Really Such A Bright Idea?

Really Such A Bright Idea?

Let’s talk CFL, or compact flourescent lights. As I pointed out in the 2007 Lights On survey of California energy policy, and in testimony in 2007 to the Georgia Public Service Commission,

DSM rose to regulatory prominence during the 1980s,…everybody was open to other approaches to meet future energy demand. DSM advocates claimed that power plants could be shut down if only everybody would start conserving energy—for example, by using fluorescent light bulbs. The notion sounded plausible; perhaps high efficiency could eliminate or at least reduce the need for future power plants. But the DSM concept implied that a coercive tax-and-spend program would be required to get “everybody” to use the light bulbs, instead of depending on consumers to take rational and efficient action on their own.

Turns out that consumers can and do make rational decisions, without the need for intervention, and do it more cost-effectively. The PUC grants utilities credit and incentive payments for energy savings from increased use of CFLs in the marketplace because of utility rebates to bulb manufacturer, which is how the program works. Manufactureers and retailers then pass [some] of the utility rebate on to customers. Customers fund the utility through a rate surcharge. Dizzy yet? The circular funding flow simplies adds costs at each go-round.

Utilities want to claim “spillover” effects so they can count the savings towards their energy efficiency goals , and hence recieve their own incentive payment (again from ratepayers.) The PUC does allow incentives to the utilities, but only for those actions they can claim responsibility for. But a report by the Cadmus Group in late January, found that greater adoption of CFLs in the marketplace “may have occurred for reasons other than the California energy efficiency programs,” as states without CFL programs have seen increasing sales of the bulbs, some even faster than California. Those sales are being driven by large retailers such as Wal-Mart and Home Depot that sell the bulbs at lower prices and smarter marketing.

In comments filed on the report, The Utility Reform Network and the Division of RatepayerAdvocates complained that utility programs inflate the price of CFLs sold in California. TURN and DRA noted that, as part of the incentive program, California utilities paid $2.75 to $4.15 per CFL, (add to that administrative and program costs, all told the program pays out about $6 a bulb) but ratepayers in other states that don’t offer manufacturer rebates can purchase CFLs for $2 or less at Home Depot or Wal-Mart. States with limited utility efficiency programs, like Arkansas, actually lead the nation in CFL sales per capita. Arkansas happens to be the hometown of the nation’s largest CFL retailer, Wal-Mart. California ranked 43rd in CFL sales per capita even when paying the highest per-bulb cost and then giving them away to customers. “This CFL strategy does not require additional subsidy in California by ratepayers,” TURN and DRA claimed. In comments filed on February 17, PG&E stated: “Any claims that these reports are reason to stop the program are premature,” PG&E said. Rocky Bacchus, of Houston-based Efficiency Power, wrote to the CPUC that “if any credible study … shows that market transformation is happening faster in other states without any program money being spent, then that study information can be used as evidence to show that California program money spent did not speed what was happening anyway, and so the program net impact was zero.” Nevertheless, if the Energy Division wants to continue the rebate program, he suggested they simply say, ‘There is not enough confidence in the study to shut down the CFL programs’

But there is certainly not enough evidence that the program even works. There is NO evidence that the program is or has been effective in getting customers to buy CFLs they wouldn’t have otherwise. This program extorts money from hardworking consumers struggling in a difficult economy. It is time to stop paying $6 for a $2 product. We’ll likely actually see more CFLs sold in that light.

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Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.