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Lawmakers, Advocates Spar Over Energy Efficiency Alternative

With the changing of lightbulbs and the lowering of thermostats, Energizing Indiana helped reduce the state’s energy consumption, while reducing homeowners’ bills.

Field inspectors would visit homes and give families advice on how to cut back on their energy use, and a report from the Indiana Utility Regulatory Commission found the program to be cost-effective, saving about $3 for every $1 spent.

But legislators say the second phase of Energizing Indiana would have been significantly more expensive, so they voted to end the program.

Now, they’re debating an alternative.

The proposed new plan, which comes in the form of Senate Bill 412, would allow utility companies to set their own energy savings goals, which would then be subject to approval by the IURC.

Which Strategy Works Best?

"A one-size-fits-all approach never works." That's what Chatrice Mosley, the external affairs director at the IURC, thinks of the state's previous law, which required all utilities to meet a statewide energy efficiency goal of reducing energy consumption by about 12 percent over ten years.

As part of the new bill, utility companies would have to submit an integrated resource plan to the IURC at least once every three years. It would detail how each of the utilities plans to reduce energy consumption.

An independent auditor would then assess whether the utilities met those goals.

The governor's office considers this a first step toward what Gov. Mike Pence called an "all-of-the-above energy strategy" in his State of the State address last week.

Gov. Pence's energy adviser, Dan Schmidt, says through the new plan, the state can monitor whether or not utilities are working toward energy efficiency.

"If you don't, then when you come in for a rate case and you want to build a power plant, then the commission has some historical knowledge that you haven't been pursuing energy efficiency," Schmidt says. "There's an opportunity to take some things into account."

Options For Large Energy Consumers

The proposal also allows the largest energy consumers to opt out utilities energy efficiency programs, which was allowed last year when Energizing Indiana was still in place.

Indiana Industrial Energy Consumers Attorney Jennifer Terry says that has translated to significant cost-savings for large manufacturers.

"We used to have the fifth lowest industrial energy prices, but today, Indiana ranks 26th," she says. "And so the opt-out provision is a very helpful first step in continuing to give industrial customers some relief from the very high prices they are experiencing."

Allison Transmission in Indianapolis reportedly saves $11,000 per month by opting out and instead implementing its own energy savings measures.

Supporters say the bill wouldn’t just benefit businesses. They insist utility consumers will see some savings, too.

"You have to spend money to get more energy efficiency," Schmidt says. "More energy efficiency might mean a bump up in consumer rates, but the reduced usage will mean an overall lower bill."

But at Thursday’s hearing, a number of people spoke in opposition to the proposal, arguing it doesn’t have enough teeth to produce any meaningful results.

The plan doesn’t include specific penalties for utility companies if they don’t meet their energy savings goals, and the only requirement for those goals is that they’re reasonable. Critics say that’s too vague.

Denise Abdul-Rahman, Chair of Indiana's NAACP Environmental Climate Justice, says utilities need more stringent oversight.

"Indiana needs to reinstate, we believe, a resource standard of 2 percent annual [energy] reduction," Abdul-Raham said at the committee hearing.

Critics Say Rate Payers Will Suffer

Another area of concern for some is that the program allows utilities to recoup some of the costs of the energy efficiency program through periodic rate hikes.

Citizens Action Coalition Executive Director Kerwin Olson wants the bill amended so it would put a cap on those lost revenues, which is something other states have implemented.

"To the issue of cost recovery, as it relates to lost revenues, we see this as an anti-rate payer bill. We believe it will bring harm to customers," he says.

Legislators have their own questions about the bill: What incentives are there for utilities to make energy efficiency a priority and what impact could the measure have on rate payers?

They’re all questions they’ll hash out as the bill moves forward.

It passed the Senate Utilities Committee 7-3.

Brandon Smith contributed to this report.

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