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PSC quandary: Will boosting conservation raise electric rates?

TALLAHASSEE — Should the state's electric companies be required to reward customers who install energy-efficient light bulbs, buy energy-saving appliances, replace inefficient windows or make other investments that save electricity?

That's one of the questions the Florida Public Service Commission will decide today when it determines how much energy the state's seven largest utilities should be required to save over the next five years.

The debate will be one more test of whether the agency, battered by recent allegations that staff and commissioners are too cozy with the utilities it regulates, can distance itself from the agendas of the energy companies.

Florida Power & Light, Progress Energy and Tampa Electric say they shouldn't be required to reward people for doing things they should already be doing. They argue that they have programs in place to encourage people to curb their energy usage and that if the PSC forces them to do more, they will have to raise rates.

"It's a balance," said Mayco Villafana, FPL spokesman. "If you do too much energy efficiency, a la what the conservationists are asking for, you are going to increase electric rates. You are reducing consumption, but you still have to pay for existing power plants, transmission lines plus any new construction."

It's a classic chicken-and-egg problem for the utility regulators. They've let the companies start charging customers for new nuclear power and natural gas-powered generators based on the companies' predictions that Florida needs to double its electricity capacity by 2050. But if conservation reduces demand, will existing customers be forced to pay more?

"How outrageous is that?" asked Kristin Jacobs, a Broward County commissioner and chairwoman of the county's Climate Change Task Force. "We should just continue to stumble along in our wasteful, excessive ways?"

She sent a letter to the PSC in October saying that Broward and 77 other municipalities want the PSC to require utilities to set aggressive energy conservation goals that will help reduce greenhouse gas emissions from power plants 7 percent by 2012.

Instead, the PSC staff rejected those approaches, pointing to the weak economy as a reason for not tinkering with the possibility that demand could decline and force rates to rise. The PSC recommended more "public information'' about energy-saving programs and suggested a pilot project to offset the costs of solar water heaters.

Jacobs called it "antiquated thinking. … The whole world is shifting from those arguments except in Florida."

Environmentalists want the PSC to demand that the utilities match 17 other states and require electric companies to save at least 1 percent of their energy demand through efficiency each year, up from 0.02 percent right now.

They argue that this will not only reduce emissions of global-warming greenhouse gases but save customers in the long run by eliminating or postponing the need for the construction of expensive power plants.

"If you can meet the growth demand with efficiencies, you can avoid the need to build expensive power plants," said Susan Glickman, a lobbyist for the Southern Alliance for Clean Energy and National Resources Defense Council.

FPL noted that it has been ranked by the U.S. Energy Department as one of the most energy-efficient companies in the nation, using conservation to offset the construction of 12 power plants sine 1980.

Mary Ellen Klas can be reached at [email protected]

PSC quandary: Will boosting conservation raise electric rates? 11/09/09 [Last modified: Tuesday, November 10, 2009 10:20am]
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