Transcript Introduction to the ERG Team Outreach Services for the

National
Action
Plan for
Energy
Efficiency
www.epa.gov/
eeactionplan
The Role of Energy
Efficiency in Utility
Energy Planning
Snuller Price
Partner
Energy and Environmental Economics, Inc.
Action Plan Motivation
Efficiency Helps Meets Today’s Challenges
• Environmental
• Utility System Benefits
– Lower carbon emissions and
criteria pollutants
– Lower water use
• Economic
– Savings to customers
– Lower cost (about half)
compared to new G&T
– Downward pressure on natural •
gas prices and volatility
– Improved local economy, using
local labor
– Near-term tool with persistent, longterm benefits
– Improved security of systems
– Lower baseload and peak demand
– Reduce need for “hard to site” G&T
assets
– Targeted, modular, manageable
Risk Management
– Diversifies utility resource portfolios
– Zero carbon emissions
– Benefits low–income, seniors
Quick, cheap, and clean resource
Action Plan Motivation
Persistent Barriers Hinder EE Investments
•
Market barriers
– Split incentives
– Transaction costs
•
Customer barriers
– Lack of information
– Competing vendor claims
– Lack of funding
•
Public policy and utility regulatory barriers
– Lack of good documentation on energy efficiency policy options
– Misperception that energy efficiency is not a guaranteed, reliable cost effective
resource
– Ratemaking policies may financially discourage utilities from investing in
efficiency
– Resources planning processes may not consider energy efficiency resources
•
Program barriers
– Lack of good documentation and education on demand-side programs
– Lack of knowledge about the most effective and cost-effective program portfolios
National Action Plan for Energy Efficiency
Addresses Utility Barriers
National Action Plan for Energy Efficiency
•
•
•
Released on July 31, 2006 at the
National Association of Regulatory
Utility Commissioners meeting
Goal: To create a sustainable,
aggressive national commitment to
energy efficiency through gas and
electric utilities, utility regulators,
and partner organizations
60 member public-private
Leadership Group developed five
recommendations and commits to
take action
•
Commitments to energy efficiency
by over120 organizations
•
Released its Vision for 2025 in
November 2007
Recommendations
1.
2.
Recognize energy efficiency as a highpriority energy resource.
Make a strong, long-term commitment to
implement cost-effective energy
efficiency as a resource.
3.
Broadly communicate the benefits of
and opportunities for energy
efficiency.
4.
Provide sufficient, timely and stable
program funding to deliver energy
efficiency where cost-effective.
Modify policies to align utility incentives
with the delivery of cost-effective energy
efficiency and modify ratemaking
practices to promote energy efficiency
investments.
5.
Action Plan Leadership Group
• Sets tone and overall direction of the Action Plan
• Released Action Plan Report and Recommendations
• Co-Chaired by:
– Commissioner Marsha Smith, NARUC First Vice President and Member
of Idaho Public Utility Commission
– Jim Rogers, Chairman, President and CEO of Duke Energy
• Includes 60 leading electric and gas utilities, state utility
commissioners, state air and energy agencies, energy
services providers, energy consumers, and energy efficiency
and consumer advocates
– US DOE and US EPA facilitated
Leadership Group Members
The Leadership Group includes 30 electric and gas utilities, 18 state agencies,
– PJM Interconnection
and 13 other organizations: – Entergy Corporation
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Alliance to Save Energy
American Council for an EnergyEfficient Economy
Ameren
American Electric Power
Arkansas Electric Cooperative
Corporation
Arkansas Public Service
Commission
Austin Energy
Baltimore Gas and Electric
Bonneville Power Administration
California Energy Commission
California Public Utilities
Commission
Servidyne Systems
Connecticut Consumer Counsel
Connecticut Department of
Environmental Protection
Connecticut Department of Public
Utility Control
Delaware General Assembly
District of Columbia Public Service
Commission
Duke Energy
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Environmental Defense
–
Exelon
–
Food Lion
–
Great River Energy
Idaho Public Utilities Commission –
ISO New England Inc.
