Energy Efficiency Savings Standards Around the U.S. and the World

American Council for an Energy-Efficient Economy
July 2005

— One of a Series of ACEEE Fact Sheets

Texas: Texas' electricity restructuring law (SB-7-1999, signed into law by then-Governor Bush) established a requirement for electric utilities to offset 10% of their demand growth through end-use energy efficiency programs. Utilities are generally exceeding this goal. For example, in 2003, utility energy efficiency programs reduced demand by 151 MW, exceeding the 135 MW goal by 11%. These programs also reduced electricity use by 370 million kWh.¹

Hawaii: Hawaii established a binding renewable portfolio standard via statute in 2004 (Act 95). The law sets a renewable resource requirement of 8% of kWh sales in 2005, rising to 20% in 2020. Efficiency qualifies as a resource under these requirements with no cap or set-aside. In 2004, according to reports filed by Hawaii's utilities, renewable energy and energy efficiency resources accounted for about 11.2% of electricity sales, with renewables 68% of these resources and efficiency 32%.²

Pennsylvania: The legislature adopted the Alternative Energy Portfolio Standards (AEPS) Act in late 2004. Under the law, renewable energy must account for 8% of the power sold in the state after 15 years of implementation. In addition, "tier 2" "advanced energy resources" must account for an additional 10% of power sold in 15 years. "Tier 2" resources include energy efficiency, hydropower, and waste coal generation. The legislation also establishes interim requirements. Implementing regulations are now being developed; implementation is scheduled to begin in 2006.

Nevada: In 2001, the Nevada legislature enacted renewable portfolio standard legislation. In 2005 this law was amended to increase the portfolio requirement, but also to allow the utilities to use energy efficiency programs to help meet the requirements. Under the new law, renewable energy and energy efficiency must meet 20% of the state's electricity needs by 2015, of which up to 25% can be met with energy efficiency. There are also gradually rising targets for earlier years. These amendments were agreed to after the utilities had difficulty meeting the renewables-only requirements during the first two years of implementation.

Connecticut: Connecticut is another state that established a renewable portfolio standard (RPS) a few years ago and in 2005 expanded it. Specifically, in June 2005 the Connecticut legislature adopted legislation that, among other provisions, complements the existing RPS by adding new "Class III" requirements covering energy efficiency and combined heat and power plants (CHP). Under the new class III requirements, electricity suppliers must purchase 1% of supply from efficiency and CHP by 2007, and 4% by 2010.

Illinois: The Governor of Illinois has developed an Illinois Sustainable Energy Plan that among other things asks the Illinois Commerce Commission (their utility regulatory commission) to establish an energy efficiency portfolio standard that will meet 25% of projected load growth by 2017. The proposal also includes gradually increasing targets for earlier years (i.e. 10% of load growth for 2006-2008, 15% of growth for 2009-2011, and 20% of growth for 2012-2014). A complementary companion proposal would establish RPS requirements. The proposal has the support of the state's utilities, consumer and environmental groups, and many other stakeholders. The Commerce Commission is now investigating the details of such a policy and expects to issue a decision late this year.

California: Following California's 2001 electricity crisis, the main state resource agencies worked together along with the state's utilities and other key stakeholders and developed the California Integrated Energy Policy Report that includes energy savings goals for the state's investor-owned utilities. These goals call for savings of 6,892 MW of peak power demand and 26,508 million kWh of electricity use reductions by 2013. These ten-year targets represent 12% of peak demand and 10% of electricity use for the most recent year for which data are available (2003). The California Public Utilities Commission is now working with the utilities and others to develop program plans, goals, and budgets for 2006-2008, including rewards/penalties based on whether the goals are achieved or not.

United Kingdom: The UK established an "Energy Efficiency Commitment" in 2001 that requires electricity and gas suppliers to achieve targets for energy efficiency in the residential sector. The first commitment period covered spring 2002 – spring 2005 and required savings of 62 billion kWh (or the equivalent amount of natural gas, oil, or coal).³ Preliminary results indicate that 84 billion kWh of savings were actually achieved, exceeding the goal by 37%. A goal of 130 billion kWh was recently established for the 2005-2008 period, and work has begun to consider an appropriate goal for the 2008-2011 period.⁴ The 2005-2008 goal amounts to about a 2% reduction in annual UK residential energy use (i.e., savings of nearly 0.7%/year).

Italy: In 2001, the Italian Ministry of Industry established an obligation for gas and electric distribution companies to achieve specific energy savings targets. Implementing details were worked out by the Regulatory Authority and the program began in January 2005. Under the program, electric and gas distribution companies must meet steadily increasing savings targets over the 2005-2009 period. The 2009 targets are 1.6 million metric tonnes of oil equivalent for electric distributors and an additional 1.3 million metric tonnes of oil equivalent for gas distributors. The 2009 targets amount to about 2% each of covered electricity use and covered gas use. Savings targets start at modest levels, but in the final year, the targets envision nearly a 1% reduction in electric and gas energy use. Distribution companies can operate programs themselves or can buy credits from others. There are penalties if they fail to meet the targets.

France: The French legislature is now working on a new energy law that includes energy targets somewhat similar to the program in the United Kingdom. In the draft French law, a target of 54 billion kWh (or the equivalent for other fuels) is established for lifetime savings for measures implemented in 2006-2008. The target is on the order of 1% of covered French energy use. Passage of the law is expected later this year.