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The political adage “good people are good policy” is the critical starting point for thinking about clean energy policy goals in state government. Simply put, a newly elected governor may make no more important energy policy decision than his or her appointments for energy adviser, public utility commissioner, and state energy officer. By appointing a diverse set of individuals well-suited to tackling the complex issues in their state’s rapidly changing energy landscape, governors can support their state’s economic growth and good-paying jobs, improve the public health and prosperity of all of their state’s communities, and much more. Understanding the roles of public utility commissions (PUCs), state energy offices, and the governor’s energy adviser is paramount to navigating, crafting, implementing, and ultimately regulating a visionary and equitable clean energy agenda.

In the past two years, governors and other leaders across the country have proven the case that states are leading the nation on clean energy in the absence of federal action and often against strong political headwinds.¹ The evidence for a clean energy agenda is clear: Clean energy jobs are growing; related technology and integration costs are increasingly competitive; the public and investors strongly support these solutions; and extreme weather and other climate impacts have caused more frequent and intense destruction—particularly in communities of color and low-income areas, where vulnerabilities to such impacts are higher.² The scientific case for action on climate change has only grown clearer and more alarming in this time period.³ State leaders have fueled the United States’ growing clean energy economy by outlining ambitious goals and arming utilities, businesses, and consumers with the policies and incentives needed to reach them.

Now, as new governors enter office in several states, they have a vital opportunity—and responsibility—to enact bold and equitable clean energy agendas and put in place the people needed to achieve them. Each state contains a constellation of energy officials who oversee its policy and programs, state and federal funding, and electric utility regulation and planning. To reach strong clean energy goals, governors must recognize the critical importance of certain key positions in state government—in particular, public utility commissioners, state energy officers, and their direct energy advisers. By nominating talented and diverse policymakers and regulators, new governors can use these appointments to signal their policy intentions, formalize collaboration across the many state agencies that influence energy policy, make equity a core aspect of energy planning and policy, and empower those officials to carry out their vision. Equally important, though, is the need to set guiding principles and goals that equip these officials to navigate each state’s political environment and take a proactive stance on clean energy.

Rather than urging governors to adopt a specific set of policies, this report focuses on the thinking, actions, and decisions that frame any discussion of individual state energy policies. It identifies some of the decision points for newly elected governors that may determine progress toward increased clean energy and lower carbon emissions, as well as related benefits, in any state. To do so, the report describes the roles of and relationships among major state energy policy officials, and it outlines guiding principles that will aid governors in selecting and collaborating with their energy officials. Finally, it discusses certain current state-level energy policy debates—areas where incumbent leaders may increase their ambition and new champions may find ideas to incorporate into their clean energy vision.

The principles described in this report draw on the experience of current and former regulators; energy advisers; energy officers; and staff in California, Colorado, New York, Oregon, and Washington, obtained via personal communications with the authors in September and October 2018. Additionally, expert staff at national organizations dedicated to state government and environment organizations shared their expertise through personal communications with the authors in October 2018 The communications are on file with the authors.

In August 2017, the Center for American Progress Action Fund described the clean energy and climate policy stakes in seven gubernatorial races in 2017 and 2018. The authors argued that candidates should take a stand in favor of strong clean energy and climate actions and published an analysis showing that bold leadership in those seven states would approximately double the carbon emission reductions then covered by state-level commitments.⁴ Since that publication, five of those states have elected governors who support taking action on this issue, and this encouraging sign grows even more encouraging when one considers the fact that gubernatorial elections in 36 states just concluded.⁵ If every newly elected governor who pledged action on climate and clean energy as a candidate follows through on that pledge, seven additional states could join the existing cohort of 16 states, which would then altogether cover more than 38 percent of U.S. carbon emissions.⁶ This presents an incredible opportunity for governors to lead with even greater ambition than that seen in the past two years.

The ranks of governors leading the charge on clean energy have also grown. Gov. Ralph Northam (D-VA) and Gov. Phil Murphy (D-NJ), both elected in 2017, have announced ambitious clean energy plans, including legislation, funding, and appointments of key advisers and regulators.⁷ For example, Gov. Northam recently announced the 2018 Virginia Energy Plan, which calls for the deployment of 8,000 megawatts (MW) of solar and wind power by 2022 and directs Virginia’s utilities to invest $115 million per year into energy efficiency programs.⁸ In New Jersey, Gov. Murphy recently signed a law setting a statewide renewable energy standard of 50 percent by 2030—that’s a 2 percent efficiency standard designed to save consumers $200 million on utility bills—and an energy storage goal of 2,000 MW by 2030.⁹

