{"id":3610,"date":"2014-03-17T09:31:55","date_gmt":"2014-03-17T15:31:55","guid":{"rendered":"http:\/\/valleywatch.net\/?p=3610"},"modified":"2014-03-19T17:14:02","modified_gmt":"2014-03-19T23:14:02","slug":"whos-behind-the-effort-to-kill-indianas-efficiency-law","status":"publish","type":"post","link":"http:\/\/valleywatch.net\/?p=3610","title":{"rendered":"Who\u2019s behind the effort to kill Indiana\u2019s efficiency law?"},"content":{"rendered":"

March 17, 2014- By Kari Lydersen in Midwest Energy News<\/a><\/strong><\/p>\n

A bill before Indiana Governor Mike Pence could end a state efficiency program that has led to significant energy savings in the past two years.\"SANYO<\/a><\/p>\n

Clean energy and environmental groups, along with some major companies, are pleading with Pence to veto the bill, saying it would mean higher energy bills and jobs lost as demand drops for products from light bulbs to efficient appliances.<\/p>\n

Advocates say the state\u2019s efficiency program,\u00a0Energizing Indiana<\/a>, is a \u201cwin-win-win situation\u201d for companies, consumers and the environment. The program was created by a December 2009 order from the Indiana Utility Regulatory Commission and was implemented in 2012.<\/p>\n

The bill passed by lawmakers this year actually started as a much narrower provision that would have allowed large industrial users to opt out of the energy efficiency program. Large manufacturers like steel mills have paid millions of dollars to support the efficiency program, while typical households are paying an extra $2 or $3 a month.<\/p>\n

The program includes free energy audits, weatherization for low-income households, subsidies for residential lighting products, heating and cooling retrofits at schools, education about energy efficiency, and rebates for commercial and industrial retrofits. Six utilities are covered by the program, which resulted in a savings of more than 416 million kWh in 2012.<\/p>\n

The original bill was introduced in January by state Sen. Jim Merritt (R-Indianapolis) and passed in early February. Then in the House, Rep. Heath VanNatter (R-Kokomo) introduced a floor amendment that greatly\u00a0altered the bill<\/a>\u00a0so that it would terminate the entire efficiency program in December. The amended bill says the utility regulatory commission cannot \u201cextend, renew, or require the establishment of an energy efficiency program\u201d under the 2009 order. It says utilities can continue to recover costs related to their compliance with the order.<\/p>\n

The amended bill passed the House on Feb. 26 and then the Senate on March 10, with a vote of 37-8. At the time this story was published it had not yet reached Pence\u2019s desk. Once the governor has the bill, he has seven calendar days to sign or veto it. (See when\u00a0SB 340<\/a>\u00a0lands on the Pence\u2019s desk\u00a0here<\/a>.) If the governor takes no action, the bill becomes law.<\/p>\n

That \u201cwould be devastating, it would kill efficiency in our state as we know it,\u201d said Kerwin Olson, executive director of the\u00a0Citizens Action Council.<\/a><\/p>\n

A good investment?<\/h3>\n

<\/p>\n

The only parties that would logically have an interest in terminating the program altogether, experts say, are the\u00a0utilities<\/a>\u00a0that are required to make a good faith effort to reduce energy demand by two percent by 2019.<\/p>\n

In some states, legislation has \u201cdecoupled<\/a>\u201d the amount of energy sold from utility profits, or otherwise offered incentives for utilities to reduce their customers\u2019 energy demand. Indiana does not have a decoupling policy, and a lost revenue recovery program meant to encourage utilities to push efficiency has encountered opposition from ratepayer groups because of inappropriately inflated program costs, experts said. Historically, utilities have opposed efficiency requirements because lower demand cuts into their revenue.<\/p>\n

Edwin Simcox, interim president of the\u00a0Indiana Energy Association<\/a>, a utility group, said SB340 is \u201cnot a utility bill\u201d and was not crafted or pushed by utilities, though he has\u00a0spoken out<\/a>\u00a0in favor of the bill.<\/p>\n

Simcox said Energizing Indiana has cost ratepayers $500 million so far and would cost almost $2 billion by 2019. Proponents of the program dispute those numbers, and say no hard evidence for the figures has been presented. They point to a June 2013\u00a0evaluation<\/a>\u00a0that showed $2 savings for every dollar spent on efficiency.<\/p>\n

Simcox also said the bill does not end the state energy efficiency program, but rather \u201cpauses\u201d it until a study can be completed. He also said utilities are free to continue voluntary investments in energy efficiency even if the program is ended.<\/p>\n

