Dive Brief:
- The Florida Public Service Commission on Tuesday voted 3-2 to adopt staff’s proposed changes to the state’s energy efficiency goal-setting process while also rejecting more robust revisions to the process that were proposed by the Southern Alliance for Clean Energy and other consumer and efficiency advocates.
- Changes to the goal-setting process will make it more administratively efficient, but SACE and others say the new rule largely leaves in place cost-effectiveness tests that obscure the true value of efficiency.
- The rule adopted by commissioners “doesn't give you a line of sight on whether an energy efficiency investment offsets more expensive power generation,” George Cavros, an energy policy attorney and SACE Florida director, said at Tuesday’s hearing on the rule.
Dive Insight:
The PSC approved changes to the efficiency goal-setting process in March, but advocates subsequently requested Tuesday’s hearing to ask commissioners to consider modernizing the rules ahead of next year’s work to set new utility energy savings targets.
The PSC “missed a key opportunity to put the state on a path to lower power bills,” Cavros said in a statement after the group’s changes were rejected. SACE will “continue to fight for meaningful energy efficiency goals and customer programs in next year’s goal-setting proceeding.”
The PSC sets utility energy savings goals every five years for a 10-year period. In 2014 Florida targets were substantially reduced over cost concerns, and in 2019 utilities proposed almost no increases to their energy savings targets.
SACE is critical of the commission’s reliance on a ratepayer impact, or RIM, test, which considers energy efficiency as lost revenue for utilities without valuing savings, and a total resource cost test which the group says overstates costs.
“Unfortunately, they provide an incomplete perspective,” Cavros said. “The RIM test is more of a lost sales test than it is [a] cost effectiveness test. ... And that's why we've proposed adding the utility cost test,” or UCT, also known as the program administrator test.
SACE and other groups were also critical of the use of a two-year payback screen, which Cavros said “muddles that picture even further.”
“Florida is the only state in the union that uses a two-year payback screen to address free ridership. It's not standard industry practice,” he said.
Florida Power & Light Senior Attorney William Cox told commissioners the rule changes that were ultimately adopted “will benefit all of our customers” and “will add clarity and transparency to the goal-setting process.”
Conversely, Cox said the rule changes proposed by efficiency advocates “would result in less flexibility, a less efficient goal-setting process and what we believe will be ultimately higher rates for utility customers.”
The addition of a utility cost test would “no doubt increase costs for utility customers,” he added. “The UCT intentionally discards ... the RIM test’s critical consideration of pressure on electric rates.”
Other utilities, including Duke Energy, told the commission they largely agreed with FPL’s comments.
PSC Chairman Andrew Giles Fay acknowledged ahead of the vote that it had been almost 30 years since the efficiency rules were put in place “and there hasn't been a material change since then. And so this was a heavy lift, just to make any change to the rule.”
The rule changes the commission did adopt should allow for more “creativity” in the development of efficiency programs, Fay said. “I still think, going forward, there'll be some optimism as to what we'll see for these programs.”
