October 12, 2011

Connecticut’s new energy department taking shape

The plan to turn Connecticut into a leader in clean energy technology, renewable resources and lower cost electricity is beginning to take form.

“We are at that transformational moment,” said Kevin DelGobbo, chairman of the Connecticut Public Utilities Regulatory Authority.

When Gov. Dannel Malloy signed a comprehensive energy policy reform law in June, the legislation was high on concepts and big-picture moves but low on the details of how Connecticut could become an energy leader while also lowering its overall costs.

More than three months after the energy bill created a new Department of Energy & Environmental Protection, Malloy and state energy officials are putting the pieces in place for those concepts to be realized.

Those small details now include weatherizing 80 percent of all Connecticut homes by 2030; determining if the $2.9 billion in estimated costs of implementing the state’s renewable portfolio standard can be lessened if hydroelectric power plays a greater role; and examining the way New England pays for its electricity.

Malloy told the attendees at the Connecticut Business & Industry Association and Connecticut Power and Energy Society’s What’s the Deal? Energy Conference on Oct. 5 that the low-hanging fruit would come first.

Since Connecticut has the highest electricity rates in the nation — behind only Hawaii year-round and New York in the summer — it must be first in energy efficiency, Malloy said. By using less energy, businesses and homeowners could lower their bills, even if their rates are still high.

With its many programs — particularly the Homes Energy Services weatherization program — Connecticut used to be a national leader in energy efficiency, ranked No. 1 in 2007 by the American Council for an Energy-Efficient Economy. That rank slipped to No. 3 in 2008 and 2009 before dropping to No. 8 in 2010.

Connecticut slipped over the past four years because the state lowered its spending for energy efficiency programs; lowered its goals for efficiency while other states raised them; had fewer state government initiatives; and lost ground to other states in areas such as building energy codes and appliance efficiency standards.

Malloy said the state will get back on track with its programs and accelerate the changes and the goals to move ahead of states that are also implementing progressive goals. The changes need to be long-term, more than just switching out light bulbs. They need to focus on items such as appliance standards and financing energy efficient equipment upgrades.

“If we go from the eighth most efficient user of energy to first, that will create jobs,” Malloy said.

To put downward pressure on electricity rates, the state government needs to cut the number of fees it collects on ratepayers’ bills, Malloy said. His administration took the first step by eliminating all borrowing against electricity bills; but the cuts must go deeper.

“We are going to change that over time,” Malloy said.

Other opportunities to lower energy costs include bringing in low-cost power from Canada, and Malloy said he has contacted officials in Newfoundland & Labrador about bringing their electricity to Connecticut.

But while Connecticut wants to lower its overall energy costs, Malloy’s energy policy also calls for aggressively making the state a national leader in renewable energy use and research and development in clean energy technology, which comes at a cost.

Programs such as the newly created zero emissions renewable energy credit and low emissions renewable energy credits will add costs to ratepayers’ bills as the electric utilities are required to pay ZRECs and LRECs to make solar, fuel cell and other clean energy projects more affordable and abundant.

To marry these initiatives to lower costs while growing the clean energy industry, the Department of Energy & Environmental Protection is filling out its energy bureau with an eye toward reconciling these competing interests.

Before DEEP was formed, Connecticut had no agency to set energy policy, DelGobbo said. The only policies set were short-term and typically done under the limited purview of the Department of Public Utility Control, which is now organized under DEEP as the Public Utilities Regulatory Authority, or PURA.

“Energy is a lot more than electricity,” DelGobbo said. “It is more than we regulate.”

The two branches of the DEEP energy bureau will be PURA and the branch setting energy and technology policy. The latter will include policy and planning; operations of clean energy and efficiency programs; research; transportation and infrastructure initiatives; reduction of energy use by state-owned buildings; and a procurement manager dedicated to buying energy at lower costs.

One of the immediate policies will be looking at the pricing model used by ISO New England to set the wholesale electricity price for the region. The model says all power generators receive all the same price per kilowatt hour of electricity, regardless of how much it costs them to produce that electricity. Connecticut argues this pricing model drives up costs, particularly for a state that gets 45 percent of its electricity from low-cost nuclear.

“We are finding that our neighboring states are interested in looking at that as well,” said Jessie Stratton, DEEP director of policy.

DEEP also will examine the role of better including hydropower in the state’s renewable portfolio standard. The standard calls for 20 percent of the state’s electricity to come from renewable resources such as solar and wind by 2020. The cost of meeting this standard could climb as high as $2.9 billion over the next nine years — as much as $100 annually for ratepayers — but that price tag could be sharply reduced if low-cost hydropower is included.

Other efforts include folding water policy into energy policy, examining the role of the transportation sector and developing an infrastructure strategy.

“We have a very aggressive agenda, and we are trying to be very serious about that,” Stratton said.


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