By Jim O'Reilly, NEEP Public Relations Director
Participants ranging from regulatory commissioners and utility representatives to environmental advocates and state energy officials acknowledged energy efficiency as a key component of public policy during the 2nd Annual Northeast Energy Efficiency Public Policy Summit hosted by NEEP on Nov. 12 in Providence.
But transforming those acknowledgements to active commitments will require much work, coordinated effort, consistent messaging and diligence, all agreed.
NEEP Board member Stephen Cowell, president and CEO of Conservation Services Group, set the tone for the day during his opening remarks by laying out the overall assessment of energy efficiency as public policy.
Highlighting a number of defining events in 2003, which included the war in Iraq, spikes in natural gas prices and the great Northeast Blackout, Cowell noted those "solutions beyond market forces" that need to be pursued, including investments in energy efficiency (by regulation or legislation); codes and standards; and procurement of efficiency as part of supply acquisitions. He also urged that coordination take place between advocates of energy efficiency, renewable energy, distributed generation and distribution system planning in order to take advantage of a similar policy framework.
"The Cheapest kWh Is The One You're Not Using"
While ensuring energy efficiency advocates that "I get it," Massachusetts Department of Telecommunications and Energy Chairman Paul Afonso said that he favors "an integrated approach to things." "Energy efficiency needs to be part of our strategy," said the Bay State's chief regulator, who is also the incoming president of the New England Conference of Public Utility Commissioners (NECPUC). At the same time, he acknowledged that "regulators need to be educated" about energy efficiency, and welcomed "the beginning of a dialogue" that came about as part of his invitation to speak at the NEEP conference. What will catch the regulators' attention, he advised, was the cost effectiveness of energy efficiency programs.
One area where energy efficiency must play a significant role is in helping to mitigate rising energy costs, according to the three lead-off panelists who examined energy economics.
MA DTE Chairman Paul Afonso speaks at Policy Summit.
"Regulators pay attention to cost-benefit," he noted. "If there are savings there for the taking, let's not leave money on the table."
Afonso's fellow regulator on the panel, Commissioner Fred Butler of the New Jersey Board of Public Utilities, built off Afonso's comments.
"This is a very important discussion and conference," he noted, "and I want to tell you that we are beginning to 'get it,' and our governor (James McGreevey) gets it."
However, Butler noted, "We are the choir. There are a lot of people who don't understand it, so we have the opportunity, and, in fact, the requirement, to go out and teach people."
Ultimately, Butler said, economics will be a major driver for energy efficiency. "There's no doubting the fact that the cheapest kilowatt hour is the one you're not using," he said.
From the utilities' perspective, the bottom line is also economics. Barbara Kates-Garnick, director of corporate affairs in New England for KeySpan Energy Delivery, noted that particularly as it relates to volatile natural gas prices, energy efficiency is an attractive solution. However, she warned, "It's all in how you measure it and capture it." When developing a framework for gas energy efficiency programs, "one size does not fit all," she said in reference to a recent pronouncement from Doug Foy, chief of Commonwealth Development for Massachusetts, that he'd push for gas efficiency programs similar to those administered by the electric utilities. "To force companies to do it, I'm not sure works," Kates-Garnick said. "We need to consider all of the ramifications," including appropriate "risk and reward" investment strategies for utilities, she said.
As for how to most effectively integrate energy efficiency into regulatory proceedings or other forums, commissioners Afonso and Butler both extended direct invitations.
"You need to keep demonstrating the payback," said Butler, advising that telling the story in human terms ("homes rather than gigawatts") is the best approach. He also advocated for a regional approach to energy efficiency, citing a letter from Gov. McGreevey to his fellow Northeast governors earlier this year in which he called on all of their states to enact energy efficiency standards legislation.
"You have a seat at the table," promised Afonso. "Pick and choose your issues, and be there."
Energy Efficiency As Gateway to Climate Change Planning
When it comes to integrating energy efficiency into public policy, an emerging forum that is particularly relevant and effective is climate change planning, agreed the second group of panelists, who included: Beth Nagusky, Maine's Director of Energy Independence and Security; Paul DeCotis, director of energy analysis for the New York State Energy Research and Development Authority (NYSERDA); Paul Jacobson, principal analyst for National Grid USA; and Dan Sosland, executive director of Environment Northeast.
"Climate change planning is a very powerful forum for promoting energy efficiency," noted Sosland. His fellow panelists presented plenty of supporting evidence, which included:
- New York, where energy efficiency funds committed through June of 2003 reduced the state's CO2 emissions by 2.3 million tons, according to DeCotis, which is the equivalent of removing 450,000 cars from New York roadways.
