My view: Enact energy efficiency requirements immediately

Gail Ryba |

2/10/2008 - 2/10/08

The Coalition for Clean Affordable Energy and all of its affiliated environmental and consumer organizations support House Bill 305, the amendments to the Efficient Use of Energy Act.

The affiliated groups include the Rio Grande Chapter of the Sierra Club, Community Action New Mexico, Physicians for Social Responsibility, Environment New Mexico and 10 other member groups. HB 305 is also one of four priority bills for the Environmental Alliance of New Mexico, which represents a broad spectrum of environmental groups, not just those with a direct interest in energy.

The bill sets requirements for energy efficiency: In 2014 utilities must save an amount of energy equal to 5 percent of their 2005 sales, and in 2020, they must save an amount of energy equal to 10 percent of their 2005 sales.

The bill also allows utilities to specifically provide efficiency programs for low-income consumers (which is currently not allowed).

The fact is, energy efficiency costs 2 to 3 cents/kWh, while new electricity generation costs at least 6 cents/kWh, if not 8 cents/kWh or more. A few years ago, Vice President Dick Cheney suggested that energy efficiency was a matter of "personal virtue," but he clearly had the interests of the energy industry at heart.

CCAE contends that energy efficiency is in the interest of the consumer, and with HB 305 we are pushing utilities to make sure they pursue all cost-effective energy efficiency. The 5 percent and 10 percent targets are floors, not ceilings. Achieving these targets will create new jobs and lead to immediate reductions in carbon dioxide emissions from our utility sector.

HB 305 offers utilities the opportunity to earn a profit on energy efficiency, with satisfactory program performance. The bill does not provide any guarantees of profit for efficiency efforts. However, utilities today do effectively have a guaranteed profit when they build coal and nuclear plants because of the past 50 years of regulatory practice which gives a steady return to utility shareholders.

This legislation flips that incentive on its head and is designed to ensure that utilities give us cheaper energy efficiency first, before they build new, more expensive power plants, thus keeping both rates and bills as low as possible. It will be up to the Public Regulation Commission, the Attorney General's Consumer Protection staff, CCAE and other stakeholders to ensure that the bar is set sufficiently high to truly transform the behavior of our utilities.

Prior to the Public Regulation Commission awarding any incentive to a utility, program performance will be reviewed by an independent auditor. CCAE has posted the first review performed on the Public Service Co. of New Mexico's first year of gas energy efficiency programs on its Web site www.nmccae.org and click on "Review of PNM Efficiency Programs". It is a thorough critique of the successes and failings of PNM's first year efforts. All future energy efficiency will be similarly monitored by the PRC and other stakeholders before any incentives are awarded.

About eight states currently offer some form of incentive to utilities for energy efficiency, and all perform careful monitoring and verification prior to awarding any incentives. In these states, the incentives that utilities are given are a small fraction of the net economic benefits resulting from the energy efficiency programs. This means that consumers get the majority of the net benefits, not utility shareholders or executives. HB 305 will result in the same "win-win" outcome in New Mexico.

Anyone with questions about HB 305 is welcome to call the CCAE office at 820-1170.

Gail Ryba is the executive director of the Coalition for Clean Affordable Energy based in Santa Fe.