Utilities Shun Energy Savings, Critics Assert

After years as national leaders in conservation, California’s utilities have abandoned their aggressive role in cutting customers’ energy use and now lag behind other innovators, prompting worries that they are encouraging the burning of more fossil fuels in an era of global warming and intractable smog problems.

According to data released last week by the California Energy Commission, three big utilities--Southern California Edison, Pacific Gas & Electric and San Diego Gas & Electric--have slashed their spending on conservation measures and energy-efficient equipment for residential, commercial, industrial and agricultural users.

The huge drop in spending on conservation programs--from $200 million in 1985 to $100 million in 1987--took energy experts by surprise and was termed “absolutely appalling” by Ralph Cavanagh, senior attorney for the Natural Resources Defense Council. The national environmental group has protested the cuts to the state Public Utilities Commission.

Basis for Concern

The data was the latest in a mounting body of evidence that energy use--and waste--is being spurred by California utilities at the time that deep cuts in the burning of fossil fuels are being called for worldwide.

Since the mid-1980s, decreasing energy costs have led utility companies to gradually trim back--and in some cases abandon--rebate and weatherization programs and rate reductions for off-peak use of energy. Some California utilities are now offering monetary rewards to industry for using more energy.

The major utilities deny that they are no longer national leaders in conservation. Officials concede that they have cut back energy-efficiency programs but argue that, with today’s plentiful and cheap energy, conservation efforts do not save the money they once did.

“When prices are down it is no longer cost-effective to spend the same amounts of dollars toward conservation,” said Vikram Budhraja, manager of electric system planning for Edison. He said urban and global environmental concerns are “public policy and social engineering questions” that cannot be addressed by the utilities.

While the long-term effects of such policies will not be known for some time, they alarm some scientists, environmentalists and smog officials grappling with the specter of global warming and worsening urban smog.

At a Critical Time

Critics say the utilities’ new thrust toward consumption could not come at a worse time for the air in Southern California or for the well-being of the world itself. Moreover, they fault the state Public Utilities Commission for not actively encouraging conservation.

“We have limited power in terms of forcing Edison or any utility to do the right thing, and what they have chosen to do instead has been a terrible, terrible turn of events,” said Larry L. Berg, a board member of the South Coast Air Quality Management District. “The public knows something about ozone and the greenhouse effect it causes, and they have got to be very frustrated that nobody is giving them the tools to fight it.”

Bill Meyer, a top adviser to the California Public Utilities Commission, said the agency may consider ways to encourage conservation by the utilities during rate policy hearings this year, but cautioned that “Environmental issues (are) not something the PUC has a broad mandate for.”

Was Among Leaders

Edison’s changing role is particularly jarring to some because, in the mid-1980s, it was among the world’s leaders in energy efficiency--considered a model utility company that helped customers conserve without sacrificing life style or business needs.

Its programs were so effective that it was widely praised for contributing to a decline in energy use here, even as California boomed and new energy users streamed into the region. According to Cavanagh, by 1986 California was using 14 units of energy for every dollar of gross national product while the nation was consuming 20 units for the same results.

Incentives to Conserve

Edison financed home insulating and weatherizing programs, began offering rebates for energy efficient appliances and generously rewarded the use of off-peak energy, which averts the need for massive new power plants that spew pollutants into the air.

While some important programs remain intact, critics say the utilities have committed what amounts to an about-face in fighting energy waste.

Today, Edison and the others are embracing new marketing schemes to promote higher consumption. It and others have cut back rewards for off-peak energy use, and PG&E; is offering monetary incentives to industrial users who add new lighting systems or refrigeration units that consume energy.

And at the residential level, California’s utilities have resisted a proven conservation method, increasingly used in the United States and Canada, known as “super-weatherizing”--a simple technique for testing, then plugging up and insulating, drafty homes.

Super-weatherizing pays for itself in about three years and would permanently--and drastically--reduce energy bills in the vast majority of Southern California homes, including those that have already been weatherized under far less effective programs sponsored by utilities, according to conservation experts.

Economic Concerns

Cavanagh said Edison and PG&E; “are obsessed with a desire to increase use so they don’t have idle generating capacity. . . . To them, a shut-down plant is a source of economic embarrassment, a symbol of decline. . . . To us, it is a deferral in the depletion of fossil fuels and a way to avert global warming.”

He said California, which despite its conservation efforts is one of the highest energy-consuming regions of the world, needs to reduce its burning of fossil fuels by as much as 50% in order to effectively fight global warming.

“We won’t get there unless we find major, major new ways to get more work out of the same energy,” he said. “But with energy prices dropping, the utilities are delivering a signal that the days of wine and roses and waste are back.”

But Jackalyne Pfannenstiel, vice president of corporate planning for PG&E;, said the company is only doing what customers themselves are doing--recognizing that conservation does not reduce costs as much as it once did.

“We have to decide if it makes sense to invest in conservation when only the customers who weatherize or participate in other ways actually save money on their bills,” Pfannenstiel said. “Customers who (don’t participate) get no savings and end up subsidizing the conservation programs.”

Ahead of the Pack

Pfannenstiel and Budhraja both contended that California’s utilities are still national leaders. “We were farther ahead of the pack and the pack is (only) catching up with us,” Budhraja said.

But a wide range of energy experts said California utilities have fallen behind as energy-conscious utilities in Washington state, Wisconsin and elsewhere promote new programs.

“When I think that Edison used to be a world leader, I can’t believe the kinds of things I see from them today, where everything is just dollar, dollar,” said Berg of the AQMD. “It’s been awful to watch their outright opposition to the clean fuels program (to burn methanol) and their totally inadequate approach to meeting environmental needs of this area.”

