School and Hospital Energy Conservation Incentives

摘要

The success of the Institutional Conservation Program will depend on the financial, economic, and institutional characteristics of schools and hospitals insofar as these factors influence energy conserving behavior. This paper explores these factors in an attempt to assist the ICP in reaching schools and hospitals. There are serious problems in both schools and hospitals with energy-conserving capital funding. Hospitals are discouraged from borrowing for this purpose by rate base regulation which limits their capital recovery. They are also unable to generate funds internally. Schools face no active disincentives for capital improvements but face a paucity of debt funding. Schools also have no means to generate funds internally. The major implications of these and other key findings for the ICP are as follows: In funding ECM's, the ICP is paying for improvements that might not otherwise have occurred, since both schools and hospitals are capital-poor; energy price decontrol hurts hospitals and schools, but tax breaks generated by the windfall profits tax do not help them; rate base regulation discourages energy conservation in hospitals if the ICP can exert some influence on hospital rating, its effectiveness would increase; and individual schools may be information-poor with regard to energy conservation. (The ICP therefore has a role to play in publicizing and organizing information for this sector). (ERA citation 10:031262)