–
Johnson Controls
–
Long Island Power Authority
–
MidAmerican Energy Company –
Minnesota Public Utilities
–
Commission
–
National Grid
Natural Resources Defense
–
Council
–
New Jersey Board of Public Utilities
New Jersey Natural Gas
–
New York Power Authority
–
New York State Public Service
–
Commission
North Carolina Air Office
–
North Carolina Energy Office
–
Ohio Consumers' Counsel
–
Pacific Gas and Electric
–
Pepco Holdings, Inc.
PNM Resources
Public Advocate State of Maine
Puget Sound
Sacramento Municipal Utility
District
Santee Cooper
Seattle City Light
Servidyne Systems
Southern California Edison
Southern Company
Tennessee Valley Authority
Texas State Energy
Conservation Office
The Dow Chemical Company
Tristate Generation and
Transmission Association, Inc.
USAA Realty Company
Vectren Corporation
Vermont Energy Investment
Corporation
Wal-Mart Stores, Inc.
Washington Utilities and
Transportation Commission
Waverly Light and Power
Xcel Energy
Observers to the Action Plan
– American Gas Association
– American Public Power
Association
– Association of Energy Engineers
– Business Council for Sustainable
Energy
– Consortium for Energy Efficiency
– Council of Energy Resource
Tribes
– Demand Response Coordinating
Committee
– Edison Electric Institute
– Electric Power Research Institute
– Energy Programs Consortium
– Gas Appliance Manufacturers
Association
– Gas Technology Institute
– National Association of Energy
Service Companies
– National Association of
Regulatory Utility
Commissioners
– National Association of State
Energy Officials
– National Conference of State
Legislatures
– National Council on Electricity
Policy
– National Electrical
Manufacturers Association
– National Rural Electric
Cooperative Association
– North American Insulation
Manufacturers Association
– Steel Manufacturers Association
Energy Efficiency in Utility Planning
• Many reasons to include EE in mid- and long-term resource
planning process
– Develop lower cost plan for providing energy
– Establish framework for resource savings targets
– Set appropriate funding targets
• The value of EE can be integrated into resource planning
decisions
– Energy-related planning (electricity generation and wholesale
purchases) and
– Capacity-related planning (new power plant construction or gas
pipeline).
• Many utilities, states, and regions have experience with
integrating cost-effective EE into resource planning process
– Estimating and verifying benefits from EE
– Successfully integrating EE into the resource planning process.
EE Saves Energy and Capacity
Potential EE-based Savings in California With Increased
Program Funding
Achievable Electricity Savings
(GWh per Year)
Achievable Peak Demand Savings
(MW)
Potential is ~17%, 32%, and 50%
of forecasted GWh growth
Potential is ~3%, 6%, and 10%
of forecasted peak load by 2011
Source: California’s Secret Surplus: The Potential for Energy Efficiency. September 2002. The Energy Foundation. The Hewlett Foundation.
Key Challenges/Steps in Integrating
EE into Resource Plan
• Determining the value of EE
– Energy procurement (estimating and valuing savings)
– Capacity benefits (estimating and valuing savings, factors
in achieving benefits)
– Incorporating non-energy benefits (such as reductions in
GHG emissions)
• Setting targets and allocating budgets
–
–
–
–
–
Quantity of EE to implement
Estimating program effectiveness
Institutional difficulty in reallocating budget
Cost expenditure timing vs. benefits
Ensuring program costs are recaptured
• Measuring impacts and adjusting resource plans
Efficiency Benefits Shown to
Exceed Costs
Primary driver for EE in planning is the low cost of energy
savings.
