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The absurdity of Demand Side Management and social engineering electricity use

The absurdity of Demand Side Management and social engineering electricity use

“For every dollar spent, consumers save $1.77,” say supporters of so-called Demand Side Management (DSM) programs. Want to really save ratepayers money? How about not incentivizing utility monopolies to spend the dollar in the first place and just let ratepayers save 77 cents or more through lower electric rates?

Here is the gist of DSM: the state legislature directs the monopoly utilities such as Xcel Energy to profit, without limitation, at a higher rate of return on programs that lecture ratepayers about using less electricity than the utility would earn on actually producing electricity. In other words, ratepayers are forced to pay their monopoly utility to NOT produce electricity and be shamed for using electricity regardless of ratepayers’ personal circumstances.

Check out your “Demand Side Mgmt Cost” line item on your electric bill. You pay it every single month. Sound absurd? That’s because it is. For more explanation on DSM absurdity, read my “irresponsible by ratepayers” DSM column and my colleague Rob Natelson’s on “energy shaming.”

Colorado has a surplus of electricity generation capacity. If Colorado ratepayers enjoyed a real market, prices would be dropping, but they aren’t. Electricity rates have been skyrocketing over the last decade because the Democrat, eco-left controlled state legislature has been socially engineering our electricity use away from affordable, reliable, clean, safe coal and natural gas and toward the unreliable and expensive wind.

To add insult to economic injury, the PUC just gave Xcel permission to add more unreliable industrial wind – the Rush Creek Wind Project – that will cost ratepayers an additional $1 billion plus.

The real reason for DSM is to put coal miners out of work and shut down the last remaining coal-fired power plants. Natural gas is next. Don’t believe it? Read the most recent Public Utilities Commission (PUC) decision on DSM: “Because Public Service currently has surplus generation capacity, the primary purpose of DSM in the early years of the 2015 through 2020 planning period is to reduce fossil fuel use and help ratepayers lower their energy bills.”

DSM is one of the major cost drivers of what former Governor Bill Ritter, previous eco-left dominated state legislatures, and Xcel Energy calls the “New Energy Economy” as we highlighted in our 2013 study “2012 Cost Analysis of the New Energy Economy.” In 2012 alone, DSM cost Xcel ratepayers nearly $80 million.

As mentioned earlier, supporters say DSM saves money. Those numbers come from the utilities themselves with no independent verification. We’ve been part of the PUC process. To see anything proprietary requires a signature on a non-disclosure so color me skeptical.

Below is what a former Xcel employee told us about how Xcel games the system when it comes to numbers. This example is from one of the other new energy economy cost drivers Clean Air, Clean Jobs Act (CACJA), which is also a line item on your bill:

 

Xcel used outdated load forecasts created before the 2008 recession even though [redacted] knew that the recession had already caused a substantial decrease in load, and overstated the environmental benefits, excluded pipeline and gas operations, transportation and delivery expenses, and ignored Xcel’s obligation to provide an independent transmission study (Xcel provided its own self-serving study).

 

Forgive me if I don’t trust self-serving utility numbers.

In reality, a decade of General Assemblies socially engineering electricity use has created a different kind of DSM program. The Washington Post described it in practice:

 

Sharon Garcia is stumbling around her dining room in the dark, trying to find Post-It notes.

 

As she has for years, Garcia wants to affix the notes, marked with dollar signs, to light switches all around her house. The message to her five kids: Light is expensive.

 

“Why do you need to turn the lights off?” she asks her son, Mariano.

 

“Because otherwise there’s no money,” he answers, dutifully.

 

“And when there’s no money?”

 

“You can’t feed us or take us anywhere.”

 

Bingo, again.

 

It’s not just the light switches, though. Ever since her power was shut off in 2010, Garcia has adopted a Depression-era obsessiveness: She doesn’t use the oven in the summer, because it heats up the house, and uses only one small air conditioner. Even the aquarium goes dark when someone’s not in the room.

 

“If we’re not in here looking at the fish, it shouldn’t be on,” she says. Oh, and forget about machine-washed dishes; Garcia does them by hand (the battle is evident in the pile at the sink). The toaster and microwave bear sticky notes ordering the user to unplug them afterward, lest they continue drawing energy from the sockets. “You think turning it off is enough, and it’s not,” she admonishes.

 

And yet, no matter how much she rations and cuts, Garcia cannot keep ahead of the fast rise in rates. She runs a daycare out of her home, so her monthly bill of about $200 is already higher than average in Pueblo, where the residential rate per kilowatt hour has risen 26 percent since 2010 — and on a per-household basis, is now among the highest in the state (which seems odd, consider her rent for the house is only $850).

 

Think about that. A decade of energy policies from almost entirely Democrat state lawmakers, more concerned about not using coal and natural gas, have forced a hard-working Colorado mom like Sharon Garcia into a “Depression-era obsessiveness” about her electricity use.

Note: Garcia is a Black Hills Corporation ratepayer. Black Hills serves roughly 93,000 Colorado customers mostly in Pueblo. I’ve described how these eco-left energy policies have hurt Black Hills ratepayers even more than Xcel ratepayers. Xcel’s collusion with Governor Ritter and the eco-left is the root problem.

Make no mistake, DSM is an Xcel and environmental left bill. A bill search on the Colorado Secretary of State’s Web site shows the list of supporters including the Environmental Defense Fund, Western Resource Advocates, Boulder County, Conservation Colorado, Rocky Mountain Climate Organization, and lobbyists and organizations representing the Natural Resources Defense Council and Xcel Energy.

No wonder a majority of this current legislature feels the need to atone for past sins by funneling taxpayer money to low income energy assistance.

Instead of theoretical savings programs like DSM that do harm in practice, the legislature should do the right thing and stick a fork in its social engineering that incentivizes monopolies like Xcel while Colorado ratepayers, who have no choice, struggle to pay their bills. Businesses and individuals can decide for themselves if using less electricity is beneficial for them.

Thank you to the courageous lawmakers in the Senate Agriculture, Energy, and Natural Resources committee who did the right thing, sent the bill to reauthorize this horrible program to Senate Finance (hopefully to die) and not to the Senate floor for approval. Finally, someone is standing up for ratepayers.

Disclosure: My husband John Cooke is a State Senator and sits on Senate Agriculture, Energy and Natural Resources.

Amy Cooke
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