Georgia Power Demand-side Management: Just Say No (testimony before the GPSC)

By Jim Clarkson -- June 28, 2016

“Demand-side management is authoritarian, tyrannical, and has no place in a free society. It’s time we stopped the trend of having more and more of our lives coming under the control of politicians….”

“The original notion behind DSM was that it is cheaper to save energy than to produce it. That’s true if consumers take their own actions, but not with high-overhead, high-profit utility-run plans.”

“The right thing to do is to make all Demand Side Management programs completely voluntary or abolish them outright.”

BEFORE THE GEORGIA PUBLIC SERVICE COMMISSION

In the Matter of:  Georgia Power Company’s Request for Approval  (Docket Nos. 40161 & 40162 of its 2016 IRP and Decertification of Certain Generating Units)

Brief of Resource Supply Management

Georgia Power’s Demand-side Management [DSM] for commercial customers is a huge rip-off, accomplishing little or nothing beyond energy efficiency improvements that happen anyway.

This problem can be solved by giving customers the option not to pay the surcharge, forgo any rebates, and do their own cost-effective efficiency improvements. 

The largest component of the DSM surcharge for commercial customers is pure profit for Georgia Power. For every dollar collected on bills for the commercial DSM rider only 27₵ to 30₵ actually makes it back to customers in the form of rebates. The Staff and the Commissioners watch out for residential customers, and the industrial customer groups have enough political clout to protect themselves, leaving the politically powerless commercial customers as the chief victims of Georgia Power’s expensive DSM programs.

Any electricity customer can install energy efficiency measures to reduce their energy bills. A walk through any hardware store exposes one to shelves of energy-saving devices and equipment. Hardware stores do not stock goods that are not selling. Clearly voluntary and much cheaper self-implemented efficiency measures are being put in place without Commission-ordered, utility-administrated, expensive social engineering.

In recent years the Federal government has issued ever tightening efficiency appliance standards and has more in the bureaucratic pipeline. Georgia Power’s efficiency programs, while never justified in the first place, are increasingly anachronistic and based on conditions that no longer exist.  The Company acknowledges that obtaining more efficiency in the future will be ever more expensive as standard equipment is now already as efficient as practical.

We are now in a period of increasing capital cost with reducing operating cost in the electric utility sector. The Company further acknowledges that with lower fuel costs the benefits of saving verses producing energy are lower. The Company nonetheless proposes to continue their admittedly uneconomical programs.

The efficiency savings claimed by Georgia are strictly hypothetical calculations that cannot be verified. Yet Georgia Power gets real profits on phantom savings based on these dubious estimates.

Example: Georgia Power’s commercial DSM program offers $20 per ton for replacement air conditioning. Anyone familiar with air conditioning knows a retrofit of commercial air condition equipment runs on the order of $1000 to $1500 per ton.  So the $20 rebate is hardly enough to induce a change out.  Any retrofit decision by a commercial customer would be justified by other factors.  Further, such equipment has about a 15-year life.

It is impossible to replace older air conditioning equipment with efficiency levels of 15 years ago.  The equipment is not manufactured any more. Any retrofit for any reason will be much more efficient than the equipment being replaced.  However, Georgia Power will claim the entire amount of energy savings just because they threw a few bucks into the project. This calculated, but unverified savings, becomes the basis for an additional sum collected from the undefended, recession-weary commercial customers.

Additionally, the idea that bureaucrats aided by experts can best run people’s lives is wrong. These soviet-style DSM programs have cost consumers dearly and failed to save energy beyond what occurs naturally. Central planners simply do not, and cannot, have all the information to make better decisions than those affected by economic choices. DSM programs take people’s money and spend it the way those developing the program feel is best.

DSM is authoritarian, tyrannical, and has no place in a free society. It’s time we stopped the trend of having more and more of our lives coming under the control of politicians.

The original notion behind DSM was that it is cheaper to save energy than to produce it. That’s true if consumers take their own actions, but not with high-overhead, high-profit utility-run plans.

Since this original idea for DSM has proven wrong, the fallback positions of government planners is that we must save energy because we are running out and the use of energy is causing global warming. Both beliefs are wrong.  We have centuries of energy right beneath our feet, and each week brings news that the theory of CO2 causing warming is a minor matter and predictions of disaster have a 100% record of being wrong.

2. The Demand Side Management Working Group should be abolished. 

This group has several meetings between filings of the Company’s Integrated Resource Planning dockets. The typical meeting consisted of a five-minute or so presentation by Georgia Power on some aspect of the program development process.   The remaining multi-hours were spent with DSM consultants and green lobbying activists talking to each other and badgering the power company to do more expensive programs.

Issues raised in previous IRPs were not narrowed; instead they were expanded, and much more time was spent in the subsequent IRPs dealing with DSM issues.  Little time was spent seeking ways to correct the Company’s bad rates.  No time was spent talking about removing the Company’s barriers to more customer response.

All the effort was spent talking about conservation cross-subsidy programs.  No customer group sought any DSM programs – in fact the industrial spokesmen expressed adamant opposition.  DSM consultants, who spend most of their time sitting around talking to each other anyway, should not be encouraged to dream up any more expensive programs for Georgia customers to pay for.

Tragically, the Working Group consists of smart young future managers of Georgia Power who are being subjected to bureaucratic methods and the belief in Big Government as problem solver.  The Commission must not continue the DSM Working Group.

3. By the Time Briefs Are Due in This Docket Georgia Power and Public Service Commission Staff Have Already Held Their Secret Meetings, Excluded Other Parties, and Drafted Their Settlement Which Will Be Accepted by The Commission with Some Possible Modifications. 

Therefore, this Brief and the Briefs of other parties in the case will be largely ignored. However, the right thing to do is to make all Demand Side Management programs completely voluntary or abolish them outright.

Submitted this 17^th day of June 2016.

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Jim Clarkson, Resource Supply Management Sumter, SC 29150