Order 25581 - RI Energy: 2025 Annual Energy Efficiency Plan

            This matter was before the Public Utilities Commission (Commission) upon The Narragansett Electric Company d/b/a Rhode Island Energy’s (Company) 2025 Annual Energy Efficiency and Conservation Procurement Plan (2025 Plan), filed on October 1, 2024.[1] This Order was delayed and reflects the Commission’s decisions from last year’s energy efficiency plan, not the 2026 energy efficiency plan, which is currently under review in Docket No. 25-37-EE.

By way of background, in Docket No. 23-35-EE, the Company submitted a proposed 2024-2026 Three-Year Energy Efficiency and Conservation Procurement Plan (Three-Year Plan) and a proposed 2024 Annual Energy Efficiency and Conservation Procurement Plan (2024 Plan), which constituted the first year of the Three-Year Plan.[2] The primary goals of the Three-Year Plan and 2024 Plan were to enable ratepayers to save money on energy bills, reduce energy consumption, and protect the environment through efficiency programs that are cost-effective, reliable, prudent, and environmentally responsible, as required by the Least Cost Procurement (LCP) Statute, codified at R.I. Gen. Laws § 39-1-27.7, and the Commission’s LCP Standards.[3]

The Three-Year Plan outlined the Company’s overall programmatic foci and strategies, including illustrative and provisional budgets and savings goals over the implementation period.[4] The Company stated that the Three-Year Plan would also be used to guide the development of subsequent annual plans.[5] The 2024 Plan contained proposed budgets to implement electric and natural gas energy efficiency programs and proposed energy efficiency charges to be collected through a fully reconciling funding mechanism.[6] Additionally, the 2024 Plan detailed the strategies, approaches, and measures that were offered in the 2024 calendar year.[7] A more full discussion of the Three-Year Plan and the 2024 Plan is found in R.I.P.U.C. Order No. 25092.

The Company’s efforts were influenced by then-recent federal, state, and regulatory initiatives. For example, the Company pointed to the Inflation Reduction Act (IRA), which set aside funding for incentives and tax credits for eligible energy efficiency measures.[8] At the state level, Rhode Island released an update to the 2016 Greenhouse Gas Emissions Reduction Plan in response to the 2021 Act on Climate, codified at R.I. Gen. Laws chapter 6.2 of title 42 (2022 Update). In the 2022 Update, the State identified near-term priority actions, including actions related to energy efficiency. In June of 2023, the State also adopted a timeline for a new building code linked to the finalization of the 2024 International Energy Conservation Code.[9] The Company noted that it intended to use external funding sources as complements and supplements to its own energy efficiency program initiatives, and specifically pointed to its collaboration with the Office of Energy Resources (OER) to cross-promote programs and maximize impact.[10]

At the close of Docket No. 23-35-EE, the Commission authorized the Company to implement the 2024 Plan with certain modifications.[11] The Commission deferred ruling on the Three-Year Plan to evaluate the Company’s response as to how its programs would integrate with State programs utilizing federal funding.[12]

As mentioned above, the Company filed its proposed 2025 Plan on October 1, 2024 as the second year of the Three-Year Plan. The 2025 Plan provided savings goals, budgets, funding plans, and a proposed performance incentive mechanism (PIM). The 2025 Plan also detailed the strategies, market approaches, programs, and measures that will be offered in the 2025 calendar year. The programs were set forth within Attachment 1 and Attachment 2 of the Company’s filing.[13] The Company further stated that the 2025 Plan satisfies LCP Standards. The Company’s rationales were fully set forth in Section 6 of the 2025 Plan.[14]

The Company’s stated objective with respect to the 2025 Plan was to utilize energy efficiency to reduce energy bills and enhance energy affordability, while also maximizing energy savings. The Company asserted that this approach aimed to achieve co-benefits such as reductions in greenhouse gas emissions and support for local economic activity, all while complying with applicable statutes and standards.[15]

Pursuant to the Commission’s guidance in Docket No. 23-35-EE, the Company reviewed its programs and found that eleven of them had a cost of efficiency greater than the cost of supply. In its 2025 Plan, the Company reduced this number to from eleven to six. The Company also revised its cost of supply analysis and adjusted program design to shift away from programs that cost more to achieve than the resulting energy savings.[16] Specifically, the Company reduced funding for delivered fuels efficiency measures to minimize costs for programs that exceed the cost of supply, excluding delivered fuels in the intrastate calculation.[17]

