As Alabama Power seeks approval for a $1.1 billion expansion of its fleet of power plants, one advocacy group now ranks the utility last in the country for its efforts to promote energy efficiency.
Alabama Power placed last among the country’s 52 largest utilities in the American Council for an Energy-Efficient Economy’s energy efficiency scorecard. Issued last week, the scorecard rates utilities on measured energy reduction, policies and programs offered to help customers reduce their energy usage.
Energy efficiency programs vary from utility to utility but could include things like helping homeowners install better insulation, smart thermostats, or upgrade to more efficient HVAC systems or appliances. They could also include energy audits or financing programs, or policies to promote low energy usage such as avoiding high fixed fees that take away customers’ incentive to save energy.
Many of the programs cited in the report were aimed at helping low-income utility customers or small businesses.
Alabama Power earned just 5 out of 50 possible points on the scorecard, behind Florida Power which scored 6.5 points and Light and Virginia Electric and Power, which scored 7 points. The top performing utilities were Eversource Massachusetts and National Grid Massachusetts, each of which scored 46 points.
Alabama Power spokesman Michael Sznajderman said the scorecard presents an “incomplete and misleading picture” of the company’s efficiency efforts because the scoring system did not take into account all of Alabama Power’s efficiency efforts.
“It puts more emphasis on what utilities spend on energy-efficiency programs rather than results,” Sznajderman said. “Utilities can achieve higher scores by simply spending more money on energy-efficiency programs, regardless of their outcomes.
“Indeed, many utilities that score high in the ACEEE ranking charge prices that are significantly higher than Alabama Power’s.”
The scorecard awarded points to utilities for things including:
- Energy savings through retrofits, smart appliances or other efficiency programs
- Reductions in the utility’s peak demand, when utilities are forced to use the least efficient power plants to meet customers’ needs
- The amount of money spent on efficiency projects
- The percentage of customers who participated in retrofit programs
- Incentives to promote use of electric vehicles, which are more efficient that gas-burning cars and can be charged overnight, during non-peak hours
- Setting specific energy savings targets and making progress towards them
Grace Relf, research analyst for the advocacy group and lead author of the report, said one reason Alabama Power finished so low is because the Alabama Legislature and Public Service Commission has not incentivized energy efficiency, as many other states have.
“Typically, there is a disincentive for utilities to pursue energy efficiency because it reduces their electric sales,” Relf said. “There are policies that utilities and their regulators can advocate for or put in place that remove that disincentive.
“Alabama does not have those in place, and even without that, utilities can set their own internal targets, and we don't find that in Alabama.”
Relf said those policies include revenue “decoupling” by state regulators, to separate a utility’s profits from its sales, or to create incentives for energy savings targets. Of the utilities in the scorecard, 18 had decoupled profits and 36 had created incentives for the utility to increase energy efficiency.
Relf said investment was included in the ACEEE scorecard because it was a “strong indicator” of performance. Relf said ACEEE also evaluated the cost-effectiveness of the efficiency programs, and the top performing utilities delivered nearly $5 in benefits to customers for every dollar invested.
“Utilities are required to show that their energy efficiency programs are cost effective, meaning that they deliver more benefits for customers than what they're spending on those programs,” Relf said. “The funding is important, and we do see that it drives achievements.”
Sznajderman also pointed to statistics from the U.S. Energy Information Administration showing Alabama Power’s residential per-customer energy use decreased by 1.5 percent from 2010 to 2018, more than the national average over that time.
However, the company’s usage per customer was the highest among the top 50 utilities in 2010. In 2018, Alabama Power had the third highest usage per customer among the top 50.
“Combined, the company’s more than 20 energy-efficiency and energy-reduction initiatives have offset the need for approximately 1,500 megawatts, which is the equivalent of two mid-sized power plants,” Sznajderman said. “The company is also seeking regulatory approval for customer-focused programs that would avoid the need for an additional 200 megawatts.”
Relf said the authors asked Alabama Power for additional information and gave them the opportunity to give feedback before the release of the scorecard but the company did not do so.
Relf said Alabama Power has made positive strides in efficiency. The company earned full points for having smart meters installed for all customers, allowing customers to track their daily energy usage and set high usage alerts. Alabama Power got points for offering a discounted rate for electric vehicle owners to charge their cars overnight.
Relf also highlighted the company’s Smart Neighborhood in Hoover, a pilot program developed with the U.S. Department of Energy to build 62 highly efficient homes partially powered by a nearby solar project with battery storage.
“I would say that their Smart Neighborhood project is really innovative and something that a lot of utilities are going to be looking at in the coming years,” Relf said. “But that's one of a pretty limited number of programs that they're running.”
Sznajderman said the company has created a Smart Neighborhood Builder program to spread those concepts to other areas and three additional neighborhoods are under construction.
But the scorecard also shows “room for improvement,” or programs that other utilities have adopted that Alabama Power has not, including home retrofit programs, multifamily dwelling efficiency initiatives, and programs for small businesses.
“We see that Alabama Power is offering a few programs, but are definitely missing out on some common programs that other utilities are running,” Relf said.
Alabama Power was the only Alabama utility included in the scorecard. The Tennessee Valley Authority, which provides power for much of north Alabama, was not included because it is a wholesaler and efficiency programs vary among the local power companies that operate within TVA territory, none of which are large enough to make the scorecard.
This survey was not the first time Alabama Power found itself at the bottom of a national ranking.
A 2017 survey found Alabama Power made it harder than any other utility for businesses to install solar panels within its service territory. Its distributed generation fee on residential solar customers is believed to be the highest in the nation among major utilities, and the company has argued that the fee should be even higher.
The Alabama Public Service Commission is expected to vote on Alabama Power’s proposed expansion --which would add about 2,000 megawatts of natural gas, 400 megawatts of solar and 200 megawatts of efficiency projects -- later this year. The PSC has scheduled a public hearing on the proposal for March 9 in Montgomery.
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February 28, 2020 at 08:30PM
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Alabama Power ranked last in energy efficiency report - AL.com
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