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NGA Reveals 10 Energy Trends to Help Govs Advance Their Goals

August 01, 2012

Motivated by a number of interests, including enhancing economic development for their states, governors are seeking ways to be more energy efficient and build their portfolio of renewables. To help states move forward in these efforts, the National Governors Association (NGA) has released a white paper outlining 10 new ways to address longstanding challenges focused around four approaches:

  • Redesigning utility incentives to invest in energy efficiency;
  • Increasing consumer access to information and financing;
  • Removing regulatory barriers to residential solar power; and,
  • Creating new ways to reduce the energy used in state buildings and fleets.

Recent efforts seen in some states over the past several years point to promising innovations that NGA says can help states advance their goals even in fiscally constrained times. For example, Oregon created a Sustainable Energy Utility (SEU) as an alternative to the traditional regulatory model in an effort to motivate utility investment in energy efficiency. In most regulatory structures, utilities earn their profit from selling electricity and face a disincentive to invest in energy efficiency, the authors state. However, SEUs do not face the same disincentives because they are dedicated to providing energy efficiency and small-scale customer-sited renewable energy. Oregon's SEU has delivered energy savings averaging $100 million per year over the past eight years, according to the report.

The report includes examples of three states that remove regulatory barriers to residential solar power. Among them is a 2010 law passed by New Jersey legislators that removed a two megawatt cap on net metering. Under net metering, utilities compensate homeowners with renewable energy systems for the excess power that their equipment provides to the grid. For many programs, there is a capacity cap on net-metered systems whereby residents receive credits for systems only up to a certain size. An emerging trend is for states to remove or expand this cap to support greater adoption of solar energy, such as the New Jersey example.

Effective approaches taken by several other states that NGA says governors should look to are included in the report, Ten Trends to Track: State Policy Innovations to Advance Energy Efficiency & Renewable Energy, available at: http://www.nga.org/files/live/sites/NGA/files/pdf/TenTrendsToTrack-Paper.pdf.

States to Decide on Energy Issues this Fall
Energy related measures are likely to appear on the ballots of at least two states this November. In Michigan, a renewable energy amendment would mandate that by 2025, at least 25 percent of the state's electricity must come from renewable sources, up from 10 percent. Supporters say the increase would attract more renewable energy jobs and additional investment.

A measure dealing with tax treatment for multistate businesses in California would dedicate approximately $500 million annually to energy efficiency and alternative energy projects as a result of additional state fund revenues. Proposition 39, which has qualified for the ballot, would require multistate businesses to calculate California income tax liability based on the percentage of their sales in the state of California and repeal an existing law giving multistate businesses an option to choose a tax liability formula that provides favorable treatment for businesses with property and payroll outside the state.

energy, cleantech