Power to the People is a column by Donald M. Kreis, New Hampshire’s Consumer Advocate. Kreis and his staff of four represent the interests of residential utility customers before the NH Public Utilities Commission and elsewhere.
By DONALD M. KREIS, Power to the People
My very first job, with Associated Press, involved taking 700-word news accounts created for newspapers and boiling them down to single paragraphs so they could easily be read aloud by announcers at radio stations around the country. Even high school kids with part-time jobs at their local broadcasters.
Hence one of my superpowers: I can explain anything to anyone, in succinct fashion.
Now I intend to put that superpower to its test. And, in so doing, I am going to get right in the face of the Public Utilities Commission (PUC).
Almost every word of the 50-page order issued by the PUC on November 12, gutting our state’s ratepayer-funded energy efficiency programs, galls me to the core. But, to invoke a term one of my English professors often used when I was in college, the ultimate ‘howler’ is these two sentences:
“The Commission finds the ‘Granite State Test’ is overly dependent upon subjective factors such that any desired outcome could potentially be obtained from its application. . . . Further, the Granite State Test and its growing complexity cannot be expected to be reasonably understood by the general public.”
To which you might reply: “Huh? What the heck is this Granite State Test anyway?”
Well, it’s only the heart of the whole thing.
Last year, we spent about $73 million of ratepayer money on energy efficiency programs, delivered by the utilities under the NHSaves banner. The Granite State test is the reason I know every cent of that $73 million was worth it because all customers will end up saving money in the long run.
Though you would not know it from reading the PUC’s order, the very same agency blessed the Granite State Test at the end of 2019 and commended the stakeholder working group that developed it. Although it was tweaked to account for specific benefits that are recognized under our state’s public policy, the Granite State Test is really just a refinement of what is known in the trade as the “utility cost” test.
“Utility cost test,” in turn, means “test for net benefits to all utility customers,” because utility costs are recoverable from customers. And by “all utility customers” we mean everyone who pays a monthly electric or natural gas bill.
The test is oblivious to the effect on individual customers who install energy efficiency measures at their homes and businesses with the help of NHSaves. Those customers incur additional costs – NHSaves does not pay for everything – but they also get additional benefits (i.e., lower bills, immediately).
The old cost-benefit test for energy efficiency measures used to take all of that into account, which engendered endless arguments, such as: Should we count health benefits, additional comfort, increased real estate values, and various other things that truly are subjective?
Ergo, the PUC is dead bang wrong. Switching to the Granite State test actually made the whole thing much less subjective than it used to be.
Perhaps this claim – that the test can be used to declare anything cost-effective – has to do with those elements of New Hampshire’s public policy that “count” toward benefits in the cost-benefit equation. Well, here’s a list of the major New Hampshire-specific items:
Avoided costs of complying with the state’s Renewable Portfolio Standard. Avoided environmental compliance costs. Reduced risk. Increased reliability. Impacts on the use of fuel other than the electricity or natural gas being supplied. Reduced water usage. Relief of poverty. The impact of reduced fossil fuel usage, but only to the extent the value of this is recognized by New Hampshire law.
You might not agree with the list. But every single one of those things can be objectively measured – even seemingly squishy things like “reduced risk.”
Total up the benefits for each NHSaves program – how much money is saved by all Hampshire customers, including via the items I have just listed, over the life of the efficiency measures subsidized by NHSaves – and compare them to what everyone pays via energy efficiency charges for that program. If the ratio is greater than one, the program is cost effective and deserves to be funded.
That’s it. Too complex to be reasonably understood by the general public? You decide.
I hasten to add: The whole premise is flawed. If everything a public utility did, as approved by the PUC, had to be reasonably understandable to the general public, utilities would be out of business.
It’s not that the general public is too ignorant to get under the hood of a public utility and figure out stuff like return on equity, revenue decoupling, depreciation, cost-of-service studies, synchro-phasers, natural gas nomination, forward capacity markets, and every other manner of energy esoterica. It’s really that most people don’t have time for that. Nor should they!
At the risk of stating the obvious, that’s why you pay me and my staff at the Office of the Consumer Advocate to work on your behalf. We worry about what the utilities are up to so you don’t have to, because the state’s residential utility customers have lives to lead, careers to pursue, families to raise, retirements to enjoy.
In other words, via its blithe dismissal of the Granite State test as too subjective and too hard to understand, the PUC has insulted not just us at the Office of the Consumer Advocate (by implying we have cast our lot with a bunch of nonsense) but also you by deeming customers too clueless to grasp what I have just explained to you.
Why would the PUC do that? I have a theory.
If you look at ratepayer funded energy efficiency from a stolidly ideological perspective, one that exalts free markets above all else, then you are inclined to view any benefits claimed on behalf of energy efficiency as nothing but baloney. I’m not getting partisan here; plenty of Democrats and plenty of Republicans are willing to credit good evidence that energy efficiency delivers real benefits.
To put it another way, some people just can’t bring themselves to believe that negawatts are comparable to megawatts. They think energy efficiency is just a ratepayer-funded imaginary friend.
What do you think? Consider sharing your thoughts about ratepayer-funded energy efficiency with the Public Utilities Commission. Write to them at firstname.lastname@example.org, and be sure to mention Docket DE 20-092 in the subject line.
I’ll be writing to them too. Rest assured.