Bill H.879

HOUSE DOCKET, NO. 989 FILED ON: 1/19/2011

HOUSE . . . . . . . . . . . . . . . No. 879

By Mr. Smizik of Brookline, a petition (accompanied by bill, House, No. 879) of Frank I. Smizik and others establishing the cost saving oil heat and propane energy efficiency program. Telecommunications, Utilities and Energy.

The Commonwealth of Massachusetts

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In the Year Two Thousand Eleven

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An Act establishing the cost saving oil heat and propane energy efficiency program.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Chapter 10 of the General Laws is hereby amended by inserting after section 35II the following section:

Section 35JJ: There shall be established and set up on the books of the commonwealth a separate fund to be known as the Oil Heat and Propane Energy Efficiency Fund. The fund shall consist of amounts credited to the fund in accordance with sections 19B of chapter 25 and expended exclusively for the purposes of said sections 19B of said chapter 25A. The fund shall be administered by the oil heat and propane efficiency trust, pursuant to section 19C of chapter 25, subject to the approval of the energy efficiency advisory council, pursuant to section 22 of chapter 25, and the commissioner of administration and finance. The fund shall be an expendable trust fund and shall not be subject to appropriation or allotment. The commissioner shall report monthly by source all amounts credited to the fund and all expenditures by subsidiary made from the fund on the Massachusetts management and accounting reporting system. Amounts remaining in the fund at the end of a fiscal year shall not revert to the General Fund and shall be available for expenditure in the next fiscal year and thereafter.

SECTION 2. Chapter 25A of the General Laws is hereby amended by adding after section 19 the following new sections: -

Section 19A. For the purposes of sections 19A through 19C, inclusive, the following terms shall have the following meanings:

“Fuel oil industry” or “oil heat industry,” persons in the production, transportation, or sale of oil heat fuel; and persons engaged in the manufacture or distribution of oil heat fuel utilization equipment; provided that “fuel oil industry” or “oil heat industry” shall not include ultimate consumers of oil heat fuel.

“No. 1 distillate,” fuel oil classified as No. 1 distillate by the American Society for Testing and Materials (ASTM).

“No. 2 dyed distillate,” fuel oil classified as No. 2 distillate by the American Society for Testing and Materials (ASTM) that is indelibly dyed in accordance with regulations prescribed by the Secretary of the Treasury under section 4082(a) (2) of the Internal Revenue Code of 1986.

“Cost Effective,“ with respect to an energy efficiency program, means that the program meets the total resource cost test, which requires that the net present value of economic benefits over the life of the program or measure, including avoided supply and delivery costs and deferred or avoided investments, is greater than the net present value of the economic costs over the life of the program, including program costs and incremental costs borne by the energy consumer.

“Oil heat fuel,” No.1 distillate and No.2 dyed distillate that is used as a fuel for residential, commercial or industrial space or hot water heating.

“Propane,” or “propane fuel,” a hydrocarbon fuel with a chemical makeup of C3H8 that is used for space and hot water heating.

“Propane industry,” persons in the production, transportation, or sale of propane fuel used for space heating and hot water heating; and persons engaged in the manufacture or distribution of propane fuel utilization equipment; provided that “propane industry” shall not include ultimate consumers of propane fuel.

“Retail marketer,” a person engaged primarily in the sale of oil heat fuel or propane fuel to ultimate consumers.

“Wholesale distributor,” a person or business entity that produces No. 1 distillate or No. 2 dyed distillate or propane; imports No. 1 distillate or No. 2 dyed distillate or propane; or transports No. 1 distillate or No. 2 dyed distillate or propane across state boundaries or among local marketing areas; and sells the products to another person that does not produce, import, or transport No. 1 distillate o r No. 2 dyed distillate or propane across state boundaries or among local marketing areas.

Section 19B: (1) Beginning in 2012, an assessment of $.025 cents (two and one-half cents) per gallon shall be imposed on all gallons of oil heat fuel sold in Massachusetts in order to establish the cost-saving Oil Heat Energy Efficiency Program. The assessment shall be collected at the point of sale of oil heat fuel by a wholesale distributor to a person other than a wholesale distributor, including a sale made pursuant to an exchange. A wholesale distributor shall be responsible for payment of the assessment to the Commonwealth on a quarterly basis; and shall provide to the Commonwealth certification of the volume of fuel sold. No. 1 distillate and No. 2 dyed distillate fuel sold for uses other than as oil heat fuel are excluded from the assessment. Distillate fuel used by vessels, railroad, utilities, farmers and the military are exempt from the assessment.

