State’s energy-efficiency programs generate big customer benefits but are undermined by legacy gas programs, new OPC analysis shows
BALTIMORE – Over its three-year cycle of 2021-2023, Maryland’s “EmPOWER” programs generated more than 26 million megawatt-hours of lifetime electricity savings at an average cost of 3.5 cents/kWh, roughly one-third the cost of generated electricity, according to a new report from the Office of People’s Counsel filed yesterday with the Public Service Commission. In 2023 alone, EmPOWER programs saved as much power as used in more than 700,000 homes in a year, OPC’s study found.
But despite their benefits, utility-administered, customer-funded EmPOWER programs continue to undermine residential customers’ economic interests as well as State climate policy by locking customers into long-lived gas appliances, OPC’s report found. One gas utility provided financial incentives for more than 18,000 gas appliances over 2021-2031, including 12,000 in new homes. If EmPOWER had successfully promoted heat pumps in those new homes, OPC’s report found, the greenhouse gas reductions would have been greater than those from all of the utility’s 2021-2023 EmPOWER programs combined.
“EmPOWER should be advancing the interests of customers and furthering the State’s climate goals by transforming markets in favor of electrification,” said Maryland People’s Counsel David Lapp. “Instead, some programs are incentivizing customers to lock in fossil fuels against their own economic interests. Unfortunately, those customers will face a hard choice between staying on gas service for 10-20 years as distribution rates continue to increase or replacing their furnaces before the end of their useful lives.”
With over 70 pages, 39 figures and nine tables, OPC’s report, prepared by technical consultant VEIC, provides a comprehensive analysis of EmPOWER for 2021-2023. It analyzes nine categories of EmPOWER programs and compares the performance of the programs administered by the State’s six largest utilities. The report also evaluates the programs run by the Department of Housing and Community Development, which administers EmPOWER for limited-income households. All the programs are funded by utility customers through a surcharge listed on customer bills.
Utility HVAC programs fell significantly short of targets, OPC’s analysis found. These programs aim to promote energy-efficient heating and cooling technologies and have great potential for energy savings and greenhouse gas (GHG) emissions reductions. Space heating and cooling improvements make up over 70 percent of the opportunity for cost-effective GHG reductions in Maryland homes, but the HVAC programs currently represent only about 5 percent of EmPOWER GHG reductions, the report found.
Only SMECO hit its HVAC targets for electric savings, with other utilities coming in at 60-75 percent of their targets. BGE achieved less than 2 percent of its gas savings forecast for HVAC, a result OPC’s report called “confounding.”
Further, Maryland utilities continued to promote more installations of central air conditioners (CACs) than heat pumps. Aside from heating homes, air source heat pumps (arguably misnamed) can also provide cooling while using less energy and creating bill savings compared to CACs. Many other jurisdictions have ended CAC incentives because they compete with efforts to promote heat pumps, the report notes. EmPOWER is also failing to advance the adoption of heat pump water heaters, accounting for less than 2 percent of water heater sales in the State.
The report also documents significant differences in utility performance. For example, from 2017 through 2023, Delmarva Power achieved more than twice as much energy savings per participant as Baltimore Gas & Electric for “Home Performance” programs, and from 2021 to 2023, Pepco converted nearly twice as many home energy audits into retrofits than did BGE. For residential new construction programs in the most recent cycle, Pepco spent twice as much to save a kilowatt hour as the lowest cost utility spent.
OPC’s report found that for the 2021-2023 cycle, participation in DHCD’s limited-income households—households at 250 percent or less of the federal poverty level—was 38 percent of that forecasted, while program spending was 80 percent and energy savings 61 percent of forecasts. In 2023, DHCD programs served just 2.5 percent of eligible households, well short of DHCD’s goals, even as DHCD saw substantial increases in applications for assistance, reflecting increased outreach and marketing.
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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