Chapter Two
Findings and Recommendations
In 1999, a total of 839 trillion Btu of energy was consumed in Connecticut at a cost of $7 billion. This represented:
According to the data from the Energy Information Administration, these numbers placed Connecticut 33rd among all states in terms of total consumption and 45th in per capita consumption. The state ranked just below the median in terms of total expenditures and 22nd in terms of per capita expenditures. Connecticut was third in terms of price per million Btu.
The availability of energy is dependent on a number of disparate elements. As shown previously in Figure I-13, the factors affecting energy supply and demand include economic conditions, energy conservation efforts, regulatory requirements, grid reliability concerns, environmental considerations, the weather, and geographic location. The extent to which each factor increases or decreases the quantity or the price of energy in Connecticut varies, with the type of fuel an important determinant of the degree of influence. Many of the key elements are inter-related.
No single individual or governmental entity has overall responsibility for energy policy in Connecticut. As displayed in Figure I-12, more than a dozen state governmental bodies have specific energy-related responsibilities. In addition, numerous types of private businesses play important roles making energy products and services available. Federal entities also are important participants in setting energy policies.
Legislative Efforts
In dealing with the question of energy availability, of particular importance to the Connecticut legislature is the fact many of the elements included in Figure I-13 are outside its control. In some cases, this is because of the way the private enterprise system functions; in other cases, it is a result of broader relationships.
For example, decisions related to the electric grid in the state must be made within the context of what is occurring in other geographic areas. Currently, Connecticut is a participant in a transmission system that covers the New England region. In the future, the Federal Energy Regulatory Commission is expected to require the New England system to become part of a larger regional transmission organization. This new region may include all of the Northeast, which would make Connecticut part of one of the largest electricity markets in the world.
However, the Connecticut General Assembly (along with other governmental entities) can offer a vision for the future of energy in the state. Indeed, on multiple occasions since the 1970s, the legislature has taken steps to describe and implement energy-related goals. A number of these efforts identified the same concerns and proposed similar solutions.
In 1978, acknowledging the importance of energy to society, the economy, and the environment, the General Assembly spelled out in detail its vision regarding energy. C.G.S. Sec. 16a-35k recognizes the lack of primary energy sources within Connecticut and the dependency on petroleum. The statute calls upon the state to "address these problems by conserving energy, increasing the efficiency of energy utilization and developing renewable energy sources." The statute also calls for the state to "seek all possible ways to implement this policy," including:
In 1992, the legislature directed the secretary of the Office of Policy and Management (OPM) to prepare a comprehensive energy plan every four years, beginning in 1994. Using C.G.S. Sec. 16a-35k as a base, the plan was to:
OPM initiated the process for developing the first plan in 1993. It issued a draft document and held public hearings. Recommendations addressed areas such as assistance to businesses to create and market energy-related products, cogeneration, opportunities to build energy efficiency into new buildings, transportation issues, and expansion of energy conservation programs.62 No final plan was issued, nor were any attempts made to produce a plan in subsequent years. However, some of the recommended proposals were implemented, in several cases as part of the electric restructuring process. Others continue to be discussed.
The Connecticut Energy Advisory Board is also statutorily required to make recommendations for carrying out the purposes of C.G.S. Sec. 16a-35k as well as examining the energy component of the state's economy.63 In February 2000, CEAB issued an Energy Policy Report in response to Special Act 99-15, which required "a study to update and strengthen the state's energy policy."
The report contains long-range energy policy goals in five areas -- economic, environmental, risk mitigation, competitive markets, and policy development and coordination. The plan identifies strategies and some key actions required to carry them out. Proposals particularly relevant currently to achieving previously specified legislative goals are:
To date, implementation of the CEAB proposals has been limited. While the board has held workshops to discuss energy issues, until recently the board has not specifically tried to focus on prioritizing the steps needed to achieve long-term solutions. However, to the extent many of the same concerns have been raised by others, the issues are receiving attention.
Electric restructuring legislation is one of the most recent ways the legislature sought to influence the supply and price of energy. Public Act 98-28 required electric utilities to separate the generation side of their companies from the transmission and distribution side. As a result, existing companies reorganized, and new suppliers began entering the marketplace. It was hoped giving consumers the opportunity to choose their electric supplier would encourage competition among suppliers, leading to lower electric bills and more efficient technologies.65
Public Act 98-28 also created two new programs funded by assessments on electric customers. In each case, a statutorily specified charged is added to consumers' bills, based on the quantity of electricity consumed.
