A Bad Energy Bill in Annapolis

Here is my testimony against SB 795, a very bad energy bill being considered right now in Annapolis.


Testimony submitted to: Senate Finance Committee
Submitted by: Gary Skulnik
President
Clean Currents
155 Gibbs Street, Suite 425
Rockville, MD 20850
Bill: SB 795
Position: OPPOSE (UNFAVORABLE)

Here in Maryland, we have renewed activity in the competitive electricity market. Commercial customers are locking in contracts for fixed rate power, for one to five years at rates not seen in years. This is saving businesses big time at a time when they most need it. Residents are finally getting into the act as well. Thanks to C Green and other programs, homeowners can sign up for alternative supplies of energy at below market rates, and get green power at the same time. This robust electricity market has spurred the growth of Clean Currents, a Rockville based sustainably operated clean energy company. At a time when many companies are talking layoffs and downsizing, Clean Currents is actually hiring. It has grown to a staff of ten, from two just a year ago. The company plans on adding more people as the year progresses. These are exactly the kind of green jobs that's on everybody's lips these days from the President on down.

Thanks to initiatives from Governor O'Malley, there is once again a vibrant market for energy efficiency in Maryland. Homeowners and businesses are now or will be very soon able to take advantage of fantastic new rebates, special discounts and other incentives that help them lower their energy use, and thus cut their energy bill. We have a real demand side management program in place after years of neglect, thanks to Empower Maryland.

Maryland's solar energy industry is finally ready for rapid growth. The state could very well put in over 6 megawatts of solar energy in 2009, far surpassing anything that's happened in the past. This solar revolution is part and parcel of the competitive electricity market we are in, with the framework of the Renewable Portfolio Standard on top.

Some people would look at this and say we have an unmitigated success here in Maryland. We have new green jobs, green businesses, renewable energy, energy efficiency, and opportunities to lower electric bills.

Unfortunately, some look at this and call it a "total disaster."

There is a real feeling in Annapolis, it seems, to do something about energy prices, even though much of it is out of our control.

SB 795 is the wrong bill for the environment, for clean energy, and ultimately for consumers.

Wrong for the Environment

In the current deregulated market, consumers can choose green energy from different energy suppliers. Clean Currents has signed up more than 1,500 customers (commercial and residential) to green power since 2006. Passing SB 795 will take away the option of choosing green power for consumers.

The utilities will be able to build coal-fired power plants and force the ratepayers to fund them. This is exactly what happened in Virginia recently. Dominion power is building a new coal fired power plant and the ratepayers of Virginia are footing the bill with an extra charge on their electricity bill.
Utilities are historically reluctant to participate in innovate programs to fund renewable energy development. For example, the three companies that have purchased the most Solar Renewable Energy Credits are Constellation, Washington Gas Energy Services, and Pepco Energy Services, all deregulated energy suppliers, not utilities. These purchase have resulted in major solar projects in Maryland, including the McCormick installation (Baltimore) and the Kelly Electric installation (Prince George's County).

SB 795 will create more greenhouse gas emissions in Maryland.

SB 795 will encourage the building of more coal-fired power plants. This is exactly the opposite of what Maryland leaders are committing to doing (reducing greenhouse gas emissions).

Wrong for the Economy

SB 795 will cost jobs and hurt the burgeoning clean energy industry in Maryland.
Competitive Energy Suppliers will layoff staff. Small green start-ups like Clean Currents will scale back and possibly close. The bill will stifle innovation in the energy sector just at a time when it's needed most.

SB 795 Just Doesn't Work

Commercial customers in Maryland are actively shopping for electricity. Many of them are getting deals that are much better than Standard Offer Service. There is no problem here to "fix."

Commercial customers of Clean Currents have purchased green power at rates below utility standard offer rates. They have saved money and achieved significant marketing/public relations benefits for their companies. This could not happen if SB 795 passes.

Clean Currents worked with residents of Catonsville to do a buying group for clean energy. More than 300 residents participated, getting stable electric rates and creating positive community feelings. This could not happen if SB 795 passes.

