Industrial Opt-Out Bill Poses Risk to Energy Efficiency Programs Across PA

Senate Bill 805 would allow large industrial customers to circumvent the collaborative stakeholder process built into Act 129 and opt out of our statewide energy savings program. Their actions could have cascading impacts beyond their own rate class that will negatively affect the availability of rebates and affordable energy for all Pennsylvania ratepayers.


Senate Bill 805 was introduced this year in the Pennsylvania state senate and could allow large industrial customers to opt out of participation in Act 129, our statewide energy efficiency incentive program.  Act 129 was introduced in 2008, requiring electric distribution companies to cost-effectively reduce electricity consumption and peak demand on their systems. The program has been successful in reducing energy usage across customer sectors statewide since the first phase rolled out in June of 2009. The second phase will be coming to a close next May, and stakeholders across the state are preparing for the beginning of Phase III, which will last five years, beginning on June 1, 2016.

The bill was introduced on behalf of a handful of large industrial customers in PA who feel they are not benefitting from paying into the Act 129 program.  Act 129 is ratepayer-funded, meaning every sector (large and small, commercial and residential) pays into this program and members of each sector are eligible to apply for rebates that will offset the cost of their energy efficiency projects. Some of these customers feel that paying into a funding pool accessible by any members of that sector serves to subsidize the energy efficiency improvements of their competitors. Another argument posed by these customers is that their cost of program participation is higher than that of any benefits they receive.

In order to address any unforeseen issues faced by program participants, Act 129 was constructed with provisions for adjusting the program framework based on stakeholder concerns. To that end, each electric utility holds regular stakeholder meetings to incorporate feedback from customers about what is working and what is not in each territory. However, it appears that this group of customers in support of SB 805 has not participated in these feedback sessions to make adjustments to Act 129. Rather, they are supporting this new legislation that will circumvent the established process and potentially damage a system that has been effective and successful in reducing energy usage statewide for the past seven years.

While the primary benefit of Act 129 is the rebates customers can access that assist with the implementation costs of energy efficiency projects, the indirect benefits of this program reach beyond to affect those who do not even apply for these rebates. Act 129 has resulted in greater ease of project implementation and widespread education around the subject, but the energy efficiency achieved to-date has resulted in lower electricity prices for all Pennsylvanians. As strain on the grid is reduced, particularly during peak usage hours, demand is reduced. As demand falls, so does price. The large industrial sector represents about one-third of the energy used in the state, and even if these customers are not directly applying for utility rebates, they are certainly seeing a benefit from energy efficiency through reduced energy prices.

Several large industrial customers who do work in Pennsylvania understand the benefits of Act 129 and have spent time and energy lobbying against SB 805.  Companies such as Whirlpool, Johnson Controls, and Siemens – just to name a few – understand the risks of dismantling Act 129 piece by piece. Other states have faced this issue and it has not gone well. For example, Indiana introduced an industrial opt-out bill in 2014 and the scope of the bill expanded to shut down its statewide energy efficiency program altogether.

Act 129 represents assistance that can help Pennsylvania homes and businesses over the cost hurdle of implementing energy efficiency measures.  It increases demand for services provided by the 4,200 energy efficiency and advanced energy businesses in the state. It means affordable energy costs and a more reliable grid for all ratepayers, as well as a healthier environment/cleaner air for all Pennsylvanians.

SB 805 has lost some momentum in light of more pressing concerns, such as the state budget, but the fight is not over. SB 805 represents a serious threat to our statewide energy efficiency program and its inherent benefits. For more information or to get involved, contact CCI’s advocacy department at alisons@ccicenter.org

Read more about what happened to Energizing Indiana. 

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