In his 16 months at the helm of the state’s Department of Energy & Environmental Protection (DEEP), Commissioner Daniel C. Esty continues to score high marks with environmentalists and some business people as well, overseeing the newly consolidated former energy agency, public utilities authority and protectors of the environment under one roof. But issues regarding the sub-metering of fuel cell-generated electricity for business and residential tenants remain unresolved in the state legislature.
Â’On the energy side, we are moving forward to fulfi ll Gov. MalloyÂ’s vision of bringing cheaper, cleaner and more reliable power to our stateÂ’s residents and businesses,Â’ says Esty.
Â“We have very high regard for Dan Esty,Â” effuses Judy Swann, executive director of the Connecticut Green Building Council. Â“I have always been very impressed with him, going back to when he was at Yale and as an author. HeÂ’s been on the cutting edge, someone whoÂ’s been a shining star in Connecticut. HeÂ’s initiating change and things are going to be done differently. You know that whenever you make changes, thereÂ’s a period of adjustment and itÂ’s not always smooth sailing before you get everything in place. This past year has been a transition year typical of most transitions. There is change afoot.Â”
Esty, who co-authored (with Andrew S. Winston) Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage (Yale University Press, 2006), was appointed by Gov. Dannel P. Malloy in March 2011 as commissioner of DEEP, the newly amalgamated agency that subsumed the functions of both the Departments of Environmental Protection and Public Utility Control. Before that he was the Hillhouse Professor of Environmental Law and Policy at Yale University and held faculty appointments in both YaleÂ’s environment and law schools. He also was director of the Yale Center for Environmental Law and Policy and the Center for Business and Environment at Yale. He has served in senior positions at the U.S. Environmental Protection Agency and practiced law in Washington, D.C. Esty, who holds a BA from Harvard, an MA from Oxford and a law degree from Yale, is the author or editor of ten books and numerous articles on environmental policy issues. He is married to Elizabeth Esty, an attorney and educator, who is running for the congressional seat soon to be vacated by U.S. Rep. Christopher Murphy (D-5).
Â“IÂ’d give Esty very high marks, not that we agree with everything that he proposes,Â” says Eric Brown, a specialist on energy issues, regulations and legislation for the Connecticut Business & Industry Association (CBIA). Â“The fundamental approach that he brings to the department, which is a good economy and a good environment, is not a choice of one over the other but that itÂ’s critical to embrace both. From that broad philosophical standpoint, weÂ’re right on board with that. HeÂ’s a tremendously hard worker, very results-oriented and those are the kinds of people we like to see in government. We work with him very well.Â”
Brown added that Esty has brought to Connecticut a philosophical concept that he has championed for a couple of decades, one that the CBIA supports.
Â“There is an economic piece to environmental policies and that itÂ’s possible the two are both good for the environment and the economy. Dan Esty and not even DEEP Â— as much power as theyÂ’ve been given Â— do not have the ability to do everything that necessarily has to be done. ItÂ’s not the end of the story. There are others involved in decision-making, specifically the state legislature, which has a lot to say about what DEEP professes to do and, to at least the same degree and probably a greater degree, the federal Environmental Protection Agency, which has been a major roadblock to progress.Â”
Brown says there are issues between the Public Utilities Regulatory Authority (PURA) and DEEP itself Â— legally separated by regulatory requirements Â— where Esty can determine policy but PURA retains its independence from the department in terms of their roles.
Brown adds that EstyÂ’s focus is on helping businesses in Connecticut achieve their goals while informing and guiding them through increasingly labyrinthine state regulations and enforcement policies. He says Esty is putting more resources into helping businesses understand the complex and fast-changing regulations rather than pushing a heavy-handed penalty-focused department.
For example, on the subject of fuel cells used to generate both domestic hot water and electric power for residential high-rise apartment buildings, Brown says the legislature must decide on whether to allow this to occur. Bruce Becker of Becker & Becker, architects and developers of the 360 State Street multi-use building in downtown New Haven Â— the first residential project in the state to use a fuel cell Â— agrees with BrownÂ’s assessment and says the legislatureÂ’s hesitation has prevented the use of the fuel cell located at his building to generate electricity for the building and sub-meter it to individual residential units within the building.
360 State Street developer Becker thought that gaining regulatory approval for sub-metering energy use from his buildingÂ’s 400-kW fuel cell would be simple. He was mistaken, but now Esty says he wants to simplify the regulatory process for similar projects.
A 31-story building with 500 apartments, ground-floor retail stores and an indoor parking garage, 360 State Street is a LEED Platinum-certified facility owned by the Multi-Employer Property Trust (MEPT) and managed by Bozzuto Management Co. The $180 million structure, funded by private pension fund financing (80 percent) and public financing (20 percent), houses more than 700,000 square feet of space located at the corner of State and Chapel streets in New Haven.
Becker says the buildingÂ’s 400-kilowatt fuel cell, which is currently operating at only half of capacity, can provide both heat and power, the former for providing domestic hot water to the buildingÂ’s tenants. He notes that fuel cells, which eliminate approximately 99.8 percent of pollution and all transmission losses, are in widespread use in similar buildings in New York, but approval to provide electricity to tenants via sub-metering Â— using separate electric meters for each tenant Â— is stalled in the Connecticut legislature.
Â“Sub-metering is allowed in marinas and mobile home parks,Â” says Becker. Â“When we proposed it for 360 State, we were told it was a simple process for approval. It wasnÂ’t. We also proposed an electric cooperative because they are allowed to resell electricity. When the then-Department of Public Utility Control met to vote on the final decision, they only had four members present and the vote was 2-2. They buy tramadol deadlocked.Â”
Â“Sub-metering is key to our energy future as it can help decentralize the generation and supply of power,Â” Esty says. Â“This means we need policies that allow a facility to generate its own power and then charge residential or business tenants for the electricity they use. Unfortunately, this is a case where our laws have not kept up with our energy needs.Â”
Esty notes that changes are needed on two fronts.
