This month Rhode Island’s dominant utility, National Grid, made its second-ever filing with the Public Utilities Commission (PUC) under Rhode Island’s “revenue decoupling” statute. Grid’s filing clarifies matters in a debate that swirled around the environmental community in Rhode Island (and the rest of New England) for years but ought now to be resolved once and for all – an argument over whether decoupling is a rip-off of utility rate-payers. CLF (and other environmental advocates) have argued for years that there are important environmental benefits to be reaped from decoupling. Opponents, including some ratepayer advocates, argued that decoupling would be bad for rate-payers because it would inevitably lead to unjustified rate hikes.

Grid’s highly technical, 59-page filing with the PUC this month is dense reading, with pages upon pages of complicated charts, but at the end of the day the filing resolves the controversy. Decoupling is good for ratepayers. In the year that ended on March 31, 2013, Rhode Island electricity ratepayers will receive a collective refund from National Grid of $4.2 million, including over $42,000 in interest on ratepayer overpayments.

Some explanation of what decoupling is and how this controversy has developed is in order.

Traditional utility regulation provides little incentive for utilities to promote energy efficiency. This is because reduction in sales equals a reduction in profits for the utility.

Decoupling is a way to address this problem and to align the utility’s pecuniary interest with the public interest in efficiency and conservation. Decoupling separates (that is, “decouples”) a utility’s income from the amount of commodity the utility sells. This effectively removes a major disincentive to utility enthusiasm for and participation in energy efficiency measures.

Decoupling is not all that is needed to achieve carbon-emission reductions through energy efficiency; but decoupling is one important and necessary ingredient. Many states have decoupled, and there is a high correlation between states that reduce carbon emissions the most (thereby lowering ratepayer bills the most) and states that have decoupled.

Work on “decoupling” is one aspect of CLF’s wider work on reducing carbon emissions in order to address the climate change emergency. More specifically, decoupling is closely linked to our work on energy efficiency. One of the most effective ways to reduce carbon emissions in the short- and medium-term is to work on energy efficiency.

In 2008, CLF participated in a litigation in the PUC in which we tried to get the PUC to decouple gas prices. The litigation, PUC Docket # 3943, took weeks, and CLF presented an expert witness, crossed examined witnesses of other parties, submitted briefs. But CLF lost the case; the PUC ruled that it would not decouple gas prices in Rhode Island.

In 2009, CLF tried again, this time trying to get the PUC to decouple electricity prices. This litigation, PUC Docket 4065, also took weeks – again, we presented an expert witness, cross-examined other parties’ witnesses, briefed the issue. Again we lost; the PUC ruled that it would not decouple electricity prices.

The main argument against decoupling was that it would hurt ratepayers. The Division of Public Utilities and Carriers (this is the statutory ratepayer advocate in Rhode Island, and is different than the PUC) opposed decoupling for this reason, as did others. One expert witness against decoupling put it this way: “[T]he plan would allow a broad range of automatic rate adjustments that would result in rate increases . . . .There is no down side to the Company. The only down side is to the ratepayers.”

In response, CLF introduced evidence that actually came from 28 natural gas utilities and 12 electric utilities in 17 states across the country that have operative decoupling mechanisms. This broad range of utilities showed two important results from decoupling. The first, and smaller point is that decoupling adjustments tend to be minor. Compared to total residential retail rates, decoupling adjustments have been most often under two percent, positive or negative, with the majority under 1 percent. The second, and larger, point is that decoupling adjustments go both ways, sometimes providing small refunds to customers, sometimes providing small surcharges.

Nevertheless, despite the evidence we introduced, we lost both cases. The PUC was persuaded that decoupling was just a trick whereby the utility could always ratchet rates upward.

In 2010, CLF, working with other environmental organizations supported a bill in the Rhode Island General Assembly that would require decoupling of both electricity and gas prices. On May 20, 2010, Governor Donald Carcieri signed the bill into law.

