Florida regulators approve plan to gut energy efficiency goals, end solar power rebates

TALLAHASSEE — State regulators on Tuesday approved proposals to gut Florida's energy-efficiency goals by more than 90 percent and to terminate solar rebate programs by the end of 2015, giving the investor-owned utilities virtually everything they wanted.

After almost two hours of debate, members of the state Public Service Commission voted 3-2 in support of staff recommendations that backed the proposals of Duke Energy Florida, Tampa Electric and Florida Power & Light.

The two dissenters, Commissioners Lisa Edgar and Julie Brown, said they could not agree with a plan that so drastically altered state energy policy.

"It's not the direction I want to go in," Edgar said before the vote. "I am uncomfortable going to the reduced goals. It is a policy and it is a statement, as a state, of what our energy policies are."

Brown said although energy efficiency and solar programs have costs, the state needs to balance all its needs.

"We have inherent conflicts," Brown said. "We're supposed to encourage conservation but it must be cost-effective. I think we should be investing in all of it."

The commissioners did agree to hold workshops on ways to improve solar energy in the Sunshine State after deciding to end current rebate programs administered by the utilities.

But that won't be enough to stave off possible legal challenges to the decision.

Environmental groups question whether the PSC might have violated state law with a policy that leaves no energy-efficiency requirements for the utilities.

"It's completely inconsistent with what the other states are doing," said Stephen Smith, executive director of the Southern Alliance for Clean Energy, which opposed the utility proposals during hearings this summer.

"We believe there may have been laws broken today by not setting goals," Smith said. "We as an organization are going to try to find every outlet possible to continue to fight."

Meanwhile, Florida's utilities will go into the holidays with their biggest wishes this year, including billions of dollars in new power plants that will come online in the next decade.

The PSC, for instance, approved Duke Energy for a $1.5 billion natural gas plant that the utility wanted to replace the shuttered Crystal River nuclear plant that broke during a botched upgrade and maintenance project as well as two coal units the company plans to retire.

What did consumers get this year?

The utilities will reduce rates come Jan. 1 by pennies a month for the average customers — 16 cents for Duke ratepayers; $1.14 for Tampa Electric; and $1.94 for FPL.

Most of the savings is the result of lower fuel prices that are out of the utilities' control. And the utilities do not profit from fuel costs.

The utilities pressed for the cuts to energy efficiency and the end of the solar rebate programs because they said neither is cost-effective. The utilities insist that it is now cheaper for them to produce a kilowatt of electricity than to save it.

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Other states continue to find ways to save energy at less cost than generating it because they have policies aimed at doing just that.

Vermont, for instance, pays manufacturers to offer high-efficiency products at lower prices. A compact fluorescent light bulb that costs $1.25 in Florida costs 99 cents in Vermont. Policies like that, big and small, mean Vermont now meets 2.12 percent of its annual energy needs by saving electricity rather than producing it.

In Florida, the number is 0.25 percent — and now dropping.

The moves by Florida utilities come as the ground beneath them continues to shift, threatening their business model. Increasingly, they are in need of ways to thwart the growing impact of rooftop solar and battery storage technology that could give more consumers energy independence.

And the utilities know it all too well. What the rest of the world admiringly calls renewable energy and conservation, the utilities call "disruptive'' technologies.

"The financial risks created by disruptive challenges include declining utility revenues, increasing costs, and lower profitability, particularly over the long-term," according to a report written for the Edison Electric Institute, which represents all U.S. investor-owned utilities.

Environmental groups argue that the need for new power plants could be offset with energy efficiency at much lower costs to ratepayers. And stronger state support for solar programs would give consumers more choice and energy freedom.

But Tuesday, commissioners debated the potential impacts on ratepayers, including those most disadvantaged.

PSC chairman Art Graham said he has gotten an earful about the proposal to gut the energy-efficiency goals. But those concerns did not prevent him from siding with commission staff and the utilities to end the solar rebates and the energy-efficiency goals.

"My office has had many calls about this item," Graham said before the vote. "One of the things that is a concern to me is how some of the low-income people would participate."

Instead, the commissioners haggled over six options, including keeping the current goals in place. But they could not reach a unanimous decision and the majority back the utilities.

"It's a very sad day for the state of Florida," Smith said.

Contact Ivan Penn at ipenn@tampabay.com or (727) 892-2332. Follow @Consumers_Edge.