Utilities Spending Less on Energy Efficiency Despite Higher Fuel Prices

As extreme weather events strain electric grids, “a new survey of energy-efficiency programs at the nation’s 53 largest utilities finds that their energy savings dropped more than 5 percent between 2018 and 2021,” reports Carl Smith in Governing.

As the article points out, “Of all the strategies for reducing CO2 emissions, energy efficiency would seem to be the easiest for all stakeholders to embrace. It means wasting less of a vital resource that has limits and is costly to produce.” Yet many utilities in states without strict energy efficiency standards are failing to invest in efficiency programs, according to the survey conducted by the American Council for an Energy-Efficient Economy (ACEEE). “Most of the utilities that scored well ‘are in states that have enacted robust energy savings targets and provide strong regulatory support for achieving those targets,’ ACEEE says.”

One solution, Smith points out, is using performance-based regulation (PBR), which incentivizes utilities to reach efficiency goals. Additionally, building “a culture of efficiency” among customers can help utilities manage limited resources during peak demand to avoid blackouts and power outages. “For utilities whose regulatory framework doesn’t incentivize adding new production capacity, efficiency can increase the potential to accommodate new customers.”