SB 795 has too many problems to be easily fixed. We respectfully ask you to OPPOSE SB 795.

Energy Confusion in Maryland

Marylanders have a lot to be proud of when it comes to setting a course for a clean energy future, but a lack of strong direction from the top could put a major road block in our way. The Governor and the Public Service Commission (PSC) have benefitted from a strong desire of Marylanders to change our energy path. They have been given unprecedented tools to change our energy picture. Yet, there is still a danger that they will not get it right. Here are some examples from the trenches of energy policy in Maryland:

Wasted Money and Effort. I was proud to be one of the main guys who passed a bill that forced then-Governor Ehrlich, against his will, to have Maryland join the Regional Greenhouse Gas Initiative (RGGI). RGGI is a group of states from Maine to Maryland that are committed to reducing greenhouse gases from power plants. Polluters have to pay the state to get allowances to emit carbon. The state is awash in cash from this. The idea was for the state to then use this money to promote things that will reduce pollution such as clean energy and energy efficiency. Instead, the Governor has taken a huge chunk of the money and given it to ratepayers in the form of a credit on their electric bill. So, each ratepayer gets a couple of dollars a month back from the state and the Governor will claim he "lowered electric rates." This may make for great politics, but it is about the stupidest idea I've ever seen if you are trying to lower carbon emissions. In fact, it will have the opposite effect. It's like with gas prices, the lower the price, the more energy people consume. Right now, most of our energy comes from fossil fuels, so that means more carbon emissions.

Solar RECs

Legislators passed one of the most progressive policies in the nation to promote solar energy by requiring utilities and energy providers to derive a certain percentage of their power from solar energy. The law requires these entities to buy Solar Renewable Energy Credits (SRECs) from anybody in Maryland with solar panels on their roofs. In essence, it's a way for consumers to get the utilities to pay down the cost of installing solar energy. It's a great program, except for the way the PSC is implementing it. In the age of the Internet, they require homeowners to fill out a paper application and make 14 copies to mail in. Once your application is in, it could take up to six weeks to process and get approval. In one case, the PSC found a couple of sentences from old Maryland code to actually deny SRECs to a Marylander, even though the person followed the proper procedure (at that time) when he put in his solar system. There's no reason the PSC shouldn't have a one click system on a web page to register SRECs.

The Solar Grant.

Did you know you can get a grant from the state of Maryland for installing solar energy? Most people don't. But even if you do, you currently have no idea exactly how much of a grant you can get, or when you can expect to actually see the money. The Maryland Energy Administration (MEA) has a wait list of several hundred, and there's no telling when/if those people will get their money. How hard is it for the Governor to set a dedicated amount of money to solar grants for the next five years and provide transparency and certainty in the application process?

Gifts to Utilities

The Governor has charged the utilities with reducing energy use (lowering rates will have the exact opposite effect!). The PSC is finalizing the programs with each utility. The general framework is that the utilities get to charge ratepayers and use the money to fund programs to reduce energy use. So now you have a situation where the utilities claim to be "green" because they are funding these programs, while not exactly promoting the fact that they are using ratepayer money to do so. And in the BGE territory, BGE is proposing to do "quicky" energy checks on households (at ratepayer expense) while keeping out the growing small business-heavy energy efficiency industry in Maryland. There are great local businesses that do real energy audits (ecobeco, for example), but the PSC could put them out of business by allowing BGE to do faux-audits at little to no direct cost (again, thanks to the ratepayers). How can a small business that does real energy audits, which lead to real energy savings compete with this? A better approach would be to use ratepayer money to significantly lower the cost of real energy audits and to make that available to all Maryland energy auditors (not the utilities only).

Summary

There are many great programs in Maryland to get us on a path towards a greener future, but there appears to be no leadership providing a unified message and direction. One policy contradicts another. Information is not shared widely. Small businesses get shut out to the benefit of the established utilities. The consumer is left confused and unsure what he/she can actually get. Meanwhile, politically popular items that actually increase carbon emissions and discourage renewable energy are getting major financial backing. These problems are not insurmountable, but we need real leadership from Annapolis to solve the issues. Right now, that's sorely lacking.

