Amendment #2 to S2214
Oil Heat Efficiency Fund
Ms. Provost of Somerville moves to amend the bill by adding at the end the following:
SECTION 1. Chapter 10 of the General Laws, as appearing in the 2012 Official Edition, is hereby amended by inserting after section 35II the following section:
Section 35II1/2: There shall be established and set up on the books of the commonwealth a separate fund to be known as the Oil Heat Energy Efficiency Fund. The fund shall consist of amounts credited to the fund in accordance with sections 11J of chapter 25A and expended exclusively for the purposes of said section 11J of said chapter 25A. The fund shall be administered by the commissioner of energy resources, pursuant to section 11J(b) of chapter 25A, in coordination with the secretary 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 by the fund in the next fiscal year and thereafter.
SECTION 2. Chapter 25A of the General Laws is hereby amended by adding after section 11I the following new sections:
Section 11J. (a) For the purposes of section 11J, 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 a cost-benefit 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, environmental benefits and avoided environmental costs, avoided operation and maintenance costs and other appropriate energy and non-energy benefits as determined by the department, is greater than the net present value of the costs over the life of the program.
“Energy Efficiency Advisory Council (EEAC),” refers to the energy efficiency advisory council established pursuant to section 22 of chapter 25 of the general laws.
“Oil heat fuel,” No.1 distillate and No.2 dyed distillate that is used as a fuel for residential or commercial space or hot water heating.
“Retail marketer,” a person engaged primarily in the sale of oil heat fuel to ultimate consumers.
“Wholesale distributor,” a person or business entity that produces No. 1 distillate or No. 2 dyed distillate; imports No. 1 distillate or No. 2 dyed distillate; blends No. 1 distillate or No. 2 dyed distillate with biodiesel or biofuels; or transports No. 1 distillate or No. 2 dyed distillate across state boundaries or among local marketing areas; and sells the products to retail home or commercial heating oil companies for resale.
(b) (1) Beginning, June 1, 2014, the department shall require a systems benefit assessment of two and one-half cents ($.025) per gallon be placed on all gallons of oil heat fuel sold for residential or commercial use in Massachusetts in order to establish oil heat energy efficiency programs. 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) Such funds shall be deposited by the secretary of administration and finance into the Oil Heat Energy Efficiency Fund pursuant to section 35II1/2 of chapter 10. The Fund shall be expended by the commissioner of energy resources, pursuant to this section, and subject to the approval of the energy efficiency advisory council (EEAC) for the sole purpose of designing, marketing and providing cost-effective energy efficiency programs through financial incentives and services for residential and small business demand-side management programs that improve energy efficiency and reduce consumption for residential and commercial customers who utilize oil heat fuel for space heat or domestic hot water heating, including but not limited to: replacing or upgrading older, inefficient oil heating or domestic hot water 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 oil heat efficiency products or services. Program design for envelope measures and measures that will save electricity or natural gas, in addition to oil heat,shall be conducted by the EEAC and the program administrator(s), 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 efficiency trust in an equitable manner and in proportion to the oil heat savings generated. No more than one percent (1%) of such funds may be used for training. No more than one percent (1%) of such funds may be allocated to the department for administration of the fund and coordination of the programs. Program design for heating system programs shall be conducted by EEAC and the program administrator(s), provided, however, that under the programs, any oil heating system eligible for replacement shall be replaced with a new oil heating system. The commissioner shall act as the fiscal agent responsible with ensuring these services are delivered as approved by the EEAC and in a cost effective manner that is coordinated with other energy efficiency programs, including the option of DOER to designate the delivery of some or all of the funds through the existing Program Administrators.
At least 20 percent of the funds collected shall be spent on comprehensive low-income residential oil heat energy efficiency and education programs. The commissioner shall designate that these programs be implemented through the low income weatherization and fuel assistance program network administered by the department of housing and community development.
(c) (1) The EEAC shall advise the department on all aspects of oil energy efficiency funds and programs in the commonwealth. Actions of the EEAC pertaining to disbursement of the oil heat efficiency funds and programs shall require a majority vote.
The EEAC shall establish a target budget designed to ramp-up over time to capture cost-effective energy efficiency for heating oil, and a corresponding annual assessment designed to recover enough money to fund the programs.
(2) To implement this section, the commissioner, with the approval of the EEAC and, 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, oil heat energy efficiency programs to be provided by retail heating oil 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. Programs shall be approved by the EEAC and shall be delivered in a cost effective manner that is coordinated with other energy efficiency programs.
(3) Every 3 years, in a manner consistent with natural gas and electric efficiency plans set forth in section 21 of chapter 25, on or before April 30, the program administrators shall jointly prepare an oil heat efficiency investment plan for approval by the department and the EEAC. 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 of chapter 25. A program included in the plan shall be screened through cost-effectiveness testing which compares the value of program benefits to the program costs to ensure that the program is designed to obtain energy savings and system benefits with value greater than the costs of the program. Program cost effectiveness shall be reviewed periodically by the department and by the EEAC. If a program fails the cost-effectiveness test as part of the review process, it shall either be modified to meet the test or shall be terminated. The EEAC may allow for transitional, one year plans in order to achieve consistency with section 21 of chapter 25.
An investment 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; (ii) the estimated energy cost savings that the acquisition of such resources will provide to oil heat consumers, including, but not limited to, reductions in energy costs and increases in price stability and affordability for low-income customers; (iii) 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 for planning and evaluation; and (E) programs for public education regarding energy efficiency; provided, however, that not more than 1 percent (1%) of the fund shall be expended for items (B) and (C) collectively, and not more than 2 percent (2%) of the fund shall be expended for item (E) without authorization from the advisory council; (iv) 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; (v) the budget that is needed to support the programs; (vi) 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) The program administrator(s) shall submit the investment plan to the EEAC. Not later than 90 days after the submission of a plan, the department and EEAC shall approve, modify and approve, or reject and require the resubmission of the plan accordingly.
(5) 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 programs may be a combination of low or zero interest loans or direct rebates and other financial incentives. The EEAC shall solicit input from the oil heat industry, consumer groups, and low income advocacy groups regarding the implementation of this section and delivery of all program services.
(6) The department shall issue regulations implementing this section within 1 year of enactment of this section and the commissioner shall enter into contracts within 6 months after such regulations have been made final.
(7) From time to time, the EEAC shall undertake, or cause to be undertaken, an assessment of cost effective oil heat energy efficiency resource potential in the commonwealth.
(8) Evaluation, monitoring, and verification of the efficiency programs shall be conducted by an independent third-party selected by the EEAC. Said independent third party shall report its findings to the EEAC, the joint committee on telecommunications, utilities, and energy, and the public through the department of energy resources. Allocations for independent third-party monitoring and other consulting services shall not exceed 1 percent (1%) of the fund on an annual basis.
(9) The EEAC, in collaboration with the program administrator(s), shall prepare an annual report for submission to the joint committee on telecommunications, utilities, and energy and the public through the department of energy resources that includes, but is not limited to: a description of the amount and use of proceeds of the Oil Heat Energy Efficiency Fund collected under this section; a description of the cost effective energy efficiency programs funded through such proceeds; the demonstration of consumer savings, cost-effectiveness, and the lifetime and annual energy savings achieved by the energy efficiency programs funded; and the lifetime and annual greenhouse gas emissions benefits achieved by energy efficiency programs funded.