CenterPoint among the worst-performing utilities in the nation on energy efficiency, report finds

Three Texas utilities, including Houston’s CenterPoint, are among the worst-performing in the country when it comes to energy efficiency, according to a new report. 

The American Council for an Energy-Efficient Economy, a nonprofit research organization, ranked Oncor, CenterPoint and AEP Texas Central at numbers 39, 44 and 48 respectively in its study of energy efficiency programs in the 53 largest utilities across the country released Thursday morning.

CenterPoint is an investor-owned company that serves as a natural gas provider for the Houston area as well as the region’s electric transmission and distribution company. Oncor is the largest transmission and distribution utility in Texas and serves the east, west and north-central parts of the state. AEP Texas Central delivers electricity to western and southern parts of Texas. 

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Energy efficiency, as the name suggests, focuses on using less energy to perform the same task – by using energy-saving light bulbs, adding smart thermostats, upgrading older appliances or improving home insulation, for example. This not only prevents energy waste and lowers consumers’ electricity bills but can also reduce overall electricity demand. 

The ACEEE report, which is based on scoring each utility based on different aspects of its energy efficiency programs, gave the three the worst possible score for lifetime energy savings for their customers. All three also earned no points for expanding efficiency programs to non-English speakers, providing financing options to low-income customers and directing customers at risk of utility shut-off towards efficiency programs that could reduce their bills.

As Texas continues to get hotter summers and its population increases, boosting energy efficiency programs could be key to alleviating some of the strain on the power grid as operators try to match soaring electricity demand with enough supply. 

“You can either do what Texas is seeming to do right now, which is building a lot more generation, putting billions of dollars into more natural gas plants, increasing the energy supply. But the other way to keep the energy supply-demand balance is to reduce demand,” said Mike Specian, a research manager at ACEEE and an author of Thursday’s report.

In a statement Thursday afternoon, CenterPoint spokesperson Alejandra Diaz said the company is “proud of our longstanding commitment to and work in energy efficiency.”

CenterPoint has supported efforts to revise Texas' energy efficiency laws, which haven't been updated in a decade, Diaz said. The company is facing cost caps that limit how much transmission and distribution utilities can spend on energy efficiency programs, and residential customers are excluded from energy efficiency programs while industrial customers can opt-out, Diaz said.

“This is beyond utilities’ control and is not a reflection on the energy programs currently being successfully run by the Texas utilities,” Diaz said.

AEP Texas Central communications manager Larry Jones said Wednesday the company is “reviewing the report, but it is too soon to comment at this time.” Oncor did not immediately respond to a request for comment on Wednesday.

Texas in 1999 became the first state in the nation to adopt energy efficiency standards for utilities. The Lone Star State has since fallen behind.

That’s because neither the state legislature nor the Public Utility Commission has increased the energy efficiency goals that utilities are required to meet since 2011, according to Cyrus Reed, conservation director of the Sierra Club’s Lone Star Chapter. Legislation that would’ve increased utilities’ energy efficiency goals failed to pass in the most recent legislative session, Reed said.

The PUC also denied an August 2022 rulemaking petition from the Sierra Club to consider raising energy efficiency goals, Reed said. 

“So far, (improving energy efficiency has) fallen on deaf ears,” he said.

CenterPoint, Oncor and AEP Texas Central invested between 1 percent and 1.46 percent of their annual revenues in energy efficiency programs, far below the national average of 2.23 percent, according to the new ACEEE report.

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The resulting energy savings ranged between 0.20 percent and 0.24 percent of their annual sales, trailing the national average of 0.91 percent and putting the three utilities in the bottom 12 of 53 on this metric.

Another ACEEE report earlier this year found that implementing demand-reduction programs like those targeted at energy efficiency would cost on average about $128 million per year – and result in a net savings of $13 per month for Texas electricity customers. In contrast, plans considered by state policymakers to build new gas-fired power plants could cost $10 billion to $18 billion, according to the May ACEEE report. 

One example of where Texas could improve on energy efficiency is home insulation: More than half of Texas homes were built before the state adopted insulation requirements in 2001, according to a 2021 report from past members of the Texas Public Utilities Commission. That makes for leaky homes that need more air-conditioning to cool down.

“If you pay to air condition your house, that air is leaving your house far more quickly than it would under a tighter building,” Specian said.