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N.H. PUC Issues Order on Electric and Gas Utilities

  • Dec 8, 2021
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CONCORD, New Hampshire, Nov. 12 (TNSsro) -- The New Hampshire Public Utilities Commission issued the following electric order (No. 26,553) involving Electric and Gas Utilities:

2021-2023 Triennial Energy Efficiency Plan

Order on 2021-2023 Triennial Energy Efficiency Plan and Implementation of Energy Efficiency Programs

In this order, the Commission sets ratepayer-funded and utility-managed energy efficiency rates for 2021 through 2023 in aggregate at a level consistent with the previous Triennial Plan. The Joint Utilities shall identify energy efficiency programs that provide the greatest benefit per unit cost with the lowest overhead and administrative costs within the approved budget and file a program proposal for review and approval by the Commission. The Commission moves the funding requested for the Performance Incentive, over $20,000,000 in the Triennial Plan Proposal, from the Joint Utilities to the energy efficiency programs; and therefore to ratepayers.

As the Commission held at the outset of restructuring, "the most appropriate policy is to stimulate, where needed, the development of market based, not utility-sponsored and ratepayer-funded, energy efficiency programs."/1

The Proposal and Settlement before the Commission present a stark contrast to those long-held tenets, instead proposing nearly $400,000,000 in entirely ratepayer-funded and utility-sponsored programs, placing an enormous burden on New Hampshire ratepayers. We view this Triennial Plan as an inflection point, with ratepayer-funded and utility managed energy efficiency programs peaking in 2020 and 2021 and returning to the intended transition to market-based energy efficiency after this triennium within the guidelines provided by the Legislature.

I. BACKGROUND AND PROCEDURAL HISTORY

On September 1, 2020, the following parties filed a proposal (the Proposal) for ratepayer funded energy efficiency programs for 2021, 2022, and 2023:

* The Electric Utilities:

* Liberty Utilities (Granite State Electric) Corp. d/b/a Liberty Utilities

* New Hampshire Electric Cooperative, Inc.

* Public Service Company of New Hampshire d/b/a Eversource Energy

* Unitil Energy Systems, Inc.

* The Gas Utilities:

* Liberty Utilities (EnergyNorth Natural Gas) Corp. d/b/a Liberty Utilities

* Northern Utilities, Inc.

The above-listed Electric Utilities and Gas Utilities are collectively referred to as the Joint Utilities.

The Office of the Consumer Advocate (OCA) notified the Commission of its participation in this docket on behalf of residential ratepayers. See RSA 363:28, II. Clean Energy New Hampshire (CENH), the Conservation Law Foundation (CLF), the Acadia Center, The Way Home, the Department of Environmental Services (DES), and Southern New Hampshire Services each filed petitions to intervene. The Commission granted all petitions to intervene at the prehearing conference held on September 14, 2020. Hearing Transcript of September 14, 2020 at 11.

On December 3, the Joint Utilities, OCA, CLF, The Way Home, Southern New Hampshire Services, and CENH (collectively, the Settling Parties) filed a settlement agreement (Settlement Agreement) that called for approval of the 2021-23 Proposal with certain modifications. The Acadia Center and DES did not sign the Settlement agreement but filed letters in support. The Department of Energy (formerly Staff Advocates with the Commission) did not join the Settlement Agreement.

The Commission held hearings on the Proposal on December 10, 14, 16, 21, and 22. The Commission held the record open for responses to the Commission's record requests and the filing of Exhibit 25B. Hearing Transcript of December 22, 2020 (12/22/20 Tr.) at 141. Responses to the Commission's record requests and Exhibit 25B were filed on December 22.

On December 29, 2020, the Commission issued Order No. 26,440, maintaining the current System Benefits Charge (SBC) rates and structure of the existing energy efficiency programs until the Commission's issuance of its final order in this proceeding.

On February 19, 2021, the Commission issued Order No. 26,458, granting the motion of the OCA for rehearing of Order No. 26,415, which had declined to designate then Commission employees Elizabeth Nixon and Paul Dexter as Staff Advocates pursuant to RSA 363:32. On rehearing the Commission granted the OCA's motion and designated Elizabeth Nixon and Paul Dexter as Staff Advocates pursuant to RSA 363:32, II.

