In Assembly, crafting incentives for efficiency

Eenergy efficiency is a term that makes utilities and their customers uncomfortable.

For customers, efficiency conjures up visions of cardigan sweaters and thermostats dialed down to let in the winter chill. But energy conservation is today a sophisticated science, not an exercise in nostalgia and deprivation. Improved insulation, modern appliances and lighting, and a few do-it-yourself projects inspired by a home energy audit can make a deep dent in a homeowner's electricity bill.

Multiply conservation efforts by thousands of homes, throw in industrial conservation programs, and the savings can have significant and immediate benefits. Over the long term, efficiency programs are not only cheaper than building new power plants, they can actually reduce the need for them and their polluting byproducts.

Without efficiency incentives, though, utilities make more money only when their customers burn more energy.

Two years ago, Dominion Virginia Power and its powerhouse lobby persuaded legislators to grant the company incentives to build new coal and nuclear plants. Curbing electricity use could be an argument to delay new generation projects, which would delay those incentives.

While some individual homeowners have already adopted energy-smart habits, a more universal effort requires help from utility companies. Gov. Tim Kaine and lawmakers introduced measures this year offering a variety of mandatory and voluntary efficiency initiatives.

Dominion has worked to boost cash awards for participating utilities, while taking an X-acto knife to penalties for power companies that fail to reduce consumption. Two imperfect but redeemable bills survive, and legislators have the opportunity over the next two weeks to forge a beneficial compromise.

Success hinges on two issues. First, state leaders must agree on reasonable and meaningful incentives. The House of Delegates favors a bill that provides modest reimbursements, while the Senate version offers more enticing, but costly, carrots paired with clearer conservation goals.

Delegates rightly chafe at approving new surcharges that will be passed on to customers, who already face new rate hikes for fuel expenses and construction of a new coal plant. However, it is naive to think that Dominion or other utilities, responsible to shareholders and other investors, will respond to merely altruistic appeals.

Customers who employ energy-saving measures can offset the cost of new surcharges in the short term. In future years, all customers will save money if fewer power plants are constructed.

A second issue requiring attention is a last-minute amendment to the Senate bill. The provision was authored by Dominion executives, who say it is needed to ensure future plant proposals are not rejected by state regulators because of energy conservation goals.

The obtusely worded amendment appears to prohibit regulators from considering efficiency goals at all, undermining the purpose of the legislation.

Utility self-interest threatens to stymie what should be the simplest and most cost-effective solution to the state's energy crunch. It will require political leadership from the governor and legislative leaders in both parties to cut through the static and craft a plan that makes sense for energy producers, customers and future generations of Virginians.