Lamont takes on energy battles
New governor inherits other Malloy-era issues
As Gov.-elect Ned Lamont’s Energy Transition Committee began its work late last month, one member held up a cellphone and said if telephone inventor Alexander Graham Bell were dropped into Hartford today, he wouldn’t recognize the phone system.
But — the person added — if Thomas Edison were dropped into Hartford today, he’d pretty much find the same electric distribution system he invented nearly 140 years ago.
That reality may be something the fledgling Lamont administration wants to heed as it picks up the reins of energy policy from the Malloy administration next month.
The Malloy administration tried for eight years to upend the state’s existing energy paradigm by creating a state energy department and rolling out dozens of programs intended to fight climate change and provide cheaper, cleaner, more reliable energy, as its mantra went.
But the administration’s success was limited by its inability to convince the state’s utilities to substantially alter — let alone abandon — the electricity delivery model that has provided them and their investors with financial reward for more than a century.
That mindset, and the persistent standoffs that accompanied it, likely will carry over into Gov.-elect Ned Lamont’s administration, leaving the new governor to fight many of the same battles with utilities that dogged the Malloy administration.
It’s possible that Lamont will wind up with the same commissioner at the De-
partment of Energy and Environmental Protection who’s there now. Rob Klee, who has run the department since 2014 after serving as its chief of staff, said this week he is “interested in having a conversation” with Lamont.
The only other name to surface as a potential DEEP commissioner is Bill Finch, who, as mayor of Bridgeport, undertook energy transformation policies and who also served on the legislature’s Environment Committee when he was a state representative. According to sources, Finch has met with Lamont to discuss the job.
Lamont also will inherit a number of knotty problems that remain unresolved — a host of outstanding policy decisions and rulings, potential backlash from a multiyear battle to keep the Millstone Nuclear Power Station open, and downright anger over the tens of millions of dollars taken from the Green Bank and energy efficiency fund to plug budget holes.
But some of the most consistent frustration has been with the utilities.
“All roads lead essentially to the rapidly failing utility business model — that’s the problem,” said Karl Rabago, executive director of the Pace University Law School Energy and Climate Center. Rabago has run utilities, served as a utility regulator, worked for the U.S. Department of Energy, and has advised Connecticut leaders on many energy policies.
He and others believe the longstanding system of central electricity generation needs to give way to a modernized, at least partially decentralized, and more efficient grid that values distributed generation — electricity people provide to themselves, such as rooftop solar power — and values less electricity usage, not more.
“Eversource and United Illuminating aren’t moving it along and have been able to slog it down and frustrate it,” Rabago said, observing that neighboring states — especially New York and Massachusetts — have zoomed past Connecticut with innovative clean energy development and distribution in recent years. “I think it’s time for something bold.”
Tony Marone, the CEO of United Illuminating (UI), the smaller of the state’s two utilities, has heard these complaints before. Eversource, the larger utility, declined to speak with the CT Mirror.
“We are not afraid to do bold things, but we need to do bold smart things,” Marone said. “It is important that we not chase after something that seems like the latest and greatest idea, but do things in a very measured approach.”
UI, which in the last few years became a subsidiary of Avangrid — itself an arm of the Spanish energy powerhouse Iberdrola — has embraced some of the modernization policies offered by the Malloy team. These include ownership of renewable generation, the first generation the utilities have been allowed to own since deregulation.
Eversource chose not to do that.
But legislators and advocates alike have complained that both companies have steadfastly protected their core business model, fighting the details of a laundry list of clean and renewable energy policies as they have wound through the legislature, DEEP and the Public Utilities Regulatory Authority.
“It’s always a fight over the next incremental policy change. Do we do X? Or do we go a little bit slow, maybe do X, but study it first? It becomes a very bogged, cautious, incremental change in public policy,” said Chris Phelps of Environment CT. “We have to get to zero-carbon energy or damn close to it by the time a child born today is graduating from college. If we just do incremental, we won’t get there.”
Klee said the utilities have started to come around. “I think over these eight years we’ve already seen some of the evolution and what may have been new and more resistance in the beginning (by utilities) has been turning around in some key places where they see new opportunities in the utility models.”
