Accelerated utility investments can help aid Covid-19 economic recovery
In a special planning meeting in late July (PUC Docket Number: E,G999/CI-20-492), the Minnesota Public Utilities Commission's motioned to accelerate utility investments to help respond to the economic recovery from the COVID‐19 pandemic.
CEE's Policy Director Mike Bull offered these comments and recommendations to the commission:
I appreciate the opportunity to speak to you today about accelerating utility investments to help respond to the economic downturn from the COVID‐19 pandemic.
The impacts from the pandemic are hard to summarize or overstate, but I think we can agree that, absent significant stimulus, we will be dealing with the economic impacts of this virus for quite some time.
CEE supports action in this docket
I’m here to support the proactive leadership of the Public Utilities Commission and the Department of Commerce in this docket, and I appreciate the comments made by Lt. Governor Flanagan. Economic development has long been important to Minnesota utility regulators, and while economic stimulus may not usually be the responsibility of utility regulators, we are in an “all hands on deck” situation. It’s important to take whatever steps can be taken to help improve our economic outlook.
You’ve already taken many steps in the other COVID-19 dockets to do what you can to mitigate the economic hardship of many utility customers in this state, and I thank you for that. Those steps were critically important. And now I think it’s equally important to move ahead with this docket.
Efficiency is the Swiss Army Knife of economic stimulus
I think all the utilities have really stepped up in response to the Commission’s inquiry in this docket, proposing a wide variety of worthy projects designed to meet the criteria established in the Commission’s notice. Our utilities are the economic anchors for the communities they serve and I appreciated the way they have leaned into this docket.
One aspect of those plans that I’d like to take a moment to highlight is the appropriately vital and central role that energy efficiency plays in pretty much all of these utility stimulus plans. The economic benefits of energy efficiency have always been important but are even more critical today.
In fact, energy efficiency is the Swiss Army Knife of economic stimulus. Not only is efficiency a cost-effective energy resource that benefits all utility customers (providing $4 in benefits for every dollar spent); it also helps homes and businesses that participate in efficiency programs to save money on their energy bills, allowing them to put those savings toward other economic necessities, which is critical at this time.
In addition, efficiency projects provide inherently local economic stimulus, by providing local jobs for the installation of electrical equipment, lighting, HVAC systems, and ceiling and wall insulation. These types of projects are typically designed and carried out by local contractors for local homes and businesses.
As you know, under the Minnesota regulatory structure, the energy efficiency projects proposed by utilities in their filings will be reviewed and approved by the Department of Commerce, who oversees the state’s Conservation Improvement Program. The Department does incredible work in their oversight of CIP (with very few staff), and it may be useful to have Commerce come back and brief the Commission at some time later this year on these efficiency proposals, so that you’ll have a more holistic understanding of the economic stimulus that stemmed from this docket.
Metrics, criteria, and process
I also wanted to touch on the appropriate metrics, criteria, and process for your evaluation of the non-efficiency utility proposals. In my opinion, the overarching criteria for prioritizing among these proposals are the following:
Does the project provide economic stimulus in the timeframe when stimulus is needed? Key metrics include: the number of direct and indirect jobs created; when those jobs can be expected; and how widely dispersed and how diverse.
Does the project provide broad system benefits, such that allof a utility's customers benefit, in addition to the folks who are specifically involved or participating in the project? System benefits are key to a no-regrets strategy.
Does the proposed project accelerate the state’s response to climate change? I think the metric the Minnesota Pollution Control Agency uses is the additional greenhouse gas emissions avoided relative to the 2025 greenhouse gas statutory goal of 30 percent below 2005 levels.
Can the ratepayer impacts of the proposal be mitigated to avoid increasing costs to customers during this recession? This one is especially important – increasing rates during the recession will have the opposite effect of economic stimulus.
With regard to the process to be used in this docket, I think it’s important that there is adequate opportunity for review, analysis, and comment, without allowing worthy projects to get bogged down, or creating missed opportunities for economic stimulus.
Some proposals should be able to move ahead with little process, while others will take more time for evaluation. I recommend that the Commission recognize and place projects in three buckets:
those that can move forward pretty much immediately,
those that can move ahead after some additional review, and
those that are more complex or that need more of a deep-dive review.
Expected timelines for each bucket would help ensure that things move forward with all deliberate speed. It’s important that everyone, but especially the Department, has a chance to both weigh in on and evaluate each proposal. But it’s also important that worthy projects get deployed in time to have the desired stimulus effect. We’re going to need every bit of economic stimulus we can muster.