MEEA Policy Webinar: Midwest Perspective of the ACEEE 2011 State Energy Efficiency Scorecard

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This MEEA Policy Webinar, held on November 17, 2011, outlined the leading states in the Midwest, reviewed current trends, and highlighted programs in Illinois and Michigan, drawing from the American Council for an Energy-Efficient Economy's 2011 State Energy Efficiency Scorecard and energy efficiency experts from the state energy offices.

Michael Sciortino, from ACEEE, presented on the newly released ACEEE State Energy Efficiency Scorecard. He discussed the leading states in the Midwest and reasons for the recent gains. He further discussed the current trends in the Midwest that were used to quantify the ACEEE Scorecard rankings, and an explanation on why Michigan, Illinois and Nebraska were named the three most improved states. Best practices and programs were highlighted within the states.

Agnes Mrozowski, from the Illinois Energy Office, presented on Illinois Energy Now, the Department of Commerce & Economic Opportunity’s program that provides public sector customers with financial incentives to make energy improvements.

Robert Ozar, from the Michigan Public Service Commission, presented on Michigan’s Public Act 295 which is a comprehensive energy package promoting private investment in renewable energy and energy efficiency, and highlighted some of the successful programs within the state.

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MEEA Policy Webinar: Midwest Perspective of the ACEEE 2011 State Energy Efficiency Scorecard

