New Jersey’s Clean Energy Future and the Utility-Administered Program Model

Oct 25, 2018

In the world of energy efficiency, a utility’s goals for how much to save and by when are often set by regulators. But some utilities and state leaders go above and beyond. We’re so excited to see PSE&G’s Clean Energy Future plan, which was filed recently with the New Jersey Board of Public Utilities. The six-year plan calls for a $4 billion investment in utility-administered energy efficiency programs, energy storage, electric vehicles, and energy cloud (advanced metering). The energy efficiency program will provide bill savings for customers who participate by reducing their energy usage.

Energy efficiency is the least expensive, most quickly deployable, and cleanest of all energy resources, according to research by American Council for an Energy Efficient Economy (ACEEE) and other organizations. At Nexant, we are committed to delivering on the promise of energy efficiency and maximizing its value for all stakeholders. According to the EPA's Greenhouse Gas Equivalency Calculator, the amount of US Energy Efficiency program savings in 2016 (25,788 GWh, see graphic below) was the same as avoiding the greenhouse gas emissions of driving over 47 billion miles in an average passenger vehicle.

low costs of energy efficiency
Comparison of Energy Resources by Levelized Cost. (Source: ACEEE - EE as a Resource)
Impacts of Energy Efficiency
Recent Impacts of Energy Efficiency

 

The PSE&G proposal aligns with NJ Governor Murphy’s legislation from May, which sets ambitious targets for renewable energy sources and energy savings that will translate on the customers’ bills. New Jersey has promised to generate 50% of its energy from renewable sources by 2030 and 100% by 2050.

The ACEEE released its 2018 scorecard this week and New Jersey is the most improved state, moving from #23 to #18.

“Energy efficiency received a huge boost in the Garden State with the passage of Senate Bill 2314, establishing new annual energy savings targets for electricity and natural gas of 2% and 0.75% of sales, respectively, to be achieved within the next five years.” (ACEEE 2018 Scorecard)

All signs point to New Jersey walking the walk, in regards to energy efficiency, and PSE&G’s proposal is paving the way for record-breaking savings. The state has enormous opportunity to increase its energy efficiency savings, as it still ranks 29th in the nation.

In addition to those benefits, Governor Murphy is set on achieving economic benefits for New Jersey with modernized infrastructure and new jobs in the energy sector. The Clean Energy Future plan is projected to create jobs and invigorate NJ’s clean energy economy. PSE&G’s plans to modernize infrastructure through a combination of transmission upgrades, gas pipe replacements, and storm resiliency “will add nearly $30 billion into the New Jersey Economy by 2020, supporting thousands of jobs.”

As with any ambitious proposal, there are some points of contention and skepticism. Will it really save customers money in the long run? Can the utility effectively administer these programs, rather than the state?

“For more than a decade PSE&G has provided energy efficiency programs for underserved markets, that have helped hospitals, apartments, small businesses, government buildings and nonprofits lower their energy use and reduce their utility bills,” said Karen Reif, PSE&G’s Vice President of Renewables and Energy Solutions. “The Clean Energy Future filing would build on that success through a range of programs that would help every PSE&G customer reduce their consumption, with a special emphasis on low- and moderate-income customers.”

PSE&G’s Clean Energy Future proposal represents a move toward utility-administered efficiency programs. This approach would allow more flexibility in designing programs that meet the specific needs of their customers and better enable them to meet or exceed the ambitious energy saving goals recently enacted by Gov. Murphy.

Evidence suggests that utilities administering their own programs are well positioned to achieve significant energy savings. Of the eight states that achieved greater than 1.5% annual incremental EE program savings in 2016, five of them were in states with utility-administered programs (Arizona, New Hampshire, Massachusetts, Rhode Island, and Connecticut), and of the remaining three, one is a hybrid model (Illinois*). (EIA- Today in Energy. June 20, 2018)

Right now, utilities have never been more focused on their customers and the customer experience. Because they need customers to enroll in energy programs and pay attention to their energy use, they are providing better customer service, real-time social media updates in severe weather, weekly energy reports, and often sizable incentives. Utilities are newly invested in customer engagement and the success of these programs. And, now that energy efficiency programs have a couple decades of experience to draw from, they are in a great position to choose successful program implementers. 

 

*In 2018 Illinois moved to a full utility-led model.