Survey Finds Variety of Approaches, But Overall High Level of Engagement
Washington, D.C.—As state policies requiring utilities to offer energy efficiency programs become more widespread and energy savings requirements become stronger, increasing attention is being focused on the issue of how these energy efficiency programs are being evaluated. One concern that has been raised is the apparent inconsistency in evaluation approaches across different states. Some have called for the creation of a “national standard” for energy efficiency program evaluation.
In response, the American Council for an Energy-Efficient Economy (ACEEE) conducted a comprehensive national survey, A National Survey of State Policies and Practices for the Evaluation of Ratepayer-Funded Energy Efficiency Programs. The study found a great diversity in the policy framework, administrative structure, and technical details across states in their approach to evaluation; but overall, a high level of state regulator commitment to evaluation.
“These states take their responsibility for ratepayer protection very seriously,” said Dr. Martin Kushler, ACEEE Senior Fellow and lead author of the report. “As someone who spent 10 years directing the evaluation unit of a major state utility regulatory commission, I can say that dollar-for-dollar, it’s hard to think of any other aspect of utility operations that receives as much detailed scrutiny as energy efficiency.”
Moreover, the variability in evaluation approaches across states does not seem to materially change the bottom line: energy efficiency programs are highly cost-effective. In a related earlier study, Saving Energy Cost-Effectively: A National Review of the Cost of Energy Saved Through Utility-Sector Energy Efficiency Programs, ACEEE examined the reported evaluation results across 14 different states with major ratepayer-funded energy efficiency programs, and found that the overall utility cost of conserved energy across states—despite differences in evaluation approaches—only ranged from 1.6 to 3.3 cents per kWh. Any point in that range is far cheaper than any available new electric supply resource, which range in cost from roughly 6 to 14 cents per kWh.
The report provides the overall survey results on a wide array of variables, ranging from policy framework and administrative structure to cost-effectiveness tests, approaches for dealing with “free-riders” and “spillover,” deemed savings databases, and a variety of key input assumptions. ACEEE did find some areas where evaluation practices could be improved and/or made more consistent, and those are noted in the report. An appendix to the report also provides links to individual state policies and rules regarding energy efficiency program evaluation.