NCPA - National Center for Policy Analysis

States Seeking Energy Policy Clues From 1970s And 1980s

March 21, 2001

Tax breaks for new power sources and rebates for energy-efficient appliances -- the same dusty "solutions" suggested for energy crises several decades earlier -- are the new hot topics in legislatures throughout the country.

Faced with the specter of California's energy woes, lawmakers seem to be turning to conservation as the energy policy of choice. While energy efficiency programs won't create one new kilowatt, they are enjoying a revival in popularity among consumer and environmental groups as well.

Some critics say if the states had stuck to their conservation programs when energy was plentiful and cheap, shortages wouldn't loom as they do now.

  • In the years leading up to the current crisis, spending on state energy-efficiency programs fell by nearly half nationwide -- to $912.5 million in 1998 from $1.65 billion in 1993.
  • One group, the American Council for an Energy-Efficient Economy, claims those reductions robbed the country of nearly 15,000 megawatts of power which could have been saved -- enough to supply 15 million homes.
  • Eight states reduced spending on energy-efficiency programs by 90 percent or more in recent years -- West Virginia, Nevada, Virginia, Georgia, Michigan, Indiana, Pennsylvania and Alabama.

But many officials defend such on and off policies, claiming it doesn't make sense to maintain big energy-efficiency funds when prices are low. Unless utility bills are high enough to justify consumers' making the investment, rebates alone aren't likely to get people to buy energy-efficient products.

"One could argue that the responsible public policy would be to turn efficiency programs on and off when they can no longer be economically justified," says Paul Decotis, director of energy analysis at the New York State Energy Research and Development Authority.

Source: Robert Gavin, "State's Rediscover Energy Policies," Wall Street Journal, March 21, 2001.


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