The Proposal, Settlement, testimony, exhibits, and other docket filings, except any information for which confidential treatment is requested of or granted by the Commission, are posted at: https://www.puc.nh.gov/Regulatory/Docketbk/2020/20-092.html.

II. SUMMARY OF THE PROPOSAL FILED SEPTEMBER 1, 2020

A. Proposal Plan Targets and Budget

The Proposal significantly expands the programs and spending implemented in the prior plan. The Proposal increases Energy Efficiency (EE) program budgets as seen in the table below with 2018-2020 EE program budgets for comparison:

* * *

Table 1: Proposed Energy Efficiency Program Budgets

[Link to table at bottom of document.]

* * *

Exh 1. at 32, Table 1-9; 1-10.

* * *

Table 2: 2018-2020 Energy Efficiency Program Budgets

[Link to table at bottom of document.]

* * *

Exh. 2 at 32-33, Docket DE 17-136; Order No. 26,095 at 5 (January 2, 2018).

1. Proposal Plan Funding

The Proposal seeks to fund electric and natural gas programs through different sources. Exh. 1 at 30-31. For the electric energy efficiency programs, funding is derived from: (1) a portion of the SBC, which is included on the electric bills of all customers receiving delivery service from a participating utility; (2) a portion of the Regional Greenhouse Gas Initiative (RGGI) auction proceeds; and (3) proceeds obtained by the Electric Utilities from their participation in the regional Forward Capacity Market (FCM). Id. In addition, under the Proposal, any unspent funds from prior program years are carried forward to future years, including interest at the prime rate. Id.

The Proposal seeks to fund natural gas energy efficiency programs from a portion of the Local Delivery Adjustment Clause (LDAC), which is included on the bills of all gas utility customers, as well as from any unspent funds from prior program years, which are carried forward to future years including interest at the prime rate. Id.

The Proposal significantly changed how the SBC and LDAC charges are calculated, allocated, and set, and has increased proposed rates for each year of the proposal. Under the Proposal, the Joint Utilities seek to review actual sales and revenues each year to determine whether the rates approved by the Commission for the following year should apply for collection of the approved budget. Id. at 37. Based on this reconciliation, the Joint Utilities request to adjust the charges by up to 10 percent of the approved rate without the need for Commission approval. Id.

For the first time in the history of EE programs, the Proposal separates residential and commercial/industrial (C&I) EE program budgets for Electric Utilities and bases its proposed SBC rates applicable to those customer classes on their respective budgets. Id. at 38. Currently, the EE portion of the SBC charge is uniform between customer classes, however, the overall SBC charges are not uniform among utility service territories. The utilities' proposed EE portion of SBC rates are laid out in the tables below:

* * *

Table 3: EE Portion of the Electric Utilities' SBC Rates (per kWh)

[Link to table at bottom of document.]

* * *

Exh. 4 at 8.

* * *

Table 4: EE Portion of the Gas Utilities' LDAC Rates (per therm) 2020

[Link to table at bottom of document.]

* * *

B. Commercial and Industrial EE Programs

The Proposal has four ratepayer-funded C&I EE programs: the Small Business Energy Solutions Program; the Municipal Program; the Large Business Energy Solutions Program; and Eversource's Large Business Energy Rewards Request For Proposals (RFP) Program. Exh. 1 at 52-53.

1. Small Business Energy Solutions Program

The Small Business Energy Solutions Program is described as a "retrofit and new equipment & construction initiative" providing incentives and technical expertise to small businesses. Id. at 52. The proposed 2021-23 electric budget is $68,248,328, while for gas the proposed budget is $7,810,522. Id. at 65.

2. Municipal Program

The Municipal Program is described as providing "technical assistance and incentives to municipalities and school districts to help them identify energy-saving opportunities and implement projects." Id. at 52. The 2021-23 electric budget is proposed to be $5,871,702. Id. at 76. According to the 2021-23 Proposal, natural gas utilities also serve municipalities through the Small and Large Business Energy Solutions programs. Id. at 52.

3. Large Business Energy Solutions Program

The Large Business Energy Solutions Program is described as offering "technical services and incentives to assist large C&I customers who are retrofitting existing facilities or equipment, adding or replacing equipment that is at the end of its useful life, or constructing new facilities or additions." Id. at 53. The proposed 2021-23 electric budget is $105,736,654, while the proposed gas budget is $10,160,707. Id. at 89.

