Bacon's Rebellion

Democracy Thrives in Sunlight

Coming Soon: Conservation Incentives for Natural Gas

—

by

James A. Bacon
in

In a rare display of bipartisanship and common sense, a Senate committee has endorsed a bill allowing a new rate structure that would encourage natural gas companies to promote conservation. The House of Delegates had previously approved the measure 98-0. Greg Edwards has the story for the Times-Dispatch.

Jim Kibler, vice president of governmental relations for AGL Resources, laid out the logic for “decoupling” in a December column, “Cleaner, Cheaper, Better.” One key — not the only one, but a very important one — to conserving energy and combating climate change is to unleash the power of the marketplace. This bill represents a huge step forward.

Share this article

ADVERTISEMENT

(comments below)

ADVERTISEMENT

(comments below)

Comments

  1. Larry Gross Avatar
    Larry Gross

    this would be an excellent example of a location-variable dialog.

    In the article, Mr. Kibler notes that 70% of the cost of natural gas is for the gas itself and 30% is for distribution.

    So – I’m a bit unclear as to what exactly de-coupling is in a Natural Gas … PIPELINE context since we all know that natural gas does not have the virtually 100% coverage of the electric grid.

    Does this mean in the location-variable costs world that settlement patterns that are “on the pipeline grid” are more “efficient” than ones that are not?

    What about … if an area on the pipeline “grid” used that gas to generate electricity ?

    Note that the legislation EXEMPTS Dominion from the price implications of the “de-coupling”.

    so.. we could have a referenda on whether we want fossil-fuel coal-powered electricity or natural-gas powered electricity in those areas that are on the pipeline grid?

    It would be interesting to have a poll with those two choices (which would also include the typical costs under each plan) and see how many folks vote to not generate mercury pollution by burning fuels that do not generate mercury and other air pollution.

    so you’d have the two options on the poll – each one with the cost and each one with the amount of mercury that would be generated by the average home usage.

    what do you think?

    how many folks would vote for the higher cost and less mercury?

    oh… I forgot.. on the Poll – a 3rd question that asks “Do you consider yourself an environmentalist”. (I’m throwing that one in for RH).

  2. Anonymous Avatar
    Anonymous

    This gas bill is my favorite piece of legislation this session. If you think it makes sense to pay farmers not to grow corn, you’re going to love this. The gas companies will create all kinds of expensive programs to promote conservation. All ratepayers will pay for these, whether they participate or not, on their monthly bills. And then if the programs succeed and the ratepayers who participate do see their costs go down X, the gas companies will keep 15 percent of X as their reward. And no matter how much that formula generates for them, the SCC cannot look at that number and adjust their profit margin accordingly in the next rate case.

    Just like Dominion proved last year — the finest legislature money can buy (ask the payday lenders…)

  3. Anonymous Avatar
    Anonymous

    It was only a few years agoe that gas companies were promising unlimited supplies and lower prices than oil.

    Thousands of homeowners switched over.

    That was before legislation made generating electricity with gas cheaper than generating electricity with coal or oil.

    On the other hand, where is the logic in isnsisting that the gas comapnies shooud participate in cutting their own throat, without taking a profit for their activities?

    RH

  4. Anonymous Avatar
    Anonymous

    Assuming that the government finds it is in the public interest for me NOT to grow corn, then why should the government not expect to pay me to NOT engage in this otherwise lawful activity?

    If I do not have to endure the risk and expense of growing corn, then I ought to be willing to accept less profit, at less risk.

    If the mutually agreeable point is still in the public interest, then we have a deal.

    If not, then I may choose to grow corn at my expense and my profit, even if it is not in the public interest.

    If the public has an interest they are not willing to pay for, then they have not interest enough.

    They ought to be willing to pay for what they get, whether it is gas conservation or corn conservation.

    RH

  5. Jim Kibler Avatar
    Jim Kibler

    Jim, many thanks to you and Bacon’s Rebellion for being early supporters of this concept.

