Presented by Steve Nadel, Executive Director, American Council for an Energy Efficient Economy (ACEEE) at the IEA DSM workshop in Washington D.C. on 27 April 2011.

1. Energy Efficiency
Resource
Standards in the
U.S.
Steven Nadel
ACEEE
Presentation to IEA Workshop
April 2011

2. Share of Maryland Electricity Sales
That Can Be Met by Efficiency Policies
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
ElectricityDemand(GWh)
CHP
Building Codes
RD&D Initiative
Appliance
Standards
State and Utility
Programs
15% reduction in
forecasted consumption
by 2015
29% reduction in
forecasted
consumption by 2025

3. Levelized Utility Cost of Electricity Resources
0
2
4
6
8
10
12
14
16
Energy
Efficiency
Wind Biomass Natural
Gas
Combined
Cycle
Pulverized
Coal
Nuclear Coal
IGCC
Range
of
Levelized
Costs
(cents
per
kWh)
Note:
The
green
bars
represent
the
lower
end
while
the
blue
bars
reflect
the
upper
end
of
costs.
average = 2.5¢
---------------
Sources: ACEEE 2009 for EE, Lazard 2008 for others

4. Energy Efficiency Resource
Standards
Analogous to a Renewable Portfolio Standard
Electric and/or gas savings targets for utilities
• Includes end-use efficiency and sometimes
combined heat & power (CHP) and codes/
standards
• Targets generally start low and increase over time
Savings must be documented in accordance with
evaluation rules established by regulators

5. Why an EERS?
Achieve substantial energy and emissions
savings
Performance based – emphasizes savings,
not spending
Can be easier to legislate savings targets
than spending amounts
Can start programs quickly, without many
years of study (but targets should be
based on cost-effective opportunities)

6. Energy Efficiency Resource Standards
26 States – April 2011
Standard
Voluntary Goal
Pending Standard
Combined RES/EERS

7. State EERS Adoption
PA, NY
MD, OH
NM, MICO, MN,
VA, IL, NC
WA
CT, NVCA, HI
VTTX
IA, DE,
IN, AZ, HI
MA, FL, ME,
AR, WI, OR
0
1
2
3
4
5
6
7
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
#ofStateswithEERS

8. Vermont 27%
New York 26%
Massachusetts 26%
Maryland 25%
Delaware 25%
Arizona 22%
Connecticut 18%
Illinois 18%
Minnesota 17%
Iowa 16%
Indiana 14%
Rhode Island 14%
Hawaii 14%
Wisconsin 13.5%
Maine 13.5%
California 13%
Ohio 12%
Colorado 12%
Washington 12%
Michigan 11%
Oregon 10%
Pennsylvania 10%
2020 Cumulative Electricity Savings
Targets by State

9. State EERS Policies
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Year
CumulativeSavingsas%ofRetailSales
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Hawaii
Illinois
Indiana
Iowa
Maine
Maryland
Massachusetts
Michigan
Minnesota
Nevada
New Mexico
New York
North Carolina
Ohio
Oregon
Pennsylvania
Rhode Island
Texas
Vermont
Washington
Wisconsin

10. Texas
• First state to establish an EERS
• Initially 10% of load growth but increased by
legislature to 20% and by commission to 30% of
load growth
• Utilities have not had difficultly meeting and
exceeding targets

11. Vermont – Raising Efficiency
to a New Level
Source: Efficiency Vermont

12. What Markets Do We Work In?
Existing
Businesses Equipment
Replacement
Business New
Construction
New Homes
Efficient
Products
Existing
Homes
Low-Income
Target Sub-Markets:
• Colleges and Universities
• Municipal Waste and Water
• K-12 Schools
• Industrial Process
• State Buildings
• Farms
• Hospitals
• Ski Areas

13. Implementation of EERS Policies in 2010
• Thirteen of the twenty states with EERS policies in place for
over two years are achieving 100% or more of their goals as of
2010
• Only three states are realizing savings below 70% of their goals
but all 3 are still ramping up
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
CaliforniaVerm
ontNevada*
W
ashington
Connecticut
M
assachusetts
Rhode
Island*
Iowa*Hawaii
M
innesota*Colorado
O
hio
Illinois
New
M
exicoM
arylandNew
York
PennsylvaniaM
ichigan*
Texas
State
PercentSavingsComparedtoRetail
Sales
Annual % Goal
% Achieved
*Reference year for savings is 2009

