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The 1980 Florida Energy Efficiency and Conservation Act required utilities to implement cost-effective energy efficiency programs. According to the EIA, Florida utilities reported efficiency program savings of 348,208 MWh in 2007, 0.15% of total retail sales. Florida utilities establish demand-side management (DSM) conservation goals for summer and winter demand (MW) and annual energy sales (GWh). The Florida Public Service Commission reviews DSM goals for each utility at least once every five years and sets demand and energy sales goals that extend 10 years into the future. Within ninety days after the commission issues its order approving a utility’s DSM goals, that utility must file a plan with the commission for approval. The utilities are also required to file annual reports on their DSM programs. Most of these DSM plans include residential, commercial, and industrial sectors. The utilities provide conservation education programs to their customers. They also typically offer incentives to encourage customers to install more efficient equipment. The utilities distribute the costs of the programs by adding a surcharge for all customers. The surcharge varies by utility. Natural gas programs are available for residential and commercial customers in Florida and are required by both orders and legislation. Natural gas energy efficiency is required by the Florida Statutes (Section 366.81-82). It is also required by FPSC Rule 25-17.009 and by two sections of the Florida Administrative Code (Requirements for Reporting Cost Effectiveness Data for Demand Side Management Programs of Natural Gas and Energy Conservation Cost Recovery). Utilities can petition for tariff riders to recover the costs of the energy efficiency programs that they implement. The FPSC oversees this process.
Investor-owned electric utilities may recover reasonable expenses, including customer incentive costs, for DSM programs approved by the Florida Public Service Commission. The utilities recover these costs by adding surcharges to customer bills. Also, the FPSC conducts Energy Conservation Cost Recovery (ECCR) proceedings each November and determines an energy conservation cost recovery factor to be applied to bills during the next year. This factor is based on each utility’s estimated conservation costs for the next year. In 2006, the cost recovery factors for various utilities ranged from 0.046 cents per kilowatt-hour to 0.169 cents per kilowatt-hour. Florida's electric utilities spent $67 million on energy efficiency programs in 2006 (as well as investing significantly in load management programs). According to the Energy Information Administration, Florida utilities spent $92.6 million on energy efficiency in 2007, 0.38% of their total spending. In 2006, the Florida Renewable Energy Technologies and Energy Efficiency Act established the Renewable Energy and Energy Efficiency Technologies Grants Program. This program will receive additional funding from the federal economic stimulus. In 2008–09, the program received $15 million; this will increase to $44 million in 2009–10. House Bill 7135, the 2008 Energy and Economic Development Legislation, authorized additional funding for this program. HB 7135 also called for the development of a cap-and-trade system for regulating greenhouse gases to reduce global warming.
Florida does not currently have an EERS, or a Renewable Portfolio Standard (RPS), in place. A recently passed bill (HB 7135), however, directs the PSC to adopt a RPS for public utilities and establish appropriate goals for energy efficiency.
HB 7135 instructed the Public Service Commission to analyze utility revenue decoupling and provide a report and recommendations to the governor and the legislature in December 2008. The report was generally unsupportive of decoupling. Decoupling reduces the financial disincentive for utilities to support energy efficiency by separating utilities’ profits from their levels of sales.
None are in place. HB 7135 authorizes the commission to provide financial rewards and penalties and to allow an investor-owned utility to earn an additional return on equity for exceeding energy efficiency and conservation goals. Specifically, the commission may allow a utility a 0.5% increased return on equity for exceeding 20% of annual load growth through energy efficiency measures.
Energy efficiency is considered a resource in Florida and plays a key role in meeting the state’s growing electric energy needs. In addition to meeting the goals of the Florida Energy Efficiency and Conservation Act, in December 2006, the PSC endorsed the National Action Plan for Energy Efficiency, which recommends making energy efficiency a high priority resource. Additionally, when determining whether there is a need for a new power plant, the PSC seeks to mitigate the need for additional generation. For many years, Florida used the Ratepayer Impact Measure (RIM) test to determine the cost-effectiveness of energy efficiency programs. This requirement limited energy efficiency investments. HB 7135 grants flexibility to the commission so that it may “modify or deny plans or programs that would have an undue impact on the costs passed on to customers.” The bill effectively allows the commission to utilize a cost-effectiveness test that is less burdensome than the RIM test. The PSC has yet to rule definitively on this issue.
Last Updated 08/20/2009
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For more information contact: Dan York, Utilities Program Senior Research Associate |
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