Future of state’s energy efficiency efforts in jeopardy
Some critics blame political meddling
For both Eversource and Liberty customers, the cost of electricity will go up on Aug. 1. Unitil’s rate increase went into effect on June 1. (Dave Cummings | New Hampshire Bulletin)
Last year, the state’s utilities reached a rare – and unanimous – agreement with clean energy, environmental, and consumer advocates on the future of the state’s energy efficiency plan.
The plan laid out goals to reduce electricity usage by 4.5% and natural gas by 2.8% by 2023. Consumer savings from efficiency improvements, such as new appliances and lightbulbs, would total $1.1 billion over the lifetime of these measures – ranging from about seven to 10 years.
The program would cost $336.5 million over three years starting in 2021, primarily funded by a portion of the electric bill called the system benefits charge. That’s a 118% increase from the $154 million spent over the past three years, or an additional 80 cents per month for the typical household. The money would fund rebates and other energy efficiency programs.
But after eight House Republicans and the late House Speaker Dick Hinch wrote a letter to oppose the plan in November citing its cost, the Public Utilities Commission – the state entity responsible for approving the plan – has failed to enact it. The letter asked the utilities commission to suspend the plan’s implementation, and that’s exactly what the commission has done.
Republicans from the House Science, Science, Technology, and Energy Committee balked at any increase to the systems benefit charge. Now, with over a quarter of the year already gone, refusal to act on the plan is casting doubt on the future of energy-efficiency measures in the state and raising questions about inappropriate political influence on the process.
“This is a significant public policy crisis that the PUC has engendered through its inaction,” said the state’s consumer advocate, Don Kreis, who helped craft the plan.
“Frankly, I’ve never seen anything like it before,” he said. It’s a turn of events that Kreis links to political pressure applied by a small subset of legislators.
“I think it is not appropriate for legislators to try to influence PUC dockets,” said Kreis, an attorney who has taught administrative law.
There is typically a separation of powers between lawmakers who create laws and the administrative agencies that carry them out.
Catherine Corkery, the chapter director of New Hampshire’s Sierra Club, also criticized what she calls “political overreach.” The Sierra Club supports the energy efficiency plan; using less energy reduces pollution from fossil fuels, with both public health and environmental benefits alongside ratepayer savings. Corkery calls it simple math.
“It is absolutely offensive that this PUC agency, which is supposed to be an independent, adjudicative agency, is like a windsock waiting for the political winds to tell them what to do,” Corkery said.
The PUC declined a request for comment on this story, as the quasi-judicial body does not discuss ongoing proceedings.
The utilities commission noted “significant programmatic and rate changes as compared to the prior triennial plan,” in the Dec. 29th order that extended the existing program.
“We do not believe sufficient time remains available to fully consider and resolve this matter prior to the requested rates effective date of January 1, 2021,” commission Chairwoman Dianne Martin and Commissioner Kathryn Bailey wrote. Martin and Bailey also wrote that they expected to make a ruling within eight weeks. Now, more than 14 weeks into the year, there has been no ruling.
Consequences of the utility commission’s inaction are already being felt. The delay has created uncertainty for the state’s utilities, as well as contractors and customers, who aren’t sure whether funding for programs will be approved.
“The longer the delay, the greater the cost to New Hampshire’s residents,” said Nicholas Krakoff, a staff attorney for the Conservation Law Foundation. As the plan languishes, ratepayers pay the price of inefficiency in their electric bills. Proponents of the plan say that energy efficiency also boosts the economy by creating local jobs. New Hampshire ranks last in New England for energy efficiency, according to the American Council for an Energy-Efficient Economy scorecard.
On April 1, New Hampshire utilities wrote to the commission detailing the “growing number of challenges faced by NH Utilities, our vendors and our customers with these temporary conditions.” In a December order, the commission instructed utilities to continue the 2020 program into 2021.
But that temporary solution is becoming increasingly problematic for the utilities, as “critical” deadlines for implementation have come and gone. The plan’s original goals are now impossible to meet, they say, with a quarter of the year gone.
”Even if the PUC put out an order five minutes from now, we can’t even implement that plan anymore because we’ve lost our first quarter,” Kreis said.”
Some programs are already being shut down as a result.
Last week, NHPR reported that a popular weatherization campaign run by Liberty Utilities in Concord stopped accepting applications for this year due to concerns about its budget.
“It’s extremely disruptive,” said Madeleine Mineau, executive director of Clean Energy NH. The nonprofit works on energy advocacy and education, and is involved in both planning and implementation of programs.
“They’re already shutting down a program that’s very needed, very popular, and has a great group of volunteers.”
“We’re getting really frustrated,” she said.
Mineau said the uncertainty is also harming contractors.
“They’re told there might be a big ramp-up coming, but they’re in this weird holding pattern. They feel they’re being set up to fail,” she said. “They haven’t hired new staff or bought new equipment.”