14. EERS Implementation:
Observations
• Utilities generally meeting targets for increased
energy efficiency savings, regardless of prior
experience with energy efficiency programs.
• Available data indicates benefits outweigh
costs
• Ramping-up savings requires programmatic
excellence
• Tried & true programs work initially, but innovative
programs reaching all sectors necessary to reach
deeper savings

15. EERS Implementation:
Observations
• Regulation must be clear and fair
• Gradual target ramp-ups
• Clarity on evaluation methods
• All parties must be committed to meeting
targets
• Utilities devote resources needed to meet goals
• Commissions approving sufficient levels of funding
and complementary policies such as performance
incentives/decoupling

16. States with Combined EERS & RES
Pennsylvania: EE in RPS tier 2, but target too
low to get any savings; in 2008 established
separate EERS
Nevada: EE can be 25% of total and utilities now
exceeding this level
Hawaii: Can do unlimited EE; EE been ~40% of
total; EE will be separate as of 2015 with
~32% savings by 2030 target
North Carolina: EE can be 25% of total to start,
40% as of 2021; just getting started

17. Federal EERS Bills in Last
Congress
• Waxman-Markey as passed House
• Includes 20% RES with 5-8% EE
• Senate Energy Committee bill
• 15% RES with efficiency up to 4% EE
• Bills with 15% electric savings and 10%
gas savings by 2020 introduced by
Schumer and Markey

18. White Certificates and
Trading
• Most states do not have trading
• Enough EE that each utility can meet on
own
• CT had white certificates thru 2010, have
not set new goals
• Trading allowed in old PA program but
didn t need any new resources
• NV also allows 3rd party participation

19. Clean Energy Standard (CES)
• Includes renewables, efficiency, nuclear,
carbon capture and storage
• Examples – Lugar and Graham bills,
Obama included in State of the Union
• Issues:
• Include efficiency, no cap
• Numbers – Obama proposed 80% by 2035
• Include natural gas for partial credit?

20. Savings Grow Over Time Under Markey
and Schumer Bills
Electric Natural Gas
Annual Cumulative Annual Cumulative
2011 0.33% 0.3% 0.25% 0.3%
2012 0.67% 1.0% 0.50% 0.8%
2013 1.00% 2.0% 0.75% 1.5%
2014 1.25% 3.3% 1.00% 2.5%
2015 1.25% 4.5% 1.00% 3.5%
2016 1.50% 6.0% 1.25% 4.8%
2017 1.50% 7.5% 1.25% 6.0%
2018 2.50% 10.0% 1.25% 7.3%
2019 2.50% 12.5% 1.25% 8.5%
2020 2.50% 15.0% 1.50% 10.0%
Note: Savings count from date of passage

21. Impacts of a Federal EERS
(10% electric; savings over and above existing state
EERS s)
• Peak demand savings of ~33,000 MW
(110 power plants, 300 MW each)
• CO2 emissions down 74 MMT in 2020
(equivalent to taking 14 million vehicles
off the road for a year)
• 76,000 net jobs created
• Cumulative net savings of $66 billion (B/
C ~3:1)
Source: ACEEE analysis using the methodology from Furrey, Laura.
2009. Laying the Foundation for Implementing a Federal Energy
Efficiency Resource Standard. Washington, DC: ACEEE.

22. How Does a Federal EERS Affect States
that Already Have a State EERS?
States can implement federal and state
EERS simultaneously – same/similar
utility filings, meet higher targets
States can set higher targets to gain
additional savings
States with targets greater than the federal
targets also benefit from savings in
nearby states
- Emission reductions
- Impacts on energy prices

23. Issues for an EERS or CES
Which providers covered? (LSE s vs. Disco s?
Size cap? Public utilities? Gas utilities?)
Which measures eligible? (CHP? T&D?)
Appropriate targets
Any caps on EE?
Trading for EE? (in PA and CT)
Cost caps? (in IL and NC)
Industrial self-direct option? (as in OH & MI)
Monitoring and verification rules?
Relationship to other policies? (PBFs, stimulus
funds, regulatory incentives)

24. For More Information
State utility policies:
http://www.aceee.org/topics/utility-regulation-and-policy
EERS:
http://www.aceee.org/topics/eers
Steven Nadel, snadel@aceee.org
202-507-4000