Early this month the Public Utility Commission approved a 3 percent decrease in the residential energy efficiency rate for Efficiency Vermont, the statewide energy efficiency utility, to compensate for over-collection this year. Rates for industrial and business customers will remain the same. Burlington Electric Department, which operates as its own efficiency utility, will not have an efficiency rate change for its customers.
The commissioners decided to waive the rule that normally calculates year-to-year energy efficiency rates in order to prevent “adverse impacts to manufacturing and other businesses,” according to the order.
Ed McNamara, director of planning and energy resources for the Department of Public Service, said the department wanted the PUC to calculate rates based on the rule “to avoid any cross-subsidy.”McNamara added that business energy efficiency measures can benefit residential customers by reducing peak demand, which lowers overall electricity costs.
The department was also concerned that keeping business and industrial rates flat this year could mean higher rate hikes next year, he said.
Abby White, director of communications for Efficiency Vermont, said that the state’s efficiency utility approves of the PUC’s decision to “waive the decades-old rule” used to calculate rates.
“We think that (the decision) helps with predictability and stability for customers with their rates, particularly the largest energy users,” she said.
Although Efficiency Vermont’s budget remains the same from 2018-2020, the rates are calculated separately, which can lead to year-to-year fluctuations, said White.
“Keeping rates steady for 2019 will enable the commission and stakeholders to update the rule, which is currently under review, and undertake broader regulatory reform,” she said.
The PUC acknowledged in their order that there must be a “clearer nexus” between budgets and rates, which commissioners are considering in a separate proceeding. PUC commissioners are also examining the overall operation of the state’s efficiency utilities in another docket.