State energy efficiency programs face the chopping block

Both New York and Massachusetts this year have slashed budgets for their energy efficiency programs, and now a third state is poised to.

What’s happening: Rhode Island Energy, the state’s dominant power utility, is proposing funding cuts to its energy efficiency plan for 2026 — budgeting 18 percent below last year’s level and $42 million less than initially projected in 2023. 

• The plan includes a range of HVAC-focused elements, including weatherization and equipment replacement programs. 
• The utility will, however, continue its efforts to recruit and upskill contractors and encourage heat pump conversions.

The big picture: All three states’ cuts follow the Trump administration’s decision to eliminate federal, HVAC-focused tax credits at the end of this year, as part of the ‘big, beautiful bill’ signed on July 4.

• Meanwhile, the Department of Energy and the EPA, through which federal funds to state energy programs often flow, face a proposed nine and 54 percent budget cut, respectively, for fiscal 2026.

Zoom out: Rhode Island has historically been a leader in energy efficiency initiatives, but its residents this year have been protesting high energy bills. The state has the sixth most expensive electricity rates in the country, according to federal data from 2023. 

• Governor Dan McKee has been pushing to cobble together $200 million in savings for customers’ energy bills. A $155 million legal settlement meant to give ratepayers credits on their bills over 30 years will now be expedited and applied over the next two years. 
• “Customer bill affordability is a key priority for the 2026 Energy Efficiency Plan,” the utility stated in a draft plan. 

The other side: Nonprofit Acadia Center noted in an analysis that the state’s proposed cuts could put 833 jobs at risk and make customers’ electric and gas bills more expensive in future years, while Canary Media reported that the cuts would save the average household just $1.87 per month. 

What we’re watching: Rhode Island’s Energy Efficiency Council is expected to consider the proposal on Thursday, before sending it to the Public Utilities Commission for final approval, the Providence Journal reported.