PRESENTATION TO THE

TASK FORCE AND WORKING GROUP ON ENERGY ISSUES

July 18, 2002

Good morning ladies and gentlemen:

My name is Mary Healey and as Connecticut’s Consumer Counsel, I am here representing its energy consumers - large and small commercial and industrial businesses and residential customers of many differing means and needs.

What would they want me to say to you?

1. First, consumers thank you for your efforts to step away from the power projects and thoughtfully assess what the Executive Order and Public Act 02-95, An Act Concerning The Protection Of Long Island Sound require.

2. Second, consumers say: Do the right thing to more effectively promote and implement the State’s well-articulated support of conservation and demand side management (DSM) as a crucial part of your assessment.

Why? Because the policy makers have said so time and time again. Here’s what some have said:

Conservation, energy efficiency, and demand side management are viable, cost-effective strategies for meeting energy needs and are necessary components of a balanced national energy strategy

Coalition Of Northeast Governors, July, 2001.

One of the best short-term opportunities for the legislature to influence the overall energy situation in the State is through efforts related to energy conservation, including both improved efficiency and curtailment consumption - a variety of solutions exist for transmission problems. In most cases, successful resolution of the issue requires a mix of approaches. [The primary options include energy conservation measures, increased use of distributed generation, construction of new power plants and new or upgraded transmission lines.]

Legislative Program Review and Investigations Committee, Report On Energy Availability In Connecticut, Dated 2/02

Energy conservation is a cornerstone of past and present State energy policy and the support for a “conservation ethic” emphasizing increased energy efficiency will bring the State closer to meeting its energy efficiency goals.

Connecticut Energy Advisory Board, Report To The Energy And Technology Committee, dated 2/00

The DPUC in a proceeding on a rate amendment proposed by an electric distribution company based upon an alleged need for increased revenues to finance an expansion of the capacity of its electric distribution system, shall determine whether demand side management would be more cost-effective in meeting any demand for electricity for which the increase in capacity is proposed

Connecticut General Statutes, Section 16-19(e).

The generation of electricity must be achieved in a manner that minimizes negative environmental impacts…those public policy measures under current law, including but not limited to conservation measures and incentives for using renewable energy sources, should be preserved.

Connecticut General Statutes, Sections 16-244(6) & (9)

The FERC will be providing $50,000 for a demand side management study and DOE and EPA will also be providing additional funding on this issue.

Commissioner Nora Mead Brownell, at the NECPUC meeting this May.

“by definition, effective and efficient competitive markets need a supply side and a demand side. One criticism of electric restructuring efforts in many states is that most of the attention has been focused on supply side, in a market focused on the short-term. In general, the demand side of the market has been under-addressed. The objective of NEDRI (New England Demand Response Initiative), is to develop a comprehensive, coordinated, set of demand response programs for the New England Regional Power Markets.

NEDRI, Framing Paper, #4: Energy Efficiency, dated May 29, 2002.

So, the State policy is very clear – conservation and DSM are preferred.

3. Consumers say: Consider explicit language to existing Siting Council, DPUC and OPM, (if applicable), Regulations to require that any decision on electric and other expansion projects must include conservation and demand side management as an integral part of the mix - part of the Standard Filing Requirements of an application if you will.

4. Consumers say: Do the right thing to move us beyond the crisis management that currently determines State energy policy to an energy policy that takes the longer term view.

Load curtailment is not conservation. It is a short-term solution that helps get us over the peak demand of the summertime. It is energy consumers doing without electricity, mostly business and mostly in Southwest Connecticut. Consumers view this moratorium and these task force reviews as providing much needed breathing room for thoughtful consideration of transmission, conservation, DSM and related issues, a refreshing longer term view - with longer term pay backs for all.

5. Consumers say: Do the right thing to assure that our conservation and renewable monies are deployed wisely to achieve the stated objectives of those funds. Electric ratepayers pay over $100 million per year into these funds.

Conservation and DSM initiatives help to reduce supply and price risk which increase system reliability and cost minimization. This benefits everyone. No one should be able to raid our funds for other purposes as has happened in the recent past. Let’s assess ways to prevent this in the future and use those funds more strategically to address the electric service and reliability issues in Southwest Connecticut.

6. And one of the most important points of my comments, consumers say: Do the right thing by identifying a replacement for the Integrated Resource Planning (IRP) process that was eliminated with restructuring but whose need is greater than ever.

The IRP process was regulated by the DPUC and worked well to coordinate and oversee the conservation efforts of the utilities. What concerns us is that today, what used to be called IRP, is scattered among a wide variety of decision makers, no one of which has ultimate responsibility for a cohesive approach which aligns with the State’s policy in this area from the utilities who administer the CL&M programs to the managers of the CL&M and Clean Energy Funds to the ISO-New England. This is one reason Connecticut has in hand no comprehensive baseline data to evaluate conservation efforts and no single overall plan to guide conservation and other energy efficiency initiatives. We urge you, along with the Energy Conservation Management Board’s efforts, to address this major oversight.

7. Lastly, but certainly not least, consumers ask you to address the existing disincentive/conflict inherent in conservation/DSM’s objectives of reducing load and the utilities’ objectives and financial incentives for increasing load. Until that’s fixed, roadblocks will continue and conservation will continue to be under-valued.

In conclusion, you have a terrific opportunity to do the right thing for the State’s energy policy and its energy consumers. You will receive a lot of pressure to do the politically expedient thing It is time to take this debate to a higher ground and take real action to put the “ratepayers’ money where the State’s policy “mouth” is.

Thank you.