The Company also pointed to a new State energy code as a catalyst for adjusting plan quantities, spending, and savings projections. The Company stated that it was no longer providing rebates for lighting control dimming and occupancy sensors, since those measures were deemed to be baseline for new construction. Additionally, the Rhode Island Mercury Reduction and Education Act for linear fluorescent products became effective on January 1, 2025, and measure lives for LED fixtures rebated through the Retrofit Program and Small Business Program were reduced by about 50%.[18]

The Company intended to continue coordinating with other energy programs, such as System Reliability Procurement (SRP). The Company also planned to begin installing Advanced Metering Functionality (AMF) meters in early 2025, with continual deployment to go through 2026.[19] Throughout 2025, the Company stated that it would identify activities that may help in implementing program enhancements enabled by AMF. The Company further noted that it had an ongoing dialogue with OER with regards to the distribution of $64 million in IRA funding and undertook further coordination efforts with other state and federal programs, as more fully described in the Company’s filing.[20]

The Rhode Island Energy Efficiency and Resource Management Council (EERMC) and Office of Energy Resources (OER) timely intervened. After extensive discovery, evidentiary hearings held on December 10, December 11, and December 12, 2024, and an Open Meeting held on December 19, 2024, the Commission:

1.      Adopted the performance incentives for Electric and Gas Energy Efficiency, shown in Tables E-8C and G-8C of the December 18, 2024 correction to Attachments 5 and 6;

2.      Established a budget of $980,175 for the EERMC;

3.      Approved the Gas and Electric budgets and savings targets as modified and as shown in the December 18, 2024 corrections to Attachments 5 and 6;

4.      Authorized the Company to implement the programs described in the 2025 Plan;

5.      Approved an Electric Energy Efficiency rate of $0.00903/kWh effective for usage on or after January 1, 2025; and

6.      Approved a Gas Energy Efficiency rate of $1.150/Dth for the Residential class and $0.530/Dth for the Commercial and Industrial (C&I) classes effective for usage on or after January 1, 2025.

The proposed budgets to implement the electric and natural gas efficiency programs are funded through an energy efficiency charge that is collected from ratepayers through a fully reconciling funding mechanism. The proposed budgets were reduced from the 2024 energy efficiency plan. The Company stated that its proposals were developed based on realistic expectations about how program uptake, costs, and incentive levels would change in 2025 relative to 2024.[21] The Company reduced incentives and quantities for several delivered fuels measures, and further reduced budgets in anticipation of Rhode Island’s new energy code, which raised baselines and therefore reduced the opportunity for savings.[22]

1.      Electric Portfolio

The Company’s proposed budget for the electric efficiency programs was approximately $82.04 million.[23] This represented an approximate $13.2 million decrease in the electric portfolio budget from last year.[24] In terms of funding, the Company proposed an Energy Efficiency Program (EEP) charge of $0.01139/kWh, plus a fully reconciling funding mechanism charge of
(-$0.00236)/kWh pursuant to R.I. Gen. Laws § 39-1-27.7(c)(5), for a total charge of $0.00903/kWh.[25] This included funding in the approximate amount of $9.79 million from ISO New England’s (ISO-NE) Forward Capacity Market (FCM).[26]

The bill impact for a typical A-16 customer was a monthly reduction in bills by about 1.1%.[27] Over the long term, participants in energy efficiency programs were projected to see bill reductions ranging from 1.19% to 8.09%.[28] However, when non-participating customers were also considered, only income eligible residential customers were projected to see a long-term bill decrease in the amount of 0.39%, whereas all other sectors would have seen a long-term increase in bills.[29]

The Company projected that its electric portfolio would save 595,734 MWhs over the lifetime of the energy efficiency measures, 82,921 net annual MWhs, 15,750 net annual summer kW, and 16,120 net annual winter kW from passive energy efficiency.[30] The Company’s corrected schedules showed that the cost of procuring 595,734 net lifetime MWh electric energy efficiency savings through the 2025 Plan was about $76.99 million less than if that electric load had been met by purchasing additional electric supply.[31] The cost of procuring those savings was about $25.12 million less than the cost of supply when considering only Rhode Island benefits and excluding delivered-fuel savings.[32] Based on the Company’s corrected schedules, about $25.78 million worth of benefits flowed to customers in other New England states.[33]

