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INNOVATIVE NEW ENERGY CONSERVATION PROGRAM PAYS FOR ENERGY SAVINGS; ALLOWS PARTICIPANTS TO DERIVE INCOME FROM ENERGY CONSERVATION MEASURES

 WASHINGTON, May 19 /PRNewswire/ -- New Jersey-based Public Service Electric & Gas Company (PSE&G) today announced a precedent-setting energy conservation program that pays participating companies to save electricity and natural gas through the installation of energy efficient equipment. The program, called The Standard Offer, provides monthly cash payments over a contracted period -- up to 15 years -- in return for actual, measured energy savings.
 The result, according to PSE&G, will be significant economic and environmental benefits.
 "The Standard Offer represents the future of demand-side management," says PSE&G President Lawrence R. Codey. "It does everything an energy conservation program is supposed to do and then some. The Standard Offer is the first program that actually allows utilities to measure energy savings and count it as a firm, reliable resource. In addition, because it provides direct payments for measured savings, the Standard Offer program will generate significant environmental and economic benefits not found in typical rebate or shared savings programs."
 In typical energy conservation programs, utilities provide customers with a one-time cash rebate for the purchase of energy efficient equipment. Customers, however, are under no obligation to demonstrate that energy has been saved.
 Under the Standard Offer, PSE&G provides monthly payments for kilowatt-hours of electricity and therms of natural gas saved. PSE&G will monitor the energy savings and make payments based only on actual savings, instituting penalties if the savings fall below the contracted amount.
 The PSE&G plan will save 150 megawatts (MW) of electric capacity over the next two years -- approximately 450 million kilowatt hours of use, enough to power 120,000 homes for a year. In addition, the Standard Offer will contribute to a savings of 1,052 MW electric capacity by the year 2000. The plan also includes a pilot program designed to save six million therms of natural gas -- two million therms from the residential market and the remainder from industrial and commercial customers.
 With these reductions, participants will save $48 million per year or more in energy costs while receiving $25 million in Standard Offer payments. In addition, avoided carbon dioxide emissions from power plants will total as much as 400 million pounds per year because of the demand reduction.
 The Standard Offer is also creating a new industry and additional jobs for New Jersey. The program allows independent energy service companies (ESCOs) to contract for energy savings on a customer's behalf. ESCOs can, in theory, handle all aspects of the proposal, from engineering design to equipment installation to maintenance. All contracts will, however, be subject to regulatory approval.
 PSE&G has formed a subsidiary company -- Public Service Conservation Resources Corporation (PSCRC) -- to participate in the DSM marketplace. PSCRC will actively promote DSM projects in New Jersey.
 Change in Regulatory Climate
 PSE&G's Standard Offer program was made possible by a growing awareness on the part of regulators that while energy conservation measures have significant societal benefits, state regulations presented utilities with significant financial disincentives. Each time a customer reduced electric use by one kilowatt-hour, for example, the electric utility "lost" the revenue from the sale of that kilowatt-hour.
 The New Jersey Board of Regulators Commissioners (BRC), which regulates utilities operating in the state, changed all that. Recognizing that reducing demand for energy was as important as providing new energy supplies, the BRC passed a new set of regulations encouraging energy conservation by offering incentives to the state's utilities for promoting energy conservation. The new regulations cover both electric and gas utilities.
 Under the new regulations, utility investment in energy conservation programs are treated in the same manner the BRC treats investments in new generating capacity. This concept, called Integrated Resource Planning, views conserved energy as a resource equal to utility generating capacity and purchased power availability. And to encourage utilities to invest in conservation programs in addition to increased generating capacity, the BRC allows the cost of such programs to be absorbed by utility ratepayers just as the cost of a new generating plant is paid for by ratepayers. The regulations also allow utilities to recover lost revenues.
 "The BRC has created a regulatory environment in which everyone can win," says PSE&G's Codey. "Utilities can provide conservation programs without suffering a financial burden, customers can reduce their energy costs, the state's economy is made more competitive, and we can all help improve our environment."
 -0- 5/19/93
 /CONTACT: Neil Brown of PSE&G, 201-430-6017, or Rob Thibault of Poppe Tyson, 201-539-0300, for PSE&G/


CO: Public Service Electric & Gas ST: New Jersey IN: UTI SU:

TM -- NY007 -- 0181 05/19/93 10:00 EDT
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Publication:PR Newswire
Date:May 19, 1993
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