The Ecology of Commerce Commissions
by Joel on October 13th, 2009
The explosive growth in funding for utility-led efficiency programs is one of the most hopeful signs for bolstering energy efficiency efforts in the Midwest and across the country. Thanks to a growing number of states instituting energy efficiency portfolio standards, funding levels are expected to multiply in the coming years. Indeed, according to the Midwest Energy Efficiency Alliance, utilities are expected to spend nearly $900 million annually on energy efficiency in the region by 2012. In Illinois, annual funding will top $250 million by then, up from under $10 million just a few years ago. This level of sustained spending could be transformational on many levels.
However, one detail that gets too little attention is the degree to which important policy decisions regarding priorities, goals, and acceptable uses of these funds have fallen to the regulatory bodies overseeing utilities. While extremely competent and professional, these commissions were established to set utility rates, adjudicate grievances, and ensure continuity of services – not administer programs, promote economic development, nor be the driving force behind the enormous task of transitioning the economy to a low carbon future. In essence, we have transformed the judiciary into a unit of the executive branch without any discussion of the benefits, consequences, or merits of doing so. More alarming, we have done so for one of the most pressing and important challenges we face as a nation (and species).
One consequence of managing these funds through the commission process is that decisions are made according to a very narrow set of criteria. Particularly important is the amount of energy saved compared to resources expended – with no consideration given to the overall economic output produced, jobs created or maintained, markets transformed, or dollars leveraged. Nor does the process evaluate the equanimity of how funds are spent, with assurances of equal distribution to all geographies, incomes, and sectors. Accountability is thought of primarily in terms of seeing that the money produces tangible energy savings, not any of the other elements we all expect and demand from government, such as open access, transparency, helping disadvantaged communities and businesses, incenting innovation, etc.
Given the importance of the decisions being made and the coming scarcity of public dollars, we need a healthy debate about which investments should be made, which outcomes and evaluation metrics are most pertinent, and what process should be used for measuring success and impact. Some states, such as Connecticut and Massachusetts, have created new bodies to ensure that investment decisions better reflect a broad array of policy goals. In Massachusetts, for instance, alternative energy investments are directed by the Massachusetts Technology Collaborative, which seeks to increase installed capacity, as well as foster other important priorities, such as driving innovation, improving global competitiveness, and fomenting job creation. Hopefully, the establishment of these new agencies and wider set of priorities portends the start of the necessary and critical discussion about our best way forward.
Tags: Blog Action Day, Climate Change, community development, green banking, Midwest Energy Efficiency Alliance, ShoreBank, triple bottom line
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