Michael A. Chowaniec, Legislative Director Connecticut Department of Public Utility Control Planning Conference on Maryland’s Energy Future July 26, 2007 Demand-Side Strategies in Connecticut

High Electric Rates Enviro Impacts Electric Demand Growth New/higher FERC Charges Siting Concerns Factors Influencing CT ’s Energy Policymaking Deficient Infrastructure

Generation Capacity CapacityTransmissionUpgrades Demand-sideStrategies Energy Efficiency Conservation Demand/Load Response Distributed Generation Recognition that Balanced Portfolio of Strategies… Connecticut Department of Public Utility Control Will Achieve Best Long-term Results

Connecticut Department of Public Utility Control Advantages of Advantages of Demand-side Solutions  Speed of implementation  Technical feasibility  Cost effectiveness  Implementation experience Addressing the Southwest CT Challenge System Realities at Ground Level Deficient Transmission & Generation Infrastructure

 Energy Efficiency/Conservation Programs  CT Energy Efficiency Fund ( $72 million current year)  Supported through dedicated ratepayer charge/administered by EDCs  EIA Near-term Measures - $7.5 million supplemental $$$  Load Response Programs (LRP)  CT has 60% (573 MW) of ISO-NE LRP – CT is 27% of NE load  Two types of DR in NE – Reliability assets or Price-response assets  EIA Near-term Measures - $5 million suplemental $$$ Connecticut Department of Public Utility Control Overview of Existing CT Demand-side Initiatives

2005 Energy Independence Act (EIA) 2005 Energy Independence Act (EIA)  New Distributed Resources Portfolio Standards (Class III)  New Credits for Energy Efficiency & Combined Heat Power  Near-term Capacity Initiatives – see previous slide  Rates Initiatives (Time-of-Use & Seasonal)  Long-term Capacity RFP – EE/DR eligible to participate  Customer-side Distributed Resource Incentives Overview of Existing CT Demand-side Initiatives Connecticut Department of Public Utility Control

 Capital Grants  Emergency generation – $200/kW  Baseload/CHP - $450/kW (plus $50/kW extra in SWCT)  Low-interest loans  Buy down of interest rate  Natural Gas Rebate  Waiver of certain gas distribution charges  Back-up Charge Exemption  Elimination of back-up rates & demand ratchet  Renewable Energy Credits  Revenue stream from use of CT renewable resources Customer-Side Distributed Resource Incentives

Total applied  231 applications  389 MW Total approved  120 projects  254 MW  $102 million plus Connecticut Department of Public Utility Control Customer-Side Distributed Resource Incentives Current Program Status – as of 7/23/07 Types of Approved Projects CHP62.9% Emergencygen.31% Baseload4.7% Other1.4%

Connecticut Department of Public Utility Control  2007 Summer Saver EE Rewards Program  Restores Diverted $$$ to EE & Renewable Funds  Deployment of Advanced Electric Metering  New CT Energy Efficiency Partners Program  Back-up Generation Pilot Program New Electricity & Energy Efficiency Act Public Act : Key Demand-Side Provisions

Connecticut Department of Public Utility Control  Statewide EE Outreach Campaign  Creation of Energy Improvement Districts (micro-grids)  Decoupling of Distribution Revenues (Gas & Electric)  New Integrated Resource Planning & Procurement Process  Preference given to cost-effective EE/Demand-side resources Key Demand-Side Provisions (cont’d) New Electricity & Energy Efficiency Act

Connecticut Department of Public Utility Control  It’s an evolutionary process – actual implementation provides useful lessons  There’s value to diverse range of programs – different programs to meet different customer needs  It’s a customer-based solution – so customer awareness & education are essential  Find the right incentive mix – and you’ll motivate participation Observations from CT ’s Demand-side Experience

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