Indiana Governor’s Inaction Results in First Rollback of Energy Efficiency Standards in the Nation

Indiana State Capitol, Source: David Schwen

Indiana State Capitol, Source: David Schwen

At the end of March, the Indiana legislature passed a bill repealing the state’s energy efficiency standard, becoming the first state in the nation to roll back its energy savings goals. Governor Mike Pence could have signed the bill into law or he could have vetoed it. He did neither; instead, the bill became law because he took no action within the prescribed time period. His statement as to why he allowed the bill to become law left us scratching our heads.

Here’s what he said:

“I could not sign this bill because it does away with a worthwhile energy efficiency program developed by the prior administration. I could not veto this bill because doing so would increase the cost of utilities for Hoosier ratepayers and make Indiana less competitive by denying relief to large electricity consumers, including our state’s manufacturing base.”

Governor Pence admits that energy efficiency saves money on ratepayers’ electricity bills. He’s right, according to a March 2014 study by the Lawrence Berkeley National Laboratory, which reviewed 1,700 energy efficiency programs in 31 states over a three-year period and revealed that the average cost for procuring the energy efficiency savings was 2.1¢ per kilowatt-hour – five times less expensive than the 10.13¢ per kilowatt-hour customers pay for electricity.

Governor Pence’s disregard for energy efficiency is part of a larger trend in the Midwest to roll back clean energy standards. Ohio is the latest battleground, where S.B. 310, which would freeze Ohio’s energy efficiency and renewable energy standards at 2014 levels, is currently being considered by Ohio legislators. These bills and other similar bills around the country are backed by the Heritage Foundation and the American Legislative Exchange Council, front groups and model bill factories for many corporate interests including oil, gas, and coal.

So why, exactly, did Governor Pence allow this bill repealing the energy efficiency standard to become law? Maybe he was listening to large industrial companies, who often oppose energy efficiency standards because they have engineers on staff who can design their own energy efficiency programs. As a result, these large companies don’t need to rely on energy efficiency programs managed by the electric utilities. But repealing the law hurts residential customers and small businesses which do not have the luxury of employing their own engineers to develop personally-tailored energy efficiency programs. If small businesses are the biggest job creators in our economy, does it make sense to take away the energy efficiency programs which allow them to save money on their electricity bills?

One thing we know for certain is that energy efficiency makes good sense. But Governor Pence’s failure to veto the bill – not so much.  As Dante said when describing the nine circles of hell in The Inferno,"[t]he hottest places in hell are reserved for those who, in time of great moral crisis, maintain their neutrality."

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