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Maine Issues RFP for Efficiency and Conservation Grants

After months of anticipation, on Friday, Maine’s Energy and Carbon Savings Trust and Efficiency Maine announced two RFPs for Energy Efficiency and Conservation Projects.  Together, the RFPs offer over $15 million in funding for efficiency and conservation projects by businesses and municipalities.

Competitive Grants for Large Energy Efficiency and Conservation Projects

The first RFP offers grants for “large energy efficiency and conservation projects.”  These grants will be funded by a combination of approximately $6 million in ARRA funds administered by the MPUC and designated for “job creation, energy efficiency, renewable energy, weatherization, and workforce development” and $3 million in RGGI auction funds administered by the Energy and Carbon Savings Trust.  ARRA funds must be spent or committed within two years.

Pursuant to a competitive grant program, Efficiency Maine and the Trust are seeking applications for large energy efficiency and conservation projects with the primary goals of reducing kilowatt hour (kWh) consumption, encouraging alternative and renewable energy, and decreasing greenhouse gas (GHG) emissions.  Grant awards will range from $100,000 to $1 million and will be used to support eligible commercial and industrial projects that will save or create jobs, achieve energy savings and GHG reductions, and are “project-ready.”  Applications for eligible projects that accomplish these goals will be evaluated on the criteria of cost effectiveness, management and resource adequacy and readiness, and economic impact.

To be eligible, projects must be at a single commercial or industrial location and at least 30 percent of the total project cost must come from private funding, including financing.  Examples of eligible projects include energy improvements for industrial and commercial processes and equipment; compressed air systems; boilers and steam systems including biomass fired; combined heat and power systems in various settings; waste-heat recovery; and solar and wind systems.  Ineligible projects include those mandated by law or required by standard industry practice, feasibility studies and projects where funds will be used at multiple locations.

Energy Efficiency and Conservation Block Grants

The second RFP offers more than $5.7 million in grants for Municipal and County energy efficiency and conservation projects, including renewable energy projects, from units of local and county government.  This program is funded by the ARRA’s Federal Energy Efficiency and Conservation Block Grant (EECBG) program.  Maine’s ten largest cities received formula grants earlier this year (see our earlier post).  Now, Maine’s remaining communities and counties may obtain support for energy use planning, action-ready projects that previously could not be funded, and/or the initial stages of projects promising long-term energy savings and emissions reductions.  This opportunity consists of two alternatives, one for “Custom Projects” and another for standardized or “Template” projects.  Custom project grants, which assist communities to bring planned projects to realization, may be up to $85,000 each (or up to $500,000 regionally) and are awarded on a competitive basis; template project grants, which assist communities with planning and/or energy use analysis, may be up to $10,000, as funds allow.  Efficiency Maine expects that a second round of these RFPs will be issued in early 2010.

Proposals for both RFPs must be submitted by 2:00 pm on November 4, 2009.

If you would like more information about the program, please contact John Gulliver, Bill Hewitt or Patty Aho. 

"An Act Regarding Maine's Energy Future" is Law

Responding to volatility in home heating energy prices and anticipating the passage of the American Reinvestment and Recovery Act, in January, 2009 the Legislature established (pdf) the Joint Select Committee on Maine’s Energy Future to undertake a holistic assessment of diverse energy issues.  In an effort to design a comprehensive process by which energy-related funds are allocated by the State, the 17-member Committee conducted a review of Maine's current approach to energy planning and received testimony from an array of stakeholders.

Today, Governor Baldacci signed the resulting legislation, LD 1485 (pdf), An Act Regarding Maine's Energy Future, into law.  The new law is the culmination of six months of effort by the Select Committee; highlights include:

• Consolidation of various conservation and energy efficiency programs, including electrical, natural gas, and greenhouse gas, into a newly established Efficiency Maine Trust, which will oversee the creation, planning and implementation of energy efficiency and alternative energy resource programs;
• Articulation of efficiency, emissions and consumptions goals intended to reduce Maine's usage of foreign fuels;
• Creation of the Maine Energy, Housing and Economic Recovery Program to be run by the Maine State Housing Authority, which establishes funding sources for affordable housing;
• Establishment of a legislative Commission to study efficiency infrastructure, especially energy corridors, cables, pipelines, and other structures, with Commission recommendations due by December 2, 2009; and
• Placement of a moratorium until mid-2010 on the final permitting of certain energy corridors and facilities, pending any legislative recommendations.

The new law is effective immediately in order to allow the Governor to start the appointment process for the members of the newly established nine-person Board which will oversee the new Trust.  The Trust in turn will commence its duties and activities starting July 1, 2010.

