Lawmakers put energy efficiency under the microscope

On a sweltering day, when peak demand records for electricity were set in New England and New Hampshire, a state legislative study committee is considering whether electric consumers in the Granite State should continue to pay for energy-efficiency programs.

During the hearing, the study committee heard from representatives of ISO New England, operator of the region’s electric system, about the value of the programs.

According to ISO representatives, a 5 percent decrease in peak demand could save approximately $600 million in decreased costs, and energy-efficiency programs are an important part of efforts to reduce peak demand. (The term “peak demand” means the point during the year when the demand for electricity is at its highest, and it has come to be associated with the hottest, most humid, day of the year.)

The new forward capacity market being launched by the ISO, in large part to address the need for power caused by a dearth in construction of power plants in New England, will include an auction in which energy efficiency can compete head-to-head with power plants to see which is the lowest-cost solution for addressing the need for increased power in the future.

Other ways in which the ISO tries to reduce demand for electricity include a demand response program through which end-use customers, typically large users like manufacturing plants, agree to reduce their power needs during peak demand periods in exchange for paying a lower rate for electricity year-round.

Another method for reducing the need for power explored by the ISO is a program that asks companies with emergency generators to be available to turn them on in the event that the demand for power becomes too great. By using their emergency generators and reducing their need for electricity from the grid these customers could, according to the ISO, save as many as 1,700 megawatts.

Program analysis

The legislative committee is charged with undertaking a complete analysis of each of the different types of programs that are funded by the system benefits charge, which all New Hampshire electric customers pay. The charge was created in the 1990s as part of the restructuring of the electric industry to fund energy-efficiency programs, new renewable programs and programs for low-income customers.

Electric utilities in New Hampshire have established a set of energy-efficiency programs designed for statewide implementation in the service territories of the utilities regulated by the PUC. These programs, for residential and for commercial and industrial customers, include new construction programs, the retrofitting of existing structures, and rebate programs for selected lighting and appliances.

There also are individual utility-specific programs, including a pilot Pay-As-You-Save – or PAYS — program. Initially rolled out in June of 2002, these statewide programs are funded through the SBC. Energy-efficiency programs specific to each utility have been available for years. The utilities file periodic updates on the performance of the programs including program expenditures, resulting projected energy savings from implemented measures, and the number of customers served by the programs.

The study committee, which must report its findings by Nov. 1, is to come up with a critical evaluation of each type of program in order to determine which programs make the best use of SBC funds and which programs should serve as models for future programs. The committee also must recommend persons or entities that the committee determines are best suited to administer SBC funds.

The ISO has said that while New Englanders continue to say “no” to new sources of electrical power they want the energy needed to meet their needs.

According to Gordon Van Welie, president and CEO of ISO New England, in the absence of a willingness to site badly needed new power resources, “the region must begin — immediately — to find ways to cut back electricity use at home and at work.”

Van Welie has pointed to the regional failure to allow liquefied natural gas terminal expansions, shutting off the region’s natural gas supply and storage options and driving up costs, as well as development of other power system resources, including what he referred to as “even a clean alternative such as a wind farm.”

With so many avenues closed off in the short term, he says, the simple answer to help control soaring power costs is to avoid potential shortages during peak power use periods by reducing the amount of electricity that is used.

“Energy efficiency is by no means a permanent solution, but it should be a permanent part of the solution. Sensible energy use, combined with new power resources, is the only workable answer for New England,” according to Van Welie.

Doug Patch, a former chairman of the state Public Utilities Commission, is an attorney with the Concord law firm of Orr & Reno.