NEEP's 2005 Annual Conference focuses on climate change
This spring, NEEP hosted a forum for public service commissioners, air regulators, energy efficiency program administrators and advocates to examine their respective roles in achieving greenhouse gas reductions through energy efficiency. The 2005 NEEP Annual Conference, Energy Efficiency: The Action in Climate Change Action engaged a variety of stakeholders in a day long exchange of ideas on May 24 in Providence, R.I.
NEEP thanks all those who participated in the 2005 Annual Conference, and expresses particular appreciation for the support of the U.S. Environmental Protection Agency, the U.S. Department of Energy, as well as the conference sponsors: Cape Light Compact; Connecticut Light & Power; Efficiency Maine; Efficiency Vermont; ICF Consulting; KeySpan; Long Island Power Authority (LIPA); National Grid; NSTAR Electric and Gas; the United Illuminating Company; Unitil; and the Western Massachusetts Electric Company.
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Setting the stage
Noting in his keynote address that "energy is the common thread that weaves through what we do in our lives every day," New York State Energy Research and Development Authority (NYSERDA) President Peter Smith set the stage for a series of valuable conversations about the significant role energy efficiency plays in climate change action strategies. "There is a fundamental shift underway in pricing of energy that benefits energy efficiency," Smith noted. "I believe that energy efficiency and renewables are the 'action' in climate change action."
Panelists and participants alike echoed these sentiments throughout the conference. Working from a consensus that energy efficiency is the fastest, cheapest and cleanest way to achieve carbon dioxide reductions that will enhance climate change action strategies, presentations and discussions focused on the best ways to capture this energy efficiency potential.
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| Peter Smith, President, New York State Energy Research and Development Authority (NYSERDA) |
Natural gas efficiency
Throughout the conference, natural gas energy efficiency programs were seen as a key strategy to complement existing electric efficiency programs and help capture the region's energy efficiency potential and spur climate change action. Peter Smith spoke about how a recent regulatory development in New York, involving Consolidated Edison, will seek to offset load growth over a five-year period through energy efficiency, including gas efficiency. He also indicated that "one option [to address gas efficiency is to implement] natural gas SBC programs." In addition to New York, the Rhode Island Energy Office and Narragansett Electric have also created fossil fuel efficiency programs.
Energy efficiency funding strategies
Another theme that emerged during the conference was the need to restructure the region's energy efficiency funding mechanisms. Given that customer energy bills in the Northeast are already higher than the national average, most conference participants agreed that raising system benefits charge (SBC) funds is not a viable option to pay for energy efficiency efforts. Nevertheless, a number of panels and participants offered other public policy strategies for funding energy efficiency, including: rate reform, energy efficiency portfolio standards and portfolio management.
Advocating on behalf of rate reform, panelist Janet Keller, Chief of the Office of Strategic Planning and Policy for the Rhode Island Department of Environmental Management, argued that for energy efficiency to be fully valued "a paradigm shift" would have to take place. "There are so many things that militate against [energy efficiency] that it's just not a priority," she said. "And without doing something with rate structure, we're not going to get that paradigm shift."
Energy efficiency portfolio standards (EEPS) were also seen as a possible funding option. Similar to renewable portfolio standards (RPS), requiring utilities to procure lower cost efficiency resources through an EEPS of a certain percentage, e.g., one percent of kilowatt-hours or therms they sell to retail customers, would potentially enable states to capture all cost-effective efficiency without increasing systems benefit charges. New Jersey is currently developing such an energy efficiency portfolio standard.
Another method that participants believed would allow states to capture more energy efficiency potential without raising SBC charges was portfolio management. Because this mechanism requires the procurement of electricity for customers at the least cost mix of demand and supply resources, the value of energy efficiency- which is approximately 67 percent cheaper than the cost of comparable electricity supply, distribution and transmission- would be greatly enhanced.
The Regional Greenhouse Gas Initiative
As the focus of its own panel, the Regional Greenhouse Gas Initiative (RGGI) was seen itself as a possible source of revenue for funding more cost-effective energy efficiency programs.
Panelist Dale Bryk of the Natural Resources Defense Council noted that "a little energy efficiency goes a long way," in terms of the impact of energy efficiency on reducing carbon allowance prices. Based on state and regional energy efficiency potential studies, there is significant cost-effective energy efficiency potential in the region that can more than offset electricity demand growth – therefore, energy efficiency is key to achieving RGGI's goal of reducing carbon emissions. Bryk advocated that carbon allowances should largely be allocated to consumers as opposed to generators, and be specifically outlined in the RGGI Model Rule. This would prevent generators from making windfall profits and passing on the costs of RGGI to customers. It would also provide for additional funding for energy efficiency investments in the region to help reduce demand and thus reduce the overall cost of RGGI.
