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Russell Wangersky: Time for a conversation about conservation


Think of it like a forest fire — the way that, when forest fires are big enough, they begin to manufacture their own winds and weather.

Russell Wangersky

Last week, Memorial University announced it’s going to start the second phase of a program to retrofit university buildings to make them more energy efficient.

It’s a program with an interesting kick: the upgrades are entirely paid for by the cost of the energy the university won’t have to use. The contract, with Honeywell Building Solutions, will do $28.4 million in work.

Now, look at it strictly from the point of view of electricity savings: the first phase of the program has resulted in $3,469,433 in savings on electricity alone. The institution has lopped — hold your breath — 35,241,568 kilowatt hours (kWh) off of its electrical bills.

It’s not the only program focusing on reducing energy use.

Newfoundland Power and Newfoundland and Labrador Hydro have come under fire in the past for not pushing what’s called demand-side management — controlling the need to build new sources of power by stressing conservation — as hard as they can.

Still, their TakeCharge program, celebrating 25 years of paying for attic and basement insulation this year, talks about the 14,000 homeowners who have taken advantage of the program, and the fact that those homeowners will save a combined total of $4.5 million this year.

The single-year power savings because of that work? According to Newfoundland Power, approximately 43,000,000 kWh that was no longer needed.

The provincial government also announced new energy efficiency programs this year, offering both grants (for low-income households) and low-interest loans for homeowners to help insulate homes and to buy more efficient heating systems like heat pumps.

Cities in this province are looking at LED streetlights — in St. John’s alone, a 7,000,000-kWh-a-year savings — home appliance consumption is dipping as technology is improving, and new heat sources, like mini-split heat pumps, are more efficient than the old radiant heat baseboard heaters.

My point?

All of those approaches already make financial sense with electrical power at 11.6 cents per kWh. Think how those economies change if power rates were to reach 22 cents per kWh, which is the current forecast for when Muskrat Falls comes on stream.

For many customers, a lot of options would suddenly make clear financial sense. Electricity suppliers already know that when they make power available at different rates during the day — higher rates during peak periods, low rates in off-peak times — customers react and shift their power usage.

There’s buckets of research that also shows that, when electricity prices rise, customers — especially household customers — react quickly to become more efficient in power use. All of that flattens or reduces demand. It’s all part of a complex equation known as price elasticity. Scores of scholarly papers have been written about the way consumers change their habits, and their ability to change consumption to meet increased prices. In situations where customers have options, for example, a doubling of electricity prices has been met by a 10 to 20 per cent drop in consumption.

And that’s where the forest fire makes its own weather. The cost of Muskrat Falls is going to be a fixed number; we’re contractually bound to buy all of its power at whatever price it needs to cover its costs. But if fewer people actually buy electricity, the cost for each of the remaining kilowatt hours used has to rise still further.

In Manitoba, the province’s public utilities board is currently launching research about proposed rate increases in that province to see “how different sectors of the economy (including industry, small business, agriculture, manufacturing, and any other relevant sectors) respond to price changes in light of their different substitution possibilities and geographical mobility.”

We should be asking the same questions. Right now.

 

Russell Wangersky’s column appears in 35 SaltWire newspapers and websites in Atlantic Canada. He can be reached at rwanger@thetelegram.com — Twitter: @wangersky.

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