Last year, Synapse Energy Economics published Missed Opportunities: The Impact of Recent Policies on Energy Efficiency Programs in Midwestern States with MEEA’s support. The report explored the energy and non-energy societal impacts of regressive energy efficiency policy in six Midwest states, including Indiana and Ohio. In both Indiana and Ohio, the regressive policy changes we studied were the repeal of each state's Energy Efficiency Resource Standard (EERS) - in 2014 in Indiana and in 2019 in Ohio - and the adoption of industrial opt-outs that allow the largest energy users to exclude their operations from utility EE portfolio participation. Not surprisingly, we found substantial negative impacts. Even though utility voluntary EE has rebounded and stabilized in Indiana after the EERS repeal, it has remained relatively flat and at a level considerably below potential. In Ohio, the total repeal of EE and subsequent disallowance of any voluntary replacement has gutted electric EE completely in the state, going from the highest savings in the Midwest to among the lowest.
Despite these regressive policy changes, it isn't all dark clouds. The silver lining in Indiana is that the Indiana Regulatory Utility Commission (IURC) has maintained and even expanded the strong regulatory framework that supports the utility voluntary portfolios allowing Indiana customers to participate in EE programs. Ohio lost electric energy efficiency, but still had voluntary gas EE that never fell under the repealed electric EERS. There is still EE happening in both states – not high levels, not ambitious, but some programs are still offered. And it felt, especially this year, like the winds of change might be blowing in those states, with the potential for some positive EE policy advancement. Instead, Indiana and Ohio are going to continue to miss out on the opportunities to save energy, reduce customer bills, support the resilience of the energy system and all the other benefits of energy efficiency.
In Indiana, the joint interim legislative committee known as the 21st Century Energy Policy Development Task Force has concluded its second two-year mandate to study energy policies for future adoption in the state. The first two years focused strongly on energy supply but recommended a second iteration of the Task Force to study additional topics like community energy, energy equity and green zones, distributed renewables and energy efficiency. MEEA testified on the importance of energy efficiency in Indiana and recommended ways that the state could advance EE without adopting new mandates. These included raising the level of demand needed to allow companies to opt-out, creating a statewide EE policy collaborative (like those in Illinois, Michigan, Missouri and Minnesota) and establishing a stakeholder process to determine whether current cost-effectiveness testing is helping meet state policy goals. The Indiana Legislature had an opportunity with the Task Force to put their best foot forward on energy and to put EE where it belongs - front and center as the lowest-cost first step in creating a modern, resilient energy system, however, they did not do so.
The Final Report from the Task Force has only this to say about energy efficiency in its findings:
“(17) Customer assistance programs, such as the Low-Income Home Energy Assistance Program (LIHEAP) and the Weatherization Assistance Program (WAP), are important resources to help low-income customers afford their energy bills, especially during the winter heating season. In addition, utility-sponsored energy efficiency programs enable customers to take advantage of opportunities to reduce their overall bill. Together, customer assistance programs and energy efficiency programs can assist customers, particularly low-income customers, and mitigate the financial impacts of higher energy prices.”
That's it. Energy efficiency might be able to help lower energy costs for low-income customers if federal energy assistance programs aren’t enough. In the minds of the majority of the Task Force, that is still efficiency’s only value, and they made no EE policy recommendations at all. At best, energy efficiency will remain at status quo in Indiana as far as the legislature is concerned. As with the original adoption of the EERS that was overturned, all the responsibility for progress is left to the IURC, within the unamended limits of current energy laws.
In Ohio, the Public Utilities Commission of Ohio (PUCO) held hearings last spring on energy efficiency, in which MEEA testified, and Chair French has expressed openness to considering voluntary electric EE filings from the utilities if and when they file them. Things are moving slowly, but there has been that feeling that we could be on the cusp of something happening. Additionally, a bill that would create a legislated framework for limited voluntary electric energy efficiency - HB 389 - has languished for well over a year since its introduction, but finally reached the floor of the House on November 16 bringing up hopes for passage during the veto session. Instead, it was passed over without the Speaker calling a vote. And what hadn't been on the radar for EE supporters was that Columbia Gas would enter into a stipulation agreement on October 31 that would decimate their gas energy efficiency programs and set a bad regulatory precedent for how parties are likely to look at future EE cases.
In Docket 21-0637, Columbia Gas had proposed in their June 30, 2021 Application a continuation of its current DSM portfolio for another five years. Columbia Gas started its current DSM plan in 2008, extended it in 2011, and again in 2016. The current proposal would have invested $30.9M annually in natural gas EE from 2023-2027, about $4M a year more than the previous plan cycle. The application included offerings for residential and commercial customers - nine different programs that included audits, new home above-code incentives, product rebates, home energy reports, student education, commercial new construction incentives and building benchmarking. The energy savings would have been substantial - a 40% increase in annual gas savings compared to the previous cycle. Instead, as a result of negotiations with PUCO Staff, the Office of Consumers Counsel (OCC) and other parties (though notably not the large industrial users, the manufacturers association or the largest grocery chain in the state, who did not join that portion of the stipulation since the portfolio would not include their members’ rate classes), Columbia agreed to cut all programs except for their low-income program, at an annual budget of exactly $14,867,329 - the exact amount that was budgeted for 2022 for that program - with no inflation or any other increases over the life of the plan. All other programs will be ramped down by March 31, 2023. And, frustratingly, and putting aside all past program success and glowing testimony about the benefits of EE for their customers:
“Columbia agrees not to pursue (and not to support others’ pursuit of) consumer-funded, low-income and consumer-funded, non-low-income energy efficiency programs (including demand side management programs) through legislation or other regulatory initiatives until Columbia files its next base rate case.”
In exchange for dropping all non-low-income energy efficiency and withdrawing any future political support for EE, the stipulation gives Columbia a total base rate increase of $68M, of which $64.5M can be allocated to the Small General Service class - i.e., residential and small business customers. That's good for Columbia Gas shareholders, but it sure isn’t looking good for the vendors, distributors, builders and others in the energy efficiency workforce that Columbia has built over a decade and a half who will lose their jobs, or for the market-rate residential and small business customers who will suffer from the rate increase with no means of relief offered by the utility. These are customers who "often view Columbia as their primary source of energy information" and need help with the "numerous barriers to the adoption of efficient technology, including higher incremental costs for high efficiency equipment, lack of customer education, lack of contractor trade ally training, lack of monetary resources, and fear of change," as noted in Columbia’s June 2021 Application.
Ohio and Indiana continue to miss opportunities to strengthen, expand or even just politically support energy efficiency. These are not the policies and practices needed to support a 21st -Century energy system in those states or the Midwest region. MEEA continues to support our members and the growth of the EE industry in all of our states and the nation. We hope that the next time opportunities knock in Ohio and Indiana, someone will listen.