On October 18, 2010, the PUC opened a new docket in order to implement the new law that mandated decoupling. This time, the question wasn’t whether Rhode Island would decouple, but how. CLF participated as a full party in the docket in order to ensure that the decoupling mechanisms adopted would be designed to reap all the environmental benefits without unduly hurting or harming ratepayers. Nine months later, on July 26, 2011, the PUC approved an excellent set of decoupling rules for both electricity and gas.

A year ago, in May 2012, Grid filed its first-ever report under the then-new Rhode Island decoupling statute and under the PUC rules. That report showed that, on the electricity side, Grid needed to rebate to Rhode Island ratepayers just over a million dollars for the year that had ended on March 31, 2012.

This month, Grid filed its second-ever report under the now-not-so-new-anymore decoupling statute.  This year, the amount Grid is going to rebate to Rhode Island ratepayers has more than quadrupled, to $4.2 million.  Rhode Island ratepayers are getting rebates – not additional payments – in both of the first two years that electricity decoupling has been implemented in Rhode Island.

Remember the main point that CLF’s expert witnesses made in the decoupling dockets that we lost in 2008 and 2009: decoupling adjustments go both ways. Sometimes ratepayers pay a little extra; sometimes ratepayers get a rebate. Real-world results from the first two years of decoupling show that CLF’s main point was 100% correct.  And not only are Rhode Island ratepayers getting a rebate from Grid, but everyone in Rhode Island enjoys the savings and efficiency benefits that decoupling enables – and the environment enjoys lower carbon emissions.

As I suggested a year ago when the first-year figures came out, there may be two lessons that can be learned from this – one about CLF and one about the broader environmental movement.

About CLF: One of the things I love about working for CLF is the stick-to-itiveness that the organization (and my fellow and sister staff members) have. In 2008, we litigated decoupling, and we lost. So we tried again. When we lost again, we turned to a different forum, the General Assembly. When the law we supported passed, we were pleased – but we didn’t rest. We still had another litigation in the PUC to make sure that the law was properly implemented.

CLF is nothing if not persistent!

And about the broader environmental movement: So often our opponents argue that environmental protections are too costly to implement. Too often, the arguments made by environmentalists about the benefits and savings from environmental protections are just not believed by decision-makers and by ordinary citizens. With decoupling, everyone (including the PUC and so many others) just “knew” that decoupling would be an expensive rip-off. When evidence like this comes to light about the financial and pecuniary benefits of environmental laws, we should make sure that the public knows.

Mainers have recently been seeing and hearing advertisements for alternatives to the standard offer electricity supply that most residential customers receive through their transmission and distribution (T&D) utility. I’ve been ask numerous times to explain the meaning of these new alternatives. This post is written as a guide to that very question.

In Maine, the majority of customers are served by three investor-owned transmission and distribution utilities: Central Maine Power, Bangor Hydro-Electric Company, and Maine Public Service Company. These T&D utilities maintain the transmission lines and related equipment to carry electricity throughout the grid. Prior to 2000, these same utilities also generated electricity.

In 1997, in response to federal changes that decoupled or split generation from transmission, the Maine legislature passed a law requiring that electric utilities divest their generation assets. Additionally, as of March 1, 2000, all Maine consumers had the right to purchase generation service directly from competitive electricity suppliers.

Until recently, however, there have been few options for residential customers other than the standard offer available through each of the T&D utilities. That, thankfully, is changing.

Recently a number of companies have entered the residential electricy supply market in Maine. They operate by purchasing power on the wholesale market, generally at rates slightly lower than the standard offer rate. The electricity itself is primarily generated by conventional power plants.

Another, greener option on the horizon is Maine Green Power. Maine Green Power is currently pre-enrolling customers who wish to offset their energy supply with renewable energy credits generated by 100% Maine-based renewable energy projects. This offer – of entirely renewable energy – is a first for the state, one that is certain to apply pressure on competing providers.

Maine Green Power’s definition of green power projects is, on the whole, in line with CLF policy priorities and includes solar photovoltaic systems; hydroelectric projects that meet state and local fish passage requirements; wind turbines; biomass facilities that use wood, wood waste, landfill gas or agricultural biogas; tidal power projects; geothermal projects; and fuels cells that use landfill gas or agricultural biogas.

