Indiana order to cut annual energy usage 2 percent by 2019 winning broad support

Indiana energy efficiency order wins wide approval

INDIANAPOLIS — Indiana regulators have ordered the state’s largest electric companies to offer uniform low-income weatherization and other energy-efficiency programs aimed at conserving 2 percent of the utilities’ power output within 10 years.

While many details still need to be worked out, Gov. Mitch Daniels, consumer advocates, an industry group and others praised the order that’s been five years in the making and aims to move the state from a conservation laggard to a regional leader.

“Conservation is the single best way to fight pollution, help ratepayers and strengthen the state’s economy,” Gov. Mitch Daniels said in a statement. “I’ve been encouraging the commission for the last year to take bold moves in this area and am very excited to see them do so. I plan to support this initiative strenuously.”

The Indiana Utility Regulatory Commission, which issued the order Wednesday, said Indiana now ranks sixth among seven Midwestern states in money spent on energy efficiency and fourth in the amount of energy savings as a percentage of total electric sales. The steps ordered by the panel would push Indiana past Ohio and Michigan for energy savings and allow it to challenge Illinois as a regional leader, the commission said.

Grant Smith, executive director of the utility watchdog group Citizens Action Coalition, called the order “a very significant step in the right direction.” However, he said it was critical that the order calls for neutral third parties to oversee and coordinate investor-owned utilities’ individual programs and to evaluate how well they do.

Ed Simcox, president of the industry group Indiana Energy Association, said many of the companies have their own individualized energy-savings programs that will have to be adjusted to make them more uniform and bring them under more oversight.

“I don’t think there’s a state in the country that isn’t focused on reduced usage,” Simcox said. “It’s an issue whose time clearly has come and it’s an issue the industry recognizes as one of a number of solutions to the higher cost of energy going forward.”

Dave Menzer, a longtime Indiana utility observer who now co-chairs the Indiana Coalition to Keep Indiana Warm, said energy-efficiency programs generally cost about a third as much as new power generation.

The Utility Regulatory Commission’s order also will extend the low-income weatherization expansion that will upgrade about 30,000 Indiana homes over three years under federal stimulus spending, Menzer said.

“It’s encouraging because I think its a sustained commitment on the part of the commission to see these programs continue,” he said.

The commission said energy conservation programs offered by the utilities now are inconsistent, so it ordered them to provide certain core programs: home energy audits, low-income weatherization, and programs covering residential lighting, energy-efficient schools, and commercial and industrial customers.

Investor-owned utilities including Duke Energy, Northern Indiana Public Service Company and American Electric Power must submit initial plans by July 1 and file updated plans in 2013, 2016 and 2019. The goal is to get them to save 0.3 percent of average power sales over the previous three years in 2010, gradually increasing each year until they reach 2 percent of savings by 2019.

The Utility Regulatory Commission handed down its order as climate change is being debated in Congress and by world leaders in Copenhagen. The commission said managing customer demand for electricity will reduce the need for additional power generation — something that likely would leave Indiana with more carbon emissions.

Executive Director Jesse Kharbanda of the Hoosier Environmental Council said the order showed it’s possible to reduce carbon at reasonable costs.

“The fact that there’s broad consensus among the various stakeholders involved is an indication that even in the middle of a tough economy there are cost-effective ways of cutting that carbon footprint,” Kharbanda said.