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PSC reverses electric conservation goals for FPL and Progress Energy

Cfl State regulators set the clock back on energy conservation in Florida Tuesday and reversed a rule that would have required Florida Power & Light and Progress Energy Florida to encourage customers to use less electricity. Their reason: saving money for some was going to require higher bills for everyone.

The Public Service Commission agreed with the utilities' projections that the cost of implementing the program for the state's two largest electric monopolies would raise bills for customers so they voted to ignore a 2008 law and not require utilities to expand their existing conservation programs.

Staff estimated that to get customers to use less energy under the rules adopted in 2009, the implementation cost for Progress Energy customers would be between $6.24 and $16.52 a month for the average residential customer using 1,200 kilowatts of electricity between now and 2014. For FPL, the increase in the monthly bill would have gone from $2.46 a month in 2011 to $4.11 in 2014.

But consumer advocates challenged those cost projections.

They said the estimates were intentionally inflated to make the programs look more expensive than necessary. They said they reflected only the short-term implementation cost without considering the long-term savings that comes from not building expensive, greenhouse-gas producing power plants. And they chided the PSC for not demanding more accurate numbers and said the decision essentially ignores the mandates of the 2008 Legislature. Lawmakers that year ordered the commission to set more aggressive energy efficiency standards as part of sweeping energy bill designed to promote renewable energy and reduce dependence on fossil fuels. 

"What I heard today is efficiency hurts,'' said Leon Jacobs, a former PSC commissioner and now a consultant for the Southern Alliance for Clean Energy, a non-profit advocate for energy conservation. "That’s not what I heard the legislature say. The legislature said efficiency is a good option we should rely on. I don’t know that we decided that there is pain.”

SACE believes that by reducing energy consumption, consumers save in the long run because it defers the need to build expensive power plants and removes pollution-causing greenhouse gas emissions.

But Commissioner Eduardo Balbis said he was not persuaded by that argument. PSC staff estimates Progress Energy will not need a new power plant until 2016 now and the more aggressive energy conservation programs would not do enough to offset the need, especially since the company now has the capacity to produce 25 percent more electricity than is demanded by customers today.

The commission's decision to roll back conservation programs follows the wishes of Gov. Rick Scott, whose staff has recently weighed into the energy debate. At a meeting of electric company lobbyists and energy industry representatives in late June, the governor's former policy director, Mary Anne Carter said the governor wanted the PSC to soften the energy efficiency goals as a way to lower the cost of electricity in Florida to attract new business. "Conservation is a good thing but the cost of it doesn't have to be this high,'' she said.

The commission may revive the debate over efficiency goals in the future. At the recommendation of Commissioner Julie Brown regulators voted to ask the utility companies how long it would take to get updated information about the cost of meeting more aggressive energy efficiency goals. Commissioners Ron Brise and Lisa Edgar said they supported that suggestion since the downturn in the economy and the need to keep consumer costs down has forced them to reconsider at what cost they are willing to pursue the short-term costs of implementing energy efficiency incentives.

Meanwhile, Balbis succeeded in persuading other commissioners to vote to approve the status quo -- allowing both companies to continue their existing conservation programs but not require them to do more. The average customer in Florida now pays $2 a month to finance conservation programs, he said. In 2011, it will cost Progress Energy customers $2.99 a month. Balbis disagreed that another study was needed because with the pace of technology, when that document is deliver "it is immediately outdated," he said.

Public Counsel JR Kelly did not take a position on the conservation goals because, he said, as a representative of all consumers, not all electric customers agree. Some want to see stronger energy conservation programs because they can afford the short-term cost of buying energy efficient lightbulbs, replacing energy hogging appliances and installing solar water heaters. But others, such as some low income residents, retailers, hospitals, and large industrial energy users, see the short-term cost of conservation as too high, he said.

Kelly acknowledged, however, that embedded in the debate are several conflicting assumptions. For example, is in the interest of protecting the environment, regulators are asking the electric monopolies to create programs that create incentives for customers to use less of their product. But when customers use less energy, electric monopolies make less money -- so they have to charge all their customers more.

So why do we ask utilities to tell people to use less energy when it’s not in their best interest to use less energy? "It goes against all logic,'' Kelly said, noting that it has the intended benefit to delaying the need for new power plants. "It's the utilities that started the programs. They wanted to be good corporate citizens."

But conservation advocates, who worked for years to get the legislature to order the PSC to require the higher energy efficiency goals say that reversing the goals underscores the short-sightedness of Florida’s regulatory system.

George Cavros, a Fort Lauderdale-based lawyer for SACE, argues that because FPL and Progress Energy have never been required to provide rigorous energy efficiency programs in the past, they have less experience at it than their peers in other states, where the cost of delivering energy savings is two to three times less than the cost in Florida. In North Carolina, for example, the sister company to Progress Energy, has encouraged customers to save 90 percent more electricity at 50 percent of the cost than what is projected in Florida.

Progress Energy lawyer Dianne Triplett said that wasn't a fair comparison, however. Her company has been doing energy conservation programs for 30 years and many customers are already saving electricity. "In Florida, 70 percent of customers already have one [compact fluorescent] light bulb so you’re not going to get the market penetration,'' she said.

Meanwhile, the commission did move closer to Scott's goal of using energy policy to promote economic development. New commercial and industrial customers of FPL that re-use existing facilities, use at least 350 kW of electricity and hire at least 10 full-time employees by June 1, 2013, will receive a 20 percent discount in their base electric bill. After that, they must hire at least 25 full-time employees.

The cost of the program will be shared by all FPL customers and new residential customers who move to Florida or move into existing residences in FPL's territory will not receive a discount.