Energy-Savings Programs Need to Evolve to Meet Climate, Low-Income Needs, People’s Counsel Report Shows
BALTIMORE – Utility-customer-funded energy-savings programs delivered nearly $1 billion in lifetime benefits from electricity and gas savings in 2022, but those savings are far below what’s cost effective and achievable through more ambitious program designs and strategies, the Office of People’s Counsel found in a report released this week. Electricity savings cost 3.3 cents a kilowatt-hour—about half the cost of electricity in Maryland, OPC reported.
While having some successes, the energy-savings programs, known as EmPOWER, are largely failing to meet the needs of low-income customers, who collectively receive less in program benefits than they pay in the EmPOWER surcharge on their utility bills, OPC’s review explained. Recently passed legislation (HB 169 and SB 144) requires measures that should help address the unfairness of low-income households paying more in costs than they receive in benefits.
OPC’s report highlighted the need for EmPOWER to evolve from focusing on energy savings to greenhouse gas emissions (GHG) reductions. Although the current cycle of EmPOWER residential programs has reduced GHGs by 1.6 million metric tons to date, a Public Service Commission-ordered study found that 45 percent of residential GHG reduction potential will come from beneficial electrification, which is largely absent from EmPOWER programming today.
“Investments in energy-efficiency reduce energy bills over the long term while benefiting the environment,” People’s Counsel David S. Lapp said. “We have made important, yet modest, gains relative to the potential gains we can achieve. We need more ambitious program designs and strategies to create greater overall energy savings and reductions in greenhouse gas emissions.”
The EmPOWER programs are currently administered by six state utilities and the Department of Housing and Community Development. During the current program cycle, the electric utilities are saving more electricity in their residential programs than they forecasted—even though they have spent less than budgeted. This overall performance means that the utilities’ projections are conservative, OPC’s report explains.
The two gas utilities with EmPOWER programs are underperforming, however. OPC’s report shows that Baltimore Gas and Electric managed to save, in the first two years of the 2021-2023 EmPOWER program cycle, just 33 percent of the gas savings it had forecasted for the three-year cycle, making it unlikely that it will achieve its full forecasted savings. Meanwhile, about half of Washington Gas’s claimed energy savings are from replacing gas appliances with new gas-burning appliances that have incrementally higher efficiency, and especially from installing gas appliances in newly constructed homes. Most of these gas appliances have useful lives well past 2031, by which time Maryland has committed to reduce GHG emissions by 60 percent. Further, gas utilities are spending vast sums on infrastructure that means substantial increases in customer rates, as two reports released by OPC in late 2022 show.
“Each year that utility customers fund incentives for installation of gas equipment locks customers into paying higher and higher gas rates going forward,” Lapp said. “Further, installing new gas equipment makes it more difficult and more costly to achieve necessary GHG reductions.”
OPC’s report identifies numerous other areas for improvements in the EmPOWER programs, some of which are recurring issues. OPC’s full report, prepared by Vermont Energy Investment Corp., is available here.
The Maryland Office of People’s Counsel is an independent state agency that represents Maryland’s residential consumers of electric, natural gas, telecommunications, private water and certain transportation matters before the Public Service Commission, federal regulatory agencies and the courts.
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