Saving Energy Called Boon to California

Energy conservation efforts have saved Californians $34 billion since 1977, or roughly $1,000 for each resident, and have played a significant role in helping the state’s economy expand, according to a study done for the state by the Rand Corp.

The report comes as the Legislature considers bills to extend beyond 2001 the so-called public goods charge, which helps fund energy conservation. The charge is included in utility bills, and costs most families a few dollars each month.

The report’s lead author, Mark Bernstein, said his findings should “end the debate” about the wisdom of the fee.

“The big surprise is . . . how big the number is,” he said of his conclusion about the savings from energy conservation. “We didn’t expect to find basic economic benefits at that level.”

The study commissioned by the California Energy Commission warns that recent increases in energy use threaten to reverse the gains and ultimately slow the state economy by forcing industry and families to spend more on electricity and natural gas. Much of the money Californians spend on those resources goes to out-of-state producers, Bernstein said.

Energy use is rising as population expands in the Central Valley and other inland areas, where summers are hotter and winters colder. The study also points out that as California utilities are deregulated, the cost of electricity could fall, at least in the near term, decreasing incentives to come up with new energy-saving programs.

The public goods charge was added to utility bills as part of 1996 legislation that deregulated the electric utility industry. The fees annually raise $240 million for energy efficiency, $180 million for renewable energy and $75 million for energy research.

The report said low-income families benefit directly from conservation efforts funded by the state. As it is, poorer people spend an average of 8% of their income on utility bills, compared with the 2% paid by middle-income families.

“Simple changes such as insulation and appliance replacement can cut the energy burden by 2% or more,” the report says. Such a reduction would shave $400 off an annual utility bill, a significant savings for low-income people.

“It’s one of the few government programs that actually puts money into people’s pockets,” Bernstein said. “If you retrofit an apartment and save people $20 off their monthly bill, that’s $20 they have to spend on other things.”

The bulk of the statewide savings came between 1975 and 1985, when energy prices soared and industry and consumers sought ways to cut back on costs. The reductions have since leveled off.

However, in part because of California’s building codes related to energy conservation, the state’s use of energy is significantly below demand in other major states such as Texas, Florida and New York, the report says.

“The Rand Corp. study illustrates [that] energy efficiency isn’t just an environmental issue,” said V. John White, a lobbyist on environmental issues. He said conservation efforts may become more important as energy demand outpaces supply, and residents and businesses face the prospect of brown-outs.