An Attack and Many Defenses of Energy Efficiency at the Maryland Public Service Commission

The director of Maryland’s Energy Administration recently fired an inexplicable attack on the state’s energy efficiency programs. That agency now has a new director. We’ll see how that works out. But in the meantime, there’s a new attack under way before the Public Service Commission, led by one of the commissioners himself.

In the bull’s eye: EmPOWER Maryland, a compilation of the state’s programs aimed at promoting smarter energy use through such programs as BGE’s Smart Energy Savers and Pepco’s Energy Wise Rewards.  

Michael Richard, formerly deputy chief of staff to Governor Larry Hogan, joined the Commission after a rocky Maryland Senate confirmation battle. After sifting through much of the transcript for the three days of Public Service Commission proceedings examining Maryland’s EmPOWER energy efficiency programs, its appears to me that Commissioner Richard may have an ax to grind.

 On the second day of testimony from utilities and other parties, he claimed that “…everyone shares a concern about the growing impact of the surcharges [on electric bills, which support energy efficiency programs]. So I think that’s great. I definitely have been pretty outspoken. I’m very concerned about that also.”

But most documents filed with the commission did not mention this issue; Marylanders are supportive. For example, Wayne Harbaugh (director of regulatory strategy for BGE, the state’s largest utility) noted growing customer satisfaction about services provided by all the utilities since energy efficiency programs were launched in 2008.

However, Commissioner Richard responded: “Hate to be a broken record” (before sounding like a broken record) “…we need to figure out how we can make these programs more economical and have less impact on our ratepayers…”

But decisions about Maryland’s energy-efficiency investments have been made based on data analysis about the returns on those investments. They must all clear strict cost-effectiveness testing comparing costs to benefits.

Nonetheless, the commissioner appeared to have just one thing to say through the hearings—Maryland needs to stop investing in energy efficiency.

Fortunately, that one note wasn’t in tune with other voices in the room. BGE’s Harbaugh provided a history lesson about EmPOWER Maryland, which is worth quoting from at length:

[In 2006] we were growing 2, 3 percent per year in [electricity] load…[S]o we were faced with potential brownouts, blackouts, rolling blackouts, in about a three-year period…unless we did some things.

That I really think was…the impetus for EmPOWER Maryland. Basically at that point we had three options. We could have done nothing, and that wouldn’t have raised the utility rates, wouldn’t have increased the generation rates, and we would have been in brownouts and blackouts…

We could have built new generation, and generation is very expensive…So had we gone the generation route and not gone the energy efficiency route, we could have had two $2 billion coal plants sitting in the state of Maryland…

So we took the third option...[W]e said we’re going to take the energy efficiency route. We’re going to take a look at can we lower overall consumption from individuals…

So by us taking the energy efficiency route, I really think that bills are lower today than what they would have been had we taken the generation and transmission route…

So it wasn’t so much of a rush to green. It was a rush to reliability. And, oh, by the way, the benefits are I don’t have two coal plants putting SOx, NOx (sulfur and nitrogen oxides, both harmful pollutants) and particulates (soot) into the air in Maryland. All of these things are perfectly green. A kilowatt-hour not used is about as environmentally green as it can be…

I really think customers are happier with us being able to hold the price of electricity down. I tell you, for the last decade, I can’t think of too many other things in my house that have gone down in price or stayed stable…

So we wouldn’t have that $7 a month surcharge on your bill for EmPOWER Maryland, but you would have had a $21 higher electric bill either from the supply side or from the extra T & D (transmission and distribution) on the utility side of the charges…

…I think customers really like…[that] you’re helping me manage my bill, your prices might be up a little bit, but my total bill is down.

If you go to our Facebook page and the other social media sites, it’s not, ‘boy, I hate this surcharge. It’s we like what you’re doing…’

Well said.

Other witnesses reported on continued progress with their energy efficiency programs for homes and businesses. And other commissioners found the progress praiseworthy, even as they peppered some witnesses with questions about program design and participation issues. From Chairman Kevin Hughes: “We gave you a very big challenge and you met that challenge and the ratepayers of Maryland are receiving enormous benefits in terms of lower energy bills because of that…” From Commissioner Anne Hoskins: “[T]hrough all of the evaluation that we’ve done, these are cost effective programs, which means…if you participate, you’re getting that direct benefit, but there are certainly very significant indirect benefits.”

In summary, it was a strange set of hearings. One commissioner kept singing the same note in spite of the evidence, while around him a concert of data analysis and deliberation unfolded.

Okay, okay—calling hours of hearings about energy efficiency programs a “concert” shows my colors as a policy nerd. But facts are invaluable for making good policy.

Unfortunately, Commissioner Richard seems more interested in derailing the successful EmPOWER Maryland energy efficiency programs. That’s a shame because Maryland’s businesses, consumers, and even utilities are all aboard with the energy efficiency train that has been steaming ahead to save money for ratepayers since 2008.