Rhode Island climate activists are criticizing a plan to fund the state’s climate council with money that otherwise would go toward energy efficiency programs.
As part of his overall budget proposal last month, Gov. Dan McKee said he wants to direct $6 million annually to the Executive Climate Change Coordinating Council, known as the EC4, as it develops a plan to meet the ambitious mandates laid out in the state’s 2021 Act on Climate.
Activists say that funding is welcome, but the source is a sore point. The governor’s plan is to divert the money from ratepayer-funded energy efficiency programs administered by National Grid.
The state’s efficiency programs, which help homeowners and businesses reduce their energy use, costs and emissions, consistently rank in the top five nationally in the annual scorecard by the American Council for an Energy-Efficient Economy. They are funded through a surcharge on customers’ natural gas and electric bills.
Hank Webster, Rhode Island director for the Acadia Center, said that since the climate crisis impacts everyone in the state, it is inequitable to ask only National Grid ratepayers to foot the bill for the EC4.
“The governor is relying on the backs of gas and electric ratepayers, but asking nothing of the state’s oil and propane users,” Webster said. “And none of the companies engaged in the sale of fossil fuels are being asked to put up anything.”
The state has plenty of other funding options that would spread the burden in a more balanced fashion, including drawing on its sizable treasury surplus, he said.
“We aren’t endorsing anything specifically, but we know the money is out there,” he said. “For example, they could alter the vehicle inspection fees and set aside part of that for climate action.”
Kai Salem, policy coordinator for the Green Energy Consumers Alliance, called the proposed diversion “egregious” in that it would take money away from programs that have been proven to deliver savings, environmental benefits and health improvements to ratepayers.
“I would prefer they ask for a smaller amount of money to staff the EC4 this year, and then come back next year with a plan for a strong funding program,” possibly involving carbon pricing, general taxpayer revenue, or federal funding, Salem said.
The EC4, made up of representatives from 12 state agencies, has never received funding since its establishment in 2014. It has met regularly, under the helm of the director of the Department of Environmental Management. The Act on Climate places more responsibility on the council, directing it to come up with a plan to incrementally reduce climate emissions to net-zero by 2050.
The governor’s office insists that funding the EC4 with energy efficiency funds will have no negative impact on those programs. That’s because in order to offset the $6 million, McKee is proposing the elimination of the annual incentives paid to National Grid for hitting performance targets in its administration of the programs.
The administration wants the Office of Energy Resources to make the operation of the programs more cost-competitive by issuing a request for proposals for their administration by March 31, 2023. The agency would then determine whether administration by a third-party operator would be in the best interests of consumers.
“This proposal mitigates ratepayer impacts while establishing, for the first time, dedicated funding to support achievement of mandates under the Act on Climate through EC4,” said a spokesperson for the governor.
Advocates are dubious. The level of performance incentives paid out to National Grid annually isn’t always as high as $6 million, Salem said. And eliminating the tool used by regulators to ensure the programs are run well makes little sense, she said.
“There are an infinite number of ways that National Grid could not run these programs well,” she said. “We believe that by eliminating regulators’ ability to set incentive goals and make sure National Grid is hitting their targets, it will reduce the quality of the programs.”
While the programs have been very successful, advocates note that they are still undersized relative to their potential. A study performed for the state in 2020 found that the electric energy efficiency programs would ideally be sized at more than $200 million annually to take full advantage of all cost-effective energy savings, Webster said. The program proposed by National Grid for fiscal year 2022 is about $123 million.
The last time Rhode Island lawmakers scooped energy efficiency funds for other purposes was in 2017, when they passed a budget article ordering the transfer of $12.5 million to the state’s general fund, according to Cindy Wilson-Frias, chief of legal services at the state Public Utilities Commission.
A law passed last year permanently allocates $5 million in energy efficiency funds annually to the Rhode Island Infrastructure Bank for use in any financing program for energy efficiency, renewable energy or demand-side management.