Energy Efficiency Plan Will Save Californians Billions, Says NRDC

Utilities Get New Incentives to Help Consumers Save Energy, Reduce Global Warming Pollution
SAN FRANCISCO (September 20, 2007) – A bold new plan unanimously approved today by California utility regulators will accelerate the state’s energy savings and reduce global warming pollution, according to the Natural Resources Defense Council (NRDC).
The plan by the California Public Utilities Commission (CPUC) seeks to maximize energy savings by rewarding the state’s investor owned utilities if they do a good job helping customers become more energy efficient. Energy efficiency – getting more work out of less energy – is a cornerstone of the state’s plan to implement the Global Warming Solutions Act, a landmark law that requires California to reduce emissions of carbon dioxide and other heat-trapping pollution to 1990 levels by 2020.
“The commission’s plan is a common sense approach that rewards utilities if they do a good job helping consumers save energy,” said Audrey Chang, NRDC staff scientist. “It makes it in the utilities’ best interest to help their customers use less energy, reducing their energy bills and cutting global warming pollution.”
The CPUC plan adopts a carrot and stick approach. If California’s investor owned utilities – Pacific Gas & Electric, Southern California Edison, San Diego Gas & Electric, and Southern California Gas – exceed energy efficiency thresholds, then they can earn rewards of up to $150 million on average before taxes each year. If they do a poor job meeting targets, then they face penalties of up to $150 million. The maximum reward is less than 1 percent of consumers’ total annual cost for electricity and natural gas.

Chang said consumers will save more than $2 billion if the utilities meet goals for the current three-year (2006-2008) energy efficiency program cycle. That represents more than a 100 percent return on investment.
“This decision will put more cash in Californians’ pocketbooks and less pollution in the air we breathe,” said Chang.
The commission’s action finalizes an ambitious effort begun in 2002. The commission requires utilities to design and deliver programs that encourage consumers to save energy by using it more efficiently. The programs include consumer rebates for the purchase of energy-efficient appliances, such as air conditioners, clothes washers, furnaces and water heaters.
has led the nation in energy efficiency for decades. State law requires utilities to invest in efficiency whenever it is cheaper than building new power plants. Unlike utilities in most other states, California’s investor-owned utilities have no disincentive to encourage energy conservation, since their revenues are not tied to the amount of energy sold. Under state law and regulations, revenues are “decoupled” from total energy use. That is one of the main reasons that the state’s utility-run efficiency programs have been so successful, according to NRDC.