HD8 - Utility Conservation Programs
Executive Summary: Introduction Senate Joint Resolution No. 155, adopted during the 1981 session of the General Assembly, requested that the Virginia Coal and Energy Commission conduct a study relative to the role of electric and natural gas utilities in promoting energy conservation in the Commonwealth. This task was subsequently assigned to its "Energy Preparedness Subcommittee". Based on the Subcommittee's findings, the Coal and Energy Commission reported to the General Assembly during the 1982 session that additional study relative to conservation efforts by electric and gas utilities was warranted. The General Assembly, in February, 1982, in the form of House Joint Resolution No. 32, requested that the Virginia State Corporation Commission review utility conservation programs. The purpose of this interim report is to provide the details relative to current conservation efforts by the electric and gas utilities in the State. A copy of House Joint Resolution No. 32 in its entirety is presented as a preface to this report. Discussion Currently there are 33 electric and gas utilities providing service in Virginia. The Appendix to this report details those utilities and provides information relative to the number of customers served, customer mix, and the average cost of providing service to those customers. For the investor-owned electric and gas utilities, maps are presented depicting the service areas of those companies. Additionally, for the electric generating utilities, information relative to fuel used for generation is presented together with the relative fuel expenses by fuel type. A review of this information indicates that the Virginia Electric and Power Company (Vepco) and the Appalachian Power Company (Apco) provide service to the bulk of the State's electric consumers. These utilities, combined, serve approximately 84% of total Virginia jurisdictional customers and represent approximately 89% of total kilowatt-hour sales made by all electric utilities, including the cooperatives. Likewise, Columbia Gas of Virginia, Commonwealth Gas Services, Roanoke Gas Company, Virginia Natural Gas, and Washington Gas Light are the principal gas utilities operating within the State. On a combined basis, these companies account for approximately 93% of the State's total gas customers and 87% of total sales. In terms of geographic service area it is understandable why the foregoing companies are, in fact, the principal electric and gas utilities in Virginia. The chart following this summary presents a synopsis of those conservation areas in which each of the electric and gas utilities named above have operative programs. The chart includes such conservation measures as: • Customer Information - Includes all forms of information relative to conservation and/or the efficient use of energy as well as the potential for both in terms of reduced utility bills. Customer information includes, but is not limited to, the following: distribution of brochures and newsletters, mailing of bill stuffers, publishing advertisements, radio or television broadcasting, participation in workshops, distribution of educational materials to schools, providing specific information upon request, etc. • Energy Audits (Residential, Commercial and Industrial) – Energy audits typically refer to an on-premise inspection of a customer's residence or business by the utility to determine what, if any, cost effective measures should be implemented to effect reduced consumption and an attendant reduction in utility bills. • Direct Load Control – Refers to the use by a utility of electronic or radio signals to physically remove certain appliances from the system during peak periods to accomplish a reduced load. Typically, electric hot water heaters, heat pumps and central air conditioning units are primary candidates for such direct load control. • Weatherization and/or Equipment Financing – In such a loan financing program, utilities generally make available to their customers a specified sum of money at a designated interest rate and loan period. This money is to be used for a specific purpose such as insulation and weatherization and/or the installation of energy efficient equipment. • Time-of-Use Rates (TOU) – Daily or seasonal time-of-use rates refer to Commission approved rate schedules, the charges of which are intended to reflect whether energy is used during the on-peak vs. the off-peak period or season. These charges are reflective of the fact that, depending upon the time of day or season of the year during which a customer imposes load upon the utility, the cost associated with providing service varies. TOU rates are generally designed to encourage off-peak usage when lower production cost base loaded capacity is available. • Interruptible Rates – Such rates are typically offered to large industrial customers. They generally have a provision whereby service is provided at a lower cost than otherwise would be the case. The utility can, however, upon relatively short notice, discontinue service to such customers during peak periods or in the event of an unexpected loss of capacity. • Cooperative Advertising – An advertising program wherein the utility shares, with the equipment manufacturer or dealer, the expense of advertising energy efficient equipment. • Add-On Heat Pump – The Add-On Heat Pump innovation combines a fossil fuel furnace with an electric heat pump. In such installations, the heat pump operates when temperatures are moderate but is turned off at temperatures between 30° F. and 35° F. when the fossil fuel furnace begins operation and fulfills the heating requirements of the building. • Research Studies and Programs – Refers to a broad range of research activities relative to promoting energy efficiency and/or conservation. As is further evidenced by the chart attached to this summary, the major emphasis of the implementation of conservation measures has been directed towards the larger Virginia jurisdictional utilities. This is appropriate in that such programs will have a greater impact because of the large customer base. As such programs are proven to be cost-effective they will be implemented as appropriate for the smaller utilities. Conclusions The State Corporation Commission agrees with the concept of encouraging and facilitating the installation of energy conservation measures which have demonstrated the potential to be cost-effective. The Commission believes that such cost-effective energy conservation programs in and of themselves are desirable. However, such programs would better serve the public good as an integral part of a larger effort encompassing strategies leading to more efficient energy use, to the reduced need for electrical generating capacity and/or to a reduction in national dependence on foreign energy sources. Therefore, for the purposes of this report, the term "conservation" is not strictly limited to the conservation of energy in terms of reduced consumption. It has been enlarged in scope to include measures which optimize the efficient use of facilities and resources so that the total cost of service to the consumer will be lower than it otherwise would have been. The following section of this report provides the details of such current programs relating to conservation efforts by the electric and gas utilities. |
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