Congressional help slow in coming

Every state and territory in the Union has an energy-efficiency program(s), and the energy and monetary savings that are resulting, the jobs being generated, and the polluting emissions being reduced emphasize the critical importance of these programs both in the individual states and nationwide.

Energy efficiency is the lesser known relative—at least in terms of news coverage—of renewable energy.  It is also less controversial.  While many have criticized federal mandates requiring ethanol in gasoline and giving tax breaks to builders of wind farms, few, if any, have attempted to argue against using less electricity and other resources to produce the same or better results.  Politicians on both sides of the aisle would have a difficult time telling their constituents that they should persist in using old, inefficient air conditioners or maintain drafty homes to continue to enrich energy companies. 

Accordingly, given the intense party hostilities hampering state and federal governments, support of energy efficiency is remarkably bipartisan.  This point was emphasized in a recent hearing of the Senate Energy Subcommittee, wherein several witnesses pointed out the strong interest in energy efficiency in red states.   For example, Steven Nadel, executive director of the American Council for an Energy-Efficient Economy (ACEEE), spoke highly of efforts by Mississippi to improve its energy-efficiency profile. 

The ACEEE rates the energy-efficiency performance of each state and, in recent years, Mississippi has been at the bottom of the list.  But Nadel noted that in a 2012 Energy Summit, Mississippi’s Governor Phil Bryant pledged to improve the state’s ranking and, in 2013, Mississippi was “one of the most improved states on our scorecard,.”  Nadel stated:

“In Mississippi, the Energy Sustainability and Development Act of 2013 requires all state agencies to report energy consumption or face penalties.  Agencies work with the Mississippi Development Authority’s Energy and Natural Resources Division to develop energy management plans.  The state has also set a goal of achieving 20 percent energy savings in public facilities by 2020 and has upgraded its energy codes for public and private buildings.  Mississippi is also working to improve its fleet efficiency, requiring at least 75 percent of state vehicles to meet fuel economy standards of at least 40 mpg by mid-2014.”

DOE’s State Energy Program

The subcommittee hearing was generally focused on what state energy-efficiency programs have accomplished.  An additional objective was to explore the relationship between federal and state programs to ensure that the two levels of government work cooperatively in advancing energy efficiency.  While states have taken the lead in introducing energy-efficiency programs, multiple witnesses lauded the Department of Energy’s (DOE) State Energy Program (SEP). 

The SEP provides financial and technical assistance to states through formula and competitive grants.  States use their formula grants to develop state strategies and goals to address their energy priorities.  Competitive grant solicitations for the adoption of energy-efficiency/renewable energy products and technologies are issued annually based on available funding.  States provide a 20 percent match under SEP annual formula allocations.

Part of the hearing also addressed the Energy Savings and Industrial Competitiveness Act (S. 1392), a bill that would create new federal programs and strengthen existing ones based on state experience.  Again, the bill has considerable bipartisan support, as does companion legislation in the House.  In the hearing, Senator Jeanne Shaheen (D-NH) indicated the legislative interest in energy efficiency by noting that there are about 10 additional bills being considered for inclusion in S. 1392.  Senator Shaheen is cosponsoring S. 1392 along with Senator Rob Portman (R-OH).  In testimony, William Taylor, vice-chairman of the National Association of State Energy Officials (NASEO), listed several of those amendments:

• The Sensible Accounting to Value Energy Act would allow federal mortgage loan agencies to consider a homeowner’s expected energy costs when determining the homeowner’s ability to make monthly mortgage payments.
• The Better Buildings Act would establish energy-efficiency best practices for tenants in commercial building spaces.
• The Weatherization Enhancement, and Local Energy Efficiency Investment and Accountability Act would reauthorize and extend the Weatherization and Assistance Program (WAP) and the SEP. 
• The Local Energy Supply and Resiliency Act would establish a grant program in the DOE to provide technical assistance for identifying, evaluating, planning, and designing waste heat recovery systems for heating, cooling, and power generation.  The bill would also authorize the DOE to provide loan guarantees to projects that recover waste heat or use local renewable energy for heating or cooling; generate power locally with combined heat and power or renewable energy; and distribute heating or cooling energy to buildings.

State examples

But, as noted, the hearing sought to highlight the many state programs that have helped make energy efficiency a common cause in every region of the country.  Following, in no particular order, are some state programs, in addition to Mississippi’s, that were called out by witnesses at the subcommittee hearing.

