Wednesday, December 21, 2011

Investing $1 to Save $8: Smart Energy Conservation Pays Off For PA!

It is better than a skyrocketing Inital Public Offering.  Or, at a time when investments in treasury bonds pay less than 2% interest, an analysis of Pennsylvania's Act 129 finds that each dollar electricity utilities invest in energy efficiency is returning 8 dollars to electricity ratepayers. See the report by Optimal Energy done for PennFuture at

Passed in October 2008, Act 129 requires Pennsylvania's electricity utilities to provide energy efficiency services that reduce their electric load by 1% by May 31, 2011 and by 3% by May, 2013.  Additionally peak demand must be reduced by 4.5% by 2013.  Optimal Energy finds that the electricity utilities have exceeded by 41% the 2011 goal.

Other key data the levelized cost of the energy efficiency measures is 1.6 cents per kilowatt-hour.  No new electricity generation could be built for that amount.  It is a total bargain.

Annual savings will be $278 million or a present value of $2.3 billion over the expected life of the efficiency measures.  All that for an upfront cost of $281 million.

Act 129 is also avoiding millions of tons of pollution each year and has created 4,000 jobs so far.

Another benefit of Act 129 is a healthy competitive electricity market.  A successful competitive electricity market requires healthy supply and demand curves to set prices.  Act 129 and PJM Demand Response programs are policies that have made sure that electricity consumers have choices about how much energy they consume and when.

Pennsylvania's electricity utilities and the Pennsylvania Public Utility Commission should be commended for implementing well Act 129, a very smart and important law.

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