Kerwin Olson's open letter to Pence on energy




The Honorable Mike Pence, Governor of the State of Indiana:

Senate Bill 340 (Demand Side Management Programs) is working

its way through the State's legislative process, currently on second reading in

the House of Representatives.

The bill in its current form promises to eviscerate energy

efficiency in Indiana, lead to the loss of hundreds of Hoosier jobs, stifle

additional and significant private sector investment in our communities, and

cause unnecessary and potentially significant increases to the already

escalating utility bills of Hoosier businesses, consumers and taxpayers.

Representing over 40,000 residential ratepayers in our great

State, Citizens Action Coalition of Indiana respectfully requests that you

protect Hoosier ratepayers and jobs by opposing SB340 and taking a strong

position against this harmful piece of public policy. Please urge the

General Assembly to slow down and consider the harmful effects of rushing this

bill through a short legislative session. Instead, lawmakers should look

into the costs and benefits of

these programs through an in-depth summer study committee which should include

all interested parties.

The current energy efficiency/DSM programs are

working. Launched in January 2012, these programs are in their

infancy. With just one year of verified data available, the programs are

already having a positive impact on Hoosier ratepayers. The State Utility

Forecasting Group (SUFG) projected significant reductions in future load growth

versus what had previously been forecasted, citing investments in energy

efficiency as the primary driver causing this decline. This reduction in

demand will save Hoosier ratepayers billions of dollars by avoiding the future

costs of expensive new generation facilities.

By allowing Big Business to "opt-out" of

participating in Indiana's successful energy efficiency/DSM programs and to not

pay into the fixed costs of those programs, SB340 will unfairly discriminate

against other classes of ratepayers, causing the electric bills of everyday,

hard-working Hoosiers and small businesses to increase. Energy

efficiency is a "resource" for the utility system—just like a

power plant. No customer or group of customers would be able to refuse to

pay for a new power plant. Instead, all customers must pay.

Similarly, all customers should pay for the energy efficiency resource.

And, because industrial customers consume almost half of all

energy used in Indiana,[1] excluding

them from the program would mean that an enormous amount of very cost-effective

energy efficiency resources would not be realized ... and much more expensive

supply resources would have to be purchased for the utility system.

At 2 to 4 cents per kWh, energy efficiency is about one-third the cost of

electricity from a new power plant (i.e., 8 to 12 cents per kWh), and

industrial energy efficiency is the cheapest energy efficiency of them all.[2]

Taking that resource off the table goes against Indiana's law mandating public

utilities to provide their customers with the lowest cost resource that is

reasonably possible. Energy efficiency is the quickest path to reducing

energy costs and the cheapest kWh of electricity we can generate. It is

counterintuitive to work towards reducing electric rates by eliminating energy

efficiency. SB340 will achieve the exact opposite of its stated goal.

On the campaign trail in August of 2012, you announced a new

energy policy in which part of the stated intent was to "to maintain

low-cost energy and improve environmental health for Hoosiers."[3] Under

your direction, the Office of Energy Development is now creating that new

energy plan for our State in which you tasked them with pursuing an "'all

of the above' energy mix."[4]

If SB340 becomes law, Indiana will not maintain

low-cost energy, because the cheapest energy resource would become

unavailable to serve the needs of captive Indiana ratepayers and the overall

cost of the energy efficiency resource will be much higher than


If SB340 becomes law, the environmental health of Hoosiers will

not be improved, because electricity demand will unnecessarily increase,

leading to more expensive power plants and more emissions from fossil-fuel

generation facilities – dirtying the air we breathe, the water we drink,

and the soil in which we cultivate our crops.

If SB340 becomes law, any new State energy plan would

not include an "'all of the above' energy mix"—instead, the

least cost resource we have will be off the table.

If your administration also intends to increase private

sector investments and jobs in Indiana, do not remain silent on SB340 as it

will kill hundreds, if not thousands, of current and future jobs in our

State. Here are just some of the companies currently investing in our

State as a result of Indiana's energy efficiency/DSM programs and providing

high-quality jobs to Hoosiers: Honeywell, Lockheed Martin, Navigant, Good

Cents, CLEAResult, Franklin Energy, Wisconsin Energy Conservation Cooperation,

JACO, and Ecova.

We appreciate the claimed intent of the

legislation—electric bills are becoming unaffordable in Indiana, and all

ratepayers need relief. However, energy efficiency/DSM is not the

problem; it's the solution. The sooner we embrace energy efficiency

as the preferred resource for our State, the sooner Indiana will realize the

substantial economic and environmental gains that energy efficiency can


Lastly, CAC was invited by your administration to

participate in the stakeholder collaborative process and assist in crafting the

new State energy plan. We accepted this honor and sincerely appreciate

the inclusive approach your administration has taken. We have found those

we have worked with in your administration to be knowledgeable, sincere, and

thorough. We are hopeful that this constructive and thoughtful approach

your administration has taken to date also includes a discussion with the

members of the Indiana General Assembly and ultimately weighing in on SB340.

SB340 is contrary to your stated campaign and gubernatorial

objectives. Please protect Hoosier ratepayers and jobs by standing by

your campaign promises and taking a strong position against SB340.


Kerwin Olson

Executive Director

Citizens Action Coalition