2009.10.09-ElectricPowerDaily-Massachusetts rolls out ambitious effciency program Press
Electric Power Daily
October 9, 2009
Massachusetts rolls out ambitious efficiency program
Massachusetts could stop seeing growth in electric demand – and, in fact, see a decline –under an ambitious new efficiency requirement that triples energy savings goals for utilities. The new program, the result of an agreement between the Department of Energy Resources and Attorney General Martha Coakley, sets what the state describes as “nation-leading targets” for electricity savings. The target bests the energy efficiency efforts by California, the previous leader, on a per capita basis, in terms of both overall spending and energy saved, according to the state Office of Energy and Environmental Affairs.The state intends to triple the 0.8% to 0.9% that Massachusetts utilities typically save through energy efficiency each year. If it does so through 2020, the state will meet 30% of its electricity needs through efficiency, rather than power plants.
“On energy efficiency, we are making the leap from the rotary phone to the cell phone – and fundamentally changing how energy is delivered to consumers in the commonwealth,” said Ian Bowles, Energy and Environmental Affairs secretary.
The program could lead to a reversal of Massachusetts’ historic trend of increasing demand by an average 1% annually. Growth would end, and demand would decline 1.4% annually. Massachusetts allows full decoupling, so the loss in sales is not expected to harm utility profits. In fact, the plan offers utilities $65 million in performance incentives for successful programs. Utilities are expected to triple consumer participation in energy efficiency programs, from 15,000 electric customers per year in 2008 to 45,000 per year in 2012.
The state forecasts that the plan will cost $1.1 billion over three years, paid for through utility system benefit charges, Regional Greenhouse Gas Initiative revenue, forward capacity market revenue, and capital outlays from the private sector. In addition, the state Department of Public Utilities will look at increasing distribution charges for the program. RGGI —one source of funding — would be paved over in 2012 by a federal cap-and-trade scheme under climate change legislation being debated in Congress. It remains uncertain,however, whether Congress will approve a cap-and-trade bill this year, leaving it open whether RGGI will end in 2012, the first year of the second compliance period for the program’s covered power generators, or at some later date. RGGI has held five allowance auctions since September 2008, which have netted Massachusetts just over $69 million.
Sources who worked on setting up the Massachusetts program pointed out that the RGGI auction revenue is just one of several pools of funding the utilities will contemplate as they put together their efficiency plans.
The efficiency program is expected to save ratepayers at least $5 billion and reduce energy use by 2,648,000 MWh over three years, which the state says is enough to supply 15% of the utilities’ residential customers for one year.
The new target will serve as the cornerstone of three-year efficiency plans that utilities must submit to state regulators later this month. The plans must pursue a “first fuel” strategy – find all cost-effective energy measures that are cheaper than supply – as required under a green energy law passed last year.
The first fuel strategy was adopted after a strong push by Environment Northeast, which was instrumental in the passage of similar laws in Connecticut and Rhode Island.
The Energy Efficiency Advisory Council, a stakeholder group charged with overseeing utility efficiency programs under a state law passed last year, approved the “four corners” of the plan Tuesday night after negotiating with utilities, said Sam Krasnow, who serves on the council and is a policy advocate and attorney for Environment Northeast.
Utilities will fill in the details on programs, spending and revenue sources in their filings to the state Department of Public Utilities at the end of October.
The plan won support from Associated Industries of Massachusetts, a business advocacy group that is frequently critical of cost of green energy programs in Massachusetts.
“It is grand slam for the Commonwealth. Like the Red Sox, it’s something everyone can agree on,” Krasnow said. “This plan will save billions and help us rebound from the recession.”
National Grid and NStar, the state’s two largest utilities, Wednesday said they also back the plan. Penni Conner, NStar’s vice president of customer care, said the company looks forward “to meeting the aggressive goals set forth in the new plan using a holistic approach to reducing electricity use and greenhouse gas emissions through new bundled services for our customers.” Deb Drew, National Grid spokeswoman, said the efficiency plan “is a top priority for us and we’re ready to get started.”
— Lisa Wood
Original source: Platts Electric Power Daily
