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Pennsylvania Governor Signs $650 Million Energy Fund

Pennsyvania Governor Edward G. Rendell recently signed into law a new fund intended to save families and small businesses money on their energy bills by supporting investments in energy conservation and efficiency.

As part of the $650 million package, residential consumers and small businesses will be eligible for $92.5 million in loans, grants, reimbursements and rebates to support energy conservation and weatherization projects that can ultimately reduce energy bills. Another $40 million is available to provide financial assistance through the state's Low-Income Home Energy Assistance Program, or LIHEAP, and establish an energy efficiency loan fund through the Pennsylvania Housing Finance Agency.

Households and small businesses can also qualify for $100 million to support the installation of solar energy technology. Solar power is a key cost-saving technology that enables homes and businesses to generate their own electricity and sell any excess power back to the grid through net metering.

Carnegie Mellon University estimates the technology could help reduce electricity demand by 5 percent during the 100 most expensive hours of the year—typically, times when the sun is most intense and temperatures the highest—which would save Pennsylvania ratepayers $1.9 billion annually. Electricity rates can be 15 to 30 times more during periods when demand is highest.

The Governor said these kinds of investments are important today because consumers who now find it difficult to pay for gasoline, diesel fuel, natural gas and heating oil will only face greater financial hardship when the generation rate caps that have held electricity prices in check since the mid-1990s expire, leading to double-digit rate increases.

"Families are having to make the difficult decision of whether or not to stay in their homes because they can barely afford to fill up their gas tank or go to the grocery store where higher energy prices have pushed up the price of food," said Governor Rendell. "Likewise, businesses are questioning whether or not to shut their doors because it costs so much to keep the lights on and the machines running.

"This should concern all of us because the residential consumers and businesses in the five utility service territories where rate caps haven't expired—PECO, PPL, Allegheny Power, MetEd and Penelec—are facing a $4 billion increase in their electricity rates by 2011," said the Governor. "At a time when gasoline and diesel fuel are at $4 and $5 per gallon and natural gas has more than doubled since last year, these rate increases will be the straw that breaks the camel's back.

"We're putting new resources in place that will help consumers lower their energy use and generate their own power in a cleaner and increasingly more cost-effective manner."

According ot the press release, the Governor will also work throughout the summer to reach an agreement with the legislature on measures that will improve what he called the state's flawed energy policies and protect consumers from the pending electricity rate spikes.

"While I'm disappointed we were unable to reach an agreement on key measures related to electricity, specifically on conservation, energy efficiency and requiring service to be provided at the lowest reasonable rate, I'm encouraged by the commitment by all of the parties to get something done this fall. We'll work throughout the summer to improve Pennsylvania's energy policy so it works for consumers and protects them from the volatility of the open market and collusion or fraud.

"It is a moral imperative that we act promptly to protect consumers from these rate spikes. It has been more than a year and a half since I first unveiled my plan to shield families and businesses from feeling the financial pain that will result from the shortcomings of deregulation. Too much time has elapsed and our ratepayers are now that much closer to paying billions of dollars in electricity costs," the Governor said.

In addition to supporting energy conservation, efficiency measures, and financial assistance, the Governor outlined new strategic investments made possible under the fund that will spur billions of dollars in new, private economic development projects from alternative energy companies and early stage businesses that will create thousands of jobs in a rapidly growing industry.

"Pennsylvania has established itself as leader in developing and deploying clean renewable energy resources," said the Governor, citing some of the world's leading businesses that now call Pennsylvania home, like Conergy, Gamesa and Iberdrola. "However, the $1 billion in private investment that has flowed into Pennsylvania and the 3,000 jobs we've created in the renewable energy industry only begin to scratch the surface of our potential.

"This new investment fund will strategically target new resources to leverage as much as $3.5 billion in private investment and create at least 13,000 new, good-paying jobs in an industry that is sure to be to the 21st century what information technology and biosciences were to the later 20th century."

Included among the new $650 million fund is $500 million that provides:

-$165 million for loans and grants to spur the development of alternative and renewable energy projects (except solar) among businesses and local governments;
-$100 million to provide loans, grants and rebates that cover up to 35 percent of the costs residential consumers and small businesses incur for installing for solar energy technology;
-$80 million in grants and loans for economic development projects in the solar sector;
-$40 million to the Ben Franklin Technology Development Authority to support early stage activities, such as incubator support services, translational and early stage research in startup businesses that develop and implement energy efficiency technologies;
-$25 million for wind energy and geothermal projects;
-$25 million for green buildings. Homeowners and small businesses will benefit from grants and loans to build energy efficient structures or renovate an existing building to improve its energy efficiency;
-$40 million ($10 million annually for four years) to support LIHEAP so the commonwealth can help low-income customers manage higher energy prices, severe weather conditions, or disasters; and
-$25 million for pollution control technology to help energy generators meet state and federal standards.
The law, originally Special Session House Bill 1, will also establish a $150 million consumer energy program for individuals and small businesses that will support projects that conserve energy and use it more efficiently—something that is increasingly important as the costs for electricity, fuels and natural gas continue to increase.

The $150 million will be allocated over eight years, with $20 million annually through 2014-15 and another $10 million in 2015-16 that will include:

-$92.5 million so homeowners and small business owners can cover 25 percent of the cost of purchasing and installing energy conservation tools and weatherize their buildings;
-$50 million in tax credits of up to $1 million a year per project for developing and building alternative energy projects, which will help Pennsylvania companies invest and grow here; and.
-$5 million to support an Energy Efficiency Loan Fund through the Pennsylvania Housing Finance Agency.


For more information on the 2008-09 budget, visit www.pa.gov.