Energy Electric Utilities
Energy Newsletter
A Quarterly Review of Energy Policy and Activities in the State Legislatures
September 2006
Vol. 2, No. 2
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Energy at the Annual Meeting
Financing Energy Efficiency and Renewable Energy with PAYS®
New York enacts bill forbidding"exclusivity contracts"
Connecticut Governor Signs Clean Cars Bill
Hawaii Promotes Energy Efficiency and Renewable Energy
Upcoming Events
Energy at the Annual Meeting
The NCSL Annual Meeting was held in Nashville, Tennessee, from August 14-18. On Monday, August 14, legislators, legislative staff, industry groups and federal officials participated in the first annual Energy Summit. Participants engaged in group discussions, and developed recommendations and action items to provide a framework for national energy efforts in meeting our energy needs. The summit was the first in a series that NCSL hopes to hold regarding this issue. Working groups will likely be developed to continue the effort throughout the year as well. If you are interested in learning more about the Energy Summit and future activities, please contact Kate Burke at 303-856-1404 or kate.burke@ncsl.org.
The Energy and Electric Utilities Committee met on Tuesday, August 15 for the full day with presentations from energy experts and policy discussion in the afternoon. Presentations covered the electric industry and restructuring; energy efficiency; energy infrastructure; and fuel transport. All presentations can be found on the NCSL Energy website at http://www.ncsl.org/programs/energy/AM06Pres.htm. Policies can be viewed online at http://www.ncsl.org/statefed/preface.htm under Energy and Electric Utilities.
Several energy and environment concurrent sessions took place throughout the rest of the week.
Financing Energy Efficiency and Renewable Energy with PAYS®
As part of Hawaii’s Senate Bill 2957, the legislature created a Pay As You Save® (PAYS®) pilot project to help finance residential solar hot water installations. Through this innovative financing system, building owners and tenants can purchase and install energy efficiency and renewable energy products with no up-front payment or debt commitment. A tariffed charge is included on utility bills for as long as the owner or tenant occupies the building. When occupancy ends, the charge passes to the next owner or tenant. All customers at a building with a PAYS® solar hot water heater will pay less than they would have without the installed equipment because the charge is structured to be less than the energy savings over the course of each year.
PAYS® works in both regulated and deregulated energy markets. A customer’s electricity distribution company, energy supplier, a third party capital provider (e.g., a bank), or product vendor provides the up-front capital to purchase the equipment. Whoever supplies the capital is repaid (including financing costs) through the customer’s monthly payment of the PAYS® tariff, which is based on the useful life of the installed measure. The electricity distribution company collects the monthly payments and forwards them to the capital provider (unless the distribution company supplied the capital).
The energy-saving measure does not qualify as a PAYS® product unless the charge is equal to or less than 75 percent of the energy savings over 75 percent of the useful life of the equipment. For example, if a new solar hot water heater with a useful life of 16 years is installed in a building, the charge is spread across the building owner’s or tenant’s utility bill(s) for 12 years. The estimated energy savings from the installation will significantly exceed the charge on the utility bill. Initially, it is likely that states or utilities will establish or contract with a state agency, nonprofit organization or consulting business to certify PAYS® products and set (or approve) the maximum monthly payment amount.
Developed by the Energy Efficiency Institute’s (www.eeivt.com) Paul Cillo and Harlan Lachman, PAYS® requires regulatory approval in most jurisdictions. In some cases, regulators may also desire legislative approval to authorize PAYS®. The tariffed charge is treated like any utility charge, meaning that nonpayment by the customer results in disconnection, and a utility can recover any bad debt from PAYS® non-collections. From a state and utility perspective, the only costs of implementing PAYS® are for design and set up of the regulations and tariff. Once the PAYS® system is in place, it can also be used to enhance existing subsidy programs, making them more cost effective and able to reach more kinds of customers.
States can use any capital source to fund the equipment installations. For instance, the state can use a bond to finance the equipment, and the utility will repay the bond from the utility bill charges. Private capital is often the preferred way to institute the program because it does not require state funds. In this case, the utility would repay the private capital supplier. PAYS® currently is in use in New Hampshire and now Hawaii. Michigan also is considering the PAYS® system.
New York enacts bill forbidding"exclusivity contracts"
On July 31, 2006, Governor Pataki signed a bill prohibiting contracts that limit the purchase of renewable fuels between fuel suppliers and gas stations. These contracts limit the ability of consumers to buy renewable fuels by not allowing service stations to buy fuel from sources beyond the main distributor. Since many major fuel distributors do not offer renewable fuels, such as E85, service stations bound by these contracts are forbidden to offer renewable fuels. These efforts are part of New York’s efforts to increase the availability and use of renewable energy.
Connecticut Governor Signs Clean Cars Bill
In Connecticut "An Act Concerning Clean Cars" (Public Act No. 06-161), became law on July 25, 2006. The new law, which goes into effect in October 2007, requires automobile manufactures to affix a greenhouse gas emissions label to vehicles sold in the state. The program is funded through a $5 fee on new car registrations. The new law also creates an education program that will disseminate information about global warming and the impact that vehicle choice has on greenhouse gas emissions.
Hawaii Promotes Energy Efficiency and Renewable Energy
On June 26, 2006, Hawaii Governor Linda Lingle signed Senate Bill 2957, which encourages renewable energy use and production. The law raises income tax credits for renewable energy technologies and establishes a financing mechanism to support the residential purchase of solar hot water systems. The bill also provides incentives to support production of biodiesel and cellulosic ethanol, and creates a plan to move Hawaii toward a renewable hydrogen economy. Hawaii also enacted HB 2175, which provides $5 million for solar power systems in public schools, provides preferences to green buildings when granting construction permits, and requires 20 percent of the state’s new vehicles to by hybrids or alternative fuel vehicles.
September
Setting the Standard: An Introduction to Energy Efficiency Resource Standards, NARUC
Chicago, Illinois
September 27
MEEA Midwest Energy Solutions Conference
Chicago, Illinois
September 27-28
October
DOE-USDA Advancing Renewable Energy Conference
St. Louis, Missouri
October 10-12
NARUC Utility Restoration Crew Access to Disaster Sites: Balancing Security and Speedy Recovery Efforts
Washington, DC
October 11
ASPO-USA Annual Conference on Peak Oil
Boston, Massachusetts
October 26-27
November
NARUC 118th Annual Convention
Miami, Florida
November 12-15
Pew Center/NCSL Climate Change Institute
Racine, Wisconsin
November 29-December 1
December
NCSL Advisory Council on Energy (ACE) Meeting
San Antonio, Texas
December 5-6
 NCSL Fall Forum
San Antonio, Texas
December 6-8
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ENERGY NEWSLETTER
Published quarterly by the National Conference of State Legislatures, 7700 East First Place, Denver, Colorado 80230, (303) 364-7700. FAX: (303) 364-7800
William T. Pound, Executive Director
Funding support for this publication is provided by the U.S. Department of Energy. Any opinions, findings or conclusions in this publication are those of NCSL staff and do not necessarily reflect the views and policies of the U.S. Department of Energy.
NCSL ENERGY PROGRAM
The NCSL Energy Program focuses on a number of issues and answers information requests dealing with state actions on energy policies, new energy technologies, potential effects of federal energy regulation on states, upcoming NCSL meetings on energy issues, NCSL publications on key issues, and legislation.
Contributors to this issue:
Kate Burke, Glen Andersen
Layout and design: Alise Garcia. |
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