(2) An assessment of $.025 cents (two and one-half cents) per gallon shall be imposed on all gallons of propane heating fuel sold in Massachusetts in order to establish the Propane Heat Energy Efficiency Program. The assessment shall be collected at the point of sale of propane fuel by a wholesale distributor to a person other than a wholesale distributor, including a sale made pursuant to an exchange. A wholesale distributor shall be responsible for payment of the assessment to the Commonwealth on a quarterly basis; and shall provide to the Commonwealth certification of the volume of fuel sold.

(3) Such funds shall be deposited by the commissioner of administration and finance into the Oil Heat and Propane Energy Efficiency Fund pursuant to section 35JJ of chapter 10. The Fund shall be expended by the oil heat and propane efficiency trust, pursuant to section 19C and subject to the approval of the EEAC pursuant to section 22 of chapter 25, for the sole purpose of designing, marketing and providing cost-effective energy efficiency programs through financial incentives and services, measured by the total resource cost test, for a residential and small business demand-side management program that improves energy efficiency and reduces consumption in for residential, commercial and industrial customers who utilize oil and/or propane for space heat or domestic hot water including but not limited to: the replacement or upgrade of older, inefficient oil and propane heating or domestic hot water system systems; duct sealing and insulation, pipe insulation, building envelope sealing and insulation; storm windows; blower door air sealing services; research and design; and marketing of efficiency products or services. Program design for envelope measures and measures that will save electricity or natural gas, in addition to oil heat or propane shall be conducted by the trust and the program administrator(s), with substantial input from, and approval by, the energy efficiency advisory council and result in integrated programs that serve all customers, regardless of heating fuel type. Program design elements that result in savings of multiple fuels shall be funded from the oil heat and propane trust in proportion to the oil heat and propane savings generated and other heating fuel types also funding in proportion to their savings. No more than one percent (1%) of such funds may be used for training. Program design for heating system programs shall be conducted by the trust and the program administrator(s), with substantial input from, and approval by, the energy efficiency advisory council, provided, however, that such oil heating systems replaced shall be replaced with a new oil heating system, and such propane heating systems replaced shall be replaced with a new propane heating system. The secretary of executive office of energy and the environment shall designate the oil heat and propane efficiency trust, pursuant to section 19C of chapter 25, as the fiscal agent responsible with ensuring these services are delivered as approved by the energy efficiency advisory council and in a cost effective manner that is coordinated with other energy efficiency programs. Funds shall be apportioned between oil heat efficiency programs and propane efficiency programs in direct correlation to funds generated from oil heat fuel sales and propane sales.

At least 20 per cent of the funds collected shall be spent on comprehensive low-income residential oil heat demand-side management and education programs. The secretary shall designate that these programs be administered in conjunction with the low income weatherization funds administered by the department of housing and community development and delivered through the Heating Energy Assistance Task Weatherization Program and Low Income Home Energy Assistance Program pursuant to the qualification guidelines outlined by said programs.

Section 19C: (1) Massachusetts shall establish a non-profit Oil Heat and Propane Efficiency Trust to serve as the fiscal agent for oil and propane energy efficiency funds and programs in the commonwealth. The Trust will be composed of five members, one of which will represent the oil heating industry, one of which will represent the propane heat industry, one of which will represent the environmental community, one of which will be the Attorney General and one of which will be the Commissioner of Energy Resources who will serve as chairman. The Secretary of Energy and Environmental Affairs shall appoint each member of the Trust for a period of 4 years, with term periods for members staggered. Actions of the trust shall require a majority vote.

The Trust, in consultation with the energy efficiency advisory council as set forth in section 22 of chapter 25, shall establish a target budget designed to ramp-up over time to capture cost-effective energy efficiency for heating oil and propane, and a corresponding annual assessment designed to recover enough money to fund the programs;

(2) To implement this section the Trust, in consultation with the energy efficiency advisory council as set forth in section 22 of chapter 25, is hereby directed and authorized to enter into contracts with appropriate organization(s) to serve as energy efficiency program administrator(s), selected through a competitive procurement process, to deliver and operate, in a cost-effective manner, the Oil Heat and Propane Energy Efficiency Program to be provided by retail heating oil and propane dealers and other business entities, organizations and agencies with qualified technical personnel including oil heat technicians in good standing with the Commonwealth in possession of a certificate of competency as defined by Code of Massachusetts Regulation (CMR) 527 CMR 4.00, and are delivered as approved by the energy efficiency advisory council and in a cost effective manner that is coordinated with other energy efficiency programs.

