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It's a War Out There: A Gas Man Questions Electric "Efficiency".

Fortnightly Magazine - December 1996

avoided costs for serving a typical gas or electric water heater:14

Figure 2. Avoided Costs

Natural Gas vs. Electricity

Since the vertical axes of the two graphs are based upon different units, the avoided-cost disparities are not readily apparent. However, by simultaneously inverting these values (i.e., energy per unit cost) and using the same units (i.e., Btu/¢), the disparity (in terms of the inverse of avoided costs) becomes much more obvious, as illustrated in the following graph:

Figure 3. Energy Content (Btu/¢)

Natural Gas vs. Electricity

On an equivalent energy basis in the case just illustrated, the avoided energy cost for electric generation is nearly two to three times greater than that for a gas utility.15 The difference between electric utility and gas utility avoided costs appears even more pronounced if new capacity additions are needed. On this basis, avoided electric costs range from four to seven times more than a gas utility needs to serve a similar portion of its load curve.16 Therefore, it stands to reason that for natural gas air conditioning (an offpeak load) versus electric air conditioning (a peak load) such differentials would be greater still. However, avoided costs are not limited to capacity costs; transmission and distribution (T&D) resources can also be avoided. T&D considerations can significantly increase overall avoided costs and may exceed capacity costs.

Cost-Inefficient DSM:

Some Concrete Examples

The following two graphs illustrate the overall effects of thermal storage based upon electric utility responses to data requests in intervention proceedings:17

Figure 4. Thermal Storage DSM: Energy Use Before & After (Composite Analysis)

Docket 11735, Texas PUC

Figure 5. Thermal Storage DSM:

Billing Demand Before & After

Docket 11735, Texas PUC

As illustrated above, energy consumption and peak summer demand increased instead of decreased as a result of thermal storage approved in the Texas Public Utilities Commission (PUC) docket. It is worth noting that this utility in question later received a national DSM award in recognition of its demand avoidance results for this program. It is also worth noting that thermal storage is being touted as the large-tonnage cooling method of choice for dealing with the resultant complexities of real-time pricing in a restructured electric utility environment. Unfortunately, offpeak thermal storage programs make up only one of many ways that electric utilities have thwarted conservation under the guise of DSM and IRP.

Moving to the residential sector, some areas within Texas subject to a decade of electric utility DSM programs have shown that the overall proportion of Texas households with electric space heating increased by over 40 percent, but decreased proportionately for natural gas. This trend was reported by a recent study through the Texas Railroad Commission.18 Also analyzed were life-cycle emissions and consumer operating costs that significantly increased as a result of the vast majority of electric utility DSM programs investigated within this study. It is important to recognize that the initial DSM/IRP enabling legislation in Texas called for the "conservation of resources" and most electric utilities in Texas quickly adopted the notion that "valley filling" and "strategic load growth" qualified as "conservation" through