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CU presentation to NARUC regarding utility-run programs

Consumers Union Presentation
to NARUC Consumer Affairs Panel
November 15, 2009

Good afternoon,
Consumers Union, the non-profit publisher of Consumer Reports, appreciates the invitation to speak before the NARUC Consumer Affairs Committee. I am Shannon Baker-Branstetter, federal policy analyst for energy and environment at Consumers Union. Consumers Union advocates for a fair, transparent marketplace in which consumers have the information they need to make informed decisions. A major component of Consumers Union’s research revolves around energy efficiency testing and educating residential consumers.
Energy efficiency programs can bring tremendous benefits for consumers, electric and natural gas utilities and the environment. Consumers want to save energy to save money and many want to reduce their energy usage to save the environment as well. Improving energy efficiency is becoming increasingly popular among consumers and federal and state lawmakers. Energy efficient appliances, buildings, lighting, heating, and cooling have enormous potential to score a Trifecta by cutting consumers’ bills, reducing utilities’ future capital infrastructure and reducing greenhouse gas emissions. In addition to federal programs, states have instituted a variety of policies aimed at decreasing energy usage while maintaining the same quality of life for consumers. These policies include building and appliance efficiency standards, weatherization programs, programmable thermostat and electric meters, and incentives for shaving peak usage. Many of these initiatives have been hugely successful with measurable, tangible results delivered to consumers and utility companies. States with the highest per capita carbon emissions have the most room for improving energy efficiency. In fact, 6 of the 10 highest carbon emitting states on a per capita basis are in the bottom 10 for energy efficiency ratings according to the American Council for an Energy-Efficient Economy (ACEEE). (WY, ND, AL, WV, AK, and LA)
However, not all energy efficiency programs are created equal. Both technological and policy design flaws can undermine the delivery of promised energy savings. Through Consumers Union’s testing, we have found that some Energy Star appliances do not deliver the savings promised by the Energy Star label and are working with federal agencies to resolve such inconsistencies. Similarly, other efficiency programs do not always measure or realize promised efficiency savings, which wastes resources and frustrates the important goals of energy efficiency programs. All energy efficiency programs and purchases, whether funded by the taxpayer or ratepayer and run by the utility or state government, should be designed to document and verify savings and prove cost-effectiveness for both the funder and the end user.
In addition to consumer-driven and government-run programs, many utilities have also run very successful energy efficiency programs, and the adoption of such programs is expanding. ACEEE calculated that ratepayer funded efficiency programs spent $3.1 billion in 2008 and have continued to rise. However, consumers must be protected from misleading or manipulative programs that are allegedly instituted for their benefit, but turn out to be a bad deal for ratepayers. In order to ensure that best practices are employed and the savings are verifiable, public utility commissions should require full disclosure of the costs and benefits of all proposed energy efficiency programs before any efficiency program is initiated and follow up with regular audits after the program is implemented.
Taxpayers and ratepayers should not be asked to pay for programs that are not cost-effective. For example, if a do-it-yourself approach is cheaper than a utility-run program, then consumer education is a superior option to a top-down approach. Assessing cost-effectiveness from a consumer perspective would have helped FirstEnergy of Ohio avoid its highly problematic CFL program that would have cost consumers $21 for 2 CFLs. There is no one perfect efficiency program that should be applied uniformly to all utilities or consumers, but the principles of transparency, cost-effectiveness, and accountability should guide every program.
In conclusion, utility commissions should do their best to ensure that utility-run programs are at least as effective as state or consumer-initiated efficiency measures. Thank you for your attention to the consumer perspective, and I look forward to any questions you may have.