We’ll Have to Buy It or Save It

There are three ways that utility customers get the electricity that they use everyday. One, their utility generates it, through some kind of power plant fueled by coal, natural gas or a renewable resource like wind. Two, their utility buys it on the open energy market, either through a short or long-term contract. And three, customers can reduce the amount of electricity they use in the first place so that their utility doesn’t have to produce it or buy it.

Which method is cheapest? If you said three, go out and treat yourself to a compact fluorescent lightbulb. As we’ve said here in the past, the cheapest kilowatt is the one that doesn’t have to be produced in the first place. That’s why CUB has always supported steady and substantial investment in energy efficiency efforts, making sure that the power that is produced or purchased goes as far as possible.

Up until 2002, utilities’ spending on energy efficiency was quite erratic. If power prices were high, they’d spend more on energy efficiency. If power prices were low, they’d cut back drastically on energy efficiency investments.

But the best way to make sure you get the most energy efficiency in the long run is to invest in it consistently over time. Unfortunately, during the late 1990s, energy efficiency investments reached all-time lows because power was relatively cheap. But that meant that when the energy crisis hit the West Coast in 2000 and 2001, energy usage was quite high, and both people and businesses got hit hard as energy prices went through the roof. If utilities had been investing in energy efficiency at the same level during the late 1990s as they had been during the early 1990s, when prices were higher, utility consumers would have saved millions of dollars during the energy crisis because our energy demand would have been lower and the blow would have been softened significantly.

Starting in March 2002 (because of a law CUB took the leadership in pushing), both Portland General Electric and Pacific Power were required to invest at least 3 percent of their overall income in energy efficiency and renewable resource development. These are known as “public purpose funds.” This requirement lasts for 10 years, until 2012.  This is a better way to invest in efficiency: a consistent amount over a long period of time. Some people ask, “Does it make sense to add 3 percent to the electric bill when rates are high?” The answer is that we are going to be spending that money anyway, and without good energy efficiency programs we would possibly be spending much more. We can either pay for expensive new power plants (that have other costs like pollution), and be at the mercy of the prices on the energy market, as we were during the energy crisis. Or we can pay for energy efficiency to reduce our overall energy usage, which is the cheapest, cleanest way to “buy power.”

Even better, CUB worked on shifting the responsibility for promoting energy efficiency out of the hands of the utilities. It made no sense to have a company, whose purpose is to generate and sell electricity, be involved in helping their customers use less of the product they are trying to sell. Rather than having that inherent conflict of interest, which did not benefit consumers, CUB helped to create the Energy Trust of Oregon, a nonprofit organization whose primary mission is to get the biggest bang for the consumer’s buck in energy efficiency and renewable energy development. Having the Energy Trust means no conflict of interest and a better deal for the consumer.

The Energy Trust of Oregon (ETO) has been up and running for almost four years. They have been working with all customers - residential, commercial and industrial - to find ways to use energy more efficiently. All customers pay into the public purpose fund and all customers benefit. The ETO has shown itself to be a good steward of ratepayer funds, conducting its business through open, public meetings, with strong accountability to the Oregon Public Utility Commission, and posting everything they do to their website so that customers can keep track of their projects. That’s a big change from when the utilities were in charge of making energy efficiency decisions.

You’ve always heard a lot from CUB about energy efficiency and you’ll hear more over the next year. The 2007 legislative session is scheduled to have a review of public purpose funding on its agenda and CUB will be working to make sure that the legislators understand that investment in energy efficiency is just another way for customers to buy necessary power, and it’s the cheapest, cleanest way to do it.

CUB will also be raising questions like: Given the rising cost of energy, is 3 percent enough to invest in energy efficiency and renewable energy resources? Can we invest more and still be cost effective? And should we commit to investing in energy efficiency beyond 2012, since it looks like energy prices won’t be dropping significantly anytime soon?

So stay tuned, and in the meantime, go over to the Energy Trust website to find out how you can reduce your energy usage and get the cleanest, cheapest kilowatt money can buy.

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