Norwich lights way as Connecticut starts to push gas heat
Norwich – Paul Blanchard’s heating system is purring like a kitten. OK, a very large kitten.
But to him, it’s the sound of music.
Before last winter that same system ran on oil. Now a new burner attached to his boiler runs on natural gas.
“It’s the best thing we ever did,” said the retired banker, who added that he didn’t miss the smell of the oil that inevitably dripped in his basement. And the $1,200 to $1,300 he typically paid for oil: “I paid less than half of that last year with natural gas,” he said.
Blanchard’s conversion happened through a program run by Norwich Public Utilities (NPU) — one of a handful of municipal utilities in the state. The rest of the state, most of which gets power from the major utility companies, will have its own gas expansion program – slated to be finalized this week by the Public Utilities Regulatory Authority.
That program is part of the state’s Comprehensive Energy Strategy, which calls for converting 280,000 homes and businesses to gas heat from oil and other fuels in the next 10 years. The goal is to take advantage of a fuel that, while not renewable, is cleaner than other traditional energy sources such as oil — the most widely used fuel in Connecticut.
New domestic and Canadian reserves of natural gas have also made it significantly cheaper than oil in the last few years -– though prices have increased steadily since last winter and are forecast to continue rising. New England natural gas prices are predicted to remain, the highest in the nation, as they’ve been for decades. While pricing concerns and continued reliance on a fossil fuel have spurred in criticism from those who think the state is too focused on natural gas, the program is going ahead.
And some are thinking Norwich’s program — Energize Norwich — could become a model for the state program. But while Energize Norwich offers lessons on community outreach and collaboration for getting new gas customers, one of its key financial underpinnings is not likely to be replicated.
Both programs put the burden of converting heating equipment in a home or business on the owner. But unlike the state program, NPU is absorbing the cost of extending the gas lines. The state program in its draft final version put that cost on new customers in the form of a surcharge for 10 years.
“I think they’ve overdone that and the proposal they’ve put forward needs to be refined in order to insure that we’re not overdoing that emphasis on new ratepayers,” said Department of Energy and Environmental Commissioner Dan Esty of PURA’s draft decision. “The existing ratepayers need to pay a fair share.”
In Norwich, however, there will be no extra charges – due in no small part to the fact that a municipal utility is running the show. In fact all the shows. NPU has all 22,000 electric customers in Norwich plus anyone who’s on municipal water, sewer and/or gas. That makes it easy to co-ordinate projects so a road only gets dug up once.
“We can couple in new gas main extensions where water mains are being replaced or where sewer mains are being repaired or sewers are being extended,” said John Bilda, NPU’s general manager.
That’s how the gas conversion project got started, Bilda said — piggybacking off a sewer extension. Residents were asking for gas lines as well, but there was not enough money. So in November 2010, the city put a $3 million bond proposal to fund the gas project before the voters.
They said yes.
And they said yes again in November 2012 for even more money — $8 million -– for gas conversion.
Even with gas line extensions costing about $1 million per mile, Bilda said there’s no need to charge extra. Just having new customers –- about 1,000 on line or under contract since 2010 -– provides enough income to pay off the bond, he said.
And there’s no additional overhead to service them, since they’re already electric customers.
“If we added 100 new gas customers, that doesn’t mean we have to hire a new meter reader,” Bilda said. “Our meter readers are already going to every one of those homes to read the electric meter.”
But Esty had a one word answer for whether the state would consider a similar bonding mechanism to finance a gas line build-out: “No.”
“The state has got a ceiling on what it can do in the way of bond support and bond funding,” he said. “We have to look at other ways to do this from a state point of view.”
In Norwich, the key to extending the lines is critical mass –- at least one customer for every 200 feet of gas main. And the lessons NPU learned on how to achieve that could be valuable to the rest of Connecticut.
Norwich learned that even the prospect of a 40 percent or more reduction in heating costs, no cost for the lines and $1,000 toward new home heating equipment wasn’t enough to get the numbers of new residential customers they needed.
