TYPE: Regulation/Rulemaking


DESCRIPTION: Recommendations for Reducing Energy Consumption for the Energy Master Plan


TO: Board of Public Utilities

We worked closely with legislators and the administration to pass the Clean Energy Bill which calls for 2% annual energy efficiency gains.
Efficiency provides the single largest, and most cost-effective, opportunity to cut global warming pollution while cleaning the air, creating jobs and saving businesses and consumers money.  However, regulatory barriers discourage utilities from investing in energy efficiency even though it costs at least 50 percent less and carries less risk than building power plants, transmission wires or pipelines. 
In 2017, U.S. electric power sector generated about 34% of the total U.S. energy-related CO2 emissions.
Buildings accounts for about 76% of electricity use and 40% of all U. S. primary energy use and associated greenhouse gas emissions. This is a prime opportunity for improved efficiency. By 2030, building energy use could be cut more than 20% using technologies known to be cost effective today and by more than 35% if research goals are met. 
There are vast good local employment opportunities in energy efficiency, and as of now, over 33,000 people work in energy efficiency comprising 13% of construction jobs and 25% of all energy related jobs.
Therefore, making more aggressive energy efficiency standards will increase good local job opportunities for all.
However, in pursuing aggressive energy efficiency targets, a major market barrier exists: Utilities are not incentivized to improve EE because it can go against their bottom line.
Decoupling turns traditional rate market on its head by breaking the link between energy sales and revenue.  It presents a win-win opportunity for both parties.  Decoupling keeps revenue steady, reduces financial risk and capital costs for the utility and keeps customer’s energy costs in check, with considerable benefits for low-income households because money they aren’t spending on energy is money directly back in their pockets without the need for public financial assistance to help pay for electricity.  Some low-income households are spending nearly 20% of their income on utility bills. 
Low-income households are demonstrated to have less efficient appliances and systems within their homes, and decoupling offers exciting opportunities to promote utility-run energy efficiency programs like insulating homes and offering rebates for purchase of energy-efficient appliances or more efficient light bulbs. Programs should target lower-income households because energy efficiency is a powerful way to make utility bills more affordable, improve the comfort of their homes, and reduce the amount other customers spend to fund bill assistance programs. 
However, low-income customers face numerous barriers to participation in efficiency programs. This makes well-designed, specifically targeted efficiency programs for low-income customers a crucial topic to consider during this process. 
We recommend the BPU set a goal for energy efficiency delivered to low-income customers. States have taken a variety of approaches to goal setting for low-income programs, including portfolio requirements, spending requirements, and portfolio savings carve-outs for low-income programs, similar to what’s been done in Illinois or Maine. 
We recommend the BPU convene a stakeholder group to ensure that programs are well-designed to meet the needs of low-moderate income customers. This ensures that the programs outlined, are monitored and evaluated to do as planned, with the input of relevant stakeholders. 
In addition, a utility’s energy efficiency program portfolio should pursue emerging technologies, providing technical support to upgrade building and appliance efficiency standards, delivering education and workforce training for installation and municipal building code enforcement, exploring pilot programs, working with key partners like local governments, and offering competitive solicitations for innovative technologies and programs. 
Lastly, the Board should commission a study to determine (1) the level of achievable, cost-effective efficiency beyond the 2% minimum, including savings from robust appliance standards and building codes (recognizing that new appliance standards would require legislation) and (ii) the maximum timeframe for achieving that level of savings (within 5 years)
The potential should include savings from benchmarking, public disclosure and the setting of specific savings targets for existing buildings: 25,000 sqft plus
The board should also consider setting mWh and therm savings requirements for each 5-6 year planning period and require utility programs to align accordingly. 
Lastly, we recommend the BPU consider forming a stakeholder advisory board similar to Massachusetts and Rhode Island, which include expert consultants, would support utilities’ efforts to adopt best practices, help ensure transparency and provide independent validation of program performance.