PROVIDENCE — Is it fair to make Rhode Island electric and natural-gas consumers pay for the entire budget of the state council in charge of climate-change policy when users of heating oil, propane, gasoline and diesel would also be affected by — and benefit from — programs developed by the council?
It’s a question being asked by environmental advocates about Gov. Dan McKee’s proposal, as part of his budget plan for the next fiscal year, to create a dedicated funding stream for the Executive Climate Change Coordinating Council, the group of state agency directors and staff formed in 2014 to lead the effort to wean Rhode Island off fossil fuels and rein in greenhouse-gas emissions.
Opposition to the source of funding
While groups such as the Audubon Society of Rhode Island and the Acadia Center applaud McKee’s efforts to start budgeting money for the council’s work, they oppose his plan to siphon $6 million from the state’s energy-efficiency program, which perennially ranks among the most effective in the nation in weatherizing buildings and upgrading heating, cooling and electrical systems and the like.
Not only do they say the move could undermine the $144-million energy-efficiency program, they also argue that it raises concerns about equity. That’s because the efficiency program is funded through a surcharge on electric and natural-gas customers. While those electric users are spread throughout Rhode Island, the gas consumers are not.
Potential divide in who pays and who benefits
Natural gas use for heating and cooking is concentrated in urban and some suburban areas of the state, while propane and heating oil are used more in rural areas that lack underground gas infrastructure. The concern is that funding the climate-change council through the efficiency program creates a geographic and potentially socioeconomic divide in who pays for it.
“I really see an issue of equity in terms of who’s benefiting and who’s paying for the programs,” Sue AnderBois, climate and energy program manager for The Nature Conservancy in Rhode Island, said at a budget hearing before the Senate Committee on Finance this week.
Sen. Jonathan Acosta, a Central Falls Democrat who sits on the committee, wondered if urban, low-income communities would be bearing an unfair share of the burden.
State energy commissioner Nicholas Ucci responded that one focus of the climate change council’s work will be on initiatives in historically marginalized communities. McKee has ordered the council to create an environmental justice committee.
“It would be a vital lens that we would use in developing potential investment plans to leverage these funds,” said Ucci, head of the Office of Energy Resources and vice-chairman of the climate-change council.
He and other administration officials say the budget move makes sense because it would be revenue-neutral, meaning there would be no additional burden on taxpayers to fund the climate-change council.
RI energy efficiency program
In addition, the money targeted for appropriation currently goes to utility National Grid as an incentive for administering the energy efficiency program — not to nuts-and-bolts upgrades to lighting, boilers or hot-water heaters in homes and businesses. Other states, such as Washington, Oregon and Maryland, have effective energy-efficiency programs without paying an incentive to utilities, they argue.
“In essence, those funds that are awarded, while historically important, those are funds that go to utility shareholders, likely located outside of Rhode Island,” Ucci said.
But those in the environmental community worry that taking away the incentive could weaken efficiency efforts and inadvertently put upward pressure on energy rates. They also point out that last year legislators approved a proposal to funnel $5 million raised through the efficiency surcharge to the Rhode Island Infrastructure Bank.
“We are offended by the implication that stealing from one clean-energy program for another can be considered climate action,” said Kai Salem, policy coordinator at Green Energy Consumers Alliance.
Salem was quick to mention that the states listed by Ucci that don’t offer a utility incentive all ranked lower than fourth-place Rhode Island in the most recent state scorecard compiled by the American Council for an Energy Efficient Economy.
She and other environmental advocates who spoke at the hearing voiced support for funding the climate change council, just not the specific way McKee would go about it. They say the need to funnel money to the council is urgent following passage last year of the Act on Climate, a landmark law signed by McKee that requires Rhode Island to reach net-zero emissions by 2050.
Getting to the goal will necessitate sweeping changes in where Rhode Islanders get their electricity, as well as how they heat their homes and businesses and fuel their cars. The climate change council will lay out the path to make it there.
McKee’s budget proposal dedicates another $145 million to climate-change efforts, with all of that money coming either from federal COVID relief funds or President Biden's infrastructure package. Much of it would be used for port improvements to support offshore wind development while some would be spent on new electric vehicle charging stations and the installation of high-efficiency electric heat pumps.
The governor is also proposing a $24-million bond issue to pay for climate protection, clean energy and forest conservation.
When asked to comment by The Journal, McKee’s office stood behind the funding proposal, while acknowledging that more needs to be done to address climate change.
“Other policies, programs, and investments will be needed to achieve Act on Climate mandates, and the administration looks forward to working with the General Assembly and stakeholders in their development,” McKee spokeswoman Alana O’Hare said.
Whether the General Assembly will approve the use of the efficiency surcharge is uncertain. Some legislators expressed skepticism at the hearing.
“Obviously we want to fund [the climate council],” said Sen. Susan Sosnowski, a South Kingstown Democrat and member of the finance committee. “I compliment the governor on recognizing that, but there might be another way that is more stable and not using ratepayer funds.”