To be clear, the power isn’t purchased directly. When power is generated through the above no- or low-emission sources, Renewable Energy Credits (RECs) are created. RECs are then sold by the green power generators to support their further development. These RECs are what Maine Green Power is purchasing and, in turn, what Maine Green Power’s customers are paying for. By doing so, customers are investing in local renewable energy projects, reducing greenhouse gas emissions, and reducing our society’s reliance on fossil fuels.

Let’s put the cost into perspective. A typical Maine household uses roughly 500 kwh of electricity per month. A 500 kwh “block” of renewable energy can be purchased from Maine Green Power for $7.50 per month (a half block of 250 kwh is available for $3.75/mo.). This charge is paid in addition to the standard offer price for electricity.

That, from my perspective, is an entirely reasonable price to pay for a brighter energy future. In fact, when you factor in the currently externalized costs of climate change and dirty energy to our public health, to our environment, and to our economies and communities, I’d say it’s more than a fair deal.

And so, to return to the original question, what exactly do these alternatives mean for the state? They mean a brighter future.

At a time when both carbon emissions and fuel prices continue to rise, Vermont is poised to reduce its reliance on fossil fuels and increase the use of renewable power – a good thing at the right time.

The legislature is considering a bill that would create a renewable portfolio standard (RPS), requiring that each electric utility acquire a percentage of its electricity from renewable sources. This is an important step in the fight against greenhouse gas emissions and climate change; CLF has testified that the bill needs to be strong and ambitious.

There’s no doubt the climate needs this bill. Levels of carbon dioxide in the atmosphere continue to shoot up, and global temperatures are rising. A warming global climate has led to increased evaporation, causing droughts and floods around the world. In his testimony before the committee considering the RPS bill, climate activist Bill McKibben described the rising worldwide occurrence of extreme weather events. Among these was Tropical Storm Irene, which devastated parts of Vermont at the end of last summer. McKibben urged the committee to act now, through measures such as an RPS, before our climate crisis gets worse.

The current version of the Vermont bill would require that by 2025 all electric utilities in Vermont get 30% of their power from renewable power plants commissioned after 2012. Whatever renewable sources are already generating power now (in 2012) would not count towards the 30% standard.

Currently Vermont only has voluntary goals for utilities to acquire a certain percentage of their power from renewable sources. A fundamental flaw of the existing program is that it allows utilities to sell renewable energy credits (RECs) from Vermont renewable projects to utilities in other states, yet still count that power as renewable in Vermont. This means that the renewable attributes of the power are counted twice. The bill currently in the legislature would correct this problem.

By enacting this bill, Vermont would not be alone. Twenty-nine other states already have an RPS, including all the other New England states, and other states as disparate as Texas and Hawaii. Their requirements vary widely. Maine has an ongoing 30% RPS; New Hampshire requires 23.8% by 2025; and Rhode Island requires 16% by 2020. Details of the requirements vary, but Vermont’s proposed program compares well with other states in the region.

Vermont needs a strong renewable standard. CLF continues to push for strong measures to tackle climate change and reduce pollution.

In an effort to clean up the Charles River—and as the result of years of CLF advocacy—residents in Bellingham, Franklin, and Milford, MA may soon be obligated to comply with a proposed EPA mandate to reduce phosphorus runoff by 65 percent. As with most important initiatives to restore our environment, implementing this program will cost money, and there are constituencies opposed.  This Milford Daily News article chronicles some of the factors at stake and how residents have reacted to the news.

What’s most exciting about the public dialogue is to see that the discussions have advanced to real thinking about HOW to finance cleanups through stormwater utilities and other fee structures for reducing polluted runoff.  In Massachusetts, polluted runoff is the number one cause of water pollution.  Conversations about how to secure dedicated funding to solve the problem have generally only happened in a few communities under enforcement orders. They had to sort out issues of what’s fair, what’s practical, and what’s most palatable to residents in order to finance the fixes.  Now we’re seeing similar discussions in more communities where new stormwater regulations are proposed. These communities can serve as a model of forward-thinking investment in the clean waters that are critical to a thriving New England.

Learn more about CLF’s work to restore and protect New England’s waterways.