Energy Blueprint: Make Businesses More Competitive

Issues & Policies

If Connecticut Governor Dannel Malloy was looking for an attentive audience for revealing his long awaited energy policy initiatives, he certainly found one last Friday.
More than 250 business people, public officials, and labor representatives were in the audience for his keynote address at the 13th annual What’s the Deal? energy conference in Cromwell.
“For too long in Connecticut, it was the same old story,” he said. “Connecticut families paid among the highest prices for energy in the country and got little in return.
“Our businesses struggled to compete because the costs to keep your lights on, heat your buildings, run your manufacturing equipment or fuel the cars and trucks that are essential to your operations was too high.
“Where is it pre-ordained…where is it written, ‘Thou shalt pay high energy prices?'”
Energy future
And with that, the governor unveiled what he described as a draft energy policy agenda, the launch of a two-month public dialogue on the state’s energy future as a prologue to the next session of the state legislature.
The theme is cheaper, cleaner, more reliable energy. The goal is economic growth, job creation and a healthier environment. And getting there means collaboration on a broad scale.
“It used to be that you could only be pro-business or pro-environment,” the governor said Friday. “You had to pick sides between business and labor. Let me say clearly that I reject those false choices. Energy is an issue that allows us to rise above these dividing lines and presents us with an opportunity to tackle some of the toughest challenges of our time.
“A comprehensive energy strategy can help us create jobs, it can make our state’s businesses more competitive, and it can ensure that we preserve and protect our environment for generations to come.”
Business, labor support
Both the business and labor communities welcomed the plan. CBIA president and CEO John Rathgeber and Connecticut AFL-CIO president John Olsen shared a byline on an opinion piece published in Saturday’s Hartford Courant. Here’s a snapshot:

Clearly, Gov. Malloy wants the General Assembly to take up his energy agenda in its 2013 session. And his strategic plan deserves the legislature’s attention, as it represents a solid foundation for developing the energy policies the state sorely needs.
Making real progress on energy policy, critical to developing a modern, competitive economy, is one of the most important issues the administration and the state legislature face in the coming years.
We won’t get there overnight — expect incremental progress and difficult decisions. Nonetheless, we are embarking on a new strategic approach that is already leaving the old business-as-usual approach in the past.

Two bets
The Malloy administration is making bets in two key areas: converting a large number of the states residential, business, and industrial consumers to natural gas; and energy efficiency.
For the latter, he advocates a shift in policy, favoring a flexible, portfolio approach to clean energy and efficiency initiatives, allowing markets, not government to determine winners and losers.
Shedding a past reliance on state subsidies is meant to fully leverage private capital, a model that Dan Esty,  commissioner of the Department of Energy and Environmental Protection, said was unprecedented in this country.
A large-scale migration to natural gas represents a massive undertaking, but promises great reward. The catalyst for supporting gas is the development of vast gas reserves in the northeast United States.
Less than one-third of Connecticut households use natural gas, compared with 72 percent in New Jersey and almost half in Massachusetts and Rhode Island. The numbers are similiar for the state’s commercial sector, while about half the industrial sector uses gas.
Over the next seven years, the governor proposes adding 250,000 households to natural gas mains and increasing the percentage of commercial and industrial customers to 75 percent.
Energy cost savings
Large manufacturers face conversion costs of around $200,000, with estimated annual energy savings of $48,000. Commercial businesses could yield $3,300 average annual savings from average investments of $20,000.
“I know this is a pretty savvy crowd,” the governor said at Friday’s conference, “so the question you all want to ask is, ‘How are we going to pay for all this?'”
The administration estimates meeting the residential goals will cost $815 million, costs the governor said gas companies would pass onto customers through distribution charges on bills.
Expanding access to anchor customers, the high-volume energy users like factories, businesses, schools, and hospitals, will cost an estimated $1.4 billion. The governor said he was open to discussions about developing financing options for meeting that cost.
“If I tell you there are minimal out-of-pocket expenses and that you can finance all this over time for a monthly cost that is less than your current bill, you are likely to make the move,” the governor said. “That’s what our strategy recommends.”
The proposal says building out the natural gas infrastructure will create 7,000 new construction jobs.
Next steps
For the next two months, the administration will host a series of public debates on the governor’s proposed energy strategy.
And the next stop after that? Expect the issue to play a major role when the General Assembly next convenes in January.
“This draft energy plan promises an energy future for Connecticut that is vastly different from the past,” Governor Malloy said.
“It’s a chance for us to seize control of our own destiny–instead of allowing our future to be shaped by people and forces beyond our borders.”


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