    In all fairness, I should reiterate that the decoupling legislation has also had early and strong support from a number of conservation and social justice organizations.

    Some of the comments above raise issues beyond my grasp. I do know that decoupling and conservation incentives have a proven track record in a number of states.

    One important clarification on the incentive is necessary to correct the misimpression of Anonymous 10:30. Under the legislation, a utility may earn an incentive of up to 15% on savings it generates for customers, but if and only if those savings are independently verified as having been the result of the utility’s conservation programs. Moreover, the savings are calculated net of the cost of the conservation programs.

    So, the utility has an incentive to employ the most cost-effective conservation programs in order to generate the greatest net savings for its customers.

  6. Larry Gross Avatar
    Larry Gross

    “If the public has an interest they are not willing to pay for, then they have not interest enough.

    They ought to be willing to pay for what they get, whether it is gas conservation or corn conservation.”

    How about this.

    Is it in the public interest for all ratepayers to pay 7/8 of your electricity bill when you choose to use peak power?

    You said the public should be “willing to pay you” to do what?

    To NOT use peak power that you only have to pay 1/8 of the cost?

    why should they be “willing” to do that?

    why not, instead, just tell you that from now on, you’re responsible for 8/8 of the cost and that’s the end of it?

    That’s what decoupling and demand strategies basically say and they are… I know this is going to come as an enormous shock to you – deemed in the public interest without having to pay what amounts to bribes to people to NOT use peak power.

    I say.. cut you loose.. let you decide for yourself how much you want to pay based on what it actually costs to provide you with the service.

    what’s wrong with that?

  7. Anonymous Avatar
    Anonymous

    “Is it in the public interest for all ratepayers to pay 7/8 of your electricity bill when you choose to use peak power?”

    I’m not arguing with you.

    I’m arguing with anonymous 10:30.

    “And then if the programs succeed and the ratepayers who participate do see their costs go down X, the gas companies will keep 15 percent of X as their reward.”

    If we want the gas company to do something for us (promote conservation programs) that cuts their own throat, then we should expect to reward them, for doing as we wish.

    Take a chill pill.

    We don’t have to pay the companies to operate these programs, but then we shouldn’t expect much in the way of results.

    Unless you think we can simply order them to work for us.

    ———————————

    “Is it in the public interest for all ratepayers to pay 7/8 of your electricity bill when you choose to use peak power?”

    I don’t know that anyone has adequately answered that. If it winds up costing us an amount equal or higher than that 7/8 expense you mention, then maybe I would rather pay the former amount. No one seems to be willing to talk about the costs of the alternatives.

    The power company at least sends us a bill. If it is too high, we can use less. But when someone comes to me with a plan that says we are going to charge you 7/8 more during peak hours so that we can all save money, then I want to see the bill, so I can decide how much I want to buy.

    Unless, I’m being ordered to buy it, in the name of a free market.

    RH

  8. Larry Gross Avatar
    Larry Gross

    no one orders you to buy it but they no longer will sell it to you for 1/8 of what it costs to generate either.

    you decide what you want and how much you want by deciding how much you want to pay.

    I know.. this is a terrible concept… much better to have subsidies so we don’t have to pay for what we use..

    “user pays” is downright Anti-American – right?

  9. Anonymous Avatar
    Anonymous

    much better to have subsidies so we don’t have to pay for what we use..

    I never said that.

    What I say is that we will pay for what we use one way or another, under your scenario we will also pay for systems to spread the costs more exactly.

    If, and only if, the sum of the two is turns out to be more costly than the first or present system of spreading costs, then it is a waste of resources, and we all lose.

    RH

  10. Anonymous Avatar
    Anonymous

    “user pays” is downright Anti-American – right?”

    It isn’t a question of being un-American. It’s a question of whether we do something stupid in a blind quest to implement “User Pays”

    It’s a question of whether in a blind quest to implement a “user pays” dogma we implement a system whose transaction costs exceed the benefits. Whether it reduces all the pools of cash to the point that we cannot “lend” each other the capital that is needed for larger projects.

