Anyone who has paid an electric bill knows the importance of energy efficiency.
Turn off the lights when you leave the room, install energy-saving light bulbs, keep the thermostat at a reasonable temperature: Every day, energy consumers, both individual and corporate, analyze their energy use and make decisions that help them save money and decrease their carbon footprint.
For large companies that use a lot of energy, these decisions aren’t voluntary – and that’s causing a problem.
In 2008, Pennsylvania established Act 129, an energy-efficiency and conservation law that requires all electric companies with at least 100,000 customers to implement an energy-efficiency program approved by the state’s Public Utility Commission.
State law allows the major electric companies to spend up to $250 million across the state to meet energy-savings goals. Some of that money goes into audits of your home or business energy use, tips on how you can save money, and custom projects on how to save energy over time.
Depending on the customer’s needs, one such plan might be going into a large business and changing all the lighting.
But these efforts have been counterproductive when it comes to large manufacturers.
Large manufacturers end up paying a surcharge on their electric bills to support energy-savings projects throughout the utility’s coverage area. In some cases, manufacturers subsidize efficiency projects for competitors.
These manufacturers have been doing energy-efficiency analysis on their own for years as a way to save money. Some have efficiency engineers who are dedicated to that task and, in some cases, have more expertise than the utilities.
For large manufacturers using a lot of energy, even the smallest changes in energy price mean a large change in cost. These companies are already motivated to do all they can to reduce energy use as part of growing their bottom line.
Our firm represents large companies that pay tens of thousands of dollars a year to meet these mandates.
It makes more sense to allow manufacturers to use the $20,000 or $30,000 a month spent subsidizing these mandated energy plans on projects that could benefit their business and the economy.
Pennsylvania manufacturers already face stiff competition from other states and abroad. For decades, these manufacturers have implemented energy savings as a way to remain competitive – and these efforts were going on before Act 129.
We now have an opportunity to fix this problem.
Legislation now in the state Senate would allow companies to opt out of these state-required energy-efficiency programs. Senate Bill 805, sponsored by Sen. Lisa M. Boscola, D-Lehigh County, would allow large commercial and industrial energy users to voluntarily opt-out of Act 129’s utility-administered Energy Efficiency and Conservation (EE&C) Plans.
Boscola puts the case simply: “The vast majority of these large customers are being forced to participate in EE&C Plans that promise them no benefit while still costing between 2 percent and 5 percent of their total electricity spend.’’
Of the 24 states that have mandatory EE&C programs, 13 of them allow larger customers to opt out. Manufacturers in those 13 states enjoy a competitive advantage over our own companies.
When Pennsylvania manufacturers are forced to spend additional money to subsidize state energy-saving mandates, everybody pays. Not only are costs passed on to customers, but anything that hurts the competitiveness of our manufacturers threatens the more than 500,000 workers these companies employ.
Companies will always invest in energy efficiency, provided the investments deliver a return. Competition in the manufacturing sector will ensure these companies will always look for ways to save energy – and costs.
It is time for Pennsylvania to level the playing field for its largest employers. It’s good business – and good government.
