Fiscal office warns S.65 could shift energy‑efficiency spending toward electrification, prompting risks to rates and weatherization

The Legislative Joint Fiscal Office (JFO) told the Senate Natural Resources & Energy Committee on March 12 that S.65’s expansion of energy‑efficiency utility jurisdiction to include greenhouse‑gas (GHG) emission reductions and electrification projects could change how the existing energy efficiency charge is used and shift investment toward fuel switching and electrification.

JFO’s analysis: JFO said the bill would allow energy efficiency utilities to prioritize GHG reductions and electrification and to use energy efficiency charge revenue on projects that reduce total energy use across fuels rather than being limited to electricity‑saving measures. JFO highlighted three potential state budget impacts: state government electricity costs, taxes levied on electricity retail sales (a monthly gross receipts tax and an annual gross‑operating‑revenue tax), and the need for future transmission or distribution upgrades if electrification increases peak demand.

Rate implications and tradeoffs: JFO explained countervailing effects: (1) traditional electric‑efficiency projects lower demand and exert downward pressure on retail rates; (2) electrification and fuel switching can increase electricity demand and thus exert upward pressure on rates and trigger infrastructure upgrades; and (3) the bill’s cap on annual revenue raised by the energy‑efficiency charge through 2026 means the same pool of funds might finance different priorities (electrification versus traditional efficiency), potentially reducing historically cost‑effective efficiency activities.

Department of Public Service and other witnesses: the Public Service Department reiterated support for climate action but expressed concern that diverting electric efficiency funds toward GHG priorities could deprioritize weatherization and other full‑home measures that deliver household health and bill savings. Witnesses also noted the bill includes an equity carve‑out for low‑ and moderate‑income customers and that program design details (targeting, low‑income rates, and eligibility) will be crucial to protect vulnerable households.

Legislative counsel and drafting changes: committee counsel presented edits to the bill that remove or move provisions for the Clean Heat Standard technical and equity advisory groups and that add a reporting requirement for fuel‑dealer registry data sharing with tax and utility agencies to support emissions inventories and regional/local planning. The committee directed staff to refine language about data collection, geographic granularity for fuel delivery data, and the equity provisions so they explicitly target reductions in energy burden for low‑income households.

Committee direction and outstanding questions: JFO offered to produce more detailed quantitative modeling to estimate state budget impacts. Committee members asked for clarification on the bill language that prioritizes cost‑effective GHG reductions versus traditional electric efficiency, and questioned whether weatherization (which yields non‑electrical benefits) will be displaced. Agencies were asked to return with implementation details, more precise fiscal modeling, and suggested drafting edits to the equity language to explicitly protect low‑income customers from rate increases.