Louisiana ushers in new energy efficiency policy, bans “ghost charges” by utility companies

BATON ROUGE (Louisiana Illuminator) — In a meeting that boiled over with testy exchanges and chanting crowds, Louisiana utility regulators adopted a long-awaited energy efficiency program they say will bring accountability to utility companies and stop them from charging customers for power they don’t use. 

The Louisiana Public Service Commission voted 3-2 on an energy efficiency resource standards (EERS) policy a consultant has worked on 13 years at a cost of more than a half-million dollars. 

One Republican commissioner, Craig Greene of Baton Rouge, and two Democrats, Foster Campbell of Bossier City and Davanté Lewis of Baton Rouge, voted for the new standards. Eric Skrmetta of Metairie and Mike Francis of Crowley, both Republicans, voted against it.

Greene spearheaded the effort to identify a new framework that uses a third-party administrator to oversee the program. He also introduced an amendment to the policy that removes the ability for utilities to collect so-called “ghost charges” from their customers, though customers will still foot the bill for the EERS program itself. 

The policy requires utilities under the commission’s jurisdiction, such as Entergy, Cleco, Swepco and others, to meet certain energy savings targets each year. For instance, they can accomplish this with localized upgrades such as fixing inefficient homes with new insulation or making larger, systemwide upgrades to the power grid. 

The utilities pay for it with little-known energy efficiency fees they’ve been charging their customers for years. Entergy Louisiana customers can find those fees on their monthly statements billed as “Rider EECR-QS” and “Rider EECR-PE.” 

Even though customers have been paying those fees, the utility companies lobbied the commission hard to keep a provision that allowed them to tack on additional charges to make up for profits they miss out on when their customers no longer waste electricity. In other words, customers would have had to pay fees for both the EERS program and for electricity they never used. Greene and other supporters of the new program refer to those as “ghost charges.” 

According to Together Louisiana, a nonprofit organization that advocated for the new policy, ghost charges have already cost ratepayers $37 million over the past nine years. 

Under the new policy, the utilities can still make customers pay for those lost profits, but the utilities must prove their losses were the direct result of the program, and they must seek recovery through the regular ratemaking process with Public Service Commission approval. 

The energy efficiency program used in Louisiana for the past decade was voluntary, and the utility companies ran and oversaw it themselves with their own staff. The new program is mandatory and will use a third-party administrator to manage and hold the utilities to the energy savings targets.

Utilities generally oppose energy efficiency requirements because they lead to customers using less of their product, an inherent conflict of interest for companies that profit from the sale of that product, whether electricity or gas. 

In addition to Greene’s amendment, Lewis added a provision that requires 15% of the energy efficiency budget to go toward initiatives that help low-income residents and another 10% toward initiatives that help renters and landlords. 

Both the third-party administrator and Lewis’ budget carve-out were major sticking points for Skrmetta, who said he was concerned the amendment would relinquish the commission’s budgeting authority to a third-party administrator. 

Lewis said the commission still gets to approve the administrator’s budget and has ultimate authority on how the money is spent. 

Skrmetta said hiring a third-party administrator will waste millions that could instead go to customers through the programs the utility companies already have. 

“There’s a lot of people that are out there going, ‘Ooh, we’re gonna get an administrator, and we’re gonna have lots of extra money and we can all put our hand out,'” Skrmetta said. “So it’s not the general public who are going to benefit. I want a program where it’s 100% the general public benefits.”

Although Louisiana has some of the lowest per kilowatt-hour electricity rates in the country, average electric bills in the state are among the most expensive. This is the result of how much electricity is used. Louisiana has the highest per capita residential sector electricity consumption in the nation, according to the U.S. Energy Information Administration. Many blame this high power usage on inefficiency and waste. 

Skrmetta spent more than two hours delivering lengthy monologues, questioning witnesses with long prefaced statements and debating his colleagues to the point of frustration. 

At one point in the meeting, Greene said the whole point of the third-party administrator is to provide public accountability and implied Skrmetta must not want accountability. This led to a testy exchange between the two.

“Are you OK with accountability?” Greene asked Skrmetta.

“You can ask me silly questions, and you’ll get a silly answer,” Skrmetta responded.

“I don’t think accountability is silly,” Greene fired back.

The verbal bout gained momentum until Francis, the commission chairman, halted it with his gavel. 

Skrmetta promptly returned to his monologues, but he soon drew the ire of spectators in support for the new policy. 

They interrupted Skrmetta’s speech, chanting, “Vote! Vote! Vote! Vote!” 

Although Skrmetta couldn’t be heard over the crowd, the room’s microphones captured his reaction.

“Just stop this, please,” he said. “Control yourselves. We’re not done here.” 

Francis eventually quelled the uproar with his gavel, but the event signaled the beginning of the end to the debate.

The proposal adopted Wednesday simply establishes a framework for the energy efficiency program and doesn’t yet include the selection or hiring of the third-party administrator. The hiring process isn’t expected to begin for a few months and is under complete control of the commissioners.

Editor’s Note: The following article from author Wes Muller was originally published by the Louisiana Illuminator, an independent, nonprofit, nonpartisan news organization with a mission to cast light on how decisions in Baton Rouge are made and how they affect the lives of everyday Louisianians. Read more from The Louisiana Illuminator @ www.lailluminator.com

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