Policy Priorities

CALIFORNIA

Defeat of SB-118

NAESCO led the effort of the ESCO industry to defeat SB 118, which would have replaced negotiated performance contracts with low-bid procurement for all public agency EE and RE projects. This was a major victory and represents another example of the effectiveness of the industry when it works together in a coordinated way and with one voice.

Gas Surcharge Funds

The California FY 2012 budget deal designed to close the massive state deficit appropriated the $150 million surcharge from the funding that was supposed to support gas EE programs into the state’s General Fund. NAESCO supported a lawsuit brought by multiple parties to have the funding grab declared illegal. The CPUC currently has a proceeding underway to cobble together enough funding from various sources (unspent prior year gas and electric EE, unspent EM&V funds, etc.) to keep the gas EE programs running through 2012. A CPUC decision was issued on October 12. In early November, in a suit brought by NRDC and supported by a NAESCO affidavit, the courts ruled that the legislative action is unconstitutional. We are waiting to see if the state will appeal the court decision.

Electric EE System Benefits Charge (SBC)

Legislation to renew the electric SBC beyond its expiration at the end of 2011 failed on the last day of the legislative session, September 9. The utilities that administer the electric EE programs assure NAESCO that the defeat of the bill will not result in cuts to electric EE programs, because the 2012 budgets have already been set by the CPUC, and full funding is simply a matter of the amount of the SBC funding (which today is only about 25% of the full EE program funding) from the SBC to the supply procurement lines on customer bills. NAESCO, the utilities and prominent environmental and EE organizations in California believe that the SBC extension legislation has serious problems because it proposes to extend legislative control over the EE programs. NAESCO successfully fought similar provisions in New York legislation several years ago, because we think that EE funds collected from ratepayers should not be subject to appropriation into the state’s General Fund, and that the CPUC process, not a legislative process, is the appropriate way to administer EE programs. CPUC Commissioner Ferron (and lead Energy Efficiency Commissioner) issued a Scoping Order on October 25 to which NAESCO provided comments and reply comments.

Custom Measures EM&V

Many ESCO projects in large facilities involve custom measures, (i.e., measures that are not common enough to be captured in tables of standard savings values). The Energy Division (ED) of the Public Utilities Commission (CPUC) had proposed an EM&V process that involves an unworkable additional review by the already overworked ED staff, or a 20% discount on project savings. NAESCO participated in a coalition of other project implementers to fight the ED proposal through submission of several rounds of comments, lobbying visits to the CPUC Commissioners and staff and a special hearing held by the three new CPUC Commissioners on June 6. As a result of this effort, the decision issued by the Commission in mid-July mandated an M&V protocol that is a substantial improvement from the original proposal. 

Bridge Year Programs

All stakeholders in the California EE programs agree that the new program portfolios will not be ready for implementation on the currently scheduled date – January 1, 2013. The pre-requisite EM&V work on the current portfolio (2010-2012) will not be completed in time to allow the Commission and the utilities to incorporate the EM&V results into the 2013 program portfolios. NAESCO coordinated a group of stakeholders that included the utilities, project implementers, local governments and environmental groups that submitted Joint Comments that recommended continued funding for successful programs for the Bridge Period. The Scoping Order of CPUC Commissioner Ferron issued on October 25 also addresses Bridge Period (2013-2014) programs and NAESCO addressed these issues in its comments and reply comments. In early December ALJ Farrar issued an Order that requests comments on an ED proposal to modify the program portfolio for the Bridge Period. NAESCO will continue to participate in these proceedings to champion the ESCO industry.

NAESCO is also participating in a Working Group comprised of the IOUs and other stakeholders that will examine the current EM&V protocols in California, which most stakeholders agree are expensive and unworkable, identify the key issues and research more successful approaches to these issues in other states. The Working Group will them present its conclusions and recommendations at the appropriate points in the CPUC proceedings.

