Guest Highlight
Guest Columnist Alecia Ward of the Midwest Energy Efficiency Alliance (MEEA) discusses the need for state leadership on energy efficiency.

State Updates
Legislative and Regulatory News from California, Colorado, Connecticut, Florida, Hawaii, Louisiana, Maine, Maryland, Massachusetts, Nebraska, New Mexico, Virginia, and Washington.

RECA Report
Get the latest on the work of the Responsible Energy Codes Alliance (RECA).

The Alliance Wants to Hear from You!
Contact us with suggestions or comments.


Click here to subscribe to the State Energy Efficiency Policy Bulletin
View Archives

Step Up! The Need for State Leadership
By Alecia Ward of the Midwest Energy Efficiency Alliance

2003 was a tumultuous year for energy issues generally. The rising cost of natural gas, the August 14th Blackout, and the continued revelations related to Enron's collapse all underscore the need for greater national attention and a more balanced set of energy policies. Despite these circumstances our federal policy makers have failed to lead on the issue of energy efficiency and its role in helping to stabilize volatile energy markets.

On a state-by-state evaluation the picture is equally bleak. Last year was a disaster year for declines in energy efficiency funding in the Midwest and it punctuates a persistent decline in investments over the last decade.

Public Benefit Funds
Since the wave of utility deregulation/restructuring swept the country in the 1990's several strategies have been employed to maintain funding in energy efficiency. When restructuring started, it was feared that absent a mandatory regulatory requirement to participate in demand side management (DSM) programs, integrated resource planning (IRP), or a cost-recovery mechanism to encourage the utilities to support efficiency programs, funding would drop off.

An attempt to stave off declines in funding manifested itself in the creation of rate-payer based funds, known as public benefit funds (PBF) or system benefit charges (SBC) administered in one of several ways: 1) those funds administered by state agencies, 2) those funds administered by third party (typically non-profit) organizations, 3) those funds which actually operate as an efficiency utility in a regulated paradigm just as investor owned utilities are regulated.

Of the nine states in which MEEA operates programs (Minnesota, Wisconsin, Michigan, Iowa, Illinois, Indiana, Ohio, Missouri and Kentucky) three have been deregulated and instituted some form of public benefit funding, three have retained regulatory oversight of the utilities by a state agency and have some sort of cost recovery mechanism or incentive to the utilities to participate in energy efficiency, and three have limited regulatory oversight with efficiency investments being negotiated on a rate-case by rate-case basis or as mergers occur.

In the Midwest, in states where deregulation has occurred ( Illinois, Michigan and Ohio ), funding through PBF's has decreased substantially.

• In Ohio, when deregulation created a revolving loan fund which was supposed to be capitalized at $10 million per year for 10 years for a total of $100 million, the Governor and the legislature took $3 million in FY03 for the general fund and redirected $10 million in FY 04 from the revolving loan fund to their low-income bill payment program.
  
• In Illinois, where deregulation created a $7 million per year fund ($3 million for energy efficiency/$4 million for renewable energy) administered by the agency now called the Illinois Department of Commerce and Economic Opportunity (DCEO) the Governor took $4 million. In addition, in Illinois where a separate fund created the Illinois Clean Energy Community Foundation (ICECF) from the sale of ComEd's coal-fired generation plants to Midwest Generation, the Governor and legislature have requested that the trust turn over fully ½ of its $225 million principal.
  
• In Michigan, where the utilities primarily won the stranded cost argument during their restructuring debate, Detroit Edison (DTE) was the only utility to pay up to $50 million into a public benefit fund. DTE's contribution comes from the refinancing of their stranded costs and is at risk of going away in the near future.
  
• Of their $62 million annual investment in public benefit funding in Wisconsin, a state that did not restructure its utility industry, but did shift the manner in which efficiency dollars are administered, funding was reduced by $19 million in FY04 and $29 million in FY05 as a result of raids by the Governor and legislators to balance the state budget.

In January 2003, MEEA estimated that in the Midwest roughly $230 million in investments occurred on an annual basis through regulated DSM spending as well as funding through PBFs, state investments and federal funding that flows through the state. Since the legislative sessions in 2003, these funds have hemorrhaged. One of these states is still in litigation, but if all of these decisions are supported, the Midwest investment in energy efficiency will have declined by roughly 1/3 rd in one year.

