Public Power Efficiency: Progress but More Savings Possible

California’s publicly owned utilities have made great strides helping their customers cut electricity waste, saving $4.3 billion in total through lower electricity bills over the past 12 years, which amounts to nearly $3 for every $1 invested after accounting for the cost of the program. These energy savings also helped avoid as much pollution as the annual emissions from more than 430,000 cars.

And yet, according to our new report—the only comprehensive historical and future assessment of California POU progress—substantial opportunities remain for public power to step up its efficiency program efforts and produce even greater health, economic, and environmental benefits for all Californians. 

Making sure all utilities (public or private) scale up energy efficiency as much as possible—and that efficiency programs are designed and targeted for who and where they are needed the most—is critical. California is witnessing the devastating effects of climate change from burning fossil fuels and experiencing an unprecedented housing crisis, with low-income households bearing a greater energy burden than the rest of the population. Energy efficiency can help reduce these problems.

Who are we talking about and why does it matter?

Publicly owned utilities (POUs) are different from large investor-owned utilities (IOUs) like Pacific Gas & Electric (in northern California) and Southern California Edison. POUs are owned by a local government body and overseen by elected or appointed councils and boards, whereas the IOUs are private companies overseen by the California Public Utilities Commission. POUs range in size from the Los Angeles Department of Water and Power, the largest publicly owned utility in the nation and providing service to approximately 1.5 million customers, to the smallest California publicly owned utilities that may serve fewer than 400 customers. 

Regardless of size or location, every utility—public or private—is a critical partner to reach the state’s ambitious goals of reducing greenhouse gas emissions to 40 percent below 1990 levels by 2030 (aiming to be carbon neutral by 2045) and doubling energy efficiency savings by 2030 (as compared to projected savings published in the 2015 California Energy Commission’s demand forecast).

How much have the public utilities saved?

Since 2006, when the POUs began formally reporting their progress to the California Energy Commission, public power collectively:

• Cut more than enough electricity waste to power all the homes in San Diego, San Jose, and Bakersfield for one year—and saved consumers $4.3 billion on their bills (before accounting for the cost of the programs).
• Kept 2 million metric tons of carbon pollution out of the air, which is especially important to ensure good air quality and keep Californians healthy and free of respiratory ailments like asthma.
• Avoided the need to build two large, 500-megawatt power plants.

Last year alone, California’s POUs:

• Helped their customers achieve the highest energy savings ever, a 14 percent increase in electricity savings from 2016 and more than five times the amount achieved in 2006
• Invested the most ever—more than $200 million—on programs like rebates for purchasing efficient appliances and energy audits to identify energy-saving opportunities
• Saved their customers $850 million on their utility bills in one year.

All of this helped make energy efficiency one of the largest sources of clean energy jobs in the state, totaling more than 300,000 workers in 2017 and accounting for one-third of California's energy-sector jobs, according to E2 and E4theFuture. Energy efficiency also supports jobs beyond the energy sector as customers with more money are able to spend it in the local economy, growing other service and retail industries that in turn need to expand their workforces to meet the increased demand. 

What more can be done?

Even with this good news, there is plenty of room to grow. Over the last three years, more than half of the POUs met their average targets, with many POUs of all sizes greatly surpassing expectations. However, you can also see that a number of POUs fell short. 

While efficiency efforts among the POUs clearly varies, every utility could do more to help their customers cut electricity use by:

• Scaling up efforts to capture substantially more electricity savings, especially for any POU that shows more than $1 of return on $1 of investment (spoiler alert: that’s ALL of them, even the best performers).
• Looking for new ways (including through partnerships with other utilities) that efficiency programs can serve every customer, including those who are harder to reach—like in rural communities—as well as customers that do not have money to invest in efficiency upgrades.
• Evaluating programs on a reasonable schedule, potentially in partnership with other utilities, to make sure programs are meeting their customers’ needs and saving energy so that power planners can rely on the programs to lower the amount of more costly power they need to buy to serve their customers.
• Improving the current efficiency target-setting process by clearly defining which assumptions are being used to set those targets and why, so that we can be assured that the POU targets are aggressive yet achievable.

Furthermore, if all POUs were to scale up to the national benchmark for aggressive efficiency efforts, they could save nearly 50 percent more than what they’ve adopted as their 10-year targets. That translates into cutting enough electricity to meet the needs of nearly 2 million homes for one year (600,000 more households than with the current targets, alone) and reducing pollution equivalent to the annual emissions spewed by 260,000 more cars.

While this is a standard metric to assess progress toward scaling up efficiency, it does not tell the entire story about a utility’s effort to reduce greenhouse gas emissions, lower costs for customers, or serve its unique customer composition. For example, POU investments that target efficiency where and when it’s needed the most will lower costs by not having to invest in expensive transmission and distribution upgrades. This also helps reduce greenhouse gas emissions by avoiding the need to ramp up dirty power to meet the evening high electricity demand (like when residents come home and turn on their lights, TVs, and plug in phones and tablets). In addition, it does not fully measure the importance of reaching customers who cannot afford to upgrade their homes or small businesses.

California’s POUs deserve credit for their success in achieving significant energy savings through efficiency. But so much more is possible. Let’s up the game, and in the process, save consumers more money, further reduce harmful pollution, and continue to boost California’s clean energy economy.

The 38 POUs analyzed for this report: Alameda, Anaheim, Azusa, Banning, Biggs, Burbank, Colton, Corona, Glendale, Gridley, Healdsburg, Imperial Irrigation District, Lassen, Lodi, Lompoc, Los Angeles Department of Water and Power, Merced, Modesto, Moreno Valley, Needles, Palo Alto, Pasadena, Pittsburg, Plumas Sierra, Port of Oakland, Rancho Cucamonga, Redding, Riverside, Roseville, San Francisco, Shasta Lake, Silicon Valley Power, Sacramento Municipal Utility District, Trinity, Truckee Donner, Turlock Irrigation District, Ukiah, and Vernon.