Utilities Cutting Back on Energy Efficiency Programs

As the cost of creating new generation has become more expensive, and as it has also become more difficult to site new generation (especially coal and nuclear), more utilities have focused on trying to reduce energy demand. The idea: If they can reduce demand, then the need to build new generation can also be reduced.

One of the most widespread and successful initiatives, which began to gain traction over 30 years ago, has been for utilities to set up energy efficiency programs, including consulting services and rebates for their residential, commercial and industrial customers.

These days, however, a few utilities are starting to think that these programs may be going too far. As they experience declining loads and revenues from the impact of these programs, and as more and more customers opt for customer-sited generation (especially rooftop solar), utilities question whether they should continue to invest resources to help customers become even more energy-efficient, the results of which would allow customers to reduce their utility bills even more, and thus reduce loads and revenues for the utilities even more.

Recently, two Kentucky utilities (Louisville Gas and Electric Company and Kentucky Utilities Company) announced that they are petitioning the Kentucky Public Service Commission to allow many of their energy efficiency programs to expire at the end of 2018. The programs include on-site home energy analyses, online home energy analyses, refrigerator and freezer recycling, business facility upgrade rebates, and high-efficiency appliance rebates.

"The programs were designed to help change customers' behavior in regards to using energy more wisely," said David Huff, director of energy efficiency and emerging technologies for the two utilities (which are owned by PPL Corporation). "Through their combined use of more energy-efficient appliances, devices, and lighting in homes and businesses, customers have saved money and energy." He added, "Because of a variety of factors that include the abundance of more energy-efficient appliances, devices, and lighting in homes and businesses, some of the existing programs are no longer cost-effective."

Other utilities looking to cut back on such programs include the Tennessee Valley Authority, Tucson Electric Power and Arizona Public Service. The concern for electrical contractors: These scalebacks can cut into their work. Some lighting and solar contractors, for example, quoted in an article in the Arizona Daily Star, noted that their work was being negatively affected because of cutbacks on energy efficiency programs at Tucson Electric Power.

But these measures may just be the start. The White House is looking at ways to scrap or significantly reduce a number of energy efficiency programs, including Energy Star, the Low Income Home Energy Assistance Program and the Weatherization Assistance Program, which would reduce or eliminate federal dollars for these initiatives.

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