Out of Consensus and Contention, an Energy-Efficiency Portfolio Emerges

Tom Johnson | March 22, 2017 | Energy & Environment
Key to the standard is decoupling, which alters the utility business model and has gone down in defeat in the past in New Jersey

Sen. Bob Smith (D-Middlesex)
Worried that the state is not doing enough to curb energy use, an initiative to promote the use of smart thermostats in New Jersey homes is moving forward in the Legislature, the first of a wave of bills intended to revamp energy policy.

Despite opposition from builders, the Senate Environment and Energy Committee Monday approved a package of three bills to introduce the energy-saving technology on a much larger scale in the state.

The legislation is the first salvo in bills being developed by the committee to put a higher priority on adopting a wide range of energy-efficient measures to reduce gas and electricity use — a policy advocates say will help lower utility bills in a state long saddled with high energy costs.

More controversial, and yet to be introduced, is legislation that would adopt an energy-efficiency portfolio standard, a goal long sought by clean-energy proponents. Such a standard, along with a contentious decoupling provision, would require utilities to reduce energy use by their customers to meet a specific threshold.

Most environmentalists, many consumers, and even some utility executives tout energy efficiency as the most cost-effective way to guide energy policy. It saves customers money, reduces pollution, and reduces strain on the power grid, particularly at times of peak use.

An energy-efficiency standard, however, likely will not happen unless lawmakers agree to a decoupling provision that would ensure utilities get the revenue they need to maintain the reliability of the gas and electric grids. More than half the states in the nation have adopted decoupling in one form or other, but efforts in New Jersey to do so have proved fruitless.

Sen. Bob Smith (D-Middlesex), the chairman of the Senate committee, is pushing and sponsoring many of the measures to increase the state’s energy efficiency, but noted the debate could get ugly, particularly on bills yet to be introduced.

“We’re going to take a look at a very serious energy efficiency/decoupling bill that is under construction,’’ Smith said, before kidding “that bill will likely have a great deal of violence associated with it.’’

Twice in the past few years Smith has appointed a legislative task force comprising a wide range of stakeholders to study ways to enact decoupling in New Jersey. On both occasions, most recently this session, the groups could reach no consensus.

Consumer advocates fear decoupling could lead to an increase in energy bills by potentially increasing rates as their gas and electric use falls. Utilities, under pressure to make their systems more reliable from regulators, are concerned they will not earn enough to maintain and modernize their infrastructure.

Even some environmental groups concede the utility business model may need revamping to allow them to invest in energy efficiency.

“Through an energy-efficiency portfolio standard, we will have goals and targets that ensure the level of savings we achieve will benefit both consumers and the environment,’’ said Mary Barber of the Environmental Defense Fund.

Besides energy efficiency/decoupling, Smith also wants to put a constitutional amendment on the ballot in November that will prevent lawmakers and the executive branch from diverting clean-energy funds to other uses. During the Christie administration, more than $1 billion from the fund, financed by a surcharge on customers’ gas and electric bills, has been diverted. The constitutional amendment would phase out the diversions over five years.

Finally, Smith said he also wants to look at the issue of net metering, which gives financial incentives to owners of solar systems for the electricity their panels produce that ends up being used on the grid. The issue is contentious nationwide with some states pulling back on those incentives. Smith, however, said he wants to expand net metering in New Jersey.

Meanwhile, the committee voted out three measures dealing with promoting the use of smart thermostats in both new homes and existing houses. ”The potential energy savings are huge,’’ said Smith, noting some estimates project the devices can reduce energy bills by as much as 20 percent.

Jeff Kolakowski of the New Jersey Builders Association opposed the bill (S-3066) to require smart thermostats in all new homes, saying it should be left up to the buyer to decide how best to achieve energy savings.

“Truth be told, some people won’t make use of these widgets,’’ he said.

Another bill (S-3065) would provide a gross income tax-credit for the cost to purchase and install a thermostat, which usually runs around $250.

Finally, one of the measures would urge the state Board of Public Utilities to adopt a goal to equip at least a half-million homes with smart thermostats by 2023.

Public Service Electric & Gas, the state’s largest utility, earlier this month submitted a new filing with the BPU seeking to extend its energy-efficiency programs, including a $11.5 million pilot to install smart thermostats in their franchise territory.