Report: Efficiency’s market impacts save Ohio consumers an extra $2 per month

The report’s conclusions indicate that a pending bill to gut Ohio’s energy efficiency standards and subsidize nuclear and coal plants would cost consumers even more than already estimated.

Who conducted the economic analysis?

Resource Insight, Inc., an industry analysis firm based in Massachusetts, prepared the June 12 report at the request of the Environmental Law & Policy Center and the Ohio Environmental Council.

What did the report look at?

The analysis calculated how utility programs under Ohio’s energy efficiency standards affect a typical residential consumer’s bill, based on 2017 data. It included the impacts on electricity prices in daily, real-time markets, as well as estimated impacts on the longer-range capacity market.

How much are those impacts?

The report concluded that a typical residential household saves about $2 per month, even if it isn’t among the thousands of consumers who directly participate in utilities’ energy efficiency programs under the standards.

How does energy efficiency produce those savings?

Energy efficiency programs reduce overall demand for electricity. In the market, ​“load reduction is like an energy supply,” said Resource Insight’s President Paul Chernick. ​“It will shift the demand curve down — and therefore the market prices of energy.”

What impacts on consumers were left out of the new report?

The savings calculated in the new report are in addition to direct savings from having to buy less electricity as a result of energy efficiency measures. On average, the net impact of those direct benefits after subtracting the costs of Ohio’s clean energy standards is $3.61 per month, an earlier analysis found.

What about the amounts that Ohio consumers pay under the energy efficiency standards?

“In Ohio, energy efficiency programs must be cost-effective,” or else they don’t qualify under the standards, said attorney Miranda Leppla at the Ohio Environmental Council. In other words, the savings must be more than the costs.

That’s different from even the most favorable scenario that PJM looked at for Ohio House Bill 6. ​“The whole problem with the nuclear subsidy is you’re paying more than it’s worth,” said attorney Madeline Fleisher at the Environmental Law & Policy Center.

How does the study relate to the pending Ohio bill to subsidize nuclear and coal plants and gut the state’s clean energy standards?

“This is just another layer of why it’s bad,” Leppla said. The loss of a chunk of energy efficiency savings would push Ohioans’ energy bills higher than they would otherwise be. And those added costs would be in addition to the loss of some direct benefits to program participants, subsidies paid under the bill, higher capacity market prices, and also higher energy prices if more efficient resources didn’t enter the market.

If energy efficiency is such a good deal, won’t people do it regardless of whether Ohio keeps the clean energy standards?

Don’t count on it. ​“If you look at states without an energy efficiency standard on the electricity side, they produce less savings,” Fleisher said. And in Ohio, there’s been slower progress in energy efficiency from gas utilities, which don’t have analogous standards, she noted.

Residential consumers also face barriers to adding energy efficiency when states don’t have standards. ​“The fact that we have utility programs that can educate and offer these savings in a very cost-effective and easy manner for residential customers is a huge deal,” Leppla said.

What about the argument that most of the low-cost energy efficiency options have already been used?

“Utility studies show there is still plenty of potential energy efficiency out there,” Fleisher said, referring to market studies that utilities must periodically perform under current requirements. Specialty lighting and heating and cooling are examples of areas that are still largely untapped, she noted.

Chernick likewise dismissed the argument. ​“You still have a lot of low-hanging fruit there that you just haven’t gotten yet,” he said. Plus, ​“the fruit keeps maturing.” As older equipment wears out and time goes by, the opportunity becomes ripe for more renovation and energy efficiency improvements.