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Summary
Wisconsin has a statewide energy efficiency and renewable resources program, called Focus on Energy, which is funded through ratepayer dollars. Electric and natural gas investor-owned utilities are required to participate in the statewide program. Customers of participating utilities are eligible to receive technical assistance and incentives for energy efficiency and renewable projects. Wisconsin's investor-owned utilities are not restructured; as regulated energy providers, some still offer energy efficiency and renewable programs to varying degrees. Utility program plans must be approved by the Public Service Commission and complement existing Focus on Energy program offerings. Wisconsin's municipal electric and electric cooperatives are required to either opt into Focus on Energy, or offer parallel programs called "Commitment to Community" programs.
Under 2005 Wisconsin Act 141, oversight of the Focus on Energy program was transferred from the Department of Administration to the Public Service Commission of Wisconsin in July of 2007. However, Act 141 directed Wisconsin utilities to administer and fund the statewide program. In order to fulfill their obligations, the utilities formed the Statewide Energy Efficiency and Renewable Administration (SEERA). SEERA contracts with a Program Administrator(s) to implement specific programs and provide program services. In 2007, expenditures for the Focus on Energy Program were $51 million (January-June administered by Department of Administration and July – December under the new structure). These programs saved almost 467,725 MWh. Under Wisconsin Act 141 energy efficiency programs are funded at 1.2% of gross utility revenues. This number is calculated using a three-year rolling average to alleviate extreme increases or decreases in funding from year to year. In 2008, utility contributions totaled $85 million, in 2009 the total was $85 million and in 2010 the total is $94 million.
Wisconsin Focus on Energy also provides natural gas efficiency programs. Focus on Energy programs saved 15.5 million therms in FY 2007. Staff at the Wisconsin Public Service Commission reported natural gas program spending of $10 million in 2007 and $18 million in 2008.
In addition to the Focus on Energy programs, four investor-owned utilities operated energy efficiency programs in 2007: We Energies and Wisconsin Public Service Corporation operated programs ordered by the Commission as a result of new power plant construction cases; Wisconsin Power and Light (Alliant Energy) operated its Shared Savings program, and Northern States Power (Xcel Energy) offered energy efficiency programs to residential and small business customers in targeted communities. These four programs combined had expenditures of just over $23 million in 2007.
According to the Energy Information Administration, Wisconsin utilities reported efficiency program savings of 467,725 MWh in 2007.
Wisconsin's utility operated energy efficiency programs were initiated in the mid-1980s when integrated resource planning - termed the "Advance Plan Process" - was enacted by PSCW. This process is no longer in place and has been replaced by biennial "strategic energy assessments." |
| Customer Energy Efficiency Programs |
Wisconsin has a statewide energy efficiency and renewable resources program, called Focus on Energy, which is funded through ratepayer dollars. Customers of participating electric and natural gas investor-owned utilities are eligible to receive technical assistance and incentives for energy efficiency and renewable projects. Wisconsin's investor-owned utilities are not restructured; as regulated providers, some still offer energy efficiency and renewable programs to varying degrees. These program plans have to be approved by the Public Service Commission and complement existing Focus on Energy program offerings. Wisconsin's municipal electric and electric cooperatives are required to either opt into Focus on Energy, or offer parallel programs called "Commitment to Community" programs.
Under 2005 Wisconsin Act 141, oversight of the Focus on Energy program was transferred from the Department of Administration to the Public Service Commission of Wisconsin in July of 2007. However, Act 141 directed Wisconsin utilities to administer and fund the statewide program. In order to fulfill their obligations, the utilities formed the Statewide Energy Efficiency and Renewable Administration (SEERA). SEERA contracts with a Program Administrator(s) to implement specific programs and provide program services in four areas: (1) residential energy efficiency, (2) non-residential energy efficiency (including the commercial, government, schools, industrial and agricultural sectors), (3) renewable energy, and (4) environmental and economic research and development. Wisconsin Energy Conservation Corporation is the Program Administrator for the residential and non-residential energy efficiency programs as well as for the renewable resource program. Programs include both electric and natural gas efficiency. The Energy Center of Wisconsin is the Program Administrator for the environmental and economic research and development program. SEERA also contracts with a Fiscal Agent to manage program funds and a Compliance Agent to ensure that Program Administrators and contractors follow program guidelines. The PSCW has a separate contract for independent program evaluation.
