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State Energy Efficiency Policy Database

Arkansas

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Summary

Utility-sector energy efficiency initiatives in Arkansas have increased significantly since 2007, when the Arkansas Public Service Commission (APSC) approved Rules for Conservation and Energy Efficiency Programs requiring electric and gas utilities to propose and administer energy efficiency programs.  In 2010, the APSC further established the importance of energy efficiency as a resource by adopting an energy efficiency resource standard (EERS) for both electricity and natural gas, guidelines for efficiency program cost recovery and a shareholder performance incentive, and new guidelines for utility resource planning, which include provisions for demand-side resources.  In 2013, the APSC has an open docket to set new efficiency targets and to address efficiency-related policy issues for the three-year plan (2015-2017).

The most recent budgets for energy efficiency programs and electricity and natural gas savings can be found in the State Spending and Savings Tables on the left.

For further reading, in March 2011, as part of the State Clean Energy Resource Project, ACEEE completed the report Advancing Energy Efficiency in Arkansas: Opportunities for a Clean Energy Economy.

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November 8, 2013


Customer Energy Efficiency Programs

In May 2007, the Public Service Commission approved Rules for Conservation and Energy Efficiency Programs requiring electric and gas utilities to propose and administer energy efficiency programs (Docket No. 06-004-R, Orders No. 1, 12, 18). The state’s jurisdictional utilities filed Energy Efficiency Plans in July 2007 containing proposed Quick Start efficiency programs. All seven gas and electric utilities elected to sponsor and fund statewide programs supporting weatherization and energy efficiency education. The three gas companies jointly sponsored a statewide energy audit program for commercial and industrial customers.  Each of the seven utilities individually proposed EE programs. There are 22 electric utilities regulated by the AR PSC, including cooperatives and investor-owned, but not municipal or independent power producers.

In 2010, the APSC further established the importance of energy efficiency as a resource by adopting an energy efficiency resource standard (EERS), guidelines for efficiency program cost recovery and a shareholder performance incentive, and new guidelines for utility resource planning, which include provisions for demand-side resources. Since then, electric and gas utilities have significantly expanded their energy efficiency program portfolios in order to meet the annual energy efficiency targets.  Recovery of direct program costs associated with commission-approved energy efficiency programs is accomplished through an energy efficiency cost recovery rider on customer bills.

The most recent budgets for energy efficiency programs and electricity and natural gas savings can be found in the State Spending and Savings Tables on the left.


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November 8, 2013


Alternative Business Models

In December 2010 the Arkansas PSC approved a joint electric and gas utility motion to allow the awarding of lost contributions to fixed costs that result from future utility energy efficiency programs. All investor owned utilities are approved to recover lost revenues as part of the annual energy efficiency program tariff docket (See Order No. 14 Docket 08-137-U).

In 2007 rate cases, the Arkansas PSC approved a decoupling mechanism, a Billing Determinant Adjustment tariff that furthers its goal of promoting energy efficiency, for the three major natural gas distribution companies in the state. The purpose of the BDA Tariff is to account for declines in non-gas revenues due to declining gas volumes caused by conservation and decreasing billing determinants. The tariff applies to the Residential and Small Commercial rate classes and was in effect for three evaluation periods (2008, 2009, and 2010). (See Docket No. 07-016-U for Arkansas Oklahoma Gas).


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August 9, 2013


Reward Structures for Successful Energy Efficiency Programs

In December 2010 the PSC issued an Order approving a general policy under which the Commission will approve incentives to reward achievement in the delivery of essential energy conservation services by investor owned utilities. The first opportunity for utilities to request incentives based on performance will be in April 2012 (See Order No. 15 Docket 08-137-U).


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August 9, 2013


Energy Efficiency as a Resource

The Commission approved "Resource Planning Guidelines for Electric Utilities" in Docket 06-028-R (final order issued in January 2007).These guidelines include specific requirements for demand-side resources. Utilities are required to consider "all reasonably useful and economic supply and demand resources that are available to a utility or its customers" for "incremental capacity needs." Further, "[u]tility efforts to encourage energy efficiency, conservation, demand-side management, interruptible load and price responsive demand should be identified."

Although there is no loading order prioritizing energy efficiency, the Commission approved Rules for Conservation and Energy Efficiency Programs in May 2007 (Docket 06-004-R), and subsequently established an EERS in 2010, requiring utilities to file energy efficiency plans to implement cost-effective energy efficiency programs. 


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August 12, 2013


Evaluation, Measurement & Verification
  • Cost-effectiveness test(s) used: TRC, UCT, PCT, RIM
  • Uses a deemed savings database: no

The evaluation of ratepayer-funded energy efficiency programs in Arkansas relies on regulatory orders (APSC Rules for Conservation and Energy Efficiency Programs, Docket 06-004-R). Evaluations are administered by the Arkansas Public Service Commission (APSC). Evaluations are conducted for each of the utilities, but there are no specific legal requirements for these evaluations in Arkansas. Arkansas uses four of the five classic benefit-cost tests identified in the California Standard Practice Manual. These are the Total Resource Cost (TRC), Utility/Programs Administrator (UCT), Participant (PCT), and Ratepayer Impact Measure (RIM). The rules for benefit-cost tests are stated in APSC Rules for Conservation and Energy Efficiency Programs, Docket 06-004-R. Arkansas specifies the TRC to be its primary cost-effectiveness test. These benefit-cost tests are required for overall portfolio, total program, customer project, and individual measure level screening.

The Commission requires each utility to hire an independent EM&V contractor, and to jointly fund an Independent EM&V Monitor.  The Commission required an EM&V collaborative to develop a Technical Resource Manual that is updated annually and approved by the Commission.  


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August 9, 2013


Energy Efficiency Resource Standards

Summary: Incremental annual electricity savings of 0.75% of retail sales for 2013-2014 and 0.9% in 2015. Natural gas savings of 0.4% of retail sales for 2013-2014 and 0.6% in 2015.

In December 2010, Arkansas PSC adopted an energy efficiency resource standard (see Docket No. 08-144-U). The targets set by the Public Service Commission were moderate, rising from an annual reduction of 0.25% of total electric kilowatt hour (kwh) sales in 2011, to 0.5% in 2012, and 0.75% in 2013, Natural gas targets are 0.2% in 2011, 0.3% in 2012, and 0.4% in 2013.

In January 2013, the Public Service Commission issued an order in Docket 13-002-U seeking comment on proposed savings goals for the next three-year program cycle. The proposed goals by the PSC staff would double the previous annual electricity savings levels to 1% of sales in the first program year, 1.25% in the second, and 1.5% in the third.  Proposed savings targets for natural gas would more than double the previous targets: 0.6%, 0.8%, and 1% per year. Based on stakeholder feedback, the PSC rescheduled the filing date to June 1, 2014 for the next three-year program cycle, and pushed back the start year so that the new program cycle is 2015-2017. For 2014, the PSC directed program administrators to use the energy savings targets, budgets, and the incentive structure previously approved for Program Year 2013 (unless program administrators seek to make modifications to program plans for approval by the PSC). In September 2013, the PSC issued an order setting an electricity savings target of 0.9% and a natural gas savings target of 0.6% for 2015. The PSC deferred the ruling on 2016-2017 targets pending completion of a thorough potential study aimed at improving programs.


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October 16, 2013