News Detail

01.5.2010

Testimony of D. Dickinson Henry, Jr.;Executive Director of The Jordan Institute Re: SB 300 before the Senate Environment Committee, January 5, 2010

Thank you Madame Chairman and members of the committee for this opportunity to testify today. I speak today in opposition to SB 300 as currently written.

I. Introduction.

My name is Dickinson Henry. I am Executive Director of The Jordan Institute, anon-profit organization dedicated to improving the energy efficiency, energy conservation, and the use of renewable energy in buildings. I serve as a member of the Energy Efficiency and Sustainable Energy Board. I serve on the advisory committee to the CORE electric efficiency programs and have been an intervener in the CORE program dockets at the PUC for the last three years. Fifteen years ago, I helped found and served as the director of the Electric Utility Restructuring Collaborative representing small business,environmental, and low-income constituents in the restructuring process. The Collaborative provided the groundwork for what eventually became the Systems Benefits Charge program in 1999. It is this program that SB 300 is addressing to modify today.

I fully support the legislative goal of assistance to low-income customers for their electric bills.  However, I oppose the legislation in its current form because it provides a limited short term fix at a huge, long term cost by misallocating resources, reinforcing inequities over time, derailing conservation measures vital to the state’s economy and hindering achievement of goals outlined in the Governor’s Climate Change Action Plan. I propose an alternative solution that will increase funding for the Electric Assistance Program and can be accomplished without raising electric bills.

II. Background.

The current Systems Benefit Charge (“SBC”)funds two programs annually: the Electric Assistance Program (“EAP”) which receives approximately 16 million dollars, and the CORE energy efficiency programs which receive about 19 million dollars. The EAP program serves low-income residential customers who apply annually through NH’s 6 Community Action Agencies. It provides a variable discount on electric bills, based on income and family size, through a payment made directly to the utilities. Its benefit is to lower a customer’s bill for a given period, which helps to prevent shut offs, but provides no long term relief to those consumers who most need it, and who often live in the least efficient housing stock in the state.

In contrast, the CORE efficiency program serves all classes of customers and provides a number of programs to reduce the life cycle costs of a wide variety of energy measures. Approximately 75% of all CORE funding goes to increase efficiency in lighting. Important features of the CORE programs are:

·        they generally return about eight dollars in savings for every dollar invested;

·        they leverage investment by customers, thus harnessing the power of the private markets to implement energy efficiency all across New Hampshire in every sector;

·        they cost about 2.4 cents per kWh saved versus eight to nine cents for new energy supply;

·        they reduce New Hampshire’s carbon foot print by about 500,000tons of CO2 a year, helping us meet the Governor’s New Hampshire Climate Action Plan which many of you helped develop;

·        they create jobs. For every $80,000 dollars or so we invest in energy conservation, we create or preserve a job in the energy efficiency businesses here in the state.

If the five million dollars being considered here is shifted for eighteen months from CORE programs to EAP programs,they will temporarily reduce low income customers bills, but they will:

·        eliminate $40 million dollars of energy savings;

·        have no return on investment;

·        leverage no private dollars;

·        avoid or postpone no new energy generation;

·        increase the state’s carbon footprint  by about 82,500 tons of CO2;

·        eliminate approximately 60 to 70 new jobs in the state;

·        disrupt successful CORE energy efficiency programs.

In addition, approximately $725,000 of the five million dollars slated for transfer from CORE programs to EAP would have gone specifically to low income CORE programs. This would have amounted to about a $5,800,000 dollar in energy savings to low income recipients over the life of the installed measures. Those low income recipients who will not receive these services are essentially subsidizing the onetime benefit proposed here, and most importantly, will lose the opportunity to have their homes weatherized.But this transfer also loses another $34 million dollars in savings in other sectors as well.

 It is critically important that we develop an alternate approach to meeting the immediate needs of low income electric customers, one that does not sacrifice the stable, long term solution to their energy needs as well as other vital state wide initiatives.

III. The Impact of Oil and Electric Prices in 2009.

One of the benefits of the 2010 CORE program is that we are continuing the work of the utilities to implement conservation and efficiency measures that will also reduce the use of fossil fuels. This is called the fuels blind pilot.

As81% of all homes in NH heat with a petroleum product, such as oil, kerosene, or propane, now is a critical time to be reducing customers’ usage of fossil fuels and not just of electricity.  Over the past year, the price of oil has gone from a low of $32.00 a barrel to a high of $82.00. This morning it was $81.45a barrel, about a 155% increase from the twelve month low.  With a weakening dollar and cold weather, the price of oil is expected to rise even further in the next few months. During the same period, the average price of electricity in New Hampshire has fallen about 12% from 16.46 cents to 14.41 cents as a result of the large amount of electricity generated from gas and the paying off of a number of stranded costs.

