Energy Efficiency Resource Standards

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An Energy Efficiency Resource Standard (EERS) is a flexible mechanism to ensure that utilities adopt energy efficiency as a clean, cost-effective energy resource.

A federal EERS would require that electricity and natural gas utilities help their customers reduce energy use by a specified and increasing amount each year, based on a percentage of total energy sales. It complements a renewable electricity standard (RES), which requires that a percentage of electricity generation be from renewable sources.

EERS is a tested policy measure that has successfully reduced energy use in several states. A national EERS would lower energy costs, reduce air pollution and global warming, create jobs, and improve energy reliability throughout the nation.

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  • Energy Efficiency Resource Standards

    1. 1. Energy Efficiency Resource Standards Lowell Ungar Director of Policy Alliance to Save Energy
    2. 2. Presentation Outline <ul><li>Utility and State Efficiency Programs </li></ul><ul><li>State-level EERS programs </li></ul><ul><li>Federal EERS—Issues </li></ul><ul><ul><li>Scope and Targets </li></ul></ul><ul><ul><li>Trading and alternative compliance </li></ul></ul><ul><ul><li>EM&V and Administration </li></ul></ul><ul><li>Efficiency in an RES </li></ul>
    3. 3. Utility Energy Efficiency Programs <ul><li>Help customers save electricity or natural gas </li></ul><ul><li>Many kinds of programs </li></ul><ul><ul><li>Consumer education </li></ul></ul><ul><ul><li>Technical training </li></ul></ul><ul><ul><li>Energy audits </li></ul></ul><ul><ul><li>Appliance rebates </li></ul></ul><ul><ul><li>Financing </li></ul></ul><ul><li>$3.7 billion in 2008 </li></ul>
    4. 4. Why Should Ratepayers Fund Energy Efficiency? <ul><li>Because it’s cheaper, quicker, and cleaner than providing more energy </li></ul><ul><li>Demand-Side Management (DSM) avoids 30 GW of peak load—about 100 power plants </li></ul><ul><li>Reported cost of about 3-4 cents per kWh </li></ul>
    5. 5. Program Opportunities Energy Efficiency Potential 40% Adapted from McKinsey Analysis
    6. 6. Energy Efficiency Resource Standards (EERS) <ul><li>Electric and natural gas utilities required to achieve set level of customer energy savings </li></ul><ul><ul><li>Similar to a Renewable Electricity Standard (RES) </li></ul></ul><ul><li>Complements other policies to spur utility programs </li></ul><ul><ul><li>Public Benefits Fund </li></ul></ul><ul><ul><li>Integrated Resource Planning </li></ul></ul><ul><ul><li>Competitive bid in wholesale markets </li></ul></ul><ul><ul><li>Utility rate reforms </li></ul></ul>
    7. 7. State-Level EERS <ul><li>Spreading rapidly: </li></ul><ul><ul><li>~10 states set efficiency targets </li></ul></ul><ul><ul><li>~5 states include efficiency in renewable standard </li></ul></ul><ul><ul><li>~5 states have related requirements </li></ul></ul>
    8. 8. State-Level EERS - Examples <ul><li>Texas – initially 10% of peak load growth, increased to 20% </li></ul><ul><li>Nevada – combined EERS and RES; EE capped at 25% of total </li></ul><ul><li>Ohio – ramps up to 2%/year target </li></ul><ul><li>Connecticut – 1%/year target as separate tier in RES, plus new “all cost-effective efficiency” requirement </li></ul><ul><li>California – CPUC sets electric and gas targets based on potential study </li></ul>
    9. 9. Federal EERS <ul><li>Save American Energy Act </li></ul><ul><ul><li>H.R. 889 by Rep. Markey and S. 548 by Sen. Schumer </li></ul></ul><ul><li>Bingaman draft RES </li></ul>
    10. 10. Federal EERS Potential Benefits <ul><li>By 2020: </li></ul><ul><ul><li>117,000 MW peak demand savings (390 power plants) </li></ul></ul><ul><ul><li>260 MMT CO 2 emission reductions (48 million cars) </li></ul></ul><ul><ul><li>$168 billion net savings in utility bills </li></ul></ul><ul><ul><li>222,000 net jobs created </li></ul></ul><ul><li>(ACEEE estimates for Save American Energy Act) </li></ul><ul><li>Bring efficiency programs to additional states and regions. </li></ul>
