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Public Benefits Funds

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In September 1999, the Arizona Corporation Commission ordered utilities to include a system benefits charge (SBC) in their restructuring plans to fund Commission-approved programs for low-income consumers, demand side management, consumer education, renewable energy, etc. Funding is determined on a case-by-case basis. Over time the Arizona SBC began to focus increasingly on renewable energy sources rather than energy-efficiency programs. For the investor-owned utilities, the bulk of the SBC funding finances the Environmental Portfolio Standard, which requires all utility companies that sell retail electricity in Arizona to generate a percentage of their electricity from renewable resources, although there is no set percentage for efficiency programs. However, the public benefits fund for Salt River Project (the second largest utility in Arizona) does support several energy efficiency programs.

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In September 1996, California created a four-year system benefits charge funded through a non-bypassable wires charge. The fund supports low-income, renewable, energy efficiency, and research and development programs. In August 2000, the system benefits fund received a ten-year extension, until 2010, with adjustment for inflation.

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In April 1998, Connecticut passed legislation that established the Conservation and Load Management and Renewable Energy Fund to ensure the advancement of energy-efficient technologies and the development of Connecticut�s sustainable energy future. In 2003, the fund had a $109 million annual budget. Due to budget shortfalls, the fund currently operates on a $70 million annual budget. Funds are collected through a non-bypassable wires charge.

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In 1999, Delaware passed the Electric Utility Restructuring Act. Revised in 2000, and again in 2003, the Act includes a Public Benefits Fund formerly called the �Environmental Incentive Fund� and re-titled �The Green Fund.� A systems benefit charge gives the fund roughly $1.5 million in annual revenue for energy efficiency and renewable energy programs. However, so far the fund, administered by the State Energy Office, has only been used for renewable energy programs. Delaware also has a separate systems benefit charge providing about $0.8 million a year for low-income programs.

Click here for the Delaware Electric Utility Restructuring Act of 1999.

Click here for the Delaware Energy Act of 2003.


District of Columbia

In March of 2005, the District of Columbia appropriated $20 million for two-year energy-efficiency, renewable and low-income energy programs. The programs are funded by the Reliable Energy Trust Fund, a public benefits fund that is funded by a surcharge on residential PEPCO bills. The surcharge is equal to $.0001 per kWh, or about 50 cents per month per consumer. The Trust Fund already supported the Residential Aid Discount program and a weatherization program. Beyond LIHEAP weatherization programs, energy-efficiency education programs will also be funded.

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The Illinois Energy Efficiency Trust Fund provides funding for residential energy-efficiency programs through annual contributions from each electric utility and each alternative retail electric supplier that supplies electric power and energy to retail customers located in Illinois. Contributions are made on a pro rata basis of a total amount of $3 million based upon the number of kilowatt-hours sold in the 12 months preceding the year of contribution. The fund supports residential electric customers through energy-efficiency programs, including programs for low-income households, and programs to replace energy inefficient appliances with more efficient appliances.

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A June 2005 bill requests the Louisiana Public Service Commission to continue to work with the Louisiana Association of Community Action Partnerships to develop and implement an Energy Efficiency Fund.

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In 2002, the Maine legislature passed electric utility restructuring legislation that includes a system benefits fund to pay for a refrigerator replacement program and an energy-efficient lighting program for low-income residences.

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In April 1999, Maryland created a Universal Service Fund supported by $34 million of state appropriations per year as part of electricity restructuring legislation. The fund�s money is used for bill assistance and energy efficiency programs for low income customers. In addition, two of the state�s three largest utilities agreed to an energy efficiency surcharge of one-tenth of one cent ($0.001) per kilowatt-hour.

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Massachusetts� 1997 Electric Utility Industry Restructuring Act requires customers of the electric distribution companies to pay a charge to support energy-efficiency programs. Each distribution company collects $0.00025 per kWh from all customers except low-income consumers. The statewide expenditures are near $125M annually with equitable portions of residential and commercial collections subsidizing the low-income sector. In February 2002, legislation was signed extending the SBC for five years, through December 2007.

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Gas energy efficiency has also been offered through the local distribution companies for over 20 years. Collections by distribution companies equal around $0.01 per therm sold to all customers except low-income consumers. Expenditures are near $25M annually with equitable portions of residential and commercial collections subsidizing the low income sector. The investments provide for the installation of high efficiency HVAC equipment and appliances, the construction of high-efficiency homes and commercial buildings, and more.

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An electricity restructuring law in 2000 created a low income and energy efficiency fund, to be financed through savings from utility securitization (bonds repaid through charges on utility customer bills). Funding for low income and energy efficient projects is projected to reach $50 million per year for 6 years. The majority of the money goes to low-income bill payment assistance.

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Energy utilities are required to devote a percentage of their operating revenues to energy efficiency projects through a Conservation Improvement Program (CIP). State statute mandates that gas utilities invest 0.5 percent, electric utilities invest 1.5 percent, and electric companies that operate nuclear plants invest 2 percent of their gross operating revenues into energy conservation improvements.