– Utility cost of EE = $0.01/kWh to $0.03/kWh
– Utility program costs and customer costs = $0.03/kWh to $0.05/kWh
– Benefits for electric EE = $0.06/kWh to $0.08/kWh
Levelized Costs and Benefits from Four Regions
Overall Organization of the Guide
Potential Studies
(Section 1)
Potential Studies
Section 1
Portfolio Development and Reporting
(Section 2 to 7)
Development of
Avoided Costs
Development of
EE Measures
Section 2
Section 3
Determining CostEffectiveness
Section 4
Procurement, Measurement,
and Verfication
(Section 8 and 9)
Procurement of
EE Services
Section 8
Evaluation,
Measurement and
Verification
Section 9
Development of
EE Programs and
Portfolios
Section 5
Estimating EE
Impacts for
Resource Panning
Best Practices
(Section 10)
Best Practices
Section 6
Section 10
Reporting EE
Impacts for
Resource Planning
Section 7
Assessing Cost-Effective Potential and
Determining Achievable Energy Savings
• Well-designed EE potential studies assess 5 types of potential:
– Technical and Economic potential - Estimates the size of the EE
resource in MW, MWh or MMBtu.
– Maximum Achievable potential – Estimates the economic potential
achieved over a given time period in the most aggressive program
scenario.
– Achievable potential – Estimates energy saved resulting from
specific program funding levels and incentives that are beyond
those that would occur naturally.
– Naturally Occurring potential – Estimates energy saved as a result
of normal market forces.
• Many states and utilities use a cost-effectiveness test that
reflects the long-term benefits of EE
– Total Resource Cost Test
– Societal Test
Definitions of Energy Efficiency
Potential
Not technically
feasible
Technical Potential
Not technically
feasible
Not cost
effective
Not technically
feasible
Not cost
effective
Market and
adoption
barriers
Not technically
feasible
Not cost
effective
Market and
adoption
barriers
Economic Potential
Market Potential
Program design,
budget, staffing and
time constraints
Program
Potential
Typical Components of Avoided Costs
Avoided Component
• Electricity Energy (with losses)
• Electricity Capacity (with losses)
• Natural Gas Commodity (with losses)
• Natural Gas Capacity (with storage, and compression)
Other Components
• Ancillary Services
• Transmission and Distribution Capacity
• Air Emissions (including greenhouse gas emissions)
• Hedge of Fossil Fuel Prices
• Price Effect of Demand Reduction
• Savings in water, fuel oil, or other value streams
Standard Practice Manual Cost Tests
• Utility Cost Test (Program Administrator Cost)
– Change in Revenue Requirement
• Ratepayer Impact Measure
– Impact on rates and non-participants
• Total Resource Cost
– Total monetized community costs
• Societal Cost Test
– Total monetized and non-monetized costs
• Participant Cost Test
– Participant finanical picture
Questions Addressed by the Various
Cost Tests (1/3)
Cost Test
Questions Addressed
Participant Cost Test
Is it worth it to the customer to
install energy efficiency?
Is the customer likely to want to
participate in a utility program
that promotes energy efficiency?
Ratepayer Impact
What is the impact of the energy
efficiency project on the utility’s
operating margin?
Would the project require an
increase in rates to reach the
same operating margin?
Questions Addressed by the Various
Cost Tests (2/3)
Cost Test
Questions Addressed
Utility Cost Test (also called Program
Administrator Cost Test)
Do total utility costs increase or
decrease?What is the change in total
customer bills required to keep the utility
whole (the change in revenue
requirement)?
Total Resource Cost Test (TRC)
What is the regional benefit of the
energy efficiency project including the
net costs and benefits to the utility and
its customers?
Are all of the benefits greater than all of
the costs (regardless of who pays the
costs and who receives the benefits)?
Is more or less money required by the
region to pay for energy needs?
Questions Addressed by the Various
Cost Tests (3/3)
Cost Test
Questions Addressed
Societal Cost Test
What is the overall benefit to the
community of the energy
efficiency project, including
indirect benefits?