Even with the utility struggle, Malloy gets generally good marks for his efforts toward groundbreaking energy strategies to address climate change. And he pretty much started from scratch.
From DEP to DEEP
Malloy came into office with his first environmental commissioner, Dan Esty, and plans already in progress to add an energy component to the existing Department of Environmental Protection. Oil prices were extremely high, in the $100-per-barrel range. Electric rates were high. And while the state had aggressive goals for how much renewable and clean energy it should be using for electricity generation, it had no cohesive strategy to accomplish that.
Out of that first legislative session came the formation of DEEP and dozens of first-time energy programs to lower greenhouse gas emissions.
But all that came with growing pains.
“They said the right things and had some consistency with the environmental community in terms of where they said they wanted to go,” said John Humphries, director of the Connecticut Roundtable on Climate and Jobs and a member of the Governor’s Council on Climate Change, one of the widely lauded Malloy creations. “But the path of how to get there, there was a lot of disagreement along the way.”
It would take another year to get the new Green Bank’s residential solar program up and running, and two years before the state’s first-ever energy strategy was in place.
The energy strategy centered on greater use of natural gas instead of oil. While gas is cleaner and cheaper than oil, gas is still a fossil fuel with plenty of greenhouse gas emissions.
The environmental community was incensed. Oil suppliers were incensed. And it turned out that building the pipelines to provide the additional gas was next to impossible because communities across New England refused to allow them. Oil prices also plunged, so while power plants have converted to natural gas — there is little oil and no coal generation to speak of left in New England — there’s still quite a bit of oil used for home heating.
The residential solar program soared, blowing through its program mandate to create 30 megawatts of residential solar power so quickly that it was raised to 300 megawatts or through December 2022, whichever comes first. The Green Bank expects to reach 300 megawatts before the end of 2019.
As of now, more than 31,000 systems have been approved in the Malloy administration alone and a program to specifically target low- and moderate-income homes currently has about the same annual adoption level as the rest of the population.
Since 2011, the state has procured more than 800 megawatts of grid-scale clean or renewable energy throughout the region, including from the state’s first grid-scale solar fields. More — including the state’s initial foray into offshore wind, a bit behind the efforts of neighboring states — are in development, and the winners of a large zero-carbon competition that drew an unprecedented 100 proposals are to be announced before Malloy leaves office.
Nearly 500 megawatts of renewable and clean power also have been approved through an extremely popular program for commercial distributed generation. At the same time, however, a significant number of approved projects have not been built.
Consumer and business advocates balked at the notion that renewable energy might make electric rates higher even though energy efficiency has kept electric bills low.
“We are laser focused on cost and competitiveness,” said Eric Brown of the Connecticut Business and Industry Association, which long has worried that the state’s high energy prices could be pushed even higher by renewable energy, putting the state at a disadvantage for attracting business. “I don’t think the energy marketplace is influenced by philosophical epiphanies,” he said. “It’s about dollars and cents.”
The state’s homegrown fuel cell industry, despite building the nation’s first fuel cell gridscale power plant in Bridgeport, lost out on a number of proposals that resulted in layoffs at Fuel Cell Energy, the largest company.
“We were extremely valuable but perhaps under-appreciated,” said Frank Wolak, Fuel Cell Energy’s vice president of sales, Americas.
Tropical Storm Irene hit in August 2011, followed by a devastating blizzard that October and Superstorm Sandy the following year. Hundreds of thousands lost power during each storm, many for a week or more. Those experiences became a driving force in Connecticut energy policy and DEEP began looking seriously at ways to decentralize power delivery so it wouldn’t happen again.
State officials zeroed in on microgrids, small systems that could operate independently if the grid were to go down. Fuel cells were considered ideal. But utilities were more interested in trimming trees to keep them off power lines, not systems that might cost them revenue while using their wires and poles.
Pilot projects were all the utilities would agree to and while a few microgrids have been built, they haven’t taken off as envisioned.
“The utilities have to embrace the change or else it will just simply go on around them,” Wolak warned.
But by far the biggest flashpoint pitting utilities against clean energy advocates involved solar, with utilities pushing back against shared solar, which allows homeowners who can’t put solar on their own roofs to still get it from another location. And there were battles over other ways businesses could use clean energy generated in another location.