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In 1997 Montana passed restructuring legislation (that was extended through 2009 in 2005) that created an electric universal systems benefits charge. Utilities are required to use 2.4 percent of their retail sales revenues and put it towards energy-efficiency and renewable energy projects and low-income energy assistance. At least 17 percent of the money (about $2.3 million per year) must go to low-income projects, including weatherization. There is also a parallel systems benefits charge for the gas industry.

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Nevada�s Public Utility Commission implemented the Nevada Fund for Energy Assistance and Conservation in 2001, funded through a system benefits charge. The money raised goes toward low-income energy efficiency and assistance programs.

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New Hampshire

As part of New Hampshire�s electric restructuring law, the Legislature created a system benefits charge to fund energy efficiency programs (including low-income customers) and low-income rate assistance. The programs for low-income customers include insulation, air sealing, lighting upgrades, and refrigerator replacements.

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A bill passed in June 2005 requires any utility that collects funds for energy efficiency programs to set aside, on a yearly basis, one-third of those funds for eligible public school construction or renovation projects designed to improve indoor air quality or energy efficiency.

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New Jersey

In 2001, New Jersey�s Board of Public Utilities started funding the Clean Energy Program through a system benefits charge, with 75 percent of the revenue going to energy efficiency programs and the rest to renewable energy programs. Funding was set at $115 million in 2001 and $124 million in 2003.

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New Mexico

In April of 2005, New Mexico passed the Efficient Use of Energy Act. The bill requires public electric and natural gas utilities to implement cost-effective energy-reduction programs. The programs will be funded through a tariff rider for energy-efficiency and load management programs. The charges on the consumer cannot exceed 1.5 percent of the energy bill or $75,000 per year. The act will take effect in 2006.

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New York

In July 1998, the Public Service Commission (PSC) approved a plan by the New York State Energy Research and Development Authority (NYSERDA) for a statewide system benefits charge (SBC). The money raised goes to energy efficiency, research and development, and low-income programs. The energy efficiency aspect focuses on market transformation, energy services industry programs, and technical assistance and outreach programs. Until 2001, the SBC received about $78 million per year. In 2001, the PSC extended the SBC through June 2006 and increased the funding level to $150 million per year.

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North Carolina

SB 1149, signed by the Governor on September 20, 2005, establishes a banking and selling program for credits issued under the federal Energy Policy Act in order to generate funds for the use of alternative fuels and alternative fueled vehicles by state departments, institutions, and agencies and to extend and expand the credit for investment in renewable energy property.

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In 1980 the North Carolina Utility Commission (NCUC) established a systems benefit charge, creating a non-profit corporate to administer the funds with the charter �to encourage energy efficient economic development in North Carolina.� The non-profit, now called North Carolina Advanced Energy Corporation (Advanced Energy) operates programs for subsidized and market-rate home construction, and provides energy efficiency assistance to North Carolina industry. In 2003 Advanced Energy established a subsidiary, NC GreenPower, a state-wide, multi-utility green power program.

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As part of electricity restructuring legislation in 1999, the Legislature created a low-income housing weatherization program and an energy efficiency revolving loan program for residential customers, small commercial and industrial businesses, local governments, educational institutions, non-profit entities, and agricultural customers. The Energy Efficiency Revolving Loan Fund is financed by a system benefits charge, and can receive up to $15 million per year.

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Under Oregon�s 1999 electricity restructuring law, a three percent public purpose charge is assessed on retail electric customers. These funds are used to support energy efficiency, renewable energy, and low-income weatherization programs. 66 percent of the funds collected are devoted to energy efficiency measures.

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Pennsylvania�s electric restructuring legislation took effect in 1999. A system benefits charge funds low-income rate assistance and energy efficiency programs that exclusively target low-income residents.

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Rhode Island

Under Rhode Island�s Utility Restructuring Act of 1996, a system benefits charge was created to fund low-income assistance and weatherization programs and a demand-side management (energy efficiency) program. The demand-side management program, funded through a charge of 0.23 cents ($0.0023) per kilowatt-hour, includes residential customers, commercial and industrial customers, and renewable energy projects. In 2001, the program was extended through 2007.

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As part of electricity restructuring in 1999, a small system benefits charge was created to finance low-income assistance and consumer education programs.

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Efficiency Vermont, an �energy efficiency utility,� was created by the Vermont Public Service Board. The utility is funded by an energy efficiency charge on consumer electric bills, similar to a system benefits charge. Efficiency Vermont offers energy- and money-saving programs to consumers that allow them to install and use energy-efficient construction designs, products and equipment. It also includes low-income assistance programs.

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In 1999, Wisconsin created Wisconsin Focus on Energy, a public-private partnership with the goal of encouraging energy efficiency and the use of renewable energy to ensure a future supply of energy and to help protect the environment. Funded through a system benefits charge of up to $1.98 per month, the money raised goes to energy-efficiency, low-income, renewable energy and research and development programs. Focus on Energy programs are estimated to save six dollars for every dollar invested. In 2005, the Governor proposed using $53 million earmarked for Focus on Energy to help balance the budget. A similar measure was taken in the previous biennium.

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