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State Energy Efficiency Policy Database

Indiana

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Summary

Since 2007 Indiana has been expanding customer energy efficiency programs. Both electric and natural gas utilities administer programs for their customers as the result of regulatory orders and other decisions by the Indiana Utility Regulatory Commission. The electric utilities offer a portfolio of “core programs,” organized and coordinated statewide as “Energizing Indiana,” as a statewide, common platform. While growth of these programs has been steady in recent years, overall spending on programs is still modest in comparison to leading Midwestern states. The state has an energy efficiency resource standard (EERS) and an integrated resource planning (IRP) requirement.

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


Customer Energy Efficiency Programs

Both natural gas and electric utilities in Indiana operate energy efficiency programs. These utilities include Duke Energy, Vectren, Indiana Michigan Power Company, Northern Indiana Public Service Company, Northern Indiana Fuel and Light, and Kokomo Gas and Fuel. While some of these programs have existed for over a decade, they have been relatively small.

In 2007, the state’s regulators, utilities and stakeholders began efforts to expand customer energy efficiency programs and to establish targets for energy savings through such programs. This has led to a series of dockets at the Indiana Utility Regulatory Commission (IURC). A Commission order (in Case 42693) called on all electric utilities to provide a core set of statewide programs. It was implemented starting January 2, 2012. Phase II of the order requires regulated utilities to achieve energy savings targets. Utilities must contract with a single independent third party administrator for the purpose of jointly administering and implementing the “Core Programs,” which are called “Energizing Indiana.”  Non-jurisdictional utilities, such as cooperatives and municipal utilities, were invited to participate in the statewide Core program. However, most of these non-jurisdictional utilities chose not to participate.

The portfolio of core programs, Energizing Indiana, which has been created as the result of IURC orders on customer energy efficiency programs, provides a statewide approach offered by all regulated electric utilities. The statewide approach offers consumers a uniform set of energy efficiency programs, using coordinated marketing, outreach, and consumer education strategies. The programs include: residential lighting, home energy audits, low-income weatherization, energy-efficient schools, and commercial and industrial. Energizing Indiana is administered by a single independent, third-party entity, which is contracted by all of the utilities. Utilities are able to oversee additional programs. Programs are evaluated through a consistent evaluation framework developed by a third-party evaluator.

Energy efficiency programs for natural gas utility customers have been growing steadily in recent years. The IURC requires utilities to complete market potential studies, annual operating plans, annual reports and EM&V reports for their customer programs. Such programs have expanded every year recently in terms of their budgets, participation and goals. All four of the state’s largest natural gas utilities offer programs to their residential, commercial and industrial customers.

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


Energy Efficiency Resource Standards

Summary: No EERS currently in place. Previous targets for annual electricity savings increased to 1.1% in 2014, and leveled at 2% in 2019. The Indiana legislature voted to end Energizing Indiana programs in 2014.

Indiana’s Commission ordered all jurisdictional electric utilities to begin submitting three-year DSM plans in July 2010 indicating their proposals and projected progress in meeting annual savings goals outlined by the Commission. The goals began at 0.3% annual savings in 2010, increasing to 1.1% in 2014, and leveling at 2% in 2019. Load management and direct load control initiatives, including peak-shaving, which result in net-energy savings was counted towards the goal. 

The decision also outlined a portfolio of core programs, called Energizing Indiana, offered by all affected utilities. The statewide approach offered consumers a uniform set of energy efficiency programs, using coordinated marketing, outreach, and consumer education strategies. The programs included: residential lighting, home energy audits, low-income weatherization, energy-efficient schools, and commercial and industrial. Energizing Indiana was administered by a single independent, third-party entity, which is contracted by all of the utilities. Utilities were able to oversee additional programs.

In March 2014, the Indiana legislature voted to end Energizing Indiana programs, effectively eliminating the state's EERS. Governor Pence neither signed nor vetoed the bill, and it became law in April 2014. Governor Pence voiced his support for energy efficiency, directing legislators and regulators to consider new frameworks for energy efficiency in the future.

Indiana Administrative Code provides guidelines for demand-side recovery electric utilities, as well as lost-revenue recovery and demand-side management incentives.


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April 8, 2014


Alternative Business Models

At one time Vectran Energy had a decoupling mechanism for gas and electric utilities, however decoupling was rejected for electric utilities in a 2011 PUC order (See Cause No. 43839, approved April 27, 2011 and Cause No. 43112, approved Aug. 1, 2007). Vectren has a Reliability Cost and Revenue Adjustment Mechanism (See Cause Nos. 43111, 39453, and 43406) and Duke Energy Indiana has lost revenue recovery. (Cause No. 43374). 


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August 9, 2013


Reward Structures for Successful Energy Efficiency Programs

In 2009 Vectren received approval for a tiered structure shareholder performance incentives for electricity programs and Indiana Michigan Power Company received approval for a shared benefits approach (See Cause No. 43427; Cause No. 43618).

Review relevant Dockets by searching here.


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August 9, 2013


Energy Efficiency as a Resource

Electric utilities are required to submit resource plans every 2 years that cover a 20-year-planning horizon. Under requirements of the Indiana Administrative Code (170 IAC 4-7-1 through 4-7-9) the affected utilities are required “to consider alternative methods of meeting future demand for electric service. The code adds that a utility “must consider a demand-side resource, including innovative rate design, as a source of new supply in meeting future electric service requirements.”


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August 7, 2013


Evaluation, Measurement & Verification

The evaluation of ratepayer-funded energy efficiency programs in Indiana relies on regulatory orders (Cause No. 42693, Phase II Order). Evaluations for electric programs are administered by both the utilities and the Indiana Utility Regulatory Commission. There are no specific legal requirements for these evaluations in Indiana. Evaluations are conducted statewide and for each of the utilities. Indiana 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 Rule 8. 170 IAC 4-8. Indiana specifies the TRC to be its primary cost-effectiveness test. These benefit-cost tests are required for overall portfolio, total program, and customer project level screening, with exceptions for low-income programs, pilots, and new technologies. Indiana program evaluation is still in the nascent stages of development.

Natural gas programs are subject to EM&V developed by a third-party evaluator and directed by a Joint Oversight Board consisting of representatives from the utilities, the Indiana State Office of Utility Consumer Counselor, and the Citizens Action Coalition, a local non-profit representing the interests of Indiana consumers.


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August 13, 2013