State Leadership
Given these circumstances, it is clear that we are in need of state leadership on energy policies generally and energy efficiency specifically. But from where will that leadership come? In December of 2002 – after the mid-term elections – in an article for the MEEA Minute I predicted that “In the absence of effective fiscal leadership, short-sighted decisions to cut efficiency funding rather than investing in efficiency programs for their net contribution to the economy are likely. “ This was not an especially prescient insight. At that time it was clear that the basic level of awareness and understanding of the value of energy efficiency was lacking among newly elected policy makers.

Now that those policy makers have a little over a year of experience under their collective belt, I issue this challenge: Step Up! Step up and ask the questions that will help you be better legislators, Governors, and policy makers. Step up and accept responsibility for the status of energy issues in your state and help find creative solutions that will benefit your constituents. Step up and fight for efficiency dollars that will make the difference in the lives of consumers, in the bottom lines of manufacturing businesses in your state, and ultimately in your state's fiscal health. Step up and claim the energy savings, environmental benefits, re-invested state resources, and jobs that accrue to states that maintain investments in energy efficiency.

In the Midwest we are practical people. Investments in energy efficiency pay back to states in the form of reduced monthly energy bills for their facilities and buildings, pay back to the economy in the form of increased jobs and greater available disposable income to consumers who are not spending all their resources on skyrocketing energy bills, and pay back to policy makers in the reflected glory of happy constituents. Step up!

For more information click here

Back to the Top

Hybrid Electric Vehicles and HOV Lanes – Federal Legislation Stalling State Action
By Kara Saul Rinaldi of the Alliance to Save Energy

Growing concerns about greenhouse gas emissions, urban air quality and increasing dependence on foreign oil have led many states to create innovative incentives that encourage consumers to purchase hybrid-electric and other clean fuel vehicles that reduce our dependence on oil and result in far fewer emissions. With federal policies to address pollution and energy waste in the transportation sector being delayed by the energy policy stalemate in Congress, several states are forging ahead with innovative transportation policies and initiatives. Among these initiatives is the effort by some states to allow access to high occupancy vehicle (HOV) lanes for single occupant, hybrid-electric vehicles.

Access to HOV lanes has proven to be a significant incentive to the purchase of hybrid-electric vehicles. It appears that time is recognized by consumers as a valuable commodity, and the ability to save time commuting by driving a hybrid-electric, therefore, is a meaningful puchase purchase incentive. A significant number of states also have put in place tax incentives that help to lower the transaction costs for purchase of a hybrid electric vehicle. These incentives, coupled with the proposed access to HOV lanes are projected to make a meaningful transformation in the market toward energy efficient hybrids.

Unfortunately, federal legislation currently prevents states from moving forward to open HOV lanes to hybrid-electric vehicle owners. The Transportation Equity Act of 1998 (which authorizes federal highway and mass transportation programs) dictates that HOV lanes can be used only by multiple occupants or vehicles that have been certified by the US EPA as Inherently Low Emission Vehicles (ILEV). To meet this definition, vehicles must have zero evaporative emissions. Natural gas fueled vehicles and battery electric vehicles can meet this standard; hybrid-electric vehicles, while among the lowest emitting vehicles in the market today, cannot meet this definition.

Hybrid gas-electric vehicles (which achieve fuel economy ratings as high as 60mpg in city use) also receive very low emission ratings, some in the market today are certified as meeting the California Super Low Emission Vehicles (SULEV) rating which is surpassed only by the “Zero Emission Vehicle” rating that currently can be met only by battery or fuel cell electric vehicles. For several years proponents of hybrid-electrics have worked to amend federal law to open HOV lane access for hybrids. These efforts have been supported in the Congress by energy efficiency and environmental advocates, but unfortunately the effort was undertaken as part of comprehensive energy legislation that has proven – for reasons completely unrelated to hybrid and other clean fuel vehicles – to be contentious. In both the hotly debated Energy Bill in Congress as well as the current Senate and House versions of the Federal Highway Bill, known as the Safe, Accountable, Flexible, and Efficient Transportation Equity Act of 2003 (S.1072 and H.R. 2088), the law would be expanded to allow states to expand the use of their HOV lanes to hybrid gas-electric.

Notwithstanding the absence of federal action, states such as Arizona (SB 1429), Colorado (SB91), Florida (SB88), Georgia (HB 719), and Virginia (Chapter 324) have moved forward with an expansion of their HOV lanes to allow access for hybrid electric vehicles. This is creating difficulty with the Federal Highway Administration. While many recognize that the current law is outdated, until Congress passes legislation to change it, states cannot alter the rules governing their highways. In fact, the FHA has threatened to withhold federal highway funding from states that have violated the rules, threatening millions of dollars that are crucial to states' upkeep of the transportation infrastructure. In Virginia, although the state was able to get an exception to allow hybrids in HOV lanes in a pilot trial, an HOV task force set up by the state to improve HOV lane enforcement announced in August 2003 their recommendation that the state not extend the exemption for hybrid vehicles set to expire on July 1, 2006 because of the federal concerns.

