2009/11/02 ENE Applauds DPU "Decoupling" Decision to Promote Energy Efficiency Press

ENE Applauds DPU "Decoupling" Decision to Promote Energy Efficiency

November 2, 2009
For Immediate Release
Contact: Jeremy McDiarmid 617-742-0054 x102
                                             617-429-0677
                        

The Massachusetts Department of Public Utilities approved a Bay State Gas Company plan to remove a powerful disincentive to energy efficiency investments on Friday, October 30, 2009.  Under Bay State’s plan, which the DPU approved by a unanimous vote, the company’s revenues will be separated or “decoupled” from its sales of natural gas.  No longer will the company make more money when it sells its customers more gas. 

“Today, the DPU scored one for consumers and for energy efficiency,” said ENE (Environment Northeast) Executive Director Daniel Sosland.  “Decoupling puts the company in a position to promote cost-saving energy efficiency without fear that it will hurt its bottom line.”

In July of 2008, the DPU issued a broad policy order calling for all investor-owned gas and electric utilities to propose a decoupled rate structure at the time of their next rate proceeding.  Bay State was the first utility to come before the Department with a decoupling plan, and it is now the first decoupled utility in the Commonwealth.  Massachusetts has joined a growing number of states that recognize that the current rate structures—where a utility makes more money when it sells more gas or electricity—is at odds with efforts to promote lower energy use through energy efficiency and other demand side measures. 

“With decoupled rates, Bay State can focus on saving its customers money through efficiency without negatively affecting its own financial health,” said Jeremy McDiarmid, ENE staff attorney.  “ENE applauds the Department for recognizing decoupling as an essential tool for bringing cost-saving energy efficiency to Bay State’s customers.”

The Bay State decision comes on the same day that all Massachusetts utilities, including Bay State, filed three-year energy efficiency plans with the Department.  The three-year plans have been under development since the beginning of 2009, and put the Commonwealth on course to achieve more than $6 billion in consumer benefits through larger investments in cost-saving energy efficiency.  The programs are designed to ramp-up to achieve electric energy savings of 2.4% per year and natural gas energy savings of 1.15% per year.

The three-year plans are part of last year’s Green Communities Act, which requires utilities and program administrators to invest in all energy efficiency that is cheaper than new supply.  Along with other members of the Energy Efficiency Advisory Council, ENE has worked closely with utilities and other program administrators to shape these plans for maximum economic and environmental benefit. The DPU now has 90 days to review and decide on the plans.

ENE recently quantified the profound economic impact that investments in efficiency have on local economies in its report, Energy Efficiency: Engine of Economic Growth. ENE’s findings demonstrate that for every additional dollar invested in electric and gas energy efficiency, Massachusetts will see an approximate increase in gross state product of $6.40 and $7.50, respectively.  ENE also projected that this level of investment will lead to about 25,000 additional jobs. These efficiency investments will also provide significant climate and air emissions benefits, helping the state achieve its new climate goals.