Why are utility companies in the business of saving energy?

May 27, 2014

Watson: Wouldn't it make more sense to let the utility companies supply the utilities to their customers and  let the Energy Conservation Professionals provide their services directly to the owners to help them operate their plants as efficiently as possible? Eliminate the conflict of interest, take the Fox out of the Henhouse.

Watson: Why are Utility Companies in the business of Saving Energy, Holmes? Seems like a huge conflict of interest; like having the Fox guard the Henhouse.

Holmes: That’s a great question Watson. I have been hearing it from everyone from CEO’s to plant engineers to Certified Energy Dogs for at least 20 years. The first time I heard it I was in a meeting with John, the President of a Meat Packing Plant and Jeff, the Industrial Engineer for the local electric utility, PSI Energy.

John asked Jeff if PSI was regulated by the State Public Utilities Commission with profits regulated as a percentage of electricity sold. When Jeff answered “Yes”, the next question was, “why should I believe that PSI actually wants me to reduce the amount of electricity we use and reduce your profits?” Jeff just sat there. He was probably the sharpest utility engineer I have ever encountered and he knew the answer. But he wasn’t going to tell John it was just another one of PSI’s many programs that it was his job to sell.

Watson: You said you have been hearing it for 20 years. Give me a recent example

Holmes: I gave a presentation on Energy Monitoring to 70 people at a National Association for Environmental Managers (NAEM) Conference in Montreal last October. These were high level people from Fortune 500 companies who had been tasked with reducing their water, energy and waste. After the session a number of them came up to talk with me.

One of the attendees raised the topic of whether their local utilities were helping them reduce their energy costs and I was surprised at the volley of caustic comments. A number of people stated that not only did their Utility not want to reduce sales, they had found ways to make a profit on the supposed “Energy Conservation Programs” they were pushing.

Watson: If you think about it, it doesn’t make a lot of scents does it? Why are Utility Companies in the business of Saving Energy?

Holmes: The main reason is that many States have mandated that a certain percentage of utility revenues be spent on energy conservation measures. The theory is that conservation is cheaper than building more generating and transmission facilities. The result is many utilities have millions of dollars to spend every year on conservation. So not only are utilities now in the business of energy conservation, they are driving it and there are literally thousands of people employed by these programs.

You know the Golden Rule don’t you Watson?

Watson: Do unto others as you would have them do unto you?

Holmes: The version I was thinking of is He Who has the Gold Makes the Rules. What I have been hearing for several years from a number of sources is similar to what I heard in Montreal; that although the Utilities must comply with the regulations and spend the money, they really don’t want to reduce their income.

As a result most utilities are spending the money on Energy Audits, Benchmarking, Data Collection, filling out forms and writing reports, things that are Preparing to Save Energy but not actually saving much.

Why the States think that just because the utility companies can deliver the electricity and gas to a facility, they should also be the ones qualified to help conserve them within the plant, is a mystery to me.

Watson: What about Jeff, the utility engineer you mentioned earlier? Wasn’t he qualified to help his customers conserve energy?

Holmes: Jeff and I worked together on a number of projects to help his customers reduce their energy costs; he wanted to do what was best for them. But he clearly realized that he didn’t have the required skills to do what was necessary within the plants; it wasn’t his background or training. He needed my help and would call me whenever he encountered a situation where I could help him.

I needed his help, too. Jeff knew a lot about delivering high quality, reliable electricity to his industrial customers. I didn’t. I knew a lot about how to conserve energy in energy systems within the plants. Supplying energy to industrial plants and helping those same plants conserve energy requires different skills. It took the two of us working together to be successful and we both understood that.

Watson: So what would make more sense would be to let the utility companies do what they are in business to do, to supply the utilities to their customers and to let the Energy Conservation Professionals provide their services directly to the owners to help them operate their plants as efficiently as possible. Eliminate the conflict of interest, take the Fox out of the Henhouse.

Holmes: Watson. You’re a Genius!

Tell us about your experiences, both good and bad with energy professionals, what has worked and what hasn’t. Send us your comments, thoughts and suggestions on how to improve our profession so we can all continue to learn from each other. Thanks – Holmes & Watson.

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