Connecticut’s Comprehensive Energy Strategy, a three-year plan first adopted in 2013, was the focus of CBIA’s annual business energy conference, held Oct. 5 in Cromwell.

Designed as a roadmap to cheaper, cleaner, more reliable power, the CES is being updated for the next three years by the Department of Energy and Environmental Protection, the state’s lead agency on drafting the strategy.

DEEP's Katie Scharf Dykes
DEEP deputy commissioner Katie Scharf Dykes said the agency expects to release the draft CES later this fall.

Over the last several months, DEEP officials have solicited input from various stakeholders on what should be the top priorities for the new three-year plan.

At a scoping and public input session in late May, the agency presented an outline of proposed guiding principles in the areas of transportation, electricity, and heating and cooling uses and buildings. They are now in the final stages of a draft CES for 2016-2019.

DEEP Deputy Commissioner of Energy Katie Scharf Dykes reviewed key elements of the updated strategy with Connecticut businesses, energy suppliers, and others at the conference before opening the floor to questions and comments.

(The first-ever draft CES was unveiled at CBIA’s 21st Century Energy conference in 2012. Centerpieces of the original plan, adopted in 2013, included moving away from state- or ratepayer-subsidized energy efficiency and clean energy initiatives to a finance-focused model in encouraging more private-sector investment; a more diverse portfolio of fuels and expanded residential, business, and industrial consumers’ access to lower-cost natural gas; and aligning Connecticut’s renewable portfolio standards with regional supplies of clean energy, such as large-scale hydropower.)

Cleaner and More Reliable—But Cheaper?

The overarching goal of the revised CES, she said, is a move toward more sustainable energy—particularly a reduction in greenhouse gas emissions—an area in which Connecticut leads, compared with other states.

“We are hopeful to have the draft out this fall,” said Dykes, adding that there will be a minimum 60-day public comment period.

Audience members expressed concerns that a greater focus on clean energy ignores the problem of affordability.

Live polling at the conference revealed a plurality of audience members (49%) believe Connecticut’s top priority for energy policy should be lower energy bills for businesses and residents.

More than half (54%) think renewable portfolio standards should not be the same for all New England states (Connecticut currently has the most restrictive RPS in the country), and 51% are not clear why Connecticut’s energy costs are among the highest in the nation—higher, in fact, than those in other New England states.

We have this challenge of inadequate gas capacity, which has exposed us to cost volatility.
— DEEP's Katie Scharf Dykes
Dykes acknowledged that Connecticut and New England have traditionally been plagued by high energy costs in large part because of the lack of fossil fuel and the inefficiency of a monopoly development of energy generation.

The impetus behind deregulation, she said, was to divest power generation assets, open up retail competition for sourcing electricity, and give consumers choice.

“Deregulation prompted a tremendous amount of merchant generation,” she said, adding that the same statute that enabled deregulation and an ISO-administered market also enabled future laws such as those governing renewable portfolio standards.

Another cost factor, said Dykes, is this: “We have this challenge of inadequate gas capacity, which has exposed us to cost volatility.”

And because efficiency funding is embedded into legislation—and therefore fixed—“we’re not always able to take advantage of market opportunities.”

The revised CES is looking at—among other things—natural gas reliance as well as fuel diversity, reliability challenges, cyber-security, and integration of intermittent renewable energy.

Economic Implications

A panel of energy experts moderated by ISO New England’s Eric Johnson and comprising Carl Gustin (president, New England Coalition for Affordable Energy), Heather Hunt (executive director, NESCOE), and Marc Montalvo (president, Daymark Energy Advisors) debated the economic implications of the new CES.

“What’s at stake?” Gustin asked.

“In the new CES, the focus very much is on clean, safer, more reliable energy. Our focus is on affordability.

“Affordability continues to be a major concern for our members, despite the warm winter we had last year and the lower prices.

"Within the business community, regional competitiveness is a major concern. If we don’t build more infrastructure, we will see significantly higher energy costs by 2020,” most of which, he said, won’t really hit until 2019.

Furthermore, he added, “We’re way behind in meeting natural gas capacity requirements, because we’re expecting to retire a third of the electric generation in place in this region.