Prior to passage of Act 141, four investor-owned utilities operated energy efficiency programs in addition to Focus programs: We Energies, Wisconsin Public Service Corporation, Wisconsin Power and Light (Alliant Energy), and Northern States Power (Xcel Energy). We Energies and Wisconsin Public Service Corporation both had commission-established goals for demand savings (55 MW for We Energies and 32 MW for Wisconsin Public Service) as a result of new power plant construction cases. These programs ended in December 2008.
Also in 2008, Wisconsin Power & Light continued to offer its commercial/industrial customers a “Shared Savings Program” for which the company is allowed to earn a rate of return on these energy efficiency investments. Northern States Power offered energy efficiency programs in targeted areas to residential and small business customers using a combination of conservation escrow and economic development dollars. Some NSP programs used incentives in combination with selected Focus on Energy incentives.
In addition to changing the method used to fund the statewide energy efficiency and renewable resource program, Act 141 allowed for three other types of energy efficiency programs: utility administered (for large commercial, industrial, institutional and agricultural customers); large customer self-directed programs (large customers could keep the funds they paid into the program based on 2005 levels to implement energy efficiency projects); and voluntary utility programs. Funding for utility administered or large customer self -directed programs would be taken out of the 1.2% of gross utility revenues (therefore, decreasing funds available for the Focus program) but voluntary programs would be funded with dollars over and above the 1.2% of required utility contributions.
To date, no utility administered or self-directed programs have been proposed. However, beginning in 2009, We Energies, Wisconsin Power and Light (Shared Savings program) and Northern States Power offered voluntary utility programs with budget levels and program plans approved by the Commission.
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Wisconsin did not restructure its electric utilities, but established funding for statewide energy efficiency and renewable resource programs to be implemented by a non-utility program administrator(s). The resulting statewide program, Focus on Energy, is funded by ratepayers served by regulated investor-owned utilities. In addition, some publicly-owned utilities—municipal and cooperative utilities—use and support Focus on Energy. The legislation that established the statewide program also requires publicly-owned utilities to either offer comparable programs and services to the statewide program or elect to participate in the statewide program and fund it accordingly. Total Focus on Energy program expenditures in 2007 were $51 million. Staff at the Public Service Commission of Wisconsin reported natural gas program spending of $10 million in 2007 and $18 million in 2008.
Funding levels have increased substantially under Wisconsin Act 141. The statewide energy efficiency programs are currently funded at 1.2% of gross utility revenue. This number is calculated using a three-year rolling average to alleviate extreme increases or decreases in funding from year to year. In 2008, utility contributions totaled $85 million, in 2009 the total was $85 million and in 2010 the total is $94 million.
Beginning in 2009, We Energies, Wisconsin Power and Light (Shared Savings program) and Northern States Power offered voluntary utility programs with budget levels and program plans approved by the Commission. We Energies budget for electric programs in 2009 is $13 million and for natural gas programs the budget is $5.6 million. Wisconsin Power and Light has a budget of $14.3 million in 2009 for its Shared Savings program and Northern States Power has a budget of $976,500 for its voluntary programs in 2009.
Program cost recovery is handled via individual rate cases. A conservation escrow account is used for demand-side management programs. Program costs are recovered through rates, the money goes into an escrow account, and then the costs are adjusted, or "trued up," in the next rate case. If utilities spend more than the approved budget, they generally receive cost recovery through the true up. If the amount of actual spending is higher than the amount collected in escrow, the utilities may amortize cost recovery. If actual spending is less than the escrow amount, the PSCW "trues it up" through a reduction in escrow for the next rate period.
