Acadia Center: Support Efficiency Investments for a Clean, Affordable Energy Economy

Acadia Center: Support Efficiency Investments for a Clean, Affordable Energy Economy

Stephen Beale’s January 15th article in GoLocalProv, “Electric Rate Hike Means Millions More in RI Tax Revenue,” states that Rhode Island’s energy efficiency programs make our electric bills more expensive. This is misleading at best. In fact, far from being any sort of “extra,” the Energy Efficiency Program Charge is the only portion of the bill that helps save us money.

RI is a proven leader in energy policy and efficiency investments; this is good news for Rhode Islanders. In the American Council for an Energy Efficient Economy’s 2014 State Scorecard, Rhode Island tied with Massachusetts in first place for utility energy efficiency programs, and ranked #3 in the nation overall. Energy efficiency is a “Triple Win” for the state’s citizens, families, and business owners: it lowers energy bills; increases economic activity from new clean energy jobs; and reduces greenhouse gas emissions. 

In short, energy efficiency is a powerful tool to help chart RI’s pathway to a sustainable economy and clean energy future. Energy efficiency is the least-cost fuel source. Buying electricity from a power plant like the natural-gas fired Manchester Street Station costs between 8¢ and12¢ per kilowatt hour; yet, saving power through energy efficiency actions costs about 4¢ per kilowatt hour. By investing in as much low-cost energy efficiency as possible, RI is reducing the cost of doing business in the state and leaving consumers with more money in their pockets. Such consumer savings are often spent right in RI– where they can support our local markets, our students, our education and health facilities—while payments to fossil fuel providers head immediately out of state. Every dollar invested in cost-effective energy efficiency boosts the RI Gross State Product an estimated $3.60 and every $1 million invested in energy efficiency generates almost 40 job years of employment. Contrary to Mr. Beale’s statement that energy efficiency increases Rhode Islanders electric bills, it is clearly a great deal for the state! 

GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST

The 2015 Energy Efficiency Program Plan approved by the Public Utilities Commission in December will:

-Produce over $336 million in net economic benefits to Rhode Island homes and businesses;
-Save 1.9 million MWh of electricity and 4.8 million MMBTU of natural gas;
-Boost Rhode Island’s economy by adding over $417 million to Gross State Product;
-Create over 4,500 job-years of employment economy-wide.

Savvy Rhode Islanders may be skeptical of a bargain that looks too good to be true. When it comes to energy efficiency, there is no catch: the cost savings are real. The Division of Public Utilities--the state agency charged with watching out for consumer interests-- recently commissioned the research firm Synapse Energy Economics to see what efficiency is really doing for our electric bills. The analysis finds that a homeowner who gets a home energy assessment can save approximately 12% on her electric bill by replacing inefficient lighting and appliances and upgrading home insulation and weatherization.  Factor in savings on natural gas or fuel oil use and total spending on energy is even lower. And small business customers, who are eligible for free energy audits, can save as much as 37% to 47% by installing high efficiency equipment and making recommended retrofits. 

Importantly, even customers who do nothing to their own houses or offices benefit from their neighbors’ energy efficiency actions. Reducing the state’s demand for power helps lower the costs of the whole energy system, and those savings are passed on to all electric consumers. The Division’s study finds that these bill savings significantly outweigh the amount—an average of just over 1%-- that we all pay to finance low cost, low risk energy efficiency investments. 

That small fee we all pay appears on our bills as the Energy Efficiency Program Charge. Before the grumbling about costs starts, think of it this way:  Energy efficiency is an energy resource just like power from the coal and natural gas-fired power plants at Salem Harbor, Brayton Point, or Manchester Street, but with two important differences. One, the energy cost from those power plants is not broken out as a separate line item on customers’ energy bills. And two, energy efficiency is much cheaper, cleaner, and lower risk. In fact, far from being any sort of “extra,” the Energy Efficiency Program Charge is the only portion of the bill that helps save us money.

To ensure RI consumers are getting a good deal for the money they invest, a team of stakeholders--the Public Utilities Commission, Division of Public Utilities, Office of Energy Resources, the Energy Efficiency & Resource Management Council, and National Grid—are charged (by the General Assembly) with overseeing state energy efficiency programs. This group has worked together since 2006 to ensure that all RI consumers (low-income, residential, small and big business) get optimal benefits from energy efficiency. Mr. Beale’s article mentions that National Grid is eligible for a 5% performance incentive for meeting or exceeding the annual electric and natural gas savings goals set by the Public Utilities Commission. This reward was recently restructured to drive excellent performance by penalizing the utility if it were to fall short of the energy savings goals and by providing a stronger incentive to reach 100% or more. Beale does not mention an important fact: that Rhode Island offers one of the lowest performance incentive in the country, while achieving highest-in-the-nation levels of energy savings. 

Energy efficiency is the best strategy for reducing Rhode Islanders’ energy bills, lowering the cost of doing business in the state, and putting money back in the wallets of all consumers.

Abigail Anthony leads Acadia Center’s Grid Modernization and Utility Reform initiative, focusing on changing regulatory and economic incentives in order to achieve a sustainable and consumer-friendly energy system. A Rhode Island native, Abigail is based in Acadia Centers’s Providence office and has played a leading role in advancing the state’s energy efficiency procurement policies, particularly through her appointment by Governor Chafee to the Rhode Island Energy Efficiency and Resource Management Council. Abigail received her PhD in Environmental and Natural Resource Economics from the University of Rhode Island where she researched the effectiveness of demand response in maintaining system reliability under climate change scenarios and was a selected symposium scholar for the Dissertations Initiative for the Advancement of Climate Change Research. While at URI, Abigail was a fellow in the National Science Foundation Coastal Institute IGERT Program, focusing on multidisciplinary problem-solving in coastal ecosystems. Abigail received her MA and BA in economics from the University of Montana.