  1. 1. The 2011 State EnergyEfficiency Scorecard MEEA Webinar – November 17, 2011 Michael Sciortino
  2. 2. The American Council for anEnergy-Efficient Economy (ACEEE)• Nonprofit 501(c)(3) dedicated to advancing energy efficiency through research, communications, and conferences.• ~40 staff in Washington DC, + field offices in DE, IL, MI, and WI.• Focus on End-Use Efficiency in Industry, Buildings, Utilities, and Transportation; Economic Analysis & Human Behavior; and State & National Policy• Funding: • Foundations (34%) • Federal & State Grants (7%) • Specific Contract work (21%) • Conferences and Publications (34%) • Contributions and Other (4%)
  3. 3. Overview• Methodology• Results• Major Developments in and outside the Midwest• Breaking down the Midwest Scores
  4. 4. Methodology, part 1 Policy Maximum Score1. Utility and Public Benefits Programs and Policies 20 Electricity Efficiency Program Budgets 5 Natural Gas Efficiency Program Budgets 3 Annual Savings from Electricity Efficiency Programs 5 Targets (Energy Efficiency Resource Standards) 4Performance Incentives/Alternative Regulatory Business Models 32. Transportation Policies 9 Integration of Transportation and Land Use Planning; VMT 5 Targets; Complete Streets Legislation GHG Tailpipe Emission Standards 2 Transit Funding 1 High-Efficiency Vehicle Consumer Incentives 1
  5. 5. Methodology, Continued Policy Maximum Score3. Building Energy Codes 7 Level of Stringency 5 Enforcement/Compliance 24. Combined Heat and Power 5 Interconnection Standards Standby Rates Incentives for CHP Output-based Emissions Regulations CHP in EERS or RPS Net Metering5. State Government Initiatives 7 Financial and Information Incentives 3 Lead by Example in State Facilities and Fleets 2 Research, Development, and Demonstration 26. Appliance and Equipment Efficiency Standards 2 Maximum Total Score 50
  6. 6. The 2011 Scorecard Rankings
  7. 7. Most Improved States
  8. 8. Key Findings and Major Developments• Massachusetts: #1• General upward trend among all states• ~30 states with stringent building codes• EE remains a bi-partisan solution• 24 states with an EERS• States implementing EERS policies moving ahead• Total utility budgets for EE at $5.5 billion• Electricity savings of 13,147 GWh in 2009• Major gap in states advancing efficient transportation policies
  9. 9. Trends in Utility-Sector EEProgram Spending/Budgets
  10. 10. Electricity DSM Budgets 2009 vs. 2010 4.50% 4.00% 3.50% 2010 Budgets as % of Revenues 3.00%Budgets as % of Revenues 2009 Budgets as % of Revenues 2.50% 2.00% 1.50% 1.00% 0.50% 0.00%
  11. 11. Electricity Savings 2008 vs. 2009 2.50% 2.00%Savings as % of Retail Sales 2009 Savings as % of Retail Sales 2008 Savings as % of Retail Sales 1.50% 1.00% 0.50% 0.00%
  12. 12. Midwest States in the Scorecard Utility and Public Benefits Programs Building Combined State Appliance Change in Change in and Transportation Energy Heat & Government Efficiency TOTAL rank from score FromRank State Policies Policies Codes Power Initiatives Standards SCORE 2010 2010Maximum Score 20 9 7 5 7 2 50 8 Minnesota 18 2 4 3 6 0 33 0 5 11 Iowa 14 1 5 2 5 0 27 1 2.5 16 Wisconsin 11.5 1 5 4 3.5 0 25 -5 -1 17 Illinois 9 3 5 4 3.5 0 24.5 8 6 17 Michigan 10 2 4.5 3 5 0 24.5 10 7 24 Ohio 8.5 0 4 5 4.5 0 22 3 4.5 32 Indiana 6.5 0 4 3 3.5 0 17 -1 0.5 37 Kentucky 3.5 0 4.5 1 3 0 12 -1 1.5 40 Nebraska 1.5 0 5 1 2.5 0 10 7 6 42 South Dakota 4.5 0 0 3 2 0 9.5 -3 0 44 Missouri 2.5 0 2 1 3 0 8.5 -1 2.5 48 Kansas 1 0 1.5 1 2 0 5.5 -2 0.5 51 North Dakota 0 1 0 1 0.5 0 2.5 0 1
  13. 13. Some other Best Practices - Transportation High- Integration of Efficiency GHG Tailpipe Transportation Complete Vehicle Emissions and Land Use Streets Transit Consumer State Standards Planning VMT Targets Legislation Funding Incentives ScoreMaximumScore 2 2 2 1 1 1 9Maryland 2 2 1 0 1 1 7
  14. 14. Looking ahead to 2012• Continued improvement in EERS states• Sour economy’s impact on customer participation• Political climate
  15. 15. Thank you for joining!Michael Sciortino202-507-4028msciortino@aceee.org
  16. 16. www.ilenergynow.orgPat Quinn Warren RibleyGovernor Director
  17. 17. What is Illinois Energy Now? Illinois Energy Now, formerly known as the Energy Efficiency Portfolio Standard, is the Department of Commerce & Economic Opportunity’s program that provides public sector customers with financial incentives to make energy improvements. Millions of dollars in funding is available to public sector organizations through Illinois Energy Now. Offers public sector organization financial incentives to upgrade electric and natural gas systems, save energy and help the environment.
  18. 18. How did Illinois Energy Now get started?  2007: Legislation amended the Illinois Public Utilities Act and required the State’s largest utility providers and the Department of Commerce & Economic Opportunity (DCEO) to develop a portfolio of electric energy efficiency programs to meet legislative goals that reduce energy demand.  2009: Legislation was passed to include natural gas energy efficiency programs to meet legislative reduction goals.
  19. 19. How is Illinois Energy Now structured? Nicor ComEd Integrys Ameren DCEO AmerenElectric Efficiency Electric Efficiency Gas Efficiency Gas Efficiency Private Sector Low-income Private Sector Businesses Public Sector Businesses Residential Sector Residential Governments Residential Affordable housing Non-profits K-12 schools Non-profits PHAs Community colleges Implementation Public universities agencies