Several members of the Pierce Atwood Energy Practice Group were actively involved with the creation of the new law, and specific questions regarding LD 1485 should be directed to Pattie Aho. 

Maine PUC Begins Inquiry Into Decoupling

On May 20th, the Maine Public Utility Commission issued a Notice of Inquiry"to obtain information and viewpoints regarding whether there is a need to provide different or additional financial incentives to the State’s transmission and distribution (T&D) and natural gas utilities to encourage customers to use energy more efficiently."  The NOI is in response to language included in the American Recovery and Reinvestment Act that required states to try to implement a policy that would align utility incentives with helping consumers use energy more efficiently as a condition of receiving additional State Energy Program funds. 

That language is generally understood to refer to "decoupling": changes in rate structures to address the fact that under traditional ratemaking policies utilities make more money as consumers use more electricity and gas. This makes it difficult to enlist utilities in efforts to encourage energy efficiency.  Those rate structures also create disincentives for T&D utilities to support behind the meter renewable distributed generation, such as residential roof-mounted solar photovoltaics or home wind turbines, which have the same effect of reducing total energy use by end users, and thus utility profits.  Decoupling is often paired with net metering, which allows home users to use on-site energy generation to offset energy consumed and reduce or in some cases eliminate their retail electricity bill.

The tone of the NOI is, on the whole, skeptical about the prospect of adopting a "decoupling" regime for Maine's transmission and distribution utilities.  The Commission notes Maine's prior experience with decoupling, including a failed implementation with Central Maine Power in the early 1990s, and a series of investigations and reports by the Commission that concluded the negative impacts (or risk thereof) of new rate designs exceeded any potential benefits.  They also note that the state's electricity efficiency programs are already administered by a separate entity, Efficiency Maine, and not the utilities themselves, reducing the conflict of interest inherent in utility-run efficiency programs absent decoupling.

Nonetheless, the Commission seeks input from interested persons on the following questions (additional questions relating to natural gas are omitted here):

1. Is there a need for Maine to implement alternative rate structures or other incentives for T&D utilities that would encourage energy efficiency measures by consumers?
2. Are there rate design or ratemaking techniques that were not considered in the prior investigations into efficiency incentives for Maine’s electricity utilities that could provide substantial benefit to the State?
3. Are there unintended consequences to implementing alternative rate structures or other efficiency incentives for T&D utilities that were not considered previously by the Commission?

Comments in this proceeding, Docket No. 2009-159 are due June 19, 2009, with reply comments to be filed by July 3, 2009.

Fancy Math

On March 26, Maine’s Governor Baldacci proposed LD 1201, emergency legislation called “An Act Regarding Energy Independence.”  A major feature of this bill (Section 9303(4)(D)) is the establishment of “Efficiency Maine Plus,” an entity that will replace the current Efficiency Maine and will be governed by a Council which will be responsible for developing “quantifiable measures of performance” to which EMP will be held accountable.  “Such measures may include, but are not limited to, reduced energy consumption, reduced capacity demand for natural gas and electricity, reduced energy costs, reduced carbon dioxide emissions, program and overhead costs and cost-effectiveness, the number of new jobs created, the number of energy efficiency trainings or certification courses completed and the amount of sales generated.”

Reducing emissions and creating jobs sound like great objectives.  But measuring this kind of performance is not a challenge to be taken lightly.  Even if you can measure a reduction in emissions or the creation of jobs, how can you be sure those changes were caused by the program you’re funding?

This issue of whether incentives (like those that would be offered through EMP programs) should only be available when the reduction in emissions or increase in jobs would not have occurred but for the incentive is called additionality and is hotly contested in the carbon-reduction arena.  Some commentators say additionality is a good objective in theory, but in practice will lead to public money being invested only in bad ideas.  In other words, this school of thought argues that additionality tests serve only to encourage the diversion of funding from projects the market supports (because they work) to projects the market does not support (because they don’t). 

Others take the position that incentives shouldn’t be squandered on changes that will take place anyway.  Under the Kyoto Protocol, for example, only “additional” reductions may be counted as Clean Development Mechanisms,  and the governing body has developed a tool (pdf) for measuring the additionality of a project.  As you can see from the Kyoto Protocol, screening for additionality is a complex task (though the flow chart on page 3 of the tool provides a nice visual introduction). 

Whether additionality should be a factor in public funding of programs like those envisioned by LD 1201 may be an open question.  But surely the metrics proposed should at least be calculable.  Section 9303 (1)(C), for example, gives EMP the target of reducing peak load by 100 MW by 2020.  It does not say relative to what: 2008 peaks?  Future forecasts?