StimPack - Here's how to Really Rev the Engine

StimPack. Sounds like something you'd get at the physical therapist's office or pick up at the pharmacy to get off some addiction. It's actually the short-hand name inside the beltway types are giving the new Stimulus Package that the President and Congress are preparing for the struggling (drowning?) economy.

Sounds like the basic outlines of the bill are already in place. There is a lot of good measures to promote renewable energy and energy efficiency. I applaud that whole-heartedly. Where I get the heartburn is knowing that the massive Federal financial injection is going to end up in the hands probably exclusively of large, Fortune 500 type businesses. There will be no crumbs for the little guys.

The thing that really irks me is that leaders of both parties are constantly talking about "small businesses" in America. How we are the engines of growth and innovation, the doers, the risk takers. You'd think all this lip service to small businesses would translate to real dollars when StimPack comes around. You'd be wrong.

Let's take one example. There is an excellant provision to provide loan guarentees for renewable energy projects. Sounds great. Problem is that a small business will have extreme difficulty accesing that, or any other loan guarentee. See, we don't have the paid lawyers, lobbyists, or government procurement staff that the big companies do. We don't have the ability to devote countless hours to navigating the Federal waters like the big guys do. We don't have the ready access to large capital that the Fortune 500 companies do.

Yet, I believe that money given to small businesses has a direct impact on the local economies where those businesses are located. Instead of giving billions to large companies, how about giving billions to small businesses? I know what the impact of a loan guarentee or even a direct financial infusion would have on Clean Currents. We'd immediately hire people, spend money right here in the DC area, and invest in renewable energy projects. Money wouldn't sit on our balance sheets as it would with large companies. It would be directly injected into the local economy.

So, here comes StimPack. Hopefully it will work. And if it's not too late, maybe there can be a carve out for small businesses. After all, we are the engine that drives the economy.

Let's Give Carbon Tax a Whirl

With the new President and Congress getting set to (finally!) tackle climate change, the mainstream commentariat seems to be almost exclusively focusing on what is called a "cap and trade" system, whereby the overall level of greenhouse gas emissions is capped, but polluters who can't meet the cap have options to trade for credits or allowances. Very few are talking about the easiest, most direct way to change the market and lower greenhouse gas emissions - a carbon tax. Now, out of the blue, or should I say, out of the sludge and muck, comes word that Exxon Mobil has come out in favor of a carbon tax! This is, after all, the company that spent years and millions of dollars funding bogus "research" to say climate change is a myth. So, should we view this as a dastardly plot to trick people into supporting a carbon tax or should we take them at their word and try to pass legislation (with their support?).

I say give it a whirl.

Many economists believe a carbon tax is the best way to attack climate change. There is no need to create a complicated trading scheme, nor is there any room for gaming the system. It's a very straight forward approach - a tax on carbon emissions. Yes, this would impact our gas prices, and electricity prices... but that's a good thing. We need loud and clear price signals to make the market work. This is what happened earlier in 2008. When gas prices skyrocketed, sales of gas hogging SUVs dropped. Now that gas prices are lowering, sales of gas hogging SUVs are increasing. I'm not an economist, but even I can see the relationship there!

Politically, some people are afraid to death of the word, "tax." But I have more faith in the American people. They understand the need to stop climate change and know that some things must change. Setting a strong price signal will allow clean energy and green tech companies to invest in growth without fear of too-low fossil fuel prices.

And heck, maybe the folks at Exxon Mobil will actually lobby for it!

