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State Energy Policies Drive Efficiency, Spark Investment

By Jen Singer, ICF on Nov 02, 2017

Both New York and Rhode Island have enacted legislation prioritizing energy efficiency with measurable success. New York created a framework to set energy reduction targets and track improvements, while Rhode Island established a set of guiding principles to make energy efficiency more cost effective.

New York’s Framework

The State of New York’s Executive Order 88 set an ambitious goal of achieving 20 percent savings in the state building portfolio by April 2020. The state’s largest utility, New York Power Authority (NYPA), developed the BuildSmart NY program to centralize state building energy management and provide building managers with a unifying framework to support them in pursuit of this goal.   

Key structural elements of the framework include:

  1. A core team dedicated to stakeholder communications, technical expertise, and progress tracking.
  2. A day-to-day contact and an executive sponsor for direct reporting to the head of the agency.
  3. An Executive Steering Committee comprised of senior NYPA officials, the Governor’s Office, and state agencies to ensure stakeholder input across state departments.

In addition, the BuildSmart framework contains a set of guidelines for short- and long-term goals and establishes baselines and reduction targets for each agency. Key energy saving measures include operations and maintenance, sub-metering, auditing of low-performance buildings, and retro-commissioning. As a result, BuildSmart NY has resulted in a 4.3 percent reduction in state building energy use intensity within just two years, a great start for New York state agencies as they reach towards the 20 percent goal.

Rhode Island’s Principles

The State of Rhode Island was spending 60 times more on energy supply than it did on energy efficiency, despite it being six times more expensive. As a response, the state enacted the Comprehensive Energy Efficiency, Conservation, and Affordability Act of 2006, transforming the state’s energy market by adopting Least Cost Procurement (LCP)  in energy planning.

These principles prioritize cost-effective methods of meeting energy demand, making energy efficiency the “First Fuel” as opposed to energy supply. LCP components include market incentives for the utility (National Grid), stable and long-term funding, cost-effectiveness assessments, and stakeholder engagement.

The 2006 Act and subsequent amendments implemented two primary market incentives to make energy-efficiency measures cost-effective. First, the LCP decoupled utility revenue from sales, making it in National Grid’s business interests to conserve energy.  Second, LCP offered performance-based incentives: National Grid receives 5 percent of its spending budget if it achieves 100 percent of its savings targets within budget, more if they exceed the goal.

Since implementation, Rhode Island has realized a tripling of state investment in energy efficiency over four years, placing it third on the list of state per-capita energy-efficiency investment.  Rhode Island exceeded its energy savings targets over the last two years to become the only state to reach 3 percent savings in a single year, and residents have gained $2 billion in savings on energy bills and 25,000 job-years of employment.

Learn more about the legislative efforts of New York and Rhode Island here.