Amory Lovins, an energy expert based in Colorado, said Edison “used to have the best large-scale program in the world for saving electricity. They still do good things, but they are no longer leading the way, and I say that with great regret.”

And Lovins said that PG&E; is “putting much more emphasis on an outdated view of what business they are in. They are turning their efficiency people into marketing people, trying to sell more energy, not less.”

Effects on Businesses

Meanwhile, businesses that sell conservation equipment and programs say the utilities are driving them out of Southern California with their new policies.

Douglas Ames, president of Transphase Systems Inc. of Huntington Beach, said he “moved here from Virginia because Edison was the national leader in energy-efficiency, which is what we sell. But now, just when the greenhouse effect is coming on strong, Edison is going the opposite direction. It’s completely wrong in my eyes.”

Transphase, which installs systems that cut cooling costs and electrical use at hospitals and other large facilities, is fighting to survive in the face of what Ames called “a complete about-face in (energy) management and conservation in California.”

The company has installed 44 of the $250,000 to $5-million systems, which use low-cost night-time electricity to chill special tanks of sodium sulfate that, during the day, transfer the coldness to a building’s cooling system. Savings over traditional cooling systems are so dramatic that the tanks sometimes pay for themselves in just months.

But Edison’s shift, including cutting in half its $200 rebate for each kilowatt used to chill the special tanks, has severely curtailed demand.

Transphase is fighting Edison’s policies and hopes to remain here, but has expanded its sales to Taiwan and Japan, where conservation is “really catching on, like it was in California once,” said Walt Hallstein, vice president.

Also typical of the new trend is Edison’s prominent campaign to persuade Los Angeles-area residents to buy “heat pumps”--an electrically powered heater and air chiller that eliminates the need for a gas furnace or air conditioner.

Stealing Customers?

Edison says the $2,500 device saves energy, but independent experts say the heat pump is actually a poorly disguised attempt to steal winter customers from Southern California Gas Co. by selling electrical heaters.

“It is less efficient in the summer than air conditioning, but they push it because it sells electricity for heating during the winter, when Edison’s plants have a lot of unused capacity they want to market,” said Lovins.

One big success story has been Edison’s cash rebates for energy-efficient appliances. Last year rebates on newly purchased refrigerators accounted for about half of the company’s residential rebates.

But such programs are being eclipsed by innovations at aggressive utility companies in other states, such as Puget Energy Services and Wisconsin Power and Light, which are invading territories of other utilities to peddle energy efficiency equipment and programs.

Lovins said energy-conservation and efficiency programs sponsored by utility companies nationwide--including those programs still in place in California--will save enough energy by the year 2000 to avoid construction of 56 new power plants in the United States.

“But the gains will be largely undone by power plants being constructed to handle all the new sales now being pushed by the utilities,” he added.

Blame Put on PUC

John Phillips, executive director of the California Energy Coalition, a group of large industrial customers, blames not the utilities but the Public Utilities Commission and political leaders, who he said have failed to reform an outdated system that encourages utilities to grow.

“If you were in the business of selling a product, why would you go out and spend your money and time getting customers not to buy your products?” Phillips said. “It’s a screwed up system that discourages energy efficiency and encourages more and more use.”

Phillips, Lovins and Cavanagh all said that the PUC should allow the utilities to make a profit when they help customers cut energy use. If so, the current trend away from conservation could probably be turned around, they said.

“The best way to get a slack group like Southern Californians to do anything is to pay them,” Cavanagh said. “I am talking about paying them rewards for investing in efficiency.”

Such ideas may be discussed by the PUC this year, but Budhraja of Edison said he opposes residential incentives to conserve because they would not benefit customers who do not join the conservation programs.

“It basically means some other customer will have to pay for it,” he said.

Paying for Themselves

Although details have not been worked out, such a program could assist utility customers who install items such as energy-efficient lighting, insulation, appliances and super-weatherization. The items would pay for themselves in a few years and permanently reduce monthly costs, proponents say.

Cavanagh said part of the savings could be pocketed by the utilities, and the rest could go to the customer in the form of lower bills.

But Phillips warned that change may be elusive. If the past is any indicator, he said, “California utilities will again wait until there’s a crisis and then go screaming to the Public Utilities Commission that they need more plants.”

Paul Wuebben, of the office of technology advancement at the AQMD, said he believes the PUC and California Energy Commission “have a lot of resolve to do something this year” because of increased attention to the greenhouse effect.

Wuebben supports a a legislative effort to enact a “carbon-users tax” that would be assessed every time a household or business burned up a certain amount of fossil fuel.

“We would say if you use it, you must pay,” he said. “Faced with that, people would install insulation and other devices.”

If the utilities do reverse their policies, conservationists say many long-proven programs could get underway immediately, which would not require any changes in life style that many Californians associate with “conserving” energy.

Progress in Iowa

One proven approach is super-weatherizing. More than half the residents in Osage, Iowa, have had their homes tested for air leakage, then plugged the drafts and insulated the walls and ceilings. The method, which detects unseen leaks that account for most residential energy waste, saved the small town about $1.2 million in energy costs last year.

Solar energy, still under-utilized in sunny Southern California, could be easily and widely adapted in residential and industrial uses.

And there are futuristic new ideas that, if sufficiently promoted, could become a part of everyday life in California in the not-so-distant future.

For instance, light bulbs are now available to industry, but not yet at the retail level, that burn ten times longer than normal bulbs and use far less energy per hour, while providing equal brightness. But they cost $12 each, and energy experts say they won’t be widely available until the cost is driven below $10.