The debate about freeridership in energy efficiency isn’t wrong, but it is wrongheaded.
Hossein Haeri is executive director and M. Sami Khawaja is senior vice president at The Cadmus Group. The authors acknowledge the research assistance of Seth Kadish of The Cadmus Group.
The energy efficiency programs administered by California’s investor-owned utilities reported 6,500 GWh of electricity and 84 million therms of natural gas savings for the three-year program cycle from 2006 to 2008. Yet valuations of these programs later credited the utilities for less than two-thirds of the electricity and slightly more than just one-half of the natural gas savings the utilities claimed. The rest—2,400 GWh and 40 million therms, to be exact—was claimed by freeriders.
And for the next three-year program cycle, from 2010 to 2012, California utilities appear set to invest $3.1 billion from 2010 to 2012 to meet the saving targets, 6,965 GWh and 153 million therms, approved by the California Public Utilities Commission (CPUC).1 However, if things go as they did before—and indications are that they might—much of these savings will again go to freeriders.