Utilities' new role in energy efficiency

Last summer, Massachusetts passed the Green Communities Act mandating that utilities invest in low-cost energy efficiency first, before turning to more expensive sources of energy. Days later, the Department of Public Utilities announced a "decoupling" policy breaking the link between utility revenues and the amount of energy they deliver. Normally utilities are motivated to sell more energy, not less, to increase revenues. Decoupling removes utilities' incentive to increase sales, strengthening their support for efficiency programs.

We are beginning to see the impact of these policies. On April 30, utilities filed energy efficiency plans proposing major increases in consumer efficiency. These include higher rebates and incentives for rate-payers providing billions of dollars in savings for commercial, residential, and industrial consumers.

Bay State Gas and National Grid recently filed the first decoupling proposals with the Department of Public Utilities. The outcome will have significant impact on how aggressively utilities pursue cost-saving energy efficiency.

Expanded efficiency programs will lead to greater opportunities for all consumers to substantially lower bills. These policies allow for much broader and deeper efficiency measures including more efficient lighting, insulation, and industrial equipment. To reap the full benefits, we must all participate in the energy efficiency programs offered by utilities.

At Millipore, we realized cost savings through partnerships with the utilities, directly impacting our bottom line. For example, our distribution center, working with NSTAR, lowered electricity use by installing high-efficiency fluorescent lights with motion controls. We split the $100,000 cost with NSTAR and expected payback in eight months. Payback came in five months with annual savings of over $120,000. As a result, we have initiated similar projects at five other facilities. We also extended these efforts to include boiler upgrades resulting in a 19 percent reduction in natural gas consumption. These projects provide substantial cost savings, lower maintenance expenses, and important reductions in emissions.

At The Lenox Hotel and other sites, we have implemented numerous efficiency measures, many not feasible without support from utilities. Some are as simple as replacing 90-watt incandescent bulbs. Savings are not only in electricity costs, but engineers can focus on other preventative maintenance rather than replacing light bulbs. Our vending machines have "misers," reducing energy by 67 percent while keeping food and drink perfectly cold. Our new dishwasher at The Lenox Hotel's Azure restaurant saves over 180,000 gallons of hot water per year. Our new LED "exit" signs are on 24/7, cost only $25, use a fraction of the energy used before, and last 20 years. These are small pieces, but in the aggregate help us achieve substantial cost and energy savings.

There is much more to do. Our companies and others are working with the Environmental League of Massachusetts to bring forward examples of partnerships to reduce our carbon footprint. These savings reduce the cost of doing business in the state, allowing us to expand and employ more people.

But corporate stewardship is not enough. We support the work of those committed to maximizing energy efficiency programs for residential consumers, particularly in communities with the greatest need.

We expect dramatic increases in cost-saving efficiency, but only if decoupling is implemented to align utility incentives with maximum reductions in energy use and consumer savings.

The attorney general, as a ratepayer advocate, has appropriately called for transparency and accountability and must carefully scrutinize rate increases proposed by utilities. But it is important to recognize rate-increase requests are distinct from decoupling. Decoupling can result in small decreases or increases in rates. It does not drive rate-setting.

We are counting on the attorney general to advocate for a decoupling mechanism that makes utilities active partners in the acquisition of energy efficiency and conservation. Working together, we can transform the role of our utilities from sellers of electricity and gas to purveyors of efficiency and conservation.

Tedd Saunders is president of Eco-Logical Solutions Inc. and co-owner of The Lenox Hotel. David Newman is director of sustainability at Millipore.