One of New York’s largest electric utilities, National Grid, is proposing a lackluster energy efficiency program for 2018-2020 that is inconsistent with New York’s clean energy and climate change goals. Fortunately, Governor Cuomo has created a perfect opportunity to secure a better program not only for National Grid, but for all utilities serving New Yorkers.
In his State of the State address on Jan. 3, Governor Cuomo promised “a comprehensive and far-reaching energy efficiency initiative by Earth Day, April 22,” including a new and improved 2025 energy efficiency savings target. As explained in a previous blog, setting ambitious targets to increase energy efficiency is essential to goals such as reaching 50 percent renewable energy by 2030, cutting greenhouse gases by 40 percent from 1990 levels by then, and closing the Indian Point nuclear plant without increasing carbon emissions. Luckily, as part of Cuomo’s Earth Day efficiency plan, New York’s Public Service Commission can order National Grid to scale up the unacceptably weak energy efficiency initiatives contained in its proposal.
Why do utility efficiency programs matter?
Energy efficiency is the nation’s leading source of clean energy jobs, saves customers money, and reduces the amount of new power plants we need to build. Efficiency is essential to meeting New York’s climate change goals (as discussed here). While New York State ranked No. 3 in energy efficiency in 2013, it has slipped to No. 7 in 2017, according to scorecards published by the American Council for an Energy-Efficient Economy that review efficiency policies as well as achievements. When measured in energy savings as a percentage of total electricity sales, New York State ranks 15th, and lags far behind other leading states like Rhode Island, Massachusetts, and Vermont.
Roughly every three years, New York’s utility companies go through a rate case process in which they submit proposals to the state’s Public Service Commission (PSC) to set the terms for how much they can charge customers for electricity service. These cases cover a huge array of issues: everything from buying sufficient electricity to keep the lights on to keeping poles and wires working reliably. One that often doesn’t get enough attention is energy efficiency. Through strategies such as providing comprehensive programs to retrofit buildings and make them more efficient, utilities can reduce the amount of electricity they need to buy in the first place. This lowers customers’ bills while cutting harmful power plant pollution. Rate cases are a key opportunity for regulators to ensure that utility companies set ambitious targets for helping customers save energy, and that the rules governing cost recovery by utilities to fund efficiency initiatives to meet those targets.
New York’s clean energy goals depend upon lowering electricity demand through greater energy efficiency. The governor’s plan to achieve 50 percent renewable energy supply by 2030, for instance, sets a trajectory for building new renewable energy projects based on calculations that assume the state will achieve more energy efficiency over time. If those savings don’t materialize, carbon emissions and other harmful pollutants will be greater, energy will be more expensive, and it will take more renewable production to supply 50 percent of total demand (which will be higher).
Energy efficiency can be achieved in a variety of ways, such as through better building codes, and strategies developed and administered by the New York State Energy Research & Development Authority. But utility investments in energy efficiency are one of the largest and most critical elements. The state’s clean energy goals simply won’t pencil out unless utilities significantly scale up their efficiency initiatives.
National Grid's proposal falls short
National Grid provides electricity service to its about 600,000 homes and businesses in upstate New York through its local affiliate the Niagara Mohawk Power Corporation (NIMO). National Grid’s rate case proposal for NIMO, which was negotiated with the state’s Department of Public Service and a variety of other entities—including cities, large industrial consumers, and consumer advocates—falls short on energy efficiency. National Grid plan to save about 1 percent of the utility’s total energy load annually from 2018 to 2020 pales in comparison to leading utilities. Its own affiliate in Massachusetts, for example, ramped up its annual incremental energy efficiency savings from 1.34 percent of total sales in 2010 to 3.03 percent in 2015 over a period of 5 years.
A report by Synapse Energy Economics explains that between 2008 and 2015, utilities in Rhode Island and Massachusetts increased annual incremental efficiency savings by roughly 0.4 percent of retail savings per year, ramping up to between 2.5 and 3 percent of retail savings annually. Synapse concludes that implementing a similar plan in New York would save customers $3 billion in electricity costs.
Not only do National Grid’s New York targets lack ambition, they stay flat each year unlike the targets proposed by Con Edison, another large New York utility company. Con Edison showed leadership in its last rate case by promising to scale up its energy efficiency programs over time.
NRDC and Acadia Center filed comments (available here) with the New York Public Service Commission today with a coalition of groups opposing National Grid’s proposal. We recommend that the PSC order National Grid to scale up its energy efficiency initiatives to be consistent with leading utilities and the state’s clean energy goals. In addition to discussing energy efficiency, our statement expresses our concerns that the proposed electric vehicle charging infrastructure investments are insufficient for reaching the state’s ambitious—yet achievable—climate and clean transportation goals. (This is the subject of a forthcoming blog.)
Cuomo's efficiency plan should demand more
Thankfully, Governor Cuomo’s plan to announce a new, overarching statewide energy efficiency target on Earth Day, coupled with a comprehensive strategy to achieve it, provides the perfect opportunity to require National Grid and the state’s other utilities to do more. As we recommend in opposing National Grid’s proposal, the PSC can order immediate upward revisions, or should make clear that National Grid’s energy efficiency will be supplemented by additional energy efficiency efforts that form a critical utility-driven part of the governor’s Earth Day plan. New York can and should be a national leader on energy efficiency, but for that to happen it needs to get smarter energy use from every available source, including the state’s utilities.