Energy/Utilities

New Hampshire's Energy Initiatives Up for Review

December 2010

By Heidi L. Kroll, Market and Policy Analyst

In the coming year, New Hampshire's energy efficiency and renewable energy initiatives will be the subject of no fewer than eight separate reviews and reports — summarized below — and that number is likely to grow. Given the recent shift in the makeup of the Legislature, additional independent assessments and audits are possible as well. Many newly-elected Legislators say they plan to focus on the costs and effectiveness of ratepayer-funded energy initiatives, with an eye toward minimizing mandates and mitigating rate impacts. Their objective is to ensure that energy policies and costs are aligned with their overarching goals for the economy, the business climate, and job growth. What exactly this burst of scrutiny will mean for New Hampshire's clean energy initiatives remains an open question but in-depth analyses are almost certain.

At least eight separate reviews and reports on energy efficiency and renewable energy initiatives will be presented to the Legislature in the coming year. Legislators will need to sort out how the evaluations were conducted, how reliable the results are, and what the findings might mean for state energy policy. The forthcoming reports are as follows:

Annual Report on the Renewable Energy Fund: The Public Utilities Commission (PUC) is required to file a report with the Legislature by October 1st of each year. The report must detail how the Renewable Energy Fund is being used and any recommended changes to such use. The latest report was filed on October 1, 2010. Legislators will likely take a hard look at how the Fund is being administered, what the administrative costs are, who is receiving the money, and how effective the funds are at achieving renewable energy goals. As of October 2010, over $5.8 million had been deposited into the Fund — nearly $4.5 million in July 2009 and over $1.3 million in July 2010, and approximately $585,000 was set aside for Fund administration. Funding comes from Alternative Compliance Payments made by electricity providers when they are unable to use market mechanisms to comply with the state's Renewable Portfolio Standards (RPS) law.

Comprehensive Review of the Renewable Portfolio Standards (RPS) Law: Beginning in January 2011, the PUC must review the RPS law, including the requirements for the four renewable classes, achievement of the RPS goals at least-cost to ratepayers, distribution of the Renewable Energy Fund, and any recommended changes to the statute. This report to the Legislature, due November 1, 2011, will provide the first comprehensive evaluation of the strengths and weaknesses of New Hampshire's RPS based on several years of experience. In compliance year 2009, for example, electricity providers spent more than $15.2 million on Renewable Energy Certificates purchased in the market and more than $1.3 million in Alternative Compliance Payments, for a total of $16.5 million, excluding providers' administrative-related compliance costs.

Annual Report on the Regional Greenhouse Gas Initiative (RGGI): The Department of Environmental Service (DES) and the PUC must file annual reports each October on the implementation of RGGI in New Hampshire "with emphasis on the price and availability of RGGI allowances... and the trends in electric rates for New Hampshire businesses and ratepayers." The report must also cover the allocation and spending of the RGGI Fund, including the energy savings and emissions reductions resulting from the spending. As of October 2010 according to the annual report, the state's RGGI Fund had received over $26 million, funded by revenues from allowance auctions.

Comprehensive Review of the RGGI Law: The DES and PUC must review New Hampshire-specific elements of RGGI, including the RGGI Fund and allowance pricing, and encompass the results in the agencies' annual report filed in October 2012. This state-specific review will coincide with a comprehensive 2012 review of the Initiative by all of the RGGI states.

Senate Bill 323 Comprehensive Study of Energy Efficiency and Sustainable Energy Programs: The PUC, in close consultation with the Energy Efficiency and Sustainable Energy (EESE) Board, will oversee a comprehensive study conducted by a recently-hired consultant, Vermont Energy Investment Corporation (VEIC). Under a contract not to exceed $300,000, VEIC will review New Hampshire's energy efficiency and sustainable energy programs, assess stakeholders' roles in achieving the state's energy efficiency potential, and gauge the effectiveness and sustainability of various funding sources. VEIC will also recommend improvements and policy changes. Their report is due November 1, 2011 to the Legislature.

Annual Report of the Energy Efficiency and Sustainable Energy Board: The Energy Efficiency and Sustainable Energy (EESE) Board, created by law in 2008 and administratively attached to the PUC, files annual reports to the Legislature on December 1st. The reports provide updates on the Board's activities and its recommendations for action including possible legislation. The duties of the 25-member Board are extensive, but its central charge is to promote and coordinate energy efficiency, demand response, and sustainable energy programs in the state. The Board's 2011 report will include recommendations stemming from its review of the Senate Bill 323 Comprehensive Study.

Annual Report of the NH Energy and Climate Collaborative: The New Hampshire Energy and Climate Collaborative issues Annual Progress Reviews in June of each year reporting on the 67 recommended actions in the New Hampshire Climate Action Plan. The Plan calls for the state to reduce greenhouse gas emissions 20% below 1990 levels by 2025. The Collaborative is a group of 18 volunteer members, 2 part-time support staff, and 1 full-time coordinator tasked with tracking and reporting progress towards implementing the recommended actions and reaching the Plan's goals.

Annual Report on the Results and Effectiveness of the System Benefits Charge: The PUC files reports to the Legislature on the results and effectiveness of the System benefits Charge (SBC) on October 1st of each year. The SBC is a charge paid by all electric customers to fund energy efficiency programs offered by regulated utilities and low income bill assistance programs administered by Community Action Agencies. The current SBC is $0.0033 per kilowatt-hour (kWh), which means that a household using 1,000 kWh per month pays $3.30 in SBC charges. In 2009, approximately $34.7 million was collected in SBC funds — about $18.9 M for energy efficiency and $15.7 M for low income assistance. On January 14, 2010, Senate Bill 300 took effect and directed the PUC to reallocate funding between the two programs in order to adequately fund low income assistance. As a result, $3.2 million was reallocated to the low income program in 2010. The reallocation of funds authorized by Senate Bill 300 expires on June 30, 2011.

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