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The following commentary was written by Shelley Hudson Robbins, a project director at Clean Energy Group. Her work focuses on the Phase Out Peakers Project and the Resilient Power Project. See our commentary guidelines for more information.
With the click of a button, on January 21, 2022, a U.S. Energy Information Agency web page quietly changed. If only it had changed four months sooner.
If you look up the Energy Information Agency’s (EIA) web page explaining energy efficiency, you will see a lengthy discussion of how energy efficiency and energy conservation are “related and often complimentary or overlapping ways to avoid or reduce energy consumption.” The language emphasizes the importance of these “complimentary or overlapping” efficiency and conservation measures in their role reducing electricity demand, which then benefits all ratepayers by reducing the cost of electricity generation, transmission, and distribution. The new page is quite robust.
That same web page, prior to January 21, did not include these important facts. Instead, it drew a very stark line between efficiency and conservation and then proceeded to dwell upon the “rebound effect,” suggesting energy efficiency measures are pointless.
This change seems like a wonky, immaterial thing, but it is not.
The words on the old EIA page had a significant impact on a proposal filed with the South Carolina Public Service Commission (PSC) last year. That proposal could have opened the door to an innovative way for Duke Energy to utilize new concepts and technologies behind its customers’ meters to reduce peak demand, which is typically met by the most expensive and dirtiest energy on the grid.
The Smart $aver Solar as Energy Efficiency program, filed in South Carolina in April 2021, represented the culmination of a landmark settlement between Duke and a long list of stakeholders representing the rooftop solar industry, environmental advocates working in the energy justice space, and clean energy advocates. The concept involved combining smart meters, time-of-use rates, critical peak pricing, a performance incentive, a rebate, demand response (utility control of a smart thermostat) and rooftop solar. The demand response element would have allowed Duke to shave winter peaks more effectively, in addition to the significant summer peak-shaving accomplished by solar.
The proposal was lauded nationally for addressing the concept of “cost shift” between solar and non-solar ratepayers, so parties were shocked when the South Carolina Office of Regulatory Staff (ORS) opposed the filing.
ORS’s primary expert witness, Brian Horii with Energy and Environmental Economics, Inc. (E3), cited the definition of energy efficiency from the 2021 EIA website in his pre-filed testimony filed on September 21. He explained how the program did not meet that definition and then stated unequivocally that including solar in the EE program “would contradict long standing, industry-wide understanding of what constitutes EE to the detriment of all South Carolina utility customers.”
During the five days of testimony in November of 2021, ORS’s definition of energy efficiency and the EIA website were referred to repeatedly in testimony and in questions from commissioners. But the “long standing” understanding of what constitutes energy efficiency that Horii emphasized in his testimony… changed, four months to the day after his testimony was filed.
And on January 13, 2022, the SC Public Service Commission rejected Duke’s proposal by a vote of 4-2, one week before the EIA updated the language. The PSC had relied on ORS’s assertion that there is a bright line between conservation and efficiency, that the program falls in a distinct “conservation” bucket, and it should not be part of Duke’s energy efficiency program measures. By rejecting the idea that solar could be part of a carefully designed energy efficiency program, the PSC rejected the notion that reducing expensive and dirty energy generated to meet peak demand has value for all customers.
When the SC PSC killed the proposal, they also killed the additional programs that were part of the settlement agreement.
According to the agreement, approval of the Smart $aver Solar as EE program in both South Carolina and North Carolina would lead to expansion of the program to include “other peak load reduction technologies” such as battery storage and heat pump water heaters, as well as a process to explore a program tailored to low-income customers. Approval would have opened the door to real solutions to South Carolina’s historic energy justice problems by putting energy resources in the hands of customers in a way that reduces costs and increases resilience. Instead, that door was closed.
Would the outcomes have differed if the current EIA language had been in place last fall? The updated language clearly acknowledges the importance of expanding the definition of efficiency to embrace conservation for the sake of the climate, ratepayers, and communities that live near dirty power plants. Duke has now filed the program in North Carolina, with the continued support of the settlement stakeholders, but that proposal has been challenged by others, including the North Carolina Office of Public Staff, so the debate in the Carolinas continues. We will now see if the EIA changes matter.