Connecticut’s Energy Future

After much compromise and debate, Connecticut’s General Assembly this year passed a legislative package that brings sweeping energy reform to the state.

Exactly what that legislation means for the state’s 300,000-plus business energy consumers―from the rates they pay to the incentives they receive—was the topic of the 12th annual What’s the Deal? Business Energy Conference, presented by CBIA and the Connecticut Power and Energy Society, in Cromwell October 5.

More than 300 business leaders and government officials heard Gov. Dannel P. Malloy deliver the morning keynote address. Officials in key positions at the newly created Department of Energy and Environmental Protection (DEEP) led panel discussions on new business energy policy, regulations, and incentives.

“Transformational Change”

DEEP commissioner Dan Esty called the omnibus energy bill “the most important breakthrough in energy policy that has occurred in the United States in the last five years.”

Signed into law earlier this summer, PA 11-80: An Act Concerning Connecticut’s Energy Future consolidates the state’s energy and environmental regulatory bodies into a single agency—DEEP—tasked with promoting energy efficiency, increasing the use of clean energy, and developing a long-term energy strategy to lower ratepayers’ costs.

The law also establishes the Clean Energy Finance and Investment Authority (CEFIA) to create incentives and leverage private capital for clean/renewable energy projects and give greater protection to consumers switching to competitive energy suppliers.

Gov. Malloy called the new legislation “a substantially better energy bill than had ever been talked about in the state…”

 “In Connecticut, for a long period of time, we have paid too much for energy, and we’ve paid too little attention to making sure we’re in a senior position when it comes to energy efficiency,” he said.

Public Utilities Regulatory Authority chairman Kevin DelGobbo led off a panel discussion on changing energy policy and regulation, describing the reorganization of various agencies into DEEP a “transformational change in the relationship between government and the public.”

He recalled the three Es that are DEEP’s top priorities—energy,  environment, and the economy—and said the agency is working out how those priorities will be modulated.

Much progress has been made, he said, after a decade characterized by insufficient electric capacity, ratepayers burdened with “extraordinary costs” because of an inefficient transmission system, the development of long-term energy policy “diffused across state government,” and single agencies—such as the former Department of Environmental Protection—in the dual role of policymaker and regulator.

The passage of PA 11-80 is a positive step for Connecticut, DelGobbo noted, as it “unwind[s] the regulatory body from the schizophrenia of being in the policy arena” and unsiloes industry-specific agencies and realigns them to address such areas as rates and revenue, engineering, and finance.

Key Deliverables

DEEP director of policy Jessie Stratton said the agency’s Bureau of Energy and Technology Policy is concerned with the” fourth E,” executing policies.

The bureau has an “ambitious agenda, an aggressive timeline, and a small staff,” she said, whose mission includes “sorting out which areas are the regulatory bailiwick and which are policy.”

Stratton outlined key initial deliverables of PA 11-80, which include hiring a procurement manager by year’s end, working with the utilities on an integrated resource plan, and analyzing the ISO NE Market Rule 1 to determine whether it is still accomplishing the goals it was set out to achieve. (Market Rule 1 governs pricing, bidding, and other procedures related to the sale and purchase of electricity in New England.)

She also noted that DEEP’s overarching energy efficiency agenda—centered on the governor’s charge to be No. 1 in the nation in energy efficiency—will involve materials management; ramping up electric and gas savings; weatherizing 80% of homes by 2030; developing a comprehensive energy plan that includes coordinating water and energy infrastructure strategy, integration, and policy; and addressing transportation issues and transit-oriented development.

Statewide energy efficiency will also require municipal engagement, said Jonathan Schrag, newly appointed DEEP deputy commissioner for energy.

Schrag emphasized the importance of transparency and clarity within his agency, the separation of the regulatory function from the policymaking arm, and rigorous evaluation of its own internal processes.

“We’re going to operate a lean shop,” he said.

Show Me the Money

The second panel—comprising DEEP’s Alex Kragie, CEFIA’s Bryan Garcia, and Elizabeth “Liddy” Karter, managing director of Enhanced Capital Partners—addressed the mandate for clean energy and how it will be funded.

Kragie noted that PA 11-80 passed with strong bipartisan support for clean energy investment, which will require leveraging private capital and targeting investments of limited state funds.

Garcia, president of CEFIA (the nation’s first “green bank”) outlined several key stipulations of the new energy law, including what he called “sleeper provisions” that are important but not yet widely discussed.

An immediate imperative, said Garcia, is taking clean energy from being a niche product and bringing it to scale in Connecticut. The task, he explained, is figuring out how to finance that kind of transition without an overreliance on ratepayers’ contributions.

Diversifying sources of revenue (90% of which now come from ratepayers) means attracting private investment and other sources of capital. Property Assessed Clean Energy (PACE) and the Green Loan Guaranty Fund are both designed to spur investment, as are zero- and low-emission renewable energy credit payment programs, or L-RECs and Z-RECs—long-term contracts for the purchase of renewable energy credits available from Connecticut Light and Power (CL&P) and The United Illuminating Company (UI).

“So Much Capital Out There”

Liddy Karter, whose firm invests in small companies’ small and infrastructure-level clean energy projects, offered practical advice for businesses interested in obtaining financing for their renewable energy projects: establish a detailed pipeline and a management team with a solid track record; reduce regulatory, technology, and commodity price risks; leverage tax incentives; and present a clear value proposition and a capital-efficient structure.

From venture capital to private-equity funds, said Karter, financing for business energy projects in Connecticut is both readily available and seriously “underdeployed.” For small businesses with the right credentials, she said, ”there is so much capital out there.”

Both panels fielded audience questions about regional (i.e., interstate) approaches to procuring renewable and evaluating the transmission system; stakeholder input in DEEP’s administrative processes, funding mechanisms for DEEP mandates such as residential weatherization; and the development of a centralized location for business information on energy efficiency/clean energy incentives.

The Bottom Line

Michael Mahan, product general manager for EV infrastructure at GE Energy Industrial Solutions gave the afternoon keynote address, which explained industry- and consumer-driven momentum, business benefits, and costs associated with the electrical vehicle market.

Following Mahan’s address, a panel discussion featuring business energy consumers and consultants described how new energy sources, retrofits, and energy  efficiency technologies have enhanced the bottom line for their companies.

Panelists were Brian McCarter, CEO of Sustainable Real Estate Solutions; Tristam Coffin, green mission specialist for Whole Foods Market; and James Gildea, plant manager at Bigelow Tea. Richard Steeves, first vice chair of the Connecticut Office of Consumer Counsel's Energy Efficiency Board, moderated.

For more information, contact CBIA’s Eric Brown at 860.244.1926 or eric.brown@cbia.com. — Lesia Winiarskyj

Lesia Winiarskyj is a writer/editor with CBIA. She may be reached at lesia.winiarskyj@cbia.com.