The Energy Conservation and Load Management Fund (C.G.S. Sec. 16-245m) pays for cost-effective energy conservation programs and market transformation initiatives. The Department of Public Utility Control, with advice from the Energy Conservation Management Board, must approve expenditures from the fund. The fee for the program generates approximately $84 million a year.66 Projects funded during calendar year 2001 saved an estimated 314 million kWh during that year, with potential lifetime savings estimated at 4.7 billion kWh. In addition, thousands of tons of air emissions were avoided.67
The Renewable Energy Investment Fund (C.G.S. Sec. 16-245n), also known as the Connecticut Clean Energy Fund, provides venture capital for projects and companies that promote the use of clean power. In FY 01, the fund invested $12.3 million in projects involving a variety of renewable energy sources. The largest portion (54 percent) went toward fuel cells.68
Future Actions
Actions taken by the Connecticut General Assembly to affect the availability of energy often work indirectly. As discussed in Chapter One, the legislature can offer financial incentives for energy conservation efforts and research into new technologies. Alternatively, it can place restrictions on prices and the location of facilities.
The program review committee believes one of the best short-term opportunities for the legislature to influence the overall energy situation in the state is through efforts related to energy conservation. Proposed changes support improved efficiency, curtailment of consumption, and increased use of alternative fuels. As the National Association of State Energy Officials noted in 1998:
Businesses and consumers are discovering that energy efficiency and renewable energy mean not just energy savings and improved national security (less oil imported), but also cleaner air, pollution prevention, more disposable income and profitable increases in productivity.69
The program review committee recommends C.G.S. Sec. 16a-48 be amended to require a review of the state's energy efficiency standards for appliances at least every four years. As part of that process, new products appropriate for inclusion within the requirements of the statute should be identified.
As noted in testimony at the program review committee's January 2002 public hearing, modernizing building codes and appliance standards are important actions the state can take to improve conservation. C.G.S. Sec. 29-252 already requires the State Building Code be revised within 18 months of the publication of updated national standards from organizations such as the Building Officials and Code Administrators International, Inc. and the International Code Council, Inc. This recommendation seeks to ensure OPM in consultation with the Department of Consumer Protection periodically examines the standards for appliances to be sure they are up-to-date.
The program review committee recommends the State of Connecticut endeavor to be a model energy consumer. As such, it should identify and then demonstrate best practices for reducing the quantity of energy consumed and diversifying the mix of fuel sources used in a variety of settings.
Designation of the State government as a role model is based on its diverse energy requirements. Although it does not have the same needs as all categories of consumers, the State does require power, heat, and cooling for a wide range of facilities, including around-the-clock residential institutions, office buildings, science laboratories, and airports. In addition, the State has properties in nearly all of the territories served by major fuel suppliers operating in Connecticut.
The State also has a financial incentive to reduce its consumption of energy. Preliminary data compiled for the program review committee's study "Energy Management by State Government" showed the state spent approximately $100 million on energy-related expenses in FY 00. This represented slightly less than 1 percent of the state's expenditures that year.70
Since the 1970s, the State has undertaken a number of conservation initiatives involving curtailment of usage as well as installation of more energy efficient equipment. A detailed examination of the results of those efforts is one of the tasks remaining to be completed as part of the committee's energy management study. More specific proposals regarding the energy consumption activities of the state will be provided at the conclusion of that review.
Communication. Part of the State's responsibility as a model consumer will be to increase the public's awareness of energy issues and opportunities. Although no government entity currently serves as a central coordinating body, greater efforts will be needed in the future to ensure the various agencies involved with energy-related tasks are aware of, at least in a general way, the work of each other.
By the conclusion of program review's energy management study, more information will be available about the performance of a number of the long-standing agencies and the roles of some of the newer entities, which may lead to specific recommendations regarding communication. In the meantime, as one speaker noted at the committee's public hearing:
[S]ometimes decentralization is very valuable [a]nd leads to a bubbling up of ideas, new perspectives. .... [C]oordination should not mean consolidation. Coordination should really mean information flow. So that different entities involved in different aspects know what the others are doing. Many of these entities are new. .... It's part of a transition that's occurring in the state and in the region towards ... a cleaner more sustainable system.71
Electricity Concerns
An issue of increasing interest nationally as well as in Connecticut is the question of whether consumers will have access to all of the electricity they desire at affordable prices. The answer involves two key elements -- the specific level of demand and the capability of the system to deliver that amount of electricity.
The electric power system is made up of multiple components. Equipment at a number of locations, using a variety of fuels and methods, generates electricity. This power is then transferred via high voltage transmission lines to distribution systems that deliver the electricity to consumers through a series of feeders, substations, and transformers. In New England, day-to-day operation of the system is managed by the nonprofit, independent system operator ISO - New England.
Normally, the electric grid does not need all existing generating facilities to be operational or supply the grid at full capacity. However, successful operation of the system does require more potential capacity than expected demand.