\u201c(Legislators) would come back in the 2015 session of the general assembly and do whatever they would do \u2013 continue the program as is, recalibrate it, or choose to put it aside based on cost,\u201d said Simcox. \u201cThat\u2019s the nature of the bill.\u201d<\/p>\n

Oppponents of the bill point out that under the legislation, the programs are ended as of December 31, 2014, and would not be allowed to continue.<\/p>\n

\u201cThat\u2019s not a pause, that\u2019s a termination,\u201d said Martin Kushler, a senior fellow at the American Council for an Energy-Efficient Economy (ACEEE), who argued against the bill in a recent\u00a0blog post.<\/a><\/p>\n

Advocates say prior to the program, Indiana utilities invested very little in energy efficiency. They have little confidence utilities would prioritize efficiency without a state order.<\/p>\n

\u201cI\u2019ve been in this business for 30 years and I\u2019ve never seen an investor-owned utility voluntarily on their own provide serious energy efficiency programs without being required to or having some type of regulatory or legislative incentive,\u201d said Kushler.<\/p>\n

Indiana moved from 31st\u00a0to 27th\u00a0nationwide in ACEEE\u2019s annual\u00a0energy efficiency scorecard<\/a>between 2012 and 2013, thanks in large part to action driven by the program, Kushler said.<\/p>\n

Bad for business<\/h3>\n

It\u2019s not only environmentalists and consumer groups who want to save energy.<\/p>\n

Energy efficiency programs create a significant market for products from light bulbs to efficient heaters and air conditioners. So a host of major companies including Johnson Controls, Honeywell, Siemens, Ingersoll Rand and United Technologies sent a\u00a0letter<\/a>\u00a0to Pence opposing the bill. The American Heating and Refrigeration Institute, a trade association representing makers of air conditioners and chillers, also wrote to legislators opposing the bill.<\/p>\n

\u201cEnding this initiative would eliminate approximately 381 direct program jobs, over 1,200 indirect jobs and over $500 million of economic investment each year that the programs are not operating,\u201d said the letter from Johnson Controls and other companies.<\/p>\n

\u201cI\u2019m really concerned about this as it relates to the ability for business to be competitive in Indiana,\u201d said Charles McGinnis, senior director of commercial energy solutions for Johnson Controls. \u201cA tremendous amount of jobs would be impacted.\u201d<\/p>\n

He said that energy efficiency construction projects carried out by Johnson Controls have created an average of 2,257 direct and indirect jobs per state. That number is based on a multiplier from the U.S. Department of Commerce and includes \u201cmany small electrical contractors, mechanical contractors, equipment suppliers, wholesale distributors and tradespeople.\u201d<\/p>\n

Half those jobs would be lost if programs such as Indiana\u2019s were eliminated, McGinnis said.<\/p>\n

Kevin Lauckner, director of Smart Grid Solutions for Honeywell, added that the company believes Energizing Indiana has been a boon for Indiana business, \u201creducing energy costs, providing thousands of good jobs for small businesses and manufacturers in the state, and generating hundreds of millions in annual economic benefit \u2014 double what\u2019s been invested to date.\u201d<\/p>\n

\u201cWe believe that repealing the state\u2019s efficiency standard via Senate Bill 340 will jeopardize important energy initiatives in Indiana, and will reverse a trend toward greater efficiency across the state and country,\u201d he said.<\/p>\n

Olson said that vendors, consultants and others involved in the energy efficiency economy \u201care watching somewhat in shock\u201d as the Indiana bill progresses. \u201cWe\u2019re well aware there are folks who wanted to invest in Indiana who are now having other thoughts,\u201d he said. \u201cThis will benefit other states. If you\u2019re someone who invests in demand-side management, you\u2019re going to go somewhere else.\u201d<\/p>\n

\u201cThey keep hammering home the point of Indiana being competitive in the U.S. and globally,\u201d added\u00a0Hoosier Environmental Council<\/a>\u00a0executive director Jesse Kharbanda. \u201cIf you want a tool box to help the state remain competitive, you need a pretty robust tool to control energy costs.\u201d<\/p>\n

Political history<\/h3>\n

Simcox said utilities were \u201ctroubled\u201d by the fact that Energizing Indiana was never passed by the legislature but rather crafted and implemented by the utility regulatory commission.<\/p>\n

Kushler said that while most state efficiency programs originate with the legislature, there are states where utility commissions have started programs without a state law.<\/p>\n

