by Claude Solnik
Published: February 17th, 2012
The Long Island Power Authority brought in $92 million last year from ratepayers and grants to finance energy-efficiency and renewable-energy programs, but $28 million of that went unspent in large part due to program delays.
Although its alternative-energy program attracted more interest and got more grants than anticipated, LIPA’s efficiency program, which includes a menu of rebates and incentives for everything from energy-efficient lighting to insulation, suffered from delays in signing contracts to carry out programs, a weak economy and a reluctance by companies and consumers to spend money upfront.
As a result, a chunk of the $3 per month that residential ratepayers were billed for energy efficiency and renewables wasn’t spent.
“With the highest rates in the country, I don’t think that’s fair to beleaguered customers,” said Matthew Cordaro, co-chairman of the Suffolk County Legislature’s LIPA Oversight Committee. “It’s unfair to be charging customers for [LIPA’s] failing to be able to keep up with their original plan.”
LIPA, which is using the excess to help fund next year’s program rather than refunding it to customers, said spending fell short in part because it was able to reduce program costs.
“Our efficiency programs were more cost-effective than we originally forecast,” said Michael Deering, LIPA’s vice president of environmental affairs. “We went out for requests for proposals for a contractor to implement a small business direct program. We negotiated a better price than what was expected.”
But the authority said a delay until October in signing a contract for the program hurt that initiative, which achieved 6 percent of its goal. “That’s part of the reason for the underspend in 2011,” Deering said.
The authority also ran into delays in shifting to a new contractor for its low-income Residential Energy Affordability Partnership program. LIPA signed a contract in July, but the firm wasn’t fully “on board” until the fourth quarter of the year.
“The issues with both of those were similar,” Deering said. “We’re ramping these programs up. Those delays are now past us. The contractors are on board.”
Cordaro, nevertheless, said ratepayers ended up making de-facto loans to the authority to fund programs that stalled.
“The customer loaned them, paid in advance for a cost that was not incurred,” Cordaro said. “Customers are paying so much, they can’t afford to float interest-free loans for LIPA.”
Rather than backing off energy efficiency, LIPA is expanding programs, expected to cost $1 billion over a decade, reducing demand by 524 megawatts or the amount of a large power plant. Since initiating energy-efficiency programs in 2009, LIPA says it shaved off 90 megawatts, less than 15 percent of its 10-year goal.
LIPA since March 2010 also recycled more than 15,000 refrigerators and freezers through a rebate program for those who buy newer, energy-efficient devices. LIPA has other incentives to replace outdated, electricity-guzzling machinery.
And the authority is considering hiring a firm to mail information to customers, comparing their energy use to others’ to motivate heavy users to cut consumption. LIPA didn’t sign a contract for that service in 2011, another possible reason for the shortfall.
Although contract delays crimped efficiency in 2011, industry sources said efforts were hampered by the difficulty of informing the public about a patchwork of incentives.
“There are obstacles to getting people to invest in energy efficiency,” said Frank Murray, CEO of the New York State Energy Research and Development Agency. “A big one is getting the information out to folks, letting them know what’s available.”
Others said a weak economy makes people leery of spending on something that will only provide benefits in the future. “After the challenge of information, the second biggest obstacle is cash,” Murray said. “People generally don’t have a whole lot of money sitting in their checking or savings account that they’ll say they should spend on energy efficiency.”
To overcome that obstacle, LIPA is joining NYSERDA’s new on-bill energy- efficiency financing program, in which the state facilitates low-interest, five-, 10- or 15-year fixed-rate loans for energy-efficiency projects. Monthly payments are calculated to be less than monthly energy savings, so bills should decrease even after energy-efficiency expenses.
LIPA already offers free energy audits for business customers and residential customers with central air conditioning. But the state is offering free audits to Long Islanders with household income up to $212,000 who apply for on-bill financing.
Meanwhile, LIPA is increasing its 2012 energy-efficiency and renewable charges for residential customers from 0.58 cents a kilowatt-hour to 0.62 cents, in anticipation of greater demand.