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| Energy Efficiency Resource Standard |
No Energy Efficiency Resource Standard is currently in place. However, the Governor's Task Force on Global Warming recommended that the state set savings targets of 2% per year for electricity and 1% per year for natural gas. These targets are percentages of total energy (kWh) sales to end-use customers. The Commission is currently conducting the first quadrennial planning process as required by Act 141 to establish goals, priorities and measurable targets for the Focus on Energy program. One of the decisions before the Commission is to determine whether energy efficiency and renewable resource goals should be set as savings target rather than a spending target (1.2 % of gross utility revenue.) A decision is expected in September of 2009.
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Decoupling was approved for Wisconsin Public Service Corporation in December 2008 (Docket 6690-UR-119), allowing the utility to pursue a four-year pilot program. WPSC is required to pursue three community-based pilots, which will be regularly reviewed (at 2, 12, 24, and 30 months). True-ups occur annually and over- or under-collection is capped at $14 million for electricity and at $8 million for natural gas. The Commission approved WPSC’s community based pilot plan and Focus on Energy’s plan for additional energy efficiency and renewable initiatives in August 2009. Under the stipulation, WPSC will provide additional funds to Focus on Energy for service territory-wide initiatives and for specific energy efficiency programs in the three pilot communities.
Wisconsin Power and Light company has submitted a proposed Gas Cost Recovery Mechanism. Approval is pending as of July 2009. WPSC Docket No. 6690-UR-119 (December 2008, modified February 2009); WPL Docket No. 6680-UR-116.
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| Reward Structures for Successful Energy Efficiency Programs |
A decision in a recent rate case (Docket 6680-UR-114) of Wisconsin Power & Light (Alliant Energy) allows the company to earn the same rate-of-return on its investments in energy efficiency made through its “Shared Savings” program for C/I customers as it earns on other capital investments (e.g., power plant construction.) Utilities can propose incentives as part of their rate cases, but there have been no such proposals from other utilities recently. Wisconsin utilities did have performance incentives in place in the early to mid-‘90s, but dropped them as the state began investigating restructuring and deregulation deregulation.
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| Energy Efficiency as a Resource |
The Public Service Commission of Wisconsin carries out a "Strategic Energy Assessment" every two years. These assessments assess past and future electric energy needs and associated resources available to meet these needs. It also addresses issues that may need to be addressed to ensure the availability and reliability of the state's electric energy supply. This process is for planning only; it yields no regulatory orders or decisions that require actions by affected utilities, such as establishing specific resource goals or required investment levels in energy efficiency.
Two of Wisconsin's utilities, We Energies and Wisconsin Public Service Corporation, were required to meet energy efficiency goals (given in megawatts equivalent) as a result of decisions made for applications for construction of new generation plants. Both programs ended in December of 2008.
With the passage of Act 141, there was a renewed emphasis on demand. Act 141 states “the commission shall give priority to programs that moderate the growth in electric and natural gas demand and usage.” The result was that the current statewide program goals emphasize kW savings more so than did the goals set under 1999 Wisconsin Act 9 (legislation that first established the statewide program.) For example, the program administrator’s performance bonus budget allocation is weighted 40 percent kW, 30 percent kWh and 30 percent therms.
In April 2008, PSCW initiated a docket as a result of recommendations by the Governor's Task Force on Global Warming to establish targets for energy efficiency savings through energy efficiency and conservation, "Investigation into the Adoption and Achievement of Increased Conservation and Energy Efficiency Goals (05-UI-115)." This docket is currently underway. A potential study was completed in May of 2009 and the Commission is currently conducting the first quadrennial planning process as required by Act 141 to establish goals, priorities and measurable targets for the Focus on Energy program. This process is expected to be completed in the fall of 2009.
Statute also requires the PSC to implement a priority list of energy sources in making all energy related decisions and orders, to the extent cost-effective and technically feasible, and EE is the first priority (Statute 1.12). However, with Act 141 passed in 2006, the PSC may not impose the energy efficiency requirements of the priority list on IOUs and wholesale suppliers if the PSC and the applicant have fulfilled all the obligations related to funding and implementing the statewide EE programs -- which require utilities to spend 1.2% of the latest 3-year average of its gross operating revenues on EE and RE.
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Last Updated
10/13/2009
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