Solution In Sight for Industrial Energy Efficiency Issue

We’ve written about CUB’s work to re-balance the amounts that various customers groups are paying for energy efficiency. Currently, industrial customers contribute a lot less toward energy efficiency investments than residential customers do.

That’s a problem because it threatens to lead to a situation where there are efficiency projects in the industrial sector that may not be able to be undertaken because there’s not enough money coming from that sector. That would mean that we would leave those savings on the table, fail to meet existing utility integrated resource plans that define how a utility is going to serve its energy loads, and require either the building or buying of new generation, both of which would be much more expensive than investing in efficiency.

CUB has been pursuing this issue for more than two years, even making it an issue in utility rate cases. But an end may be in sight.

After ongoing negotiations with industrial customers, utilities, and other stakeholders, it appears as though a consensus may be forming around a legislative solution. Today, energy efficiency is paid for through a public purpose charge, along with (for residential and commercial customers) a separate charge that the Public Utility Commission (PUC) is allowed to set to achieve more efficiency savings. The legislative solution would be to eliminate these charges and give the PUC the authority to pursue all cost-effective efficiency and assign the costs for acquiring that efficiency appropriately between all customer classes.

Back when we first established the public purpose charge in 1999, investment in energy efficiency went up and down pretty dramatically. Since then, the Energy Trust of Oregon (ETO) has been charged with identifying the available efficiency and figuring how much it costs to acquire it. Frankly, ETO has done a much better job at this than the utilities ever did when they were in charge of energy efficiency, and has done it at a lower administrative cost. The infrastructure that has been built through ETO’s work enables us to approach energy efficiency through a policy directive (pursue all cost-effective efficiency) rather than by setting a specific dollar amount.

A lot of people are working on the details of this approach to get a proposal ready for the 2016 short session of the Oregon legislature. Those same folks, and others, are also taking a look at what this change to the public purpose charge might mean for other investments supported by the charge, namely low-income weatherization, small-scale renewable energy resources, and energy efficiency in schools. We want to make sure that all ratepayer investments in all these areas are protected and managed effectively.

There’s a lot of work to do between now and next February when the legislative session starts. But there now seems to be a path to follow that key stakeholders seem to be willing to walk together. CUB will be working to achieve a favorable consensus for residential customers and a better approach for the entire energy system. Watch this blog for updates in the coming weeks.

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