Carpool advocates and some environmentalists also are concerned about the expansion of HOV lanes. HOV lanes were designed to encourage carpooling and reduce the number of vehicles on America 's roads. As more hybrids vehicles are sold (Honda and Toyota currently sell hybrids; Ford, Lexus and others will soon introduce additional models) the fear is that HOV lanes will become as congested as regular highway lanes. Advocates on both sides of this issue make interesting points. Opponents to single-occupant access ask: which is more efficient, a Honda Civic carrying three commuters that achieves 32mpg on the highway or a Hybrid Honda Civic with one commuter that achieves 55mpg on the highway? Proponents of access for hybrids note that the hybrid delivers greater fuel economy and lower pollution on and off HOV lanes, helping to improve the overall performance of the car park significantly

Right now the debate remains academic as states await action by the Congress on this and a number of other important, energy-related policies that were contained in the comprehensive energy legislation, H.R. 6.

Back to the Top

California
House Bill 2311 Re-referred to Committee on Business and Professions on 3/31/04

HB 1225 would set a goal to design, demolish, construct, renovate, operate, and maintain state buildings that are models of energy, water, and materials efficiency, while providing healthy, productive, and comfortable indoor environments and long-term benefits to residents of the state.  

For more information click here

Back to the Top


Colorado
House Bill 1225 Introduced in Senate referred to Appropriations Committee on 3/17/04

HB 1225 would require utilities to collect an energy assistance charge from each electric and gas customer beginning January 1, 2005, unless a customer opts not to pay the charge. The bill also directs the organization to hold the moneys in a separate account and expend the moneys only for the purposes of low-income energy assistance in the form of payment to utilities. This bill repeals the low-income energy assistance program, effective on January 1, 2010 .

For more information click here

Back to the Top


Connecticut
Senate Bill 145 Filed on Senate Calendar on 3/23/04  

SB 145 would require the Secretary of the Office of Policy and Management to establish a minimum energy efficiency standard for certain heating, cooling, lighting and other types of products.

For more information click here


Connecticut
Senate Bill 595 Filed on Senate Calendar on 3/31/04

 SB 595 would establish goals for 2010, 2020 and a long-term basis for the reduction of greenhouse gas emissions. This bill would also establish reporting requirements for the emission of greenhouse gas, and a Governor's Steering Committee on Climate Change. In addition, it requires the Department of Administrative Services to maintain information about products, services and practices to be used by state government that minimize the impact on global warming. This bill would take effect on October 1, 2004 .

For more information click here

Back to the Top


Florida
Senate Bill 112 Referred to Appropriations Subcommittee on Transportation and Economic Development on 03/31/2004

SB 112 would create the Florida Alternative Electric Energy Trust Fund within the Public Service Commission. The trust fund would be used to fund the Florida Alternative Energy Technology Center. This bill would require funds to remain in the trust fund at the end of each fiscal year. The bill will take effect July 1, 2004 , if there is a three-fifths vote of the membership of each house of the Legislature and will terminate July 1, 2008.  

For more information click here


Florida
Senate Bill 2724 Introduced and referred to Commerce, Economic Opportunities, and Consumer Services; Finance and Taxation; Appropriations Subcommittee on General Government on 03/16/2004  

SB 2724 would provide an exemption from sales tax for certain energy-efficient appliances that meet the Energy Star requirements specified by the Federal Government. This act would take effect July 1, 2004 .  

For more information click here  

Back to the Top


Hawaii
House Resolution 130 Introduced on 3/24/04 and referred to House Transportation and House Finance Committee on 3/29/04  

HR 130 would urge the Department of Transportation to support use of incentives to use hybrid vehicles and other fuel-saving, energy-efficient, non-polluting vehicles.  

For more information click here

Back to the Top


Louisiana
House Bill 1256 Introduced and referred to the Appropriations Committee on 3/29/04  

HB 1256 would require performance-based energy contracts to be reviewed, approved, and overseen by the Office of Facility Planning and Control, division of administration, according to regulations it promulgates.  

