You asked for an overview of the Connecticut Energy Efficiency Fund and the Connecticut Clean Energy Fund

SUMMARY

The Connecticut Energy Efficiency Fund (conservation fund) supports programs that provide financial incentives to help residents, businesses, and institutions reduce the amount of energy they used. The Connecticut Clean Energy Fund supports the development and deployment of clean and renewable energy technologies such as photovoltaics and fuel cells.

Both funds were established under PA 98-28, the law that restructured the electric industry to permit retail competition. Both funds are supported by a surcharge on electricity sold in the state by electric companies and competitive suppliers. The Connecticut Energy Efficiency Fund is also supported by a charge on natural gas bills.

In recent years, the legislature diverted to the General Fund part of the revenue that would have otherwise gone into the funds. To reduce the impact of this transfer, the legislature authorized the issuance of bonds backed by future revenue from the renewable energy and conservation charges on electric bills. OLR report 2004-R-0954 describes the early history of the fund, including this diversion. The FY 07-08 budget act appropriated $ 85 million to defease or buy back the bonds

that matured after December 30, 2007.  Seventy-five percent of the revenue freed up as a result of this measure (net of the state's administrative costs) went into the Energy Efficiency Fund and 25% into the Clean Energy Fund.  

This year, further diversions of the revenues supporting the funds were considered to help address the state's budget deficit. However, as a condition of receiving increased federal funds for the State Energy Program under the American Recovery and Reinvestment Act, the state agreed to maintain ratepayer funding for the conservation and clean energy funds for the next three fiscal years.

CONNECTICUT ENERGY EFFICIENCY FUND

All customers served by electric companies and competitive electric suppliers contribute to the Connecticut Energy Efficiency Fund through a charge on their electric bills.   Customers pay three mills (0. 3 cents) per kilowatt-hour to support energy conservation and related programs. Customers of Connecticut Natural Gas, Southern Connecticut Gas Company and Yankee Gas Services Company contribute to the fund through a conservation charge on gas bills.

The electric and gas companies are required to develop, with the assistance of the Energy Conservation Management Board (ECMB), annual plans for spending this revenue. ECMB includes representatives of the attorney general, the consumer counsel (who represents consumer interests at the Department of Public Utility Control (DPUC)), and the Department of Environmental Protection. ECMB also has representatives of business and residential consumers, the utility companies, and environmental groups.

The plans include various conservation programs, and can include other components such as public education programs. DPUC reviews the plans and makes final decisions regarding proposed programs, budgets, and incentives. To be approved, the programs must be cost-effective. Program cost-effectiveness must be reviewed annually, if practicable. If a program fails the cost-effectiveness test, it must be modified to meet the test or be terminated.

Among the fund's residential initiatives are the Home Energy Solutions (HES) and programs to help low- and moderate-income customers (WRAP for Connecticut Light and Power customers and UI Cares for United Illuminating customers). In the HES program, a specialist comes to the customer's home to perform an energy assessment, find and seal critical air leaks, replace incandescent bulbs with compact florescent lamps, and provide water conservation devices, among other things. In the low- and moderate income programs, the specialist also evaluates appliances and heating and cooling systems. There is also a rebate program for energy efficient gas water heaters.

In addition, there are a number of programs targeted at business and institutional customers. In the Small Business Energy Advantage Program, a utility contractor conducts a free energy assessment of the business to determine potential energy-saving actions. The utility works with the contractor to prepare a proposal detailing the proposed measures, the estimated energy savings, and the complete cost. The program uses financial incentives to offset the project's cost and zero-percent financing options to cover the balance. Commercial, industrial, and municipal electric and gas company customers are eligible for assistance with retrofit projects under the Energy Opportunities Program. The projects can include heating, ventilation, and air conditioning (HVAC), lighting, refrigeration, and water heating equipment. The program identifies energy-saving equipment opportunities. It offers financial incentives, which may include 0% or low-interest rate financing, to help the customer evaluate the choice between maintaining older, inefficient equipment or replacing it with a high-efficiency option. The Express Rebate Program provides rebates for energy efficient lighting, motors, and HVAC equipment. The fund also provides interest-free financing of up to $ 100,000 for implementing cost-effective energy-efficiency projects.

