Utility rates are down — now let’s keep them that way

Energy efficiency is the key to long-term savings

April 27, 2010|By Fielding Huseth

The front page of Friday's Baltimore Sun featured two major stories on energy. The first highlighted the upcoming drop in utility rates for BGE customers, prompting a sigh of relief in households struggling to pay high energy bills. The second noted the swarms of customers buying energy-efficient appliances on the first day of the Cash for Appliances program. While the drop in utility rates has nothing to do with the Cash for Appliances program, the way to keep utility rates on the downward spiral lies in the heart of the second article: efficiency.

To start, why are utility rates going down all of a sudden? It's certainly not increased competition among energy suppliers. Instead, rates are going down because demand is going down. While the cost of energy has gone up, the economy has plummeted to its worst depths since the Great Depression. Naturally, people are choosing to conserve energy to lower their bills by turning down the heat and shutting off the lights. However, when the economy recovers, people will crank the heat back up, and utility rates will follow the trend.

The good news is we can keep using less electricity without sacrificing comfort, and that's where efficiency arrives. Under state law, utility companies are offering programs such as efficient lighting and appliance rebates, free or low-cost energy audits, discounts on home/office weatherization, and more. Combined with federal incentives, we can weatherize and retrofit our homes and businesses quickly and affordably. In fact, studies show that every $1 invested in efficiency returns up to $4 in reduced utility bills. In many cases, families are slashing their bills by hundreds of dollars per month by taking advantage of the efficiency programs.

We should recognize that maximizing efficiency is like building a virtual power plant. Remember, the reason rates are going down is the decrease in overall demand. If the state's utilities comply with law and meet their energy-efficiency goals, the state will reduce per capita electricity consumption by 15 percent by 2015. Beyond that, studies show that we could drop 29 percent by 2025, and doing so would create 12,000 clean energy jobs.

To draw a comparison, consider that the new nuclear reactor at Calvert Cliffs will power approximately 20 percent of homes in Maryland. However, the reactor has a price tag of at least $10 billion, most of which will be financed by taxpayers, and it will take 10 years to construct. This means that no new electricity will be added to the grid for at least 10 years, leaving ratepayers susceptible to price spikes during the next decade. Energy efficiency, on the other hand, steadily reduces demand each day forward, which makes energy prices more stable and our electric grid more reliable.

Energy efficiency is the fastest and cheapest way to lower our utility bills and keep them that way. But for energy efficiency to realize its potential, two critical objectives must be met. First, the state's utilities and the Public Service Commission must work together to build upon existing energy-efficiency programs and educate the public about their existence. Second, lawmakers in Annapolis need to stop shifting funding intended for energy-efficiency programs to bill-payment assistance.

Bill-payment assistance is important for many families struggling to pay energy bills, but energy-efficiency funding intended for low-income homes is a much more sustainable solution to helping families keep their bills low month after month. For the sake of pushing utility rates downward, we call on the utilities, the Public Service Commission, and the state legislature to make energy efficiency Maryland's top energy priority.

Fielding Huseth is an advocate with Maryland PIRG. His e-mail is fielding@marylandpirg.org.

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