2.      Natural Gas Portfolio

With respect to the natural gas portfolio, the 2025 Plan’s proposed budget was approximately $35.08 million.[34] This represented an approximate $1 million decrease in the natural gas portfolio budget from 2024.[35] To fund the Company’s natural gas efficiency programs, the Company proposed an EEP charge of $1.150/Dth for residential customers with a fully reconciling mechanism adjustment of $0.152/Dth, and an EEP charge of $0.530/Dth for non-residential customers with an adjustment of (-$0.150)/Dth.[36]

The bill impact for a typical R12 customer was a monthly increase in bills by about 0.8%.[37] Conversely, C&I natural gas customers were projected to see a monthly reduction in bills by about 0.9%.[38] Over the long term, participating customers across all sectors were projected to see reductions in bills ranging from 0.98% to 3.35%.[39] However, when factoring in all customers—participants or not—all sectors were projected to see a long-term increase in bills ranging from 0.22% to 0.41%.[40]

The Company projected that its natural gas portfolio would save about 2.9 million MMBtus over the lifetime of the energy efficiency measures, and 274,817 net annual MMBtus.[41] The cost of procuring the above-referenced 2.9 million net lifetime MMBtus natural gas energy efficiency savings through the 2025 Plan was about $23.11 million less than if that natural gas load was met by purchasing additional supply.[42] The cost of procuring those savings was about $15.62 million less than the cost of supply when considering only Rhode Island benefits and excluding delivered-fuel savings.[43] Based on the Company’s corrected schedules, about $7.48 million worth of benefits flowed to customers in other New England states.[44]

3.      Total Benefits and Energy Savings

The Company represented that the 2025 Plan would create $282.4 million in total benefits over the life of the installed electric and natural gas energy efficiency measures.[45] Of the total benefits, $200.8 million ($175 million of which benefitted Rhode Island customers) came from electric efficiency and passive demand reductions, and $81.6 million ($74.1 million of which benefitted Rhode Island customers) derived from natural gas efficiency.[46] The Company further represented that every dollar spent on the electric portfolio created $2.05 in benefits ($1.78 of which benefitted Rhode Island customers) over the lifetime of the investment, and every dollar spent on the natural gas portfolio created $1.93 million in benefits ($1.75 million of which benefitted Rhode Island customers) over the same period.[47] Additionally, the Company expected that the investments in the 2025 Plan would add $201.3 million to Rhode Island’s Gross State Product (GSP) and the equivalent of 2,090 job-years.[48]

The Company did not propose structural changes to the Performance Incentive Mechanism (PIM) approved by the Commission in Docket No. 5076. The Company’s PIM budget calculations appear in Tables E-3 and G-3, as corrected on December 18, 2024.[49]

For 2025, the electric sectors through which the Company’s performance incentive is proposed to be earned (non-income eligible residential and C&I) were the same as in 2024.[50] The combined eligible net benefits decreased from 2024 to 2025.[51] The Company proposed an electric portfolio payout rate of 7%, which was the same rate used to calculate the 2024 compliance filing payout pool.[52] The target incentive pool for 2025 was $2,553,974, which was $521,094 less in electric performance incentives from 2024.[53] The Company also proposed raising the maximum income eligible electric Service Quality Adjustment (SQA) from $352,674 to $481,230, which was directly scaled to the increase in total income eligible benefits between 2024 and 2025.[54] Non-income eligible residential and C&I sectors were not eligible for SQAs in 2025.

Like in 2024, the Company’s proposed gas performance incentive was entirely allocated to the C&I sector.[55] The gas C&I payout rate remained constant at 10% from the Company’s 2024 compliance filing.[56] The target incentive pool for 2025 is $604,043— $154,609 less in gas performance incentives from 2024—which aligned with the decrease in eligible net benefits for 2025.[57] The Company also proposed raising the maximum non-income eligible gas SQA from $302,823 to $396,000 and raising the maximum income eligible gas SQA from $109,114 to $144,369, adjustments that were directly scaled to the changes in total sector-specific eligible benefits between 2024 and 2025.[58] The C&I sector was not eligible for an SQA in 2025.