4. Eversource's Large Business Energy Rewards Program

Eversource's Large Business Energy Rewards RFP Program is described as encouraging "customers to propose energy efficiency projects through a competitive solicitation process." Id. at 53. The 2021-23 budget for this encouragement is $17,781,164. Id. at 93.

C. Residential EE Programs

The Proposal has four Residential ratepayer funded programs: the ENERGY STAR Copyright (c) Homes Program; the ENERGY STAR Copyright (c) Products Program; the Home Energy Assistance Program (HEA); and the Home Performance ENERGY STAR Copyright (c) Program.

1. ENERGY STAR Copyright (c) Homes Program

The ENERGY STAR Copyright (c) Homes Program is described as providing incentives and contractor support for residential single-family and multi-family new construction homes. Id. at 97. The proposed 2021-23 electric budget for this program is $10,854,423, while the proposed gas budget for the same time period is $4,762,071. Id. at 118.

2. ENERGY STAR Copyright (c) Products Program

The ENERGY STAR Copyright (c) Products Program is described as helping residential customers overcome the extra expense of purchasing and installing ENERGY STAR-certified appliances, electronics, HVAC equipment and systems, hot water-saving equipment, and lighting. Id. at 97. The proposed 2021-23 electric budget for this program is $31,627,751, while the proposed gas budget is $4,906,684. Id. at 126.

3. Home Energy Assistance (HEA) Program

The HEA Program is described as being a fuel-neutral weatherization program designed to reduce energy use from both electric and gas appliances, lighting, and HVAC systems. The proposed 2021-23 electric budget for this program is $69,854,034, while the proposed gas budget is $7,136,139. Id. at 137. Under the Proposal, the per-project incentive cap would be more than doubled from $8,000 to $20,000. In addition, the Proposal would allow exceptions to that increased cap. Id. at 130.

4. Home Performance ENERGY STAR Copyright (c) Program

The Home Performance ENERGY STAR Copyright (c) Program is described as providing "comprehensive energy-saving services at significantly reduced cost to customers' existing homes, and covers lighting improvements, space heating and hot water equipment upgrades, weatherization measures, and appliance replacements." Id. at 98. The 2021-23 proposed electric budget for this program is $29,062,551, while the proposed gas budget is $4,840,463. Id. at 148.

D. Active Demand Reduction programs

The proposed Active Demand Reduction (ADR) program is a ratepayer-funded program described as seeking "to reduce peak demand and capture benefits as quantified in the regional Annual Energy Supply Components ("AESC") study." Id. at 150. In the Proposal, program offerings include a residential Wi-Fi Thermostat offering from Eversource and Unitil Electric; a residential Battery Storage offering from Eversource; a C&I Load Curtailment from Eversource, Unitil Electric, and Liberty Electric; and a C&I Storage Performance offering from Eversource and Until Electric. Id. at 151. The 2021-23 proposed budget for ADR programs is $626,372 for residential offerings, and $4,775,494 for C&I offerings. Id. at 157.

E. Behavioral-Based Strategies

The Joint Utilities describe Behavioral-Based Strategies as being designed to make customers aware of their energy consumption to empower and motivate them to adopt energy-efficient behaviors or technologies. Id. at 150. The proposed strategies include providing Unitil Electric and Gas customers and Liberty Electric and Gas customers Home Energy Reports (HERs), with energy consumption information and energy-saving information. Over the triennium, the total budget proposal for the electric HER program is $963,157, and the total budget proposal for the gas HER program is $651,850. Id. at 585. In addition, Eversource proposed a Customer Engagement Initiative, which is a behavioral-based marketing strategy encouraging energy efficiency measures through other residential program offerings. Id. at 159-164. Finally, Liberty Gas proposes performing aerial infrared mapping to provide a visual profile of heat loss to help drive customer behavior changes and program participation. Id. at 165. The proposed budget for Liberty's aerial mapping is $460,250 in 2021, $271,428 in 2022, and $262,884 in 2023. Id. at 861.

F. Energy Optimization

This proposed pilot program is described as minimizing "customers' total energy usage across all energy sources while maximizing customers' benefits" with a focus on conversions from gas heating systems to higher-efficiency heating systems consisting of cold climate air source heat pumps. Id. at 177.

The Joint Utilities claim the pilot is necessary to provide "a more comprehensive understanding and experience of the benefits of heat pumps to the electric system, as well as the impact on emissions from [greenhouse gases] and nitrogen and sulfur oxides." Id. Over the triennium, the total budget proposal for the Energy optimization Pilot is $1,492,259. Id. at 585.

