Utilities Offer Little Incentive to Save Energy : Power: Getting customers to use less electricity may seem like a contradiction for the companies. But some say it makes economic sense.

The four municipal utilities that generate power in the Los Angeles basin are doing relatively little to help customers cut their electricity bills and conserve energy, with Glendale and Burbank doing the least of the four.

An analysis of spending by area publicly owned utilities shows that Glendale is spending about $1 of every $1,000 and Burbank is spending about $2 of every $1,000 to help customers cut water and power usage. In addition, those utilities have structured their rates to provide residential customers with a volume discount, which critics say encourages consumption.

The utility department of neighboring Pasadena is spending $18 out of every $1,000, but utilities recognized nationally as leaders in conservation spend a larger percentage of their funds, almost twice as much. The Los Angeles Department of Water and Power reported that this year it is spending about $7 per $1,000 of revenue on conservation.

“Traditional utilities see conservation as a conflict of interest,” said Conner Everts, who resigned in October as Burbank’s conservation consultant. “But ultimately it is the cheapest alternative. . . .”

Although it seems paradoxical for utilities to promote conservation--to, in other words, encourage customers to use less of their product--in fact it makes economic sense. The cost of building a power plant can be twice as expensive --kilowatt for kilowatt--as helping customers use energy more efficiently, conservation advocates said.

Everts, who has worked in conservation-related jobs for 14 years, said he attempted during his six months on the job in Burbank to push home-weatherproofing programs for elderly homeowners and to win support for other conservation programs, such as a private group’s effort to retrofit a Burbank house to demonstrate energy-efficient technologies.

But, he said, he got little support. “They make it so difficult . . . until the point they could say, ‘See. Conservation doesn’t work,’ ” Everts said.

Such minimal spending by the municipal utilities in the Los Angeles basin means that most area residential customers receive few services from them other than exhortations for prudent use of energy and water.

Even utility managers acknowledge that such efforts, absent financial incentives, have little impact on customer behavior. Reducing consumption by using less air conditioning, for example, saves some energy, but far less than would be possible by buying a modern air conditioner that operates as much as 60% more efficiently as older models.

Municipal utilities elsewhere in the state, such as in Palo Alto and Sacramento, are helping homeowners and commercial customers finance such energy-efficiency measures as new lighting, solar power, weatherstripping and energy-saving refrigerators.

Utility executives in Burbank and Glendale argue that investing heavily in conservation makes little sense when power is plentiful, even though a growing body of climatic research shows that burning fossil fuels, such as coal and oil, contributes to global warming and to air pollution. Those power surpluses are assured, in some cases, by so-called “take or pay” purchase contracts that require payment for a constant quantity of power, whether it is used or not.

Critics say the utilities place a far higher priority on finding new sources of power than on using the power they have now--both from local generating plants and from long-term purchase contracts--more efficiently.

“Our responsibility is to provide energy for the growth that is taking place,” said Ed Cameron, general manager of the Glendale Public Service Department. Although the Glendale utility employs two energy consultants to audit customers’ energy usage and to hand out pamphlets urging conservation, the utility has no rebate or incentive programs to curb consumption.

Meanwhile, the city has curbed its own use of energy by spending $4 million in the past nine years to switch from incandescent street lights to mercury-vapor and high-pressure sodium lights. The investment made the street lights 25% more efficient.

Glendale will spend about $115,000 to promote conservation this year, or about $1 of every $1,000 of water and power revenues. Long-term contracts to purchase power, agreed to in the past three years, give the city utility the capacity to supply about 34% more power than its peak demand.

The utility is also pondering a partnership with Los Angeles to build a new coal-generating plant in Nevada and to build additional transmission lines to bring power from the Southwest and the Northwest. Such projects would be needed beginning in 1996.

A Glendale city employee, familiar with the utility’s operations, said the two-person conservation operation “preaches to people . . . that conservation is wonderful, rah, rah, rah” while the utility’s management “is looking everywhere they can to increase the capacity” to supply power.

The Burbank Public Service Department spends about $2 of every $1,000 in water and power revenues to promote conservation. It, too, has ignored rebate or incentive programs to encourage conservation, although General Manager Ron Stassi said the utility will soon begin placing greater emphasis on such programs. Stassi estimated that the utility enjoys a 25% surplus of available energy over demand.

“We don’t have the need right now” to invest heavily in conservation measures, Stassi said. “We can serve the loads that are presently out there.”

He said demand charges, built into the department’s power rates, already give large customers an incentive to shift their usage of energy from peak to off-peak periods. That allows the utility to lower its peak demand and to use only its cheapest sources of energy.

