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Summary
Vermont has had extensive energy efficiency programs since 1990. Originally, programs were run by the state’s utilities under jurisdiction of the Vermont Public Service Board (PSB), but in 1999 the PSB transferred operations to Efficiency Vermont, a statewide “energy efficiency utility” supported by public benefits funding. Vermont is one of two states that established statewide public benefits funding without electric utility restructuring.
Vermont's energy efficiency programs have yielded significant results; in 2005, their energy savings cumulatively met over 5% of Vermont’s electricity requirements. In 2006, efficiency savings were about 1% of sales. In late 2006, Efficiency Vermont began to expand its programs, targeting four areas of the state with significant transmission and distribution constraints.
Efficiency Vermont now provides a comprehensive portfolio of services and has achieved significant success in meeting its objectives. Vermont saved 311 GWh between 2006 and 2008, exceeding its three-year savings goal of 261.7 GWh. In 2007 and 2008, savings from energy efficiency measures more than offset the average underlying rate of electricity load growth.
The aggressive energy efficiency measures have proven to be cost-effective. In 2007, Efficiency Vermont saved 103 GWh at a cost of 2.7 cents per kilowatt-hour (over the life of the measures). These numbers come from Efficiency Vermont's annual reports. In 2008, Efficiency Vermont saved 150 GWh at a cost of 2.9 cents per kilowatt-hour. In 2007, Vermont's utilities spent $23.7 million in total, saving 105 GWh. Vermont plans to reduce its electricity consumption by 2% per year over the next three years, according to its draft plan for 2009-2011.
Vermont has natural gas efficiency programs as well, administered and implemented by Vermont Gas Systems, Inc. The programs saved 97,924 MCF in 2008 and have saved over 800,000 MCF since their beginning in 1993.
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| Customer Energy Efficiency Programs |
Vermont pioneered the model of a statewide "energy efficiency utility" (EEU) after Vermont enacted legislation in 1999 authorizing Vermont Public Service Board (PSB) to collect a volumetric charge on all electric utility customers’ bills to support energy efficiency programs. Volumetric charges are assessed on a per kWh or per therm basis. Vermont PSB created the EEU, Efficiency Vermont, to use these public benefits funds to provide programs and services that save money and conserve energy.
The Vermont Public Service Board (PSB) oversees the EEU, "Efficiency Vermont," which is run by a competitively selected contractor, the nonprofit Vermont Energy Investment Corporation (VEIC). PSB also employs a contract administrator, a fiscal agent and an advisory board to oversee Efficiency Vermont. The fiscal agent receives monies collected by the electric distribution companies and disburses the funds to Efficiency Vermont.
The Vermont Energy Act of 2009 directs the Vermont Department of Public Service (DPS) to create a self-managed energy efficiency pilot program for select transmission and industrial utility customers whose individual contributions to the public benefits fund exceeded $1.5 million in 2008. Program guidelines are to be released late 2009 by the PSB.
Natural gas efficiency programs are administered and implemented by Vermont Gas Systems, Inc. Natural gas efficiency programs are supported by legislation and regulation (30 V.S.A. section 235(d); Docket No. 5270 VGS-1, 2) and began in 1993.
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Efficiency Vermont is funded by a non-bypassable "energy efficiency charge" (EEC) that is included in electric rates. This charge resulted from passage of S. 137 by the Vermont Legislature in 1999. In September 1999, the PSB issued a memorandum of understanding that set the initial five-year budgets and set a maximum funding level of about $17.5 million. An August 2006 order by the PSB greatly increased program funding. (Order Re: Energy Efficiency Utility Budget for Calendar Years 2006, 2007, 2008. Aug. 2, 2006) Efficiency Vermont's reported program spending in 2007 was $18.4 million. In total, Vermont's utilities spent $23.7 million on energy efficiency in 2007. The 2009-2011 draft plan sets the three-year budget at $100 million, starting at $29.1 million in 2009 and increasing to $33.4 million in 2010 and $37.5 million in 2011.
Natural gas efficiency program expenses, excluding payroll, are deferred between rate proceedings. In the next base rate proceeding, the deferred expenses are embedded in rates and collected over a three year period. Energy efficiency payroll expenses are embedded in rates. Natural gas programs were funded at $1.51 million in 2007 and $1.88 million in 2008.
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| Energy Efficiency Resource Standard |
The Vermont Public Service Board (PSB) has established a performance-based contract with VEIC that includes specific energy (kWh) and peak demand (kW) savings targets. Efficiency Vermont planned to achieve 261 million kWh of savings and 30 MW of summer peak demand reduction in the years 2007-2008. The kWh savings goal was equal to 3.5% of 2006 sales. Efficiency Vermont saved 255 million kWh in 2007-2008.
In its draft annual plan for 2009-2011, Efficiency Vermont set goals of saving 360 million total kWh, 51.2 total summer peak MW, and 54 total winter peak MW. The annual projected kWh savings equal about 2% of 2008 sales.
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Green Mountain Power’s Alternative Regulation Plan, implementing partial revenue-per-customer decoupling, was approved by the PSB on December 22, 2006. The plan is for a period of three years, expiring on December 31, 2009. The plan included two annual adjustments to rates, the Earnings Sharing Adjustor and the base rate adjustment, that are now calculated on a yearly basis. (Docket Nos. 7175, 7176)
Central Vermont Public Service (CVPS) received approval for a 3-year alternative regulatory plan in September 2008, under which it may adjust rates every year based on forecast costs and sales. (Docket No. 7336)
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| Reward Structures for Successful Energy Efficiency Programs |
The PSB contracts with VEIC to operate Efficiency Vermont. VEIC is eligible to receive a performance incentive for meeting or exceeding performance goals established in its contracts. The contractor does not receive compensation until the achievement has been confirmed by the DPS. In its initial contract (2000-2002), VEIC could earn up to $795,000 (~ 2% of the overall energy efficiency budget) over the three-year contract period. Subsequent contracts have set "stretch goals" to encourage program growth.
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| Energy Efficiency as a Resource |
Vermont statute (30 VSA Sec. 218c) directs all electric and natural gas utilities to prepare and implement least cost integrated plans - plans "for meeting the public's need for energy services, after safety concerns are addressed, at the lowest present value life cycle cost, including environmental and economic costs, through a strategy combining investments and expenditures on energy supply, transmission and distribution capacity, transmission and distribution efficiency, and comprehensive energy efficiency programs." In addition, Vermont has a well-established regulatory process to factor the Energy Efficiency Utility's energy savings into utility companies' load forecasts. Vermont law requires EEU budgets to be set at a level that would realize "all reasonably available, cost-effective energy efficiency." According to the DPS, which verifies the savings achieved by Efficiency Vermont, program savings in 2006 were more than 56 million kWh. Vermont is also revising its energy plan and has released a draft Vermont Comprehensive Energy Plan for 2009.
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Last Updated
11/23/2009
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