Utilities support energy savings

The plan moved a big step closer to reality earlier this week when four major electric companies in Massachusetts said they would support it.

Despite some early reservations, representatives for National Grid, NStar, Unitil Corp., and Western Massachusetts Electric backed the proposal, which they helped craft. Approval is still needed from the Department of Public Utilities, which has yet to review the measure.

The plan would be a pioneering effort that would unfold over the next three years, aimed at tripling the number of consumers in Massachusetts who take advantage of existing programs and incentives offered by utilities to reduce energy use.

The utilities would help arrange for customers to, say, install more efficient appliances or install energy-tight windows and to use incentives such as rebates to help pay for the improvements. The effort would also include extensive follow-up by utilities to make sure customers are implementing efficiency improvements.

Now that utilities have agreed to participate, the next step is for the state and the companies to raise $1.1 billion to pay for the effort.

Some of that $1.1 billion would come from an existing “energy conservation’’ charge on consumer utility bills. Another $40 million to $60 million annually is expected to come from revenue that the state gets from its participation in a regional effort to reduce greenhouse gas emissions from area power plants by charging for the extra pollution they emit.

But at least a portion of the funding will come from an increased distribution charge to ratepayers, who, utility and state officials say, could see their bills rise, on average, about $3 a month by 2012. Additional money is expected to come from private sources, such as loans to the utilities, officials said.

Over three years, the expanded conservation efforts would save those who took advantage of them a total of $5 billion in home and commercial energy costs, officials said - easily offsetting the amount tacked on to monthly electric bills to get the program up and running.

Customers who participate in energy efficiency programs will reap the most savings, though every utility customer could benefit if, as expected, the reduction in demand for energy results in lower wholesale energy costs.

“Ratepayers may end up paying a higher rate, that is true,’’ said David Farnsworth, a senior associate with the nonprofit Regulatory Assistance Project. “But it is important to remember when talking about efficiency . . . your rates might go up, but your bill is less.’’

Said Ian Bowles, secretary of the state’s Executive Office of Energy and Environmental Affairs: “It’s a billion put up for $5 billion in savings.’’

The new effort was prompted by legislation - the Green Communities Act of 2008 - passed last year on Beacon Hill. The act requires utility companies to invest in energy efficient improvements when doing so would cost less than building new electric generating facilities to meet electric usage demand.

Under the act, companies are also required to offer consumers incentives to upgrade inefficient appliances to cut energy use. It created the Energy Efficiency Advisory Council, a state body that oversees the utilities’ efforts. The plan outlined Tuesday evolved from months of meetings between the council, utilities, public advocates, and state officials.

“Five billion in savings was something that everyone had an interest in, to roll up their sleeves and put differences aside to get the low-hanging fruit,’’ said Sam Krasnow at Environment Northeast, a nonprofit environmental policy and advocacy group that participated in the discussions.

Unitil spokesman Wesley Eberle said his company welcomed the proposal, but worried about how the costs would affect the company’s low-income customers. “We wanted to make sure [it] doesn’t have an unacceptable impact on our ratepayers,’’ he said.

Said NStar vice president of customer care Penni Conner: “We want to get deep savings for every business and every home that we touch, and then we want to reach even more customers.’’

Jerrold Oppenheim, an attorney who advocates for low-income groups, did not object to the idea of a monthly rate increase to help fund the effort. “The money has to come from someplace,’’ he said. “There’s really no money that the utilities receive that doesn’t come from ratepayers.’’

The program is backed by Governor Deval Patrick and Attorney General Martha Coakley.

The goal by 2012: cut energy usage by an amount equal to that needed to power more than 350,000 homes, or roughly 15 percent of residential customers served by the state’s four investor-owned utilities.

Because she is the state’s ratepayer advocate, Coakley’s preapproval of the plan is unusual. In an e-mailed statement to the Globe, she explained her support saying that the state’s plan “will provide customers with the opportunity to reduce consumption, resulting in savings,’’ as well as a reduction in pollutants that contribute to climate change.

Seth Kaplan, an environmental advocate with the Conservation Law Foundation, said Coakley’s support of the plan is a must for its success. “That’s really important because the attorney general, as the ratepayer advocate, has been the one citing the most concern about the plans,’’ Kaplan said.

Oppenheim said the attorney general’s office put much pressure on the utilities and others to “justify what we were proposing.’’

“They gave us a lot of heartburn along the way,’’ Oppenheim said. “So if we’re here [with their support] it means we really accomplished something.’’

Erin Ailworth can be reached at eailworth@globe.com.