\u201cThis bill [to end the program] is certainly a bad precedent,\u201d Kushler said. \u201cThis would be the first time a state legislature killed the state\u2019s existing energy efficiency resource standard.\u201d<\/p>\n

Meanwhile, Indiana experts noted that Energizing Indiana was the result of a years-long process involving legislators. To portray the program as something foisted on the state by the utility commission, Olson said, would be \u201ccomplete revisionist history and a mischaracterization of what happened.\u201d<\/p>\n

He pointed to a 2009\u00a0editorial<\/a>\u00a0co-authored by Sen. Merritt that said: \u201cA coordinated, statewide energy efficiency effort is a significant and realistic step in the right direction and we applaud the [former Gov. Mitch] Daniels administration for taking it.\u201d<\/p>\n

Sen. Merritt\u2019s office did not return calls for this story.<\/p>\n

Rebecca Stanfield, deputy director for policy for the Natural Resources Defense Council Midwest program, noted that Energizing Indiana was started by Daniels, \u201ca pretty conservative governor, because of the large economic benefits that energy efficiency brings.\u201d<\/p>\n

\u201cI\u2019m hoping this governor recognizes that being inefficient is a drag on the state\u2019s economic growth, it\u2019s like a tax on the state\u2019s economic activity to be using more energy than you need,\u201d she continued.<\/p>\n

The ACEEE and NRDC are members of\u00a0RE-AMP<\/a>, which also publishes\u00a0Midwest Energy News<\/em>.<\/p>\n

A surprise<\/h3>\n

A host of other groups, including the U.S. Green Building Council and the American Institute of Architects of Indiana have also called for a veto. Experts said that many state legislators who signed the bill likely did not understand its implications or the level of opposition it would spark. Advocates noted there was no debate on the House or Senate floor about the bill\u2019s implications, and they were caught off guard by the sweeping nature of the amendment.<\/p>\n

Environmental groups also opposed the original bill that would have allowed industrial customers to opt out of Energizing Indiana. They note that energy efficiency should be seen as a \u201csupply resource\u201d akin to creating new power sources.<\/p>\n

\u201cYou wouldn\u2019t let [industrial] customers walk away from paying for a power plant, why should they be able to walk away from paying for efficiency programs?\u201d asked Kushler.<\/p>\n

McGinnis said that Johnson Controls also did not support the original bill, even though it might have relieved their factories from energy efficiency investment obligations.<\/p>\n

\u201cIt started with manufacturers and industrial companies,\u201d seeking the opt out provision, \u201cthen the utilities hijacked it in the House,\u201d with backing from the Indiana Manufacturers Association and the Indiana Chamber of Commerce, explained Olson.<\/p>\n

\u201cThat is a strong, powerful and influential lobby,\u201d said Olson, noting that the Citizens Action Council has collected about 2,000 signatures on online and paper\u00a0petitions<\/a>\u00a0demanding a veto of the bill. \u201cBut on the other side of the fence you now have the public getting very very engaged; and you have outreach efforts by the NAACP\u2026and then this Fortune 100 business coalition is also opposing the bill.<\/p>\n

\u201cYou have a political hot potato here for the governor.\u201d<\/p>\n

Low-hanging fruit?<\/h3>\n

Simcox thinks Energizing Indiana will get significantly more expensive each year as the \u201clow-hanging fruit\u201d energy efficiency upgrades are made. Other states, like Illinois, have\u00a0grappled<\/a>with the question of how to keep cutting energy use once simple solutions like bulb replacement have been done.<\/p>\n

But critics of the bill said it is \u201cabsurd\u201d \u2013 in Stanfield\u2019s words \u2013 to say Indiana has already tapped its cost-effective efficiency potential.<\/p>\n

\u201cWe\u2019ve been doing this for a decade and a half in some states and there\u2019s still plenty of cost-effective ways to get efficiency,\u201d she said. \u201cThe technology improves continuously \u2013 what\u2019s cost-effective this year is amplified by new technologies a few years down the road. Indiana hasn\u2019t even scratched the surface of what\u2019s economically feasible.\u201d<\/p>\n

\u201cThat argument about low-hanging fruit is one that crops up from time to time, but in a state like Indiana that\u2019s ludicrous\u2026that\u2019s baloney,\u201d added Kushler. \u201cIn Indiana you have almost no history of energy efficiency programs. So you have a vast forest of energy efficiency opportunities.\u201d<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

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