The broader picture of U.S. clean energy progress is very encouraging. Since June 1, 2017, the United States has added enough renewable energy to power more than 3 million homes, and recent analysis of existing binding and voluntary commitments to renewable energy sources at the subnational level forecasts these sources increasing to approximately 500 terawatt-hours by 2025—enough to power 56 million homes annually.¹⁰ Similarly, clean energy jobs grew by 24 percent from 2016 to 2018.¹¹ In September 2018, state, local, tribal, and other leaders gathered in San Francisco at the Global Climate Action Summit to discuss progress toward the Paris Agreement goals, including the U.S. nationally determined contribution of decreasing greenhouse gas emissions by 26 percent to 28 percent below 2005 levels by 2025.¹² U.S. state, local, and tribal government leaders, businesses, and civil organizations have already met half of the overall U.S. target and will likely reach two-thirds of that goal by 2025.¹³ This achievement is remarkable in light of the aggressive rollback of federal environmental protections, but analysts have forecast that U.S. carbon emissions will likely increase if current federal policies go unchecked.¹⁴

The latest scientific report about global climate change clearly indicates that the targets set in Paris do not put the world on a path to limiting climate change to 2 degrees Celsius, let alone the safer limit of 1.5 degrees Celsius. Thus, all leaders, regardless of sector or level of government, must move more quickly to lower carbon emissions.¹⁵ Given the current national political circumstances, progress at the state level has become more important than ever; new governors need to tap talented individuals to aid them in advancing clean energy policy in their states. Fortunately, clean energy solutions exist: They are competitive or less expensive than fossil fuel alternatives, attract investment, save money for consumers, and make money for utilities.

The transition period between Election Day and assuming office provides governors-elect and their staff time to recharge from the campaign, receive briefings on issues facing the state government, translate their platform into policy proposals, and plan appointments and hiring. The transition also enables governors-elect to communicate their management style, the structure of their offices and information flow, and the order of their policy and governing priorities.¹⁶ By announcing the formation of a clean energy Cabinet during the transition, newly elected governors will highlight the importance of climate and energy policy to their agenda; indicate how they plan to manage relevant policies and programs across different agencies, mandates, and budgets; and elevate the issue for senior state officials, the legislature, and the public. Forming a clean energy Cabinet will empower governors, their advisers, their agency leads, and appropriate staff from independent agencies to share information, conduct policy analysis, and manage issues that cross multiple authorities—from equitable access to worker protections in clean energy—all while elevating the stature of clean energy issues outside the regular operation of broader Cabinet meetings.¹⁷

Naming an energy adviser is a critical first step from which additional hiring, policy planning, and enthusiasm for the clean energy Cabinet can follow. Energy policy applies across the jurisdictions and policy areas of multiple state agencies—from transportation and economic development to public health and emergency response, and more. Governors need an experienced and savvy energy adviser to navigate, advise on, and manage programs in these cross-cutting areas. Capable energy advisers may also assess budget and other resource needs; build relationships with the legislature directly; and convene political appointees, independent agency staff, and others to address policy implementation.¹⁸ As a senior adviser to the governor, an energy adviser may assist the formation of the governor’s entire clean energy Cabinet, nominating individuals to lead relevant agencies and later convening those leaders to tackle policy issues together.

To formulate and promote a comprehensive vision for clean energy, governors should move swiftly to communicate the principles that will guide their hiring, management of agencies, and legislative proposals. These principles include broadly shared good governance practices, from exercising fiscal responsibility to maintaining appropriate public engagement and stakeholder processes.¹⁹ In the context of clean energy, those principles must also include an understanding of the political, economic, and even technical structure of the state’s energy system and an ability to discern when to tailor a policy to the existing circumstances or to reshape those circumstances to meet a policy goal. As one example, it is important for a governor and his or her transition team to recognize the market dynamics in a state with large, investor-owned utilities versus one predominantly served by rural electric cooperatives. From that understanding, governors and their energy officials can determine whether to craft policies that match those different utility structures or to guide those utilities into a new policy and regulatory environment. By developing literacy on state energy issues, governors and their energy advisers will more deftly navigate appointments and policy development—matching talent and expertise with ambitious plans.

Promoting clean energy effectively requires raising its stature as a priority across state government agencies—through public and internal communications and coordination with the legislature. By first recognizing the importance of the relationship between the governor’s office and the legislature, a strategic governor and his or her energy adviser will need to manage the complex set of political relationships that shape the budget, any new clean energy legislation, and critical appointments. Building relationships with the legislature’s leadership and key members will aid funding, policy, and personnel priorities. A governor’s initial meetings with those officials presents an excellent opportunity to set his or her clean energy agenda as a legislative priority.

