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The Los Angeles Department of Water & Power (LADWP), the nation’s largest public utility, this week adopted an annual budget directing an unprecedented $128 million toward energy efficiency and setting a soft target of 15% cumulative savings by 2020.

These are significant increases and sets LADWP on the path to be a leader in energy efficiency, allowing its customers to take advantage of this clean and cheap source of power. A robust energy efficiency budget can help create jobs and displace dirty coal in LADWP’s portfolio.

The expanded energy efficiency provisions approved in the utility’s $4.5 billion budget hopefully indicate a positive new trend for LADWP, which has been aiming far too low even though the utility’s1.4 million customers have been clamoring for cleaner sources of energy.

Less than a year ago, an NRDC report evaluating the energy efficiency achievements and targets of all of California’s publicly owned utilities found LADWP was falling far short of the others – and national best practices – despite state law requiring utilities to first invest in reducing demand before paying more for generating energy (see my colleague Noah Long’s blog on this here).

Last December the LADWP Board approved an energy efficiency goal of 8.5% by 2020. At that time, the Board noted that the goal did not comply with the state’s mandate that all publicly-owned utilities achieve at least 10% by 2020, and the board asked staff to re-evaluate what it would take to meet and exceed the state mandate.  

The Board Letter accompanying the vote this week explained that staff recommended setting a goal of a minimum of 10% savings by 2020, with a target of 15%, pending a revised potential energy savings study in 2013. LADWP General Manager Ron Nichols explained to the Board that the previous potential study did not evaluate all the programs LADWP wishes to adopt and that the utility did not want to make promises about future performance, thus choosing instead to adopt a conservative minimum target to be revisited next year.

“While this FY2012-13 final budget sets the direction to exceed the 10% energy efficiency savings by 2020 that is required by law, we will continue to strive for a higher goal,” the utility said in a separate memo (item 14 in document) explaining differences between its March preliminary budget proposal and the version approved this week.

At the Board meeting, NRDC, Sierra Club, Los Angeles Alliance for a New Economy, and Communities for a Better Environment all urged the Board to aim for the higher goal, and to require regular reports from staff on the performance and progress of energy efficiency programs. The reason for these two asks is that all these groups believe it is critical that LADWP maintain a long-term, sustained commitment to energy efficiency programs. Sustaining the programs over time not only allows more customers to take advantage of the services, but it actually helps the programs become cheaper as they overcome start-up costs and hit their stride. This energy efficiency plan presented for the next two years is a fantastic kick-off to a long-term commitment to energy efficiency, but if the budget is slashed in year three (as has happened in the past to LADWP), then many of the benefits those programs are building will be lost.

LADWP says increased energy efficiency investment combined with expanded and new programs for residential, commercial and industrial customers – as well as new building codes and appliance standards – will lead to energy use reductions.

NRDC has long believed that setting aggressive targets and achieving cost-effective energy efficiency are essential to ensure utility bills remain affordable, good local jobs are created, air quality is improved, and the state’s emissions reduction targets are met.

The utility says its proposed Energy Efficiency Program Portfolio reflects recent feedback. For the programs to be successful, NRDC believes the utility must implement a transparent and consistent approach to evaluating and measuring their efficiency.

LADWP’s planned energy efficiency programs for FY 2012-2013 include:

  • Increasing program offerings for small, hard-to-reach commercial customers such as the Small Business Lighting Installation Program and the new Small Business Heating, Ventilation, and Air Conditioning Tune-up Program;
  • Expanding the Retro-Commissioning Program for existing LA buildings;
  • Expanding its Custom Program serving medium and large commercial customers that “develop effective, measurable and reliable conservation solutions”;
  • Creating a Custom Plus program for industrial customers that invest in major system replacements resulting in more efficient processes;
  • Creating a multi-year energy conservation program for LA’s Unified School District;
  • Expanding residential programs serving the income-qualified community through a whole house weatherization approach and adding a program for middle- and upper-income residents to reduce peak hours cooling load and invest in home system improvements; and
  • Launching behavioral programs to change energy use habits.

In addition to energy efficiency, the utility plans to continue and develop new solar programs, including smart grid and solar feed-in tariff demonstration programs.

One final exciting development for LADWP energy efficiency this week: the Board met David Jacot, the new head of energy efficiency (formerly a Southern California Edison). He starts in June and has a big job ahead in putting this new budget to good use for all Angelinos.

Image Credit: Oleksiy Mark/Shutterstock