Utility Energy Efficiency Programs: Consumers Energy
Consumers Energy, Michigan’s largest utility, has a lot to brag about when it comes to utility energy efficiency programs. Since Michigan launched its energy reform law in 2008—requiring energy providers to provide up to 1% in electric sales savings over a number of years—the utility has reaped more than $365 million for customers who participated in its energy efficiency programs.
But what happens next? Consumers Energy has already picked a lot of its low-hanging fruit, says Teri VanSumeren, manager of the utility’s energy efficiency. The utility can’t keep growing its program—a program that has generated about 900 jobs.
“We’ve gotten much of the low-hanging fruit,” she says. The utility can’t keep pushing high-efficiency furnaces and other measures once all the customers who want them have bought them, she says. Items such as efficient furnaces will reap savings for at least 10 or 15 years. What’s more, new building codes and efficiency standards tighten up new buildings and also make it difficult to reap additional savings.
For the utility, all this good news means harvesting efficiency is getting harder and harder—and more and more expensive. Right now, Consumers Energy invests about $115 million a year to deliver energy savings. For every dollar invested, the utility reaps $2 to $3 in benefits, she says. But soon enough the program will end because costs will exceed benefits—as defined by state law.
But wait a minute. What about all those jobs? The success of this program raises interesting questions about how regulators and utilities determine the costs and benefits of efficiency programs. The new jobs created as a result of the efficiency program aren’t factored into the cost-benefit equation—even though Consumers Energy brags that since the efficiency program began in 2009, it has created about 900 jobs. Most of these jobs are for employees of trade allies and implantation contractors—the people who market the programs and do the installation work.
It’s difficult to quantify the benefits of these new jobs, so they’re not included in the cost-benefit analysis, which involves dividing the benefits of the efficiency programs by the cost of them, says VanSumeren.
“There certainly are benefits associated with new energy efficiency jobs but in order to account for that we would need some very detailed information beyond the number of jobs such as the wages paid for each new job, which is often difficult to obtain from our trade allies,” says VanSumeren.
Here’s a question for regulators and utilities in Michigan and elsewhere: If we’re going to spend a lot of time bragging about all the jobs created as a result of efficiency programs, wouldn’t it make sense to include these jobs as benefits in the all-important cost-benefit analysis? If they’re not important enough to quantify, maybe they’re not important enough to boast about.
