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DEP Recommends Measures to Reduce Electricity Costs, Avoid Full Effects Of Rate Spike

Acting Department of Environmental Protection Secretary John Hanger offered the Public Utility Commission suggestions this week 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.

He also said that with electricity rates for a majority of Pennsylvanians set to spike as much as 60 percent in the near future, it is important that the commission act quickly to implement guidelines so programs have time to take effect and benefit ratepayers.

“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 Acting Secretary 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 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 Acting Secretary 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.

For more information, visit the PUC's Act 129 webpage.

11/21/2008

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