(3) Every 3 years, on or before April 30, the program administrators shall jointly prepare an oil heat efficiency investment plan and a propane efficiency investment plan. Each plan shall provide for the acquisition of energy efficiency resources that are cost effective or less expensive than supply and shall be prepared in coordination with the energy efficiency advisory council established by section 22.

A plan shall include: (i) an assessment of the estimated lifetime cost, reliability and magnitude of all available energy efficiency resources that are cost effective or less expensive than supply; (iii) the estimated energy cost savings that the acquisition of such resources will provide to oil heat and propane consumers, including, but not limited to, reductions in energy costs and increases in price stability and affordability for low-income customers; (iv) a description of programs, which may include, but which shall not be limited to: (A) efficiency programs; (B) programs for research, development and commercialization of products or processes which are more energy-efficient than those generally available; (C) programs for development of markets for such products and processes, including recommendations for new appliance and product efficiency standards; (D) programs providing support for energy use assessment, real time monitoring systems, engineering studies and services related to new construction or major building renovation, including integration of such assessments, systems, studies and services with building energy codes programs and processes, or those regarding the development of high performance or sustainable buildings that exceed code; (E) programs for planning and evaluation; and (F) programs for public education regarding energy; provided, however, that not more than 1 per cent of the fund shall be expended for items (B) and (C) collectively, without authorization from the advisory council; (v) a proposed mechanism which provides performance incentives to the program administrator(s) based on their success in meeting or exceeding the goals in the plan; (vi) the budget that is needed to support the programs; (vii) data showing the percentage of all monies collected that will be used for direct consumer benefit, such as incentives and technical assistance to carry out the plan.

(4) Programs shall be designed to treat all energy use in a building in a comprehensive and coordinated fashion across the state with maximum use of common program designs, integrated programs, and a common pool of energy efficiency vendors and contractors who can treat all energy use in a building comprehensively.

The financial incentives used in said program may be a combination of low or zero interest loans or direct rebates and other financial incentives. The Trust, in consultation with the energy efficiency advisory council as set forth in section 22 of chapter 25, shall solicit input from the oil heat industry, banking and lending institutions and environmental, consumer, and low income advocacy groups on the development of the regulations implementing this section and delivery of all program services.

(5) The department of energy resources shall issue regulations implementing this section within 3 months of enactment of this section and the Trust shall enter into contracts within 6 months after such regulations have been made final.

(6) From time to time, the Trust, in consultation with the energy efficiency advisory council, shall undertake, or cause to be undertaken, an assessment of cost-effective oil heat and propane energy efficiency resource potential in the commonwealth.

(7) Evaluation, monitoring, and verification of the efficiency programs shall be conducted by an independent third-party selected by the energy efficiency advisory council, in consultation with the Trust. Said independent third party shall report its findings to the Trust, the energy efficiency advisory council, the joint committee on telecommunications, utilities, and energy, and the public. Allocations for independent third-party EM&V and other consulting services shall not exceed 1 per cent of the fund on an annual basis

(8) The Trust, in collaboration with the program administrator(s) and the energy efficiency advisory council, shall prepare an annual report to the joint committee on telecommunications, utilities, and energy and the public that includes but is not limited to: a description and amount and use of proceeds of home Oil Heat and Propane Energy Efficiency Fund collected under this section, a description of the cost-effective energy efficiency programs funded through such proceeds; and demonstration of the consumer savings, cost-effectiveness of, and the lifetime and annual energy savings achieved by the energy efficiency programs funded.

Name:	District/Address:	Date Added:
Frank I. Smizik	15th Norfolk	1/19/2011
James B. Eldridge		2/4/2011
Carl M. Sciortino, Jr.	34th Middlesex	2/4/2011
Katherine M. Clark	Fifth Middlesex	2/3/2011
Steven M. Walsh	11th Essex	2/1/2011
Peter V. Kocot	1st Hampshire	1/31/2011
David Paul Linsky	5th Middlesex	2/3/2011
Sal N. DiDomenico	Middlesex and Suffolk	2/3/2011
Stephen Stat Smith	28th Middlesex	2/4/2011
Ann-Margaret Ferrante	5th Essex	2/4/2011