Â“First, we need legislation to allow sub-metering in commercial, industrial and multi-family residential settings,Â” Esty asserts. Â“It is currently only allowed in recreational campgrounds and marinas. Once this legislation is in place, our utility regulators would need to put policies and practices in place to make certain sub-metering is carried out in a manner that protects the rights of consumers. WeÂ’d need to make certain that consumers had the kinds of rights and protections to ensure accurate and fair billing that they now enjoy when dealing with Connecticut Light & Power (CL&P) and United Illuminating (UI).Â”
Â“Since coming into existence on July 1, 2011, DEEP has made tremendous strides in transforming our approach to environmental regulation and implementing an effective energy strategy for our stateÂ’s future,Â”Â says Esty. Â“On the environmental side, we are moving to Â‘lightenÂ’ the regulatory burden while maintaining high standards. This means streamlining our processes for swifter decision-making, increased use of technology so it is easier to do business with us, and providing support for business that are looking to be in compliance with our stateÂ’s environmental laws and regulations.Â”
Esty notes that DEEP is focused on addressing longstanding challenges, such as revitalizing the stateÂ’s approach to the cleanup of contaminated properties and revamping the way solid waste is managed to capture more of the valuable materials found in the waste stream.
Â“On the energy side, we are moving forward to fulfill Gov. MalloyÂ’s vision of bringing cheaper, cleaner and more reliable power to our stateÂ’s residents and businesses,Â” says Esty. Â“The cost of electricity is coming down. We are strengthening efficiency programs which can help everyone reduce bills.Â”
Dennis Schain, communications director for DEEP, provides figures from CL&P supporting EstyÂ’s claim regarding a lowering trend in electricity costs. Combined generation and delivery rates went from 18.689 per kWh in 2009, 17.523 per kWh in 2010, 15.974 per kWh in 2011, to 15.249 per kWh in 2012. Nevertheless, Connecticut has the second-highest retail electricity costs in the nation, second only to Hawaii, according to the Institute for Energy Research.
Esty adds that DEEP has taken steps to encourage the deployment of renewable energy including solar, wind, fuel cells and other technologies, with an approach that relies not just on scarce government resources but on attracting investments from private sources of capital.
Â“We are addressing the need for improvements in our grid system to ensure the reliability of our power supply,Â” adds Esty.
Becker also has high praise for Esty, noting the commissioner has been 100-percent supportive of efforts on behalf of the owners of 360 State.
Â“He is trying to get legislation adopted to allow sub-metering,Â” Becker explains. Â“He has a very progressive philosophy and outlook and heÂ’s trying hard but he hasnÂ’t gotten the support needed. We do believe he is trying very hard to do the right thing. HeÂ’s been promoting renewable energy and programs to support solar panels. The building [360 State] is going to be there for 100 years and if it takes us five years to get through this, I guess itÂ’s worth it. ItÂ’ll happen eventually.Â”
Â“The electricity costs have been trending down for the last six to seven years and theyÂ’re probably not going to go much lower,Â” says Michelle Erca, of Connecticut Energy Savings, an organization that provides detailed information on electric suppliersÂ’ plans and rates, allowing consumers to make a decision on which company to choose as their electricity supplier. Â“This is the lowest that Connecticut has ever seen, at 6.29 cents (per kilowatt hour) for residential customers. It was as high as 14 cents several years ago. WeÂ’re in a really good place.Â”
Erca says that, due to deregulation and market competition, electricity prices themselves have come down, but the distribution system costs affecting the total remain nearly the same as past years. She notes that Direct Energy of Houston, Tex., and ConEdison Solutions of New York have offered the lowest rates to CL&P customers. She adds that Dominion Energy of Pennsylvania, a supplier for United Illuminating area customers, also shows rates as low as 6.79 cents, although her organization doesnÂ’t offer them as a partner. In contrast, United Illuminating shows a residential rate of 11.30 cents on-peak, and 7.8 cents off-peak, according to information from CT Energy Info.
Jerry Clupper of the New Haven Manufacturers Association says he is waiting to see the results of a major study on how Connecticut may reduce energy costs by using natural gas, which is both cheap and plentiful right now. However, many manufacturers arenÂ’t near gas lines and that added cost Â— to bring gas to their locations Â— may not yield savings immediately.
With over 30 years of experience in industry and consulting, Clupper cites the Process Re-Engineering to Improve Manufacturing Efficiencies (PRIME) program that seeks to improve productivity and cash flow by using so-called lean manufacturing concepts that streamline production flow, eliminate or greatly reduce waste and reduce energy consumption.
Â“Energy costs are certainly a significant part of manufacturing costs, something weÂ’re concerned about,Â” says Clupper. Â“In terms of what is being done to address energy costs, the PRIME programs are useful for manufacturers. WeÂ’re particularly interested in the kind of changes that can be made that will reduce the use of energy, one way to lower costs for manufacturers.Â” Clupper notes the use of combined heat and power systems, known as CHPs, are especially efficient in the form of fuel cells, which use natural gas to produce both heat and electricity.
Â“WeÂ’re cautiously optimistic about things,Â” Clupper comments about Esty and DEEP. Â“Certainly what has been said has been positive and weÂ’re looking to see if many of those things actually result in changes in the time it takes to do some of the permitting in the area of environmental matters.
Â“On the energy side, weÂ’re waiting for the report to come out to see exactly what will be done,Â” Clupper adds. Â“Questions we have are: Â‘What is the right policy?Â’ And the second one is Â‘What funding will be made available to implement the policy?Â’ ThatÂ’s the bigger question.Â”
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