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PUC Staff: Lower Efficiency Maine’s Proposed 3-Year Budget by $45 Million

Last year’s legislative session included a battle over how much consumer money is spent on energy efficiency programs in Maine. The stage is set for a rematch between energy efficiency’s most avid fans and regulators at the Maine Public Utilities Commission.

Hearings get underway in Augusta Wednesday that could make a $45 million difference in the state’s energy efficiency budget.

Last year the proponents of spending on energy efficiency won the day. Lawmakers unanimously overrode Gov. Paul LePage’s veto of a bill that, in turn, overrode a state regulatory decision to slash that funding by tens of millions of dollars.

It was a complicated argument over legislative intent, and now there’s a new and complicated argument over — estimates and assumptions.

It starts with the Efficiency Maine Trust, which uses money collected from energy consumers and other sources to finance subsidies that help individuals and businesses pay the upfront costs for more efficient energy technologies.

“We use consultants to model all the different kinds of lights and appliances and air conditioners and refrigerators and all the business equipment where there’s an opportunity to save energy and where the cost of doing so would be less than the benefits,” says Michael Stoddard, the trust’s executive director.

It’s a cost-benefit calculation, and under state law, the trust must spend enough to gain the maximum achievable cost-effective energy efficiency investments.

The trust recently submitted to the state’s Public Utilities Commission its “triennial plan,” a three-year budget that calls for some $216 million in energy efficiency investments, which should save energy consumers hundreds of millions of dollars over time.

But it’s an increase over previous years’ spending. And according to an analysis by PUC staff released late last month, the PUC’s three-member board should cut the proposed budget by more than 25 percent.

“There are several areas where the staff has made adjustments,” says Harry Lanphear, the commission’s spokesman.

Lanphear says PUC staff found numerous areas where the trust was overestimating benefits. In the biggest single case, staff says a program that provides rebates for buying energy-efficient, compact fluorescent lights should be significantly reduced, because most consumers will now buy CFLs without the subsidy and shouldn’t be given a “free ride.”

The PUC also challenged several of the trust’s financial assumptions, including an estimate of likely energy prices in the future. The PUC staff used a lower estimate, which makes it harder to justify the cost-effectiveness of energy efficiency investments.

When electricity prices are low, it might not make much sense, say, to help a business buy that super-efficient, but super-costly, high-tech cooler.

Overall, the PUC staff says the three-year budget should be lowered by $45 million.

“I’m surprised and disappointed at this point to be honest,” says Sarah Gideon, a Freeport Democrat who led the successful fight last year to restore Efficiency Maine funding that the commission — and LePage administration — tried to cut.

Gideon says lawmakers made clear that the Commission must allow the program to achieve maximum cost-effective benefits, but is on a path that won’t make it to that mandated goal.

And if the Commission’s three-member board accepts their staff’s recommended cuts, she suggests, the Legislature could step in.

Environmental groups are also unhappy with the PUC staff’s proposals. In the middle of it all, meanwhile, is the state’s public advocate, Tim Schneider, charged with protecting consumers’ interests. He says he’s still digesting the staff report.

“The top-line number is more important to us than the assumptions the commission used to get there,” Schneider says. “It’s a mixed bag. Some of the assumptions seem to make sense. Others we have some more questions.”

Questions, he says, that ideally will be answered as hearings and technical conferences get underway — and which will be fiercely argued before the PUC makes its decision some time this spring.

A Columbia University graduate, Fred began his journalism career as a print reporter in Vermont, then came to Maine Public in 2001 as its political reporter, as well as serving as a host for a variety of Maine Public Radio and Maine Public Television programs. Fred later went on to become news director for New England Public Radio in Western Massachusetts and worked as a freelancer for National Public Radio and a number of regional public radio stations, including WBUR in Boston and NHPR in New Hampshire.