Connecticut's electric distribution companies (Connecticut Light & Power and United Illuminating Company), natural gas investor-owned utilities (Connecticut Natural Gas Corporation, Southern Connecticut Gas Company, and Yankee Gas Services Company), and municipal electric companies provide portfolios of energy efficiency programs to their customers.
The Energy Conservation Management Board (ECMB), appointed by the Public Utilities Regulatory Authority (PURA), is responsible for approving the natural gas and electric distribution companies’ plans. Electric and natural gas programs are both required by legislation. The ECMB administers the Connecticut Energy Efficiency Fund (CEEF), which is primarily supported by monthly charges on customers' bills. The utilities administer the energy efficiency programs, and the utilities and contractors they hire implement them.
In 2007, the Connecticut legislature enacted a law that builds on the state's strong record of electric energy efficiency program accomplishments to take these programs to a higher level of savings and success. Public Act 07-242, An Act Concerning Electricity and Energy Efficiency, places new requirements for energy efficiency and establishes new regulatory mechanisms, such as electric and natural gas decoupling, to support achievement of these goals. The Act requires the electric distribution utilities to procure all cost-effective energy efficiency as their first-priority resource.
Connecticut includes performance incentives to encourage and reward the electric and natural gas utilities for reaching performance targets. Connecticut also has established overall energy efficiency resource standards to drive programs to higher levels of savings.
According to the Energy Information Administration, Connecticut electric utilities programs saved 250,373 MWh in 2008. The ECMB reported a 2010 electric efficiency program budget total of $126.8 million and a natural gas program budget of $11.5 million.
Electric distribution utilities, natural gas companies, and municipal electric utilities are required by Connecticut statute to provide "conservation and load management" (C&LM) programs for their customers. The Energy Conservation Management Board (ECMB) works with the utilities to develop their energy efficiency plans. The natural gas and electric distribution companies’ plans are subject to review and approval by the Public Utilities Regulatory Authority (PURA). All programs included in the plans are required to pass a benefit-cost test. The PURA oversees the electric distribution utility and natural gas utility programs. The ECMB, appointed by the PURA, administers the Connecticut Energy Efficiency Fund (CEEF). The utilities administer the energy efficiency programs. The utilities and contractors hired by the utilities implement the programs.
Each year, the ECMB meets to review and approve the energy efficiency program plans. These are formal, uncontested hearings. Board consultants work with the utilities on developing their plans. The utilities set goals (savings and other program metrics) for program results in conjunction with these hearings.
The ECMB and the CEEF were established in 1998 through the state’s electric utility restructuring legislation, Public Act 98–28, An Act Concerning Energy Independence, Connecticut General Statute §16-245m. The 1998 Act required electric companies to offer efficiency programs. CEEF expenditures for electric efficiency programs have steadily grown through the years.
In 2005, Public Act 05-1, An Act Concerning Energy Independence (Connecticut General Statute §16-32f and Connecticut General Statute §7-233y) required the investor-owned natural gas companies to submit energy efficiency program plans to the DPUC and required the municipal electric companies and the Connecticut Fuel Oil Conservation Board to work with the ECMB to develop energy efficiency programs for their customers.
According to the Energy Information Administration, Connecticut electric utilities reported efficiency program savings of 250,373 MWh in 2009. Reported electricity savings for 2010 are in the State Spending and Savings Tables.
Connecticut offers the Connecticut Home Energy Solutions program, which provides financing for residential whole-house retrofits. An authorized contractor performs energy assessments, making on-the-spot improvements such as sealing of critical air leaks and caulking. Depending on eligibility, rebates can be provided for appliances, HVAC systems, and insulation. More information on the program can be found in the ACEEE report, Energy Efficiency Financing Programs.
Connecticut’s electric energy efficiency programs are supported by a monthly system benefits charge (approximately 0.3 cents/kWh for “conservation and load management”) on customers' electric bills. This charge is listed as a separate line item with several other public benefits fees. Electric Connecticut Energy Efficiency Fund (CEEF) programs are also funded through the ISO-New England Forward Capacity Market (FCM). Demand savings resulting from CEEF programs were enrolled into the FCM as other demand resources (ODR) capacity. This produced $2.5 million in revenues for program funding in 2007. CEEF will also be supplemented with funds from Class III Renewable Energy Credits (REC) for energy efficiency and the Regional Greenhouse Gas Initiative (RGGI). ECMB reported the revised 2010 electric efficiency program budget total as $126.8 million.