Lamont will inherit the still unresolved and most divisive issue of all: how to compensate people with solar systems for the excess power their systems make during certain times of the day. Connecticut has been using what’s known as retail rate net metering. System owners are paid the going retail rate for whatever extra power they put into the grid during the day. Their bill reflects what they use, minus what they sell.
Connecticut’s utilities, like many nationwide, along with consumer advocates have argued this causes a “cost shift” — that people without solar power will wind up subsidizing people who have it by paying higher fees to maintain the transmission and delivery systems.
This argument has flared again and again, with renewable energy advocates brandishing studies showing how renewable energy lowers, not raises, grid maintenance costs so that non-solar owners benefit from solar on other homes.
The updated Comprehensive Strategy released by DEEP earlier this year does away with net metering, a provision that threatened to kill the implementation legislation and now is being hashed out at PURA. A new plan is so far behind that an interim system will have to be put in place. Environmental advocates would like to revisit net metering in the next legislative session.
Lamont also will inherit two other extremely touchy issues from Malloy, both of which sidetracked the legislature and the administration for the better part of two sessions.
One was the battle over whether to, in essence, bail out the Millstone Nuclear Power Station and its 2,100 megawatts of power. Dominion, Millstone’s owner, is being allowed to compete as a carbon-free energy source in the current zero-carbon competition. Win or lose, there will be complaints.
The other is the sweeps that took roughly $160 million over two years from the energy efficiency fund and the Green Bank to plug state budget holes, with negative consequences for both. The legality of those sweeps still is being fought out in court.
Even without Malloy’s leftover problems, the Lamont transition team — which would not make anyone available to speak to the CT Mirror — already is catching blowback despite a full-throated climate change and renewable energy policy in his campaign literature.
From Malloy to Lamont
Lamont’s goals broadly mirror those of the Malloy administration, with a few more aggressive targets.
He wants to get greenhouse gas emissions to carbon-neutral and the state’s energy portfolio to 100 percent renewable, both by 2050. He is calling for internal carbon pricing for state and local governments and for all new homes and buildings to be zero-carbon by 2035.
He also has come down forcefully against future energy fund sweeps but does not offer any specifics on how to reach those goals or how to convince the utilities that any of this is worth supporting.
While calling Lamont’s ideas for “Addressing Climate Change and Expanding Renewable Energy” bold and assertive on one hand, many members of the state’s environmental advocacy community found it strikingly familiar, since much of it was drawn from their joint Climate Change Action Agenda in 2017. At least one part was lifted verbatim.
Some also bristled when Lamont’s 19-member Steering Committee included a person from Eversource but no environmental advocate. And a number looked warily at the large and potentially unwieldy Energy Transition Committee tasked with working through the many complicated policies and coming up with priorities in a very short period of time.
That committee’s work is due to be unveiled as a twopage document on Monday. Members of the committee declined to speak to the CT Mirror, saying Lamont’s team instructed them to not talk to the media.
Klee has his own thoughts on where the Lamont administration should focus. First is the intersection of climate and energy and being a national leader against rollbacks by the Trump administration. Transportation is another, pushing electric vehicle adoption and making sure the grid and utilities are ready for the influx. A third is to guard against more funding sweeps.
Lamont may find himself with more room to do all of the above than Malloy had, especially the last few years. While he will have similar economic pressures, Lamont will have a stronger Democratic majority in both legislative chambers that probably will be less inclined to compromise with either the Republicans or the utilities.
Ken Gillingham, an environmental economist at Yale and a senior economist for energy and the environment at the White House Council of Economic Advisers during the Obama administration, said he would like to see a less antagonistic relationship with utilities.
That will probably take some sort of regulatory and incentive process to help shift the utility business model to one that would also accommodate a smarter, more dynamic and flexible grid, Gillingham said.
“I think there’s a very high likelihood that that’s what’s going to be happening over the next few years, as sad as it is to say,” he said. “I just worry that there’s so much tension built up over the last several years and a lot of the same players are going to be sitting in the room again who don’t trust each other. I would love it if we could get past it.”