Energy Efficiency Resource Standards Lowell Ungar Director of Policy Alliance to Save Energy

Presentation Outline Utility and State Efficiency Programs State-level EERS programs Federal EERS—Issues Scope and Targets Trading and alternative compliance EM&V and Administration Efficiency in an RES

Utility and State Efficiency Programs

State-level EERS programs

Federal EERS—Issues

Scope and Targets

Trading and alternative compliance

EM&V and Administration

Efficiency in an RES

Utility Energy Efficiency Programs Help customers save electricity or natural gas Many kinds of programs Consumer education Technical training Energy audits Appliance rebates Financing $3.7 billion in 2008

Help customers save electricity or natural gas

Many kinds of programs

Consumer education

Technical training

Energy audits

Appliance rebates

Financing

$3.7 billion in 2008

Why Should Ratepayers Fund Energy Efficiency? Because it’s cheaper, quicker, and cleaner than providing more energy Demand-Side Management (DSM) avoids 30 GW of peak load—about 100 power plants Reported cost of about 3-4 cents per kWh

Because it’s cheaper, quicker, and cleaner than providing more energy

Demand-Side Management (DSM) avoids 30 GW of peak load—about 100 power plants

Reported cost of about 3-4 cents per kWh

Program Opportunities Energy Efficiency Potential 40% Adapted from McKinsey Analysis

Energy Efficiency Resource Standards (EERS) Electric and natural gas utilities required to achieve set level of customer energy savings Similar to a Renewable Electricity Standard (RES) Complements other policies to spur utility programs Public Benefits Fund Integrated Resource Planning Competitive bid in wholesale markets Utility rate reforms

Electric and natural gas utilities required to achieve set level of customer energy savings

Similar to a Renewable Electricity Standard (RES)

Complements other policies to spur utility programs

Public Benefits Fund

Integrated Resource Planning

Competitive bid in wholesale markets

Utility rate reforms

State-Level EERS Spreading rapidly: ~10 states set efficiency targets ~5 states include efficiency in renewable standard ~5 states have related requirements

Spreading rapidly:

~10 states set efficiency targets

~5 states include efficiency in renewable standard

~5 states have related requirements

State-Level EERS - Examples Texas – initially 10% of peak load growth, increased to 20% Nevada – combined EERS and RES; EE capped at 25% of total Ohio – ramps up to 2%/year target Connecticut – 1%/year target as separate tier in RES, plus new “all cost-effective efficiency” requirement California – CPUC sets electric and gas targets based on potential study

Texas – initially 10% of peak load growth, increased to 20%

Nevada – combined EERS and RES; EE capped at 25% of total

Ohio – ramps up to 2%/year target

Connecticut – 1%/year target as separate tier in RES, plus new “all cost-effective efficiency” requirement

California – CPUC sets electric and gas targets based on potential study

Federal EERS Save American Energy Act H.R. 889 by Rep. Markey and S. 548 by Sen. Schumer Bingaman draft RES

Save American Energy Act

H.R. 889 by Rep. Markey and S. 548 by Sen. Schumer

Bingaman draft RES

Federal EERS Potential Benefits By 2020: 117,000 MW peak demand savings (390 power plants) 260 MMT CO 2 emission reductions (48 million cars) $168 billion net savings in utility bills 222,000 net jobs created (ACEEE estimates for Save American Energy Act) Bring efficiency programs to additional states and regions.

By 2020:

117,000 MW peak demand savings (390 power plants)

260 MMT CO 2 emission reductions (48 million cars)

$168 billion net savings in utility bills

222,000 net jobs created

(ACEEE estimates for Save American Energy Act)

Bring efficiency programs to additional states and regions.

Save American Energy Act: Scope Applies to local distribution companies (LDCs) Regulated even in restructured-market states Size threshold Counts savings from: Utility energy efficiency programs Combined heat & power and recycled energy Distribution system savings Building codes and appliance standards

Applies to local distribution companies (LDCs)

Regulated even in restructured-market states

Size threshold

Counts savings from:

Utility energy efficiency programs

Combined heat & power and recycled energy

Distribution system savings

Building codes and appliance standards

Save American Energy Act: Targets Requires savings rising to 15% electricity and 10% natural gas by 2020 Estimated savings from efficiency programs, not a sales limit Codes and standards may account for ~5% electric and 3% natural gas State EERS and policies may account for ~6% electric

