Blog Post

Yes, municipal utilities can compete with their investor-owned cousins on energy efficiency

November 12, 2015

Utility energy efficiency policies and programs have seen tremendous growth over the past dozen years, and this progress has been widely cited by ACEEE and others. During this time, much attention has rightly been focused on investor-owned utilities, since they account for the majority of electricity sales in the nation.

However, over a quarter of all customers and a quarter of all electric sales in the United States are served by the public power sector. For the United States to achieve its economic and environmental objectives in the area of energy efficiency, public power utilities must be strong partners. Toward that end, our new report focuses on a key segment of the public power sector: municipal utilities.

Our findings indicate that it is definitely possible for municipal utilities to ”hold their own” against their investor-owned neighbors. Based on suggestions from industry experts, we identified and surveyed a total of 23 municipal utilities with substantial energy efficiency efforts and achievements. Overall, this group had an average annual energy efficiency spending of 2.44% of revenues, and an average annual savings of 1.0% of sales.

In the hope of inspiring additional municipal utilities to strive for strong energy efficiency achievements, the report profiles a total of nine of the highest-performing municipal utilities. For that group, the average annual spending on energy efficiency programs was 3.1% of revenues, and the average savings was 1.4% of sales. That is competitive with many of the best-performing investor-owned utilities in the nation.

Our study also gathered information on the major factors motivating municipal utilities to engage in substantial energy efficiency efforts. At the top of the list was the fact that their customers “like” having energy efficiency programs and services available from their utility. The other top factors were: the value of energy efficiency as a resource in reducing other supply costs, the corollary economic benefits to the community they serve, and whether their local governing board had a strong policy position on energy efficiency. State policies encouraging or requiring energy efficiency efforts by public power utilities were also rated as very important factors by municipal utilities located in states with such policies.

When asked about factors that tend to inhibit aggressive energy efficiency efforts, municipal respondents most often mentioned the concern over revenue loss. In that respect, municipal utilities share that concern with their IOU counterparts.

While there is much variability in the level of energy efficiency activity across the municipal utility sector, this study documents that there are many excellent examples around the nation of municipal utilities demonstrating strong energy efficiency achievements. We hope that by providing this information, we will enable more public power utilities increase their efforts in this area.

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