Proposed Illinois Budget Cuts Into Energy Efficiency

March 5, 2015 By Karen Henry

Chicago skyline-Energy-ManageTo help address a state budget shortfall, Illinois Gov. Bruce Rauner has proposed a budget that would reallocate $265 million in utility ratepayer funds from energy efficiency projects and programs to the state’s general fund. According to an American Council for an Energy-Efficient Economy (ACEEE) blog post, this reallocation would include Department of Commerce and Economic Opportunity (DCEO) energy efficiency programs and the Low Income Home Energy Assistance Program (LIHEAP), which helps pay the energy bills of low-income families.

Under Illinois law, utilities keep 75 percent of the funds they collect through rates to operate their energy efficiency programs and divert the remaining 25 percent to the DCEO for its programs. A 2014 ACEEE analysis found that Illinois electric utilities have exceeded their energy savings goals every year, while the gas utilities have just about met theirs. DCEO’s programs have an estimated benefit-cost ratio of 2.26, according to a 2014 independent evaluation.

Although the legislature has not yet approved the governor’s proposed budget, there are reports that senior staff at DCEO’s energy efficiency programs have been laid off, and remaining staff members have been told not to sign any new contracts or to approve any new rebate applications.

The legislature will also be considering energy legislation that could increase energy efficiency activity in the state. Current Illinois law calls for savings that are double what the utilities are currently achieving; however, the law also includes cost caps that limit the amount of money the utilities can spend, so their savings have been lower than the law requires. As part of the forthcoming energy bill, a coalition of business, environmental and labor leaders is proposing to raise the cost caps while still requiring programs to meet cost-effectiveness tests.

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