But the rates for electricity in Burbank, as in Glendale, are structured so that they provide a volume discount: The cost of a kilowatt of energy goes down as the number of kilowatts used increases. Pasadena, on the other hand, has structured its electricity rates to encourage conservation because the city’s per-kilowatt price goes up as usage increases. The rates in Los Angeles remain virtually flat for residential customers, regardless of the amount used.

Encouraging consumption is costly, both for consumers and to the utility, experts say. The Natural Resources Defense Council, a national group that lobbies policy-makers on science and environmental issues, reported last summer that the state annually wastes $1 billion in energy that could be recovered through conservation.

Routinely encouraging, and investing in, conservation “is very cost-effective for the utility as well as for the consumer,” said Edward Aghjayan, Pasadena’s deputy city manager. “The money you spend comes back and helps you spend less money for power plants and transmission lines and expensive supplies of natural gas.”

Aghjayan has helped establish programs to hand out efficient and compact fluorescent light bulbs and water heater blankets and to install weatherstripping and other conservation measures in homes. Those programs--plus others under consideration for commercial and industrial energy users rather than residences--are designed to reduce the predicted growth in energy use in Pasadena by about 10%.

If that goal is met, officials said, Pasadena can delay purchasing additional sources of power from 1996 until after the year 2000.

Even though Pasadena spends far more of its revenue than other nearby utilities its conservation programs place greater emphasis on saving water than on saving power.

The water conservation efforts of the Los Angeles Department of Water and Power have also overshadowed its energy conservation programs. But, among local municipal utilities, it is the only one, so far, to provide its customers with financial incentives to save.

The DWP, for example, pays large commercial and industrial customers up to $240 for every kilowatt of power they save by installing efficient lighting.

A company that reduced its use of energy by 10 kilowatts by, for example, replacing incandescent lights with the more efficient, compact fluorescent lights, would be paid $2,400. It costs about $600 per kilowatt of capacity to construct the least expensive power plant.

Chuck Montoya, director of planning and marketing for the DWP, said the incentive program, one of several the department operates, has cost $2.7 million and reduced the utility’s peak demand by 12.5 megawatts--or 12,500 kilowatts--during the past 20 months.

Although the DWP is developing plans to build coal-fired power plants in Nevada and Utah, it is also considering installing conservation measures to reduce future demand.

In the future, Montoya said, conservation methods such as installing energy-saving devices on office buildings will be weighed against constructing new power-generating plants as a way to ensure sufficient supplies to meet demand.

Despite such efforts, the report from the Natural Resources Defense Council last summer criticized the DWP for cutting its conservation investments by 75% between 1982 and 1986. The report said the utility has increased its spending on conservation since then, but that it was still insufficient. The state’s four largest utilities, including the DWP, had cut conservation spending by 56%, according to the report.

Reports to the California Energy Commission show that, by 1988, large privately owned utilities, such as Southern California Edison, had achieved a 4.5% cut in consumption using conservation. The DWP achieved power savings of 2.1%. But the smaller utilities had managed to trim consumption by less than 1%.

“There are enormous, cost-effective saving opportunities in every sector” of the energy market, said Ralph Cavanagh of the Resources Defense Council. “If they are really serious about conservation, they should be . . . spending some appreciable fraction of their electrical revenues on conservation.”

Utility executives estimate that, absent a major conservation push, electrical power usage in the Los Angeles area will grow by about 2% annually, or about twice the rate of population growth, for much of the rest of the century. As a result, Los Angeles municipal utility managers estimate that they will need to buy or build additional power supplies beginning in the mid- to late-1990s.

The California Public Utilities Commission, which regulates investor-owned utilities, such as Southern California Edison, has been pressuring the utilities it oversees to revive once-aggressive conservation efforts that in past have included giving away compact fluorescent light bulbs that use 18 watts instead of 75 watts of energy, weatherproofing homes for free and offering financial incentives to encourage efficient building designs and the purchase of efficient appliances.

But, Imbrecht said, all utilities will have to “do substantially better than anything they’ve achieved to this point.”

Aghjayan, the Pasadena deputy city manager, said it will require a change in thinking before utility executives grasp the nature of the effort that such a goal will require.

“The traditional utility approach is to hook up customers and to provide the power necessary to serve them, whatever they want, and not to tell them how to use it,” he said. “In the 21st Century . . . the utility itself will have to have a much higher level of interest in how that energy is utilized.”

INVESTING IN CONSERVATION

Amount per $1,000 of revenue spent Conservation on conservation spending Revenue PASADENA $18.00 $1.2 million $101.5 million BURBANK $2.00 $168,000 $79.8 million GLENDALE $1.00 $115,000 $89 million LOS ANGELES $6.80 $13.5 million $1.98 billion

Water Power Customers Customers PASADENA 36,700 55,200 BURBANK 26,100 48,200 GLENDALE 32,000 80,000 LOS ANGELES 635,000 1.3 million