Fate of Conservation Mandates

Deck: 

Many states allow private opt-outs, but Florida bucks the trend.

Fortnightly Magazine - March 2016
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For the past several years state legislators have been taking a look at mandates imposed on energy utilities to offer programs that promote conservation, renewable power, and energy efficiency. A number of states have acted to reduce, eliminate or postpone such obligations, including high-profile programs in Ohio and Indiana. Most recently, however, a decision issued by the Florida Public Service Commission suggests movement in the opposite direction.

These developments invite questions about whether conservation and energy efficiency are public or private goods. Should regulators allow customers to opt-out from such programs, on the theory that they know best how to tailor their investments to get the best results? Or should all customers be made to participate in a coordinated fashion, since conservation and efficiency confer benefits on society at large?

Florida: Wal-Mart Rebuffed

Florida regulators, who were not bound by any new legislation aimed at curtailing mandates, voted this past January to reject a request by large commercial customers in the state to switch to an opt-out model for energy efficiency initiatives; i.e. to allow them to come up with their own self-directed programs and at the same time benefit from an exemption from paying for costs associated with established conservation programs offered by utilities. This decision, issued by the Florida Public Service Commission, concluded that the opt-out advocates had not provided convincing evidence to justify altering the state's long-held policy that since all ratepayers benefit from cost-effective demand-side management (DSM) measures, all ratepayers should share in the costs. Re Wal-Mart Stores East, LP et al., Docket No. 140226-EI, Order No. PSC-16-0011-FOF-EI, Jan. 5, 2016 (Fla.P.S.C.).

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