Last fall, in the midst of the multitude of year-end utility filings, Eversource filed a request with the Massachusetts Department of Public Utilities for a $20 million surcharge, on top of its energy efficiency charge, to fund its dabbling in demand reduction demonstration projects. I say “dabbling” because the filing is little more than a hodgepodge of exploratory ideas to be implemented over less than 18 months to gather information to inform its next three-year energy efficiency plan. The filing focuses on demand response, battery storage, thermal storage and the software and hardware to manage these technologies. It provides vague descriptions of what Eversource will do with the money, no deliverables and no benchmarks for how to evaluate the success of the projects.
To be fair, this submission resulted from months of work and consideration by the consultants and members of the Energy Efficiency Advisory Council (EEAC), which is responsible for designing the energy efficiency plans of the utilities. The Council felt it was prudent for Eversource customers to pay $20 million to test a variety of theories through such demonstration projects. But, since the projects will be in place for only a few months before Eversource must present their draft three-year energy efficiency plan to the EEAC next year, it seems impossible that the information gathered would be reliable enough to justify even more spending in the next three-year plans, which total more than a half billion dollars annually.
The utilities and the EEAC have been expanding the scope of the measures in the plans to include demand reduction to help reduce capacity costs and, thereby, the need for expensive and higher emission electricity generation. For this, they should be applauded. This haphazard approach in the recent filing, however, is not the way to accomplish that goal.
National Grid included demand reduction projects in its three-year plans, so it does not need a surcharge and its plans are already in the works. This filing makes clear that Eversource is playing catch-up with ratepayer money.
At a minimum, Eversource should be required to use the existing plan budget to fund these demonstration projects. Eversource says it can’t do that because it will spend that money on energy efficiency programs contemplated in their existing plan. But the utilities have not spent the funds in their commercial and industrial customer plan budgets for seven years. That under-spending should allow for use of funds to do whatever experimentation is needed rather than assessing an additional charge on customers.
Corrective changes in utility energy efficiency plans are often presented to the Department and approved, so such a change is not impossible. More importantly, however, Eversource and the EEAC could gather significant information about demand reduction strategies simply by doing scenario analyses and reviewing what has already been done across the country. We don’t have to reinvent the wheel—at a significant cost to already-burdened ratepayers.
The EEAC is at a crossroads of energy efficiency planning and spending. Technological advancements have rendered many of the strategies used for years no longer in need of financial support. These energy efficiency investments have successfully transformed the market. As such, they are no longer delivering the level of energy savings as in the past. Lighting is a good example. The advancement of LEDs and the federal legislation phasing out incandescent bulbs releases significant dollars to be spent on other strategies. The question is what and how.
Pursuing demand reduction strategies is long overdue, but it must be done cost-effectively and thoughtfully. The Eversource filing should be rejected. The company and the EEAC need to regroup.