Maine lawmakers have a number of big decisions to make about energy priorities after several bills were submitted to address issues such as natural gas pipeline capacity and energy efficiency programs. One of those bills, LD 1425, serves as a good starting point for discussion. Proposed by Gov. Paul LePage’s administration, it contains a worthwhile component to use cap-and-trade auction revenue to help residential consumers invest in affordable energy programs to reduce their long-term heating costs.
As is typically the case soon after bills are drafted, this one can be improved. Specifically, two parts of the proposal counter the aim of the affordable energy program for residential consumers. One would allow an escape hatch for businesses, establishing a system by which proceeds from the sale of carbon dioxide allowances may be returned to business electricity customers as “direct credits” on their bills — at times of “heightened price pressure in regional carbon dioxide allowance markets” — instead of directing the funding toward energy efficiency programs.
Another provision of the bill would exempt industrial electricity customers from having to pay what’s called a “systems benefit charge.” The charge is based on the number of kilowatt-hours consumed and is applied to all electricity bills; the money funds energy conservation programs carried out by the quasi-state agency Efficiency Maine Trust.
In both instances, exempting a smaller subset of electricity customers from paying toward energy efficiency programs would likely only hurt them and all customers in the long run. If lawmakers need an example of businesses and industrial users benefiting from their contributions, they can look to the results of an agreement among Maine and eight other Northeast and Mid-Atlantic states to lower the carbon emissions produced by power plants.
As part of the Regional Greenhouse Gas Initiative, a cooperative effort among Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont, states sell carbon dioxide emission allowances through auctions and invest the proceeds in ways proven to benefit consumers: energy efficiency, renewable energy and other clean energy technologies.
Most RGGI auction proceeds fund Efficiency Maine’s programs to help residential, business and industrial customers buy and install new, high-efficiency lighting, refrigeration or mechanical systems. RGGI is designed to reward states that lower costs: As Maine consumes less electricity, the price of its carbon emission allowances decreases.
In the past two years, Efficiency Maine has spent $16.4 million from the RGGI Trust Fund and earned nearly $188 million in reduced lifetime energy costs, according to the trust. Those savings include significant reduced costs to businesses and residents: $29 million in lower lifetime electricity costs for Maine residential customers, $60.5 million in lower lifetime electricity costs for large business customers and $84.9 million in lower lifetime oil and natural gas costs for Maine’s large-business customers.
Exempting some users from paying into energy efficiency programs could increase electricity costs in the long term because it would reduce budgets for programs that return significant savings for each dollar invested. It would also disrupt the current equity, where everyone pays and everyone benefits.
People might not realize they feel the effects of energy efficiency programs if they don’t participate in a rebate or weatherization program, but they are — whether through avoided transmission costs or reduced electricity costs. Legislators should weigh the question about exempting certain users from contributing toward energy efficiency programs with long-term rewards in mind.