Economic Benefits of LADWP’s Energy Efficiency Programs

Economic Benefits of LADWP’s Energy Efficiency Programs

J.R. DeShazo, Jason Karpman, Weilong (David) Kong, Colleen Callahan, Britta McOmber, Mara Elana Burstein

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This study estimates the economic benefits of energy efficiency programs administered by the Los Angeles Department of Water and Power (LADWP). The report focuses on the 22 programs that LADWP administered in fiscal year (FY) 2016-17, the most recent year for which complete implementation details were available at the time of writing this report.

To quantify the economic benefits of LADWP’s energy efficiency programs, we focus on three key metrics—number of jobs, value added, and labor income—to quantify the benefits of energy efficiency programs for local workers, businesses, and public agencies in Los Angeles County. Value added is a local proxy for gross domestic product (GDP) and isolates the wealth generated by an investment that ends up in three forms: income for workers, profits for businesses, and taxes for local government. Labor income is a subset of value added that represents the total dollar value of employee compensation (wages and benefits) and proprietor income (payments received by self-employed individuals and unincorporated business owners).

LADWP’s suite of energy efficiency programs perform particularly well according to these three metrics because they generate energy cost savings for LADWP customers, leverage co-investment from residents and businesses, and rely heavily on local labor for program activities. In particular, we find that LADWP’s investment in energy efficiency, on average, supports more local jobs per dollar of investment than the oil and gas sector, a common benchmarkfor comparing investments in energy resources. This finding also holds true when value added and labor income are the units of comparison.