FirstEnergy's Pending Energy Efficiency Plan Leaves $180 million on the Table

FirstEnergy’s clean energy strategy over the last three years reminds me of my father’s laundry strategy when he and my mother got married three decades ago: intentionally do a bad job – wash those bright colors on hot – and hope you never get asked to do it again. We’ve seen it at least three times from FirstEnergy. First was their CFL-on-the-doorstep program, which would have charged customers $22 for two CFLs. Next was their business energy efficiency program, where FirstEnergy so underestimated demand for efficiency that they ran though their three-year incentive budget in 8 months. Most recently, an independent auditor discovered that FirstEnergy paid about 15 times what they should have for renewable energy credits.

Now the Company has filed its 2013-2015 energy efficiency plan at the Public Utilities Commission of Ohio (PUCO). The Company anticipates spending $204 million on energy efficiency programs to residential and business customers over three years.

On Monday we submitted our objections to the plan to the PUCO (find them here), joining forces with the Sierra Club. To summarize our objections: the Company is not investing enough money, management attention, and ingenuity to proactively encourage energy efficiency in its service territory. The Company proposes a massive, $34 million effort to send no-cost, opt-in “energy efficiency kits” to residential customers (basically a big box of CFLs). It’s a weird idea. Customers buy light bulbs, at retailers. A program that worked to help retailers like Home Depot stock and sell as many efficient bulbs as possible would be a better use of customers' money.

FirstEnergy's plan also short-changes businesses. At the rebate levels the Company is willing to pay, it risks not encouraging new projects. Instead, people who are already doing projects will just apply for an incentive. The Company’s plan fails to include good ideas that other utilities in the region are implementing: like a program to help manufacturers develop and implement energy management plans, one to help businesses manage fast-growing energy use from computer servers, or a program that cuts small business’ expenses with HVAC and lighting upgrades. Instead small businesses get a CFL kit too! FirstEnergy isn’t even developing case studies so businesses can see how energy efficiency projects have helped other businesses in their industry.

All of these problems are fix-able. Rather than sending people big boxes of CFLs, FirstEnergy could make use of the robust energy efficiency supply chain in Ohio and do everything possible to ensure that new buildings and production lines are built right the first time. The Company can increase rebates so they actually spark projects and purchases. The Company can partner with gas utilities to insulate and tighten homes. The Company can launch new programs.

The benefits of a bigger, better plan would be huge. I estimate that if FirstEnergy’s plan was as good as AEP-Ohio’s recently-approved energy efficiency plan, customers would pay $184 million[1] less in energy bills over time, just from programs run from 2013-2015. Moreover, when customers make investments in energy efficiency, their energy bill savings are directed into the broader Ohio economy, creating more jobs than if customers continued spending this money on their energy bills. NRDC estimated earlier this year that fully implementing Ohio’s energy efficiency standard will create 32,000 jobs by 2025. Robust energy efficiency programs give customers options to control their energy use. And when a region invests in efficiency, it means we don’t have to build as many expensive, polluting power plants.

To get there, the Public Utilities Commission of Ohio will have to exercise its right to improve the Company’s plan. Along with our objections, on Monday 145 NRDC activists from northern Ohio submitted comments to the PUCO demanding they improve the plan. Businesses and customers want FirstEnergy to do a better job at energy efficiency: there’s no excuse for FirstEnergy customers getting lackluster programs when other utilities in the region and Ohio are doing so much better.


[1] This assumes that FirstEnergy would get the same share of its savings from customer-directed energy efficiency programs (excluding mercantile self-direct, transmission and distribution projects, and demand response) as AEP-Ohio plans to, that FirstEnergy would exceed the statutory benchmarks by the same percentage that AEP-Ohio plans to, and that FirstEnergy would get the same net bill savings per MWh of saved energy that AEP-Ohio plans to get.

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