If it Can Happen in Blacksburg

It's happening in Blacksburg, Virginia. That means it can happen anywhere in the country. Blacksburg is a sleepy town among rolling hills hours away from the nearest city. It's home to Virginia Tech and the folks there are mighty proud of their Hokies. But it is not a town usually associated with progressive, green minded citizens or businesses. Now that's changing. I was there for a conference hosted by the Virginia Sustainable Building Network the other day and I ran into a gentleman named Pat Bixler. Pat is the Executive Director of a group called, "Sustainable Blacksburg." As it says on their web site, "Sustainable Blacksburg is a non-profit community organization which facilitates effective environmental stewardship in the Blacksburg area to enhance the region’s livability and economic vitality by reducing its impact on the local and global environment." But it's really so much more than that. Sustainable Blacksburg represents to me the next step in the greening of the American mind. Sure, Takoma Park, Catonsville, and Arlington have been doing green for years. There is a lot to be proud of in those parts. But to get this country to turn the corner and embrace a sustainable lifestyle, free of the threat of climate change and pollution requires the mainstreaming of all things green. It can't be just for progressives in the "blue" areas. There's hope. It's happening in Blacksburg. And if it's happening in Blacksburg, why not Lexington, or Fredericksburg, or Frederick?

Montgomery County Shines Again

Montgomery County, Maryland is once again offering consumers a "reward" for going green and I for one could not be happier about it. The County's Clean Energy Rewards Program has been renewed with some new improved rules voted on by the County Council. Right now, businesses, non profits, and residents who buy clean energy from certified vendors will get a reward of 1/2 cent for each kilowatt hour of clean energy purchased. This may not sound like much, but I am hard pressed to name a single county, city or state in the entire United States that is taking this kind of innovative approach to fighting climate change through clean energy solutions.

Hats off once again to County Council Members George Leventhal, Roger Berliner, Nancy Floreen and the others who supported this!

I am proud to say that I played a very direct role in changing the rules of the Program.

The initial incarnation of the Program only allowed regional clean energy sources to count, and it capped the non residential award at a mere 100,000 kWh annually. While I strongly supported the bill, I lobbied to change the rules. Now, my plan is being implemented. The new Program now allows national clean energy sources to qualify and raises the cap to 400,000 kWh annually. This means that the clean energy is cheaper and the Reward larger for small businesses. This was a victory for our Clean Currents customers in the County who now qualify for the Reward and will get real savings as a result. It will enable Clean Currents to more broadly market clean energy to the hundreds of small businesses in the County who might otherwise be priced out of the market. From a climate change perspective, of course, the changes have no impact. The environmental benefit (with regards to carbon) will be the same no matter where we get the clean energy from.

Clean Currents may be the only company in the entire state of Maryland that lobbies on behalf of environmental legislation shoulder to shoulder with the leading environmental advocacy groups. We won a victory in Montgomery County, and with your continued support can win victories elsewhere in the state.

Taking the Long Term View

I am not going to try to pretend to fully understand the financial meltdown that is hitting Wall Street and the rest of the nation. I'll leave that to the pundits. But I do know that this nation seems trapped in the vice grip of short term thinking. And it is short term thinking, with an emphasis on profit or loss today(!) that appears to be at the heart of this recent calamity, plus a lot of other financial implosions. Unfortunately, it is this very same short thinking mentality that prevents us from solving our climate challenge.

Climate change is the deadliest of problems for Americans because it hits at our biggest weakness - inability to confront a challenge until it is right upon us. The build up of carbon in our atmosphere occurs slowly over time, but once it hits a certain tipping point, we are doomed to catastrophic consequences in our ecosystem and hence in our entire way of life. We can't see the carbon coming out of the tailpipes of our cars and power plants. It's hard to measure in a way that people can comprehend. Unlike the movie, "The Day After Tomorrow," there is not likely to be a single massive event that everyone can point to as evidence that the climate has passed the tipping point. So, how do we solve a problem that is long-term and not visible, or easily understood by the average person?

Long term thinking. We have to make investments in clean energy, in energy efficiency, and yes, in adaptation, today with the thought that these investments may not pay off for several years. We need to break the chains of short term thinking. Maybe the Wall Street meltdown is enough of a wake up call. Maybe our leadership will finally understand that we need policies in place that go beyond the next election cycle. We need fundamental change that will last a generation. The beauty of investments in a clean energy infrastructure are that they provide jobs today. They put this country back to work. In the short term, that will provide a needed lift. In the long term, the clean energy economy will solve climate change.