NJ’s Top Two Utilities Could Do More to Help Customers Cut Energy Use, Costs

Tom Johnson | June 19, 2017 | Energy & Environment
National scorecard of 51 largest utilities ranks PSE&G, JCP&L near bottom when it comes to saving consumers money with energy efficiency

energy efficiency
New Jersey’s two biggest electric utilities are not measuring up to their counterparts in other states when it comes to helping customers cut energy use and reduce their monthly bills, according to an analysis by an energy research organization.

The American Council for an Energy-Efficient Economy used a scorecard to evaluate 51 of the nation’s largest electric utilities, rating how each is doing delivering savings to their customers in the form of energy efficiency.

Jersey Central Power & Light and Public Service Electric & Gas finished near the bottom of the scorecard, ranking 41st and 42nd. The report examined energy efficiency programs undertaken in the utility’s service territory under the oversight of state regulatory authorities, but excluded a company’s individual programs.

The council’s views are taken seriously by clean-energy advocates who cite previous rankings that found New Jersey lagging nearly half of the states in promoting energy efficiency — a finding used to bolster lobbying for more aggressive efforts to reduce energy use.

‘A wake-up call’

“I would think this would be a wake-up call for the Board of Public Utilities and the utilities,’’ said Doug O’Malley, director of Environment New Jersey, an organization that has urged policymakers to set more ambitious goals in promoting energy efficiency.

The performance by the two utilities reflects what happened in 2015 in New Jersey’s Clean Energy Program, a wide-ranging effort to cut use of energy through rebates for high-efficiency heating and cooling equipment and other financial incentives for energy efficient products.

The Clean Energy Program, funded by a surcharge on customers’ monthly bills, is projected to spend $143 million in the next fiscal year, according to a draft budget by the state Office of Clean Energy.

In its analysis, the council looked at 18 different metrics to assess how well utilities were doing in energy efficiency. The council evaluated incremental savings achieved by the utility programs, how much they were spending, and whether energy use was reduced during times of peak demand, among other things.

The top performers

The best performing utilities were Eversource Massachusetts and National Grid Massachusetts, both of which saved customers more than 3 percent of their total retail sales, an impressive achievement, according to Grace Relf, an author of the report. PSE&G and JCP&L, in contrast, save customers 0.52 percent and 0.47 percent of retail sales.

The utilities that ranked highest on the scorecard have the most diverse energy-efficiency programs, including promoting new technologies such as smart thermostats. The top-ranked utilities also invested a higher percentage of their total revenue in energy efficiency programs, according to Relf.

The findings also underscore that state and regulatory support, as well as company commitment, are critical to promoting energy efficiency. PSE&G and many clean-energy advocates have pushed New Jersey to revamp its regulatory policies to incent utilities to invest more in energy efficiency without hurting a company’s revenue.

The decoupling deal

To deal with that problem, more than two dozen states have adopted a new regulatory model called “decoupling,’’ which ensure utilities bring in enough revenue to maintain their infrastructure. Legislators have talked about developing such a system here in New Jersey, but no consensus has been reached.

Relf acknowledged such programs would give utilities more incentive to invest in energy efficiency, along with specific mandates to reduce energy use — dubbed “energy efficiency portfolio standards.” Legislation to require such standards also has been introduced in New Jersey but has never been enacted.

“There’s a lot of growth in this sector,’’ Relf said.

Individual efforts

Karen Johnson, a spokeswoman for PSE&G, noted the report fails to evaluate individual energy efficiency programs offered by the utility for its customers. PSE&G has invested $400 million in such efforts, including efforts to cut energy use at hospitals and multifamily housing. It also has a filing pending with the BPU to invest another $93 million in such programs, including a pilot offering to install smart thermostats in homes.

“We agree with the report’s conclusion about the importance of strong state policies and regulatory support so that we can best help our customers identify energy savings opportunities and lower their bills,’’ Johnson said. “And we are committed to do more with the right policies in place.’’

JCP&L said it does not believe the report accurately reflects the impacts of energy efficiency offerings in its service area and cannot agree with its findings concerning the company. In particular, it avers, that a section of the report dealing with data limitations misses that utility-specific data may not be tracked or reported by third-party administrators.

The other two electric utilities in the state — Atlantic City Electric and Rockland Electric — were not mentioned specifically in the report although their parent companies were.