Connecticut Department of Energy and Environmental Protection

Transcription

1 Connecticut Department of Energy and Environmental Protection

2 Connecticut s Comprehensive Energy Strategy: Natural Gas NGA Forum April 30, 2013 Hartford, CT Tracy Babbidge, Bureau Chief Bureau of Energy and Technology Policy 2

3 Guiding Principles: Cheaper, Cleaner, More Reliable PORTFOLIO APPROACH to clean energy in which market (not government) picks winners and losers BROADER & DEEPER energy efficiency investments Move away from traditional subsidy approach to FINANCE model, using limited government resources to leverage private capital Focus on DEPLOYMENT AT SCALE to reduce costs Harness COMPETITION to bring down costs Lower Electric Rates Make Connecticut businesses more competitive and profitable through efficiency, combined heat and power, and targeted support for renewable power 3

4 CT s Strategic Energy Planning Framework 1 2 Integrated Resource Plan Process Forecasts trends in the electricity sector out to 2022 Established plan to save ~$534 million annually through increased energy efficiency spending Conservation & Load Management Plan Implements expanded budget for energy efficiency spending Comprehensive Energy Strategy 3 Long term vision out to 2050 Plan for all energy needs of the state, covering all fuels, all sectors, including: Buildings (Energy Efficiency), Industry, Electricity, Transportation & Natural Gas 4

5 Energy Policy Model: Key Elements Lower electric rates Budget gimmicks (e.g., Competitive Transition Assessment) eliminated Congestion charges reduced better transmission planning Capacity payments coming down Better procurement (no laddering ) Emphasize energy efficiency to help all ratepayers reduce their energy bills Make Connecticut businesses more competitive and profitable through efficiency, combined heat and power, and targeted support for renewable power Broaden energy efficiency engagement through better marketing including unified branding of outreach initiatives through Energize CT Strengthen programs aimed at low income communities Position Connecticut to attract jobs in the growing clean energy sector Launch a Clean Energy Innovation Hub Build out CEFIA s Clean Energy Competitiveness Fund for DECD s economic development efforts 5

6 CT s First Comprehensive Energy Strategy Strategy to guide Connecticut policymaking toward the Governor s vision of a cheaper, cleaner, and more reliable energy future Final Strategy released on February 19, available at Must be updated every three years All fuels, all sectors, planning out to 2050 Five chapters: Efficiency, Electricity, Industry, Transportation, and Natural Gas 6

7 Natural Gas in Connecticut Today % CT Home Heating Market % of penetration of gas CT Home Heating Market Penetration 60% 40% 20% 0% 50% Heating Oil #2 72% 31% Natural Gas 53% 53% 15% Electric Heating Natural gas heating penetration 80% 60% 40% 20% 4% Propane 48% 47% 31% In heating and industrial manufacturing, Connecticut significantly lags surrounding states in the utilization of natural gas Oil maintains a 50% market share in Connecticut s residential heating market, by comparison, fuel oil penetration in the entire US is only 7% Natural gas share of the heating market is 31% with electricity and propane comprising the balance (15% and 4% respectively) 0% NJ US Avg. NY RI MA CT Sources: SNL; Energy Information Administration State Energy Data System (SEDS); Northeast Gas Association 7

8 Natural Gas Opportunity in Connecticut Conversion to natural gas offers about 50% heating cost savings in all sectors, creates jobs, and reduces emissions Burning natural gas instead of fuel oil (for heating), gasoline, or diesel (for transportation) can reduce emissions of nitrogen oxides (NO x ) by 20 50%, sulfur oxides (SO x ) by up to 99%, and carbon dioxide (CO 2 ) by 25 30% Multiple tiers of opportunity with different cost structures: ~220,000 residents and businesses are on main and have easily financed conversion options RESIDENTIAL (210,000 customers) 31% 50% COMMERCIAL (16,000 businesses) 35% 47% INDUSTRIAL (469 firms) 53% 65% Additional ~90,000 have potential for cost saving conversion Anchor loads (schools, hospitals, factories, apartment buildings) that could be cost effective if seen as an economic development strategy 8

9 Customer Conversion Potential 9

10 Pipeline and Transmission Build out Needed 10

11 Financing the Switch to Natural Gas Incentives to Drive Conversion Tax credit to jump start conversion Targeted financing for economic development Streamlined Regulatory Framework Extend payback period for main extensions to 25 years Adopt new ways to test cost effectiveness Aggregate multiple neighborhoods (portfolio approach) Allow gas companies to factor in projections of after acquired customers (forecasting) Allow customers to pay for main extension over time, rather than up front Alternative rate rider to pay customer main extension costs Establish a mechanism for timely recovery of capital expenditures made by LDCs 11

12 Facilitating the Switch to Natural Gas Reduce the costs of equipment conversion and main extension Paving notification required by Governor s Storm Bill to reduce paving costs by combining infrastructure build out Other initiatives Offer training and assistance programs to reduce economic dislocation Mandate low sulfur heating oil Create options for customers who are unlikely to convert Provide incentives to encourage installation of high efficiency furnaces 12

13 A Coherent Planning Process LDCs submit to DEEP and PURA a 7 year expansion plan including: Identify number and location of new on and off main customers in each sector that the LDCs will target during each year of the planning period Feasibility analysis, including Expected capital budget, proposed incentives Expected costs of distribution service installations Plan to secure infrastructure, overhead, and capacity Rate and revenue impact analysis, including sensitivity to fuel price Outreach and marketing analysis Cost reduction strategy Capacity needed and timing of additions needed Strategy to leverage third party investment to finance equipment conversions and main extensions Proposals for regulatory changes needed to achieve expansion goals

14 Contact Information Tracy Babbidge Energy and Technology Policy Department of Energy and Environmental Protection p. (860)