Are all of the benefits, including
indirect benefits, greater than all
of the costs (regardless of who
pays the costs and who receives
the benefits)?
Determining the Value of EE
Estimating energy benefits
• Standard practice analysis compares costs of EE resources to costs
of the displaced resources, ‘avoided cost’
– Forecast expected future costs with and without EE resources
– Estimate the level of savings EE resources will provide
– Analysis can be conducted with a variety of levels of sophistication
depending on metric used to compare alternate resource plans
• Databases provide EE savings from a variety of common measures
– Northwest and California maintain public databases of cost and
performance, other jurisdictions also have a history of data
• Well-established approaches address measurement issues such as
free-riders and improvements in EE that happen anyway.
• Value of energy savings can be benchmarked against price of
wholesale electricity or gas, or deferred cost of new power plant.
• Utilities can use same techniques and assumptions for EE avoided
costs as they use to forecast long-term market prices
Determining the Value of EE
Estimating capacity benefits
• Apply capacity savings to load growth forecasts
– Determine amount of capacity reduced by EE during
critical/peak hours
– Estimate the “equivalent reliability” of the load reduction.
• Value capacity savings
– Cost of not building or purchasing new infrastructure, or
– Capacity markets payments for system reliability.
• Requires close coordination between efficiency and
resource planners
– Needed to ensure specific investments can actually be
deferred as a result of EE programs.
Determining the Value of EE
Incorporating non-energy benefits
• Value of non-energy benefits are less common in
resource planning
–
–
–
–
Environmental costs (growing popularity)
Support for low-income customers
Economic development
Customer satisfaction and comfort
• Several utilities incorporate the estimated future costs of
CO2 emissions into their resource planning process
– Addresses financial risks associated with future regulatory
changes
– California’s assessment of EE includes costs of CO2: $8/ton
in 2004 escalating 5% per year.
– Examples: Idaho Power, Pacificorp, Xcel, Avista and
Portland General Electric
Allocating Budgets
• Common barrier to EE is developing a budget to fund
programs.
• Action Plan Recommendation:
– Provide sufficient, timely, and stable program funding to
deliver EE where cost-effective.
• Two common approaches for funding EE:
– Resource planning processes
• If EE is a resource, the EE funding will be allocated through
planning process based on cost-effectiveness, portfolio risk,
energy and capacity benefits, etc.
• Cost recovery mechanism should be included to ensure
recover EE spending.
– Public goods-funded charges
• Collected in rates.
• Separates the EE budget from the planning process.
Reporting Energy Efficiency Impacts
for Resource Planning
• Resource plan documents are an increasingly important source
of information on energy efficiency impacts that can be used to
measure progress toward state, regional or national energy
efficiency goals or greenhouse gas (GHG) reduction targets.
• Regardless of the methods used to forecast the energy and
capacity impacts of energy efficiency programs, they should be
reported clearly and consistently.
• Two key concepts—total resource requirements and net
resources for load—can help distinguish energy efficiency
impacts in load forecasts.
• A spreadsheet tool to facilitate the reporting and accounting of
loads and resources in the resource plan, with adaptable data
reporting forms and tables, is available at:
http://eetd.lbl.gov/ea/EMS/rplan-pubs.html
Tracking Energy Efficiency Resources
in Load Forecasts
resource plan analysis period
Load Forecast
unadjusted load
forecast:
total resource
requirements
plan-period EE program impacts
net
resources
for load
plan start date
status-quo EE program impacts
other EE impacts (e.g., codes, standards)
load met with supply-side resources
(not to scale)
plan end date
Note: Energy Efficiency in Western Utility Resource Plans: Impacts on
Regional Resource Assessment and Support for WGA Policies can
be downloaded at http:eetd.lbl.gov/ea/EMS/rplan-pubs.html
Procurement of Energy Efficiency
Services
•
•
•
The program administrator in many states will be the utility, but in some
states, it is the state energy agency or a third party.