  20. 20. How is Illinois Energy Now structured?PUBLIC SECTOR - DCEO ELECTRIC & GAS UTILITIES Local governments  Privately-owned businesses • Municipalities  Privately-owned industrial & • Townships & county facilities commercial facilities Special units of local government  Private schools • Library & park districts • Private K-12 schools • Public safety • Private colleges • Water reclamation districts • Private universities State and federal agencies  Not-for-profit • Museums Public schools • Foundations • K-12 Public schools • Trade Organizations • Public community colleges • Public universities  Residential
  21. 21. How is Illinois Energy Now funded? Funded by a System Benefits Charge on utility customers’ monthly utility bill. Not by tax dollars. Direct Benefit: • Each $1 spent on energy efficiency saves $2-4 Indirect Benefits: • Downward pressure on energy prices • Consumers have more money to spend in the economy • Increased jobs to meet economic stimulation
  22. 22. What is the IEN estimated budget? Year Electric Natural Gas 2011 $54 million $15 million 2012 $55 million $22 million 2013 $55 million $30 million
  23. 23. Who has received IEN incentives? Community K-12 Schools College 23% 5% University Local Govt. 16% 49% State 1% Federal 6%
  24. 24. Where do electric savings come from? Standard HVAC 3% Custom HVAC Custom 1% Other Standard 18% Custom Lighting 66% Exterior Lighting 1% Custom Lighting 11%
  25. 25. Public Sector Load Reduction1.20% 1.05% annual energy savings goal1.00% public sector gross savings 0.80%0.80% public sector savings 0.60%0.60% 0.51% 0.42% 0.40%0.40% 0.20% 0.23%0.20%0.00% 2009 2010 2011 • DCEO continues to exceed the legislative goals with its public sector programs • Additional savings from Market Transformation
  26. 26. Energy Efficient Building Act Public Act 096-0778 was signed into law on August 28, 2009 amending the Energy Efficient Commercial Building Act by including residential buildings which became effective January 29, 2010. Requires all new commercial and residential construction to follow a comprehensive statewide energy conservation code. Renovations, alterations, additions, and repairs to most existing commercial and residential buildings must follow the Illinois Energy Conservation Code.
  27. 27. Building Industry Training & Education Programs to train students and the building industry as well as to enhance the capacity of efficiency service providers, in order to meet long- term Program goals and includes: 1. Commercial & residential green building practices 2. Building code and beyond code training 3. Building Operator Certification (www.boccentral.org) 4. Illinois Home Performance with Energy Star 5. Trade Ally Network support and training
  28. 28. To Learn More about Illinois Energy Now Contact Agnes Mrozowski Assistant Deputy Director Illinois Energy Office 217.524.0933 agnes.mrozowski@illinois.gov Or Visit www.ilenergynow.org
  29. 29. Midwest Energy Efficiency AllianceACEEE State EE Scorecard Webinar Michigan Public Service Commission Robert G. Ozar, PE Manager, Energy Efficiency Electric Reliability Division November 17, 2011
  30. 30. Overview of PA 295• Michigan’s Public Act 295 was signed into law on October 8, 2008.• PA 295 is part of a comprehensive energy package promoting private investment in renewable energy and energy efficiency.• “The overall goal of an energy optimization plan shall be to reduce the future costs of provider service to customers. In particular, an EO plan shall be designed to delay the need for constructing new electric generation facilities…”• The Act sets very specific administrative procedures and standards.
  31. 31. Overview of PA 295 (cont.)• 65 utilities in Michigan are required to file energy efficiency plans. The Act calls such plans “Energy Optimization” (EO) plans.• Targets are based on percentage reductions in retail sales. The Act does not set standards for electric peak reductions nor is power factor recognized as contributing to electric generation demand.• Electric utility targets ramp to 1% of retail sales in 2012, gas utility targets ramp to 0.5%.
  32. 32. EO Plan Design• Most plans divide customers into two customer groups: residential, and commercial/industrial (C&I). In addition, about 10% of the total budget is directed toward residential low-income programs.• C&I programs generally consist of two foundational programs: (1) prescriptive rebates; and (2) custom incentives, $/kWh.• PA 295 limits education spending to 3% of budget and pilot programs to 5% of budget.
  33. 33. Spending: The statewide three-year cumulative funding level for EnergyOptimization programs in Michigan is $410,541,330. The three-year cumulativefunding level can be divided into three categories: $161,597,672 for residential(excluding low-income) programs, $171,362,521 for commercial and industrialprograms, and $58,158,540 for low income programs.
  34. 34. Financial Incentive Mechanism Maximum at 115% of Target : 15% of Spending Utility Incentive Amount % of Target MetConsumers Energy (Electric) $5,076,731 141% Consumers Energy (Gas) $3,407,064 126% Detroit Edison $6,200,000 177%Michigan Consolidated Gas $2,400,000 196%
  35. 35. 2009-2011 Low Income Funds $58,158,540 Low Income EO Funds CE Electric $5,918,889 DTE $10,761,250 Electric IOUs $1,056,804 Cooperatives $921,044 Municipals 1,017,871 CE Gas 24,335,558 MichCon $12,110,000 IOU Gas 2,037,124 Total $58,158,540
  36. 36. Energy Efficiency Financing ProgramLoans Approved 402Loan Approval Rate 56%Loans Closed 168Average Loan Size Approved $7,398Average Credit Score Approved 747Authorized Contractors State-wide 210Total Loan Value Issues $1,143,341Average Electric Savings* 808kWh/yearAverage Natural Gas Savings* 230 CCf/yearAverage Utility Bill Savings* $389/year
