The Florida Public Service Commission's practices for setting energy efficiency goals date back to the early '90's. The practices are so bad that no other states rely on them for setting goals. The Commission now has a chance to finally modernize them, but will it?George Cavros | August 17, 2020
Remember the Early ’90’s?
The internet had just become commercially available, businessmen clipped pagers to their belts, and kids were listening to the Backstreet Boys on cassette tapes. Boy, how times have changed. But for some government agencies, time has stood still for decades. For instance, the Florida Public Service Commission (PSC) – the agency charged with setting efficiency goals for the state’s largest power companies, continues to rely on practices that are frozen in time. It has an opportunity to modernize those practices, but will it?
We all know that energy efficiency is the lowest cost resource to a utility when it comes to meeting electricity demand, plus it helps customers cut energy waste and save money on their bills.
And we all know that the need today couldn’t be more pronounced – as the economic fallout from the COVID-19 crisis has laid bare, too many Florida households shoulder unaffordably high energy burdens. Counting only customers of the state’s largest investor-owned utilities, more than 600,000 households have fallen behind on power bill payments during the pandemic. Increasingly, these customers are being forced to choose between paying power bills and meeting essential needs for their families like food and medicine. Especially at a time like this, no one should have to make this choice.
It is time we got to the root of the problem: costly energy waste is perpetuating high electricity bills in Florida.
Why do we pay so much for wasted energy in Florida? Because the Commission that sets efficiency savings goals for the state’s power companies continues to rely upon fundamentally flawed, decades-old economic screening practices that ignore the central benefit of efficiency – it helps customers save money. This is one of the reasons Floridians pay the 11th highest electricity bills in the country and we remain near the bottom of state rankings for annual energy savings – both in the Southeast and nationally.
Florida’s efficiency practices are so bad that no other state in the country uses them
So what are Florida’s utilities doing so wrong? First off, they are using the Rate Impact Measure (RIM) test as the primary basis for setting annual utility efficiency savings goals. Instead of treating customer energy savings as a benefit, the RIM test actually treats them as a cost – because the utility company receives less revenue. Since customer bill savings are the central reason to pursue energy efficiency in the first place, this first problem is easy to see.
The second problem is that Florida utilities automatically eliminate any efficiency measure with a return on investment of fewer than two years, automatically eliminating the most cost-effective and affordable efficiency measures.
Combined, the RIM test and 2-year screen eliminate all of the most cost-effective energy efficiency measures – the ones that are commonly implemented by utilities across the country.
In 2014, these flawed screening practices were used to justify slashing energy savings goals by more than 90%. Emboldened by the Commission’s complacency, in 2019 Florida’s utilities used these same flawed screening practices to argue for energy efficiency goals of zero – that’s right, zero. With abysmal efficiency savings performance and a set of goal-setting practices so backward that no other state relies on them, clearly Florida’s goal-setting process isn’t working.
Fortunately, it is well within the Commission’s power to modernize its rules and fix the problems – if they choose to consider these issues. At its December 2019 Agenda Conference, the Commission appropriately rejected the utilities’ proposed zero goals and expressed frustration at the results generated by continued use of these flawed cost-effectiveness screening practices. This led to the Commission approving a request by its staff at a July 2020 Agenda Conference to revise the Commission’s rule for setting energy efficiency goals and approving utility program plans. A docket has been established to do just that.
The 1990s were good while they lasted, but it’s time to say “Bye, Bye, Bye”
Unfortunately, current Florida cost-effectiveness screening practices work against the very intent of the law, which plainly calls for setting goals that reduce the growth rate of electricity consumption to protect both public health and the prosperity of the state and its citizens.
In order to get meaningful efficiency programs to Florida families and businesses, we must come into the 21st Century and modernize the states’ energy efficiency practices. It is not clear yet whether the PSC’s new rulemaking will address head-on what’s holding Florida back – or avoid that conversation altogether. That’s why SACE filed a request that the Commission hold one or more scoping workshops to get broad input from the public, stakeholders, and experts who can share information about best practices from other jurisdictions. This is the best way to fix the problems that have plagued Florida’s energy efficiency goal-setting processes for decades. SACE will work to ensure that the PSC grants our scoping workshop request prior to Commission staff rewriting the state’s energy efficiency rules.
The 1990s were good while they lasted, but it is time to move on. Let’s not miss this opportunity to modernize practices in order to help Florida’s hard-working families – including the utilities’ most vulnerable customers.
Join us in our call. Send a letter to the PSC today in support of a scoping workshop to finally address and modernize outdated practices that no longer serve the state or its citizens.