For more information click here

Back to the Top


Maine !
Senate Bill 407 Passed in Concurrence on 3/29/04  

SB 407 established minimum energy efficiency standard for certain products, such as ceiling fans, illuminated exit signs, traffic signal lights and digital cable television boxes. Beginning January 1, 2005, the sale of a product that does not meet the energy efficiency standards is prohibited. Beginning January 1, 2006, the installation of a product that does not meet the energy efficiency standards is prohibited. The bill also increases transmission and distribution utilities to 0.2¢ per kilowatt-hour to fund energy conservation programs and impose transmission and distribution utilities of 0.1¢ per kilowatt-hour to fund the Clean Energy Fund established in the Public Utilities Commission to encourage the development, construction and operation of new renewable energy resources projects, defined as electrical generation powered by fuel cells using renewable fuels; tidal, ocean or wave power; solar arrays and installations; wind power; and geothermal power.

For more information click here

Back to the Top


Maryland !
Senate Bill 654 Third Reading of the bill and Passed Senate; First Reading House Rules and Executive Nominations on 3/31/04

SB 654 would create an Energy-Saving Investment Fund to provide funding for energy efficiency programs; requiring specified electric and gas customers to contribute to the Fund through an energy-saving investment charge set by the Public Service Commission in a specified manner. The bill also would require the Maryland Energy Administration to develop and manage energy efficiency programs; providing for a plan for the disbursement of funds to implement the programs throughout the state.

For more information click here

Back to the Top


New Mexico !
House Bill 251 signed into law March 4, 2004. Passed in the House (52-1) and Senate (30-0). This bill carried Governor Richardson's designation (“GR”) and was one of his top 2004 legislative priorities.

HB 251 will enact the Advanced Energy Technologies Economic Development Act and create a fund and grants program to promote research and development of energy conservation technologies.

For more information click here


New Mexico !
Senate Bill 86 Passed Senate (29-0) on March 4, 2004 and House (62-0) February 18, 2004; awaiting signature by Governor. This bill represented one of Governor Richardson's gubernatorial campaign promises and was one of his 2004 legislative priorities

SB 86, the "No Excise Tax on Fuel-Efficient Vehicles" bill amends the Motor Vehicle Excise Tax Act [NMSA 1978, Chapter 7, Article 14] to provide a one-time exemption from the motor vehicle excise tax for the purchase of new gasoline-electric hybrid vehicles at the time of the issuance of the original certificate of title for the vehicle. The reduction in motor vehicle excise tax on qualifying vehicles is scheduled to begin on July 1, 2004.

For more information click here

Back to the Top


Virginia !
House Bill 1176 was approved by the Governor on 3/19/04  

HB 1176 amends the required contract provisions for energy performance-based contracts by increasing the payback period from 12 to 20 years. This act will be effective as of July 1, 2004 .

For more information click here

Back to the Top


Washington !
House Bill 3141 was signed into law by the Governor on 3/31/04. Passed the House by a vote of 69 to 26 and passed the Senate by a vote of 40 to 6.

HB 3141 requires fossil fueled thermal power plants with a generating capacity of 25 MW or more to provide mitigation for 20 percent of the CO2 emissions produced by the plants over a period of 30 years. This requirement would apply to new power plants seeking site certification or an order of approval after July 1, 2004, and existing plants that increase the production of CO2 emissions by 15 percent.  

For more information click here  

Back to the Top

The Responsible Energy Codes Alliance (RECA) continues its work to promote adoption of the International Energy Conservation Code (IECC). In March, RECA and its members were active in Arizona, Colorado, Illinois, and Nebraska. In Illinois, thanks in part to the concerted effort of RECA members, the Energy Efficient Commercial Building Code bill, H.4099, passed out of the House on Friday, April 2 with a vote of 62-54.  The bill will be voted on in the Senate in upcoming weeks. States to watch for code developments in the month ahead are Illinois, Indiana, Michigan, and New York.

Click here to visit the RECA website for more information.

Additional Resources:

Building Codes Assistance Project (BCAP), a joint initiative of the Alliance to Save Energy, American Council for an Energy-Efficient Economy, and National Resources Defense Council, is dedicated to assisting states in the development and implementation of statewide building energy codes. For more information click here.

Appliance Standards Awareness Project (ASAP), a joint venture of the Alliance to Save Energy, American Council for an Energy-Efficient Economy, and the Natural Resources Defense Council, provides advice and technical support to parties interested in advancing state standards. ASAP is dedicated to increasing awareness of and support for appliance and equipment efficiency standards. For more information click here.

Back to the Top