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Iowans will lose access to home energy audits, insulation rebates, and light bulb discounts under new five-year efficiency plans proposed by utilities.
The plans, filed with the Iowa Utilities Board before a Monday deadline, are the first since a new state law capped the amount of money that utilities spend on the programs. The result is “a huge step back” for energy efficiency in the state, according to clean energy advocates.
MidAmerican Energy and Interstate Power & Light, an Alliant Energy subsidiary, emphasized the bill reductions most customers will see under the plans, but critics predicted those cuts will eventually be absorbed by the cost of new investments to meet growing energy use in the state.
“These plans are significantly smaller and leave significant energy-efficiency savings on the table, even more than in the past,” said Josh Mandelbaum, an attorney for the Environmental Law & Policy Center in Des Moines.
MidAmerican Energy is proposing to spend $257 million between 2019-2023 on programs estimated to save 898 million kilowatt-hours of electricity and nearly 8.3 million therms of natural gas. Annual energy savings would be about 50 percent less for electricity and 80 percent less for gas in 2019 compared to 2017, according to the Iowa Environmental Council.
Interstate Power & Light wants to spend about $238 million between 2019-2023 on programs aimed at saving 611 million kilowatt-hours of electricity and 2.5 million therms of natural gas. The annual energy savings under its plan represent a 25 percent decrease for electric and 75 percent less for gas in 2019 from 2017, according to the Iowa Environmental Council.
“Some folks are saying these programs will still be robust, but I think the reduction in savings makes clear we absolutely are not getting the same benefit to Iowa customers as under the previous process and law,” said Kerri Johannsen, energy program director for the Iowa Environmental Council.
Those smaller efficiency benefits will be accompanied by smaller energy bills for most customers, at least in the near term.
All customers pay into a fund that supports the efficiency programs. Starting in 2019, customers will for the first time see on their bills how much they are paying to support those energy-efficiency benefits.
MidAmerican estimated that an average residential customer who receives both gas and electricity from the company will save about $81 per year, while commercial customers could see around $172 in annual savings.
“MidAmerican Energy is offering our customers the best of both worlds,” CEO Adam Wright said in a press release. “MidAmerican Energy’s energy efficiency plan will put money back into our customers’ pockets and still provide a wide range of programs to encourage taking action to save energy.”
An Interstate spokesman said that the company calculated that the typical residential customer would save 1 percent annually on electric bills and 10 percent annually on natural gas bills.
Johannsen is skeptical about how long that trade-off will benefit customers.
“Maybe that charge on customer bills will be lower now, but customers have to look at what’s happening to their overall bill, and not just in the next few months, but the next few years,” Johannsen said.
Studies have shown well-designed energy efficiency programs save money for all customers, not just those who directly participate, because they slow the need to invest in expensive new power plants and distribution equipment — costs that get spread among all customers.
Along with cutting spending, MidAmerican and Interstate are proposing to eliminate some program features. MidAmerican wants to terminate subsidies for LED bulbs, for example. And both utilities want to end insulation incentives for all customers except those with low incomes. Also, new residential construction would no longer qualify for any benefits.
The most impactful change, according to Mandelbaum, is the request by both utilities to stop providing free in-person audits for business and residential customers. The utilities want to offer an online audit for homeowners, and no assistance for business customers.
“They’ve taken away audits and assessments, the road map to how you would do energy-efficiency savings,” Mandelbaum said. “It’s the precursor to an informed energy-efficiency plan. That’s a hugely important tool.”
The Iowa Utilities Board needs to approve both utilities’ plans. The programs will take effect no later than April 1, 2019, and be in effect through the end of 2023.
Read the utilities’ 2019-2023 energy efficiency plans:
MidAmerican Energy (Docket: EEP-2018-0002)
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Interstate Power and Light (Docket: EEP-2018-0003)
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The way I read this, the average Iowa customer would save 2% of their electric bills and 20% of their gas bills. It’s a shame to see the nature of these programs being lost in the ruckus of to and fro protectionism for natural gas. These programs are the cheapest resource. Because they are the cheapest resource they automatically reduce use of the most expensive resource. With electricity the programs produce avoided capacity savings which benefit all customers, even those who don’t participate in the programs, work for companies that participate in the programs, own companies which hire people who participate in the programs, shop at stores or buy products from business which participate in the programs or attend schools or go to hospitals that participate in the programs.
In other states this controversy is a purely political one, Republicans on one side and everyone who understands math on the other side. I can’t be sure about Iowa, but I can be sure that Iowa is boldly forging ahead with wind, and efficiency is a good fit with wind since it reduces electricity consumption in ways that soften the importance of wind variability.
The sticking point for utilities is usually compensation. A meaningful share of verified net savings should be provided to the utility. That gives them an economic incentive which matches their customers. I am quite sure that this proposed plan does not create that alignment. Maybe it won’t last very long.
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