Connecticut’s energy efficiency industry is graduating from light bulbs and weather-stripping to boilers and ventilation systems.
In the Connecticut General Assembly’s special legislative session on Tuesday, lawmakers approved a method of financing called Property Assessed Clean Energy for large-scale commercial efficiency measures.
“It will open up the opportunity to do comprehensive energy efficiency upgrades in the commercial market,” said Chris Halpin, president of Glastonbury energy consultant Celtic Energy.
Instead of paying for large capital improvements upfront or though significant down payments, PACE allows property owners to take out long-term loans to cover the improvement costs and pay off the loans through an annual payment added to their property tax bills.
Since the property benefits from the improvements, PACE allows for the loan to remain with the property, even if the property is sold to someone else.
“The big hurdle in expanding the implementation of energy efficiency has not been in the technology, but in the financing,” said State Sen. John Fonfara (D-Hartford), co-chair of the General Assembly’s Energy & Technology Committee.
Since commercial property owners don’t have to worry about large upfront costs of improvements, they reap the benefits of reduced energy bills immediately. Because the loan stays with the property, the property owners don’t have to consider whether they will occupy the facility until the improvements are paid off.
“It opens up a pathway to finance these deeper retrofits,” said Kerry O’Neill, senior advisor for the Clean Energy Finance Center in West Hartford.
Before PACE, the bulk of the state’s energy efficiency industry focused on the low-hanging fruit of switching out light bulbs and sealing cracks in doors and windows. With PACE, property owners can afford costly improvements such as efficient boilers, insulation and HVAC systems.
“It will create a lot of jobs,” Halpin said.
The industry will need electricians, plumbers and HVAC contractors to handle the increase, Halpin said. Even though most equipment isn’t manufactured in Connecticut, PACE will provide a boost to distributors.
“Even if the fixtures are made in China, they are sold locally,” Halpin said.
Before Tuesday’s session, the commissioner of the Department of Energy & Environmental Protection — Dan Esty — said he was disappointed the legislature didn’t pass PACE. Gov. Dannel Malloy brought Esty into the commissioner’s role to shape Connecticut’s energy policy around environmental initiatives.
“We are pleased that the legislature passed the C-PACE,” said DEEP spokesman Dennis Schain. “It is an important step to strengthening our efficiency programs.”
The Connecticut Clean Energy Finance and Investment Authority will oversee the program once Malloy signs it into law. The individual municipalities will develop the terms of PACE for their property tax rolls, but CEFIA will make sure the program is consistent throughout the state.
Gas stations forced to find private insurance
Also in the special legislative session, the General Assembly passed a measure closing an environmental cleanup fund, forcing businesses to seek private insurance while offering claimants a small percentage of the millions owed.
The Underground Storage Tank Fund was established in 1991 to meet a U.S. Environmental Protection Agency requirement that facilities with underground oil tanks — mostly gas stations — have a financial back-up against spills. Whenever a spill occurs, gas stations submit a claim to cover cleanup costs.
By 2012, poor administration and the legislature’s robbing of the fund’s financing left $18.3 million in unpaid approved claims, and $85 million in unprocessed claims. EPA warned in January it would decertified the fund if it didn’t change.
On Tuesday, the legislature offered $36 million spread over four years to pay $103.3 million in claims, and then close the fund, forcing most gas stations to obtain private insurance against spills.
“The DEEP has not gotten its arms around adequately over how many stations can get insurance,” said Gene Guilford, president of the Independent Connecticut Petroleum Association.
The $36 million is distributed evenly in four categories: municipal-owned stations; small businesses with less than six stations; mid-sized businesses with six to 99 stations; and large businesses with more than 100.
The mid and large businesses must get private insurance by October. For those with claims pending, the mid-sized can get 35 percent of what they are owed and the large can get 20 percent of what they are owed. If the stations wait to be paid, the payouts increase by 10 percent annually.
The small business and municipal stations must get private insurance by October 2013. For pending claims, they will receive 100 percent of what is owed.
Diesel tax increasing
Lastly, the legislature decided not to act on requests from the ICPA and the Motor Transport Association of Connecticut to cancel the planned 5-cent increase in the diesel fuel tax.
On July 1, the state tax on diesel fuel will rise to 51.2 cents per gallon from 46.2 cents, giving Connecticut the highest diesel tax rate in the Northeast.