The Dernogalizer

December 31, 2008

Revisiting Energy Efficiency

Every once in awhile I like to revisit a well received column that I wrote, especially then the issue I brought up in the column is more relevant today than ever. Back in April I wrote a piece about the value of energy efficiency, and how the state of Maryland was missing a big opportunity by only half-heartedly investing in it. I was reminded of this column today when I came across a recent study by McKinsey Global Institute about the enormous benefits of energy efficiency in solving our energy crisis and the problem of climate change. The study can be found Here. I highly encourage you read it.

I’ve copied and pasted the column I wrote below(the editors messed up the title, not me!), and you can also find it Here

Happy New Years!

Dernoga: Revisiting artithmetic

Matt Dernoga

Issue date: 4/29/08 Section: Opinion
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In 1999, Maryland struck a deal for the ages with Constellation Energy to deregulate the energy market in exchange for a limit on energy costs for six years. The trade-off? Only the removal of the government’s oversight of the electricity market followed by the startling realization that six years doesn’t last forever. Utilities that were once mandated to invest $13 per person in energy efficiency decided their businesses would be better if their customers bought more energy. Go figure! They started investing a penny per person.

After the six year cap on rates ended, electricity rates rose by 72 percent – almost as much as the blood pressure of the customer when they saw their electricity bill. Combine that with almost zilch going into energy efficiency for our infrastructure and appliances along with rising energy use, and the state could be facing rolling blackouts in the next few years. Take a breath, and savor this, for it is political and fiscal incompetence at its finest.

While deregulation is here to stay, lawmakers had an opportunity this year to set right some of its casualties. After entering into the Regional Greenhouse Gas Initiative Program with nine other states, Maryland will acquire $80 to $140 million this summer from state power plants, which need to purchase carbon allowances from the government in order to pollute. All of this money was supposed to go into a yearly $140 million strategic investment fund to help consumers and businesses improve their energy efficiency. Significant reductions in our energy use per capita would greatly alleviate the coming energy shortage. Factor in that every $1 invested in energy efficiency yields $4 in savings, and this would be significant long- term rate relief.

In the book 1984, there’s an episode where a man is tortured into admitting two plus two doesn’t equal four, but three, because the government says so. You have to wonder if our politicians have taken this same math class, because they seem convinced that $1 is more than $4. The bill that was supposed to allocate all the money to energy efficiency programs was watered down, so now the fund is getting 46 percent of the proceeds. That isn’t even half of what was originally expected, and the long-term rate relief isn’t going to be nearly as significant as it should be.

So where will the rest of the money go? Mostly into rebates and billing credits for energy consumers. Don’t be easily deceived into thinking this is good policy. When spread out over all of the consumers whom the rebates will reach, this is only a couple hundred dollars of rate relief at best. When your electricity bill has been hundreds of dollars too high every month, a few hundred dollars of relief for one month isn’t going to make any substantial dent on the year. Rather than investing all of this money into useless short-term relief, it should all have gone into securing Maryland’s energy future and making a dent in our energy bills for the next 10 years. We should have learned our lesson on energy efficiency in 1999. Apparently, some mistakes are too much fun to make only once.

Maryland lawmakers aren’t the only ones failing preschool math. Just take a look at our federal government. When faced with a sagging economy due in part to high energy prices, they gave out $168 billion in rebates to Americans to stimulate the economy, with zip going to energy efficiency programs. Will that work? At the university, we’re taking notes: We spend $50 million a year on energy, and a lot of it is wasted on inefficient buildings and lighting. Then we go to Annapolis and ask dumb and dumber for more state funding without seriously considering what we could do to save money ourselves.

I’d rather have energy savings for the next 10 years than a pittance of a rebate for 2008. I want my lights to turn on when I flick the switch in the future. I’d also like our officials to understand that the least expensive watt of energy is the one you never have to use. Recognizing that four is greater than one would be a good place to start.

Matt Dernoga is a sophomore government and politics major. He can be reached at mdernoga@umd.edu

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3 Comments »

  1. […] how terrible that we invest in energy efficiency over the next 7 years, which not only conserves energy, but gives people a payback of $4 for very […]

    Pingback by George Will won’t Quit Lying « The Dernogalizer — April 2, 2009 @ 11:53 pm | Reply

  2. […] change bill a net saver for American’s wallets, and a net gain for US GDP.  As I wrote before, every $1 invested in efficiency can yield up to $4 in savings over the life of the investment. […]

    Pingback by The Next Stimulus « The Dernogalizer — June 14, 2009 @ 3:17 pm | Reply

  3. […] climate change bill a net saver for American’s wallets, and a net gain for US GDP. As I wrote before, every $1 invested in efficiency can yield up to $4 in savings over the life of the investment. […]

    Pingback by The Next Stimulus « It’s Getting Hot In Here — June 14, 2009 @ 3:22 pm | Reply


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