand for power needs historically, utility companies are left only with the option of building new, expensive power plants that meet not only the existing demand, but also the estimated future needs, said Bradley-Wright, who unsuccessfully ran as a Democrat for Field’s seat and consulted with the Alliance for Affordable Energy on this issue. The Alliance is a membership group based in New Orleans that advocates for consumers on utility issues.

“We now have a framework that looks at all those energy resources — traditional fossil-fuel plants, generators using renewable fuels and now energy efficiencies, that is customers operating with less waste, as alternatives to meet our future energy needs,” Bradley-Wright said.