Atypical electric customer who uses about 6,000 kWh a year has an annual electric cost of about $870 dollars. The average home uses about 920 gallons of oil annually, which at December 22^nd’s prices ($2.636/gal) equals about $2,425 dollars a year. Propane and kerosene are used extensively by low-income customers and are even more expensive ($2.732/gal for propane and$3.095/gal for kerosene). Higher oil prices are going to hit everyone much harder than electric prices - especially low-income consumers. By cutting CORE funding this program to reduce fossil fuel use will suffer as well.

IV. Critical Year for the CORE Programs.

The combination of ARRA funding with the CORE programs for the next two years allows us to make real progress towards the state’s climate action plan goal of retrofitting 30,000 homes annually for the next fifteen years.  CORE Programs are testing a number of approaches this year, we have increased the funding to low-income recipients, and will meet monthly to further develop these initiatives. In addition, we are planning the integration of the gas utility programs with the electric programs for 2011 CORE program.   But make no mistake;there is not “enough” money in the state to do all of the energy efficiency that we need to do, we need to address over 600,000 buildings in the next fifteen years.

As the CORE programs become more comprehensive, consistency and reliability is vital to their continued success.   Whether it is a commercial enterprise, a builder trying to reach Energy Star home status or an individual waiting to take advantage of a rebate program, each participant must be able to count on these benefits. Frustration with interruptions and delays, such as we experienced with similar legislation in 2005, sets back overall implementation of conservation and energy efficiency measures throughout the state, and stunts the business growth that we desperately need.

Consistency is particularly important to commercial and industrial customers who operate on longer time lines and undertake more complex projects than individual homeowners. These sectors contribute more than 50% of the total Systems Benefit Charge funding. In 2009, they have demonstrated a significant upsurge in interest and participation leading to waiting lists for nonresidential programs.  CORE funding cuts will harm the same New Hampshire businesses whose recovery from daunting economic conditions is so important to employment throughout the state.

V. Expand the SBC while Encouraging Conservation

I applaud the legislators who want to help low income individuals and families meet their energy bills. The only sustainable way to improve their situation is to reduce their need for energy. Paying for inefficient uses of energy at the expense of lasting conservation measures hurts everyone. I believe we do need an immediate influx of funds to the EAP, the most appropriate place to turn is the Systems Benefit Charge.

Increasing the SBC by .3 mills per kWh (that’s three one thousandths of a dollar), adds about 18cents to the average monthly residential bill in the state, less than it costs to park your car on Main Street in Concord for half an hour. Customers can keep their electrical bills exactly the same, even with this increase, through simple conservation measures. If every resident in the state turned off one 100 watt light bulb for twenty minutes a day, their savings would cover the SBC increase.Alternatively, replacing one incandescent bulb with a Compact Fluorescent Light bulb would also cover the increased cost per month. And, the CORE program subsidizes CFLs with a rebate.Expanding the SBC doesn’t mandate increase electrical bills for consumers.

In thinking about this problem, imagine New Hampshire’s housing stock as a huge leaky energy bucket. As energy prices increase, the leaks get even bigger, as energy gets more and more expensive; we have to spend more and more dollars for the same net benefit. When we add dollars to the bucket:

·        our dollars go overseas, often to hostile regimes,

·        we divert resources from our local economy,

·        we generate more greenhouse gases.

When we fix the bucket through the CORE programs:

·        we keep our dollars  in New Hampshire,

·        we create and preserve more jobs,

·        we lower our energy requirements permanently and reduce our carbon footprint.

With your leadership, we can meet short term needs and continue vital efficiency and conservation programs by increasing the SBC rather than by cutting CORE funding.

The 3/100^thof a cent Solution.

I respectfully recommend to the Committee that SB 300 be amended to require the Public Utilities Commission to raise the EAP portion of the SBC by .3 mills (an increase from $0.0033 to$0.0036 per kWh). This approach will:

• meet the needs of low-income customers on the EAP waiting list
• preserve the existing highly cost effective CORE energy efficiency programs
• avoid raising monthly bills through simple conservation measures
• and reduce the state’s carbon footprint, helping us to meet the goals in the Governor’s Climate Change Action Plan.

Please use your leadership to make sure our dollars are spent wisely, don’t cripple successful,permanent solutions for temporary benefits. I’m happy to answer any questions

D.Dickinson Henry, Jr.

Executive Director

The Jordan Institute

49 N Main St.

Concord,NH 03301

dhenry@thejordaninstitute.org

226-1009x 202