Half a billion dollars in, state lags on promised energy savings

Gov. Andrew Cuomo’s administration acknowledged last week that New York is far behind on a pledge to reduce the state’s energy consumption — an initiative that has already spent hundreds of millions of dollars collected via state households’ utility bills.

In his State of the State address on Wednesday, Gov. Cuomo introduced a sweep of energy efficiency measures — bolstering financial opportunities for clean energy and appointing a new “energy czar” to oversee the state’s efforts. In the accompanying policy book, the governor’s office noted that though the state collects and spends $1.4 billion a year on renewable energy and energy-efficiency efforts, it is “far from realizing its clean energy goals.”

Those goals date back to 2007, when Gov. Eliot Spitzer announced that his administration sought to reduce electricity use in New York State 15 percent by 2015 — what his and subsequent administrations called their “15×15” goal.

But midway through the timeline, success remained elusive. In 2011, the Department of Public Service, tasked with overseeing the efforts, found that the state programs to lower energy consumption were behind schedule.

A more recent report by the Pace Energy and Climate Center found that by the end of 2011, the state and utility companies only managed to reduce energy consumption by 2,132 gigawatt hours (GWh), far short of the target of 3,943 GWh by that date.

As a point of comparison, the Indian Point nuclear facility north of New York City, which Gov. Cuomo has vowed to shut down, generates about 16,000 GWh of electricity a year.

Hanging in the balance are “billions of dollars in savings going forward to ratepayers or billions of dollars in costs,” explains Jackson Morris, director of strategic engagement for Pace and one of the authors of the report. By Pace’s estimates, the shortfall through 2011 meant nearly $2 billion in missed savings opportunities for the state.

The 15×15 project relies largely on the Energy Efficiency Portfolio Standard, or EEPS, to which the Public Service Commission funneled nearly $518 million between 2008 and 2011, with another $1.5 billion expected the next six years. That money comes from small fees the state’s utility companies collect on customers’ monthly bills, called a System Benefit Charge. The fee, collected since 1996 and most recently renewed in 2011, is used to fund the more than 100 programs created by the state itself and by utility companies in order to meet the energy-reduction targets set by the state Public Service Commission.

That money — typically a little less than $1 on a customer’s bill each month — has mostly sat accumulating. The 2011 Department of Public Service report noted more than $300 million in system benefit funds had not been committed to any particular project. Pace and the Department of Public Service both highlight one major hindrance: the lengthy set of approvals required by the state for any new energy-saving program. In some cases it takes a year and a half of planning and petitions before a utility can go about doing anything with the funds.

Morris says New York also has persisted in analyzing proposals individually instead of looking at the cumulative effect they could have in an area — like the difference between just focusing on the financial effects of switching out some light bulbs in a house and analyzing the costs and benefits of going through with an array of different energy-savings measures in that house. One move might not be worth it financially, but added together they could save a lot of money. For that reason, most other states have begun looking at the merits of efficiency programs on a broader level instead of analyzing them individually, he said.

“Even Georgia figured out that was a bad idea,” he said.

It hasn’t helped that the New York State Energy Research and Development Authority (NYSERDA) and the utility companies, operating with separate budgets under EEPS, have crafted similar incentive programs for businesses and households and are going after the same customers.

NYSERDA has not denied that it is falling behind. In March, it filed a petition asking the Public Service Commission to substantially lower its energy reduction targets to make them achievable in “today’s economy following today’s rules.” For example, it asked for an 85 percent reduction for residential lighting programs, arguing that a 2011 decision by the commission to promote LED lighting and discontinue financial support to promote less-expensive compact fluorescent bulbs put the goals out of reach.

NYSERDA did respond to an inquiry from The New York World in time for this article’s posting.

The electric utility Con Edison, which spent $38.6 million in system benefit funds through February 2011, said it welcomed the governor’s commitment to refocus energy-saving investments. “Con Edison supports Governor Cuomo’s call for a strategic, long term planning process to address our region’s energy needs. We have implemented a broad range of energy efficiency programs to support the state’s goal of achieving a 15 percent reduction in the growth of electric usage by 2015.”

The 15×15 initiative put the state and utilities head-to-head in marketing energy efficiency incentives for the first time. Gerald Nordlander, executive director of the Public Utility Law Project, notes that the utility companies took the lead on those efforts in the 1980s and 1990s, under arrangements that allowed them to make money when their customers saved energy; then NYSERDA took the reins for a while.

Morris said it might still be possible for New York to meet its energy-savings goals by 2015 now that Gov. Cuomo has acknowledged the need for changes. That kind of direct, hands-on effort from the state leader is exactly what’s needed to fix the program, he said.

“The governor has shown that when he takes on an issue, he follows through,” Morris said.

But Morris and his colleagues will be watching closely to see how it all plays out. Among the initiatives Cuomo introduced in his State of the State was the creation of a $1 billion Green Bank to fund environmental efforts and an additional $150 million per year for solar energy efforts. He also appointed Richard Kauffman, senior advisor to the U.S. Secretary of Energy, to serve as an “Energy Czar,” overseeing the state’s energy portfolio and agenda.

And following its disastrous performance in Sandy’s aftermath, Cuomo vowed to abolish the Long Island Power Authority for good, proposing a privatized service for the area.

LIPA, incidentally, had done pretty well in meeting its energy-savings targets, Morris said.

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