PSC wants utilities, customers to save energy

Editor’s note: Roby Brock, with our content partner Talk Business, wrote this report. He can be reached at [email protected]

Late last week, the Arkansas Public Service Commission approved a number of electric and gas utility companies’ energy efficiency plans to meet targeted goals for energy savings related to baseline 2010 annual sales.

The three-year energy efficiency program has been in the works for months with Arkansas utility firms outlining what they will do to meet modest energy savings goals by 2013. Arkansas is one of the first states in the South to implement statewide comprehensive energy efficiency programs, according to PSC research.

For electric companies, the PSC wants to see energy savings of 0.25% of 2010 sales in calendar year 2011, 0.50% by 2012, and 0.75% in 2013. Gas utilities will be required to achieve energy savings tied to their 2010 sales of .20% in 2011, .30% in 2012 and .40% in 2013.

How will companies achieve these reductions? According to plans filed with the PSC, Arkansas utilities have outlined a variety of initiatives, including public awareness campaigns for energy efficiency, more consumer demand for energy efficient equipment, weatherization programs, and working with community groups for progress on the subject. The programs will be targeted to residential, small and large commercial, and industrial customers.

PSC Chair Colette Honorable tells Talk Business that there is a monetary goal tied to the program, but a larger economic picture is also at work.

"The overall benefit and costs associated with program implementation is one of our primary concerns," she says. "There are standard methods for calculating costs and benefits that have been developed over the past 25 years or so. Taking into account what utility companies and customers might spend and the benefits that would accrue, the estimated savings is approximately $200 million."

But Honorable also explains that the PSC’s ultimate goal is to move Arkansas forward – through the work of the public utilities and the customers they serve – to make energy efficiency and conservation a priority.

Building new power plants to meet consumer demands costs billions of dollars and those costs are passed on to customers through regulated rates.

"The simple fact is that our resources are not infinite," Honorable said. "We must begin planning for our future and for future generations. And, the cheapest kilowatt of energy is the one never used."

She says the energy efficiency program has the possibility to boost the state’s economic advantages and she hopes the data collected during the next three years will give clearer direction in that realm.

"The commission chose a short-term goal or target with a purpose. We are thoughtfully, deliberatively building a market. We also must monitor progress and determine lessons learned and best practices as we evaluate the effectiveness of the programs implemented, and whether they are reaching every customer or ratepayer class," Honorable said.

"We simply cannot take the estimated savings for granted. In order for those savings to be achieved, it will require quite a bit of work by many, many people to come to fruition. Once we achieve these goals in 2013, we will then be able to broaden our goals for future years," she added.

Some have wondered if the energy efficiency program is a step towards establishing a renewable energy standard in Arkansas – a move that many business and economic development officials would view with trepidation. However, others argue that a standard could be an economic development tool to draw businesses to the state.

"While entities such as ours can help facilitate discussion about the benefits and costs associated with a renewable energy standard, the legislature would ultimately need to approve such a standard prior to implementation," said Honorable. "The commission is open to discussion and debate on the subject."