FERC’s new rule on compensation for demand resources tips the market balance toward negawatts. Arguably the commission’s economic analysis is flawed, and the rule represents a covert policy...
The Efficiency Mandate: Stimulating Energy Efficiency
NARUC decries conditions on states for federal grants.
But if regulators can’t provide the “assurances” the law requires, I don’t know how that will impact the bill’s overall goals.
I would say that although we expressed our concerns with the stimulus bill, it’s in our interest—indeed, the country’s interest—that it works. We want the money to get out to the states as quickly as possible, and to that end, we are interested in working with Congress and the administration to ensure the money is distributed.
Fortnightly: What are your specific concerns on how federal energy policies are affecting states' progress on conservation and energy efficiency?
Butler: We want Congress and the administration to encourage and reward, rather than mandate, innovative energy policies. The problem we had with the prescriptive decoupling language in earlier bills is that it ignored the good work that states are doing in terms of efficiency.
Decoupling is a tool in a state’s toolbox, and we don’t want anyone to think NARUC is against decoupling; that simply isn’t the case. However, we want Congress and the administration to know that decoupling is only one way to encourage efficiency. States like Vermont and Oregon are on the cutting edge of energy efficiency and only very recently considered decoupling measures. California, often seen as a decoupling success story, runs a ton of other efficiency programs as well. The problem is that while decoupling, if used correctly, can be a useful and effective tool, by no means is it the only way to do this.
States have long been pioneers on the energy efficiency and conservation front. Many of the policies Congress is considering have been used and perfected at the state level. If we start mandating particular policies, we run the risk of losing this entrepreneurial spirit and wasting valuable time and money. Decoupling isn’t appropriate in every situation, and forcing states to implement such a policy is a major distraction that will complicate their efforts to implement effective efficiency programs.
Fortnightly: Now that the Stimulus Bill is law, what more should the federal government do to encourage energy efficiency and conservation? What more should NARUC be doing to encourage the right actions at the state level?
Butler: We believe the government should look at what all the states are doing and instead of mandating specific programs, Congress should reward the intrepid efforts by the states that encourage conservation. Look at results, look at what works. Don’t focus on a buzzword that may or may not result in the conservation levels we need.
States recognize the need to become more efficient. In fact, at NARUC, we’ve been focusing on these issues for a long time. We’ve passed multiple resolutions encouraging efficiency and the adoption of innovative rate methodologies, and we’ve also taken the lead role in efforts like the National Action Plan for Energy Efficiency.
Our Energy Resources and the Environment Committee has been at the forefront of this topic, and if you’ve attended any NARUC meetings in the past five years, I’m sure you’ve noticed that ERE meetings are now some of the most well-attended committee