Operation Fuel Supports H.B. 5439, An Act Concerning Heat Pump Adoption and H.B. 5438, An Act Concerning Energy Efficiency Funding and Programs

Testimony from Operation Fuel Policy & Public Affairs Associate, Mike Turaj – March 14, 2024

Dear Co-Chairs Rep. Steinberg, Sen. Needleman, Ranking Members Rep. Buckbee, Sen. Fazio, Vice-Chairs Rep. Foster and Sen. McCrory and Honorable Members of the Energy and Technology Committee:
Thank you for the opportunity to testify on multiple bills before the committee today. Operation Fuel ensures equitable access to energy for all by providing year-round energy and utility assistance, promoting energy independence and advocating for affordable energy. Operation Fuel would like to voice our support for multiple bills today.

H.B. 5439, An Act Concerning Heat Pump Adoption

This raised bill would require the state to achieve the installation of not less than 310,000 heat pumps by 2030. Operation Fuel submitted written testimony in support of Section 17 of H.B. 5004, An Act Concerning the Implementation of Certain Climate Change Measures.

1 Operation Fuel suggests that this committee amend H.B. 5439 and add language from Section 17 of H.B. 5004 (currently before the Environment Committee), that would require the development and implementation of a plan for achieving this deployment number. If H.B. 5439 were to be amended and adopted, Operation Fuel would greatly appreciate the opportunity to participate in the development and implementation of this plan.

Heat pumps can lower energy prices and greenhouse gas emissions, efficiently heating one’s home in the winter as well as a cooling system in the summer- which is vital as the
summers are becoming increasingly hotter. According to the U.S. Department of Energy2, heat pumps transfer heat from a cool space to a warm space and the most common type of heat pump (ducted air-source) can reduce electricity use for heating by approximately 65% compared to furnaces and baseboard heaters.

The need for the program and for the deployment of heat pumps is essential in guiding Connecticut to an equitable modern grid and decreasing energy burden. Operation Fuel released our 2023 affordability study3, conducted by VEIC, measuring CT household costs of energy, housing, transportation and water. The affordability gap- the difference between an affordable level of spending and actual dollars spent- continues to rise. The affordability gap has increased to approximately $608 million, up 37% from $440 million in 2020. Our research shows that 424,000 households across Connecticut face unaffordable home energy costs. Working families with young children, people with medical conditions and elderly people who are living on a fixed income, are particularly vulnerable.

Installing heat pumps is one way to address the growing energy burden, as upgrading to an electric heat pump could save residents up to 35% on their electric bill and save up to 10% by replacing their water heater with a heat pump.4 However, heat pumps are most efficient after a home has been weatherized, which also helps to reduce energy burden and remediate structural barriers or mold issues.

In 2022, Operation Fuel launched the Better Homes and Buildings Program (BHBP) to address barriers, weatherize homes, and install heat pumps in low-and moderate-income (LMI) households in underserved communities across Connecticut. Operation Fuel received a Healthy Communities Grant through the EPA for the community outreach and education portion of the project in New Haven and was granted a second grant from the EPA to expand efforts to Bridgeport. Along with that, Energize CT made a grant of $50,000 to provide outreach on the benefit of heat pumps. Operation Fuel received a $115,000 grant from the Community Environmental Benefit Fund for the Bridgeport Environmental Task Force (ETF) for the installation of heat pumps in Bridgeport. So far, we have aided in weatherizing 8 homes and have installed 20 heat pumps.

Operation Fuel worked collaborated with Neighborhood Housing Services (NHS) of New Haven in an outreach and education campaign, reaching around 6,000 individuals digitally and approximately 260 New Haven area residents through in-person education events. The outreach efforts identified 131 residents eligible for the I Heart My Home CT program, which helps renters, owner occupants and landlords make their buildings more energy efficient. More than 40 residents expressed interest in enrolling, once enrolled in I Heart My Home- 12 residents were selected for participation in the New Haven BHBP. Operation Fuel coordinated with contractors and managed the budget for each project, while still providing ongoing education and technical assistance through the home energy upgrade. While BHBP provides tremendous value to clients who qualify for the services, we recognize that to impact CT’s affordability and climate goals, our state must scale up heat pump deployment, and fast. We stand ready to partner with other
stakeholders to pass this bill and accelerate implementation according to best practices, including from our neighboring states.