Further information about the residential and non-residential programs is available at http: //www. ct-energyinfo. com/energy-programs. htm.

The fund's most recent report to the legislature is available at http: //www. ctsavesenergy. org/files/2008%20ECMB%20Annual%20Legislative%20Report. pdf. The report notes that the fund's programs activities in 2008 will result in 4. 2 billion kilowatt-hour savings over their lifetime. These activities will reduce energy costs by $ 774 million and avoid the emissions of 2. 4 million tons of carbon dioxide over their lifetime.

CONNECTICUT CLEAN ENERGY FUND

The Clean Energy Fund is supported by a one mill per kilowatt charge on electric bills. The fund was initially administered by Connecticut Innovations, Inc. , (CII) a quasi-public agency. PA 07-152 instead created the Renewable Energy Investments Board and allows CII to spend money in the fund only as authorized by the board. The act specifies the board's membership and establishes its responsibilities.  It eliminates the advisory committee that previously assisted CII in developing a comprehensive plan, among other things.

Under the act, the board has 15 members.  These are the Consumer Counsel and the heads of the following agencies, or their designees:  the Department of Emergency Management and Homeland Security, the Office of Policy and Management, and the Department of Environmental Protection.  The board also has 11 members appointed by the governor, legislative leaders, and CII's board of directors.  The membership of the new board is similar to that of the prior advisory committee.

By law, the board must act on matters related to the fund, including developing an annual plan and spending money from the fund.  The board must make a draft of the plan available for public comment for at least 30 days and hold three hearings on the draft plan in different parts of the state.  The board must summarize the comments it receives in the final plan.  It must provide a copy of the plan to the Energy and Technology and Commerce committees.  The board must submit the plan to DPUC, which must approve, modify, or reject the plan.  

The fund supports a wide range of renewable energy programs, encouraging growth in renewable energy supply and demand. PA 98-28 allowed the fund to support several technologies, including solar energy, wind, ocean thermal energy, wave or tidal energy, fuel cells, and landfill gas. Legislation passed in 2007 (PA 07-242) specifically allows the fund to (1) invest in solar thermal energy and (2) be used for demonstration projects for advanced technologies that reduce energy use from traditional sources. It also allows the fund to invest in (1) alternative fuel used for electric generation, including ethanol, biodiesel, or certain other fuels, (2) geothermal energy and (3) hydropower that meets the low-impact standards of the Low-Impact Hydropower Institute.

The fund's major residential initiatives are solar lease and rebate programs. The lease program requires no downpayment and qualifying homeowners make a fixed monthly payment that is less than $ 120 per month for a typical (5 kilowatt) system. At the end of the 15 year lease, homeowners can buy the system at its then current value; extend the lease for another 5 years at a significantly reduced monthly rate; or have the system removed at their expense and returned to CT Solar Leasing with no future obligation. Further information about this program is available at http: //www. ctcleanenergy. com/Portals/0/CT%20Solar%20Lease_Flyer_02-05-09. pdf.

The fund recently reopened its solar rebate program, which provides an allowance of $ 1. 75 per watt for solar photovoltaic systems of 5,000 watts (5 kW) or less and $ 1. 25 per watt for additional watts above 5,000 to a maximum of 10,000 watts (10 kW). The program is being funded with $ 1. 5 million from American Recovery and Reinvestment Act funds and $ 1. 6 million from electric ratepayers. The new funding will support rebates for about 325 new residential solar installations. The fund anticipates that this funding will sustain the program through June 2010. The rebates, when combined with federal tax credits for photovoltaic systems, help to reduce a homeowner's out-of-pocket cost for installing a system by about 40%. Further information about this program is available at www. ctcleanenergy. com/YourHome/SolarRebates/tabid/68/Default. aspx.

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