Legislative Paths to Energy Efficiency - The Northeast Saga

January 02, 2009
January/February 2009
A version of this article appears in the January/February 2009 issue of Home Energy Magazine.
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Rising energy costs, climate change, and shifts in utility pricing are driving a new round of energy legislation at the state level. Many states decided to move ahead on new legislation to mitigate the effects of the double whammy of high gasoline prices and increased costs for home heating and electricity.

Mid-Atlantic and New England states are particularly vulnerable, with 30%–50% of the homes relying on oil for heating, at a cost of $4 per gallon. At the same time, Northeast states, such as Pennsylvania and Maryland, are facing or have experienced sharp rises (30%–70%) in electric rates as rate caps enacted during utility restructuring expire.

The 2008 legislative agenda in the Northeast reflects and in some cases goes far beyond programs that have been developed around the country. In Massachusetts, the state government and utilities already have multiple programs to reduce energy costs, particularly electricity costs. In Pennsylvania, very little money was allocated to residential energy efficiency, except for low-income households, until this legislative session. Pennsylvania does have a modest Alternative Energy Portfolio standard enacted in 2004 that requires utilities to purchase 18% of their power from renewable energy sources by 2020.

The challenge in all cases has been to keep the focus on what can benefit the most people the quickest—energy efficiency. It’s easier to sell legislators and people on sexy solutions, such as solar PV and wind. Biofuels, of course, are perceived as the ultimate solution for getting rid of our dependence on foreign oil. But any way you run the numbers—making homes and buildings more energy efficient is the key.

The Pennsylvania Story

Governor Rendell introduced his Energy Independence Strategy in September 2007 at a special session of the Pennsylvania legislature, which was translated into a series of special session bills. One of these bills, Special Session Bill 1, provided tax credits and rebates for renewable energy industries and projects, as well as some rebates and loan programs for energy efficiency. Another provided incentives for biofuels. Both these modified bills passed at the end of June 2008.

While many state environmental groups endorsed the governor’s approach, a core group of organizations realized that energy efficiency was missing from the package—particularly solutions that would help residents deal with the expiring electric rate caps. With the leadership of ACI, the Energy Coordinating Agency in Philadelphia, Conservation Services Group (CSG), and MaGrann Associates, an ad hoc coalition of energy efficiency partners organized as the Keystone Energy Efficiency Alliance (KEEA).

Over 60 groups, primarily small energy service businesses in Pennsylvania, signed on to the KEEA Agenda and worked tirelessly to convince the legislature to enact House Bill 2200 (Act 129), which directs the Pennsylvania Public Utility Commission (PUC) to require electric utilities to develop energy efficiency programs. A key element of the original legislation was a provision to set up an independent administrator for the utility efficiency programs, which was eliminated in the final negotiations. Requirements for the use of Smart Meters, which were not on the KEEA agenda, were also rolled into the bill. The KEEA position during the legislative discussions, and now to the PUC, focused on qualified energy audits and home performance measures based on the Energy Star, Building Performance Institute (BPI), and Residential Energy Services Network (RESNET) models.  

Key elements of Pennsylvania Act 129 include:
  • Overall use of electricity must be reduced by 1% by 2011 and by 3% by 2013, and peak demand must be reduced by 4.5% by 2013.
     
  • Utilities will be fully accountable for reaching the targets. Failure to meet the 1% reduction by 2011 will expose the utilities to a penalty as high as $20 million, and the bill requires the PUC to take the conservation program away from a utility failing to meet the goal.
     
  • Utilities are required to contract with third-party providers, via competitive bid, for all or part of the energy conservation programs.
     
  • Utilities are permitted to recover the costs of energy conservation programs in rates.

Governor Rendell held a ceremonial bill signing while visiting the home of Ed Solecki who, with the help of the Energy Coordination Agency in Philadelphia, demonstrated how consumers can save by improving the energy efficiency of their home. Solecki’s home improvements will save him $400 a year on energy costs. The PUC is soliciting input on how to develop the guidelines for this program.

The Massachusetts Story

The saga of the “Green Communities” bill in Massachusetts was a bit longer, with the initial bill floated in the House in January 2007. After intense negotiations, the provisions were rolled into Senate Bill 2768, which was introduced in November 2007 and passed at the end of June 2008. A broad coalition of groups supported the legislation, including Environment Northeast, CSG, community groups, business leaders, several utilities, and low-income advocates.

The Massachusetts “Green Communities Act” is more comprehensive than what was enacted in Pennsylvania.
  • It sets vigorous goals for energy efficiency, including meeting 25% of electric load with demand-side resources by 2025, and a 10% reduction in fossil fuel use and energy consumption by 2020.
     
  • The existing Systems Benefit Charge will be modified to double ($250 million) or triple ($370 million) money spent on energy efficiency programs.
     
  • In addition, the same requirements are put on gas utilities and proceeds from Regional Greenhouse Gas Initiative (80%), NOx (100%), and Capacity (100%) trading markets should be applied to energy efficiency programs. 
     
  • Low-income programs are guaranteed at least 10% of the electric and 30% of the gas efficiency funding.
     
  • Residential funding is fuel neutral, so work can be comprehensive.
     
  • There were also a substantial expansion of the renewable energy requirements and expanded energy code requirements.

A large collaborative effort and a legislature closely aligned with the governor’s interest enabled Massachusetts to raise the bar significantly on state energy initiatives.

Pennsylvania and Massachusetts are not alone in pursuing more progressive energy efficiency policies. Vermont, Maryland, and Virginia are among the Northeast/Mid-Atlantic states that have adopted new programs. For details on these and other state efforts, check the American Council for an Energy Efficient Economy (ACEEE) and Database of State Incentives for Renewables and Energy Efficiency (DSIRE) Web sites listed below.

Impact on Home Performance

As it did during the energy crisis of the 1970s, this renewed focus on energy presents opportunities and challenges. The potential jump in funding for energy efficiency in all sectors will mean more business opportunities for energy auditors, raters, and home performance contractors; the challenge will be to find qualified workers, so increased training is essential. With the housing slump, this could be a good time to find contractors with the basic skills.

One challenge will be to distinguish the quality energy service providers from the shysters. The training and certification groundwork laid by ACI, BPI, and RESNET provide a common standard that should be referenced in all state residential efficiency programs. It’s important for all energy service providers to learn more about what is happening in their state, and to make sure their expertise is represented on any of the advisory groups that are created.

Another challenge is education—explaining to public officials and consumers the best options for reducing energy costs. The excellent information contained in this magazine and at training events needs to be translated into simple, yet practical, action plans for consumers, builders and remodelers, financing groups, public officials—anyone who has a role in deciding how to deal with this spiraling energy tornado.  

Gloria S. Fultz is a consultant who has worked on energy education and training programs for over 30 years. She provides marketing and education materials for ACI and is outreach coordinator for the Keystone Energy Efficiency Alliance. She lives in Richfield, Pennsylvania.

For more information:

For details on state programs, including climate change initiatives, check the Database of State Incentives for Renewables and Energy Efficiency (DSIRE) Web site, www.dsireusa.org/ and the ACEEE Web site, www.aceee.org/energy/state/index.htm.
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