Changes to RGGI are penny wise and pound foolish

Saving energy reduces the need to build new power plants and transmission, which always mean higher costs

Last month, the New Hampshire House voted to eliminate funding for energy-efficiency programs through the Regional Greenhouse Gas Initiative and rebate the electricity customer contributions to ratepayers.

If that was all you heard about this vote, you might be tempted to say, “What’s wrong with that?”

A lot. Let’s look at the actual facts, and not just the bumper sticker slogan.

RGGI, started in 2008, was originally suggested by former Republican governor George Pataki of New York. It includes nine northeastern states and all New England states. RGGI sets caps on allowable CO2 emissions and requires those generators that cannot meet the reductions through their own efforts, such as acquiring power supplies from renewable and non-polluting sources, to purchase renewable energy credits (RECs) to comply. Sale of these RECs through an auction process generates significant revenues. For New Hampshire, these revenues amounted in 2014 to nearly $3.5 million.

Other member states have devoted all the revenue, less administrative expenses, to funding energy-efficiency programs. The results have been spectacular. According to the well-respected economic consulting firm the Analysis Group, the program has achieved a net economic benefit to the member states of $1.6 billion in economic activity (activities such as housing retrofits) and $1.3 billion in energy savings for consumers.

As for the impact on New Hampshire specifically, the Analysis Group found that so far RGGI has “provided $20 million in net economic value, $32 million in reduced energy bills for energy consumers, local job creation and $14 million less spent on fossil fuels purchased from places outside New Hampshire.”

However, in 2012 New Hampshire directed that only the first dollar of revenue would be used to fund energy-efficiency projects, with most of them administered by the four distribution utilities serving the state, and the balance rebated to consumers. Currently this means that only about 20 percent of the RGGI revenues are available for energy efficiency.

So what is the amount we are talking about if we now rebate the remaining 20 percent of RGGI revenues to customers? For a typical residential customer of Eversource, it is about 21 cents a month on a bill of $120 for 650 kwh of electricity.

Can this customer use that 21 cents a month, or $2.52 a year, to undertake an energy-efficiency upgrade? Of course not. These projects, although they have positive and usually short-term paybacks that continue for the life of the building, require up-front costs that can only be achieved by putting these savings together to fund projects.

While critics say it’s a fairness issue – since not everyone will undertake an energy-efficiency project at least everyone will get a 21-cent a month rebate – this ignores the fact that everyone benefits from RGGI-funded energy-efficiency projects.

Saving energy reduces the need to build new power plants and transmission, and new power plants always mean higher costs. The cheapest way to meet our energy needs is to avoid incurring the costs of a new supply, and particularly new peaking plants. These are the plants that are required to run at the time of highest demand and are always the most expensive to operate. So your energy-efficiency project, and everyone else’s, benefits all electric consumers.

That is why the chairman of the New Hampshire Public Utilities Commission testified, without opposing testimony, that eliminating funding for energy efficiency would not result in a rate decrease, but would, in relatively short order, cause rate increases.

That is why the proposal to rebate pennies to customers, and beggar the energy-efficiency program in this state, is indeed penny wise and pound foolish. If you agree, ask your state senator to reject the gutting of RGGI’s demonstrated economic benefits for a foolish and illusory ratepayer rebate.

Rep. Bob Backus, D-Manchester, is a member of the House Science, Technology and Energy Committee.

Categories: Opinion