Natural gas energy efficiency programs are supported by a monthly charge established in the companies’ plans plus funding based on the difference between the imposed tax and the approved tax (described in PA 07-242, section 115b). The amount collected by the excess gross receipts tax is not allowed to exceed $10 million. ECMB reported the 2010 natural gas program budget as $11.5 million.
Reported budgets for energy efficiency programs for 2011 are in the State Spending and Savings Tables.
Municipal electric utilities are required to create a fund to support energy efficiency and renewable energy programs. This fund is supported by a surcharge of 0.1 cents/kWh on and after January 1, 2006. The surcharge will increase by .03 cents per year to a maximum of 0.22 cents/kWh on January 1, 2010.
The ECMB is required to submit annual reports to the legislature. These reports include expenditures, fund balances, and benefit-cost analyses for the previous year’s programs. Administrative costs are limited to 5 percent of the total revenue collected. As a result of the 2007 Act Concerning Electricity and Energy Efficiency, utility program budgets for energy efficiency are likely to increase significantly to meet the requirements of this bill.
Connecticut's Public Utilities Regulatory Authority (formerly the Department Public Utility Control) approved the 2010 joint Conservation and Load Management plan for the state's electric and natural gas utilities. The PURA ordered a number of program changes, including expanding the rebate for high efficiency gas water heaters, creating a financing pilot program for natural gas customers, recalculating certain energy savings based upon updated buildings codes, and increasing training on code revisions. The full decisions are available on the PURA's website.
After energy efficiency funding was diverted to shore up the state budget deficit in 2010, Governor Dannel Malloy signed a bill restoring funding to the CEEF in 2011 (HB 6652).
Connecticut has an all cost-effective efficiency procurement requirement for electric and natural gas utilities that has yet to be implemented. It also has a stakeholder Council called the Energy Conservation Management Board comprised of representatives of commercial, industrial, residential, low income, and environmental interests that helps to review, provide crucial input into, and oversee the utilities’ efficiency program. Connecticut established a renewable portfolio standard (RPS) several years ago and expanded it in 2005. Specifically, in June 2005, the Connecticut legislature adopted legislation that adds new “Class III” requirements covering energy efficiency and combined heat and power plants (CHP). Under the new Class III requirements, electricity suppliers must meet 1% of their demand through using efficiency and CHP by 2007 and 4% by 2010. No additional Class III resources are required after 2010. Class III resources include: customer-sited CHP systems, with a minimum operating efficiency of 50%, installed at commercial or industrial facilities in Connecticut on or after January 1, 2006; (2) electricity savings from conservation and load management programs that started on or after January 1, 2006; and (3) systems that recover waste heat or pressure from commercial and industrial processes installed on or after April 1, 2007. The revenue from these credits must be divided between the customer and the state Conservation and Load Management Fund, depending on when the Class III systems are installed, whether the owner is residential or nonresidential, and whether the resources received state support.
The 2007 Electricity and Energy Efficiency Act (H.B. 7432) strengthened these requirements by enacting complementary policies, including policies covering energy savings from waste heat recovery. The law also requires utilities to achieve resource needs through "all available energy efficiency resources that are cost-effective, reliable and feasible." The DPUC has interpreted this mandate overly restrictively, however, focusing only on capacity needs, and has not approved funding increases to achieve all cost-effective energy efficiency (Docket 10-02-07).
The distribution companies must submit biennial assessments of energy and capacity requirements looking forward three, five and ten years, as well as plans to "eliminate growth in electric demand" and to achieve other demand-side and environmental objectives. The Connecticut Energy Advisory Board (CEAB) reviews the plans before they are submitted to the Department of Public Utility Control (DPUC), along with CEAB comments and analysis. In a separate proceeding, the DPUC reviews the annual Conservation and Load Management (CLM) Plan, which is developed by the utilities with oversight by the Energy Conservation Management Board (ECMB), which is appointed by the DPUC. Connecticut electric utilities adopt savings targets through annual CLM Plans. The ECMB oversees the Connecticut Energy Efficiency Fund (CEEF), which is primarily supported by monthly charges on customers' bills. CEEF was created in 1998 to address increasing energy demand and rising costs. With oversight by the ECMB and its consultants, the utilities administer the energy efficiency programs.
