Indiana: Is This Where Energy Efficiency Goes to Die?

Energy Efficiency plug loads

Indiana: Is This Where Energy Efficiency Goes to Die?

Gita Subramony for Zondits, March 28, 2014

In 2009, the Indiana Utility Regulatory Commission (IURC) created an order mandating energy efficiency programs in the state. The Energizing Indiana initiative was the result of this order, and it began work in 2012.

In recent months, this program has come under fire from the Indiana legislature, even though the program resulted in $2 of savings for every $1 spent, as verified through a third-party evaluation effort. A proposal in the state legislature sought to allow customers with 1 MW of demand or greater to opt out of paying into the fund that supports Energizing Indiana; this opt-out would effectively make half the state’s total energy load ineligible as program targets and would severely limit energy efficiency opportunities in the commercial, industrial, and institutional sectors in Indiana.

The opt-out bill was introduced and passed earlier this year, and representative Heath VanNatter (R-Kokomo) later introduced an amendment that sought to completely eliminate energy efficiency programs in the state. The amended bill passed the House in February and also passed the Senate in early March.

As the bill was awaiting action from Governor Mike Pence, several major corporations and organizations came out in opposition to it. These companies included Johnson Controls, Honeywell, Siemens, Ingersoll Rand, and United Technologies. They argued that by slashing the energy efficiency programs, the state would effectively eliminate job growth and economic growth directly and indirectly related to the initiative.

Proponents of the bill argued that the program would cost ratepayers more money every year as the low-hanging fruit disappeared. However, since the energy efficiency initiative has only been operational since 2012, it is unlikely that Indiana has even gotten past the tip of the iceberg with potential energy savings.

Governor Mike Pence allowed the bill to come into law on March 27, effectively killing the state’s energy efficiency program (albeit without his signature). Pence claimed that the program was too expensive and that it had a detrimental effect on Indiana’s industrial sector. He has, however, directed the IURC to begin developing a new program framework including an opt-out for larger users. Although the fate of energy efficiency in Indiana looks grim right now, there might be a silver lining. Pence has committed to addressing energy efficiency legislation in the 2015 session. There is hope that this process might result in a more streamlined and effective program for Indiana. However, that remains to be seen.