Make the End User Pay

Well, the CAL Independent System Operator, called Wednesday for a Stage 1 emergency power alert requesting that users of the state’s electricity system voluntarily conserve energy. Even the governor has issued his own request for energy conservation.

So, I did what conscientious and knowledgeable people do (we follow this issue for our clients, like BOMA, who is a leader in energy conservation throughout the state of California) and opened my blinds, turned off the overhead lights in the office (using ambient light as best as I can), shut down idle electronics like my printer, scanner and PDA charger, set the thermostat a bit higher and encouraged the rest of the people in my office to do the same.

We also sent notices through our BOMA e-list to our members to conserve energy and encourage their tenants to do the same.

What’s amazing to me is that we really haven’t had many problems during this summer of global warming with our energy grid. The system’s stability is nothing short of a miracle considering that not much has changed from 2000-2001 when the state hit the brink of economic collapse as a result of the burgeoning energy crisis when rates surged as electricity became scarce.

Yes, there was the “death star” practices of the Enron evil-empire and lingering questions about our state’s utilities’ roles in the near system collapse, but suffice it to say the root problem, which still remains is a lack of energy production to keep up with demand and the lack of facilities to transmit what energy is being generated to where it’s needed.

Nowadays, as I squint trying to read what I’m typing in this bad light, we decry ugly facilities on our coastline (power plants need something to cool themselves and generate steam…water’s a good thing for that), power lines through our backcountries or solar and wind farms in our deserts.

I wonder, though, when all is said and done, whether people are even paying attention to the latest power grid emergency and, if they are, whether they are “curtailing” the use of their air conditioner, office equipment, washer and dryer, whatever it is they use during the day that needs electricity. Considering the peak demands estimated by the ISO, it seems like we already know the answer.

But instead of trying to act like a first world country and try to figure out how to meet the electricity demands of our growing population, we always seem to fall back on to the old arguments of trying to constrain demand by increasing the cost of supply.

For example, one of the things that the California Public Utilities Commission (CPUC) is considering is the concept of “real time” pricing, or at least to establish higher rates during peak periods of demand (called critical peak pricing or CPP). In fact, SDG&E is currently presenting its latest rate increase request to the CPUC and has included a critical peak pricing component.

The concept is pretty simple; you’re encouraged to switch your energy use to off peak hours through the carrot and stick of energy pricing. If a CPP day is called and you use energy during that event, the price of electricity charged to you would increase exponentially. Conversely, if you switch your energy load to off-peak hours, you would get a discounted rate of electricity during those off peak hours.

If you discount that per capita energy consumption in California has actually declined over time and don’t care that any real increases in the amount of energy generated to accommodate population growth over that same period of time has been negligible, then you are probably ready for the social engineering being offered by the California Energy Commission (CEC) in the form of CPP.

So, for the sake of the argument, let’s support CPP, which would seem well and fine to some, except when you consider that under state law, not everyone is able to be charged for their actual energy usage. In most multi-tenant commercial buildings, for example, sub-metering is not allowed under the CPUC’s archaic rules (Rule 18 to be exact). It’s interesting to note that while SDG&E continues to push the social engineering agenda of the CPUC and CEC, they also oppose the elimination or modification of Rule 18 that would allow for commercial property owners to charge tenants for the exact energy usage.

Why is that important? Well, if price signals are the way to control use and in a non-sub-metered multi-tenant office building you can’t direct price to the amount of use, then no one is incentivized to reduce consumption except out of the goodness of their hopefully conscientious hearts.

To be clear, our members absolutely support energy conservation. In fact, BOMA has received numerous awards for its energy conservation efforts (including a statewide “Flex Your Power” award for our efforts to conserve during the 2001 energy crisis and most recently, receiving the Energy Star Partner of the Year award for our efforts to create a best practices program known as BEEP or the BOMA Energy Efficiency Program.

The problem is that BOMA wants to make sure our tenants who conserve receive the benefit of that conservation should CPP be implemented in SDG&E’s utility service area. Under the current law, this cannot happen. Hopefully, the readers of the VOSD and the VOSD itself will encourage SDG&E to help us change Rule 18 so that sub-metering can occur and market forces, whatever they might be, can be more directly targeted to the end user.

— CRAIG BENEDETTO

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