Patrick-Murray Administration Announces Final Approval of Nation-Leading Energy Efficiency Plans
Efficiency program ramp-up under Green Communities Act is estimated to lock in savings of $6 billion for electric and natural gas customers
"These plans provide a roadmap toward a clean energy future that includes more local jobs in the efficiency sector, a cleaner environment thanks to fewer power plant emissions, and lower electric and natural gas bills for consumers residing in more energy efficient, comfortable homes," Governor Deval Patrick said.
The Green Communities Act signed into law by Governor Deval Patrick in 2008 required the state's investor-owned electric and gas utilities (and the Cape Light Compact, which operates efficiency programs on Cape Cod) to prepare energy efficiency plans that secure for their customers all available energy efficiency and demand reduction resources that cost less than new energy supply. Following an exhaustive process led by EEA's Department of Energy Resources (DOER) and Attorney General Martha Coakley's office, the Energy Efficiency Advisory Council created by the Act unanimously approved the electric and natural gas utilities' three-year efficiency plans last fall, and the utilities filed them with the DPU on October 30, 2009.
"Cost-effective energy efficiency programs provide readily available options for consumers to control and reduce their energy consumption which can lead to lower bills, lower overall electricity demand and lower emissions from power plants," said Attorney General Martha Coakley. "We applaud the department's approval of these groundbreaking plans that were developed by a diverse group of stakeholders over the past year. We look forward to now working to ensure that they are implemented in a manner that will help families and businesses in the Commonwealth cope with our region's high energy costs."
"The Green Communities Act established energy efficiency as the Commonwealth's 'first fuel' - what we look to first to power our homes and our economy," Secretary Ian Bowles said. "With this DPU action, we are off and running, pulling out all the stops to cut energy waste, save money and reduce greenhouse gas emissions in buildings across Massachusetts."
Following a 90-day review period, during which it held a series of public and evidentiary hearings, the DPU yesterday approved plans that call for electric and gas utilities to invest approximately $2.2 billion in efficiency measures over three years. Funding for the programs will include existing charges on ratepayer bills, carbon allowance auction proceeds from the Regional Greenhouse Gas Initiative (RGGI) - the nation's first functioning carbon market which has generated $79 million in auction proceeds to date, regional energy market revenues, and customer contributions. While utilities are allowed to recoup the cost of efficiency measures through rates (just as they would to pay for new supply), resulting improvements are projected to save participating electric and natural gas customers three times as much in the long run - more than $6 billion over the lifetime of the energy efficiency measures installed, rocketing Massachusetts to the front of the national pack in terms of per capita savings through energy efficiency.
"Today's decision levels the playing field, putting energy efficiency on equal footing with new energy supply when it comes to powering our economy," DPU Chairman Paul Hibbard said.
"The initiatives launched by these plans are expected to create or maintain nearly 4,000 jobs in Massachusetts," DOER Commissioner Phil Giudice said. "In the process, we'll reap unprecedented savings for consumers, spur growth in the clean energy sector and cut greenhouse gas emissions from power plants."
Greenhouse gas reductions attributable to electric and natural gas efficiency steps taken as a result of three-year plans are estimated at 15 million tons over the lifetime of the measures installed.
Hammered out during 25 Energy Efficiency Advisory Council meetings between November 2008 and October 2009 involving a wide range of energy, environment and business stakeholders, the new efficiency plans require investor-owned electric and gas utilities to scale up their energy efficiency programs to reach greater numbers of customers than ever before. Types of programs and services offered under the plans include improved energy assessments of ratepayers' homes, and incentives for purchase and installation of high efficiency lighting, appliances, heating and air conditioning, and insulation and air sealing.
The plans call for better outreach to and education of energy consumers about the availability and benefits of energy efficiency programs, including outreach that is multicultural and multilingual, community-based, and geared toward new markets such as small family-owned businesses. Relying on traditional public information campaigns as well as new social media techniques, this outreach is expected to triple the number of Massachusetts customers that have historically tapped into efficiency programs offered by public utilities.
On the electric side, the plans set an energy savings target of 2.4 percent of electricity sales in 2012, which would reverse the overall electricity usage trend from growing roughly 1 percent per year to declining 1.4 percent per year. Previous electric utility energy efficiency programs have produced savings of 0.8 percent to 0.9 percent annually. Energy efficiency investments to reach the 2012 target will save approximately 2,600 gigawatt-hours of electricity - enough to power more than 350,000 households, or 15 percent of the utilities' residential customers, for one year. With electricity savings of 2.4 percent per year going forward, Massachusetts would meet nearly 30 percent of its electricity needs through improved energy efficiency, rather than additional power generation, by 2020.
"The actions taken today by the Massachusetts DPU prove that there is still an enormous reservoir within our state and communities for leading the way toward a clean and efficient, low-carbon energy future," said Kateri Callahan, President of the Alliance to Save Energy. "It is especially significant that when the state's electric utilities meet their new targets for energy efficiency this will not only slow but actually reverse the historical trend of growing electricity demand. At the same time, these new programs - which make Massachusetts first in the nation in terms of per capita investment in energy efficiency - will reduce utility bills for consumers and businesses and add or save an estimated 4,000 jobs statewide over the next three years."
"With approval of this plan, Massachusetts moves ahead of the pack relative to most other states. By 2012, it is likely that Massachusetts will be number one in terms of per capita commitment to energy efficiency programs," said Steven Nadel, Executive Director of the American Council for an Energy Efficient Economy (ACEEE). "Massachusetts' efforts on energy efficiency will help the state's economy and environment, and will show other states a path they too should follow."
"Every company in Massachusetts should now be thinking about how they can save energy by taking advantage of these new energy efficiency programs," said Robert Rio, Senior Vice President of Government Affairs for Associated Industries of Massachusetts.
"We now have the most cutting edge efficiency programs in the nation. They will produce unparalleled savings to fuel business competitiveness and put billions back in consumers' pockets to re-invest in other parts of our economy," said Sam Krasnow, Policy Advocate and Attorney for Environment Northeast.
"Energy efficiency is the cheapest and most effective tool we have to combat climate change. The newly approved utility energy efficiency plans now can deliver on their promise to drastically reduce greenhouse gas emissions while also delivering major economic dividends to the Commonwealth. Being green and saving money is a great combination," said Conservation Law Foundation President John Kassel.
Funded over three years with $1.7 billion from distribution charges on electricity bills, the proceeds of Regional Greenhouse Gas Initiative allowance auctions, customer contributions, and third-party capital, the electric energy efficiency plans are expected to lock in energy savings of nearly $5 billion.
A similar set of natural gas plans target equally aggressive energy savings. Costing $480 million over three years, natural gas efficiency programs are expected to produce total energy cost savings of $1.1 billion for consumers over the lifetime of efficiency measures installed. The natural gas efficiency plans set an energy savings target of 1.15 percent of natural gas sales in 2012, with aggregate savings over three years of 57 million therms.
"One of the greatest tools we have at our disposal to address rising energy costs is for our utilities to buy lowest cost energy efficiency services before going out to buy new power," said State Senator Michael W. Morrissey, Senate chair of the Committee on Telecommunications, Utilities and Energy.
"This approval will allow electric and natural gas companies across the Commonwealth to help consumers conserve energy, reduce waste, and cut down on their bills," said Representative Barry Finegold, House chair of the Committee on Telecommunications, Utilities and Energy. "I am excited that these new programs will help utilities reach more customers than ever before."
A redesigned and improved web site providing a single point of entry for energy efficiency programs serving all utility customers - www.masssave.com - will launch next month.