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Karl Michael of NYSERDA, who is playing a lead role in the RGGI modeling process, agreed about needing to stress the role of energy efficiency in RGGI, but raised concerns about how best to integrate energy efficiency into the model rule, as well as whether a consumer allocation of carbon allowances was feasible. He did, however, agree with Bryk in that complementary energy efficiency public policies should be part of state specific memorandum of understanding with the states.
Panelist, Daniel Cunningham of Public Service Electric & Gas, stressed that RGGI is important at setting a national precedent. In terms of the role of energy efficiency, Cunningham proposed that energy efficiency be defined as a rate of CO2 per mWh of electricity generation, such that the cap and trade system stimulates the energy market to seek out energy efficiency. Cunningham concluded that energy companies are best positioned to implement successful efficiency programs if provided the appropriate economic incentives.
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| From left to right: Tim Stout, NAtional Grid; Daniel Cunningham, Public Service Electric & Gas; Stephen Ward, Public Advocate State of Maine; Karl Michael, NYSERDA |
Energy efficiency as an economic opportunity
Beginning with Peter Smith's comment that climate change action should be viewed as an economic opportunity rather than a burden, the NEEP conference involved much dialogue on the positive economic impacts of energy efficiency, including job creation and a reduced dependence on resources from outside the region. Noting that efficiency is "cheaper than coal and cleaner than renewables," Smith related that, as a least cost strategy, energy efficiency "creates and retains 4,000 jobs in New York."
Panelists Dan Sosland of Environment Northeast, Richard Sedano of the Regulatory Assistance Project and Karl Jessen of the Massachusetts Renewable Energy Trust each looked at job creation from three different perspectives and concluded that energy efficiency would provide a significant economic benefit to states and the region as a whole. Between 2000 and 2010, energy efficiency in New England is expected to have an approximately $2 billion economic impact, noted Sedano, including the creation of over 15,000 job years, and more than $693 million in labor income.
But in order to take advantage of those economic opportunities, the Northeast states need to work together. Smith advised that the work underway on the Regional Greenhouse Gas Initiative (RGGI) was a good example of this.
Selling and telling the story
Despite the myriad ways to increase energy efficiency efforts as a means to address climate change, the general consensus among conference participants was that efficiency advocates need to do a better job of "selling" their message. Smith advised that efficiency is constantly a battle of educating and convincing "government leaders and the business community, especially the largest industrial customers, about its value. To that end, "we need greater collaboration between the public benefit fund administrators and the utilities" where they aren't one and the same, Smith said. "RGGI," he noted, "is a very powerful tool, to have all of these parties in the same room talking about the same stuff."
Equally as important as selling the value of efficiency to potential stakeholders is "telling the story" of the benefits of energy efficiency to the public.
Rhode Island's Janet Keller noted that, in the past, the "media used to carry public goods messages," such as those advocating on behalf of the environment. With what she termed "the collapse of the standard media," it is much harder to get the message out to the public about the need for climate change action or energy efficiency, she said.
Keller's state policy colleagues and fellow conference panelists- Denis Bergeron from Efficiency Maine, Michael Winka of the New Jersey Clean Energy Program and Sonia Hamel of the Massachusetts Office of Commonwealth Development- agreed that marketplace developments, such as rising energy costs, can spark greater interest in energy efficiency, but when and how to deliver the messages is critical.
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From left to right: Denis Bergeron, Efficiency Maine; Janet Keller, RI Office of Energy Management; Michael Winka, NJ Clean Energy Program; Gina McCarthy, Conn. Department of Environmental Protection; Sonia Hamel, Mass. Office of Commonwealth Development;
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Higher energy costs do present an opportunity, Bergeron said, but added: "we can also end up with a situation where people say, 'Rates are high, so we don't want to add another cost to them'." Hamel suggested that the timing for such messaging might be just when energy prices begin to trend downward again. "That uses the recent fact of prices being high" to advocate for greater efficiency as a hedge against future price increases, she said.
More
Many other topics were covered during the 2005 NEEP Annual Conference. To see the day's full agenda and to access speaker and panelist presentations, please click here.
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