August 26, 2013
DEEP Proposes New Investment in Energy Efficiency Programs Additional Funding Will Reduce Bills for Families and Businesses
Draft decision will increase support for programs of Energy Efficiency Board
Connecticut today announced a plan to ramp up the state’s investment in energy efficiency – a step that will significantly reduce electric and natural gas bills for families and businesses.
This action comes in the form of a draft decision from Connecticut’s Department of Energy and Environmental Protection (DEEP) that will increase funding for electric and natural gas energy efficiency programs from $122 million to $231 million a year for the next three years. This increase will be financed through an adjustment on charges for efficiency programs that are part of monthly electric and natural gas bills.
“Increased funding for energy efficiency programs is a smart investment with an unrivaled rate of return,” said Daniel C. Esty, Commissioner of Connecticut’s Department of Energy and Environmental Protection. “Residents and businesses who take advantage of efficiency programs see immediate and dramatic savings on their bill – with $3 to $4 in savings typically achieved for every $1 invested in energy efficiency.”
“As a result of Governor Malloy’s leadership on energy issues, Connecticut has adopted a Comprehensive Energy Strategy designed to bring cheaper, cleaner, and more reliable power to our state,” Esty said. “Energy efficiency is at the heart of this Strategy because reducing demand brings down bills for families, makes our businesses more competitive, creates jobs, and reduces the environmental impact of burning fossil fuels.”
Process for Final Action
Release of the draft decision by DEEP – which can be viewed at www.ct.gov/deep/conservationloadmanagementplannotice
- opens a 30-day comment period. A public comment session is also scheduled for September 10, at 9 a.m. at DEEP’s offices at 10 Franklin Sq., New Britain.
After evaluating public comments and making any necessary adjustments, DEEP’s Bureau of Energy and Technology Policy will finalize its decision and forward it to the Public Utilities Regulatory Authority (PURA). PURA will then take action to implement a Conservation Adjustment Mechanism (CAM) to fund expanded electric and natural gas efficiency programs. Final action on this decision is expected this fall.
Legislation approved in the 2013 session of the General Assembly – Public Act 13-298 – authorized the use of a CAM to fund expanded efficiency programs and outlined the process for implementing this change.
Electric and Gas Efficiency Charges
Monthly electric bills now include a conservation fee of $0.003 per kilowatt hour, which provides funding for efficiency programs. This results in charges of $2.25 per month for the average residential ratepayer – who uses 750 kWh per month. The proposed CAM will add the equivalent of another $0.003 per kilowatt hour to distribution charges on electric bills. This charge will likely be more than offset by reduced and avoided costs on other portions of bills that are paid by ratepayers. While customers who take advantage of efficiency program offerings benefit the most, all customers save money as lower consumption reduces the need for transmission upgrades and the need for ISO New England to call upon the most expensive generation
There is also an efficiency charge included in the distribution portion of monthly natural gas bills of about $0.017 per hundred cubic feet (cc/f). This results in charges of about $2.50 per month for the average customer during the heaviest use winter months. The proposed expanded CAM will bring this charge to about $0.046/ccf, which will have an impact of about an additional $4.40 per month on the average customer during the heaviest use winter months. The impact will be notably lower during other times of the year when residents are not using as much natural gas to heat homes.
Approximately $105 million a year is currently collected from all electric ratepayers and $17 million from all natural gas ratepayers for energy efficiency programs. This includes commercial, industrial, residential, institutional, and government customers. These funds are distributed by the utilities for programs developed under the oversight of the Energy Efficiency Board and include:
- Rebates for energy efficient appliances
- Home energy audits
- Financing for home improvements such as insulation and high efficiency furnaces.
- Reduced retail prices on energy efficient light bulbs
- Education programs
- Investments in efficiency measures for municipal and state buildings
- Energy audits and financing for upgraded equipment for commercial and industrial customers
Benefits of Energy Efficiency
The use of a CAM to support expanded efficiency programs is consistent with the state’s first-ever Comprehensive Energy Strategy – which analyzed future needs for all sources of power in all sectors of our economy. The Strategy concluded that a full investment in all cost-effective efficiency measures would allow Connecticut ratepayers to achieve a net savings of $1.9 billion for natural gas and $3.5 billion for electricity over the next decade.
The energy strategy also noted that fully-funded efficiency programs will create 5,500 new jobs in our state, cause air emissions to decline between 5% and 10%, and help make Connecticut a national leader in innovative approaches to achieving cost-effective energy efficiency.
“Connecticut is a small state with relatively limited energy resources within our borders,” Commissioner Esty said. “Our most available and affordable resource is energy efficiency.”
“Every dollar invested in efficiency is money that is spent within the state rather than spent somewhere else. Although Connecticut has been a leader in efficiency, the Governor’s Comprehensive Energy Strategy revealed that we are seriously under exploiting this resource. The Strategy showed that at current investments we are only tapping into half of the true potential for gas and electric efficiency and we are now taking action to capture the full benefits of energy efficiency.”
Esty also noted that the programs funded by the proposed ramp up in electric and natural gas efficiency funding are closely coordinated with several attractive financing options. These options allow both residential and commercial customers to achieve immediate financial benefits from major efficiency measures – such as insulation, new heating systems or windows – by offering monthly payments that are less than the cost of the energy being saved. The marriage of utility incentive programs with accessible, affordable financing options will enable Connecticut businesses and residents to achieve far greater savings than would be possible under the expanded programs alone.
Real-life examples of energy-efficiency savings Connecticut businesses and homeowners have achieved include:
- Connecticut Children’s Medical Center, Hartford – Approximately $23,000 and 287,000 kilowatt-hours annually
- CNC Software, Tolland – Approximately $6,430 and 40,401 kilowatt-hours annually
- Fish Family Farm, Bolton – Approximately $5,600 and 31,913 kilowatt-hours annually
- Homeowners are saving an average of $200 annually by signing up for home energy audits and taking simple energy-saving steps such as sealing air leaks and installing energy-efficiency lighting, faucet aerators, and low-flow showerheads
More information on energy efficiency programs available in the state can be found on the Energize Connecticut website at www.energizect.com