G. Financing Mechanisms

The Proposal has multiple financing mechanisms, including low-interest, zero-interest, and on-bill mechanisms. For C&I programs, all utilities offer zero percent on-bill financing to certain customers, and facilitate the use of third-party financing options. Eversource and the NHEC also offer tariffs to municipal customers that allow municipalities to repay upfront costs through charges that are less than or equal to the customer's estimated savings. Id. at 55-56.

For Residential programs, each of the Joint Utilities proposes varying amounts of on-bill financing for the Home Performance program. Id. at 101. Additionally, each of the Joint Utilities partners with third-party lenders offering low-interest EE loans residential customers and zero-interest loans for moderate-income residential customers. Id. at 102-103.

H. Benefit/Cost Screening

Under the Proposal, the Joint Utilities propose using a new cost-effectiveness screening framework for the EE programs. The framework consists of a complicated series of tests; a primary test, called the "Granite State Test," and two secondary tests: the "Utility Cost Test," and the "Secondary Granite State Test." Id. at 209-211. Energy benefits are evaluated using the "Avoided Energy Supply Cost" (AESC) study./8

Id. at 44-45. The Joint Utilities propose to file an informational report with information on the results of the AESC study update in 2021, which may result in proposed program changes. Id.

I. Performance Incentive

Under the Proposal, the Joint Utilities propose ratepayer-funded performance incentives for themselves of up to 6.875 percent of actual program expenditures. Id. at 218. Over the triennium, the total budget proposal for the electric program performance incentives is $19,289,318, id. at 617, and the total budget proposal for gas program performance incentives is $2,303,525, id. at 621. Additionally, the Proposal asks to transition the ADR offerings from demonstration projects to full programs, and include a performance incentive component for achievement of ADR goals at 5.5 percent of actual expenditures, with a threshold for savings and benefits components of 65 percent and maximum performance incentive level of 125 percent. Id. Over the triennium, the budget proposal's cap for performance incentives related to the ADR program is $109,719 for Unitil Electric, id. at 792, $574,198 for Liberty Electric, id. at 701, and $902,775 for Eversource, id. at 633.

J. Lost Base Revenue

The Proposal maintains the existing practice of allowing Joint Utilities that have not instituted decoupling to collect revenue lost due to decreased energy sales resulting from EE programs. Id. at 938-941. Electric utilities collect lost base revenue (LBR) as another component of the SBC, while gas utilities collect LBR as a component of the LDAC. NHEC does not collect LBR, and Liberty Electric only calculated a LBR charge for 2021, based on its intent to implement revenue decoupling in its general rate scheme. Id. The Joint Utilities proposed electric LBR rates for electric customers, per kWh, as follows:

* * *

Table 5: Joint Utilities' LBR Proposals

[Link to table at bottom of document.]

* * *

Id. at 938, Table 3.

K. Technical Reference Manual

The Joint Utilities created a Technical Reference Manual (TRM) that documents how the Joint Utilities propose to calculate savings from the installation of EE measures by providing methods, formulas, and assumptions for estimating energy, peak demand, and other resource impacts from EE measures. Id. at 241. In the Proposal, the Joint Utilities will update the TRM on an annual basis, and in advance of any program plan or update filing. Id. at 219. Updates would take into account savings assumptions, incorporate results from New Hampshire evaluations, identify changes in federal equipment standards, reference neighboring states' evaluations, and update relevant savings algorithms. Id. The Joint Utilities propose to update the TRM in coordination with the Evaluation, Measurement, and Verification (EM&V) Working Group. Id. at 220.

* * *

Footnotes:

1/ Electric Utility Restructuring, Order No. 22,875 at 79 (March 20, 1998)

2/ Exh. 1 at 38.

3/ Exh. 1 at 725.

4/ Exh. 17 at 19.

5/ Exh. 1 at 773.

6/ Exh. 1 at 853-54.

7/ Exh. 1 at 925.

8/ The Commission notes that this study was not performed on a New Hampshire-specific basis and was, instead, performed across all New England States. An updated study is due to be released in 2021. Id. at 44-45.

* * *

View tables and full order at https://www.puc.nh.gov/Regulatory/Orders/2021Orders/26-553.pdf

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