    11. 11. Save American Energy Act: Scope <ul><li>Applies to local distribution companies (LDCs) </li></ul><ul><ul><li>Regulated even in restructured-market states </li></ul></ul><ul><ul><li>Size threshold </li></ul></ul><ul><li>Counts savings from: </li></ul><ul><ul><li>Utility energy efficiency programs </li></ul></ul><ul><ul><li>Combined heat & power and recycled energy </li></ul></ul><ul><ul><li>Distribution system savings </li></ul></ul><ul><ul><li>Building codes and appliance standards </li></ul></ul>
    12. 12. Save American Energy Act: Targets <ul><li>Requires savings rising to 15% electricity and 10% natural gas by 2020 </li></ul><ul><ul><li>Estimated savings from efficiency programs, not a sales limit </li></ul></ul><ul><ul><li>Codes and standards may account for ~5% electric and 3% natural gas </li></ul></ul><ul><ul><li>State EERS and policies may account for ~6% electric </li></ul></ul>
    13. 13. Save American Energy Act: Trading and Alternatives <ul><li>Utilities can buy savings from customers and third parties through bilateral contracts </li></ul><ul><ul><li>In-state or in power pool with PUC approval </li></ul></ul><ul><ul><li>EM&V rules still apply </li></ul></ul><ul><ul><li>No credit markets </li></ul></ul><ul><li>Buyout: 5 cents/kWh or $5/million Btu </li></ul>
    14. 14. Save American Energy Act: Implementation <ul><li>DOE sets rules </li></ul><ul><li>States administer with DOE review </li></ul><ul><ul><li>If states choose not to, DOE administers </li></ul></ul><ul><li>Does not affect state EERS </li></ul><ul><ul><li>Same programs can qualify for both </li></ul></ul>
    15. 15. Save American Energy Act: EM&V <ul><li>DOE sets Measurement and Verification requirements </li></ul><ul><ul><li>Utility played significant role </li></ul></ul><ul><ul><li>Additional to business-as-usual practices </li></ul></ul><ul><ul><li>May have outside (including federal) funding </li></ul></ul><ul><ul><li>Account for useful life of measures </li></ul></ul><ul><ul><li>May use “deemed” savings, sampling </li></ul></ul><ul><ul><li>Third-party verification </li></ul></ul><ul><li>States can apply their own rules if at least as accurate </li></ul>
    16. 16. Renewable Electricity Standard: Bingaman Draft <ul><li>Energy efficiency can meet up to one-fourth of requirement (5% savings in 2020) </li></ul><ul><ul><li>Customer savings, CHP, and distribution system, but NOT codes or standards </li></ul></ul><ul><li>Trading of credits </li></ul><ul><li>Applies to Load Serving Entitites </li></ul><ul><li>Current state EERS add up to ~6% savings  No additional efficiency </li></ul>
    17. 17. <ul><li>H.R. 889 , the “Save American Energy Act,” introduced by Rep. Edward Markey (D-MA) on February 4, 2009. </li></ul><ul><ul><li>EERS included in the Waxman-Markey in the American Clean Energy and Security Act of 2009 discussion draft. </li></ul></ul><ul><ul><li>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. </li></ul></ul><ul><ul><li>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), </li></ul></ul><ul><ul><li>Need for letters and visits from in-state businesses and organizations </li></ul></ul>House side EERS bill:
    18. 18. <ul><li>S. 548 , the “Save American Energy Act,” introduced by Sen. Charles Schumer (D-NY) on March 9, 2009. </li></ul><ul><ul><li>Coalition meetings last week with Bingaman’s staff cracked open the door for a stand-alone bill </li></ul></ul><ul><ul><li>No official cosponsors yet - a Republican cosponsor will be critical for gaining support throughout the E&NR committee. </li></ul></ul><ul><ul><li>Coalition still supports a stand-alone bill, but if made to compromise, would take a 10% carve-out of an RPS (currently 5%) </li></ul></ul><ul><ul><li>Need for letters and visits, particularly from in-state businesses, particularly to Republican and moderate Dems. </li></ul></ul>Senate side EERS bill:
    19. 19. Thank You! Lowell Ungar Alliance to Save Energy Phone: (202) 857-0666 Email: [email_address] Website: www.ase.org

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