House Minority Leader Ken Fredette, R-Newport, and Patrick Woodcock, director of the Governor's Energy Office, are seen in Augusta in this April 2015 file photo.

After ‘and’ dispute, stability expected for Maine heating incentives

PORTLAND | The three-letter word “and” prompted some four-letter words in Augusta this year, for politicians on both sides of the aisle and particularly for companies that do heating system installations or replacements. But state incentives for people to replace home heating oil systems or upgrade to more efficient …

Published July 21, 2015, at 2:58 p.m.     |    

After ‘and’ dispute, stability expected for Maine heating incentives

Posted July 21, 2015, at 2:58 p.m.

PORTLAND, Maine — The three-letter word “and” prompted some four-letter words in Augusta this year, for politicians on both sides of the aisle and particularly for companies that do heating system installations or replacements.

But state incentives for people to replace home heating oil systems or upgrade to more efficient units should hold steady after all of the uncertainty earlier this year, according to Michael Stoddard, executive director of the Efficiency Maine Trust.

With a missing “and” in a massive energy bill passed in 2013, the Legislature unintentionally had left regulators with two choices of where to set a cap on how much the Efficiency Maine Trust could receive in payments from utilities, and thereby electricity ratepayers. Lawmakers overrode a veto in June to add the missing “and,” clarifying that the Legislature intended to set the cap at the higher of the two possible amounts.

Without that change, Stoddard previously said funding for those heating programs was at risk.

Stoddard said the fix better ensures the agency will have the money to fund its electricity investment programs with payments from utilities — and thereby ratepayers — and won’t have to consider cutting heating programs to meet its electricity saving obligations.

“Resolution of that situation should help provide some stability to that [heating system] marketplace that should be useful into the summer and fall,” Stoddard said in a phone interview. “It takes time for people to plan for that home improvement project, and they should know those will be available.”

Money from utilities pays for most of the electricity program, while money from a regional cap-and-trade auction funds most of the heating program.

The same law creating the “and” headache directed the Efficiency Maine Trust to spend 35 percent of what it gets from the Regional Greenhouse Gas Initiative auction toward reducing heating demand, without specific direction about fuel types or systems that can be supported.

The agency last year spent about $5.2 million on its Home Energy Savings Program, which provides homeowners with rebates ranging from about $500 to $5,000 for different heating system or insulation upgrades.

Jacob Roberson, a partner in the wood pellet boiler distributor Interphase Energy, said about all of its customers in Maine use the state heating system incentives, making it unclear just what would happen to sales if the program weren’t funded. As the industry matures, he said, those incentives could eventually be phased out when there is enough critical mass of customers to support delivery trucks and other infrastructure serving the wood pellet industry.

“There’s a way to dial those incentives down over time without putting people out of business in the process,” Roberson said.

The program in its current form offers a $5,000 rebate for homeowners installing certain wood pellet boilers or geothermal heating systems.

While the “and” decision became a political flashpoint, it means more for Efficiency Maine’s upcoming budget considerations. The case prompted Democrats to criticize the Maine Public Utilities Commission, by insinuating or stating Gov. Paul LePage was somehow behind commission decisions against the wishes of Democratic supporters such as environmental groups and wind energy advocates. The Maine Association of Building Efficiency Professionals also had petitioned the PUC to reconsider the case.

Beyond the political storyline, the “and” has implications for what’s coming this fall for the Efficiency Maine Trust: it’s next three-year spending plan, the first that will be able to get up to about $59 million from utilities for electricity savings programs.

The trust first has to establish how much potential energy savings exist and develop a spending plan to capture that savings. The types of projects it funds must make business sense, too. The agency’s standard is whether a project to avoid a particular amount of energy use is cheaper than buying the electricity itself at retail rates.

The findings of that study and the trust’s budget for funding those related efficiency investments will go before the Maine Public Utilities Commission, which will scrutinize how much ratepayers stand to pay toward efficiency programs against the projected benefit.

Backing down energy demand, for instance, can delay a need for upgrades to transmission lines or other infrastructure for which electricity customers also pay.

Efficiency Maine thinks there’s more incentives to offer. The agency expects consultant GDS Associates will finish a 10-year projection of the state’s possible efficiency savings by September, to guide the three-year spending plan.

That plan will set out how much is available to homeowners and businesses interested in making energy efficiency upgrades, starting with the agency’s first budget under the new cap, which will start July 2017.

Stoddard said he expects the agency’s projections for available energy savings — and what of that savings can be accomplished — to rise each year, driven partly by lower prices for efficient lighting and heating technologies but mostly because funding in the first three-year plan left some energy savings on the table.

“We’re a little behind schedule in harvesting all of what we had identified in our first three-year plan,” Stoddard said.

A 2012 study found there would be at least $45 million in cost-efficient electricity savings projects in Maine last year and another $60 million worth for 2015 and 2016. The agency spent about $35 million for electricity projects in its 2015 budget year, which ended June 30.

 

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