EXECUTIVE SUMMARY

Nationwide spending on ratepayer-funded electric energy efficiency programs in 2003 was about $1.35 billion. This includes both utility demand-side management programs and public benefits energy efficiency programs. The level of spending continues a modest rebound since reaching a low point of about $900 million in 1998. This upward trend is likely to continue as states such as California have increased their commitment to supporting energy efficiency programs as part of long-term energy resource plans.

The nationwide average for electric energy efficiency program spending is $4.65 per capita. Eighteen states are above this national average; the highest (Vermont) is $28.26 per capita. The nationwide average for electric energy efficiency program spending as a percentage of total utility revenues is 0.52%. Thirteen states exceed 1% by this measure. The highest (Vermont) is 3.0%. Twenty-three states spend less than 0.1%.

Despite observed growth in overall nationwide spending and associated electric energy efficiency program activity, there are still great disparities among states. The top ten states in terms of spending per capita account for 39% of the total nationwide spending on energy efficiency programs. The top twenty states by this measure account for 90% of nationwide spending.

Cumulative energy savings achieved by electric energy efficiency programs were 1.9% of total national energy (kilowatt-hour) sales in 2003. Seven states have achieved savings greater than 5% of total energy sales. The high was 7.8% (Connecticut). The top ten states by this measure account for about 60% of nationwide savings from electric energy efficiency programs. The top twenty states account for 87% of nationwide savings.

Ratepayer-funded electric energy efficiency programs have entered an era of renewed focus and importance after a decade of relative neglect in the wake of electric industry restructuring. This renewal has been driven by a combination of factors, including reliability crises such as occurred in western states in 2000-2001; dramatic increases in fossil fuel prices; growing concern over electric system capacity; and the emerging recognition of financial risks associated with future environmental costs.

Recent trends suggest that the energy utility industry is once again looking upon energy efficiency as a viable and cost-effective long-term resource for system planning and operation, and a proven mechanism for helping utilities meet customer demand.

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18 pp., October 2005, $16.00, U054