    I don;t have anything against user pays when it makes sense: sometimes it doesn’t.

    RH

  11. Larry Gross Avatar
    Larry Gross

    PSSSTT – “user pays” is the DEFAULT condition.

    when you walk into a 7-11, you are the user who will pay.

    We don’t charge the guy ahead of you more for his coffee so you can get your slurpee cheaper…

    That’s the funny thing about you saying that sometimes it does not make sense that the user pays…

    well.. WHO do you think WILL pay if the user does not?

    The only time it makes sense for the user to not pay is when the user is young or sick or elderly and unable to fend for themselves and need help.

    You’ve got this really confused.

    Somehow you think that some folks who are perfectly capable of paying for they use should be “helped” by other people….in those situations where “user pays” does not make any sense (to you).

    Why is the world would you take money from one person to give it to another if the recipient was not sick/elderly/unable to take care of them self?

    Remember – we’re talking about people who CONSUME MORE than average .. proliferate consumers that you apparently advocate subsidizing so their consumption is “more affordable”.

    why, in that case, is “user pays” not appropriate?

  12. Anonymous Avatar
    Anonymous

    “PSSSTT – “user pays” is the DEFAULT condition.”

    You can’t possibly actually believe that. And it isn’t even a good example. 7-11 is famous for offering loss leaders.

    “WHO do you think WILL pay if the user does not?”

    There are frequently more beneficiaries than there are users. I agree that auto drivers get some benefit from Metro and that they shoudl pay even though they are not users.

    I just think we should be able to measure how much the benefit.

    Within reason. When it costs more th make the measurement than the benefit is worth, it is time to stop quibbling. Like when you have 500 people at the table vs 5.

    “The only time it makes sense for the user to not pay is when the user is young or sick or elderly and unable to fend for themselves and need help.”

    That is the dumbest idea I ever heard. there are plenty of other times it makes sense to divy the costs via some kind of averaging.

    What do you think you get when you buy insurance? You get an average cost – even though some losers may use a lot more than you do.

    How do you know who really consumes more than average? What about the guy who consumes more but has half as many children?

    I don’t advocate subsidizing anyone, I just don’t advocate being stupid about reducing costs in such a way that they actually increase. That means we actually have to take a good hard look, with agreed upon standards of measure.

    And, I also happen to believe that so called environmentalists might be very surprised at the results.

    —————————–

    Where does it say we are talking about people who consume more than average? We are talking about 20 to 80% reductions, depending on who you believe. Just because you already installed curly bulbs, efficient windows, passive solar and work at home you get to take a pass? In your 7000 sq ft home?

    You really think that only the gross consumers will be affected by what this is going to do to our economy?

    RH

  13. Anonymous Avatar
    Anonymous

    “Under the legislation, a utility may earn an incentive of up to 15% on savings it generates for customers, but if and only if those savings are independently verified as having been the result of the utility’s conservation programs. Moreover, the savings are calculated net of the cost of the conservation programs. “

    That is the kind of thing I expect to see. Measured benefits, and measured rewards for those that provide them.

    Notice the part that says measured, and independently verified.

    It is a much better plan than punishing those that don’t provide them.

    RH

  14. Anonymous Avatar
    Anonymous

    How is this for incentive.

    Some people claim the government should buy back used cars (presumably at a premium) to encourage people to get new cars that are safer, smaller, and less polluting.

    RH

  15. Anonymous Avatar
    Anonymous

    “The outcomes of the forest negotiations here in Bali do not include any guarantee that the rights of Indigenous Peoples and local communities regarding their forests, which have been enshrined in the UN Declaration on the rights of Indigenous Peoples, will be respected. Instead, this entire process is dominated by the corporate interests of logging, soy and palmoil companies that have started to demand compensation for every tree they don’t cut down.”

    Global Forest Coalition’s Managing Coordinator, Simone Lovera

Leave a Reply

Read More