PUC report spurs concerns about future of state’s energy efficiency programs

By: - February 9, 2023 6:30 am

Energy efficiency advocates are once again concerned about cuts to state programs. (Getty Images)

In 2021, New Hampshire’s Public Utilities Commission sent the state’s energy utilities into turmoil: It approved a plan to slash funding for the “NHSaves” energy efficiency program down to 2017 levels, sparking an outcry and legal challenges from the utilities.

After lawmakers and Gov. Chris Sununu joined in the criticism, the Legislature passed an emergency bill to override the decision and restore the funding. 

This year, energy efficiency advocates are worried the commission is gearing up to try again. 

A report from the commission released last month appears to cast doubts on how the state assesses its energy efficiency investments. Advocates are concerned that could lay the groundwork for more cuts, which they say could undermine efforts to lower carbon emissions and costs for consumers, and create uncertainty for contractors

The report, published Jan. 13, is a multi-month effort by the commission to take stock of the way the utilities use money collected from customers via the systems benefits charge. That charge, appended to ratepayers’ bills, helps fund energy efficiency programs in the state. Utilities must present three-year plans for how they will spend that money toward energy efficiency, and the commission must approve those plans. 

The PUC’s report sought to look at whether those energy efficiency investments were providing the “greatest possible return” to ratepayers in the state. But in doing so, the report raised questions as to whether the state’s current models are overestimating the long-term benefits. 

Instead, the report suggests that more conservative assessment models – which would find fewer long-term benefits to energy efficiency – are more appropriate. 

The report notes that the state’s annual energy efficiency investments have grown by 144 percent in recent years, from $32 million in 2016 to $78 million in 2021. It finds that the state’s energy efficiency investments pay between half and 100 percent of the project’s costs. 

It concludes that the cost-benefit tests the state uses to assess its energy efficiency investments “do not appear to align with industry norms” and “are primarily based on predictions, not observational data.”

And it finds that the utilities’ Home Energy Assistance programs – which help fund aid to low-income tenants and homeowners – “have the lowest cost-effectiveness of all (energy efficiency) programs” in the state’s plan.

The commission says the report is intended only as a fact-finding analysis. 

“I would say, there’s no findings in our report,” Dan Goldner, the chairman of the PUC, told the Executive Council Jan. 18. “All we were doing is we were reporting on what the utilities and what the other participants had told us in the process, and we were just returning that information back to the public, so the public could see what we had heard.” 

And the report itself states that the commission “shares the … perspective” that energy efficiency investments “have a critical role to play” in reducing energy costs. 

But critics argue the report’s findings are a roadmap to future cuts to energy efficiency programs. The commission is set to hold hearings and make a decision on the next triennial energy plan for utilities by July. 

“Imagine that there’s an upcoming trial of a murder …,” said Sam Evans-Brown, executive director at Clean Energy New Hampshire, an advocacy group. “And the judge who’s supposed to make the decision puts out a paper that critiques the very idea that we should prosecute murderers.”

The state’s consumer advocate, Donald Kreis, has argued the PUC is overstepping its authority. And with a new three-year energy plan set to be deliberated and approved by July – which will involve energy efficiency programs and require PUC approval – Kreis and others say the new report indicates that the commission is entering those proceedings with a bias against the energy efficiency standards.

“Especially in a time of soaring energy costs, the Office of the Consumer Advocate steadfastly maintains that energy efficiency programs are essential components of the service provided to customers by our state’s electric and gas utilities,” Kreis wrote in a filing to the PUC on Jan. 31. “… It appears, to our regret, that the Public Utilities Commission does not share these views.”

Critics of the commission argue the report suggests it won’t be neutral during this year’s deliberations when it comes to energy efficiency.

“The real risk is that they upset the applecart again,” Evans-Brown said. “That they toss out the three-year plan, and that the programs grind to a halt again.” 

The report is the latest in a series of changes at the PUC, which indicated strong support for energy efficiency efforts just seven years ago.

In 2016, the commission created an energy efficiency resource standard, which set up savings goals allowing the state to begin investing in clean energy technology. Two years later, the commission approved a triennial plan that followed that new standard, working with the utilities to plan for the savings programs.

But by December 2020, when the PUC was supposed to have issued a ruling over the next three-year plan, new commissioners had been appointed. The December 2020 proceedings were delayed nearly a year. When the new plan was approved in November 2021 – with only two of the three commissioners present – the PUC made what to observers appeared to be a U-turn by significantly reducing funding to the NHSaves program.

Advocates protested, utilities appealed to the state Supreme Court, and Gov. Chris Sununu called for the move to be reversed. Legislation sponsored by Republican representatives, House Bill 549, restored funding and forced the PUC to approve a new plan that centered clean energy programs. 

Months later, in the fall of 2022, the PUC began commissioning its analysis of the value created by the energy efficiency programs. On Jan. 13, it released the analysis. 

The utilities are set to file a new plan for 2024, 2025, and 2026 in July. 

Kreis and others say they are worried about the direction of that new plan. While the 2022 statute forced the PUC to backtrack on its decision to defund NHSaves, it did not fully restore some of the energy efficiency policies that were removed in 2021. The 2016 energy efficiency resource standard has not been re-established by the Legislature, for instance; the PUC is free to ignore it moving forward. 

Kreis says the January analysis on the best cost-benefit model is important because it could influence whether the PUC decides the utilities’ three-year plan proposals are feasible. 

Evans-Brown argued that contractors and leaders in clean energy fields would be put into an “untenable situation” should the PUC approve another plan that slashes funding to energy efficiency programs. Absent another intervention by the Legislature, the situation might take years to resolve itself through the appeals process. 

And clean energy contractors might give up their efforts – regardless of the chances of an appeal, he warned. 

“Without some modicum of consistency and predictability, who’s going to try to build their business around providing the services that are called for in these programs?” he said. 

The new report has attracted the wary eye of Democrats, including Executive Councilor Cinde Warmington of Concord, who questioned Goldner sharply at the Jan. 18 council meeting. 

But Republicans – even those who had helped chastise the PUC last year through legislation – were less concerned.

Rep. Michael Vose, an Epping Republican and the chairman of the House Science, Technology, and Energy Committee, said he doesn’t think that the report drew any conclusions. 

“This was in an investigatory docket,” he said. “So (they were) trying to help themselves understand how the utilities go about the process of putting together the triennial plan. … And the report indicated that based on the information that the investigatory document generated, there were still questions about whether some of the assumptions that are being made to put together the plan are valid or not.”

The report, Vose argued, was in line with what the PUC should be doing.

Concerns about the direction of the next triennial plan have led some advocates to wonder whether the Legislature would step in to intervene again. Vose said he didn’t think that would be necessary. 

“It’s an adjudicative process, almost like a trial,” he said of the upcoming deliberations. “That should ensure that the right answer comes out at the other end.” 

But he didn’t rule it out. 

“If the same thing were to happen again, if the PUC essentially halted the program, then I think the Legislature would get involved,” he said. “But if the PUC just approves an altered program, altered from whatever the utilities propose, then the Legislature wouldn’t necessarily step in at that point.”

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Ethan DeWitt
Ethan DeWitt

Ethan DeWitt is the New Hampshire Bulletin’s education reporter. Previously, he worked as the New Hampshire State House reporter for the Concord Monitor, covering the state, the Legislature, and the New Hampshire presidential primary. A Westmoreland native, Ethan started his career as the politics and health care reporter at the Keene Sentinel. Email: [email protected]