Energy Efficiency Mandates

What Are They About?

Do They Work?

2009 NASUCA Mid-Year Meetings

Cynthia Mitchell, Principal

Energy Economics Inc.

DOE’s 2006 National Action Plan for Energy Efficiency “NAPPE”

“Modify policies to align utility incentives with the delivery of cost-effective energy efficiency, and modify ratemaking practices to promote efficiency investments.”

Energy Independence and Security Act of 2007 “EISA”

Modified PURPA 1978 to promote EE investments• Align utility incentives with the delivery of cost-

effective EE• Remove the throughput incentive (aka “lost

revenues”)• Provide additional utility incentives

American Recovery and Reinvestment Act of 2009

• “Ensure utility financial incentives are aligned with helping customers use energy more efficiently.”

• “Provide timely cost recovery and timely earnings opportunity for utilities with cost-effective measurable and verifiable energy savings.”

Back to the Future• CA decoupling; 2007 net benefits /shared

savings IOUs 9 – 12% sharing rate• Jim Rogers, Duke Energy net benefits / shared

savings IOU 80% sharing rate• Arkansas: decoupling; lost revenues; addtl.

utility incentives• New Mexico: decoupling; 1 cent kWh & $10 kW

lifecycle EE savings paid in Year 1.

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

1975 1978 1981 1984 1987 1990 1993 1996 1999 2002

GW

h/Y

r

--15% of Annual Electricity Use in California in 2003

Utility Efficiency Programs

Appliance Standards

Building Standards

CA Cumulative Energy GWh Savings: Utility EE Programs and Bldg. & Appliance Standards

Per Capita Electricity Use in the U.S. and CA: 1960-2004

March 2009 PUF Article

CA electricity per capita consumption: correlation or “cause and effect”

• < 20% energy efficiency savings • > 20% CA electricity prices • 20% CA moderate cooling season

Trend: decrease industrial energy intensity; larger households; more MF dwellings; “conservation ethic”

CA Cumulative Energy GWh Savings: Utility EE Programs and Bldg. & Appliance Standards

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003

GW

h/Y

r

--15% of Annual Electricity Use in California in 2003

Utility Efficiency Programs

Appliance Standards

Building Standards

Re-ordered CA Cumulative Energy GWh Savings: Utility EE Programs and Standards

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003

Sa

vin

gs

(G

Wh

/Yr)

Utility Efficiency Programs

Building Standards

Appliance Standards

Let’s Talk CFLs….

• Wal-Mart effect • Market transformation • CFL quality: utilities vs. “Wal-Mart” • Legislative phase-out incandescents • Ratepayers as consumers pay 2 times+• Residential lighting largely winter off peak• Negative interactive effects

What is (?) Working

• Efficiency Vermont 1990; Efficiency Maine 2002; Delaware Sustainable Energy Utility 2007

• Northwest Energy Efficiency Alliance (NEEA); Northeast Energy Efficiency Partnership (NEEP); Midwest Energy Efficiency Alliance (MEEA)

• State public – private partnerships: Connecticut, Illinois, Maryland, Minnesota, New Jersey, New York; Ohio

Closing Thought: FINANCING!

We currently have on-bill financing for power plants, and T&D.

We must be able to pay for energy efficiency and other sustainable resources in a similar manner.