The Company maintained that the 2025 Plan complied with the LCP Statute and LCP Standards in that it was cost-effective, reliable, prudent, and environmentally responsible; a detailed analysis can be found in the Company’s filing.[59]

The Company asserted that it analyzed the electric and natural gas portfolios and programs proposed for 2025 and determined that they met the criteria for cost-effectiveness under the Rhode Island Test (RI Test)[60] and LCP Standards. As referenced above, the Company’s corrected schedules showed that the electric portfolio was expected to have a benefit-cost ratio of 2.05 when considering all benefits regardless of jurisdiction, and 1.78 when considering only those benefits and costs accruing to the Company.[61] The Company’s corrected schedules also showed that the natural gas portfolio’s benefit-cost ratios were expected to be 1.93 and 1.75, respectively.[62]

The Company expected that the demand for energy efficiency would increase due to IRA federal funding as well as other state and local programs to fund energy initiatives.[63] The Company intended to expand its current efficiency workforce development efforts and leverage the knowledge and training opportunities available through trade allies and other industry experts. The Company was working to recruit and train 8 to 10 more energy auditors for the 2025 program year to assist Community Action Programs (CAPs) with income-eligible energy audits.[64]

The Company represented that it would continue offering training to facility managers, building operators, and other staff to operate systems efficiently, as well as recruit technical and vocational students and educate them about career opportunities in energy efficiency.[65] The Company continued to provide trainings to support compliance with the 2024 International Energy Conservation Code. In January of 2023, Rhode Island passed a law requiring the State to adopt this new building code within three months of publication with no weakening amendments, as well as a plan for 90% compliance within six months for residential and commercial new construction and renovation projects. The Company continued to work with OER to leverage IRA funding that assists states in adopting the 2024 International Energy Conservation Code and/or a zero-energy code as well as implementing a code compliance plan. OER was responsible for administering this funding and the Company stated that it would work closely with OER to support training efforts.[66]

The Company also continued its efforts to connect and engage Minority and Women-Owned Businesses (MWBEs) and worked to establish metrics to track equitable workforce development.[67]

2.      Residential and Income-Eligible Programs

In Order No. 25092 from the 2024 energy efficiency plan docket, the Commission noted that the Company had been providing self-attesting, moderate income customers with no-cost weatherization services through Regional Greenhouse Gas Initiative (RGGI) funding from OER.[68] The Company did not expect any revenue from RGGI for the 2025 program year.[69] The Company was considering a 100% incentive for moderate-income customers through the EnergyWise Program, and was working to refine its model to estimate potential uptake, costs, and benefits of this approach.[70]

The Company reduced the EnergyWise Program incentive for weatherization for delivered fuels customers from 75% to 50% and reduced planned quantities by 20%.[71] The Company increased its planned quantities of electric, non-delivered fuels measures by 20%. These modifications were made to improve the program’s performance relative to the additional cost of supply. Heating system replacements for income-eligible delivered fuels customers were reduced by 85% relative to 2023 actuals, again to improve program performance.[72]

The Company reiterated that due to pre-weatherization barriers (including but not limited to asbestos, knob-and-tube wiring, mold and mildew, and vermiculite), otherwise eligible customers under the Residential and Income-Eligible Programs were prevented from receiving weatherization services.[73] The Company stated that it applied for $3 million through the Rhode Island Department of Environmental Management’s (DEM) Priority Climate Action Plan (PCAP) to address pre-weatherization barriers. However, DEM’s proposal was not selected by the United States Environmental Protection Agency (EPA) for funding.[74] The Company noted that it was developing more robust tracking and reporting capabilities with vendors, publicly reporting on pre-weatherization barriers quarterly, exploring additional partnerships and funding sources, and conducting research to learn how other program administrators and states address pre-weatherization barriers.[75]

In Docket No. 22-33-EE, the Commission directed the Company to achieve 750 electric resistance heat to air source heat pump conversions annually by 2025, with 25% of those customers served being income eligible. For 2025, the Company established a goal of upgrading 190 income-eligible customers, which it aims to achieve through continued marketing, education, and outreach. The Company stated that it would continue coordinating with OER to leverage outside funding through the IRA, Low Income Home Energy Assistance Program (LIHEAP), Weatherization Assistance Program (WAP), Clean Heat RI, Home Electrification and Appliance Rebates (HEAR), and Home Energy Rebates (HER) to further energy efficiency goals and serve customers.[76]