The utilities warn that confusion among customers about the program could last for months after an order is issued, leaving some unserved.
“That uncertainty on the timeframe actually has a fairly big impact on how we approach running the programs,” said Kate Peters, the energy-efficiency manager of the state’s largest utility, Eversource.
Not only are vendors and contractors unsure whether they can hire workers to meet increased demand should the plan eventually be approved, but utilities are also in limbo when it comes to informing ratepayers about what programs will be available.
Peters said utilities need a decision from the utilities commission about how to proceed.
Short-term costs and long-term benefits
Some Republican opposition to the plan has focused on the system benefits charge – a small portion of consumers’ monthly electricity bill that would be increased to fund the new plan. For a typical residential customer using around 600 kilowatt hours per month, the increase would cost around 80 cents per month. A typical household currently pays a charge of $4 to $5.
All electricity customers pay toward the fund that is then used to provide rebates on lightbulbs or efficient appliances, for example.
The letter from Republicans says that the pandemic is a bad time to increase rates. But Kreis believes that the pandemic is being used as an excuse, and that opposition to ratepayer-funded energy efficiency is ideological.
The letter was signed by Republican members of the House Science, Technology, and Energy Committee, including Reps. Michael Harrington, Glen Aldrich, Troy Merner, Jeanine Notter, Russell Ober, Fred Plett, Doug Thomas, and Michael Vose.
Harrington, of Strafford, served as the utilities commissioner from 2012 to 2013. He said his opposition to increasing the system benefits charge is philosophical.
“I believe in capitalism. Letting people keep their money is always going to be more efficient,” he said.
“If it’s cost-effective,” he added, “people will do it by themselves.”
But economists have found that individuals and businesses fail to invest in energy efficiency measures, even when it is financially beneficial to do so.
“It has long been observed that these technologies may not be adopted by individuals and firms to the degree that might be justified, even on a purely financial basis,” according to a 2017 report by economists Todd D. Gerarden, Richard G. Newell, and Robert Stavins.
Studies show that people are more likely to switch to an efficient option when rebates are offered.
And in the state, public entities depend on incentives to pay for energy-efficiency measures. Suzanne Goulet, the town administrator of Stratford, said that without incentives from Eversource, the town would not have weatherized its library and fire station.
Harrington also introduced a bill this session that would take control of increasing the system benefits charge away from the utilities commission and give it to the Legislature. The bill would limit energy efficiency to programs “whose main purpose is to reduce the consumption of electricity and not some other form of energy.”
He argues that weatherization, for example, should no longer be paid for through the system benefits charge because its goal is to reduce heating costs. “Insulating houses so we’re burning less oil has nothing to do with what I should be paying for electricity,” said Harrington.
But according to energy-efficiency professionals, weatherization measures can also affect the electricity bill. In an insulated house, the boiler runs less, decreasing the use of electricity. If less water runs through a shower head, the pumps run less, and the electricity bill also goes down.
The Business and Industry Association has argued that raising the system benefits charge would be detrimental to businesses that have already been hit hard by the pandemic.
“It’s a lot to ask of our members to foot the bill right now when they’re just trying to recover from the pandemic that we’re currently in,” said David Creer, director of public policy at the Business and Industry Association.
Creer said that the increase would cost some businesses hundreds of thousands of dollars per year.
But Peters, of Eversource, said the BIA is presenting only one piece of the picture.
“What the BIA didn’t articulate,” said Peters, “is what exactly is that large business’s overall amount that they’re paying for their electricity and what’s the portion that is the SBC charge: That portion is a small percent of their overall bill.”
Businesses are far from united over this issue, with many saying the measures make “good business sense.”
“Investments in energy efficiency not only help businesses cut costs, they also support some of the state’s highest paying jobs and will help drive the state’s economic recovery,” reads a letter to the utilities commission signed by 27 businesses, including Timberland, Stonyfield Organic, and the Hanover Co-op Food Stores. One hundred and twenty businesses also signed on to a set of clean energy principles created by Ceres and New Hampshire Businesses for Social Responsibility. The principles call for state-led energy efficiency programs, “because energy efficiency is the most cost-effective energy resource available.”
The businesses signing the letter say the short-term costs are worth it in light of long-term cost savings, which they deem “critical for the state’s business community to make a sustained economic recovery.”
Businesses and individuals that implement energy-efficiency measures stand to save the most money, but energy efficiency can also reduce peak demand, when energy prices are the highest, bringing down the cost of energy for everyone.
The measures in the energy-efficiency plan before the utilities commission have all passed a rigorous cost-effectiveness test, showing that each cent invested will return more in benefits to all ratepayers. In total, utilities would spend more than $350 million on the plan.
There is no expiration date on the utility commission’s temporary order to extend the 2020 plan into 2021, and there is no public timeline for a decision on the 2021-2023 plan.
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