Penny wise, kilowatt foolish

Imagine you have been given a task.  Over a five year period you are to bring in more clients to your company, and in the early years you will be given more resources to bring in each new client, but as the years go on, you will be expected to bring in more clients with fewer resources.  You could look at the requirement of bringing in new customers and go try to get the easiest prospects first, hoping that the momentum from new business will create more new business.  On the other hand, you could look at your mission and see that in the later years, you get fewer dollars to spend bringing in each new client, so maybe you should leave easier work for that time and focus first on using the greater per client resources on tougher prospects.

This describes what occurred when ComEd and Ameren, the electric utilities in Illinois, negotiated an agreement with the state's General Assembly in 2007.  The state created an energy efficiency portfolio standard (EEPS) that the utilities had to meet, and in return, the state would allow the utilities to create a customer charge that would fund that work.  In order to keep the utilities honest, the General Assembly capped the amount the utilities could collect from the customers, but continually ramped up the required energy efficiency.  Although no one will admit they got all they wanted out of the deal, the parties agreed and the mandate became law.

Fast forward six years, and ComEd wants to change the rules.  The investor-owned utility claims it cannot meet the desired efficiency mandate without more resources.  It wants to increase the customer charge for energy efficiency, raising rates, without much of a performance record for delivering on the efficiency.  The reason ComEd finds itself in this predicament is that it focused early efforts on large customers, a relatively small group of users that they can reach with little effort.  Once they had tapped that pool, they started to focus on smaller (and more numerous) users.  This proves difficult and resource intensive.  It takes a network of advocates, working in communities across the state, delivering smaller and smaller bundles of efficiency but from a larger pool of users.  It appears the utility assumed that mass-media campaigns would bring in the residential and small business customers, while they focused personal efforts on larger users.

It should have been reversed.  If the utilities had used the early resources to build networks, incentivize the development of community organizations, and create the infrastructure for efficiency, then they would have been able to build on that in each subsequent year.  By focusing their resources on matching incentives to customers that already had an incentive to save (because of their large expenses associated with energy), ComEd and Ameren delivered savings, but not the culture to deliver more savings in the future.

All of this is not, at its core, the fault of ComEd and Ameren, per se.  The fault lies in the business model of the investor-owned utility.  They make their money based upon high usage...more kilowatt-hours means more revenue.  This runs contrary to the concept of energy efficiency, which is why only a state mandate was necessary.  Utilities are horrible advocates for energy efficiency because it runs counter to their business model.  If we really want efficiency, we need to change the model.