Mass. Utilities File Efficiency Program Plans
by Josh Craft, Public Policy Analyst
Massachusetts energy distributors recently submitted their Joint Statewide Three-Year Energy Efficiency Plans for both the electric and gas sectors to the state Energy Efficiency Advisory Council. The council, charged with overseeing the energy efficiency provisions of the Green Communities Act, will evaluate the plans in the months ahead. Calling the effort “an unprecedented collaborative, consensus-building effort,” electric and gas distributors intend to work together to meet the robust energy efficiency goals set last year by the General Assembly. The plans propose to double annual savings in both electric and gas use by 2012, an ambitious target that would make Massachusetts a national leader in energy efficiency.
Background
Massachusetts enacted the Green Communities Act in 2008, which calls for a “sustained and integrated statewide energy efficiency effort.” The act's major energy efficiency provision states, “electric and natural gas resource needs shall first be met through all available energy efficiency and demand reduction resources that are cost effective or less expensive than supply,” thus requiring statewide electric and gas distributors (NSTAR, National Grid, Western Massachusetts Electric, Bay State Gas, Berkshire Gas, New England Gas Company, Blackstone Gas, Unitil, and the Cape Light Compact) to capture all efficiency gains before using new fossil fuel resources.
As a first step, these program administrators were ordered to create their own three-year electric and gas efficiency investment plans, the first of which was submitted on April 30th. The plans will now be evaluated by the new Energy Efficiency Advisory Council (EEAC), representing the consumer, environmental, government, and academic sectors, as well as energy producers. Northeast Energy Efficiency Partnerships (NEEP) will take on a significant role in working with program administrators and the EEAC to monitor and evaluate progress through its Evaluation, Meaurement, and Verification Forum.
The plans are the first attempt by the program administrators to create a common statewide effort to increase energy efficiency. The electric and gas efficiency plans are available online at http://www.ma-eeac.org/plan430.htm. Each builds on existing programs in order to improve energy efficiency among the major state energy consumers (the residential, commercial and industrial, and low-income sectors). The plans form the foundation for the efficiency efforts of individual electric and gas companies, to be submitted later this year.
Efficiency Goals and Programs
The plans, which used NEEP's 2005 “Economically Achievable Energy Efficiency Potential in New England” report, create a target of 3 percent reduction in energy use from 2009 to 2012. Energy efficiency improvements would save a total of 2,491,201 megawatt hours of electricity (mWh) and 44.7 million thermal units of gas statewide, resulting in a net cost benefit of $3.53 billion for electric and $517 million for gas. In addition, the efficiency measures would help Massachusetts reduce greenhouse gas emissions, saving 13 million tons of carbon dioxide from being emitted. Electric and gas program administrators seek to achieve results by building upon and expanding existing efficiency programs that provide incentives for reducing energy use and buying energy saving technologies, including the MassSave and EPA ENERGY STAR programs, and improving program coordination and customer service. Some specific measures include:
• Promoting residential conservation efforts like energy audits and home upgrades
• Providing financial incentives for constructing energy efficient homes
• Building upon weatherization programs to improve thermal efficiency of homes
• Incentivizing the installation of Energy Star-rated high-efficiency space heating equipment
• Increasing awareness and use of Energy Star-rated HVAC technologies, including programmable thermostats, efficient central A/C, high efficiency water heating, home
appliances, and efficient lighting
• Implementing pilot programs to finance major home renovations and to evaluate the
impact of programs on consumer energy bills
• Improving feedback from multi-family homes
• Expanding access to services for low-income residents
• Increasing the effectiveness of commercial and industrial design and retrofit programs
The plans have budgeted about $1.4 billion for these programs ($1.14 billion for electricity efficiency and $236 million for gas efficiency). Program administrators foresee the biggest energy savings from the commercial and industrial and residential sectors. Fifty percent of electricity efficiency gains would be captured in the commercial and industrial sector, followed by 47 percent in the residential sector, with the remainder from the low-income sector. Similarly, 56 percent of the gas efficiency gains would come from the commercial and industrial sector, 40 percent from the residential sector, and the remaining 4 percent from the low-income sector. A more extensive summary of these measures can be found at http://www.ma-eeac.org/docs/090505-PAPresent-2.pdf.
Preliminary evaluations of the plans performed by consultants employed by the EEAC found that even more efficiency gains would be made, although they estimate higher net costs for programs as well. The consultants envision significantly higher electricity and gas energy savings, particularly for the commercial and industrial sector. Their analysis finds that the programs would cost a lot more than the plans estimate, however, placing spending levels at $2 billion and almost $312 million for electric and gas measures, respectively. The analysis is available online at http://www.ma-eeac.org/docs/090505-
ConsultantPrelim.pdf.
Impacts on Consumer Electric and Gas Bills
Program administrators also assessed how much efficiency improvements will increase consumer energy bills. In order to offset lost revenues from reduced energy use, electric and gas companies will increase rates gradually for residential and commercial and industrial consumers. Electricity bill increases by 2012 are estimated to be:
• $4.05 per month for the average resident, which could be offset by using 4.4 percent less electricity
• $13.55 per month for smaller commercial and industrial consumers, which could be offset by using 3.4 percent less electricity
• $1354 per month for large commercial and industrial consumers, which could be offset by using 5.3 percent less electricity
Annual gas bill increases are estimated to be:
• a 4.2 percent increase for the average residential customer
• a 2.3 to 3.2 percent increase for commercial and industrial customers, depending upon their size
The EEAC will now review the three-year plans for approval in consultation with program administrators. It is expected to reach its final decision in late July, with the Department of Public Utilities reaching a decision at the end of October.
