Louisiana’s utilities are going to give up the ghost starting in 2026 and won’t be able to charge customers for “energy saved” under a conservation program.
Starting in 2026, the energy efficiency program will be run by a neutral, state-appointed third-party administrator and the practice of “ghost charges” – a practice in which utilities could calculate using models how much they saved customers and charge them for those savings – will end.
A study by the nonprofit Together Louisiana estimates the charges have hit customers to the tune of $37 million.
The Louisiana Public Service Commission will conduct a request for procurement for a third-party manager to start up and run the new energy efficiency program, which could take from six to nine months.
The commission passed in January a new energy efficiency program that will replace the previous rule known as Quick Start dating from 2010. This allowed the state’s utilities to charge customers with an Energy Efficiency Cost Recovery rider on their bills and allowed utilities to run their own programs that some groups say didn’t serve many customers.
The commission also paid more than $500,000 to a consultant since 2010 to write a permanent rule to follow the Quick Start program, which was intended to be temporary.
The new program will still allow utilities to charge customers for energy efficiency programs, but also utilize funding from the federal sources such as the $1.2 trillion Infrastructure Investment and Jobs Act of 2021 and the $891 billion Inflation Reduction Act of 2022.
The commission passed the order with two amendments by a 3-2 vote on Jan. 26 at a sometimes contentious hearing.
The amendments require 15% of the spending on the program be allocated to low-income residents and 10% for energy efficiency improvements at rental properties.
District 1 Commissioner Eric Skrmetta said during the hearing that doing an energy efficiency is universal, but said that having a third-party administrator run the program would open the door to “special interests.” He also said he thought a change to the program was unnecessary.
“There’s a lot of people that are out there going, ‘Ooh, we’re going to get a an administrator and we’re going to have lots of extra money and we can all put our hand out,’ so it’s not the general public who are going to benefit,” Skremetta said. “We want, I want a program where it’s 100% the general public benefits and there’s not special interests are going to come in and go, ‘I want to do this and I want to do that, I want to be paid this and I want to be paid that.'”
Skremetta called the third-party administrator program “patronage” and said it would cost $5 million annually.
“The point of this is accountability,” Commissioner Craig Greene said during a contentious part of the hearing, when he and Skremetta verbally jousted over whether the new program would have accountability to ratepayers.
Forest Bradley-Wright of the American Council for an Energy-Efficient Economy told the commission that energy efficiency was the “least cost energy resource” and that if the state didn’t put enough resources into its energy efficiency program, new power plants would have to be built.
The state’s investor-owned utilities opposed the new energy efficiency program. Entergy said in a filing from July about the program that only a few states use a third-party system and that the proposed program could provide an administrative burden to the utilities. Entergy also said the proposed program lacks “any measures for accountability and transparency, as there are no cost-effectiveness requirements or energy savings targets.”
According to data from the federal Energy Information Administration, the average price of electricity for residential customers in January was 10.82 cents per kilowatt hour, the lowest regionally. Last year, that figure was 11.94 cents kWh.
The national average is 15.45 cents per kWh.
Usage of that energy is second nationwide, according to data from EIA. State residents and businesses consume 925 million British Thermal Units per year, second only to Alaska at 932 million BTUs.
The American Council for an Energy-Efficient Economy, a nonprofit group that supports renewable generation sources and energy efficiency, ranked Louisiana utility Entergy 43rd out of the nation’s 53 largest utilities for its energy efficiency program. The group graded utilities on their program performance, offerings and enabling of these programs.
