The conservation plan for Progress Energy Florida that the Public Service Commission takes up Tuesday moves the state, the company and the industry in the wrong direction. The plan cuts the company's energy savings goals in half through the end of this decade. Conservation is the cheapest way to ensure that the state has an adequate and affordable generating capacity. The PSC should work with Progress Energy on an approach to meet its original targets.
The commission established a goal in 2009 for Progress Energy to use conservation measures to save 3,205 gigawatt-hours over the next 10 years. After talks between the two sides, the PSC staff has recommended that this target be reduced by more than half. The company said the original goal would cost a typical residential customer an average of $14.83 a month through 2019. The staff report said the rate impact was "disproportionately high," and it called for halving the targets, which also would cut the costs by half, to between $6 and $7 per month.
The commission clearly needs to balance the cost impacts to consumers. But it also has a responsibility to ensure that these estimates are fair and that utilities are pursuing the most cost-effective and meaningful conservation programs. The PSC staff reduced Progress Energy's cost estimate for reaching its original targets by more than $500 million after finding that Progress shifted the costs for an unrelated program to the conservation initiative. It also found the company initially planned to offer rebates that exceeded the costs of the work the rebates would cover.
Conservation advocates give Progress Energy credit for some of its energy-saving programs, but they say the company's approach is not effective or cost-efficient compared with utilities across the country. The commission should more closely scrutinize the plan to ensure that the cost estimates are fair and that the conservation programs are well designed to get the most bang for the buck. More than a dozen states are saving energy through conservation at levels four times that of Florida. Given that disparity, it is particularly disappointing the PSC staff would recommend to lower Progress Energy's goals and lessen the company's risk that it could be financially penalized for not hitting its targets.
The challenge for Florida is to step up, not back. And the challenge for the PSC is to show that it is not doing the bidding of Gov. Rick Scott, who has called for the regulatory agency to soften the state's efficiency goals. Florida's problem is that it has viewed conservation as a virtue, not a necessary component of smart energy policy. Energy efficiency costs money upfront, but the savings accumulate over time. In an era of high gasoline prices, concerns over offshore drilling, fears about the safety of nuclear power and overreliance on imported oil, conservation needs to play a meaningful role.
Progress Energy's initial goals would have saved enough energy to power 225,000 homes for a year. The commission should not let the company off the hook. It should keep the case open, allowing Progress Energy to move forward with programs that work while recasting those that don't. This is the balance that Florida's conservation law — and economic common sense — calls for.