In 2010, Arkansas became the first state in the Southeast to implement an energy efficiency resources standard (EERS). Along with these new requirements for conservation and energy efficiency programs, the Arkansas PSC also has recently established new guidelines for utility resource planning, which include provisions for demand-side resources. In May 2007, the Public Service Commission approved Rules for Conservation and Energy Efficiency Programs requiring electric and gas utilities to propose and administer energy efficiency programs. Investor-owned electric and natural gas public utilities were required to make Comprehensive Plan filings beginning April 1, 2009. Prior to 2007, despite a 1977 statute in place that established the legal basis for utility energy efficiency programs, such programs generally had not been funded and offered by utilities in Arkansas over most of the last 30 years.
Efficiency program savings in Arkansas were reported by the Energy Information Administration at 59,759 MWh in 2009, and the Consortium for Energy Efficiency reported 2010 investor-owned utility electric program budgets totaling $13.1 million and natural gas budgets of $4.2 million. Reported budgets for energy efficiency programs for 2011 are in the State Spending and Savings Tables. Reported electricity savings for 2010 are in the State Spending and Savings Tables.
For further reading, in March 2011, as part of the State Clean Energy Resource Project, ACEEE completed the report Advancing Energy Efficiency in Arkansas: Opportunities for a Clean Energy Economy.
In May 2007, the Public Service Commission approved Rules for Conservation and Energy Efficiency Programs requiring electric and gas utilities to propose and administer energy efficiency programs (Docket No. 06-004-R, Orders No. 1, 12, 18). The state’s jurisdictional utilities filed Energy Efficiency Plans in July 2007 containing proposed Quick Start efficiency programs. All seven gas and electric utilities elected to sponsor and fund statewide programs supporting weatherization of severely energy-inefficient homes and promoting energy efficiency education through media channels. The three gas companies jointly sponsored a statewide energy audit program for commercial and industrial customers. Each of the seven utilities individually proposed EE programs. There are now 22 electric utilities regulated by the AR PSC, including cooperatives and investor-owned, but not municipal or independent power producers.
Investor-owned electric and natural gas public utilities are required to make Comprehensive Plan filings; this requirement began April 1, 2009. The Comprehensive plans are intended to move beyond the Quick Start plans for program years 2007 through 2009. Arkansas Oklahoma Gas Corporation, Arkansas Western Gas Company, Centerpoint Energy Resources Corporation, Empire District Electric Company, and Oklahoma Gas and Electric Company were granted an extension for filing, which were due July 1, 2009 (See Docket No. 06-004-R; 2007 Energy Efficiency TF Dockets No. 075 - 079 and 081 - 085; 2008 RP Dockets No. 038 - 063, 065 – 067).
Based on the Arkansas Weatherization Program Annual Report, the quick start Arkansas Weatherization Program (AWP) has overcome significant start-up barriers to become a highly successful energy efficiency and weatherization program, very well regarded by recipients of the services provided. AWP performance has improved to the point that in the fourth quarter of 2008, the agencies achieved an average of 79% of their implementation targets. By continuing this trajectory into 2009 and beyond, the agencies are achieving energy efficiency savings at unprecedented rates in Arkansas energy-inefficient homes. (See Arkansas Weatherization Program Annual Report – 2008. Docket Nos. 07-079-TF and 08-065-RP.)
In Docket No. 08-144-U, Order No. 1 (Oct. 7, 2008), the commission established an inquiry regarding the promotion of the expanded development of Sustainable Energy Resources, including energy efficiency, demand response, renewable resources, and Automatic Metering Infrastructure in Arkansas. The Arkansas Sustainable Energy Collaborative was also established to assist the Commission in conducting the inquiry.
Arkansas electric utilities reported efficiency program savings of 59,759 MWh for 2009, up significantly from 6,154 MWh in 2007. Reported budgets for energy efficiency programs for 2011 are in the State Spending and Savings Tables. Reported electricity savings for 2010 are in the State Spending and Savings Tables.
Recovery of incremental costs associated with commission-approved electricity and natural gas energy efficiency programs is accomplished through Energy Efficiency Cost Recovery riders. Actual spending on electric programs in 2009 stood at $7.7 million. The Consortium for Energy Efficiency reports 2010 electric program budgets totaling $13.1 million and natural gas program budgets of $4.2 million.
Reported budgets for energy efficiency programs for 2011 are in the State Spending and Savings Tables.
On December 10, 2010 Arkansas adopted the first EERS in the Southeast. The targets set by the PSC are moderate, rising from an annual reduction of 0.25% of total electric kilowatt hour (kWh) sales to 0.75% of total electric kWh sales from 2011-2013 (and slightly less for natural gas sales), but require a high level of verification to ensure that utility companies are fairly rewarded, and that consumers get solid cost benefits.
In December 2010 the Arkansas PSC approved a joint electric and gas utility motion to allow the awarding of lost contributions to fixed costs that result from future utility energy efficiency programs. All large utilities (4 electric and 3 gas) are approved to recover lost revenues as part of the annual energy efficiency program tariff docket. See Order No. 14 Docket 08-137-U.
In 2007 rate cases, the Arkansas PSC approved a decoupling mechanism, a Billing Determinant Adjustment tariff that furthers its goal of promoting energy efficiency, for the three major natural gas distribution companies in the state. The purpose of the BDA Tariff is to account for declines in non-gas revenues due to declining gas volumes caused by conservation and decreasing billing determinants. The tariff applies to the Residential and Small Commercial rate classes and was in effect for three evaluation periods (2008, 2009, and 2010). (see, for example, Docket No. 07-016-U for Arkansas Oklahoma Gas).
In December 2010 the PSC issued an Order approving a general policy under which the Commission will approve incentives to reward achievement in the delivery of essential energy conservation services by investor owned utilities. The first opportunity for utilities to request incentives based on performance will be in April 2012. See Order No. 15 Docket 08-137-U.
The Commission approved "Resource Planning Guidelines for Electric Utilities" in Docket 06-028-R (final order issued in January 2007).These guidelines include specific requirements for demand-side resources. Utilities are required to consider "all reasonably useful and economic supply and demand resources that are available to a utility or its customers" for "incremental capacity needs." Further, "[u]tility efforts to encourage energy efficiency, conservation, demand-side management, interruptible load and price responsive demand should be identified." Although there is no loading order prioritizing energy efficiency, the Commission approved Rules for Conservation and Energy Efficiency Programs in May 2007 (Docket 06-004-R) requiring utilities to file energy efficiency plans to implement cost-effective energy efficiency programs. Additionally, all investor-owned electric and natural gas public utilities are required to make Comprehensive Plan filings. The Comprehensive Plans are intended to move energy efficiency in Arkansas beyond the initial Quick Start plans which were filed and approved for program years 2007 through 2009.
The evaluation of ratepayer-funded energy efficiency programs in Arkansas relies on regulatory orders (APSC Rules for Conservation and Energy Efficiency Programs, Docket 06-004-R). Evaluations are administered by the Arkansas Public Service Commission (APSC). Evaluations are conducted for each of the utilities, but there are no specific legal requirements for these evaluations in Arkansas. Arkansas uses four of the five classic benefit-cost tests identified in the California Standard Practice Manual. These are the Total Resource Cost (TRC), Utility/Programs Administrator (UCT), Participant (PCT), and Ratepayer Impact Measure (RIM). The rules for benefit-cost tests are stated in APSC Rules for Conservation and Energy Efficiency Programs, Docket 06-004-R. Arkansas specifies the TRC to be its primary cost-effectiveness test. These benefit-cost tests are required for overall portfolio, total program, customer project, and individual measure level screening.