Program administrators typically procure various types of energy
efficiency services from contractors (e.g. consultants, vendors,
engineering firms, architects, academic institutions, community-based
organizations), as part of managing, implementing, and evaluating their
portfolio of energy efficiency programs.
In order to utilize contractors effectively, a program administrator
should consider issues related to the scope of functional
responsibilities of contractors, methods to stimulate innovative new
program concepts and designs, the types of performance risks that
should be borne by contractors, and alternative procurement methods
(e.g. competitive solicitations involving Request for Qualifications or
Request for Proposals, or partnership arrangements with contractors).
Potential Roles of Third-Party Contractors in
Providing Energy Efficiency Services and
Savings
Program
Development
Program
Administration
& Management
Program
Delivery &
Implementation
Market
Assessment &
Program
Evaluation
Broad-based solicitation
(covers all market segments)
Procurement
of
EE Services
Targeted solicitation for new program concepts
Competitive solicitation
Partnership
arrangement
Procurement
of
EE Savings
DSM bidding
Standard Performance Contract
Competitive
solicitation
Evaluation, Measurement and
Verification (EM&V)
• Evaluation, measurement, and verification (EM&V) is
the process of determining and documenting the
results, benefits, and lessons learned from an
energy-efficiency program.
• A rough rule of thumb is to spend 2-5% of the energy
efficiency budget on EM&V activities. The specific
funding level is a function of the scope and purpose
of EM&V and the scale of the efficiency program. It
also depends on whether EM&V is conducted at the
level of the individual utility or statewide.
EM&V Consists of Three Main Types of
Activities
•
•
•
Process evaluation: Used to verify whether the program was
(or is being) correctly implemented, and to understand any
problems or issues that arose (or may arise) in program
implementation. Customer feedback and acceptance
information can also be part of process evaluation. All energy
efficiency program categories can have process evaluations.
Impact evaluation: Used to determine the actual savings
achieved by different programs and specific measures.
Market effects evaluation: Used to estimate a program’s
influence on encouraging future energy efficiency projects
because of changes in the energy marketplace. All categories
of programs can have market effects evaluations, however
these evaluations are primarily associated with market
transformation programs that indirectly achieve impacts.
Best Practices
• Coordination between different energy efficiency
planning functions can improve the accuracy and
confidence of energy efficiency projections. Areas to
improve coordination include:
– Potential studies and utility energy efficiency resource plans
should be coordinated, or at a minimum, there should be an
understanding of differences;
– Supply-side resource investment decisions should made in
coordination with forecasted energy efficiency impacts;
– Evaluation, Measurement and Verification results should be
used to adjust expected future energy efficiency measure
and program impacts, with improved assumptions on
program participation, net to gross ratio, expected useful life
and other factors.
Resources and Next Steps
• National Action Plan for Energy Efficiency: The Report
– Covers key barriers and policy options for EE in resource planning, utility
revenue requirements, rate design and program implementation.
– Chapter 3: Energy Resource Planning Processes.
• Guidebook on Energy Resource Planning and Procurement
Processes: Integrating Energy Efficiency (Forthcoming – Spring 07)
– A ‘How-to-Guide’ that walks through important methodology and data
input assumptions for incorporating EE in the resource planning
process.
– Will list important sources of data that are commonly used to develop
the necessary data and information.
• Clean Energy-Environment Guide to Action
– A resource document for state air, energy and utility officials and other
stakeholders that details 16 policies and strategies that are delivering
economic and environmental results for states
– Chapter 6.1: Portfolio Management Strategies.