Each state’s executive branch has a varying degree of independence from its legislature to shape policies, fund programs, and perform regulatory duties. To determine the course of these executive branch activities, governors should carefully consider the people they appoint to two key roles: the regulator, or public utility commissioner, and the implementer, or leading state energy official. For both positions, newly elected governors should recognize the benefits gained by hiring or nominating diverse candidates: Hiring for diversity across education, gender, work experience, race, and much more enables decision-making about policies, funding priorities, or what determines a fair regulatory outcome to better reflect the full range of citizens affected. In addition, by emphasizing diversity in hiring, governors can remove biases in state energy planning that perpetuate inequities. The following sections describe how each of these roles carries out the policymaking, funding, and regulatory processes of state government and how they factor into a clean energy agenda.

The regulators: Public utility commissioners

In 37 states and the District of Columbia, governors appoint—and state legislatures confirm—commissioners to the state’s top regulatory position overseeing utilities that provide electricity, natural gas, other energy resources, water, telecommunications, transportation, and other services.²⁰ The incoming class of governors will make up to 60 appointments total to public utility commissions in 2019 alone.²¹ In the remaining 13 states, voters elect utility commissioners outright or—in the cases of South Carolina and Virginia—the state legislatures elect them.²² Whether appointed or elected, commissioners typically have staggered terms so that PUCs remain politically independent and maintain the quorum required to make rulings.²³ This report’s Appendix also indicates which states have vacant commissioner posts in 2019 and the regulatory authorities that each commission covers.*

Public utility commissioners oversee electric utility companies that own and operate systems where physical or other constraints largely limit the service provided to the utility’s control, and historically, these conditions have often prevented competition and made it possible to set unreasonable prices or bias the provision of service.²⁴ For example, a utility’s power lines physically limit the flow of electricity from power plants to homes and thus enable the utilities that own the generators and power lines to raise or lower prices unfairly in the absence of regulation.

In the past several decades, many states have introduced retail competition to state electricity markets, and although those developments have expanded and altered the regulator’s role, commissioners nevertheless remain vital arbiters of fairness, access, and affordability for consumers and providers alike.²⁵ The fundamental responsibility of PUCs remains “to ensure that such services are provided at rates and conditions that are fair, reasonable and nondiscriminatory for all consumers.”²⁶ Citizens and their elected representatives have a stake in safeguarding their PUC’s independence from political, industry, or other influence over decision-making due to the PUC’s authority over the markets, services, and infrastructure that underpin economies and livelihoods.

There is no single ideal utility commissioner. Rather, ideal candidates possess a mix of attributes that enable them to act out of principle in their quasi-judiciary role as regulators. They should have foresight and understanding of the energy system and markets—as well as of environmental and consumer protections—so that they can think and plan alongside utilities and the public in the context of a rapidly changing landscape. An ideal commissioner would manage complex processes with understanding and decisiveness while maintaining his or her independence from undue influence through data, analysis, and direct engagement with stakeholders. Maintaining such independence also requires political skill and an ability to know when best to collaborate or coordinate with state government on issues of energy policy.²⁷

PUCs do not often have the budgetary and staff resources to perform on a level playing field with utilities and advocacy groups coming before them in rate cases or other decision-making processes. PUC funding varies by state but typically comes from fees levied through electricity or other utility rates.²⁸ These fees often have statutory limits, essentially creating de facto budget ceilings for PUCs; by extension, this fact limits their ability to make informed decisions in rapidly changing state energy landscapes.²⁹ Commissioners and staff must often analyze the current actions and potential effects of new market participants, rate structures, and technologies, but they may not have adequate analytical capabilities in-house or resources allowing them to contract with independent outside experts. For example, the Minnesota Public Utilities Commission has a budget of approximately $7.4 million, drawn from “special assessment[s],” or fees, on the utilities it regulates, but the PUC ranks among the lowest in the country in terms of budget amount per staff member as well as total staff size.³⁰ Equally problematic, the Oregon Public Utility Commission receives no funding from the state’s general fund and instead generated an operating budget of nearly $43 million in the fiscal year 2015–2017 budget period through fees in the rate structure.³¹ As part of the transition process, newly elected governors should identify the budget and staffing resources for their state’s PUC and discuss with current commissioners and staff the degree to which those resources sufficiently enable the PUC to conduct analysis in rate cases, planning processes, and beyond. In the event that more resources are needed, governors should prioritize this in overall budget considerations.³²

A PUC’s two major regulatory functions are adjudicating rate cases and managing the utility planning process to meet state energy policy goals. Depending on the state, PUCs have authorities over a broad range of activities: siting power generation units and interstate transmission lines; overseeing utility business mergers and acquisitions; assessing resource adequacy and mix; regulating retail sales and rates to consumers; guiding utility planning; and setting standards for the types of consumers allowed to connect to the grid or provide electricity, among many other elements of electricity distribution.³³ Across this spectrum of activities, governors should encourage current commissioners and those they nominate to take a proactive approach to planning and improving the rate-making process and outcomes rather than maintaining a status quo process that defers to the timeline of utilities petitioning for rate changes.

