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Summary
Since 1999, Texas law has required electric utilities to meet energy efficiency goals. In accordance with HB 3693, which revised the prior legislative mandate, the Public Utilities Commission of Texas (PUCT) set energy savings targets at 20 percent of load growth for Texas utilities in 2009. HB 280 and SB 546, introduced this last session in the Texas Legislature, proposed future targets, but neither bill passed.
To meet these goals, utilities administer incentive programs, which retail electric providers and energy efficiency service providers implement. Programs are typically funded through the utilities’ tariff or base rate. In 2007, Texas utilities spent $79.5 million on energy efficiency in 2007, saving 457,808 MWh.
Utilities submit plans for the forthcoming year and reports on the previous year to the PUCT. The PUCT approves the plans. The year-end report gives an account of energy and capacity saved. Utilities receive performance bonuses based on their achieved energy savings.
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| Customer Energy Efficiency Programs |
Texas law requires all electric transmission and distribution utilities (TDUs) to meet certain energy efficiency goals - currently, 20 percent of load growth. To meet these goals, utilities administer incentive programs. Retail electric providers and energy efficiency service providers implement the programs. All programs are designed to reduce system peak demand, energy consumption and/or energy costs and are available to customers in all customer classes. In 2007, Texas energy efficiency programs reduced demand by 167,000 kW, exceeding the legislative goal of 136,000 kW by 23%. The TDUs also reduced energy consumption by 427.9 million kWh. Between 1999 and 2006, energy efficiency programs have reduced peak demand by 756,000 kW and saved 2,005 million kWh per year. Texas utilities reported efficiency program savings of 457,808 MWh in 2007.
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An Energy Efficiency Cost Recovery Factor (EECRF) rate schedule is included in tariffs and permits the utility to recover the costs of providing energy efficiency programs. Alternatively, a commission order establishing a utility’s base rate may also include an amount for energy efficiency program costs in the base rate. The commission also has the option of approving an energy charge or a monthly customer charge for the EECRF. According to the Energy Information Administration, Texas utilities spent $79.5 million on energy efficiency in 2007.
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| Energy Efficiency Resource Standard |
In 1999, Texas became the first state to establish an EERS, requiring electric utilities to offset 10% of load growth through end-use energy efficiency. After several years of meeting this goal at low costs, in 2007 the legislature increased the standard to 15% of load growth by December 31, 2008 and 20% of load growth by December 31, 2009. The commission approved these goals in March 2008.
The recent legislation also required a study to determine whether the target could be increased to 30% of load growth in 2010 and 50% of load growth in 2015. The study, released in December 2008, found these targets were reasonable and attainable for the majority of utility service areas. The study did suggest, however, delaying the adoption of the initial proposed energy and peaking savings goals from 2010 to 2012 to allow utilities sufficient time to ramp up programs.
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Not in place.
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| Reward Structures for Successful Energy Efficiency Programs |
A utility that exceeds its demand reduction goal within the prescribed cost limit is awarded a performance bonus. The performance bonus is based on the utility’s energy efficiency achievements for programs implemented in the previous year.
A utility that exceeds 100% of its demand reduction goal receives a bonus of 1% of the net benefits for every 2% that the demand reduction goal has been exceeded. The maximum bonus is equal to 20% of the utility’s program costs. Additionally, a utility that meets at least 120% of its demand reduction goal with at least 10% of its savings achieved through Hard-to-Reach programs (which benefit customers with an annual household income at or below 200% of the federal poverty guidelines) can receive an additional bonus equal to 10% of the regular performance bonus.
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| Energy Efficiency as a Resource |
The PUCT has established targets and funding for energy efficiency programs. Utilities must submit an energy efficiency plan for the forthcoming year and a year-end report to the PUCT. Plans must be approved by the commission. The year-end report details energy and capacity saved, verified by independent evaluators. According to the Electric Utility Marketing Managers of Texas, Texas TDUs exceeded their legislative energy efficiency goals in 2007, achieving 167 MW of peak demand reduction and 427.9 GWh of energy reduction.
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Last Updated
08/19/2009
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