Pa. DEP Recommends Energy Conservation, Smart Meters

Acting Department of Environmental Protection Secretary John Hanger offered the Pennsylvania Public Utility Commission suggestions on Nov. 19 to ensure that consumers can realize the greatest amount of savings—up to $500 million by 2013 and $800 million annually thereafter—from the state's new energy efficiency and conservation law.

"By reducing electricity consumption, especially during the 100 most expensive hours of the year, power consumers can save more than $250 million a year beginning in 2011 and $800 million annually by 2013," said Hanger. "We can reduce the price increases that will hit consumers when rate caps expire statewide two years from now, but we must act decisively to ensure the conservation plans put in place produce verifiable, cost-effective results. There is much work to do and little time to do it."

During his testimony, Hanger also reiterated a call to fast-track implementation of advanced meters, also known as smart meters, that allow consumers to respond to higher prices during periods of peak demand by shifting their consumption to times when power prices are lower. Act 129, which Gov. Edward G. Rendell signed last month, requires that utilities must provide their customers with smart meters within 15 years. "To achieve Act 129's important goals, the Department of Environmental Protection recommends that smart meters be fully deployed within 10 years," said Hanger. "Smart meters and time-sensitive price plans effectively use market forces to reduce consumption, shift some uses to cheaper times of day, save consumers money, and provide system-wide benefits to all consumers."

Act 129 requires utilities to adopt and implement cost-effective plans to cut electricity use 1 percent by 2011 and 3 percent by 2013. Utilities must also implement plans to cut energy use 4.5 percent during peak demand periods when prices are highest—typically the hottest days of summer and the coldest days of winter—by 2013. Electric utilities that fail to meet the law's requirements may face steep penalties. In order to have the conservation plans up and running ahead of the rate cap expirations, Act 129 calls for the plans to go into effect by November 2009.

The PUC is charged with creating standards for the energy efficiency and conservation program, including an evaluation process. Because the cost of the energy efficiency and conservation plans will be recovered from the ratepayers, Hanger said the process for creating and evaluating the plans demands accountability.

Hanger submitted detailed written answers on behalf of DEP to specific questions on how to implement the program. His responses are available at www.puc.state.pa.us.

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