In its 2008 decision approving the combined 2009 CLM Plan submitted by the states’ major utilities and the Energy Conservation Management Board, the DPUC ordered that the 2010 plan establish broader, longer-term goals (Docket 08-10-03). Connecticut utilities did not include long-term goals in the joint 2010 or 2011 Plans, but goals for programs do exceed 1% annual savings in 2010 and 2011. The 2010 CLM Plan was approved, but the Department expressed concern that long-term goals were not adopted (Docket 09-10-03, Department Order March 17, 2010, pgs 56-58).However, utilities are reluctant to include long-term goals without commitment from the DPUC to increase levels of funding necessary for aggressive long-term energy efficiency goals. The DPUC has shown no indication it will approve additional ratepayer funding for electric programs beyond the current statutorily-mandated ratepayer charge.
In its 2012 IRP, the state estimates that, if implemented, it could cost-effectively achieve energy savings of 2% each year from 2012-2022, supported by a doubling of annual budgets for energy efficiency to approximately $206 million.
Connecticut has no Natural Gas EERS.
Connecticut's 2007 Electricity and Energy Efficiency Act (CT Public Act No. 07-242) requires the Department of Public Utility Control to order the state's electric and natural gas distribution companies to decouple distribution revenues from the volume of natural gas or electricity sales through one or more of three strategies: (1) a mechanism that adjusts actual distribution revenues to equal allowed distribution revenues, (2) rate design changes that increase the amount of revenue recovered through fixed distribution charges, and/or (3) a sales adjustment clause. Currently, United Illuminating uses a full decoupling mechanism, adjusted annually. See Docket No. 08-07-04RE03.
During annual hearings, the Energy Conservation Management Board (ECMB) reviews the past year’s results relative to the established goals and determines a performance incentive for the distribution utilities for achieving or exceeding the goals. The incentive, referred to as a “management fee,” can be from 1-8% of the program costs before taxes. The threshold for earning the minimum incentive (1%) is 70% of the goal. At 100% of the goal, the incentive would be 5%. At 130% of goals, it would be 8%. Program costs are recovered through rates.
Anticipated incentives are built into the annual budgets. Over the course of several dockets, the Public Utilities Regulatory Authority has affirmed the value of the incentive. The expenditures used to calculate the incentive may include administrative and overhead costs, but not ECMB costs and incentive costs.
Connecticut has had some type of utility performance incentives for DSM since 1988. The exact mechanism has changed over time.
Prior to passage of the 2007 Electric and Energy Efficiency Act, utilities were not required to submit integrated resource plans in Connecticut's restructured utility markets. With passage of this act, however, this picture changed significantly. The act requires electric distribution companies to review the state's energy and capacity resource assessment and develop a comprehensive plan for procurement of energy resources, considering a full array of supply and demand resources. The act requires resource selection and procurement to be done so as to minimize the costs and to maximize consumer benefits consistent with the state's environmental goals . The distribution companies must submit annual assessments of energy and capacity requirements for the next three, five and ten years, as well as plans to "eliminate growth in electric demand" and to achieve other demand-side and environmental objectives. Resource needs are first to be met through "all available energy efficiency resources that are cost-effective, reliable and feasible."
In its latest decision, the DPUC did not approve additional funding for energy efficiency programs that would be necessary to comply with the state's statute to acquire all cost-effective energy efficiency.
The evaluationof ratepayer-funded energy efficiency programs in Connecticut relies on legislative mandates (Public Act 11-80). Evaluations are administered by the Connecticut Energy Efficiency Board. Connecticut has established formal rules and procedures for evaluation, which are stated in Public Act 11-80and Evaluation Rules and Roadmap. Statewide evaluations are conducted. Connecticut uses two of the five classic benefit-cost tests identified in the California Standard Practice Manual. These are the Total Resource Cost (TRC) and Utility/Programs Administrator (UCT) test. The rules for benefit-cost tests are stated inPublic Act 11-80. Connecticut specifies the UCT to be its primary cost-effectiveness test. These benefit-cost tests are required for overall portfolio and total program level screening.