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Charging for efficiency isn’t a good business model


I am puzzled by the recent article (“Charging for energy efficiency?”) that reported the Mississippi Public Service Commission is looking at ways to get “Mississippi’s regulated utilities — Entergy Mississippi and Mississippi Power Company — to implement robust energy-efficiency measures.”

I think everyone can agree that energy efficiency is a positive thing, particularly here in Mississippi where sweltering summers can put a strain on our electric grid. If we don’t increase energy production to meet our growing consumption, we have to use our current supply smarter.  

But where is the incentive for an electric utility, which makes money by selling electricity, to pay money to sell less electricity? Would the owner of a gas station pay more to sell less gas?  Would a Burger King pay more to sell fewer hamburgers?  From a business standpoint, it simply doesn’t make sense. 

The article was correct that “public utilities have a duty to meet the electric generation needs of customers in their service areas,” but they are also allowed to make a fair rate of return.  

It also doesn’t make sense from the consumer side. Ultimately, ratepayers feel the cost burden of imposing energy efficiency expenses on a utility. In a crazy way, that means we would be paying more for lower cost electricity.

Energy efficiency works best at our homes and businesses.  We can find ways to curtail consumption and purchase appliances, equipment and electronics that use less energy. But that isn’t a cost for a utility and it is not up to the Public Service Commission to decide for me what I purchase for my own home or small business.

We should encourage energy efficiency, but not through costly mandates on consumers or increased expenses to utilities.  


Larry Winter



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