FirstEnergy Efficiency Progam Fails to Meet 2012 Targets

FirstEnergy can’t meet the very unambitious efficiency targets they set for themselves for 2012.  The efficiency programs that WV Citizens Action Group forced on FE in the last PSC rate cases for FE’s WV subsidiaries Mon Power and Potomac Edison are the bare minimum that the PSC would allow them to get by with.  FE sees these programs as window dressing that it can use for PR, but little else.  Here is the evaluation report that FirstEnergy filed with the WV PSC.

The two tables below tell the tale.  They compare the program’s 2012 targets with actual results, in terms of calculated kwh saved.  The right hand columns show the percentage of the targets that were actually achieved.

FE residential efficiency FE non residential efficiency

The report is full of excuses and rosy predictions for better luck in 2013, but the numbers tell the tale.  FE is just not serious.

The WV Department of Energy’s Draft Energy plan includes a special plan for implementing effective energy efficiency programs in WV.  The plan includes two excellent recommendations that neither the WV Legislature nor the WV PSC pursued.

If WV power companies are going to have any incentive to reduce electricity demand in our state, they need to be able to recover their overhead and plant costs some other way than on a per kwh basis.  That is what the decoupling recommendation is about.

B. Recommendations for Utilities and WV Public Service Commission

  • Implement Decoupling or a Similar Mechanism to Allow for Reasonable Recoveries of Utility Lost-Revenues Resulting from Energy Efficiency Programs

Because utilities are a vital component of both effective implementation and administration of EE, it is necessary to provide a framework for lost revenue recovery that, at a minimum, removes their disincentive to engage in EE programs. Decoupling a utility’s revenue from sales is less disruptive in states like West Virginia where deregulation has not occurred. However, choosing the right decoupling or alternative lost-revenue mechanisms, or a combination of those mechanisms with performance incentives like shared savings, necessitates an analysis of other factors as well. Considerations for administrative costs, regulatory efficiency, earnings attrition, and promotion of EE should also be taken to ensure the appropriate form of decoupling is selected.

Furthermore, accompanying the recommendation to implement a mechanism for lost-revenue recovery is the notion that potential ―off ramps or transitioning features should be examined before departing from traditional rate-making processes. Balancing accounts, rate banding, shared earnings, and course corrections for single events are all relevant factors that should all be examined to insure the transition from traditional rate-making procedures is fluid. Ensuring the change in structure has the intended effects and avoids harmful unintended consequences is a necessary component for making decoupling an effective regulatory policy.
Responsible Entity: WV Public Service Commission

  • Establish an Energy Efficiency Resource Standard with Targeted Goals for Producing Energy Savings via Energy Efficiency Programs

It is recommended that a mandatory Energy Efficiency Resource Standard be established to ensure EE programs within the state are meeting energy savings goals within given timeframes. Both cumulative and interim goals should be established. EERS have been proven to facilitate greater energy savings for EE programs than they would have had no goal been established. Although the Alternative and Renewable Energy Portfolio Act of 2009 establishes goals for WV investor-owned utilities to enhance its reliance on alternative forms of energy generation, there is not a mandate for the portion of EE which will contribute to those goals.
Responsible Entities: WV Public Service Commission, WV Legislature

Until the Legislature and the PSC get serious about designing programs that promote real energy efficiency investment, WV will remain locked in to increasingly expensive alternatives for meeting future energy needs.

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