– www.epa.gov/cleanenergy/stateandlocal/guidetoaction.htm
For More Information
www.epa.gov/eeactionplan
Speaker’s contact information
Snuller Price
[email protected]
(415)391-5100
Katrina Pielli
[email protected]
(202) 343-9610
Larry Mansueti
[email protected]
(202) 586-2588
Overall Organization of the Guide to
Resource Planning with Energy Efficiency
Potential Studies
(Section 1)
Potential Studies
Section 1
Portfolio Development and Reporting
(Section 2 to 7)
Development of
Avoided Costs
Development of
EE Measures
Section 2
Section 3
Determining CostEffectiveness
Section 4
Procurement, Measurement,
and Verfication
(Section 8 and 9)
Procurement of
EE Services
Section 8
Evaluation,
Measurement and
Verification
Section 9
Development of
EE Programs and
Portfolios
Section 5
Estimating EE
Impacts for
Resource Panning
Best Practices
(Section 10)
Best Practices
Section 6
Section 10
Reporting EE
Impacts for
Resource Planning
Section 7
Potential Studies
Key Questions for Utilities and Regulators
• What is this potential study’s goal? Does it achieve
that goal?
• Are the potential study results realistic, reflecting
what we are likely to achieve through energy
efficiency programs?
• How do the results of this study compare to the
results for other jurisdictions?
• Does the potential study highlight any new
opportunities to add to the efficiency portfolio?
Development of Energy Efficiency Measures
Key Questions for Utilities and Regulators
• Are we missing any good energy savings opportunities?
• Have we developed measures and programs that provide
savings to the range of residential, commercial, industrial,
agricultural and other energy user types? For example, do we
have measures to address the harder to reach customers such
as low-income and small commercial customers?
• Do we have a mix of measures so that we are able to reach
customers at different stages of the energy efficiency purchase
decision? (New construction, retrofit, replacement of failed old
equipment, early replacement to high efficiency devices, etc.)
• Have we considered the way that energy efficiency measures
can be integrated together into a comprehensive approach that
considers the interactions and potential for overlap between
measures?
Determining Cost-Effectiveness
Key Questions for Utilities and Regulators
• What perspective(s) should we use to
determine cost-effectiveness?
• Have we defined the appropriate costs and
benefits to get the right program trade-offs?
• Are we using the correct discount rate?
• Do we have a Standard Practice Manual for
determining cost effectiveness of energy
efficiency to ensure that the criteria used are
transparent to stakeholders?
Development of Energy Efficiency
Programs and Portfolios
Key Questions for Utilities and Regulators
• Have we developed a program that is costeffective, achieves energy savings, and
meets other criteria appropriate for our
service territory?
• Does the portfolio of programs reach all of
the customer classes and consider all of the
energy efficiency opportunities?
Estimating Energy Efficiency Impacts
for Resource Planning
Key Points for Utilities and Regulators
• Do the estimates, especially of peak
reductions, reflect the unique
characteristics of our region?
• Do the estimates reflect expected or
overly optimistic levels?
Reporting Energy Efficiency Impacts
for Resource Planning
Key Questions for Utilities and Regulators
• Are energy efficiency impacts reported clearly
enough that an outsider could easily
distinguish energy efficiency load impacts
from load met with supply resources?
• Does the resource plan provide enough
information to determine my utility’s progress
toward energy efficiency or GHG goals or
targets?
EE Services Procurement
Key Questions for Utilities and Regulators
• What functions are most appropriately done
by a program administrator and/ or
contractors, so as to guide staffing and
contracting needs?
• Does the approach used by a program
administrator in procuring energy efficiency
services contribute to the longer term goal of
creating a vibrant, private sector energy
efficiency services industry?
Evaluation, Measurement and
Verification (EM&V)
Key Questions for Utilities and Regulators
• Do we have the appropriate protocols for EM&V?
• Is responsibility for conducting EM&V clearly
assigned, and is its independence assured? Have we
assured that the EM&V analysis and results will be
transparent and robust?
• Do we have the right level of resources allocated to
EM&V?
• Are retrospective EM&V results being used to
improve programs and determine cost-effectiveness
in the planning phase?
