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Utilities’ high hopes for marijuana surge dim

With local restrictions on marijuana easing across the U.S., power suppliers from California to Maine were expecting a little buzz of their own from newly legitimate pot farmers. After all, a 5,000-square-foot warehouse filled with hydroponic growing systems can draw five times the electricity of a typical industrial user.

But after an initial jolt in electricity use, when western states began legalizing marijuana cultivation and sales, demand has fallen off in some areas, according to utilities and analysts. That’s partly because the once-illicit business may no longer have to keep plants hidden from law enforcement and producers are upgrading to energy-efficient lights, pumps and cooling systems.

“You have to ask yourself: Why is weed grown indoors?” said Paul Patterson, a utility analyst at Glenrock Associates in New York. “As it becomes legal, you’re going to see more go outside or in greenhouses.”

The sobering reality of pot power may prove a disappointment for American utilities hurt by stagnating electricity demand, with the rise of renewable energy such as solar cells and more-efficient generators and appliances. Legalization of the $3.5 billion U.S. cannabis market, where thousands of growers use energy 24 hours a day, was supposed to spark more consumption, even as it threatened to strain the nation’s aging transmission grid.

In the power industry, small demand increases can be significant. The Energy Department forecasts electricity consumption in the country will grow 1 percent a year or less through 2040.

When Colorado legalized marijuana, power use at the state’s biggest utility rose 1 to 2 percent, according to Xcel Energy, a supplier in the state. Similar gains were reported in Washington and Oregon, where regulators were expecting the pot growers to consume enough power for a small city.

“We were thrilled to get that much load growth from one new industry,” said Mark Stutz, a spokesman for Xcel’s Public Service Co. of Colorado. “That just doesn’t happen to utilities.”

But some of the gains since legalization didn’t last.

In Tacoma, the municipal utility was preparing for a surge in consumption that proved much smaller than expected, said Chris Gleason, a spokeswoman for the city. At one growing facility, where demand was supposed to reach 12 megawatts, the operation is about half the size that was planned and using just 1.3 megawatts.

“Things like advanced LED lighting technology and smart growing methods have reduced the amount of electricity growers need,” Gleason said. “We didn’t have as many growers in our service area as we anticipated.”

Puget Sound Energy, a power supplier based in Bellevue, helped supply more than 70 pot growers with LED lights and other upgrades that have saved more than 40 million kilowatt-hours over two years, said David Montgomery, the utility’s energy management consultant.

Indoor growing operations in 2012 racked up at least $6 billion a year in energy costs, compared with $1 billion for pharmaceutical companies.