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Reprinted from EEnergy Informer (March 2015), with permission.

US Energy Efficiency On The Rise

 
Fereidoon P. Sioshansi
Editor and Publisher
"EEnergy Informer"
Walnut Creek, CA
fpsioshansi@aol.com
 

One of the reasons for the slow electricity demand growth in the US and elsewhere is the renewed interest in energy efficiency. In the US, many states require utilities to engage in energy efficiency programs with funding from their very own customers. Like everything else in the US, the details vary considerably from state to state.

Figure 1: Different Ways to Implement Energy Efficiency
Source: State Electric Efficiency Regulatory Frameworks, Institute for Electric Innovation (IEI), Dec 2014

A recent report by the Institute for Electric Innovation,   (IEI), titled State Electric Efficiency Regulatory Frameworks, provides an updated account of how different states implement and fund  programs using one of 3 main regulatory approaches:

Direct cost recovery, allowing the recovery of costs related to the program administration, implementation, and actual costs through system benefit charges, and/or tariff surcharges;

  • Fixed-cost recovery through decoupling and/or lost revenue adjustment mechanisms that allow utilities to recover fixed costs as volumetric consumption falls due to energy efficiency programs; and
  • Performance incentives, which reward utilities for meeting or exceeding certain electric efficiency targets or penalizing for poor performance.

According to the report, 32 states currently have approved fixed-cost recovery mechanisms. Of these, 14 have revenue decoupling and 19 have lost revenue adjustment mechanisms. Meanwhile, 29 states have performance incentives in place, up from 28 in 2013.

 Figure 2: Rising Energy Efficiency Budgets
Source: State Electric Efficiency Regulatory Frameworks, Institute for Electric Innovation (IEI), Dec 2014

 

Overall, customer-funded energy efficiency programs have seen a 30% boost compared to 2010 and could double by 2025, thanks to expanding state level policies.

The IEI says US electric utility efficiency budgets in 2013 totaled $7 billion, a figure it reckons will exceed $14 billion by 2025. The future budgets can, of course, change if regulators change their minds on the cost-effectiveness of the programs, as they recently did in Florida.

 

 

Figure 3: Incentives vary from state to state, so do energy efficiency gains
Source: State Electric Efficiency Regulatory Frameworks, Institute for Electric Innovation (IEI), Dec 2014

 

The existing programs saved an estimated 126 TWh from total US electricity consumption in 2012, according to IEI.

Some states and regions are more ambitious in promoting energy efficiency than others. In October 2014, the Northwest Power and Conservation Council, for example, reported that energy efficiency was the second-largest power resource in the Pacific Northwest region, ranking only behind hydroelectricity. That says a lot for a region blessed with abundant hydro resources. 

 

 

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