House panel OKs bill that loosens energy-efficiency rules

A bill that would allow Indiana's industries that use one megawatt or more of electricity to pull out of the state's energy-efficiency program passed an Indiana House committee Wednesday despite warnings by its opponents that the measure would undermine the 2-year-old program.

The House Utilities and Energy Committee passed the bill on a 10-2 vote, sending it to the full House for consideration. The Indiana Senate had approved the measure Feb. 3.

The bill targets the Energizing Indiana program that began in 2012 under former Gov. Mitch Daniels' administration and is funded by fees that residential, commercial and industrial users pay on their monthly electricity bills.

That money finances the program's energy efficiency home assessments, low-income home weatherizations, energy efficiency lighting discounts and other cost-cutting efforts that have saved enough energy to power nearly 74,000 Indiana homes in the past two year, according to the program's website.

The bill's sponsor, state Sen. Jim Merritt, R-Indianapolis, told the committee the program's fees had made it more difficult for the state to compete with other states in attracting new industries. He also said that while residential and commercial customers were benefiting from the program's offerings, only about 18 percent of Indiana's industries have taken part in any of those.

Merritt also said the program is unfair to industries because many of them are already paying for sophisticated in-house programs focused on cutting energy use and pursuing other efficiencies.

"I feel strongly that this will allow us to compete, that this will stop the industrials from possibly paying twice for efficiency," he told the panel.

But representatives of environmental and citizens groups testified that the bill would gut the Energizing Indiana program just as it was showing results. They urged the panel to convert the legislation to a summer study committee measure, arguing that the proposal needed much more study.

Jesse Kharbanda, executive director of the Hoosier Environmental Council, told the panel the bill would discriminate against residential and commercial power users by allowing only certain industries to leave the program and stop paying the monthly fees, thereby draining resources from the program. He said the measure "goes against the grain" of policies other industrial Midwestern states have embraced.

"This is very significant policy change effectively dismantling the flagship clean energy program of the undeniably pro-business Gov. Mitch Daniels," Kharbanda said. "… This is a decision that ought not to be rushed."

Jodi Perras, director of the Sierra Club's Beyond Coal campaign in Indiana, said an analysis has shown that in its first year Energizing Indiana saved $2 overall for every $1 spent on energy efficiency, while its commercial and industrial program had saved $3.19 for every $1 spent.

She said energy efficiency programs like Indiana's cost about a third of what a new power plant costs and help reduce the need for new plants by cutting energy demand.

"So if you're concerned about the high cost of electricity, this is about the worst thing you can do," Perras said of the bill. "Without energy efficiency, we will be building new, expensive power plants or keeping older, inefficient plants running when they do not need to be."

Several manufacturers and members of business groups, including the Indiana Chamber of Commerce, testified in favor of the legislation.

Tim Rushenberg, vice president for governmental affairs and tax policy for the Indiana Manufacturers Association, urged the panel to pass the bill, saying the program had created a new burden by boosting industries' electricity bills between 1 percent and 3 percent.

"This is a lot of money. This is an expensive program," he said.