The sweeping regulatory reform implemented in Michigan over the past year is often couched as a response to the economic crisis. Decoupling rates from utility profits, the reasoning goes, will...
Stabilizing California's Demand
The real reasons behind the state’s energy savings.
CEC’s estimate of California’s historical cumulative EE savings shown in Figure 1, so that the utility EE program savings are layered in first, followed by building and appliance standard savings. 26
This is in part because the utilities have relied on EE measures that are short-lived, such as compact fluorescent lamps, (or CFLs). In essence what this means is the California utilities are treading water when it comes to growing cumulative long-term EE savings. 27
The historical California utility EE program savings data used by the CEC in its DSM forecasting model is as reported by the utilities on an ex ante basis—or prior to measurement and verification. Recent preliminary independent analysis of the California utilities’ 2006 and 2007 reported EE accomplishments indicate the utilities’ claimed savings to be off or high by a significant amount. 28
Not until 1989 were utility-reported savings adjusted for free ridership or net-to-gross (NTG) ratios. In response to the possible argument that via spillover (or “free drivers”), the California utilities have caused much greater levels of EE than reflected in Figure 1, it is important to note two important facts: The current NTG ratios were in fact derived by the California utilities; and the current NTG values include the effects of free ridership and both participant and nonparticipant spillover. 29
From 1989 through 1999, some billing analysis also was used to adjust reported savings on an ex post basis. Since that time, the EE savings data has reverted to utility-reported ex ante savings. Also, for the first decade of run-up in claimed EE savings from zero to close to 15,000 GWh, the utility EE programs largely were home audits and education and information programs, with the first cash rebate given in 1982. Thus, to represent those EE savings as equivalent “steel in the ground” supply-side resources is extremely far-fetched. Further, about 10 percent of the generation and capacity savings are ascribed to utility T&D conservation voltage reduction implemented from 1975 through 1980. Such utility-system efficiency savings, while beneficial, are not generally classified as consumer EE.
If the current trend continues (from 2006 through 2008) in utility EE savings as forecasted by the utilities, there will be little if any new or incremental utility EE savings towards the CPUC’s aggressive EE saving targets. That trend can be seen in the forecast of California’s cumulative utility EE program savings from 2004 to 2013, based on PG&E, SCE, and SDG&E’s forecast of 2006 through 2008 EE portfolio savings (see Figure 7) .30 To develop this forecast, a weighted average EE measure (energy useful life) EUL of 7.1 years was used, calculated from the IOUs’ forecasts of the mix of EE measures in their 2006 through 2008 EE portfolios. By 2013 there will be little if any gains in new or incremental GWh savings. 31(See Fig. 7)
Over the past 20 years, there has been a strong divergence between California and the United States with regard to per capita electricity consumption. This divergence has been attributed to California’s ambitious and far-reaching EE programs and standards. However,