"And virtually every infrastructure project faces opposition. If we cannot get past litigation and protracted opposition that, in some cases, goes beyond what is legitimate, it threatens our near-term and long-term economic competitiveness.”

The coalition released The Economic Impacts of Failing to Build Energy Infrastructure in New England, a detailed report on the region's energy challenges, a week after the conference.

“Policies adopted in recent years around the region,” Gustin said, “show an overriding concern for climate change components and renewable over a long period, and the affordability component in the near term tends to be overshadowed.”

Montalvo concurred that there is broad consensus among the six New England states “that we have to get infrastructure moving,” noting that a “failure to timely build out energy structure” will have negative consequences for our economy, employment, and GDP.

whatsthedealenergyreporters
Reporters Brad Kane, Mark Pazniokas, Max Reiss, and Steve Kotchko discuss the implications of energy policy.

“The timing of a lot of the infrastructure work being done in the various states has been pushed out to 2022 or 2023, which creates additional exposure to price volatility,” he said.

Rallying the New England states and encouraging greater dialogue among state policymakers on collective resources and coordinated action “in areas where our objectives overlap and timeframes coincide for state laws and wholesale energy markets,” said Montalvo, could reduce costs and increase trade.

“First,” he said, “there needs to be analysis: What is that set of things where there is overlap, and where are the savings?”

Hunt acknowledged that a lack of access to abundant resources both nearby and outside the region has been a decades-long challenge for our state and added that Connecticut consumers pay more for transmission, as a percentage of our bill, than our peers elsewhere.

“There’s no incentive for transmission developers to stay within a budget,” she said.

In fact, added Hunt, our current system “incentivizes cost overruns on projects.”

She argued, however, that the New England states “have a dialogue constantly about energy strategy—the resource mix and infrastructure for that resource mix—and have put together a collective problem statement, goalposts to marry up the markets and state policies, and reaction to the CES proposal that represents the needs of all six states.

“However, there are laws on the books, so whatever happens regionally has to respect each state’s laws.

"Activity in the New England states was intense and on aggressive time frames for natural gas expansion a few years ago,” she said, but added that differences in laws among the various states can pose a challenge.

“States with different laws but similar policy objectives can come together to achieve, as a region, economies of scale and achieve what no state could achieve on its own. An example is the current three-state RFP.”

Energy in the Headlines

The conference concluded with a panel of media professionals discussing energy in the headlines.

For moderator Brad Kane, editor of the Worcester Business Journal, Connecticut’s natural gas expansion plan—a decade-long, $7 billion project aimed at converting 280,000 Connecticut consumers to natural gas—was one of the year’s top stories in 2013, when he gave the 21st Century Energy keynote address.

Mark Pazniokas, Capitol bureau chief at the Connecticut Mirror, said energy policy today represents the best and worst of the legislative process.

“If you love the law or sausage, you should never watch either being made,” he said.

The legislature is often ill-equipped to handle complex questions and we end up with unintended consequences—or inaction.
— Connecticut Mirror's Mark Pazniokas
Pazniokas criticized a pattern of major bills “popping up in last days of session, put before a citizen legislature, and not subject to a public hearing.

"Last year, the state senate unanimously passed an 11th-hour bill that would change parameters of how nuclear energy is sold in daily auctions, to stabilize their revenue structure.

"The legislature is often ill-equipped to handle complex questions that pertain to a sizable economy, and we often end up with unintended consequences—or inaction.”

NBC Connecticut reporter Max Reiss agreed that “too many decisions and conversations are put off until the last weeks or days of the session, when they’re trying to pass a budget, and then everything starts to come undone.”

He said Connecticut is still paying for decisions “made about 50 years to do a lot of thing that a lot of states don’t do—a gigantic amount of social services.

"You pass an income tax, but you keep spending, and no decisions are made to offset the deficit…No one talks about how we’re going to pay for it.”

Connecticut Radio Network news director Steve Kotchko speculated that Connecticut may have entered “a new period where things aren’t going to get better. The legislature is dealing with a deficit year after year and can’t worry about energy or transportation progress, because we have to patch the budget.”