December 5, 2007

ENERGY EFFICIENCY IS THE "FIRST FUEL" FOR A GROWING NUMBER OF STATES

More and more governors, state legislators, and state agencies across the nation are turning to energy efficiency as the "first fuel" in the race for clean energy. In our recent travels, we've seen governors new and old talk about efficiency with passion and without notes, telling us this is a core concern, not a second-tier issue. Legislators are ramping up resource commitments, and utility commissions are pushing utilities harder than ever to increase efficiency investments. Highlights of recent state action include:

• New York State's Department of Public Service issued a preliminary plan to meet Governor Spitzer's target of reducing electricity usage in the state by 15% in 2015. ACEEE provided technical assistance to the commission in developing and estimating impacts of recommended programs and policies.
• North Carolina's legislature passed a bill in late summer that creates a Renewable Portfolio Standard, in which up to 40% of resource requirements can be met through energy efficiency.
• The Illinois legislature enacted a bill this summer that creates an Energy Efficiency Resource Standard (EERS), requiring utilities to achieve energy savings reaching as high as 2% of electricity sales. Important details, including program cost limits, are to be worked out.
• Minnesota lawmakers passed the New Generation Energy Act this year, which includes an EERS target reaching 1.5% of electricity sales—roughly equivalent to current load growth rates. Utility program, building codes, and other approaches can be used to meet the resource requirement.
• Iowa's legislature appointed an Energy Efficiency Study Committee, which held hearings this fall that may lead to a major increase in utility efficiency programs, already among the most effective in the Midwest.
• Texas lawmakers acted this year to double the state's EERS target, from 10% to 20% of load growth. A study was also commissioned to consider raising the target to as high as 50% of load growth.
• Virginia's State Corporation Commission held a stakeholder process in the summer of 2007, gathering input for a report to the legislature on ways to meet the 10% utility energy savings target that was enacted as part of legislation passed in April.
• In Colorado, Xcel Energy responded to a number of legislative, regulatory, and gubernatorial initiatives with its Colorado Resource Plan (CRP). The Plan will double the current capacity of its customer programs to 694 megawatts, while tripling the amount of annual energy sales reductions to approximately 2,350 gigawatt-hours, by 2020.

These states, spread widely across the diverse regions of the U.S., reflect a rapidly rising wave of efficiency policy commitments. ACEEE estimates that the EERS savings targets set in 15 states could reduce total national electricity sales by as much as 0.8% per year by 2015—more than half the current national Annual Energy Outlook forecast, which projects annual load growth rates at 1.5% per year.

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