GEORGIA

NAESCO is monitoring the development of the rules for the new state ESPC program, which was approved by Georgia voters with a Constitutional Amendment last November. The development process has been slower than we had hoped. The RFP for a pre-qualified list of ESCOs was issued in mid-August, with responses due September 23. Evaluation of the responses will then take up to two months, with the announcement of the rankings of the pre-qualified ESCOs announced in early December.

NEW YORK

NYSERDA SBC IV Planning

In response to the urging of the US EPA, New York City is starting a program to remove all of the PCB-laden magnetic ballasts from about 700 school buildings, and to expand the lighting retrofits into comprehensive retrofits. The NYC Department of Education sent NAESCO a draft retrofit plan, and asked that NAESCO endorse the plan. We declined to do so, because we think the plan is too slow (10 years) and should be accelerated. NAESCO is working with the Blue-Green Alliance (BGA), a national organization of environmental and labor groups, to develop a program to use the BCB issue to catalyze comprehensive retrofit programs in large urban school districts across the country. Five ESCOs have been selected by the NYC Department of Education but the program scope is still under development.

New York City has used $37 million of its ARRA funding to establish a new financing agency, called the NYC Energy Efficiency Corporation, whose goal is to stimulate more energy efficiency projects in commercial and residential buildings. NAESCO is working with the NYCEEC managers to determine how ESCOs can most successfully leverage its resources.

MICHIGAN

After several years of work by NAESCO and the ESC, Michigan announced its first round of ESPC projects – three state prison facilities – earlier this year. Shortly thereafter, the new Governor began to reorganize that Department of Energy, Labor and Economic Growth (DELEG), and unfortunately in that process the ESPC “champion” was let go. The program has apparently recovered from this setback, and is moving ahead with the next set of projects. NAESCO plans to attend, and present at an upcoming meeting of the Michigan ESC.

NEW JERSEY

In early December, the Christie Administration released its final Energy Master Plan.. The Plan re-affirms the central role of Energy Efficiency and Renewable Energy and sets new goals for the expansion of DG, CHP, waste-to-energy and biomass. The Plan also calls for the state to lead by example with an aggressive implementation of EE in state buildings, using the recently enacted ESPC legislation. The Plan also says that the Board of Public Utilities (BPU) will re-examine the administration and economics of all EE programs through public proceedings, in which NAESCO will participate. NAESCO is also involved in providing analysis to a protest that has been launched by environmentalists in New Jersey to the decision by Governor Christie to pull the state out of the nine-state Regional Greenhouse Gas Initiative (RGGI).

PENNSYLVANIA

As in Michigan, the new Governor of Pennsylvania has reorganized the Department of General Services that houses the ESPC program, called the Guaranteed Energy Savings Agreement (GESA). The GESA program staff was reduced from eight to two and the program “champion” was let go. The program was suspended in the spring, pending the results of and audit of the program by the Department of Public Works.  ESCOs have met with the Governor’s Energy Executive and report that he is primarily concerned with the development of the gas resources in the Marcellus Shale. ESCOs and NAESCO were referred to the Deputy Secretary for Public Works within DGS, who has so far been unresponsive to requests for a meeting, or even a telephone conversation. NAESCO has talked with the Governor’s Energy Executive several times during the past three months; he will not discuss the future of the GESA program until he has the results of the DGS audit, which were originally to be delivered in mid-August and now have no firm date for issuance. NAESCO has reviewed some project information that was obtained through a Freedom of Information request by Penn Futures; the documents indicate that the project is meeting its savings targets, so we have no evidence of any “smoking gun” that would undermine the success of the GESA program or give program opponents any ammunition. In early December, the DGS issued a set of documents that it proposes to use in a revised GESA program. The documents appear to be an attempt by DGS to return the GESA program to the early days of state buildings ESPC. ESCOs will compete for projects on basis of fully priced scopes of work, and the state agency will be trying to compare the prices for proposals on different scopes of work. The documents are out for public comment until January 15, and NAESCO will be organizing the PA ESCOs to make sure that NAESCO comments incorporate all of their concerns.