Stakeholder Councils: Model for Efficiency Excellence

Jamie Howland, director of ENE Climate and Energy Analysis (ENE-CLEAN) Center

Jamie Howland, director of ENE Climate and Energy Analysis (ENE-CLEAN) Center

Three states at the top of the American Council for an Energy-Efficient Economy’s national scorecard – Massachusetts  (#1), Connecticut (#5), and Rhode Island (#6) – have in common an important policy model that has been one of the keys to their success in leveraging energy efficiency as a resource. Stakeholder councils make the efficiency procurement process streamlined, fair and politically and economically sustainable.

Evolution of the Stakeholder Council Model

The concept was established by energy efficiency advocates in Connecticut at the time that the state restructured its utility model, about fifteen years ago. The crux of the innovation is that it creates a permanent forum for diverse interests to convene and deliberate on efficiency issues; a major part of the success is the emphasis on including parties that might otherwise object or create barriers to advancing energy efficiency investments. Within ten years after CT’s Energy Conservation Management Board (now Energy Efficiency Board, or EEB) was established, Massachusetts and Rhode Island established similar councils, to implement all cost-effective efficiency mandates.

Among the key characteristics of the stakeholder council model are:

  • Self-governed and independent
  • Consensus or supermajority decision-making.
  • Diverse membership that includes key parties who are engaged in energy policy in the state.
  • Technical capacity. May be provided through outside consultants who contribute industry-wide knowledge and consistency.

These qualities ensure that all stakeholders are represented, have motivation to contribute and stay engaged. Consensus decisions, supported by objective analysis, ensure fairness and buy-in.

Why it Works

Councils build strong, stable programs in three ways:

  • Collaboration: Bringing together multiple stakeholder groups in a productive, fair forum means that programs and rules are approached in a coordinated way and built on a solid foundation of consensus or majority support.
  • Consistency: Rather than sort out regulations through a series of separate proceeding, all program administrators can come together in one discussion to evaluate and decide upon a common approach.
  • Protection: Efficiency funds can be subject to the whims of legislators, administrators or interest groups that want to divert money to fill a budget gap or address other priorities. The council process acts as a safeguard to keep committed investments in place.
  • High Standards: Because stakeholders are end-users, they have an interest in securing high-quality programs, and pushing continuous improvement

Councils in Action

In Rhode Island, the Energy Efficiency Management Council (EERMC) has supported a steep ascent to the highest (by far) savings targets in the country. The voting members represent: 1) expertise in energy regulation and law; 2) large commercial/industrial users; 3) small commercial/industrial users; 4) residential users; 5) low income users; 6) environmental issues pertaining to energy; and 7) expertise in energy design and codes. Having the EERMC in place provides clear instruction and support to the PUC for approving efficiency goals and investment levels. State law requires the EERMC to propose energy savings targets that are based on identified opportunities for cost-effective energy efficiency investment. Recommendations that go to the PUC have support from the diverse board membership and have been vetted by consultants. The model has proven a consistent, broadly supported increase over the last seven years.

Massachusetts’s Energy Efficiency Advisory Council (EEAC or “the Council”) has also been very successful in supporting top-in-the-nation investments, with innovative solutions to streamline implementation of efficiency. For example, the Council’s Database Subcommittee and associated Working Group has brought together utilities/program administrators, state officials, environmental advocacy and justice representatives, consumer representatives and other stakeholders to create a centralized, accessible repository for energy program data.  This function was previously dispersed among several different program administrators. An independent consulting group has been hired to scope and build the database to organize separate information streams. Creating a single system will make tracking the programs and measuring results more consistent, efficient and cost-effective. The EEAC drove and facilitated the process, convening a monitoring body and a forum to bring all parties together to coordinate the task.

Record of Success

The recent ACEEE scorecard is just one of the many indicators of the success of these models. The states are also tops in the nation for savings targets, and residents are enjoying billions of dollars’ worth of benefits. Massachusetts’s current program will deliver $8.9 billion in economic benefits and energy savings sufficient to power nearly 500,000 households. Connecticut recently adopted plans that will boost investments to a historic high of $158 million. Rhode Island’s savings targets for the upcoming 3-year period will nearly double the already top-ranking rate.

Energy efficiency seems like an obvious solution, but implementing it as a resource is not as easy. The stakeholder council model plays a crucial role in bringing together the people and processes that can translate the concept of a clean, cost-effective resource into real programs and measurable savings for consumers.

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Jamie Howland, Director of ENE Climate and Energy Analysis (ENE-CLEAN) Center (860) 246-7121, jhowland@env-ne.org

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