The best way to reduce energy costs is to use less energy. That’s the premise behind Efficiency Maine, a state program that supports energy efficiency projects by businesses and homeowners.
The governor’s office, through LD 1398, proposes to divert money from Efficiency Maine Trust and use the funds to reduce electricity rates for businesses. Many businesses have already done energy efficiency work, and they would rather spend money to hire employees or for purposes other than their electric bill, Patrick Woodcock, director of the Governor’s Energy Office, said.
It’s important to note that the businesses that have invested in energy efficiency projects already have seen a return; they’ve saved money that they can now use to hire employees or otherwise invest in their business. Diverting money from Efficiency Maine Trust limits the opportunity other businesses have to make the same investments in efficiency and generate savings that they can reinvest.
The governor’s proposed change is unnecessary and a less effective use of the money.
The funds in question come to Maine from the Regional Greenhouse Gas Initiative, a nine-state program that auctions off carbon allowances that power plants buy to emit carbon pollution. The amount collected from the carbon auctions and divided among the states has steadily increased. Maine expects to receive $16 million this year. The state now uses 85 percent of that money to support energy efficiency improvements through Efficiency Maine, which offers technical assistance, grants and rebates.
In the last three years, the Efficiency Maine Trust has awarded nearly $27 million in Regional Greenhouse Gas Initiative funds to Maine businesses and residents. The upgrades they’ve made with this money are expected to save these businesses and residents nearly $167 million — more than six times the size of the investment.
Much of the work has been targeted to industrial users, the largest consumers of energy. With financial support from Efficiency Maine, numerous mills, manufacturing facilities and hospitals have upgraded their heating systems, which ultimately saves money and reduces pollution. These entities would get no more Regional Greenhouse Gas Initiative-funded support if LD 1398 became law. (LD 1398 would not affect Efficiency Maine programs for residential customers.)
The Jackson Laboratory, for example, received a $369,000 award from Efficiency Maine in 2010, which the Bar Harbor-based research facility matched with a $400,000 investment. The lab installed a steam turbine system to generate its own electricity. It immediately saved $150,000 a year in electricity costs. Over 20 years, JAX expects to save $3 million, an eight-to-one return on its and the state’s investment.
Other companies have projects in development, in consultation with Efficiency Maine. If the law changes, they won’t receive money from Efficiency Maine to complete these energy-saving projects.
Devoting the bulk of Regional Greenhouse Gas Initiative money to energy efficiency upgrades is a smart investment with an impressive rate of return.
Using these funds to instead subsidize electricity costs, as LD 1398 would do, greatly lowers this return and offers no long-term benefits. Paying less for energy helps businesses as long as the subsidy lasts. Investing in energy efficiency improvements ensures they use less energy, lowering their energy costs for the long term. Plus, with less energy wasted, the overall demand for energy falls, which can lower prices for all consumers.
Efficiency Maine has a proven track record of helping businesses and residential utility customers reduce energy consumption, saving money and reducing pollution. Diverting money away from this work makes no sense.
