The California Public Utility Commission (CPUC) today released its Proposed Decision on Issues Relating to Future Savings Goals and Program Planning for 2009-2011 Energy Efficiency and Beyond.
The Decision lays out recommendations (many of which will likely turn into rules) on how to move into the future with California’s already effective Demand-Side Management and End-Use Energy Efficiency programs.
California has been in the energy efficiency game longer than most governments, and in the past 30 years California policy has severely curtailed per-capita energy demand growth. The state’s efforts serve as a models for other states and nations implementing their own energy efficiency policies, and have been successful enough to – in 2001 alone – reduce the state’s demand by about 1000 MW (or two large power plants). Between 2001 and 2002, California’s efforts reduced its GHG emissions by nearly 8 million tons.
Along with aggressive consumer product standards and other policies, the state accomplishes all of this through a slightly unintuitive practice called revenue decoupling. Rather than revenues directly correlating to sales, and profits resulting from the difference between revenues and costs, the state requires its large investor-owned utilities (IOUs) to report their anticipated expenditures and sales for a coming period. The IOUs are then, based on the CPUC’s models, directed to charge a certain rate per KWh to consumers based on those numbers. The rate covers an established rate-of-return for the IOUs’ shareholders, and any shortfalls are covered by rate-hikes in subsequent years. This takes quite a lot of the risk out of utilities’ planning, in what is already a pretty risk-averse industry, and allows the CPUC to mandate energy efficiency programs without impacting the IOUs’ bottom line. Energy savings goals are set, as are incentive structures, and the IOUs are told to get to work. To date this has worked, and worked well.
But the CPUC is upping the ante. Significantly. In the interest of combating climate change, the Commission has put forth astronomically aggressive long-term energy savings goals and next month will be convening to decide on adopting rules to meet these goals. A newsprint-friendly CPUC Commissioner Diane Grueneich explained, “Today’s decision creates a framework for sustainable energy efficiency and other demand-reducing programs and a process for accomplishing extensive energy savings through long-term strategic planning. To do this well requires an approach that transcends regulatory, programmatic, and jurisdictional constraints, and emphasizes a broader view of the energy efficiency landscape.”
The Commissioner is absolutely correct on insisting on a “transcendent” and “sustainable” approach – if we’re going to do anything about climate change we’ll need to make significant changes, and quickly – but it may be that putting all of the onus for humanity’s inability to change its consumptive habits on the (already heavily-regulated) utilities is short-sighted (and woefully unrealistic).
Some of the CPUC’s stated goals: all residential construction be zero net energy by 2020; all commercial construction be zero net energy by 2030; and the entire Heating, Ventilation and Air Conditioning (HVAC) industry be reconfigured and optimized for efficiency.
These are admirable, thoughtful goals, to be sure – the HVAC industry is a disaster ecologically, and creates far more than its fair share of energy loss and GHG emissions – and any environmentalist should be proud of California for putting them forward… but are they possible?
Is there strong enough proof-of-principal to indicate reliably that any house can be built zero net energy, let alone every house in the state? And how in gods’ name can you get every California commercial building to zero net energy when they’re filled with liquid plasma flat panels, pda’s, and cosmetic recessed lighting? This is California: birthplace of the technology sector. There’s only so much roof-space for solar panels, and only so much fiberglass insulation to blow into so many crawl spaces…
Deep and substantive changes to the way we go about our lives need to be made, and we need to start somewhere, and making that a policy-priority is admirable and courageous; but requiring the utilities to somehow account for all of humanity’s wasteful, selfish consumption patterns is – facially, theoretically, and pragmatically – ludicrous.
The IOUs will fight this proposal tooth and nail, and why shouldn’t they? Their job is to sell us energy, not to singlehandedly exonerate us from our guilt in the coming climate catastrophe.