First, generating plants need periodic maintenance. When those procedures occur, the units are shut down and unavailable to the system. While this usually is only a period of hours or days, it can last for months if problems are found. Second, unexpected outages can occur as a result of equipment failure, weather conditions, or stray animals.
Third, a reserve of power proportionate to the actual amount of on-line consumption is required in order to run the system reliably. Fourth, some generating plants have higher operating costs or environmental emissions, and they only run when demand is expected to exceed the capacity provided by routinely operating plants.
In 2001, summer peak electric demand in Connecticut reached 6,255 megawatts (MW), while installed capacity totaled 6,336 MW. Transmission import capability of 2,200 MW and load shift options of 562 MW increased resources to a level providing a reserve of 31 percent.72
On any given day, Connecticut may send power to and/or receive power from other New England states, New York, or Canada as the electricity available within the transmission system is dispatched to respond to changing demand. Detailed consumption data for the 1990s show Connecticut was a net importer of electricity during six of those 10 years, including all of the years from 1996 through 1999.73
Indeed, although a region may have a sufficient supply of electric power overall, limitations of the transmission system may prevent delivery of electricity to a subregion in the quantities desired. If the problem is a lack of sufficient long-distance transmission lines able to transport power from areas with excess supply to areas with insufficient supply, problems arise during periods of peak demand. Then local generation of electricity, which may not be the most cost-effective source, is required to meet demand. In some areas including parts of Connecticut, this situation is compounded because the transmission constraints are accompanied by insufficient local generation.74
A variety of solutions exist for solving transmission problems. In most cases, successful resolution of the issue requires a mix of approaches. The primary options include:
Energy efficiency efforts are among the quickest, most cost-effective, and consumer friendly steps that can be taken. Incorporating less energy intensive products into the workplace and residences reduces the consumption of resources and delays the need to increase capacity.
Distributed generation is receiving growing attention as a means of reducing local congestion, addressing security concerns, and expanding the use of renewable energy sources. The electricity produced by these units can be used exclusively at the location where the power is generated75 or sold to the grid for use by others. In order to take full advantage of this option, issues such as interconnection standards and buy-back rates have to be resolved.
Efforts involving construction activity require more time to produce results that address the problem. Such projects can take years from conception through various required reviews to actual operation. In Connecticut, more than a dozen projects to rebuild, upgrade, or build new electric transmission lines within or adjacent to the state have been proposed, but nearly half would not be completed until 2006 or later.76
Although the area in Connecticut most directly affected by the congestion issue is the southwestern corner of the state, failure to solve this problem could be costly for all electric customers in the state. Proposals are being discussed to institute "locational pricing" in New England. Under such a policy, customers in an area where congestion causes the price of electricity to be higher than it otherwise would have to be must pay all of the added expense rather than having it averaged across all customers in the system. Depending on how the boundaries of the congested area are defined, all of Connecticut may be required to pay higher prices, not just customers in one portion of the state.
60 EIA, Annual Energy Review 2000, Table 1.6, and State Energy Price and Expenditure Report, 1999, Table 1.
61 C.G.S. Sec. 16a-35m
62 Office of Policy and Management, Preliminary Draft for Public Comment: Connecticut Comprehensive Energy Plan (November 29,1993).
63 C.G.S. Sec. 16a-3
64 CEAB, The Energy Policy Report, p. 16.
65 Department of Public Utility Control, "An Introduction to Electric Choice."
66 Written testimony submitted by Department of Public Utility Control at Legislative Program Review and Investigations Committee public hearing on January 23, 2002.
67 Report of the Energy Conservation Management Board: Year 2001 Programs and Operations (January 31, 2002), pp. 8-9.
68 Connecticut Clean Energy Fund, 2001 Annual Report.
69 National Assoc. of State Energy Officials, Energy Efficiency and Renewables Sources, p.7.
70 Legislative Program Review and Investigations Committee, Staff Update: Energy Management by State Government (August 21, 2001), p.1.
71 Daniel Sosland, Executive Director, Environment Northeast, transcript of the Legislative Program Review and Investigations Committee's January 23, 2002 public hearing, p.49.
72 Connecticut Siting Council, Twenty Year Forecasts, p. 5.
73 EIA, State Energy Data Report 1999, Table 53.
74 ISO-New England, Opportunities and Challenges Facing the Electric Power Industry in New England, pp. 6-7.
75 The capacity of these units is generally less than 25 MW. Data from the Connecticut Siting Council (Twenty- Year Forecasts, Appendix A) indicates 71 facilities in Connecticut, with a total capacity of 128 MW, were self-generating electricity and retaining it for on-site use in January 2001. See Appendix C for more detailed information about these facilities.
76 Connecticut Siting Council, Twenty-Year Forecasts, p. 17.