3.      C&I Programs

The Company proposed to continue offering C&I Programs that were available in the 2024 Plan.[77] In order to address provisions of Rhode Island’s Mercury Reduction and Education Act, the Company incorporated two features into the 2025 Plan: (1) efficiency baselines for “replace on failure” projects have been increased to reflect the ban on sale of lamps containing mercury; and (2) measure lives have been shortened for retrofit projects where the Company’s programs are accelerating the replacement of existing fluorescent lamps.[78] The Company was no longer proposing to provide rebates for lighting control dimming and occupancy sensors, since those measures were deemed to be baseline for new construction projects following Rhode Island’s passage of the 2024 International Energy Conservation Code.[79]

The EERMC moved to intervene on October 7, 2024. The LCP Statute provides a role for the EERMC to review the energy efficiency plans before they are filed with the Commission.
The 2025 Plan was reviewed by the EERMC and unanimously endorsed in a vote at its meeting on September 26, 2024.[80] The EERMC provided testimony of Craig Johnson, Kurt Teichert, and Adrian Caesar, who described aspects of the 2025 Plan that the EERMC wanted to raise for consideration by the Commission and summarized the EERMC’s process for engaging in the development of the 2025 Plan.[81] The EERMC filed a Cost Effectiveness Report setting forth the position that the 2025 Plan was cost effective under the RI Test and the intrastate version of the RI Test, and that the costs of the 2025 Plan were less than the acquisition of additional supply.[82]

Mr. Teichert stated that the EERMC had requested the Company to provide a roadmap to implement a component of the PIM that is tied to equity considerations in energy efficiency investments.[83] He noted that the 2025 Plan did not include a roadmap that the EERMC believes would send a clear signal of the importance of delivering energy efficiency programs equitably. The EERMC asserted that a process by which a share of the PIM is tied to equity-based metrics would drive the Company to improve its programs that serve income-eligible and multifamily customers, which have a history of underperformance.[84] The ERRMC further stated that the rate of change in implementing energy efficiency was not sufficient to meet the EERMC’s statutory directives or the mandates of the 2021 Act on Climate.[85]

The EERMC also proposed its budget for program year 2025. Section 6.2.H.i.b of the LCP Standards require the EERMC to “[p]rovide testimony, reasonable documentation, and justification for the budget level to support a Commission allocation of the requested amount. The budget must reflect reasonable costs, be reasonably needed to carry out its duties, and be reasonable related to the expense types identified in the statute.”[86] The EERMC’s proposed budget for 2025 was $980,175, the majority of which ($717,025) was for consulting services.[87] While many line items in the proposed budgets decreased from last year’s filing, the EERMC requested an increase in its budget for maintaining its website from $350 to $500, which the EERMC attributed to a website redesign and migration to a new domain. The additional allocation is for the cost of hosting two domains in case of issues in the first year post-migration.[88]

The proposed budget also included a new line item in the amount of $70,250, which was part of an expanded scope as part of an extension for the University of Rhode Island’s (URI) existing contract with the EERMC. The expanded scope would support a “Community of Practice” (CoP), which would involve URI convening and facilitating an “Efficient Housing for All” CoP, designing and deploying educational training tools informed by the CoP, developing and piloting an Energy Coach Program targeting income-eligible customers, and coordinating with related efforts and entities to maximize collective impact. This line item was based on URI’s proposed scope.[89]

OER filed a notice of intervention under R.I. Gen. Laws § 39-1-27.9 on October 24, 2024. OER did not submit pre-filed testimony or comments, but did respond to Data Requests propounded by the Division of Public Utilities and Carriers (Division) and the EERMC.[90]

The Division reviewed the 2025 Plan in concert with its expert consultant, Synapse Energy Economics, and submitted pre-filed testimony of Jennifer Kallay and Tim Woolf.[91] The Division found that the 2025 Plan was cost-effective based on the RI Test. However, it noted that four electric programs and two natural programs were not cost-effective using the updated cost of supply calculation.[92] Nevertheless, the Division agreed with the Company’s rationales to continue these programs despite them not being cost-effective under the updated calculation.[93]

