One Year Into Connecticut’s Comprehensive Energy Strategy: What’s the Deal?

Issues & Policies

For Brad Kane, managing editor at the Hartford Business Journal and editor of its Connecticut Green Guide, Connecticut’s natural gas expansion—a ten-year, $7 billion project aimed at converting 280,000 Connecticut customers to natural gas—has been one of the year’s biggest stories.

Kane shared the region’s top energy headlines—and what goes into reporting them—in his morning keynote address at the 14th annual What’s the Deal: 21st Century Business Energy Conference, hosted by CBIA and the Connecticut Power and Energy Society on Oct. 10.

Natural gas expansion, he noted, is a key component of Connecticut’s Comprehensive Energy Strategy, which Gov. Dannel Malloy unveiled at last year’s What’s the Deal conference.

The governor’s plan serves as a roadmap to cheaper, cleaner, more reliable energy in a state that consistently ranks anywhere from second to fifth in the nation, said Kane, for highest energy costs.

Natural Gas: A Game-Changer

Michael Dirrane, director of Northeast marketing for Spectra Energy and a panelist at the event, characterized natural gas as “a tremendous game-changer” for the region.

“We now have production of natural gas in our backyard, in Pennsylvania and Ohio. The supply is there; it’s getting the infrastructure set up to bring it in.”

Robert Young, a regional manager at Burns & McDonnell Engineering Company’s New England office, agreed.

“We have this source of energy independence in the U.S., where we’re not only talking about not having to import energy but actually being able to export it,” he said. “But there’s still the issue in the Northeast of getting the gas to the customers, of improving distribution.”

Connecticut’s expansion project starts with roughly 40,000 low-use customers (those who have access to natural gas but aren’t using it to heat their homes) and another 150,000 who are “on-main” (meaning that they are within 150 feet of a main but are not hooked up).

Another segment the state hopes to reach, said Roddy Diotalevi of UIL Holdings Corp., includes neighborhood clusters, municipal buildings, schools, and healthcare and manufacturing facilities.

Complicated Plan, Moving Pieces

When it comes to natural gas, infrastructure is only part of the problem. Penetration in Connecticut’s residential markets is decidedly low, Diotalevi explained, because much of the cost of expansion will be borne by new customers—which in turn determines whether and to what extent expansion can occur.

Camilo Serna, vice president of corporate strategy at Northeast Utilities, added that aggressive gas expansion requires coordinating a lot of moving pieces in a complicated plan, getting customers to commit in adequate numbers, and determining how to fund the expansion.

Serna and fellow panelists proposed a number of possibilities for encouraging faster and wider adoption of natural gas throughout Connecticut, among them:

  • residential conversion credits
  • maximizing manufacturers’ rebates and energy efficiency rebates
  • reducing customer hookup costs—for example, waiving the charge for customers 150 feet from the main
  • launching and publicizing new financing options
  • developing an adequate contractor network and HVAC participation to meet demand

Renewables and Energy Efficiency

That same integration of incentives, targeted financing opportunities, and increased contractor participation has been instrumental in the success of other statewide energy initiatives,such as C-PACE (Connecticut Property Assessed Clean Energy), which allows commercial, industrial and multi-family property owners the ability to make qualifying investments with no upfront costs and a guaranteed positive cash flow from energy savings; CEFIA (Clean Energy Finance and Investment Authority), which provides homeowners, businesses, and municipalities with incentives and low-cost financing for renewable energy and energy efficiency; and Connecticut’s Energy Efficiency Board (EEB), which conducts independent, comprehensive evaluations of residential and commercial and industrial energy efficiency programs funded by Connecticut’s Energy Efficiency Fund.

“Layering all these benefits—incentives, investment tax credits folded into cash flow, guaranteed payment for renewable energy credits, deferred payment until a project is completed, monitoring to ensure investments are secure and savings are achievable—this creates a package that’s a very attractive investment for a building owner,” said David Ford of Trane U.S. Inc.

Coordinated efforts such as these have also helped renewable and alternative energy providers, said Michael Silvestrini, president of Greenskies Renewable Energy.

“They’ve incubated industries such as solar power to the point where subsidies are no longer crucial. Over the next six years, solar energy is expected to achieve retail grid parity that attracts national players.”

“Here in the Northeast it’s been consistent, predictable state policies like long-term contracting and Connecticut’s lead-by-example program that have been driving renewables and bringing them to our region,” said Lisa Ward, manager of government relations for ClearEdge Power, which produces stationary fuel cell systems.

“Public Act 11-80 [Connecticut’s Comprehensive Energy Strategy] has been very progressive and supportive of these industries,” she added, pointing specifically to an expanded property tax exemption that includes fuel cell technologies.

<p> Fuel cells, biomass, and wind, however, have not yet achieved economies of scale that allow them to operate without subsidies, Ward and fellow panelists acknowledged.

Other obstacles for her industry, Ward noted, are inconsistencies from municipality to municipality in terms of permitting and fees, which could range from zero to tens of thousands of dollars.

In addition, siting challenges—such as a ban on wind energy projects—continue to hinder progress for other types of energy providers in Connecticut. (Best practices from other states include using farmland for wind energy, allowing the renewable energy industry to ‘cohabitate’ with agriculture.)

Energy Security

Ernest Hayden [pictured above], a certified ethical hacker and executive consultant for the information security firm Securicon, suggested that tax breaks and incentives could also improve electric grid security.

Hayden delivered the afternoon keynote address at What’s the Deal.

Historically, he said, the emphasis for utilities has been on physical security to protect assets—for example, preventing copper theft or substation break-ins. Focus on cybersecurity has only recently percolated into the smart grid space.

“The job is getting bigger and bigger and harder to do because of a ubiquity of data that has to be protected,” said Hayden, citing the expansion of bring-your-own-device policies (where employees attach their personal devices to their employers’ network) and “an Internet not designed for security, where not every hole in the sieve is covered.”

Hayden cautioned that these are concerns that should be top of mind for all utility executives, board members, and government officials.

“It’s right up there with profit and loss.”

Get more highlights from this year’s What’s the Deal conference and trade show, including photos and speaker presentations.


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