In many states, PUCs are responsible for reviewing and approving integrated resource plans (IRPs) developed by utilities, including whether a particular IRP serves the public interest.³⁴ Utility and electricity system planning involve yearslong to decadeslong processes due to the cost of investment and the technical, environmental, and stakeholder review needed for major infrastructure projects.³⁵ The comparatively rapid changes in electricity markets may eclipse these planning processes by removing the need for one type of investment and adding others. This has proven true in several recent IRP publications, including the Tennessee Valley Authority’s 2015 plan, which revealed a series of underestimated projections for growth in electricity demand, or in the revelation that an Indiana utility’s 2018 plan presented a strong economic case for renewable generation over existing coal generation even in conditions favorable to coal.³⁶ The IRP process has become a pivotal feature in how utilities respond to changes in state energy policies, such as renewable portfolio standards, that originate in the legislature or governor’s office, but by issuing guidance for IRPs proactively, utility commissions help further shape how utilities navigate the changing electricity landscape.³⁷

Where public utility commissioners are elected, governors should approach the independent regulators by assessing their need for additional resources and the common need to share information on the state’s energy markets. To pursue a proactive clean energy agenda while maintaining PUCs’ independence, governors, their energy advisers, and clean energy Cabinet members should share information—including by submitting formal comments to regulatory proceedings—and invite commissioners to attend meetings as methods of establishing communication for the benefit of the regulator. Including PUCs—at the staff level or commissioners themselves—in processes will aid policy planning and implementation across state government and will introduce PUCs’ perspectives. In the best circumstances, it may even prevent subsequent policy challenges before the commission.

The implementers: State energy officers

The role of state energy officer varies greatly from state to state, but in general, governors appoint them to work directly in the governor’s office or in a relevant state agency such as one that is standalone or one that deals with commerce, economic development, or environmental issues.³⁸ State energy offices fund, finance, and work with legislatures to propose, pass, and implement energy laws and programs.³⁹ They fundamentally differ from PUCs because they typically have little or no statutory authorities and instead utilize state, utility-based, or federal funding for energy efficiency and clean energy programs, including those that benefit low-income families.⁴⁰ As opposed to energy advisers directly in the governor’s office, state energy officers may report up through firmly established state agencies and may thus have less influence on state policy and legislative proposals. Whereas energy advisers help craft and manage a governor’s clean energy vision and utility commissioners ensure fairness in this vision’s implementation, state energy officers fund and shape the implementation and therefore play a crucial role in transforming the state energy system.

Federal funding provides governors a key tool to incentivize and demonstrate the energy policy changes they seek to make more broadly. With this in mind, state energy officers have access to major energy-focused funding streams from the U.S. Department of Energy (DOE) and the U.S. Department of Health and Human Services (HHS). In each case, state energy officers can direct funding or work with third-party administrators to leverage federal dollars into larger partnerships that lead to more effective and further-reaching programs. The three main sources of federal funding to states include DOE’s Weatherization Assistance Program and State Energy Program and HHS’ Low-Income Home Energy Assistance Program (LIHEAP). Together, these funding sources aid governors in providing critical assistance to low-income and other disadvantaged families and in increasing their state’s energy efficiency and clean energy deployment.

• Weatherization Assistance Program: To reduce the energy burden faced by low-income households and vulnerable populations, governors can direct Weatherization Assistance Program (WAP) funds to third parties that deliver essential weatherization services, including improvements to heating and cooling systems, insulation installation, door and window repair, and the installation of efficient appliances and lighting fixtures.⁴¹ In fiscal year 2017, the WAP provided states with more than $186 million to improve the energy efficiency and safety of households across the country.⁴² This funding can have tangible impacts at the state level: Since 2010, Florida has used $12.9 million in WAP funding to weatherize 2,400 homes.⁴³ Eligibility for weatherization assistance is based on state-determined income requirements within DOE guidelines, but households that already receive Supplemental Security Income or Aid to Families with Dependent Children are automatically eligible.⁴⁴

• State Energy Program: Through DOE’s State Energy Program (SEP), governors can utilize technical assistance and federal funding to empower state-led energy initiatives, reduce energy costs and waste, and promote energy security, resiliency, and emergency preparedness.⁴⁵ In FY 2017, states received nearly $38 million in SEP formula grant funding; additionally, DOE awarded $5 million in competitive awards to 16 states and territories for projects ranging from state energy planning and streetlight efficiency upgrades to energy audits and electric vehicle charging infrastructure.⁴⁶ By thoughtfully crafting state annual plans and matching 20 percent of SEP allocations—both eligibility requirements for SEP assistance—state policymakers can act decisively to advance a clean energy agenda and address state-specific energy pr