After a balky couple of years, NPU turned to the Clean Energy Finance and Investment Authority, the state’s “green bank,” and an organization it had partnered with called SmartPower, a nonprofit clean and renewable energy marketing company.
Together CEFIA and SmartPower drew on a model they had used called Solarize Connecticut, to reshape NPU’s outreach and financing.
The Solarize model relies in part on word-of-mouth and community grass-roots messaging. As low tech as it may sound, it has shown a New Age version of keeping-up-with-the-Joneses can motivate neighbors to embrace clean energy and efficiency upgrades.
Because Energize Norwich requires neighborhood participation or the gas mains wouldn’t be extended, it seemed like a no-brainer strategy, said Bob Wall, CEFIA’s associate director of outreach.
“The word really gets around when people are excited about something they’ve done with their home,” Wall said. “They tend to be more credible ambassadors of the opportunity than the utility or state or somebody who stands to make a profit off the venture.”
A new way to pay
For the Norwich program, CEFIA also pioneered a new financing model — the Smart-E loan. It’s unsecured, low interest and can be used for a wide range of clean and renewable energy and efficiency upgrades and equipment. The payback can run as long as 12 years, and the loans range from $3,000 to $25,000. It launched in April 2013 with Eastern Savings Bank and CorePlus Federal Credit Union and now is available through nine lenders statewide.
“People have been motivated to take action, but when it comes time to pay for those improvements, things often break down,” Wall said. “The goal is to arrive at something that will allow the savings realized from the energy upgrades to be greater than the amount of the monthly payments.”
But just having a program and a financial product didn’t necessarily translate into takers. That’s where the marketing expertise of SmartPower came in.
“It’s not enough, I don’t believe, to just have a loan product sitting out there. You actually have to figure out how to drive people to ask the question,” said Toni Bouchard, SmartPower’s chief operating officer. “That’s most likely to happen when people around them have actually started talking about it, and that’s the power of that community approach.”
That’s the lesson for the state as it moves forward with gas conversion, Bouchard said. “A lot of times people think it’s too micro; it’s not going to actually matter,” she said. “But in fact it’s exactly where it matters. When you can make it happen in small locations and people see the power of that, the rate of adoption really increases a lot.”
The micro part in Norwich fell to Bambi Poppick, the community outreach manager for Smartpower.
Since late August she has been on the ground masterminding meetings, coffees and physically going door-to-door. Norwich also has vetted contractors available to do the work, though residents have the option of using any contractor. And they’ve found setting deadlines for signing up also increases participation.
Typical of Poppick’s outreach was a recent meeting at the Yantic Firehouse, to gauge natural gas conversion interest on tandem with a planned water main upgrade.
Among the three dozen residents attending were Eugene Freaner and his neighbor Steven Ross who had already been canvassing their neighbors. “We came up with about six to eight of us who are willing to do this,” Freaner said. “We’re bringing material back to them.”
But some neighbors already said no. “A couple of the young ones did because they’re burning wood. That’s fine until you get up into our age group,” chuckled Freaner, who is 72. “That gets really old.”
But for residents in areas not being targeted for other utility work, the lift can be a little harder. John Mandeville would like to convert, but with his home at the far end of a street, his neighbors would have to convert, too.
Two have already said no. “They’re afraid of gas,” Mandeville said. “I’m from an old neighborhood, and a lot of these people don’t want to change.”
But he’s willing to do the legwork. Otherwise, he laughed: “I will be stuck with oil until the day ends.”
But Lorrie Herz was not thrilled about rounding up neighbors to get gas on her street. “That’s the one thing that’s putting me off right now,” she said. “But if I don’t have to do a lot of the legwork I’d be very excited if they could convince some people.”
But for Paul Blanchard, the work he did rounding up neighbors to get the gas main down his street more than a year ago was worth it even beyond the lower heating bills. He sold his old oil burner and got paid for his oil tank as scrap metal. “I made $200 on the deal,” he said. “It was a phenomenal deal. It was a win-win for everybody.
“It’s just been a complete home run.”
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