This summer the Lansing Board of Water and Light (LBWL) filed with state regulators its Energy Waste Reduction plan for 2020 and 2021. This plan lays out what the municipal utility will spend on its whole suite of programs to help customers cut their energy use. Specifically, LBWL projects a total annual budget for energy waste reduction of $4,596,728 in each of 2020 and 2021. That is over $700,000 more than the utility had proposed for its 2018 program.
More importantly, it represents another steady increase in LBWL’s ambitions for cutting energy waste. The plan envisions cutting energy use by over 21.8 million kilowatt-hours (kWh) in each of 2020 and 2021, up from 21.7 million kWh proposed for 2019 and 21.6 million kWh proposed for 2018.
While we applaud LBWL for continuing to invest more and more into energy efficiency, the Citizens Utility Board (CUB) of Michigan believes that LBWL could be more ambitious. Michigan law requires investor-owned utilities, cooperatives and municipal utilities like LBWL to incrementally increase energy savings each year by the equivalent of 1% of the utility’s total retail electricity sales the previous year. LBWL has stuck to that 1% legal minimum goal in its recent energy waste reduction plans. But Consumers Energy, in its recently approved integrated resource plan, proposed increasing annual incremental energy waste reduction from 1.5% to 2% of total electricity sales. Since Consumers Energy operates in much of the same part of the state as LBWL, CUB believes that there is no reason LBWL cannot at least match Consumers Energy’s efficiency goals.
CUB of Michigan has concerns about how much LBWL is investing into commercial & industrial (C&I) customers on one hand and residential customers on the other. Both the budget and the estimated energy savings are significantly tilted in favor of the C&I segment.
Specifically, LBWL is proposing spending nearly three times more on energy waste reduction for C&I customers compared to residential customers - $2.95 million vs. $995,000. The estimated savings for C&I customers are nearly six times larger than the amount of energy to be reduced for residential customers – 18.56 million kilowatt-hours vs. 3.24 million kilowatt-hours.
It is true that C&I customers contribute a bigger share of LBWL’s revenue than residential customers. But the disparity in efficiency investment is much greater than the difference in the amounts of money LBWL receives from each customer segment. In the utility’s fiscal year 2019 budget, the revenue from C&I customers is a little over twice the revenue from residential customers – a big difference, but exponentially lower than the disparity in the 2020/2021 Energy Waste Reduction plan.
Of course, there is no reason to expect an exact 1:1 relationship between revenue by customer segment and efficiency program spending on that segment. There could be reasons why it is practical to spend more on C&I customers relative to their revenue contribution. Efficiency improvements for C&I customers may be more expensive, given their higher demand, for example.
But the logic behind these spending disparities should be examined. CUB calls upon LBWL to have a transparent dialogue with regulators and customers about why its efficiency spending is allocated between customer segments as proposed, and what steps would allow more to be invested into residential customers.
LBWL’s Energy Waste Reduction plan includes:
- Outreach to low-income customers
- Offering LED lighting and high-efficient household appliances to residential customers
- Helping efficiency contractors market to commercial and industrial customers as well as schools, hospitals, municipal buildings and more
- Free or subsidized install of measures like setback thermostats and vending machine energy management to small business customers