Energy: Strategy Adopted, Renewables Expanded, Efficiency Promoted

The legislature passed some comprehensive bills this year aimed at lowering energy costs in Connecticut and promoting in-state renewable power, energy efficiency, and job creation.

Comprehensive Energy Strategy

Perhaps the flagship energy bill of the session is HB 6360, which largely reflects the Comprehensive Energy Strategy developed over much of the past year and the subject of numerous public hearings and comment sessions since a draft release last October.

This energy strategy bill: 

• Doubles-down on investments in energy efficiency by authorizing an increase in the current 3 mil “systems benefit charge” up to 6 mils. The state’s Energy Efficiency Fund also receives money from the sale of allowances at auction under the Regional Greenhouse Gas Initiative (RGGI). Those funds are also expected to increase over the coming year. All told, the measures could add approximately $100 million or more to the fund, which works with Northeast Utilities and United Illuminating to help businesses and residents reduce their energy costs through efficiency and conservation programs. 
• Reflects the governor’s priority of making natural gas an energy option for an additional 300,000 customers over the next 10 years. 
• Clarifies the roles of the Department of Energy and Environmental Protection (DEEP) and the Public Utility Regulatory Authority (PURA) to ensure both are operating in a manner consistent with the state’s goal of cleaner, cheaper, and more reliable energy for Connecticut.

Fixing Renewable Portfolio Standards

What makes Connecticut’s energy costs higher than almost every other states’is the degree to which various charges, fees, and assessments are included on most electric bills. 

A new charge, in the form of a penalty, is impacting Connecticut ratepayers in a particularly negative way because unlike some other energy charges, it has no environmental or energy benefit.

This so-called “alternative compliance payment” (ACP) is a penalty charged to electric distribution companies due to insufficient availability of renewable power. 

The state’s Renewable Portfolio Standards (RPS) define these  annually increasing quotas. Lawmakers adopted the RPS to help promote development of in-state renewable power and meet greenhouse gas reduction levels, which the General Assembly also set. 

Unfortunately, the RPS is so aggressive (the most aggressive in the nation) that it’s failing in all aspects of its intended purpose.

Development of in-state renewable sources is slower than anticipated, there are insufficient supplies of regional renewable power available to meet the current and increasingly stringent RPS, and those supplies that are available are mostly comprised of wood-burning facilities in northern New England. 

So, the insufficient supplies mean that Connecticut ratepayers now have to pay the ACP penalty–increasing our energy costs further.

Fortunately, the legislature recognized that something had to be done. Its choices included: modifying the RPS to make the compliance levels and timeframes more consistent with other New England states’ and/or expanding the RPS to include clean, renewable, affordable, plentiful, and nearby supplies of large-scale hydropower. In adopting SB 1138, it chose the latter–but with several limitations. 

SB 1138 only allows a maximum of 1% of the RPS to be attained through large-scale hydropower per year, with a maximum of 5% by 2020.  In addition, a number of conditions must be met before even this small amount of power can be used for RPS compliance. 

The extent to which large-scale hydropower will be used in Connecticut and what impact it will have on mitigating energy costs and the ACP penalty remains to be seen.

But SB 1138 is a step forward in that there is a much broader understanding within the legislature as to where our renewable energy is coming from, its cost, and how our renewable energy requirements compare to those of other states’.

It’s an issue that will require continued focus by the legislature and the administration.

Attracting Private Sector Investment

Two years ago, lawmakers created the first statewide “green bank” as a first step toward moving the state away from a subsidy model for funding clean energy and energy efficiency investments, to a model where limited state funds are used to leverage private-sector investment at a level 5-10 times that of the subsidy model.

The green bank is administered by the Clean Energy Finance and Investment Authority (CEFIA). One of the innovative programs CEFIA has developed with legislative approval is the C-PACE (Commercial/Industrial Property Assessed Clean Energy) program. C-PACE allows businesses to make investments in clean energy and energy efficiency with no upfront cost while paying for the investment over time on their property tax bill at a level that is less than what they save on their monthly energy bills.

This year, the legislature expanded the range of investments available to businesses under C-PACE.  Under HB 6472</a>, businesses can now finance solar, thermal, or geothermal systems through C-PACE.