Energy Conservation Policies Ineffective

January 2018

There is no shortage of programs intended to conserve electricity.  Less clear is if these programs work and save money.

Available information suggests that most conservation efforts are ineffective.

The Fraser Institute produces research about government actions in areas that affect Canadians’ quality of life.  They have reviewed available information about electricity energy conservation and provide insights useful for condo corporations seeking to reduce costs by controlling electricity usage.

In Ontario conservation programs were promoted from 1988 to 1996 and from 2004 until present.  The Ontario Power Authority spent nearly $400 million in 2013 alone.  Over nearly three decades it remains unclear if these programs saved consumers any money.

The term “megawatt” was created as a way to build support for the subsidization of electricity conservation efforts as a more efficient approach than building new generating capacity.  This approach was not supported by economists who disagreed with the belief that consumers paid more for electricity than what it was worth.

One study of US government information shows that between 80% and 90% of claimed benefits from energy conservation efforts are lost because consumers make irrational decisions regarding their electricity usage habits.  Where condo corporations insulate residents from the cost of electricity overuse by sharing these costs in their condo fees, they unnecessarily subsidize overuse by making residents with more prudent energy use pay more.

One 1992 study shows that utilities overestimate the amount of electricity saved.  This same study showed that implementation, monitoring and evaluation costs were often not included in dollar calculations of savings.

Over time, consumers have shown little interest in energy efficiency initiatives intended to save them money.  One Berkeley University study (2015) showed that consumers were correct in not supporting these initiatives.  The study reports that, on average, the cost of energy efficiency programs per household predicted more than double the energy savings that were realized.  For every dollar saved in electricity, the study showed two dollars spent on conservation efforts.

Condo communities may have unintentionally contributed to electricity waste by including electricity costs in common element fees.  Irrational consumer decisions about electricity usage are likely compounded in condo buildings when the cost of these decisions is hidden from them.  Allowing consumers to see, and pay, the cost of their individual usage may be the most effective means of controlling electricity costs.

For more information on the effectiveness of energy conservation efforts see the Fraser Institute article and report.