Ms. Kallay noted concerns with the 2025 Plan in her testimony. First, the 2025 Plan did not illustrate certain avoided lost electric system opportunities because the electric and natural gas benefit-cost models do not break out weatherization “with electrification” and “without electrification.” OER’s Clean Heat RI and HER programs require weatherization for income-eligible customers who want to electrify. However, the Company would not track delivered fuel home weatherization required or recommended under Clean Heat RI or HER for 2025. The Company’s heating savings calculations were based on the heating fuel that customers used at the time of weatherization, and did not include heating electric savings that may be realized by customers who electrify at or around the time of weatherization.[94] Second, the 2025 Plan understated avoided lost electric system opportunities. The Company assumed that delivered fuels customers who weatherize do not electrify over the life of the measure, which is 20 years. However, some customers weatherize as a prerequisite for electrification funding.

Ms. Kallay also noted that OER’s Clean Heat RI, HEAR, and HER programs do not support weatherization for homes using delivered fuels.[95] Although the Company planned to make customers aware of OER’s programs, it would not mention weatherization requirements and recommendations associated with OER’s electrification funding.[96] Ms. Kallay also stated that the Company’s delivered fuel home weatherization savings methodology is inaccurate for homes that also electrify.[97] She stated that it is important to improve these savings estimates because electrified and weatherized homes offer electric savings that mitigate grid impacts associated with electrification. Ms. Kallay recommended that the Company should work with OER to develop and incorporate projections of quantities, budgets, and savings associated with delivered-fuel home weatherization projects that electrify around the time of weatherization as well as delivered-fuel home weatherization projects that do not electrify right away. The assumptions around the timing of electrification in both instances should be clearly documented.[98]

Mr. Woolf noted that in the 2025 Plan, the Company assumed that there would be greenhouse gas (GHG) benefits from energy efficiency programs for 2033 and beyond, even after it reached the 100% Renewable Energy Standard target in 2033. The Company’s assumption differed from its 2024 Plan, where the Company stated that there would be no such benefits after 2033.[99] Mr. Woolf agreed that the energy programs will reduce New England GHG emissions after 2033, but noted three concerns with the Company’s method: (1) there is likely to be double counting of the value of renewable energy credits and the full value of GHG benefits; (2) the electricity-sector marginal abatement cost (MAC) represents costs that will be incurred by the Company and passed onto customers, and therefore should be considered embedded costs; and (3) the electricity sector MAC might understate the full value of GHG in 2033 and beyond because of other GHG abatement options that will likely be undertaken in the Rhode Island electricity, gas, and other sectors to meet Rhode Island’s GHG goals.[100] Mr. Woolf recommended that the Commission require the Company to address these concerns during the development of the annual plan for 2026.[101]

After reviewing the filings and testimony, discovery responses, and conducting evidentiary hearings over three days, the Commission found that the testimony and evidence show that the
Company’s budget for the 2025 Plan was justified. The proposed electric portfolio budget was about $13.2 million less than 2024’s budget.[102] Similarly, the proposed natural gas portfolio budget was approximately $1 million less than 2024’s budget.[103] With respect to the electric portfolio, the Company’s changes and reductions to key programs were easily explained, and in several cases, represented program planning and design decisions that would make electric efficiency programs more beneficial for customers.

The Residential program budget was about $4.45 million lower than in 2024. The budget decrease can be attributed to, inter alia, fewer audits and shifting the EnergyWise Single Family audit budget to the natural gas program budget. The Commission expected that shifting the audit budget to the natural gas portfolio would not affect customers’ experience and access to audits, but would reduce upward pressure on electric rates and make electrification more appealing.[104] In addition, the Company was spending 30% less on delivered fuels weatherization and performing 18% less delivered fuels weatherization for EnergyWise Single Family in 2025. The Commission noted that this program appears to be run more efficiently, since the number of delivered fuels weatherization units has decreased less than the decrease in spending.

For Income Eligible Single Family, the budget was slightly lower, but the electric savings appear to be higher based on the Company’s schedules. The Income Eligible Multifamily program budget was about $1.5 million lower than it was in 2024. The Company’s C&I program budget was about $6.5 million lower than last year’s filing due to the removal of rebates for lighting control dimming and occupancy sensors and a 50% reduction in measure lives for LED fixtures rebated through the Retrofit Program and Small Business Program.

