SB 412 Blows Chance to Save Hoosiers Big Money and to Create Many Clean Energy Jobs
I. The Past, Part I: Indiana Takes a Far-Sighted Step to Cut Hoosier Electricity Bills
In 2009, at then-Governor Mitch Daniels’ direction, the Indiana Utility Regulatory Commission (IURC) began developing a statewide electricity savings program. In 2011, that program launched under the name Energizing Indiana. This customer-funded program aimed to help provide residences, small businesses, places of worship, schools, and factories with rebates and technical assistance to save money on their electricity bills. And it worked: Investment in energy savings increased by 9 times in just two years. And, in addition, it was cost-effective: Energizing Indiana achieved a program benefit to program cost ratio of more than 3 to 1, according to an independent analysis, commissioned by the IURC itself!
II. The Past, Part II: Indiana Legislature Assaults Well-Performing Energy Savings Program
Despite immense opposition by public interest groups, a number of manufacturers involved in energy efficiency, and several editorial boards, SB 340 was enacted in 2014 — a law which abolished the well-performing, relatively new Energizing Indiana program.
III. The Present: The Governor and His Legislative Allies Propose a Weak Replacement, SB 412, to the Energizing Indiana Program
Facing sustained criticism for prematurely eliminating Indiana’s statewide energy savings program, Governor Pence — working with legislative allies — has a proposed a new bill, SB 412.
SB 412 largely abdicates Indiana policymakers from setting energy efficiency policy, and puts policy-making in the hands of the power companies themselves! Features include:
- Indiana’s electric power companies set their own electricity savings goals.
- Indiana’s government has no ability to enforce those goals, nor is required to respond to comments from the public about the power companies’ goals.
- Power companies get compensated for implementing those goals– and, furthermore, likely get compensated for any “lost revenue” that companies would have earned had they sold, rather than saved, their power.
- The biggest contributor to reducing electricity consumption in the power sector — factories — can exit from the program if they so choose, and can do so permanently.
III. SB 412 Set to Become Law: Missed Opportunity
On March 24th, the Indiana House voted in favor of SB 412’s passage. SB 412 is all but assured the Governor’s signature. Passage means that Indiana blows the chance to save Hoosiers meaningful amounts of money on their energy bills. It also sends a very weak market signal to companies involved in manufacturing, installing, and servicing energy-saving equipment. Why so?
SB 412 essentially takes Indiana back to the era before Energizing Indiana (as seen in the chart by the Midwest Energy Efficiency Alliance below), when utilities themselves defined their own energy efficiency policy as opposed to policymakers themselves. (Indiana, in 2015, is seeing a precipitous drop in electricity savings, as seen in the chart below.)
- During this period of time, energy savings for Hoosier homes and businesses was a fraction of the savings under Energizing Indiana.
- Not only does less energy savings mean less dollar savings on the electricity bills of homes and businesses, but it also means a very small, Indiana-based market for selling, installing, and servicing energy-efficient equipment.
- Substantially smaller energy savings also means significantly missing out on the benefits that energy efficiency provides to improving the reliability of the electricity grid as well as reducing pollution.
- Energy efficiency is also Indiana’s cheapest, fastest way to cut our state’s overall carbon footprint, which is the highest in the Industrial Midwest.
IV. HEC’s Statement on SB 412’s Passage
“The global building retrofit market is more than $80 billion in size. By passing SB 412, a largely voluntary, utility run energy savings program, the legislature is sending two damaging signals to this market: First, that Indiana will not guarantee market certainty to this sector, and second that Indiana will place weak limits on the cost of utility-run efficiency programs. SB 412 becomes unwise, compared to the rashly abolished Energizing Indiana, when one realizes that the building retrofit market will nearly double in size by 2020.”