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Maryland agency wants to set energy savings target for utilities

By: Mary Powers |

Maryland’s consumer advocate has recommended that regulators set a specific energy savings target for utilities to meet during the next three years after examining utility proposals for future savings.

The utilities covered by the state’s EmPower law appear to be slowing down their efforts to seek energy efficiency and peak demand reductions, the Office of the People’s Counsel said in comments filed Friday with the Public Service Commission.

Vermont Energy Investment, the consumer advocate’s consultant, suspects that a primary driver in the slowdown is that the 15% reduction goals set by 2008 legislation have come to their natural conclusion and utilities, for the most part, have met those goals.

The 2008 law requires the state’s four investor-owned utilities and Southern Maryland Electric Cooperative to reduce usage and peak demand 15% by 2015. “Without a clear goal established to take the place of the 2008 legislative goals, there is nothing compelling the utilities to expand their efforts,” the consumer advocate said.

Utilities Baltimore Gas & Electric, Pepco, Delmarva Power, Potomac Electric and SMECO, filed in early September their plans to reduce energy use and peak demand from 2015 through 2017.

VEIC said in a report to the OPC that it was surprised to see that the utilities propose to ramp down savings below current levels and flatten investment at 2013 levels.

“The residential programs have delivered increased energy savings year over year from 2009 to 2013, with average annual savings growth of 55% per year during this period,” the report said.

The consultant recommended that the PSC consider directing the utilities to achieve an annual average net savings rate of 2% of 2012 residential sales.

A 2% net annual rate would result in cumulative annual savings of 14% of 2012 residential sales by 2017, the consultant said.

VEIC recommended that the PSC include geographic and market segment targets and lifetime energy savings and net benefit targets to ensure short-term and long-term energy savings.

The Maryland Energy Administration has proposed the addition of shareholder incentives to encourage IOUs to increase energy savings, but the OPC opposes the proposal. The utilities already have an incentive, the OPC said, noting that utility revenue is decoupled from electricity sales so they bear no risk from the loss of sales from efficiency savings.

The PSC staff agreed that the achievement to date is laudable, but the utilities’ performance over the next three years appears to be plateauing or declining.

Through mid-2014, annual residential and commercial savings were 2.755 million MWh of energy savings and 1,569.8 MW of peak demand reduction, the staff said. The utilities would add an additional total savings of 1.98 million MWh and about 1,603 MW in sustained demand reduction from 2015 through 2017, the staff said.

SMECO actually see a 7% decline in savings from 2015 through 2017 and all other utilities but BGE will see a 7-12% growth in savings. BGE expects to accrue another 20% of savings primarily because of its advanced-meter-infrastructure-enabled dynamic pricing program and its combined heat and power program fully coming online, the staff said.