Ratepayer Advocates Caution CPUC on Water Efficiency Efforts

By Published On: August 4, 2006

Allowing energy utilities to claim credit for energy savings stemming from water efficiency measures may undermine existing energy-efficiency programs, warned the Division of Ratepayer Advocates. The division also raised concerns about possible disparities between the savings benefits and burdens in comments filed July 31 in the California Public Utilities Commission’s proceeding on embedded energy savings in water efficiency. “We want to make sure that ratepayers are getting the benefits if they’re paying for it,” Cheryl Cox, DRA attorney, said. Regulators are trying to figure out how to allow investor-owned utilities to get credit for the energy saved by pumping and treating less water as a result of water-conserving appliances and devices funded under energy-efficiency programs (Circuit, July 21, 2006). The division wants the commission to hold off on authorizing utilities to claim energy credits associated with water efficiency measures they implement until they complete their current 2006-08 efficiency programs. Utilities have committed to achieving specific levels of energy savings under planned efficiency measure budgets. In the interim, the division suggested that the commission fund a pilot program with money not included in current utility energy-efficiency programs, so as not to displace already planned activities. The commission could use the results of that experiment to pave the way for including embedded savings in the utilities’ 2009-11 energy-efficiency programs. Until then, the commission should not allow utilities to substitute savings from water-conservation steps for already planned energy-efficiency expenditures, even though it might benefit their shareholders, the division wrote. One potential inequity, according to the division, is that people in one utility service area might pay for water efficiency measures that save energy in another utility service territory, thereby gaining no benefit. Water, it pointed out, often travels through numerous utility districts. Other entities, ranging from energy users to water and energy utilities, also submitted comments on the matter. The California Water Association – which represents private water utilities – applauded the commission’s interest in coupling energy and water efficiency programs. However, it told the commission that it must take into account the financial impacts on water utilities. The less water they deliver to customers, the more difficult it is for them to earn enough to maintain their delivery systems and operations, pointed out Jack Hawks, association executive director. Southern California Edison said it is ready to claim credit whenever authorized by the commission. The utility said it believes enough information is available to allow embedded energy savings to be quantified and assigned to utilities. However, Edison said it believes the commission should grant efficiency credit for embedded savings only when energy utilities can “document specific influence on the customer’s decision to implement the water conservation measure. Otherwise, the energy savings claimed may constitute free-ridership.” Small Business California joined the Division of Ratepayer Advocates in voicing concern that including virtually any form of water-conservation measure that saves energy in the current efficiency program cycle could dilute existing efforts. Allowing energy utilities to use “free” new savings from water efficiency measures risks “potentially downgrading the amount of commitment to delivering savings in other challenging program areas,” wrote Hank Ryan, the small business advocacy group’s executive director. “We tried to provide a middle path,” Ryan said. Under the group’s recommendation, utilities would be able to claim credit for energy savings during the current efficiency program cycle only when the measures involved required “end-user investment.” For instance, the group recommended that utilities not be able to claim additional energy savings credit from water saved by new prerinse spray valves because they are provided for free or at little cost to restaurant owners. However, the companies should be able to claim credit for new connectionless steamers, since restaurant owners spend a significant amount of money to purchase them, the group said. Both devices save energy and water on-site, but they also save energy by cutting down on the need to deliver water, which requires power.

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