Summary: Electric: 0.3% annual savings in 2009, ramping up to 1% in 2012 and thereafter. Natural Gas: 0.10% annual savings in 2009, ramping up to 0.75% in 2012 and thereafter.
Michigan adopted an EERS in October 2008, when the Clean, Renewable, and Efficient Energy Act was signed into law, requiring all electric and natural gas utilities to provide “energy optimization (EO) programs.” Michigan’s EERS requires electric utilities to achieve 0.3% savings in 2009; 0.5% in 2010; 0.75% in 2011; and 1.0% in each year from 2012 to 2015. Percentages are savings relative to the prior year’s total retail electricity sales. Natural gas utilities must achieve 0.1% savings in 2009; 0.25% in 2010; 0.5% in 2011; and 0.75% in each year from 2012 to 2015. Percentages are of the prior year’s total annual retail natural gas sales in decatherms or equivalent MCFs. Savings goals after 2015 are to be based on a recommendation from the Public Service Commission to the Michigan legislature.
Each MWh of savings achieved by a utility in a given year qualifies for one energy optimization credit. Excess credits can be "banked", i.e., can be used to meet up to one-third of the required energy savings in the year following the year in which they were achieved. Excess credits cannot be banked if a utility has opted to receive incentive payments for exceeding its savings targets in a particular year.
Regulated investor-owned utilities are responsible for 88.9 percent of the statewide electric savings targets; municipal utilities represent 7.8 percent of savings; and electric cooperatives, 3.4 percent. Most efficiency programs are administered by the utilities, although some have opted to fund a state-selected program administrator, Efficiency United, through an alternative compliance payment mechanism specified in Act 295. Although Efficiency United program services are not subject to the statutory savings targets, equivalent contractual targets were imposed by the Commission. Large electric customers, as determined by their peak use, may administer their own programs.
The 66 utilities that administer their own programs must submit energy optimization plans to the Michigan Public Service Commission. There are limits to how much each utility may spend on energy efficiency programs each year. In 2011, spending is capped at 1.5% of total retail sales revenues for 2009. In 2012 and thereafter, the spending cap is 2.0% of the total retail sales revenues for the two years preceding.
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