The Commission noted the EERMC’s position that its priority was to see year-over-year increases in electric energy savings. However, this position seemed to ignore the economics of fixed resource extraction and diminishing marginal returns. Naturally, the easiest and cheapest energy efficiency methods were obtained first. Now, however, there is less energy efficiency to gain, and it is increasingly expensive to realize savings. For instance, the Three-Year Plan showed that annual procurement of lifetime MWh savings peaked in 2014 and has steadily fallen each year, while the cost per lifetime kWh has increased.[105] That the Company’s energy efficiency margins may be narrower is not evidence of a failed program; in fact, this is consistent with the Commission’s expectations. Absent a technological change that opens new efficiency possibilities, the Commission would not be surprised to see marginal benefits continue to slim down.

In Docket No. 23-35-EE, the Commission reduced the weighting of other resource benefits from 50% to 35%. At that time, the Company’s plan proposed to increase oil savings over the course of the Three-Year Plan.[106] The PIM was modified to further focus the Company on eliminating electric resistance heat, delivering cost-saving lifetime kWh savings to reduce the cost of the system for all ratepayers. Indeed, the PIM modifications did increase Residential and Income Eligible Utility System Benefits from 2024 to 2025.[107]

To ensure that the energy efficiency programs reduce costs for all ratepayers—not just participants—the Company must continue identifying lifetime kWh savings that are lower than the cost of supply. This will create headroom for the Company to engage in less cost-efficient weatherization efforts that do not necessarily reduce system costs. The Commission did not see a need to make additional modifications to the PIM at this time.

The Commission noted that the EERMC is seeking to have components of the PIM tied to the achievement of equity metrics. However, this is what the existing SQAs are designed to accomplish. The SQA holds the Company accountable to deliver planned benefits at the planned budget level and deducts from the Company’s earnings if it underperforms in terms of energy savings and spending efficiency.

The EERMC sought to develop a PIM to improve performance for income-eligible and multifamily customers, citing a history of underperformance. In response to discovery, the EERMC presented data purporting to show that income-eligible and multifamily programs historically underperformed. When the Commission examined that data, however, the percentage of lifetime savings goals for different multifamily programs appeared to be highly volatile.[108] The Commission was not inclined to reward or penalize the Company in the form of cash on what could simply be noise in the data. The Commission directed the EERMC’s attention to the Commission’s Guidance for Performance Incentives in Docket No. 4943, and expected that should the EERMC consider another, similar proposal, the proposal will be in accordance with this guidance.

This is not to say that if the Company is not productively engaging in the process of defining data needs, tracking, and reporting on agreed-upon metrics, that the Commission would not examine the issue further. However, the Commission has not been presented with evidence that the Company is uncooperative in this regard. Moreover, it was unclear how long it would be before the data collected presents usable and actionable information. Accordingly, the Commission found no justification to modify the PIM.

At an Open Meeting held on December 19, 2024, the Commission reviewed the filings and approved motions consistent with this Order.

Accordingly, it is hereby:

1.      The Company’s performance incentives for Electric and Gas Energy Efficiency, shown in tables E-8C and G-8C of the December 18, 2024 correction to Attachments 5 and 6 are approved.

2.      The Company is authorized to implement the programs described in the 2025 Plan.

3.      An Electric Energy Efficiency rate of $0.00903 per kWh effective for usage on or after January 1, 2025 is approved.

4.      A Gas Energy Efficiency rate of $ 1.150 per Dth for the Residential class and $0.530 per Dth for the Commercial and Industrial class, effective for usage on or after January 1, 2025, is approved.

5.      A budget of $980,175 for the EERMC is approved.

6.      The Gas and Electric budgets and savings targets as proposed by the Company in its 2025 Plan, as modified in the proceedings in this docket and as shown in the December 18, 2024 corrections to Attachments 5 and 6, are approved.

EFFECTIVE AT WARWICK, RHODE ISLAND ON JANUARY 1, 2025 PURSUANT TO AN OPEN MEETING DECISION ON DECEMBER 19, 2024. WRITTEN ORDER ISSUED JANUARY 16, 2026.