- Rhode Island, where National Grid/Narragansett Electric's large-scale energy efficiency programs and renewable energy activities have effectively avoided the emissions equal to those of the Providence power plant, according to Jacobson.
- Maine, which was the first state to become a charter member of the Chicago Climate Exchange, and is leading by example when it reduced its CO2 emissions by state government by 4.3 percent in 2002-2003.
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By far, the sector with the greatest projected growth of carbon emissions for Connecticut is in electric power generation, noted Sosland, whose organization authored the state's Climate Change Roadmap. And that makes energy efficiency an effective climate change strategy, he said, because: "It has immediate results, we know how to do it, and it provides large savings."
Ensuring that potential will require some key actions, however, which need to be implemented immediately to avoid the growing harm being done by carbon emissions, all agreed. The ratemaking process needs to be reformed, Sosland said, so that, among other things, energy efficiency is part of core energy system planning. In addition, current energy efficiency programs must be fully funded moving forward, a proposition that is far from guaranteed given the legislative and administrative diversion of energy efficiency funds to the Connecticut general budget earlier this year. |
Building energy codes should be upgrade and better enforced, and energy efficiency standards for appliances and equipment need to be enacted, agreed DeCotis and Jacobson. "That would raise the bar for everyone," Jacobson explained.
And state government can lead the effort and "internalize the savings," Nagusky noted, having cited Maine's example of a 60 percent energy savings by switching all of the state's traffic signals to more efficient LED lights.
What is not entirely clear at this point is how to integrate energy efficiency into carbon cap-and-trade systems - such as the Regional Greenhouse Gas Initiative (RGGI) being led by New York - without, as Seth Kaplan of the Conservation Law Foundation put it, "Opening the door to some questionable stuff." (see below.)
"A Very Quiet, Very Important Insurance Policy" in Energy System Planning
Panel moderator Brian Henderson, director of energy efficiency services for NYSERDA, provided an important perspective from a state that was hit hard by the August blackout. "Energy efficiency is a very quiet, but very important insurance policy for New York," he noted. In particular, "efficiency programs were very important as the system was being brought back up" following the blackout, Henderson explained. He also reiterated an oft-heard phrase: that energy efficiency is the "cleanest, cheapest and quickest way" to achieve load reductions.
The day's final panel addressed what is arguably the most pressing need for which energy efficiency can provide a significant solution, namely, regional energy system planning. On this topic, panelists Rich Sedano of the Regulatory Assistance Project and Paul Peterson of Synapse Energy Economics agreed: energy efficiency today is not given equal footing with supply-side solutions in system planning, but several opportunities are emerging that may be able to impact that dynamic.
Providing insight into the regional power planning process, Sedano summarized some of the key recommendations of the New England Demand Response Initiative (NEDRI), a recent forum convened to develop a comprehensive, coordinated set of demand response programs for the New England regional power markets. Among the recommendations to come out of NEDRI were: ratepayer support for energy efficiency; principles for energy efficiency programs; appliance and equipment energy efficiency standards; improved building energy codes; regional coordination of demand-side resources; and synergies between energy efficiency and the demand response programs run by the Independent System Operator (ISO) New England.
Additionally, recommendations regarding power delivery included resource parity - counting energy efficiency as a resource in the same way generation is counted as a resource - in regional system planning, a concept that has yet to gain traction because of, among other obstacles, cost allocation issues. "Many states," as Sedano pointed out, "partition energy efficiency off to the side, as a social program, with a budget, regardless of the resource value."
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Two developments may help to change that notion, he said. The first is the concept of "portfolio management," which is beginning to gain recognition as a means of managing energy industry risks by offering customers a range of prices and options for energy resources, including efficiency services.
The second is the formation of the Regional State Committee, mandated by the Federal Energy Regulatory Commission (FERC) as part of its standard market design and accompanying formation of Regional Transmission Organizations. The Regional State Committees would add a government role to the ISO/RTO process, Sedano explained, helping the system planners resolve planning assumptions; encouraging them to consider innovative solutions - like energy efficiency - to system needs; and helping to resolve trade-offs between resource adequacy and cost. |
The role of the RSC in system planning was elaborated upon by Peterson, who explained it in the context of the ISO's Regional Transmission Expansion Plan, which provides an annual evaluation of the New England system, forecasts future load growth, estimates new generation, as well as congestion costs, and issues RFPs for transmission upgrades.
