ENE Statement on Draft DPUC Decision on Energy Efficiency Press

For Immediate Release 
June 10, 2008
 
Contact: 
Jessie Stratton, 860-246-7121, 860-983-4046 (cell)
Meg Wilcox, 617-319-6457 (cell)

ENE Statement on Draft DPUC Decision on Energy Efficiency
 

Utility Regulators Propose $20 Million Reduction in Energy Efficiency Program Spending Needed to Meet Customer Demand 
 

HARTFORD--Environment Northeast (ENE), a research and policy organization, and leading advocate for energy reform in Connecticut, issued this statement in response to the Department of Public Utility Control's (DPUC) draft decision on Docket No. 07-10-03, 2008 Conservation and Load Management Plan.
 
The decision proposes an estimated $20 million reduction in energy efficiency program spending needed to meet consumer demand.  If enacted, the DPUC would reduce energy efficiency benefits at a time when energy costs are soaring, consumers and businesses are clamoring to participate in efficiency programs, and the General Assembly has called for a significant ramp up in energy efficiency.
 
"The DPUC's approach is wrong headed and short sighted, said Daniel Sosland, ENE executive director. "Connecticut consumers are facing soaring energy costs, and they need access to the state's energy efficiency programs, now more than ever. The DPUC's plan would cause programs to shut down, and cost consumers $80 million or more in higher power plant contracts."
 
"No energy resource is better for consumers, job growth and business than efficiency," he continued. "That is why the General Assembly passed, and Governor Rell signed into law, a mandate that the state's electric utilities purchase as much energy efficiency as is cost-effective.  The DPUC's draft decision conflicts with that new and important approach for Connecticut.  ENE calls on the DPUC to reverse itself and build the foundation for efficiency first."
 
The DPUC's decision is short-sighted because a $20 million reduction in efficiency spending will cost ratepayers about $83 million in generation costs.
 
A $20 million investment in efficiency programs would save about 800 million kWh, which translates into at least $83 million in direct savings.  State ratepayers will therefore have to buy 800 million kWh in generation at a total cost of at least $83 million, when they could be spending about $20 million to save those kWh.  And with rising energy prices, the $83 million will likely grow higher.
 
Furthermore, the $20 million investment for efficiency programs could be generated by a tiny collection in rates, amounting to about $2 per year for residential consumers.
 
Energy efficiency is the cheapest, cleanest energy "resource" available.

 
Efficiency investments cost on average just 2 to 4 cents/kWh while energy supply costs 12 cents/kWh-3 to 6 times more.  Connecticut consumers will pay about $4 billion on electric generation this year, at a cost of 12 cents/kWh, and a fraction of that, about $120 million, on efficiency programs.
 
Moreover, every dollar invested in efficiency yields about $4 in direct and indirect savings. CL&P estimates, for example, that investing $140.9 million in efficiency and demand response programs would yield about $585 million in savings from reduced demand.  The savings include both the direct savings from reduced consumption and indirect savings enjoyed by all ratepayers because reducing demand for generation lowers energy prices.  Investing in efficiency therefore puts dollars back into all consumers' pockets that they can spend on other needs.
 
 
The DPUC's decision will result in a significant interruption of valuable efficiency programs at a time when customers are clamoring for them.
 
As a result of the proposed spending cut, Connecticut's largest utility CL&P is indicating it will have to curtail its popular efficiency programs for both large (Commercial and Industrial, or C&I) and small businesses. Currently, the C&I programs are significantly over-subscribed because businesses know that one of the few ways to remain competitive in Connecticut is to become more efficient.
 
Residential programs will also be scaled back even though customer demand is running at an all time high. There are now 17 teams of experts visiting homes in Connecticut and assisting them with upgrades, up from just 1-2 teams a few years ago.
 
Reducing efficiency spending will mean that customers are turned away and contractors who provide the efficiency services are laid off.  But efficiency service jobs are precisely the type of skilled "green jobs" that the Governor wants to create in the state.
 
Furthermore, it will take time to reestablish the programs after they are cut. When efficiency funds were diverted in 2003, it took two years to restore the programs to their prior level of enrollment.
 
 
The DPUC decision is at odds with the forward-looking efficiency procurement policy established in PA 07-242
 
The landmark energy reform bill, which the General Assembly passed last June, calls for utilities to meet demand with all cost-effective energy efficiency before turning to traditional and more costly supply.  Properly implemented, the "efficiency procurement" mandate will result in a tripling of energy efficiency programs in the state. It is difficult to see how Connecticut will comply with this new mandate if the DPUC delays a ramp up in energy efficiency programs.
 
Similar to a decision earlier this year, when the DPUC failed to fully implement decoupling, this draft decision undermines the efforts to reduce the state's overall energy use and costs.  Decoupling aligns utility incentives with efficiency goals, as also called for by PA-07-242.