Best Practices
Key Questions for Utilities and Regulators
• Is each energy efficiency function
coordinated with other energy efficiency
planning processes to take advantage of
available information?
• Are EM&V results being used to improve
program designs and accuracy of savings
forecasts?
• Are expected peak load savings incorporated
into estimates of avoided capacity costs?
Overcoming Challenges
• Highlights of successful incorporation of EE
in planning processes.
– California
– Bonneville Power Administration
– New York
– Minnesota
– Texas
– Pacificorp
Successful Incorporation of EE into
Planning Processes
California
• Active energy efficiency program since the 1970’s led by
utility programs and building standards.
• Current utility budget for EE is $2 billion over the next 3
years (’06 to ’08) (pop. ~ 35 million).
• Aggressive targets for MWh and MW reductions.
• Utilities have decoupling to separate revenues from
throughput, development of shareholder incentives for EE
is underway at the CPUC (decision in 2007).
• Cost-effectiveness favors EE in high cost locations, and
for improvement in end-uses that contribute to peak.
Successful Incorporation of EE into
Planning Processes (2)
Bonneville Power Administration (BPA)
•
•
•
•
•
BPA operates the federal power system and transmission and serves
Local Distribution Companies (LDC’s) throughout the Northwest.
Integrated planning of transmission and distributed energy resources
(DER) including energy efficiency.
BPA is active in pilot projects to defer transmission investment,
savings on transmission can be used to promote DER.
– EE, distributed generation, load shifting, and dynamic pricing
Established ‘Roundtable’ that includes BPA, LDCs, NWPCC,
environmental groups, and others to coordinate planning and address
barriers of EE and DER.
Open process with data and reports available publicly.
– Stakeholder Groups
– Project reports on studies of ‘non-wires’ DER solutions to BPA
transmission projects
Successful Incorporation of EE into
Planning Processes (3)
New York
• Energy efficiency programs managed and delivered by the
New York State Energy Research and Development.
Authority (NYSERDA) since utility restructuring in the mid
1990’s.
• Program budget funded primarily by System Benefits Charge
(~$175 million / year) collected by utilities.
• State management of EE removes disincentives associated
with decreasing utility throughput.
• Cost-effectiveness based on forecasts of energy and
capacity market in New York, and measurement and
evaluation (M&V) of utility programs.
Successful Incorporation of EE into
Planning Processes (4)
Minnesota
• Conservation Incentive Program (CIP) established in 1982,
1.5% to 2% of utility revenue to be spent on EE at a minimum
for electric utilities, 0.5% for natural gas utilities.
• Utilities develop integrated resource plans (IRPS) every two
years and manage EE programs.
• Plans and targets are approved by the Department of
Commerce, and financial incentives are provided to utilities that
exceed goals.
• Minnesota utilities have been exceeding targets for the last
several years.
Successful Incorporation of EE into
Planning Processes (5)
Texas
• Texas law (Senate Bill 7, 1999) requires utilities to offset a
minimum of 10% of the growth with EE.
• Utilities hire 3rd party EE companies to implement the programs,
and make payments based on ‘deemed’ savings amounts for
each installation.
• Program costs are allowed in utility rates.
• Efficiency program cost-effectiveness is determined by avoided
costs of energy and capacity set by statute.
• Annual reporting of past success and future plans, programs
have been exceeding established targets.
Successful Incorporation of EE into
Planning Processes (6)
Pacificorp
• Utility that serves 1.6 million customers in Utah, Oregon,
Wyoming, Washington, Idaho, and California.
• Utility incorporates EE as an element in the resource planning
process and supply portfolio. This allows:
– Establishing specific targets to defer generation supply, increases
value to EE that saves peak
– Evaluating costs of EE against savings of specific projects
• Included in supply planning tools as a shaped reduction in the
forecasted load.
• 2004 10-year plan includes 250 aMW of EE with an additional
200 aMW if cost-effective.