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Download MD-PIRG-EE-scorecard-web-version.pdf - Frontier Group

Download MD-PIRG-EE-scorecard-web-version.pdf - Frontier Group

electricity rates. (See

electricity rates. (See text box on page 22for more information about cost-effectivenesstests.)The cost-effectiveness tests can providevaluable information for both policymakersand utilities about the overall social andeconomic impact of particular efficiencyprograms. The PSC acknowledges thatits counterparts in other states use thesetests. 52 However, according to the PSC,“The Commission does not consider itselfbound to follow or accept any particularcalculation of cost-effectiveness—theEmPOWER Maryland Act does not referto any definition, from California orelsewhere.” 53Unfortunately, this refusal to set aclear standard for cost-effectiveness leavesutilities without an indication of how todesign programs to gain PSC approval,which resulted in major delays for programlaunch in 2008-2009 among theutilities. For example, in August 2008 theCommission rejected BGE’s ResidentialEnergy Star Products Program, its Gasand Electric HVAC Program, its EnergyStar New Construction Program, andits Energy Star Appliance Program. Therejections came despite the fact that, witha few minor exceptions, all were cost-effectiveand had been “extensively reviewedand approved by a large, diverse groupof stakeholders…whose role is to protectthe interests of customers or to provideobjective, unbiased opinion,” accordingto Commissioner Allen Freifeld, whodissented from the PSC’s opinion andcomplained that it offered “little guidance”to utilities for presenting better alternatives.54 The reasons outlined by the PSCfor its rejection of BGE’s programs inAugust 2008 reveal other elements of thePSC’s decision-making process that workagainst EmPOWER Maryland goals. Forexample, the Commission rejected BGE’sappliance program because it wanted moreinformation about whether “more rigorousbuilding codes and efficiency standardsapplied to new construction and remodeledhomes, or accelerating the onset of morestringent federal standards” could producebetter results than the appliance programBGE had presented. 55 The PSC’s interest inbuilding codes is irrelevant because it hasno purview over the programs and policiesof the state and federal governments.EmPOWER Maryland directs the PSC toreview utilities’ proposals to reduce percapitaenergy consumption—not provideanalyses of what the state and federal governmentcould accomplish more efficientlythan utilities.The August 2008 decision also indicatesthat the PSC has been hesitant to approveefficiency programs in which the benefitsare not distributed evenly among all ratepayers,even at the cost of pursuing the bestefficiency opportunities. In 2008-2009,the PSC approved some utility programproposals only after they had been revisedto “allow every residential ratepayer toachieve savings in excess of program costs,”even though in some cases, these revisionsincreased program costs and decreasedenergy savings. 56The PSC’s review process should acknowledgethat everyone benefits fromenergy efficiency, regardless of where thesavings take place. A home weatherizationprogram overseen by the MEA in 2010,for instance, retrofitted the homes of 3,000renters, collectively saving them $294,000on their energy bills in one year. While therest of the state’s ratepayers didn’t receivethat same direct benefit, they do benefitfrom the 6,500 MWh of electricity savedby the program annually. 57 Electricitysaved means less congestion on power lines,reducing the need to build expensive newtransmission capacity in the future.Ideally, given that all consumers arehelping to pay for energy efficiency programs,all would be able to participate inenergy efficiency programs and experiencesome relief on their utility bills. However,limiting the state’s energy efficiency invest-Public Service Commission Fails to Ensure Energy Savings 21

Proper Accounting Leads to Better Energy ProgramsCreating good energy policy in Maryland requires accounting for all the benefitsof energy efficiency – not just to the utilities and ratepayers, but also tothe state’s economy and public welfare. In order to weigh the costs of a particularefficiency program against its anticipated benefits, policymakers use several “costeffectivenesstests.”“The choice of tests and their applications reveal the priorities of the statesand the perspectives of their regulatory commissions,” according to the RegulatoryAssistance Project, a non-profit organization composed of former utilityregulatory commissioners, in a report on cost-effectiveness best practices. 59Some tests, such as the Societal Cost Test (SCT), measure “energy efficiencyas a resource,” valuable in its own right for its long-term potential to deliversocial and environmental benefits. 60 Other tests, such as the Ratepayer ImpactMeasure (RIM) test, focus more narrowly on how ratepayers are affected byspecific energy efficiency measures.Policymakers’ decisions about which of the cost-effectiveness tests to usereveal how they prioritize the various benefits of energy efficiency. For example,states that have structured their cost-effectiveness rubrics to reflect their environmentaland energy priorities have some of the best efficiency programs inthe country. Five states currently use the Societal Cost Test as their primarytest: Arizona, Maine, Minnesota, Vermont, and Wisconsin. 61 Of these, Maine,Minnesota, and Vermont were ranked among the top 10 states for energy efficiencyin 2010 by the American Council for an Energy Efficient Economy(ACEEE). 62 Wisconsin was ranked 11th, and Arizona, a “most improved state,”climbed 11 spots since 2009 and is now ranked 18th. 63Currently, Maryland is ranked 23 rd in the country for its energy efficiencyprograms, most likely due to its high efficiency targets (for which it receivedtwo out of three possible points). 64 However, its electricity program budget andsavings in recent years scored quite low (0.5 out of five possible points). 65Maryland’s ranking on program implementation is unlikely to change untilthe PSC agrees to follow the example of other states that have successful programs.The PSC has stated that if it chooses to defer to a test, it will choose theTRC. 66 However, the TRC does not account for many legitimate benefits ofenergy efficiency, including reduced carbon emissions (which currently have aprice tag of $1.86 per U.S. ton) 67 and other environmental impacts, improvedaesthetics, or increased human comfort. Ignoring these benefits leaves efficiencyopportunities untapped and works against the achievement of EmPOWERMaryland’s ambitious goals.22 Falling Behind on Energy Efficiency

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