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 The Latest Energy Crisis demands Coherent Action – Not Paralysis
By Liz Robinson

This is not the first time we’ve endured energy price increases and it surely won’t be the last. What is different about the latest round of natural gas price increases is that some utilities, including the Philadelphia Gas Works (PGW) have reached the point of price inelasticity: PGW can no longer pass wholesale price increases on to its customers. As prices rise, uncollectibles rise in direct relationship.

We’ve reached the point where utilities like PGW cannot solve this problem alone. The fact that the average Philadelphia household’s annual energy bills have risen over $1,000 from $2,327 in 1995 to $3,385 in 2004, means that every year $6,000,000 more is drained out of the local economy- just from the city’s households.

It is also now the case that natural gas price increases cause electricity prices to rise. Because natural gas has become a clean, price competitive alternative to coal and oil as a way to generate electricity, the two are now linked for the first time.

What can we do in the face of rising energy prices? The fastest and least painful way to reduce gas bills, both for individuals and for all ratepayers is to reduce our consumption. “The cleanest and cheapest kilowatt hour is the one you never use.”

The failure of the federal government to develop a national energy policy has left it up to states and local governments to do so. One state which serves as a genuine model for Pennsylvania is our next door neighbor, New Jersey. For a number of years New Jersey has been implementing a comprehensive plan to develop a sustainable and affordable energy future for all sectors of the economy: residential, commercial and industrial. Their progress in just the last few years serves as a welcome example for other states. By increasing energy efficiency in every sector of the state’s economy, New Jersey has reduced energy bills, kept earnings in state creating new jobs and new industries. Its programs have saved megawatts annually since , reducing carbon emissions in the state by .

It is time for Pennsylvania to face the fact that the days of cheap oil and gas are gone. Continuing to wait for the federal government to develop a rational energy policy is leaving Pennsylvanians with ever rising prices and a steadily weakening economy.

Governor Rendell’s plan to begin investing in the state’s renewable energy resources is a welcome development. In addition to the initiatives identified by the Governor, the Commonwealth needs to take immediate steps to reduce energy costs for all of its citizens, and particularly for those who are most vulnerable. All affordable housing in Pennsylvania needs to be truly affordable – not just to get into, but to stay in.

Pennsylvania is now seeing record levels of mortgage foreclosure. This spring I predict we will witness record levels of utility service termination. Mortgage foreclosures, utility terminations, evictions, all lead to housing abandonment, homelessness, and in some cases, fatal fires as people turn to makeshift means to provide heat and light. This downward spiral is not inevitable.

Pennsylvania and Philadelphia should immediately adopt a new energy efficiency standard for all affordable housing. The national standard of excellence in energy efficiency is the Energy Star standard. Last year New Jersey’s legislature decided that state subsidies would no longer go to build inefficient homes. All affordable housing in New Jersey now must meet or exceed the Energy Star standard.

This only makes sense. Why build a house for a low income family that they cannot afford to live in?
Energy efficiency standards should also be incorporated into all low income home repair and rehabilitation programs. It is a sad truth that there are dozens of programs providing grants to repair and rehab low income homes just in Philadelphia, and that most of them pay absolutely no attention to energy efficiency.

High levels of energy efficiency, whether for affordable housing or market rate housing is the smart thing to do. Again, New Jersey’s Energy Star Homes program is a model for Pennsylvania. 6,000 new homes have already been built to Energy Star standards in New Jersey, with another 30,000 in the pipeline. This could easily happen in Pennsylvania as well.

Because natural gas is now used to generate electricity, if we were to reduce our statewide consumption of electricity even modestly, say by 2%, it would have a much more favorable impact on rates. Shaving electricity peak demand is in fact the fastest way to reduce rates.
Energy efficiency is one of those rare win win propositions. Not only does it save money, preventing millions from leaching out of the local economy every year, but it is an intense job creation engine. Good local jobs means more local and state taxes. It also creates significant manufacturing opportunities. Philadelphia and the surrounding suburbs have a number of manufacturers in the energy conservation sector. These businesses are growing as demand for energy conservation is climbing Building their local markets will only strengthen this sector.

It’s time for Philadelphia and for Pennsylvania to take energy seriously. We need a plan: a comprehensive plan which creates a clean, sustainable and affordable energy future for all citizens. To assume we can navigate even the next few years without such a plan is
frankly unthinkable.

Liz Robinson is Executive Director of the
Energy Coordinating Agency




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