Surging public demand for energy efficiency programs has overwhelmed utility company budgets and prompted the Department of Public Utility Control to propose cuts in the ratepayer-funded initiative.
Last year, Connecticut Light & Power and United Illuminating Co. overspent their Conservation and Load Management budgets by almost $27 million.
While the DPUC had allowed the companies to borrow against 2008 funds for the programs, it now proposes to crack down on future borrowings.
“To continue to borrow from future collections is plainly an unsupportable and unsound fiscal policy that the department will not allow or otherwise authorize,” the DPUC wrote in a draft decision May 28. Spokeswoman Beryl Lyons said that the department will prepare a final decision by Thursday.
But CL&P said its customers are more interested than ever in the energy-saving CLM programs. The utility is on pace to spend $104 million on CLM programs this year, about 33 percent more than the $77.2 million the department proposes to authorize.
“Unfortunately, the current budget approved by DPUC can’t support the present increase in demand,” said Mitch Gross, a spokesman for CP&L. “We’re not surprised by the increase because we’ve been seeing it for the last several years. But right now the demand has overstretched our budgets and will continue to do so without additional funding.”
Generation Costs Soar
The company said in its written comments on the DPUC plan that electricity generation costs are up 93 percent from January 2000 on an inflation-adjusted basis, and that its customers are responding to state-sponsored energy efficiency offerings.
The programs include price incentives to buy compact fluorescent light bulbs, energy efficiency assessments of homes and businesses and rebates on energy efficient appliances.
If the DPUC’s draft proposal stands, CL&P said it would curtail all commercial and industrial programs immediately and greatly reduce its residential programs.
The state government has generated significant momentum for energy efficient programs. In 2007, the legislature passed an energy efficiency bill that mandated efficient practices on the part of electricity distribution companies and offered rebates and bonds to taxpayers taking part in the programs.
CL&P suggested that if the DPUC’s proposal stands, the state should delay the launch of a $5 million energy efficiency campaign until 2009 because company officials believe it will only increase demand that won’t be backed by funding.
Environment Northeast, a Boston-based nonprofit group with an office in Hartford, opposes DPUC’s strategy of curtailing borrowing for energy efficiency programs.
Jessie Stratton, Environment Northeast’s deputy director, said the DPUC proposes to cut $20 million in energy efficiency funding for CL&P alone. That could translate into $80 million in new generation costs.
Balance needed
“The fact these programs are oversubscribed is good news,” Stratton said. “There needs to be a ramping up of efficiency programs because the state has mandated this direction.”
Stratton said state officials should pursue other funding sources, if necessary, rather than risk squelching customer demand for energy efficiency.
But the DPUC’s Lyons said, “People need to focus on the fact that our mandate and reason for [its] existence is to look out for ratepayers. That’s why we have to look to cut budgets.”
Mary Healey, director of the state’s Office of Consumer Counsel, said a balance needs to be struck between the availability of energy efficiency programs and the burden on the ratepayers who fund them.
Healey said the efficiency programs disproportionately help businesses because the barrier to entry is too high for most utility customers.
“While OCC has been a longstanding advocate for cost-effective energy efficiency measures, in today’s economic climate we must also remain cognizant of the impact of these measures on customers’ bills,” Healey wrote.
“We will certainly work within the budget the department approves,” CL&P’s Gross said. “But there must be an understanding that our budgets have gone up because of ratepayer demand for these programs.”
