We should spend a little money nowin order to save a lot of money later, says David Wheeler, dean of Dalhousie’s schoolof management.
Wheeler, who was hired to study Nova Scotia’s nascent energy efficiency program, agrees with a chorus of environmentalists, industrial leaders and politicians: The program should be run by an independent third party and not by Nova Scotia Power.
Wheeler’s decision, which will be formalized this week, cuts through what casual observers may see as incomprehensible bureaucracy and allows the province to get to the heart of the matter, which is to find the best way to reduce our energy use and meet our greenhouse-gas emission targets.
“We got Nova Scotia Power to run the numbers last year,” says Brendan Haley of the Ecology Action Centre. “And what they found was that it makes sense financially to have an energy efficiency program. It’s totally economical.”
NSP found that without an efficiency program, electrical demand would increase by about two percent each year. To meet that demand, the utility would have to build a new power station. “It’d be a dirty coal plant that would cost a billion dollars,” says Haley. “That would be paid for by rate payers, with higher bills.”
Instead, Haley and others have argued that there should be a five percent surcharge on utility bills directed to energy efficiency programs.
No one disagrees with the logic---the numbers speak for themselves. But implementing the program has raised thorny political issues. Homeowners and businesses that have already implemented their own energy efficiency programs will now, in effect, be subsidizing those who have dallied.
“Yes, but it doesn’t matter,” explains Haley. “Because they’d be paying higher rates themselves in the future, to help pay for the new power plant. They’ll see a new line on their power bill, but they’ll be paying less. These types of programs have been proven over and over to work.”
Still, already some large industrial users, including paper millers NewPage Port Hawkesbury and Bowater Mersey, have come out against the plan, arguing that they have already made their operations efficient.
Will these companies have enough political clout to stop the program? Probably not, says Wheeler.
“I think the more progressive industries... will be delighted with the recommendations,” he says, “as the whole point is to save costs for everyone over the long term. It’san investment decision, really, and mostbusinesses will see that logic over thelong term.”
“We don’t anticipate any problems,” says Allan Crandlemire, executive director of Clean Nova Scotia, the provincial agency that hired Wheeler. “We had a feel for where this was going. There wereno surprises.”
The efficiency program had been stuck in uncertainty. This year and next, NSP is running an abbreviated $13 million version of it, but critics charged that the utility has a conflict of interest---it’s in the business of selling energy, not conserving it. If Wheeler’s recommendation is followed, a new agency, possibly outside government, will be charged with running the program.
The five percent surcharge will bring in about $50 million a year for that agency.
The details of the program---what it funds, who’s eligible for funding, etc.---will be decided by the Utility and Review Board over the next few weeks, says Crandlemire. “It will be up and running by early next year.”
But even if the program achieves everything intended for it, it won’t actually reduce electrical usage: It will merely reduce the demand for more electricity---essentially lattening the demand curve that comes from typical economic growth of two percent a year.
Crandlemire acknowledges that the efficiency program and the announced goals for renewable electical generation---18 percent by 2013---are still not enough for the province to meet its greenhouse-gas reduction goals. “Are they important? Absolutely. Will the two combined be enough to meet those targets? Absolutely not...we’ll haveto increase renewable generation infuture years.”