A controversial energy bill has raised eyebrows among environmentalists and coal and gas distributors alike, but proponents of the legislation say that it will help to lower energy rates over the long term.
Senate Bill 1078, which was signed by Governor Dan Malloy, looks to encourage projects that use sustainable energy-among other potential means-to bring down the cost of electricity, particularly during the “peak periods” of the region’s cold winters, says State Representative Tim Ackert, a Republican who co-sponsored the bill’s final version.
“This is about finding a better way to feed our utilities,” Ackert said during a phone conversation.
So the Connecticut Department of Energy, (DEEP) will be doing that through the solicitation of Request for Proposals, (RFP) from utility companies, which are encouraged to work in partnership with alternative energy providers with the goal of future savings or ratepayers, Ackert says.
But there is widespread skepticism-from environmentalists who see the bill, which relies on ratepayers to finance infrastructure, as a mechanism to fund natural gas pipeline expansion projects, as well as gas and coal providers that say consumers will ultimately end up paying more.
“Our organization is fundamentally against the use of public money to pay for something like this,” said Connecticut Energy Marketers Association President Chris Herb during a phone conversation. “We’re talking about companies with enterprise values in the tens of millions.”
He’s referring more specifically to companies such as Texas-based Spectra Energy, which is looking to construct a 37 mile liquid natural gas pipeline that will run through New York, Connecticut, Massachusetts, and Rhode Island.
This is the same reason that Martha Klein of the Sierra Club opposed the bill. She and other environmental activists have their concerns regarding the Algonquin Incremental Market (AIM) project, which they say carries significant potential to contribute to climate change through the omission of methane-a greenhouse gas-while threatening wetlands and other habitats. Senate Bill 1078, Klein and others say, was passed in lockstep with the approach of the AIM pipeline-approved by the Federal Environmental Regulatory Commission, (FERC) in March.
But pipeline expansion is one of many possibilities for projects under the bill, Ackert says.
“Gas line expansion’s going to be a part of it,” he said. “It’s just a matter of how much. We don’t even know if we need the new gas line. We might be able to do it by making different elbows in the [existing] gas line or put more pressure on it to make it pump faster.”
And as far as the rates go, consumers won’t see increases unless they save first, Ackert says.
In other words, rates will rise once the infrastructure for a given project is in place, but the savings is supposed to exceed that inflation, he says.
Until then, utility companies will likely bond for the cost of the project.
But can the projected savings be guaranteed in the RFP process?
“Increase your costs today so they can lower them tomorrow,” Herb said. “The only guarantee is that your rates will go up.”
But proposals will not be approved by DEEP if they do not show a substantial enough energy savings for consumers over the long term, according to Ackert.
“These are pretty long term contracts, so it would spell out for 10 to 15 years what the prices are gonna be,” he said. “They’re stuck to that.”