by Dylan Voorhees, NRCM Clean Energy Project Director
Senator Thibodeau and Representative Fitts,
Thank you for the opportunity to provide testimony on this legislation. The intent of this legislation is somewhat unclear to us, so our written testimony is based on our best reading of the language of the bill. We recognize that the bill may represent broader ideas or related concerns that were not immediately apparent to us, so our testimony also provides some brief background on Efficiency Maine Trust spending, programs and cost-effectiveness.
In short, we believe the Trust is delivering significant energy savings in a very cost-effective manner, in accordance with the existing statutory guidance as well as the Triennial Plan recently approved by the Public Utilities Commission, and are unaware of a compelling reason to place additional language into law regarding their spending criteria.
Energy efficiency can and should be Maine’s top energy priority for reducing energy costs and for reducing our use and dependence on fossil fuels. Maine can do very little to affect the underlying prices of energy—most of which are based on global markets for fossil fuels such as oil and natural gas. We should—and do—have an array of policies to increase production of renewable energy sources indigenous to Maine. But most importantly, we can use energy efficiency to reduce total energy costs by investments that reduce the amount of energy needed to run a machine, heat a home or power a factory. After all, homeowners and businesses typically care about “bills not prices.”
Efficiency Maine provides an array of programs to help homeowners, businesses, municipalities and industrial facilities reduce their energy costs with investments in energy efficiency. Cost-effective energy efficiency investments reduce total costs for consumers, but require an upfront investment. Putting in a more efficient light bulb, weatherizing a house, or installing a more efficient industrial pump or motor are all examples of energy efficiency investments that Efficiency Maine programs support. A cost-effective efficiency investment is one that reduces energy costs over the life of the equipment by more than the additional upfront cost. Efficiency Maine has a specific test to determine cost-effectiveness, inherited from the Public Utilities Commission and similar to those in most other states, which counts all readably measured costs and benefits.
Efficiency Maine programs are very cost-effective. Since 2004, the overall savings from its programs have outweighed costs (including both public and private costs) by 3:1. Total lifetime energy savings for Maine consumers from Efficiency Maine to-date are more than $487 million. It also fosters major investments in the Maine economy. In 2010, Efficiency Maine distributed $20 million in public energy efficiency incentives to leverage $75 million in private investment.
The intent of this legislation may have been obscured in the drafting. As written, this legislation would probably prohibit nearly any spending by Efficiency Maine by prohibiting participating consumers from making any upfront cost. This would completely undermine our energy efficiency efforts and limit Maine consumers access to the cheapest energy resource available in the state: energy efficiency costs the equivalent of 3 – 4 cents/kwh. Existing law already requires Efficiency Maine’s core programs to be measurably cost-effective. Under existing law Efficiency Maine must strive to administer funds effectively and efficiently because it is accountable for actual results (i.e. energy savings and cost-effectiveness) to the Public Utilities Commission which must periodically approve their 3-year plan and multiple performance metrics.
The law may have been aimed at prohibiting customers from switching types of fuel sources when receiving an Efficiency Maine incentive (e.g. switching from an oil furnace to a high-efficiency natural gas furnace, or from a propane boiler to a renewable—solar or wood pellet—system.) Limiting fuel switching puts an arbitrary limit on customer choice and narrows opportunities to reduce their overall costs. Efficiency Maine is generally “fuel neutral”, with goals focused on reducing overall energy use in both electricity and heating fuels. The criteria is and should be cost-effectiveness and reducing costs for consumers.
Does NRCM think that consumers should use less polluting sources of energy? Absolutely. But Efficiency Maine is mostly focused on energy efficiency across fuels. So we accept that consumers may choose fuel sources that we don’t prefer in order to achieve the larger goal of reducing overall energy waste.
Finally, the issue of fuel switching can become complicated when different fuel sources are subject to System Benefit Charges and the costs for incentives must be allocated to the right accounts. But because Efficiency Maine currently has little to no ongoing funding for heating fuel efficiency (aside from a very small natural gas funds), the trickiest issues of fuel switching should not be a major concern.
We would be happy to provide further input or material if the nature of this bill changes significantly, but again we believe Maine’s laws regarding cost-effectiveness and focus on the results of energy savings are the right statutory framework for Efficiency Maine and should remain largely intact.