Requires savings rising to 15% electricity and 10% natural gas by 2020

Estimated savings from efficiency programs, not a sales limit

Codes and standards may account for ~5% electric and 3% natural gas

State EERS and policies may account for ~6% electric

Save American Energy Act: Trading and Alternatives Utilities can buy savings from customers and third parties through bilateral contracts In-state or in power pool with PUC approval EM&V rules still apply No credit markets Buyout: 5 cents/kWh or $5/million Btu

Utilities can buy savings from customers and third parties through bilateral contracts

In-state or in power pool with PUC approval

EM&V rules still apply

No credit markets

Buyout: 5 cents/kWh or $5/million Btu

Save American Energy Act: Implementation DOE sets rules States administer with DOE review If states choose not to, DOE administers Does not affect state EERS Same programs can qualify for both

DOE sets rules

States administer with DOE review

If states choose not to, DOE administers

Does not affect state EERS

Same programs can qualify for both

Save American Energy Act: EM&V DOE sets Measurement and Verification requirements Utility played significant role Additional to business-as-usual practices May have outside (including federal) funding Account for useful life of measures May use “deemed” savings, sampling Third-party verification States can apply their own rules if at least as accurate

DOE sets Measurement and Verification requirements

Utility played significant role

Additional to business-as-usual practices

May have outside (including federal) funding

Account for useful life of measures

May use “deemed” savings, sampling

Third-party verification

States can apply their own rules if at least as accurate

Renewable Electricity Standard: Bingaman Draft Energy efficiency can meet up to one-fourth of requirement (5% savings in 2020) Customer savings, CHP, and distribution system, but NOT codes or standards Trading of credits Applies to Load Serving Entitites Current state EERS add up to ~6% savings  No additional efficiency

Energy efficiency can meet up to one-fourth of requirement (5% savings in 2020)

Customer savings, CHP, and distribution system, but NOT codes or standards

Trading of credits

Applies to Load Serving Entitites

Current state EERS add up to ~6% savings  No additional efficiency

H.R. 889 , the “Save American Energy Act,” introduced by Rep. Edward Markey (D-MA) on February 4, 2009. EERS included in the Waxman-Markey in the American Clean Energy and Security Act of 2009 discussion draft. Cosponsors include Rep. Olver (D-MA), Rep. Hirono (D-HI), and Rep. Schakowsky (D-IL). Likely others that the Markey office has not yet released. Coalition is targeting Blue Dogs, e.g. Barrow (D-GA), Matheson (D-UT), Gordon (D-TN), Holden (D-PA), and others, e.g. Welch (D-VT), Need for letters and visits from in-state businesses and organizations House side EERS bill:

H.R. 889 , the “Save American Energy Act,” introduced by Rep. Edward Markey (D-MA) on February 4, 2009.

EERS included in the Waxman-Markey in the American Clean Energy and Security Act of 2009 discussion draft.

Cosponsors include Rep. Olver (D-MA), Rep. Hirono (D-HI), and Rep. Schakowsky (D-IL). Likely others that the Markey office has not yet released.

Coalition is targeting Blue Dogs, e.g. Barrow (D-GA), Matheson (D-UT), Gordon (D-TN), Holden (D-PA), and others, e.g. Welch (D-VT),

Need for letters and visits from in-state businesses and organizations

S. 548 , the “Save American Energy Act,” introduced by Sen. Charles Schumer (D-NY) on March 9, 2009. Coalition meetings last week with Bingaman’s staff cracked open the door for a stand-alone bill No official cosponsors yet - a Republican cosponsor will be critical for gaining support throughout the E&NR committee. Coalition still supports a stand-alone bill, but if made to compromise, would take a 10% carve-out of an RPS (currently 5%) Need for letters and visits, particularly from in-state businesses, particularly to Republican and moderate Dems. Senate side EERS bill:

S. 548 , the “Save American Energy Act,” introduced by Sen. Charles Schumer (D-NY) on March 9, 2009.

Coalition meetings last week with Bingaman’s staff cracked open the door for a stand-alone bill

No official cosponsors yet - a Republican cosponsor will be critical for gaining support throughout the E&NR committee.

Coalition still supports a stand-alone bill, but if made to compromise, would take a 10% carve-out of an RPS (currently 5%)

Need for letters and visits, particularly from in-state businesses, particularly to Republican and moderate Dems.

Thank You! Lowell Ungar Alliance to Save Energy Phone: (202) 857-0666 Email: [email_address] Website: www.ase.org