This evening, I received a summary from Rep. Vickie Nardello about the problems with the electricity legislation approved today in the State Senate.
Here is Rep. Nardello's summary analysis:
Here is Rep. Nardello's summary analysis:
Problems in the Energy BillEfficiency Partnerships-$60 million per year without accountability provisions like a limit on how much each partner can receive, an RFP process to choose which proposals to fund, a requirement that the person receiving the technology pay a portion of the cost and a licensure requirement instead of the more lax certification requirementMetering-“just voluntary” still costs $170 million b/c the system to support the meters is expensive-customers can currently get on a voluntary basis time-of-use meters that are capable of doing on peak and off peak pricing, but the meters in the program are the “Cadillac” meters, which are capable of doing real-time pricing-this moves customers toward real time pricing, which forces people to pay spot market prices, which are high and volatile – their costs will increaseTowns and Municipalities-In 2005, EIA forced towns and school systems into expensive (mandatory time of use rates) and volatile (pricing changes monthly) standard of last resort service-Towns and schools cannot shift their load because of the hours they operate-the bill does not exempt towns and municipalities from supplier of last resort service or time of use ratesRates-the bill does not address the problems with the underlying wholesale market that are causing the standard service benchmark to be high-the electric heat rate language only maintains the rate for 5 years and only applies to those already on this rate (i.e. no one new can get it)Procurement-bilateral contracting language doesn’t work because it doesn’t create a framework for the DPUC to do this outside the RFP process-doesn’t remove the full service generation requirement (means that we can’t buy baseload, intermediate and peaking separately, making bilateral contracts directly with generators impossible)Cost of Service-does not allow the DPUC to consider a variety of ownership options in its integrated resources plan-does not require all plants going forward (that ratepayers pay to build) to agree to sell their power at cost of service plus a reasonable profit, not the highest cost possible they can charge in the market-utilities are only allowed to generate if they are outside a regulated rate of return and bear all risk for cost overruns, which turns them into independent power producers and negates the entire purpose of utility owned generationRetail Competition-ratepayers subsidize retail competitive marketers-aggressive retail referral program encourages people to move to competitive suppliers, which increases the migration risk in standard service and therefore raises the standard service price-state is encouraged to pursue competitive suppliers-consumer protections were not includedAccountability-does not include a cost effectiveness review for generation going forward to make sure the winning bids are in the best interest of ratepayers-includes a number of programs with technology that is already funded elsewhere and is not cost effective ($30 million for renewables and combined heat and power in state buildings, $50 million for DG ($25 million earmarked for fuel cells) for businesses and state facilities)-encourages use of a standard service portfolio manager, which creates a huge potential for market manipulation
Rep. Nardello also shared the following table summarizing the costs to consumers of the energy legislation.
The first two columns are pretty straightforward. They are the name for each part of the bill and the cost of each to consumers. The third column is the section number of the bill where is of these costs is created. The fourth column, labeled "7098" tells whether the cost was also in the House energy bill, HB7098.
The first two columns are pretty straightforward. They are the name for each part of the bill and the cost of each to consumers. The third column is the section number of the bill where is of these costs is created. The fourth column, labeled "7098" tells whether the cost was also in the House energy bill, HB7098.
| Energy Bill Additional Costs | |||
| Program | Cost | Sec. | 7098 |
| Energy Efficiency Partnerships | $60 million per year | 94 | no |
| Energy Excellence Plan | unknown cost of the study | 97 | no |
| Advanced Metering System | $170 million plus up to $125 million of stranded costs | 98 | no |
| Energy Efficiency Marketing Campaign | $5 million | 87, 111,127 | no |
| Retail Competition Marketing Subsidy | unknown cost of the referral program | 92 | no |
| Increased migration risk raises standard service price for all | 92 | no | |
| Switching on and off SOLR (removal of anti-gaming language) | Increased migration risk raises standard service price for all | 49 | no |
| SOLR - Quarterly or more often procurement | Increased volatility for large and small businesses | 49 | no |
| Encourages state facilities to choose competitive suppliers | Increased migration risk raises standard service price for all | 101 | no |
| Many towns have lost money through similar programs | 101 | no | |
| CFL Fundraiser | $125,000 | 61 | no |
| Emergency Generation Pilot Program | $10 million | 103 | no |
| Standard Service Portfolio Manager Study | Increased costs through market manipulation | 104 | no |
| Mandatory option of real time pricing | Aligns costs with spot market, likely to cause increased rates | 99 | no |
| Financial incentives for utilities to cut peak demand | unknown -- study | 106 | no |
| Grants for DG and fuel cells | $50 million in bonds($25 million-fuel cells) | 108, 109 | no |
| Renewables, Combined Heat and Power in State Buildings | $30 million in bonds | 121 | no |
| Natural Gas and Fuel Oil Conservation Programs | $10 million from gross receipts tax | 115, 116 | no (removed by FIN) |
| Decoupling | would have cost $72 million last year based on revenue numbers | 107 | different |
| Municipal Renewable Energy Grants | $50 million in bonds | 90-91 | yes |
| Furnace/boiler replacement program | $5 million bonding | 1,2 | yes |
| AC replacement program | ~$9.7 million from ECMB | 3 | yes |
| Sales tax exemption for ice storage, solar, geothermal | $500,000 for 2008, $700,000 for 2009 | 68 | yes |
| Sales tax exemption for weatherization products, including CFL | $7.5 million in 2008, $7.5 million in 2009 | 69 | yes |
| Sales tax exemption for Energy Star appliances | $13 million in 2008 | 70 | yes |
| Conservation in State Buildings | $30 million in bonds | 73 | yes |
| Restores ECLM funds | $95 million in bonds | 79, 126 | yes |
| Operation Fuel | $5 million | 128 | yes |
| Low income energy assistance | yes | ||
| CHIF low-interest loans | yes | ||
| CHEFA grants for efficiency projects | yes | ||
| CHIF low-interest loans | yes | ||
So the items marked "no" in the "7098" columns are charges that consumers will have to pay because the Senate version of the energy legislation, rather than that House version, was approved.
