Cross-posted from the NC Conservation Network blog
Imagine this: an energy-efficiency program that "encourages" consumers to conserve energy by charging them higher rates to make up for any lost profits the power company may lose for not needing to produce as much energy. Because if consumers DON'T conserve, new power plants will have to be built; but if these "virtual power plants" don't have to be built, consumers will get a fabulous 10% savings on the cost of the power plants…that don't exist.
I'm sorry, what?
This rather confusing and underhanded strategy describes Duke Energy's proposed Save-a-Watt program, which has been the subject of much debate this week. From the News & Observer:
"What makes Duke's proposal different from other energy efficiency plans is that the company would not be paid for the actual cost of running Save-a-Watt. Instead, Duke says it should be paid 90 percent of the cost of building new power plants. Duke officials describe Save-a-Watt as a 10 percent savings for customers on the cost of new power plants that would otherwise have to be constructed to meet energy demand."
And from the News and Record:
"Duke would recoup the cost of programs that help consumers save energy by recouping 90 percent of what it would cost to build a power plant to meet the energy needs offset by the conservation effort."
The plan's many critics (including consumer and environmental groups and, uh, Wal-mart…) fail to see this plan as any sort of incentive to save energy because it would price-gouge consumers, only provide modest power savings, and allow Duke to rake in huge profits—literally charging consumers for the lack of using power. [As a side note, I think many groups understand the charges that would be associated with starting an energy efficiency program, but I think it's the exorbitant profit margin of 61% that's causing the real debate.]
The program is currently before review of the Public Utilities Commission, and is being discussed this week.
In the meantime, I encourage Duke Power consumers to start conserving energy now—while it's still affordable.