LETTER FROM THE CHAIR

To Governor Lincoln D. Chafee, Senate President M. Teresa Paiva-Weed, House Speaker Gordon D. Fox, and the Members of the General Assembly,

On behalf of the Energy Efficiency and Resource Management Council (“EERMC” or “Council”) please accept this April 2013 Annual Report to the General Assembly, for the Council’s sixth year of operation. As required by R.I.G.L. § 42-140.1-5, this Annual Report includes a summary of the “activities of the Council, its assessment of energy issues, the status of system reliability, energy efficiency and conservation procurement and its recommendations regarding any improvements which might be necessary or desirable.”

2012 was a positive year in the fulfillment of our mission. Rhode Island was ranked among the top four states in the nation for energy efficiency policies and programs and among the top ten across a range of energy efficiency issues. This is a tribute to the General Assembly for adopting Least Cost Procurement in 2006 and setting the state on a path to a low cost, clean energy future. Least Cost Procurement is an economic strategy for reducing Rhode Island’s energy costs by investing in cost-effective energy efficiency that costs less than traditional energy supply. This strategy is “least cost” because energy efficiency costs approximately 4¢ per kilowatt-hour (kWh) while electric supply costs between 8¢ and 12¢ per kWh.

It is important to note that energy-saving investments made through Least Cost Procurement play a vital economic role for Rhode Island. For every $1 spent on energy efficiency in 2013, Rhode Island receives electric and natural gas benefits of more than $2. This return demonstrates that Least Cost Procurement programs are a powerful agent in resolving the state’s economic crisis: they reduce our energy bills, stimulate economic growth and job creation, stem the flow of our energy dollars out of state, and make Rhode Island more competitive by lowering business operating costs.

We hope this report underscores the important role of the EERMC in providing ratepayer participation and oversight for the economic and environmental well-being of the state.

The EERMC is grateful for your support in the past and looks forward to enjoying your continued support in the coming years. We are committed to working cooperatively with legislators and all of Rhode Island’s energy stakeholders to continue the state’s leadership position in the important national energy efficiency effort.

This 2013 Annual Report contains a summary of the activities of the EERMC over the past year including its role in:

1. The implementation of the 2012 Energy Efficiency Program Plan;
2. The development and approval of the 2013 Energy Efficiency and System Reliability Program Plans;
3. Developing new criteria and incentives to support clean, efficient, combined heat and power systems;
4. Launching several exciting initiatives, including the Rhode Island Public Energy Partnership.

The Annual Report also includes the Council’s assessment of energy issues and recommendations for improvements that will benefit the energy consumers of Rhode Island and the state’s economy.

As required, this Annual Report also discusses a number of policy issues and makes specific recommendations for legislative and institutional action in 2013. This year the EERMC strongly emphasizes the need for new financing
strategies to help Rhode Island ratepayers get access to affordable capital to implement efficiency measures that will save them significant amounts of money. In addition the EERMC reflects significant input received from the public about making the efficiency performance of buildings more readily available for building users, owners and potential owners. See “Policy Recommendations” for our detailed recommendations.

This year marks the second implementation year of the 2012–2014 Energy Efficiency and System Reliability Procurement Plans. The reach and breadth of Rhode Island’s energy efficiency programs continues to grow and benefits to Rhode Islanders increase. Enabled by the least cost procurement legislation passed by the General Assembly, the 2013 Energy Efficiency Program Plan submitted by National Grid, reviewed and supported by the EERMC and the Division of Public Utilities and Carriers, TEC-RI, and ENE, and approved by the Commission on December 18, 2012 will serve many more customers than last year and achieve greater savings for each customer. Compared to approximately 211,000 electric and natural gas participants in 2012, the 2013 Energy Efficiency Program Plan will reach over 621,000 participants. New this year, over 200,000 Rhode Island households will be able to receive monthly personalized Home Energy Reports that provide energy saving advice and information. Expanding the programs to
reach this number of participants and higher energy savings goals will be done in a manner that ensures quality delivery and is cost-effective and cost-efficient. The primary goal of the 2013 Energy Efficiency Program Plan is to create economic value and cost savings for Rhode Islanders through energy efficiency. To achieve this goal, the plan includes strategies to deliver on the following four themes:

1. creating energy efficiency opportunities for every Rhode Island customer,
2. making energy efficiency work for different types of customers,
3. using the latest innovations, technologies, and best practices from around the nation, and
4. creating economic benefits for Rhode Island through work force development and program participation.

The efficiency programs carry out the General Assembly’s far-sighted, nation-leading 2006 mandate to ensure that it is Rhode Island policy to invest first in low-cost, clean efficiency resources (at 3–5¢ per lifetime kWh saved) before buying more expensive supply (8–12¢ per kWh).

The 2012 Energy Efficiency Procurement Plan is part of a larger 3-year “2012–2014 Energy Efficiency Procurement Plan,” that was approved by the PUC on December 21, 2011. The 3-year plan supports National Grid to significantly increase investments in energy efficiency measures for homeowners and businesses when they are cheaper than supply. The plan calls for steadily expanding the depth and breadth of Rhode Island’s energy efficiency programs to reach nation-leading energy savings goals. Successful implementation of the 3-year plan will generate well over $785 million in net lifetime benefits for ratepayers, save 5,116,966 MWh and 13,263,671 MMBTU over the lifetime of the energy efficiency measures, and avoid 2,555,451 metric tons of carbon dioxide.

We look forward to continuing to work together to improve the affordability, efficiency, and economic benefits of Rhode Island’s energy system in the year to come.

Respectfully Submitted,

S. Paul Ryan, Chair