Today, our cleanest and cheapest energy resource—energy efficiency—got a big boost in the Granite State. The New Hampshire House and Senate voted to send two important energy efficiency bills, profiled on this blog last month, to Governor Hassan’s desk for final approval. The passage of House Bills 532 and 1129 signals a greater focus on energy efficiency as a cornerstone of the state’s efforts to meet our energy needs while reducing energy bills and carbon pollution. The Governor is expected to sign them into law.
Working Toward an Energy Efficiency Resource Standard for NH
HB1129 is the latest step forward in a long-running effort to build the case for trimming New Hampshire energy bills by capturing much more energy efficiency savings than we do now. This process is intended to lead to a robust Energy Efficiency Resource Standard, or EERS, a policy that sets cost savings goals for the state to achieve through graduated investment in energy efficiency improvements (investments in goods and services increasing energy savings for the state). The think tank American Council for an Energy Efficient Economy (ACEEE) calls the EERS “a critical policy that lays the foundation for sustained investment in energy efficiency.”
The bill directs New Hampshire’s Office of Energy and Planning (OEP) to hold stakeholder meetings with multiple parties in the state (including residential, commercial, and industrial consumers, utilities, state agencies, and financing entities) to create a blueprint for achieving greater cost savings and reductions in emissions through an EERS.
Building off of earlier work (including a 2009 study), a 2013 study found that New Hampshire should attain as much as ten times—6.6 percent—its energy efficiency savings in 2012 through an EERS. That study, contracted by the OEP for the purpose of drafting an EERS, concluded that New Hampshire could achieve as much as $2.9 Billion in savings with a graduated investment of $941 Million by 2017. Experience in Massachusetts and other states suggests that even greater savings are feasible. With a strong message from the upcoming HB1129 stakeholder process (and a parallel process underway at the state’s Public Utilities Commission), New Hampshire can move toward a robust and ambitious EERS for enactment in 2015.
Catalyzing Private Investment Now
In the meantime, a second bill passed today would help remove another significant barrier to private investment in energy efficiency: freeing up capital for business owners interested in retrofitting their properties (installing improved efficiency systems in buildings with no or less effective ones). HB532 strengthens New Hampshire’s 2010 “Property Assessed Clean Energy,” or “PACE” law. The bill ties investments in energy-related projects to the building, not the building owner, through property tax assessments used by municipalities. This eliminates the need for loan payoff upon sale of the property.
According to Professor Michael Mooiman of Franklin Pierce University, HB532 (known as C-PACE for “commercial” PACE) helps resolves the Federal Housing Finance Authority’s unfortunate concerns with PACE laws (regarding lenders’ ability to recover capital in the event of foreclosure) by focusing on the commercial sector—over which FHFA has no jurisdiction. HB532 also ups the current $60,000 dollar cap on project size to $1 million or 35% of the property’s value, whichever is greater, which according to the Jordan Institute allows much more significant projects where “the C-PACE participant, the lender, and the town to determine the appropriate amount to finance.”
As a rule of thumb, larger investments in energy efficiency tend to yield larger returns—as long as those investments are cost-effective. C-PACE improves access to investment capital for New Hampshire’s commercial sector through financial tools such as providing up to 30 year, 100 percent up-front financing, resolving the FHFA’s concerns (removing the program’s main obstacle), eliminating the need for a loan payment upon sale of the property, and keeping the cost with the business owners instead of tax payers. It is also completely voluntary. Finally, C-PACE ties the energy efficiency lien to the commercial property, relieving owners of paying off the loan if they decide to sell the property.
As I argued in my last post, New Hampshire can and should do more to scale up energy efficiency. CLF celebrates the passage of these bills as strong milestones toward this goal. There now appears to be growing momentum to make the policy changes necessary, including within state government and the utility sector. New Hampshire is well positioned to take the golden opportunities presented by the new legislation and other burgeoning efforts to reduce energy bills and meet our energy needs as cheaply and cleanly as possible.
Jeff Fromuth is an intern in CLF’s New Hampshire office.