• Efficiency Vermont operates energy-efficiency programs in most of the state.  Over the past decade, Efficiency Vermont’s programs have reduced electricity use by about 12 percent, a figure that is increasing by about 2 percent each year.  In 2012, according to an Efficiency Vermont estimate that has been verified by the state regulator, the programs provided the state’s consumers and businesses with net economic benefits of $102 million.  An independent study estimated a net gain of about 1,900 job-years from 2012 investments plus spending of the money saved as a result of efficiency measures installed in 2012.
• Texas’s Loans to Save Taxes and Resources(LoanStar) is a revolving loan program that has operated for 2 decades and has provided hundreds of millions of dollars in low-cost financing to public facilities to implement energy and water efficiency improvements.  “The energy savings have exceeded the costs and there has never been a loan default,” testified NASEO’s Taylor, who is also director of the Texas State Energy Conservation Office.
• Minnesota launched the Buildings, Benchmarks & Beyond (B3) Project, an energy simulation model that compares a building’s actual energy to its expected usage based on the building’s size, space types, occupancy, climate, and current energy code.  Benchmarking provides a focus to find buildings most in need of energy conservation improvements, in contrast to a random approach to fixing buildings, which can result in higher costs.  Senator Al Franken (D-MN) has introduced legislation that would require benchmarking and public disclosure of the results for all buildings leased by federal agencies that have not earned the Energy Star label.
• Because of the difficulty of delivering oil to Hawaii, the state has the highest electricity rates in the nation.  In response, Hawaii adopted a renewable portfolio standard in 2009 that requires that 40 percent of electricity be generated from renewable sources by 2030.  Also in 2009, the state adopted an energy-efficiency portfolio standard to reduce electricity use by 4,300 gigawatt-hours by 2030, roughly a 40 percent reduction in electricity use from 2007 levels. 
• Arkansas has developed a loan-loss reserve or on-bill financing program through utility bills.  On-bill financing allows a property owner to finance energy-efficiency improvements through a charge on the utility bill.   The repayment amount is indicated on bills, based on projected savings.  As with many other states, Arkansas has targeted multifamily housing for energy-efficiency services—low-income homes are a special problem since the percentage of their income used by residents to pay for energy is so high.
• Oklahoma, like Mississippi, is one of ACEEE’s “most improved states.”  The state offers a tax credit along with three loan programs for energy-efficient residential construction.  Oklahoma is also considering energy-efficiency rules.
• Connecticut has passed legislation that will double funding for ratepayer-funded energy-efficiency programs and require decoupling to be approved by state regulators.  (Decoupling is a mechanism that eliminates disincentives for utilities to help their customers become more energy efficient.)  Combined with financing programs established in 2012 and 2013, this level of program investment puts Connecticut on the path to capturing all cost-effective efficiency. 
• Alaska established a $250 million Energy Efficiency Revolving Loan Fund in 2010.  The fund is available to finance energy-efficiency improvements on public facilities throughout the state.  Initially, SEP funds were used to collect benchmarking data on approximately 1,300 public facilities, plus an additional 100 university-owned buildings.

“We find that the number of state energy efficiency programs and policies is increasing each year,” said ACEEE’s Nadel.  “State action and leadership on energy efficiency are particularly important given the difficulties Congress has had in reaching consensus on energy policy in recent years.”

SEP’s per-dollar benefits

Despite congressional paralysis with the many energy-efficiency bills its members write, the federal government is clearly an important member in the advancement of energy efficiency at the state level.  Again, DOE’s SEP is probably the prime federal mechanism. 

“The State Energy Program has a history of success working across all sectors of the economy and supporting cost-effective energy efficiency improvements,” noted Mike Rothman, commissioner of the Minnesota Department of Commerce.  “The last comprehensive study of the program by Oak Ridge National Lab showed that each federal dollar invested in the State Energy Program is leveraged by nearly $11 of state and private funds and results in more than $7 in annual energy savings.  These SEP-supported projects and programs include a wide-range of activities, such as school and public building energy efficiency programs, energy efficiency financing activities, industrial and commercial programs, and energy efficiency for homeowners, and agricultural projects.”

Congressional testimony on lessons learned from state efficiency and renewable programs

William C. Schillaci