Connecticut can achieve this goal by following the example that Maine has set. In July 2023, Maine surpassed its goal of installing 100,000 heat pumps by 2025, two years ahead of time. A new goal has been set out to install 175,000 additional heat pumps in Maine by 2027. If achieved, it would have more than 320,000 heat pumps across the state. Maine has accomplished this deployment at a rapid pace through enhanced incentives through Efficiency Maine5 programs and established a low-income heat pump program at MaineHousing.6

Operation Fuel stands in strong support of H.B. 5439. If Connecticut wants to achieve the weatherization target of 80% of households by 2030, laid out in Public Act 11-80- Connecticut must invest in cost-effective, healthier weatherization programs for residents, like heat pumps. However, Operation Fuel emphasizes that to achieve this level of heat pump deployment, there must be substantial investments made towards the conservation and load management fund and robust incentives offered to qualifying customers, especially low-income households. Therefore, we are also proud to support HB 5438, which would accelerate energy efficiency investments that make heat pump deployment most effective.

H.B. 5438, An Act Concerning Energy Efficiency Funding and Programs

Section 1 of the raised bill would allow the Chair of PURA to direct the gas and electric distribution companies to expand the energy efficiency programs, using funds appropriated to DEEP. Section 2 gives oversight to the Commissioner of DEEP to study the performance and funding structure of the programs administered by the EDC’s. The scope of the study would include how funds for such programs have reduced or will reduce energy demand, whether the current funding levels is adequate to meet the state’s needs, a cost-benefit analysis for such programs and whether part or all of the funds used for programs should be managed by an entity other than an EDC. The section would also have the DEEP Commissioner submit the results of the study to the joint standing committee. Section 3 would appropriate from the general fund $145M to DEEP for energy efficiency programs identified in the Conservation and Load Management Plan.

Operation Fuel would suggest that the $145M would be best served over a three-year program cycle, rather than one fiscal year. BuildGreenCT, UI and others support this measure. This would allow program stability, an uninterrupted flow of workforce and less allocated administrative resources. This would hopefully prevent funds from being reallocated again.

A lot of legislators might be thinking, $145 million? That seems like a lot. And, as a small nonprofit, Operation Fuel certainly understands this perspective. But energy efficiency is one of the best investments we can make – for every $1.00 collected results in an additional $4.20 of clean energy investment in Connecticut7. In reality, by not appropriating this level of funding, Connecticut would effectively lose money. Energy efficiency programs help to reduce the energy burden, alleviate the need for energy assistance in Connecticut and add to the state’s workforce. These funds would help advance the state’s climate and weatherization goals.

EnergizeCT’s energy efficiency programs are in high demand, as ratepayers look to weatherize homes and save money on monthly bills. However, with less funding and increased demand- the program is oversubscribed. As a result, fewer families have access to lowering their energy costs through weatherization. Appropriating these funds will save ratepayers money for years to come, as they can access funding through the Home Energy Solutions program8, to install proper air sealing and insulation that can significantly reduce heating and cooling costs. Poor insulation leads to heat or cool air going right out of the home.

Weatherization and home improvements are key tools to reduce the demand for energy assistance programs. Operation Fuel’s 2024 Winter Program season opened on January8th, 2024-and experienced another season of high demand. When opening, Operation Fuel funding levels were set to support roughly 3,000 applications for the 3-month season. In just under two weeks, Operation Fuel received over 2,000 applications from residents. Almost all the applications were residents in crisis. Luckily, with emergency funding from Connecticut through federal ARPA funds- we were able to extend our program season timeline and able to accept exponentially more applications. While Operation Fuel is deeply grateful for this funding that will help keep CT residents warm in their homes this winter, we also recognize that our state can do more to reduce long-term effects of the current energy crisis Connecticut faces. Connecticut must focus on efficient emergency energy services, in the wake of volatile prices, declining
federal support and utility rate hikes due to the pandemic. Operation Fuel engages regularly with stakeholders on how best to deliver emergency service to Connecticut residents. Four hundred, twenty-four thousand Connecticut households face unaffordable house energy costs, touching each Connecticut census tract. Poorly insulated homes drive up use of energy- which in turn (especially for LMI residents) increases the demand for energy assistance. However, with funding for energy efficiency programs, residents can insulate their homes properly, and add energy-efficient appliances and systems that drive down energy use. The efficiency programs are long-terms investments for Connecticut residents to live in more affordable, healthier, safer homes.