  37. 37. Michigan C&I Success Story: Consumers Energy• $8.6 million in incentives so far this year to help nearly 1,700 Michigan businesses.• Reducing energy costs by $9.1 million per year over projects lifecycles.• Saving 81,629,805 kWh of electricity and 121,239 Mcf of natural gas annually.• That’s enough electricity to serve about 9,070 residential customers, and enough natural gas to serve more than 1,080 residential customers.
  38. 38. C&I Split for Consumers Energy Consumers Energy C & I Program 2009-2010 $7,610,000, 43% Commercial $9,960,000, Industrial 57%
  39. 39. General Motors Corporation Incentive from Consumers Energy• Awarded $97,000 to Flint’s GM Plant for Lighting Upgrades.
  40. 40. MICHIGAN TURKEY PRODUCERS CO-OP INC. Incentive from Consumers Energy• 4.5 Million birds processed per year• $180,000 in rebates from Consumers• Installed and replaced lighting in building.• Improved efficiency and improved working conditions and made it easier for workers to spot defects while working.
  41. 41. General Motors Incentive from Detroit EdisonJerry S. Mendoza/Associated PressGeneral Motors Orion Assembly plant in Lake Orion, Mich.
  42. 42. General Motors/Orion Assembly Incentive from Detroit EdisonThe plant project involved replacing 2,610 high-intensity discharge 465watt fixtures to a six lamp T8 fluorescent fixture using 235 watts. Followinginstallation of the lighting upgrades, DTE Energy presented the plant withan incentive rebate of $150,000.
  43. 43. Industrial Sector EE Shortcomings• Persistent energy cost control is heavily dependant upon whole system design, not isolated components – EE programs tend to focus on isolated components e.g. lighting• Issue analogous to residential “whole house” approach vs. ala carte• Program implementation adverse to ESCO performance contracting model• Deep energy savings lost: lighting pays for everything else• Difficult to go back
  44. 44. Industry Sector Perspectives• Disconnect between industry lobbyists and plant managers. – Executive management insists that in order to be competitive they aggressively pursue all economic EE measures, and therefore do not need mandatory programs (public benefits fund). – Plant managers say they are not doing all economic EE measures - have projects in mind but can’t get funding• Severe financial pressure on industrial sector – Unprecedented number of plant closings in Michigan – Declining asset value – Shrinking capital renewal allowances – Expensive financial models to evaluate high-performing technology – Short ROI desired
  45. 45. Regulatory Compromise• PA 295 compromise: Formal self-directed energy efficiency program vis-à-vis pure opt out – Assumes that industry does in fact pursue energy efficiency on their own – Self-directed customers exempt from paying public benefits charge (except for low-income) – Must file brief application and biennial report – Limited enforcement, but PSC authority to order penalties for non-compliance. – Customer targets are identical to utility targets. For example, the 2012, 2013, 2014, and 2015 utility targets are 1% each year.
  46. 46. Self-directed EO Program Results 2009 2010 2011 reported reported expected 2009 2010 2011Provider load load load Customers Customers Customers reduction reduction reduction (MWh) (MWh) (MWh)Detroit Edison 26 26 13 12,486 18,488 7,834Consumers 30 30 16 8,515 12,343 5,648State 9 11 10 5,196 14,568 21,476AdministratorCooperative 3 3 4 899 1,498 562Municipal 9 9 4 2,006 3,343 606Total 77 79 47 29,102 50,240 36,126
  47. 47. Midwestern Energy Efficiency Update Increasing EE investment through codes and energy efficiency policies
  48. 48. Residential Building Energy Code Adoption in the Midwest As of September 2011 Code Level / Equivalence No Mandatory Statewide Code Pre-2000 Code 2000 IECC 2003 IECC 2006 IECC * * 2009 IECC 2009 Adopted by Major Municipality * In Process to 2009
  49. 49. Commercial Building Energy Code Adoption in the Midwest As of September 2011 Code Level / Equivalence No Mandatory Statewide Code Pre-1999 Code 90.1-1999 90.-2001 90.1-2004 90.1-2007 90.1-2007 Adopted by Major Municipality
  50. 50. Energy Efficiency Policies in the Midwest 2.0% by 20152.5% 1.5% 2.0% 1.5% 2.0% by 2017 by 2019 current by 20192.0% 1.4% 1.5% current 1.0% current by 20121.5% 1.0% 0.63% 0.75% current current by 20121.0% 0.48% current0.5%0.0% Kentucky Minnesota North Dakota Michigan Wisconsin Illinois Missouri Indiana Kansas Ohio South Dakota Nebraska Iowa Electricity Natural GasJanuary 2011
  51. 51. Future Midwest Efficiency Targets and Funding 2010 $1.06 billion 2015 $1.58 billion Minnesota Wisconsin 1.5% elec current 0.63% elec currently 1.5% gas current 0.48% gas currently Michigan 1% elec by 2012 0.75% gas by 2012 Iowa Ohio 1.4% elec currently 2% elec by 2019 1% gas currently gas in discussion Illinois Indiana 2% elec by 2015 2% elec by 2019 1.5% gas by 2017 gas none yet Kentucky 2010 EE funding Voluntary elec and gas 2015 EE funding Missouri (projected) IRP processSept 2011
  52. 52. Discussion - Questions?• What resources can MEEA or ACEEE provide to assist other states?• Are there programs that you want to learn more about?• We will be highlighting many programs – utility and statewide – at the 2012 Midwest Energy Solutions conference – MEEAs Board has set aside travel funds for SEOs, legislators & staff, Commissioner & staff and nonprofit organizations to attend
  53. 53. Thank you!Stacey Paradis, Deputy Director 312-784-7267 sparadis@mwalliance.org www.mwalliance.org

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