Pennsylvania Act 129 of 2008 creates an EERS that requires each of the seven major electric distribution companies to procure cost-effective energy efficiency and to develop energy efficiency and conservation plans to reduce electricity consumption by a minimum 1% by May 31, 2011, increasing to a total of 3% by May 31, 2013, and to reduce peak demand by 4.5% by May 31, 2013. In July 2009, the electric distribution companies submitted energy efficiency plans to the Public Utility Commission, which oversees the implementation of Act 129, for the first time.
Taken together, the four-year plan adds up to one of the largest new efficiency programs in the nation, with a total budget of approximately $1 billion.
This is a significant change from the previous state of affairs, in which Pennsylvania utilities spent $4.6 million on energy efficiency in 2008, saving 2,715 MWh. As utilities begin to offer efficiency programs under Act 129, spending on energy efficiency in the state will increase. Electric utilities’ program budgets filed with the state totaled $96.9 million in 2009 and $110 million in 2010. Reported budgets for energy efficiency programs for 2011, and electricity savings for 2010, are in the State Spending and Savings Tables.
For further reading, in May 2009, as part of the State Clean Energy Resource Project, ACEEE completed the report Potential for Energy Efficiency, Demand Response, and Onsite Solar Energy in Pennsylvania.
Pennsylvania will have gone from virtually no efficiency programs at all to a major, multi-sector portfolio within three years. This is one of the fastest expansions of any state in the country.
In accordance with Act 129 of 2008, each electric distribution company filed an energy efficiency and conservation ("EEC") plan with the PUC in July 2009. Plans submitted by each company explain how energy reductions are to be met, including a contract with a conservation service provider, and provide for energy efficiency measures for low-income households. The PUC may approve, reject, or modify the plans. Electric distribution companies also filed a smart meter technology procurement and installation plan for approval with the PUC.
According to the Energy Information Administration, Pennsylvania utilities reported efficiency program savings of 2,715 MWh in 2008, less than 0.01% of retail sales of electricity. This number has improved dramatically as the state has ramped up its energy efficiency efforts. Reported budgets for energy efficiency programs for 2011, and electricity savings for 2010, are in the State Spending and Savings Tables.
One specific program of interest--the Keystone HELP–Energy Efficiency Loan Program--is a low rate, low payment financing program for energy efficiency home improvements and geothermal heat pump systems. More information on the program can be found in the ACEEE report, Energy Efficiency Financing Programs.
Before Act 129, Pennsylvania had Four Sustainable Energy Funds that had been created as a result of individual settlements with the state’s five major distribution utilities to promote both renewable energy and energy efficiency. In 2007, approximately $6.5 million was distributed in the form of loans and $2 million was provided in grants from all SEFs. West Penn Power SEF is the only fund still collecting funds through distribution and transmission rates, currently at $0.001/kWh.
Under the new legislation, the electric distribution companies’ energy efficiency and conservation plans propose a cost-recovery tariff mechanism to fund the energy efficiency and conservation measures and to ensure recovery of reasonable costs. The utilities can also recover the costs through a reconcilable adjustment mechanism. This will bring in over $200 million per year by 2011.
According to the Energy Information Administration, Pennsylvania utilities spent $4.6 million on energy efficiency in 2008. As utilities begin to offer efficiency programs in accordance with Act 129, spending on energy efficiency in the state is increasing. The sum of the electric efficiency program budgets filed by utilities with the Commission for the first program year (2009) was $96.9 million, which increased to $110 million in 2010. Reported budgets for energy efficiency programs for 2011 are in the State Spending and Savings Tables.
Summary: 3% cumulative savings by 2013; ~2.3% cumulative savings from 2014-2016.
In October 2008 Pennsylvania adopted Act 129, establishing an energy efficiency resource standard in Pennsylvania. Each electric distribution company (EDC) with at least 100,000 customers must reduce energy consumption by a minimum 1% by May 31, 2011, increasing to 3% by May 31, 2013, measured against projected electricity consumption for the period from June 2009 to May 2010. Peak demand must be reduced by 4.5% by May 31, 2013. Ten percent of both consumption and peak demand reductions are to come from federal, state, and local government, including municipalities, school districts, institutions of higher education and nonprofit entities. Another ten percent must come from the low-income sector. The Pennsylvania Public Utility Commission(PUC) approved Energy Efficiency and Conservation (EE&C) plans for each EDC, which detailed program portfolios and savings targets tailored to each EDC. Failure to achieve the reductions required (load and/or peak demand) subjects EDCs to a civil penalty of not less than $1M and not to exceed $20M.
Under the legislation, the EDCs’ EE&C plans propose a cost-recovery tariff mechanism to fund the EE&C measures and to ensure recovery of reasonable costs. The EDCs can also recover the costs through a reconcilable adjustment mechanism. The total cost associated with an EDC’s energy efficiency and peak demand reduction plan may not exceed 2% of the EDC’s total annual revenue as of December 31, 2006.
In August 2012, the Pennsylvania PUC issued an implementation order for Phase II of the EE&C Program, establishing electricity savings targets for the 3-year period from FY2014-2016. The targets would amount to 2.3% cumulative savings over the 3-year period; no incremental annual targets were established. The order also did not set peak demand reduction targets for Phase II.
Pennsylvania has no Natural Gas EERS.
Under the October 2008 legislation, the PUC must implement programs that encourage conservation and efficiency by every major rate class. The legislation does not, however, designate energy efficiency as a resource.
The evaluation of ratepayer-funded energy efficiency programs in Pennsylvania relies on both legislative mandates and regulatory orders. The order follows the legislation. Evaluations are mainly administered by the Pennsylvania Public Utilities Commission, but there are no specific legal requirements for these evaluations in Pennsylvania. Evaluations are conducted for each of the utilities. Pennsylvania relies on the Total Resource Cost (TRC) test and considers it to be its primary cost-effectiveness test. A benefit-cost test is required for portfolio level screening. The rules for benefit-cost tests are stated in Final Order in Docket No. M-2009-2108601.