Last year, Louisiana’s top utility regulators passed new standards to create a new, independently managed state program aimed at lowering energy consumption and saving customers money. The standards were more than a decade in the making.
Louisiana became the first state in the South to embrace the model. But the move proved short-lived.
In a 3-2 vote on Wednesday (April 16), the Louisiana Public Service Commission terminated the program before its standards could be implemented, sending the agency and its staff back to the drawing board. The commissioners said they thought the program would cost more than it was worth.
Advocates for the now-canceled program say boosting energy efficiency through home upgrades is critical to reducing Louisiana’s sky-high energy use — and waste — that significantly drives up utility bills, based on recent findings by the state legislative auditor.
Those same upgrades to homes and businesses, like sealing homes and businesses against the weather, would also benefit public health, protecting residents and workers from the growing threat of extreme heat and lowering stress. Making energy more affordable is also known to improve mental health, especially in low-income communities.
“It doesn’t matter how low the rate is if we’re just throwing our money out the cracks around our doors and windows,” said Logan Burke, the executive director of the Alliance for Affordable Energy, a statewide utility watchdog.
The vote came about two weeks before the Baton Rouge-based company APTIM was due to present the proposals for how to structure the new energy efficiency program. In September, the commission unanimously voted to pay the company $24.5 million over four years to administer the program. Now, it’s unclear if the proposals will be released, even though the agency already paid for the work to be completed.
The decision was drawn along party lines, with the agency’s three Republican commissioners — Chairman Mike Francis, Erik Skrmetta and Jean-Paul Coussan — agreeing to end the contract with the consultant and halt plans for a third-party administrator to manage a state-run program.
Davante Lewis and Foster Campbell, the five-member body’s two Democrats, voted against ending the contract, asking to delay until after the agency could review the proposed program. Lewis said he plans to call for a vote to undo Wednesday’s decision.
It was the final item in a meeting that spanned more than four hours and took place at the Cypress Bend Resort and Golf Course in Many, Louisiana, a small community deep in a rural swath of the state near the Texas-Louisiana border. One Lake Charles resident drove two hours to speak in favor of the energy efficiency program.
Advocates for broadening the state’s energy efficiency program said the lack of notice and location hurt the amount of public participation.
“It’s infuriating to think that a decision that is going to directly impact people’s ability to pay their utility bills was made at a golf resort in Many, Louisiana … without the knowledge of the public,” said Alaina DiLaura, the policy director for the Alliance for Affordable Energy.
Skrmetta, who made the motion to end the program, said he felt hiring a third-party administrator would cost the state too much in administrative fees. He and Francis also opposed the new standards when they passed last year. In past meetings, Skrmetta said he felt the utility-run programs performed “beyond adequately.”
Coussan’s predecessor, Republican Craig Greene, joined with Lewis and Campbell last year to pass the new standards and move toward a state-run program, attempting to end a 13-year debate. The state had spent more than half a million dollars to try to come up with a program that appeased utilities, according to the Louisiana Illuminator.
The standards represented a break away from past policy that relied on each utility to voluntarily run their own power-saving programs. Consumer advocates said the utility-managed model lacks transparency and has a fundamental conflict: If customers consume less energy, the utility makes less money — reducing the incentive to promote as much energy-saving as possible.
Utilities opposed the addition of an independent administrator when it was approved last year. Representatives of CLECO and Entergy Louisiana reiterated their support for continuing the utility-run model.
Forest Bradley-Wright leads the state and utility program for the American Council for an Energy-Efficient Economy, a national research nonprofit.
He said at least five other states, including Maine, Wisconsin, Hawaii, Oregon and Vermont, use an independent administrator to run statewide energy efficiency programs. His analysis founds that all of those states save anywhere from 2.5 times up to 8 times as much energy as Louisiana’s utility-run model under its lax targets.
“When you have a statewide administrator, its mission is exclusively focused on delivering energy efficiency,” Bradley-Wright said. “You have reason to think they will be more motivated and more effective at bringing energy bill reductions to customers than utilities would.”
Those energy efficiency programs often involve programs like rebates to help residents switch their appliances to ones that use less energy, which also helps protect people from the pollution produced at power plants and inside their homes.
“If your appliances are consuming less energy, whether it’s burning in your home or burning at a power plant, means fewer pollutants are being produced,” said Katherine Pruitt, who works on clean air policy for the American Lung Association.
Natural gas-burning stoves and water heaters produce emissions that can lead to a host of health problems later in life, increasing the risk of cancer, respiratory illnesses and Alzheimer’s disease, among other issues, she said.
Instead of hiring an outside administrator, Francis said he wants the agency to use a “public entities” model for an energy efficiency program. Each commissioner would receive their own budget to allocate to public services in their region — from schools hospitals to police departments — for building upgrades to save on power bills. Individual residents would be ineligible for that money.
“Everyone uses these facilities. One hundred percent of the public is getting a value from public entities,” Francis said, adding that he believed the operating cost for the program would be lower as well.
However, Chris Justin, an engineering and utility regulation consultant for the commission, told the agency ahead of Wednesday’s meeting that the administrator-run program is estimated save nearly six times as much energy as a public entities program at lower cost per kilowatt hour. He noted that administrative fees aren’t the only expense for running a program.
“The higher administrative cost of the [third-party administrator] can be justified since it leads to a better overall value … for ratepayers,” Justin said. He recommended splitting the funds between a third-party administrator-run and a public entities program.
Nationally, Bradley-Wright said states are saving more than triple the amount of energy with their programs, whether they use an administrator or not. As the commission moves forward, he said the state will need set strong targets for power-saving to help save residents money.
DiLaura said her group will continue to encourage the agency to reconsider its decision to end the current program.
The commissioners plan to work with the agency’s staff over the next month to determine what options for energy efficiency programs to consider next. The next meeting is scheduled for May 19 in Lafayette at the city government office, 705 W. University Avenue.
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