An investigation by New Hampshire utility regulators into the state’s energy efficiency programs is drawing loud objections from the state consumer advocate, the utilities that operate the programs, and efficiency advocates.
It was less than a year ago that the New Hampshire Public Utilities Commission issued a now infamous order that rejected the utilities’ proposed three-year plan to expand the ratepayer-funded programs, which operate under the umbrella NHSaves. Instead, the commission slashed the rates that support the programs and said cuts would continue in the future in order to transition to “market-based” programs.
That decision prompted lawsuits, widespread criticism and cries of foul from energy contractors with jobs in the pipeline. In response, state lawmakers came up with a legislative solution, passed early this year, that established funding levels going forward for NHSaves, although at levels considerably lower than had been anticipated.
The statute, known as House Bill 549, sets a deadline of July 1, 2023, for the utilities to submit their next Triennial Energy Efficiency Plan, which will outline the 2024-2026 spending plan for services such as energy audits, home weatherization, and appliance rebates, for commission approval.
But about two months ago, the commission issued a notice that it is opening an investigation ahead of that filing to explore “whether changes to current efficiency programming, planning, performance incentives, and evaluation are warranted.”
The proceeding “is a direct affront” to the legislative directives in HB 549, said Donald Kreis, the state consumer advocate, in a motion calling for the cancellation of the proceeding.
In an email, Kreis said the commission is “attempting to embroil itself” in the process of developing the triennial plan, a task which is customarily left to the utilities in collaboration with energy efficiency experts, the office of consumer advocate and other stakeholders.
Not only is the commission’s involvement inconsistent with the statute’s directive, but “it also reflects a misperception of the appropriate role of a utility regulator,” Kreis said. “Regulating a utility is not the same as running a utility, even when the utility is deploying energy efficiency programs.”
HB 549 sets the parameters for NHSaves, including funding levels, the method for measuring cost-effectiveness, and utility filing requirements. Yet the investigative docket “seems to question what was set in statute,” said Nick Krakoff, a staff attorney for the Conservation Law Foundation, an intervenor in the proceeding.
For example, he said, “the statute establishes the primary test to be used to determine cost-effectiveness. So really that should be the end of the matter. That the commission seems to want to reexamine that is very concerning.”
NHSaves is designed to save energy, lower consumer bills, and reduce greenhouse gas emissions. From 2018 to 2020, NHSaves reduced carbon emissions in the state by more than 3.3 million tons, according to a report from the four electric and gas distribution companies that operate the program. For every $1 invested in energy efficiency, $3.37 in benefits were generated, the report said.
But in its 2021 ruling, the commission expressed a preference for “the development of market-based, not utility-sponsored and ratepayer-funded, energy efficiency programs.”
State Rep. Michael Vose, R-Epping, a chief sponsor of HB 549, said he doesn’t have a problem with the Public Utilities Commission’s current investigation.
“The PUC thinks that maybe those programs ought to be looked at more closely to make sure they’re as cost-effective as they can be,” he said. “They want to look at how the next energy efficiency plan is going to be put together.”
HB549 effectively put “guardrails” on spending for the program, he said, as the utilities “were being too aggressive. All they could see were the benefits of energy efficiency and they totally ignored the costs.”
But in a motion objecting to the investigation, Eversource, New Hampshire Electric Cooperative, Liberty Utilities and Unitil Energy Systems said the statute clearly spells out the commission’s role as the reviewer of the energy efficiency plan.
“If HB 549 had intended for the commission to manage and oversee the development of these plans, language to that effect would have been included in the statute,” the utilities said in the filing.
In addition, they said, having to participate in the investigation at the same time they are collaborating with stakeholders in order to put together the three-year plan creates an “unreasonable burden” on staff that is “untenable.”
The last plan rejected by the commission proposed spending more than $350 million on energy efficiency over three years, the state’s most ambitious plan yet. The plan was to be funded through the system benefits charge on ratepayer bills, proceeds from the Regional Greenhouse Gas Initiative, and carry-over revenues from the forward capacity market.
The next plan must stay within the funding levels prescribed by HB 549, which sets funding at 2020 levels, with modest increases allowed for inflation, Vose said.
The commission has so far defended its proceeding. In a filing rejecting the motion from the consumer advocate, the commission said such an investigation is well within its authority and in furtherance of its “broader role overseeing public utilities.”