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Large Industrials Opting Out of Programs – A Retread Story

By February 24, 2014November 8th, 2021Energy Efficiency, Energy Rant, Utility Stuff

A few years ago, I was reading an article on road-transportation taxes, of which the taxes on fuel are a huge portion.  One trucking company rep whined about the disproportionate taxes they had to pay.  First of all, he’s not paying any taxes anyway.  His customers are.  It’s built into the fuel price across the board for him and all his competitors.  But secondly, a loaded truck exerts about 20,000 pounds of force on the road per axle, while my cars exert about 1500 pounds of force per axle.  So Mr. Trucker, we are paying all your taxes for the stuff we buy at the grocery and home improvement store; every restaurant; and every shipped and received package – AND we have the pleasure of paying our own taxes, which we pass through to the consumer – ourselves.  You wear out the roads, and we pay for it. I think you should just say thank you and keep driving.

This brings me to this week’s rant: large industrial customers who want to opt out of energy efficiency programs.  I read headlines in many articles that Indiana was considering legislation for industrial customers with greater than 1 MW demand to opt out of the programs.  Ok.  This wouldn’t directly affect Michaels since we are not in the Indiana industrial Energy Efficiency market so I wasn’t paying that much attention, until I read this article which took me over the edge.

If I back up a few months before this blew into town, and I consider Indiana; I think Indiana is Texas, north.  Indiana under Governor Mitch Daniels (R), who helped launch these programs, is the leader in business friendship of all the upper Midwest states, at least those in the rust belt that touch any of the great lakes.  Many conservatives were practically begging Daniels to run for president.  Now his Republican colleague, Senator Jim Merritt wants for the industrials – the proverbial 20,000 pound per axle industrial customers – to be able to opt out of the programs.

Mr. Merritt states, the program’s fees had made it more difficult for the state to compete with other states in attracting new industries.  Really?  This is why members of neighboring Ohio’s manufacturing association have banded together to KEEP energy efficiency programs that First Energy, a huge utility, wants out of?  Here is just one of many articles on that debate.  Think about that for a minute.  Industrial customers from Ohio, a competing state next door, WANT programs in order to be competitive.  Merritt says exactly the opposite.  Who do you believe?  The horse or the donkey (a reverse half-summersault with a triple twist metaphorical pun).

Merritt goes on to say that the programs are unfair to industries because many of them are already paying for sophisticated in-house programs.  This argument is more hollow than an empty milk jug and ironically is an excellent argument FOR programs.  If industrial customers are already doing things, why not have those poor-sucker competitors that aren’t doing anything pay for it?  This is what programs allow these “efficient” customers to do.  Could you imagine if, say trucking giant Schneider National, could get its giant rival JB Hunt to pay for its fuel economy enhancements?  And dudes, in case you haven’t noticed, trucking companies are indeed making improvements to their rigs for enhanced fuel economy.  Think about that.  No industrial customer smart enough to be in business would pass on this.

Even huge industrial customers that have and continue to implement energy efficiency are substantially short staffed, and there are always opportunities lying about.  No one knows everything.  At best, these customers have staff to manage the work of consultants and contractors – vet them, hire them, keep them on task – project management.  This alone is a lot of work.

Lastly, Merritt argues that these surcharges will drive industries to competing states.  Really?  See the Ohio argument above.  Moreover, no EE fuel surcharge in the world will scare industry into Illinois where multinationals have been threatening to leave since Pat Quinn jacked taxes a few years ago.  Furthermore, I just spent a couple days last week with a group of key account managers who manage the largest (industrial) accounts.  One case study demonstrated precisely the opposite reaction to programs as Merritt tells it – the customer decided to expand in this utility’s territory because of the incentives for energy efficiency.  Not only that, the core value of the utility is that energy efficiency makes customers more profitable, and profitable customers expand and build more facilities – not to mention stay in business and keep buying energy.  I’ve gotten this same message from account managers, directors, DSM managers, and vice presidents of multiple utilities.


  • Industrial customers place heavy loads on utility infrastructure – opting out of programs could arguably be a form of corporate welfare.
  • Of any sector, industrial customers have the greatest cost effectiveness from a program perspective.
  • Even customers that are active with energy efficiency can use help, and if they are active, they should easily get more out of the program than they contribute.
  • Smart utilities know efficiency means more profit for customers, and more profit means expansion, not to mention efficiency will never reduce energy sales like a customer that goes out of business.
  • Smart customers doing energy efficiency would never raise a stink about paying into these programs.
Jeff Ihnen

Author Jeff Ihnen

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  • Bob DeWitt says:

    You are somewhat mistaken about Ohio. While it is true that the Ohio Manufacturing Association (an association representing the smaller industries) wants to KEEP energy efficiency programs, it is not true that they represent the largest of the industrials in Ohio. These firms are represented by the Industrial Energy Users (IEU). Please contact Sam Randazzo at the IEU to get there perspective on this issue.

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