A New Jersey plan to promote energy efficiency and provide measurable benefits to users encountered scrutiny over cost, impact and effectiveness at two Board of Public Utilities (BPU) hearings this month.

Speakers at the online hearings argued for the need for consumer education, a greater emphasis on heat pumps and larger incentives to persuade consumers to buy electric — rather than gas-fueled — appliances.

The straw proposal for the plan, known as the “second triennium” because it follows a similar plan crafted in 2020, would require the state’s utilities to administer core energy efficiency programs for residential, multi-family buildings and commercial industrial properties. The outline calls for establishing energy assessments and incentives for “whole home” electrification solutions for residential properties and incentives and energy management programs for commercial and industrial properties.

The most contentious issue was the plan’s proposal to change the current management responsibility for the agency’s “comfort program,” which provides energy efficiency upgrades to low-income households at no cost to homeowners. The straw proposal suggests the program should be almost entirely administered by utilities, with “continued oversight” by the BPU, instead of the current situation in which the BPU administers the program and the utilities simply provide the services.

Leila Banihani, vice president of operations at CMC Energy Services, a Pennsylvania clean energy efficiency contractor, said her company has seen the program up close for 15 years. She said utilities are a “trusted source” for the customer and are the best suited to provide advice on how to save energy and money.

“Having the utilities administer the comfort partners program will help create a seamless process for New Jersey customers. The utility and its representatives are in the best position to ensure that each customer maximizes the energy efficiency benefits that are available,” she said, and added that “having the utilities administer the comfort partners program would encourage efficiencies that could stretch the available funding to serve more customers in need.”

But Mamie Purnell, an attorney with the New Jersey Division of Rate Council, suggested that putting utilities in charge could have a negative impact on program costs that fall on ratepayers.

“With that move, the board will retain less control over the budget and the program,” Purnell said. “Additionally, it is unclear whether this move will allow greater coordination with other New Jersey agencies that coordinate health and safety measures that often must be performed prior to weatherization for participants under this program.”

Richard Henning, CEO of the New Jersey Utilities Association, argued that utilities would be able to provide quality service to low- and moderate-income customers.

“Utility management of comfort partners program will allow the utilities to streamline customer entry to the energy efficiency programs,” he said. Such a setup, he said, would “also assist customers in finding the best lowest cost opportunity that they’re eligible for, which will assist in removing barriers to the energy efficiency programs.”

Protecting Ratepayers

The triennium proposal is part of New Jersey’s effort to reach 100% clean energy by 2050. The proposal seeks to create the most effective way to deliver the kind of energy efficiency and peak demand programs that the BPU and other stakeholders consider to be essential for the state to reach its emissions reduction goals.

A third public hearing on the issue was postponed while the agency evaluates the issues raised in the initial hearings and opinions submitted online and prepares answers to the questions raised.

The proposal would require electric and gas utilities to create “demand response” programs that would allow them to manage customer energy usage during periods of high demand, and it also encourages utilities’ “advanced metering infrastructure to the extent possible.” To ensure that elements of the proposal are carried out as planned and are effective, the draft calls for the creation of an Evaluation, Verification and Measurement work group.

Purnell urged the BPU to put more specific measures in the program rules to hold down costs, noting that the cost of the program and an additional 9.6% paid to the utilities is footed by ratepayers.

“Rate counsel believes that the board should in fact mandate rate caps for the cost of the energy efficiency programs,” she said. “The language in the straw, calling for financial discipline for the utilities, is too ambiguous to ensure compliance. In the wake of our current economic state of inflation and rising consumer costs, we urge the board to set guardrails for the utilities that will balance ratepayer costs with the energy efficiency goals of the program.”

Educating Consumers

Other speakers focused on how to create greater impact with the program. Randy Solomon, executive director of Sustainable Jersey and the Sustainability Institute at the College of New Jersey, said he saw figures that show less than 10% of residents eligible to benefit from the program actually do so. One way to improve penetration would be to enlist the help of municipal governments in promoting residential and the “small commercial” programs, he said.

“If you get a letter from your mayor, or from your town, you’re going to open it” and not throw it in the trash as may happen with other types of mail, he said.

Pat Miller, co-founder of building electrification advocacy group NJ 50 x 30 BE Team, said the triennium plan should provide greater education to consumers on the “advantages of electric heat pumps for space heating and cooling” because awareness of the equipment is so low.

“Education and incentives are the biggest factors that these programs must provide in our opinion,” she said. “The funding must be sufficient, both to incentivize consumers to take efficiency and electrification steps and to fund the work necessary for the utilities to run the programs.”

New Jersey incentives for installing a heat pump, for example, are much smaller than those offered by Maine, Massachusetts and New York, she said, adding that “it must be made easier for consumers to choose an electric appliance.”

Jennifer M. McCave, an attorney for Google Nest, encouraged the BPU to include “demand response” programs in the straw proposal, and consider the role of smart thermostats in the initiative. The reason, she said, is that the advanced metering infrastructure (AMI) cited as important in the proposal may take a while to become available.

“In light of the fact that the rollout of AMI meters is likely to take … at least another two or three years to be completed, it is very important to note that demand response programs can be accomplished using smart thermostats without AMI meters,” she said. “And therefore we shouldn’t wait for the complete rollout of AMI to launch demand response programs.”