On the state level, NAESCO is defending the ESCO industry against legislation in several states that would severely restrict performance contracting, and is participating in long-term proceedings in California and New York to restructure ratepayer-funded energy efficiency programs and the utility business model.
NAESCO organized a group of ESCOs and their lobbyists to defeat legislation that was sprung on us at the end of the state legislature's 2016 session. The promoters of the 2016 legislation introduced the same legislation (SB 1287) in early 2017. NAESCO organized a 2017 lobbying campaign, funded by a 9-member ESCO Working Group, to fight the legislation. Our efforts bottled up the bill in the state Senate, though it may stay alive during 2018. The ESCO Working Group is also modifying an RFP template for K-12 projects that has been drafted by the Illinois Association of School Business Officials (IASBO) to make it more usable for ESCOs.
Governor Walker’s budget was approved and includes a provision that revokes the Revenue Limit Exemption (RLE) for K-12 ESPC projects. The RLE allowed school districts that implement ESPC projects to avoid the referenda that are normally required to raise school district debt limits because ESPC projects pay for themselves from savings. As of January 1, 2018, all K-12 ESPC financing that involves debt instruments will have to be approved by voters at regularly scheduled elections.
These legislators are now sponsoring a second bill, SB 236, which would eliminate ESPC in K-12 schools by requiring that all K-12 construction projects use traditional spec and bid procurement. This bill has passed the Senate, and NAESCO is organizing a group of ESCOs to fight it in the House.
In late December 2016, Governor Kasich vetoed legislation, heavily promoted by fossil fuel interest groups that would have made the suspension of the state’s EERS and RPS goals permanent. The legislation has been reintroduced in the 2017 legislative sessions, has already passed the House, and is now in the Senate Energy & Natural Committee. NAESCO is working with the national Business Energy Coalition (BEC) to defeat this legislation.
Connecticut and Rhode Island
The state legislatures in both states are appropriating ratepayer funding for EE programs to fill holes in the states’ general fund budgets. NAESCO worked with the Business Energy Coalition to oppose these funding cuts, and is now exploring whether it will be possible to revive the fix that funded EE programs the last time the Connecticut legislature grabbed the ratepayer funds. That fix allowed the utilities to borrow money to fund the programs, and the borrowing was repaid over several years through a ratepayer surcharge.
Business Energy Coalition (BEC)
NAESCO is working with a national organization of EE equipment manufacturers that includes Honeywell, Honeywell, Cree, Schneider, Whirlpool, UTC and Siemens; one ESCO (Ameresco) and two trade associations (NEMA and NAESCO) to fight legislation that would reduce or eliminate state EERS programs (e.g., Ohio or Connecticut). In 2017, the BEC has been active in Connecticut, North Carolina, Nevada, Maryland, Virginia, Rhode Island and Ohio, submitting testimony, appearing in legislative hearings, and organizing lobby days in state capitols.
In California, a multi-year proceeding of the CPUC that is re-working the structure of the ratepayer-funded EE programs has reached a critical phase. Utilities filed their 10-year EE Business Plans in January, and the CPUC ruled that the Plans had to be supplemented with additional information by mid-June. NAESCO and other parties believe that the Plans, as supplemented, do not conform to explicit CPUC guidance and rulings and have requested the Commission to address issues such as the minimum 60% of the portfolio that is to be outsourced to third parties, doubling the state’s implementation of energy efficiency (SB 350), and modifying the programs to recognize savings above existing conditions, with M&V based on normalized meter readings (AB 802). We have gone through multiple rounds of comments on various issues, and we now expect the Commission to issue orders on the 2018 programs, as well as additional Commission guidance on the major issues, by the end of 2017.
New York -- Reforming the Energy Vision
The New York State Public Service Commission is in the middle of a proceeding to restructure the state's utility industry to enable customers to implement the full range of Distributed Energy Resources (DERs) -- EE, RE, DR, CHP, DG -- with utility support rather than resistance.
The first stage of the proceeding established the fact that widespread DERs are technically feasible and valuable to all ratepayers, and the NY Public Service Commission (PSC) ordered each of the utilities to begin pilot DER programs.
The second stage moves the utility revenue model away from the old centralized system, in which utility financial health and profitability are dependent on kWh throughput, to a system in which the utility acts as the operator for a complex network of DERs.
The third stage is to persuade the utilities to invest stockholder funds into DER business initiatives, which would indicate that the utilities have embraced the new DER business model. The Cuomo Administration is putting pressure on the utilities to start making investments, but the utilities do not appear enthused.
It is important to note that while the PSC is moving ahead with this development, it is maintaining its commitment to NYSERDA and utility-administered EE and R&D programs, as well as to the DER financing initiative of the Green Bank. NAESCO served as part of the Best Practices Working Group, which surveyed EE programs around the country and made recommendations about initial programs that the utilities should implement. NAESCO also serves on the Advisory Board of Energize New York, the state’s PACE coordination agency.
New York Governor Andrew Cuomo, in connection with his recent State of the State address announced a plan to create new energy efficiency targets and appliance standards. He directed the state's Department of Public Service and the New York State Energy Research and Development Authority (NYSERDA) to propose new 2025 energy efficiency targets and also announced the state's plans to develop new appliance efficiency standards for products not covered by federal standards.
The following are the Governor’s three key recommendations.
Engage stakeholders in the public and private sectors, and propose a comprehensive and far-reaching energy efficiency initiative by Earth Day, April 22, 2018;
Propose a new 2025 energy efficiency target achieved through cost effective implementation strategies and innovative approaches from both utilities and the Clean Energy Fund, which will accelerate progress towards the state's ambitious climate and clean energy goals; and
Identify opportunities by which state facilities can lead by example. From NAESCO’s perspective, one immediate opportunity would be for NYPA to finally issue rules for its new ESCO program.
Governor Cuomo is re-establishing New York’s position as a national leader in energy efficiency. In recent years, following the expiration of a 15% savings by 2015 target, New York State has fallen behind many other northeastern states on the level of energy efficiency investments and savings. As a result, and as other states in the region set aggressive targets, New York slipped from third place in the 2013 ACEEE State Energy Efficiency Scorecard to a tie for seventh in the 2017 Scorecard.