The State of the States: Energy Efficiency Policy in 2011

As our Executive Director Steven Nadel pointed out in a recent blog post, energy efficiency had mixed success in 2011. At the state level, however, we saw some nice improvements, many of which were reflected in our 2011 State Energy Efficiency Scorecard report. Utility-sector investments in energy efficiency programs are increasing, building energy code adoption is rising, and more states are adopting policies and programs to promote energy-efficient transportation systems. While the year’s developments are too numerous to detail here, below we share some of the major stories of 2011. For a complete read on what is happening in the states, check out our State Energy Efficiency Policy Database and our series of state-related blog posts: The State Current.

Northeast/Mid-Atlantic

Massachusetts, Vermont, New York, and Rhode Island continue to anchor energy efficiency in the Northeast. Each state has adopted aggressive energy efficiency goals of around 2% of sales per year and in 2011 each state’s programs achieved impressive levels of savings. New York has also reaffirmed its commitment to energy efficiency as its main energy agency, the New York State Energy Research and Development Authority (NYSERDA), submitted a proposal for a new set of programs that would shift its focus to driving technology innovation and adoption of advanced building codes. The state Public Service Commission is also attempting to revise its regulatory and program framework to help the state achieve its aggressive Energy Efficiency Resource Standard (EERS) policy.

Connecticut regained its footing in 2011. After energy efficiency funding was diverted to shore up the state budget deficit in 2010, newly-elected Governor Dannel Malloy signed a bill restoring funding to the Connecticut Energy Efficiency Fund in 2011. Governor Malloy is eager to move his state to the top of the Scorecard.

Down the coast, Pennsylvania utilities successfully met the first phase of their state’s EERS policy, and in Washington, D.C., a third-party energy efficiency program administrator got up and running. West Virginia, a state that has historically placed low in our Scorecard rankings, is also beginning to seriously consider building energy codes and improved utility-sector energy efficiency programs. Delaware and Maryland remain far behind in implementing their aggressive EERS targets. The Delaware EERS Workgroup published a Report in 2011 underscoring the numerous challenges the state must address to implement its EERS, including the need for a sustainable and robust funding source. Maryland is much farther along than Delaware, but as the Maryland Public Service Commission (PSC) pointed out in December, there is much work to be done. The Maryland PSC directed the state’s utilities to identify additional efficiency programs to make up the gap between their current plans and state law, which requires utilities to achieve 10% savings by 2015.

The Regional Greenhouse Gas Initiative (RGGI) also came under fire from numerous sides. The carbon auction proceeds from RGGI fund energy efficiency programs in many states, and recent studies have shown the program to be highly beneficial for the states. However, New Jersey intends to pull out of the compact, and similar measures were introduced but defeated in New Hampshire and Maine.

For more information on the Northeast, read the Northeast Energy Efficiency Partnership 2011 Regional Roundup Report.

South/Southeast

In the Southeast, the states are making important strides. The Mississippi Public Service Commission has proposed an energy efficiency program planning process for its major utilities. North Carolina and South Carolina will likely see more energy efficiency programs in 2014-2018 as the merger between Duke Energy Carolinas and Progress Energy Carolinas has resulted in a Settlement Agreement that calls for the implementation of more energy efficiency programs. Alabama stood out in this year’s State Energy Efficiency Scorecard as a “most improved state” as it looks set to adopt the 2009 IECC building energy codes. In Louisiana, the Public Service Commission issued a proposed rulemaking on energy efficiency programs in the fall, and the New Orleans City Council, which has utility regulatory authority for the city, passed a resolution in July that established an Integrated Resource Planning (IRP) process. The Tennessee Valley Authority (TVA) and Georgia Power both found that energy efficiency acts as a critical resource when conducting their IRPs. Both utilities have implemented new programs over the past year. In Arkansas, utilities began to implement programs following a series of PSC decisions in late 2010 and the Commission issued guidelines for industrial self-direct programs. The Texas legislature shifted the state EERS to a percent of annual sales basis, with the target to eventually reach 0.4% of sales. The legislature also broadened the range of programs utilities could use to reach their targets. Utilities and regulators in Florida, however, took a step backwards by failing to fund programs at levels that would allow them to reach their energy efficiency targets of around 3% cumulative savings by 2020.

Midwest

The Midwest featured three of our most improved states in this year’s State Energy Efficiency Scorecard. Michigan and Illinois both outpaced their neighbors in actual savings from programs implemented to meet their respective Energy Efficiency Resource Standards. Other states with recently passed EERS policies like Indiana and Ohio have programs planned or in place that will produce the savings necessary to start catching up with Michigan and Illinois in our Scorecard. Nebraska also climbed in the rankings as it adopted 2009 IECC building energy codes; however, the state still falls behind much of the region. Utilities in South Dakota have a healthy portfolio of energy efficiency programs underway, which should begin to make a solid impact on the state’s score in 2012. Meanwhile, Wisconsin risks losing its position as a leader in electric sector energy efficiency. Shortly after multiyear funding and savings targets wereapproved by a Joint Committee of the state legislature, the state essentially dismantled these steps by limiting funding to its program administrator, Focus on Energy, to 1.2% of revenues, which will not be sufficient to meet the goals laid out in the order. Further south, utilities in Missouri are developing plans to work within the PSC's new efficiency cost recovery guidelines, and Kentucky is undergoing stakeholder processes to jumpstart utility-sector energy efficiency programs.

West

Utilities in the Southwest continue to implement energy efficiency programs supported by strong policies. Commissions in New Mexico and Arizona strengthened the business model for energy efficiency by approving performance incentives and decoupling mechanisms. Xcel Energy in Colorado has cemented itself as an energy efficiency leader in the Mountain States by adopting even more aggressive energy efficiency programs and targets for 2012-2013. California dropped in our Scorecard rankings to #2, and there are concerns the state may be slipping after its legislature failed to re-authorize a systems benefits charge that funds energy efficiency programs. However, utilities in California remain steadfastly committed to the energy efficiency resource, as does the California Public Utility Commission (CPUC), which is considering ways to replace the systems benefits charge and also recently introduced a proposal that would create the nation’s first statewide on-bill repayment (OBR) program for energy efficiency and renewable energy upgrades to be financed entirely by third parties.   

Looking Forward to 2012

Overall, the states made good strides in 2011 advancing energy efficiency. Out of 50 points possible in our Scorecard report, the average score was 20.3, an increase of two points over the 2010 results. The states are poised for continued advancements in energy efficiency policy and programs in 2012. Numerous states are only in the nascent stages of utility-sector program implementation, for example, and should see their scores improve as the programs mature. There is plenty of room for progress—however, there is also opposition to energy efficiency that could set states back. The energy efficiency community must continue to make the convincing argument that energy efficiency is an abundant, affordable resource that provides a multitude of economic and environmental benefits.