Kentucky Public Service Commission Chairman Michael Schmitt said school districts need to keep finding ways to be more energy efficient. But, he cautioned, those efforts won’t always translate into spending less money on energy.
Schmitt, speaking at the inaugural School Energy Summit in Louisville last month, said in areas where demand is down, energy costs will rise because “you’re paying for the fact that electricity is available to you when you need it.”
“The trend is … that ultimately utility bills will mostly be in the future based on something other or in addition to electricity sales,” Schmitt said, comparing the process to buying insurance that you may never use. “Utilities have to be paid on some basis in order to provide service. And those are tricky problems, they’re important problems and there’s no easy answer on how to solve them. So those are things we have to look forward to working with in the future.”
Ron Willhite (left), director of the School Energy Managers Project, and Mike Armstrong (center), executive director of the Kentucky School Boards Association, talk to Kentucky Public Service Commission Chairman Michael Schmitt prior to the opening session.
Schmitt’s advice to school districts: keep doing exactly what you are doing.
“Take advantage of every energy management program, take advantage of every efficiency you can. Get every rebate that you can. Turn off every light. And if you can save the money for our schools, that’s exactly what you ought to do,” he said. “I would also urge you to be politically active. And if you have an opportunity to be a participant in a rate case or something else, protect yourselves by doing that. And that’s about all that you can do or anybody can do in the present environment.”
Schmitt told the more than 200 people attending the opening general session that utilities have excess capacity and declining sales, which is a result of demand side management.
In demand side management, the utility offers incentives to the customers to save electricity by reducing the demand and need for additional electric generation. When Kentucky passed a demand side management statute in the early 1990s, it was to avoid the cost of utilities building additional generation plants at a time when electricity sales were increasing.
“The programs that schools employ in terms of management practices through your energy manager – turning off the lights, buying equipment in which you can get rebates, and all of the other things that basically give you an opportunity to save money – you ought to do those,” Schmitt said. “But you need to realize there is another argument on the other side, and that argument is this: that the General Assembly provided that the utility should not have to reduce its sales and bear the expense. So the customer bears the expense.
“Under the statute, the utility gets all of its money back from incentivizing these programs – printing them and putting them in your bill and telling you about them, and they get the net revenue that they lost because of the energy savings. So if the school saves money, somebody else is making up the difference in the money. There’s no free lunch. Somebody is always paying.”