Harnessing Conservation to Economics : A beautiful new energy plan from the state Public Utilities Commission

Deep down, the Kuwait crisis is an energy crisis. That makes what happened at the Public Utilities Commission in San Francisco last week all the more momentous.

After a year’s analysis by commission staff, environmental activists and utility executives, four of the state’s biggest utility companies have agreed to spend $560 million to revive a conservation program that went slack in the mid-1980s. One analyst calculates that in its first year the program would save as much energy as a new 300-megawatt power plant could produce. As power plants go, that is no giant, but it is big enough to contribute to waste in the absence of energy-saving plans.

Nor is that the end of the momentous news. The first group to shed light on the way conservation had been allowed to backslide since the last energy crisis in 1979 was the Natural Resources Defense Council. Ten or more years ago, the first impulse of environmentalists in such cases was to lash the guilty party to a public relations torture rack. This time, the council spent its energy helping work out plans to turn the program around. It is, as one NRDC analyst said, as good a sign as any that environmental activism has come of age.

The key element of the new program is a utilities commission decision to encourage the utility companies to get back into energy-saving by linking the earnings they can count as profits to the amount of energy that is saved by their programs.

The NRDC noticed last year that conservation programs all over the state were running out of steam. Utility companies file reports each spring with the PUC, one entry showing what they have spent to promote insulation, more energy-efficient appliances and other approaches to reducing energy demand. As analyst Ralph Cavanaugh read the reports, spending on conservation by all of the state’s big utilities had dropped from $130 million in 1984 to $55 million in 1987. At that rate, it probably would have sunk to $35 million by this year.

One important way to save energy is to improve the design of houses, but not all programs have to start from the basement up. Southern California Edison, for example, plans to double its conservation spending in the next two years, using the extra money to donate energy-efficient electrical appliances to low-income families.

Very few events involving energy these days count as win-win situations. Thanks to a movement’s coming of age and an abundance of common sense, this one does.