Funding for Vital Rhode Island Climate Agency Again Urged
February 24, 2023
PROVIDENCE — Environmental groups are asking lawmakers to fund a state climate panel without “scooping” dollars from climate-friendly programs.
Under the state budget proposed by Gov. Dan McKee last month, the Executive Climate Change Coordinating Council (EC4) — the state’s lead agency on climate policy — would be allocated a $4.5 million dedicated budget for the first time to hire full-time staff, support its two advisory boards, fund a climate dashboard, and invest in programs designed to eliminate greenhouse gas emissions in Rhode Island.
Instead of allocating money from the general fund or using surplus dollars from previous state budgets, the governor’s office recommended paying for the EC4 budget by eliminating the shareholder incentives given to Rhode Island Energy for operating the state’s energy-efficiency programs.
Under a similar funding “scoop” last year — also opposed by environmental groups — the EC4 was slated to receive $6.5 million, but state lawmakers stripped the provision from the final state budget and chose not to find an alternative funding source. The slimmed-down allocation for this year is designed to avoid eating into energy-efficiency program funding, according to budget officials.
State energy officials would also issue a request for proposal (RFP) to have a third-party operate the energy-efficiency programs and extend those programs through 2030.
The move has been sharply criticized by environmental groups, who, while welcoming additional money for climate policy, are opposed to taking money from such a high-performing, cost-effective program. The programs — funded by a specific surcharge on electric and gas utility bills — cost ratepayers $130 million in 2021 and produced $595 million in total benefits for Rhode Islanders, according to the latest annual report from the state Energy Efficiency and Resource Management Council. In terms of emissions, since 2007 the programs have saved electric power equal that generated by 4.8 power plants, or taking 346,789 passenger cars off the road for a year, according to the report.
Included in energy-efficiency programs are free home energy assessments, which help renters and homeowners devise plants to make their homes more energy efficient (and lower energy bills), and rebates for energy-efficiency appliance upgrades and heat pumps to replace oil- or propane-burning furnaces.
The utility, Rhode Island Energy, is paid a dividend for shareholders for operating the program. Shareholder incentive payments over the past seven years have ranged from $3.6 million in 2020 to as high as $6.5 million in 2018.
“We believe that this needs to be additional new funding — not transferring funds from an existing high-performing program,” wrote Sue AnderBois, a Providence City Council member and climate and energy program manager for the Nature Conservancy, in testimony to the House Finance Committee. “Energy efficiency is our most cost-effective option to not only mitigate climate change, but also to improve the affordability and comfort of buildings.”
Critics, such as Attorney General Peter Neronha, have said funding climate programs from energy-efficiency funds would inequitably burden ratepayers and allow big state emitters, such as the transportation sector and delivered heating oil households, to reap the benefits of programs without having to pay the price.
“This proposal also stands to disproportionately harm environmental justice communities, who already shoulder more than their share of the cost associated with climate change,” Neronha wrote. “Many of these communities are found in areas traditionally served by both electric and natural gas (as opposed to rural areas that often rely on delivered fuels), and the residents often lack the means to switch to alternative exemption from this funding mechanism.”
Nicholas Ucci, the director of government affairs for Rhode Island Energy and a former Office of Energy Resources commissioner, also testified against scooping the funds.
The EC4, which is tasked with setting specific greenhouse gas reduction targets and implementing plans to get there, has lacked a budget and staff nearly every year since its inception in 2014. Prior to this fiscal year, it had only one staff member, from the Rhode Island Department of Environmental Management dedicated to its operations and goals.
But the clock is ticking. The passage of the Act on Climate law in 2021 means the agency has a mandate to lower statewide emissions on a timetable that is set in stone, with the state open to legal challenges if it fails to meet reduction goals.
Brian Daniels, director of the state Office of Management and Budget, told lawmakers his office projects a $100 million deficit by 2025, and it was imperative for state officials to find a dedicated source of EC4 funding.
“We are just not confident there will be another source of revenue that won’t require a new tax or fee or enhancing the outyear deficit,” Daniels said during a Senate Finance Committee budget hearing last week.
In the same hearing, Terrence Gray, DEM director and EC4 chair, said the agency needs money for its operations, current programs, public outreach, and data modeling, including the upcoming 2025 Climate Strategy required by the Act on Climate.
“We’re looking at programs to incentivize electric vehicles, to build infrastructure to support electric vehicles, to build heat pumps, to build the grid modernization to support all that, and we need a sustainable source of revenue,” Gray said.
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