By Rolf Nordstrom
MINNEAPOLIS -- North Dakota Public Service Commissioner Kevin Cramer recently defended North Dakota's lack of action on energy efficiency, claiming that more activity would unfairly help consumers and businesses who take advantage of energy efficiency programs at the expense of those who do not ("Energy scolds ignore N.D.'s great strengths," Page A4, Oct. 22).
Unfortunately for North Dakota ratepayers, Cramer opted for political slogans over facts.
The cheapest electron is the one that isn't used. Why? Energy efficiency helps avoid or postpone costly construction of new electric generation (power plants, wind farms and so on), which is the largest driver of increases in utility bills -- the very thing Cramer says he wants to avoid.
Experience shows that avoiding construction of new generation benefits all ratepayers -- even those who do not use energy-efficiency programs.
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This explains why 25 U.S. states have adopted energy-efficiency resource standards or goals. These require energy-efficiency savings that benefit industrial, commercial and residential customers, while rewarding utilities for implementing successful programs. Many of the other states at least have policies allowing utilities to recover the costs of running energy efficiency programs that reduce consumers' bills.
Comparing North Dakota with Indiana illustrates the flaw in Cramer's logic. Both states rely on electric generation from coal for nearly all of their electricity and enjoy low residential electric rates -- 9.96 cents per kilowatt-hour for Indiana, 8.14 cents in North Dakota. Both are energy intensive: Indiana ranks 11th nationally in total energy use per capita, while North Dakota ranks fourth.
Both are also both traditionally conservative in their politics and approach to energy policy. Indeed, Mitch Daniels of Indiana is one the country's most conservative governors and a prominent national advocate for coal-based energy.
But North Dakota and Indiana part ways on energy efficiency. The Indiana Utility Regulatory Commission, whose commissioners all were appointed by Daniels, has adopted an energy savings policy directing utilities to achieve annual energy savings of 2 percent within 10 years.
How do the Indiana commissioners square this with protecting consumer, business and industrial ratepayers? After extensive study, the commission ruled that "saving energy is the most cost-effective way of meeting future energy supply needs and has the corresponding benefit of reducing the need to build additional generation capacity."
In stark contrast, the North Dakota Public Service Commission has received requests from all of the utilities it regulates asking for the ability to implement energy-efficiency programs. Even after presenting compelling benefits, the PSC rejected the requests.
In short, utilities would like to help North Dakotans cut costs by saving energy, but they are not allowed to do so by the state's regulators.
It is hard to understand how wasting energy benefits ratepayers or reflects North Dakota values.
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North Dakotans take justifiable pride in the state's accomplishments in the energy field on the production side, both fossil and renewable. But rather than shooting the messenger over North Dakota's dismal ranking of 51st among the 50 states and District of Columbia on energy efficiency, Cramer, other state officials and legislators should follow the lead of Fargo, Grand Forks and other communities that have demonstrated energy efficiency's benefits.
Toward that end, recent state adoption of energy-efficient building codes represents a positive step.
Extensive, profitable experience of utilities and their customers nationwide shows that energy efficiency is not an ideological issue, but a cost-effective, commonsense practice that regulators have a duty to encourage. Cramer's reconsideration of this would show that he's open to abundant evidence that energy efficiency helps both consumers and the economy.
Nordstrom is executive director of the Great Plains Institute, a nonprofit that works with government and the private sector on energy policy and technology.
