Energy Efficiency for All

In last Sunday’s Oregonian, there’s a story on public purpose funds and the Energy Trust of Oregon and where best to invest energy efficiency dollars. Longtime readers have often heard us talk about the benefits of energy efficiency, the role public purpose funds have in acquiring energy efficiency and the improvement the Energy Trust has brought to ratepayers in getting the best bang for the buck in acquiring energy efficiency. So let’s look at some key questions.

What are public purpose funds? There’s a lot of confusion about what those funds are, what they are not and where they come from. Much of the debate over the years - and raised again recently it seems - is that these funds are “public” or “taxpayer” funds. They are not; they are ratepayer funds and, in some form or another, have always been a part of rates.

It has long been Oregon’s policy to require utilities to make investments in energy efficiency. What changed in 1999, when the legislature passed SB 1149, is that the legislature gave some specificity to the policy. The law changed so that there was at least three percent of utility revenues to be dedicated to energy efficiency (and some renewable energy development as well).

So, rather than having energy efficiency investments wrapped into rates and fluctuate wildly up and down as happened throughout the 1990s, the law required that the cost of those investments be pulled out and listed “above the line” so that consumers could see exactly how much was being dedicated to energy efficiency.

Why is that an improvement? Because investing in energy efficiency is just like buying power from any other generation source except that it’s much cheaper. It reduces our energy load and doesn’t require us to build more expensive power plants (read more about this point in the next paragraph). As we’ve said here before, the cheapest kilowatt hour is the one you don’t have to produce in the first place. So it’s better to invest a consistent amount in efficiency over an extended period of time.

What effect would diverting public purpose funds have on my power bill? If you are a customer of PGE or Pacific Power, it will raise your bill. The goal of energy efficiency programs is to gain efficiency at the lowest cost and at a cost that is significantly lower than building new power plants. If we take this funding away, we have to do one of two things. The first option would be to raise power bills to replace to replace any money that the legislature diverts, because these are still the most cost-effective investments for our future. Or the second option would be to raise rates even more to replace the energy efficiency with higher price electric generation. Even if the legislature diverts money from the Trust for energy efficiency programs at schools and government, our rates will go up, because these programs do not have the same bang for the buck as the existing programs. For example, if current programs cost 2 cents per kilowatt-hour, but the alternative programs cost 4 cents, we will cut our energy efficiency results in half.

Why is the Energy Trust of Oregon (ETO) better than what was in place before? Before the Energy Trust, the utilities managed energy efficiency programs and frankly didn’t do a very good job. The Energy Trust was established as an independent, nonprofit organization with the sole mission of getting the biggest bang for the ratepayer’s buck for energy efficiency. And that has led to remarkable successes on behalf of consumers over the years.

Is there enough accountability with the Energy Trust? There is much more accountability with the Energy Trust than there was with the programs under the utilities. The ETO’s board meetings are open to the public as are its conservation and renewable advisory councils. It is under an rigorous grant agreement with the Oregon Public Utility Commission and obligated to meet stringent benchmarks and report to the PUC on progress toward those benchmarks on a quarterly basis. ETO board members sign conflict of interest statements and are required to declare potential conflicts at their board meetings.

Should more money be going to energy efficiency in schools? The short answer is that we need more energy efficiency money for every sector of the economy - for residential customers, for small businesses, for large commercial and industrial customers and for public bodies, including schools. But rather than focusing on one sector over another, it’s important to have balance across all sectors so that everyone is benefitting, which is what the ETO tries to achieve with its equity policy.

Everyone can acknowledge that the state is in a tough financial situation. But diverting money away from residential and business energy efficiency is no way to solve those financial difficulties. In fact, as noted earlier, doing that may make the situation even worse because rates would go up since we are not reducing energy enough so we’ll have to buy more expensive power or utilities will have to raise rates to fulfill their efficiency responsibilities.

The legislature already created a stir earlier this session by diverting money from the Cultural Trust. If they attempt to divert money from the Energy Trust, constituents will have grounds to wonder if we can indeed trust the legislature.

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