"What it doesn't do," Peterson explained, "is develop RFPs for load response or energy efficiency solutions because transmission projects can be recovered in tariff rates, but all other (solutions) need to be market based." This imbalance between how efficiency is considered as opposed new capacity exists because "ISO says that would be interfering in the marketplace," Peterson pointed out. (Editor's note: Representatives of ISO-New England were invited to participated in the summit, but declined.)
Peterson, too, noted that portfolio management is a way to help energy efficiency gain more equal footing because it would present efficiency as a resource from the utilities' perspective as a way of managing risk. "The electric utilities need to get into (portfolio management) to maintain least cost supplies for their customers," he said, "and to maintain an optimal resource mix."
The accessibility of the ISO/RTO process is open to debate, however, according to several attendees. "Not completely," Peterson noted, "but you need to force your way in." For example, there need to be "creative ways to measure, value and pay for" energy efficiency as a capacity resource, especially absent any state proceedings ordering energy efficiency. One way to address that lack of state mandate is through legislation, noted Rob Sargent of the State PIRGs. In such public policy debates, the proposed Regional State Committee, which will comprise gubernatorial appointees on a one-state/one vote basis, may be a helpful forum, Sedano noted.
Energy Efficiency and the Media
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The day's final speaker was Don MacGillis, an editorial writer for The Boston Globe who specializes in health, science, the environment and aviation. MacGillis cited "three villains" in the dearth of focus on energy efficiency in the public eye. The media itself bears some responsibility, he admitted. The federal government shares some blame because of how energy discussions, particularly in Washington, "have been kept under wraps." But the third villain is the public itself, which, as he explained, might show interest in energy efficiency when the weather turns colder, or may want more space devoted to the fuel inefficiency of certain types of vehicles. "How much this matters to the public in general is another question, since SUVs and light trucks now make up more than 50 percent of all the models that U.S. car makers sell," he pointed out. |
| Don MacGillis, editorial writer for The Boston Globe, discusses energy efficiency in the media. |
MacGillis challenged energy efficiency advocates to call the media on the lack of attention to the cause, writing letters, contacting reporters directly, and performing outreach. And he also urged a greater focus on efficiency within the paid media, citing his own frustration in trying to find energy cost information for a new refrigerator he was seeking to purchase.
The Road From Here
Workshop attendees generally indicated that the program was a successful exercise in helping to coordinate thought and strategy on advancing an energy efficiency public policy agenda, but acknowledged the need for even greater coordination, cooperation and follow-through to help raise the profile for efficiency with real impact.
One key element, attendees agreed, was the need to "tell the story" of efficiency to the general public, as well as to hear from that public as to what's important to them. One suggested piece of such an efficiency "marketing campaign" should include grassroots or community level work to build support from the ground up.
Most also agreed that other clean energy efforts - such as renewable energy, distributed generation and combined heat and power - need to be aligned with energy efficiency in order to gain synergies and raise the clean energy profile.
The challenge of how to count energy efficiency in climate change planning, particularly cap and trade efforts, has no easy solution, most agreed. What was accepted was that efficiency can and does provide real reductions in CO2 emissions, but that those reductions need to be verified. As those savings are being counted, the E.P.A. will need to determine set-asides for energy efficiency that strikes a proper balance.
Also on the subject of counting results, many offered that energy efficiency savings need to be proven through consistent methodologies and transparent systems that will leave no doubt as to their legitimacy. Third-party certification and consistency in evaluations was suggested, as was the need for better protocols to assess and define baselines on a regional basis.
NEEP will continue to help develop regional strategies for advancing energy efficiency as public policy, using the feedback and shared thinking from the November workshop and from the input gained from its sponsors and partners. As this work progresses, we will try to post developments as frequently and as visibly as possible. In the meantime, should you have any questions or comments on energy efficiency public policy, please feel free to get in touch with the members of the NEEP Policy, Outreach and Communications Team: Jim O'Reilly, Public Relations Director, joreilly@neep.org, Julie Michals, Public Policy Outreach Manager, jmichals@neep.org, Solange Han, Public Relations Associate, shan@neep.org, and Isaac Elnecave, Energy Efficiency Standards Project Manager, ielnecave@neep.org.
Finally, a sincere "thank you" to all of the panelists who contributed to the program, and especially to those moderators who lent their time to making it a success: Charlie Harak of the National Consumer Law Center; Jonathan Raab of Raab Associates; and Brian Henderson of NYSERDA.
To access the Policy Summit Web page, which contains PDF's of all presentations and appendices, click here.