UPDATE: New Hampshire Governor Chris Sununu signed H.B. 549 on Thursday, February 24.
Over the past few months, the state of energy efficiency in New Hampshire has taken some dramatic turns. The state’s energy efficiency programs have historically brought significant energy savings and workforce stimulation, yet after the Public Utilities Commission (PUC) order in November of 2021, their continuation was uncertain. New efficiency program plans are due in March 2022, but what they look like will depend on a variety of factors.
New Hampshire started 2021 with the framework for a nation-leading energy efficiency plan that was the culmination of a 10-month stakeholder engagement process between utilities, state agencies, the PUC, the Office of the Consumer Advocate, and energy efficiency advocates. The proposed three-year plan would have increased New Hampshire’s goals from 3.2 percent of electric utilities’ 2019 delivery sales to five percent, and from 2.1 percent to three percent for natural gas utilities, some of the highest in the nation. Additionally, it included a cost-benefit analysis specific to the state of New Hampshire, the Granite State Cost Test (first approved in 2019), with adders for participant and low-income impacts. It also included a commitment to installing an additional 1,200 heat pumps, the implementation of an energy optimization pilot, and the creation of an Energy Efficiency Stakeholder Advisory Council.
Yet, after almost one year of delay, the plan was rejected by the PUC on November 12, 2021. The decision took a drastic turn on many fronts, including directing energy efficiency funding to be reduced to 2018 levels and calling for a return to “market-based energy efficiency” that relies on the free market instead of state-run programs. The PUC also eliminated the use of the Granite State Cost Test as the primary measure of cost-benefit analysis. Several parties to the proceeding filed motions for rehearing in Docket No. DE 20-092 and have pursued an appeal of the PUC’s decision in DE 20-092 before the New Hampshire Supreme Court. In this regulatory back-and-forth, legislation has appeared as an alternative solution.
House Bill 549
Introduced in spring of 2021, House Bill 549 may restore New Hampshire’s energy efficiency programs by requiring the PUC to act on triennial energy efficiency plans and providing continued funding for the programs. The bill unanimously passed the New Hampshire House in early January and passed the New Hampshire Senate in early February. Next, concurred with the changes made in the Senate in February and sent it to Governor Sununu, who signed it on February 24, 2022.
HB549 has gone through significant changes from the time it was introduced. NEEP interviewed Kelly Buchanan, Director of Legislative and Regulatory Affairs for Clean Energy New Hampshire to learn more about this process and what it means for the future of energy efficiency in the state.
Q: What was the reaction of advocates after the PUC issued its final order reversing the stakeholder process?
A: After the Commission’s November 12, 2021 order, which surprised many of the settling parties in the docket, it was clear that the three-year plan as originally proposed from the stakeholder process would not go forward. The biggest surprise was the PUC’s dramatic reduction in energy efficiency funding leading up to 2023.
Q: How well are the 2020 plans functioning in the meantime? How did this decision impact the energy efficiency industry in the state?
A: This varies by utility. With the loss of funding and uncertainty as a result of the November 12 PUC order, the majority of programs are still in a state of limbo. This has dangerous impacts for the state’s energy efficiency workforce, where funding and continuity is important. Because programs have stopped or stalled, many contractors have dramatically slowed their work in the state, leaving their business in limbo until there is further direction from regulators or the New Hampshire Legislature.
Q: Could you provide some background on HB549, where did it come from and were there any issues with it?
A: HB549 was initially proposed in the spring of 2021. The legislation would set the systems benefit charge for energy efficiency programs at 2020 levels with annual increases based on the three-year average of the Consumer Price Index and a 0.25 percent adder. Clean energy advocates were initially opposed, especially because they felt it was important for the systems benefit charge to be determined by an adjudicative process at the PUC and not the legislature. However, with the Novermber 2021 PUC order, it became clear that legislation ensuring energy efficiency programs would continue and were protected was the most reasonable path forward. Between December 2021 and January 2022, various stakeholders worked together to amend HB549 to create guardrails to prevent the PUC from creating a similar situation in the future and to ensure that New Hampshire continues to fund energy efficiency programs with the systems benefit charge at 2020 levels with the modest annual increases described above.
Q: Will HB549 be similar to the framework proposed in the 2021-2023 Triennial Plan submitted in DE 20-092?
A: No. With stakeholder consensus, legislators have agreed to a less ambitious level of funding in HB549 that somewhat abandons the Energy Efficiency Resource Standard structure. This is because the main priorities for this cycle of energy efficiency programs have shifted; now the most important things are to ensure consistent funding and continuation of programs so as not to lose the energy efficiency workforce.
Q: Will the Granite State Cost Test continue to be part of the energy efficiency plans with the passage of HB549?
A: Yes, HB549 reinstates the Granite State Test as the primary cost-benefit analysis test with the Total Resource Cost test being used as the secondary test. It also reinstates funding for evaluation, measurement, and verification work.
Q: What can we expect with the passage of HB549?
A: Efficiency program plans will be filed by the NH utilities in March, with a final decision from the PUC due in May. With the unanimous vote in the House and support from the Governor, stakeholders anticipate the passage of HB549 by March, with utility plans for the 2022—2024 program cycle due that month. The legislation mandates that the PUC must issue a decision on the plans by May 1, but if rejected or unacted upon, the plans will continue at the previous triennium levels.
Q: Is there a stakeholder and planning process for the new plans with HB549?
A: Utilities will file plans with the PUC in March, which will go through a legal process in a docket that includes a technical session and opportunity for discovery questions. It is likely this process will move quickly and involve the existing stakeholders most directly. For members of the public interested in voicing their thoughts regarding New Hampshire’s plan for energy efficiency, you may submit written comments in the docket.
Much is left to be determined, and so the state of energy efficiency in New Hampshire is still unknown, although there is hope for the growth of future programs with the anticipated passage of HB549.