Florida utilities with sales of 2,000 GWh or more are subject to the Florida Energy Efficiency and Conservation Act (FEECA). This act requires each utility to implement cost-effective energy efficiency programs and to conduct energy audits. It also includes improving the efficiency of generation, transmission and distribution systems.
FEECA was amended in 2008 and now requires the state to conduct energy efficiency potential studies. ITRON completed a study in 2008 and reported a technical potential savings of ~34%. This includes both photovoltaic solar technology and energy efficiency. In December 2009, the The Florida Public Service Commission (FPSC) set energy efficiency goals based on this study. Some of these goals have since been adjusted.
The FPSC reviews and approves utilities’ energy efficiency plans. According to FEECA, the FPSC may allow investor-owned utilities to earn an additional return on equity of up to 50 basis points for saving 20 percent or more of their annual load-growth via energy efficiency . The FPSC may also assess penalties if utilities do not meet the goals.
Since 1980, when FEECA was approved, utility programs have deferred the need for eleven 500 MW power plants. According to the Energy Information Administration (EIA), Florida electric utilities saved 364,599 MWh in 2009. The Consortium for Energy Efficiency reports 2010 electric program budgets totaling $123.2 million and natural gas budgets of $6.5 million. Reported budgets for energy efficiency programs for 2011, and electricity savings for 2010, are in the State Spending and Savings Tables.
Natural gas programs are available for residential and commercial customers in Florida and are required by both orders and legislation. These programs are approved by the FPSC and are implemented by the utilities.
Florida has considered implementing decoupling, which reduces the financial disincentive for utilities to support energy efficiency by separating utilities’ profits from their levels of sales. In 2008, the FPSC decided that existing annual cost recovery clauses made it unnecessary to introduce decoupling. In December 2009, the Florida Public Utility Commission set goals for its electric utilities at 3.5% energy savings over 10 years. This rule was rolled back in July 2011.
In 2007, ACEEE researched Florida’s energy efficiency potential. ACEEE reported that energy efficiency improvements could offset the majority of Florida’s predicted load growth over the next 15 years, leading to impressive savings for Florida residents and businesses. That report can be found here.
The 1980 Florida Energy Efficiency and Conservation Act required utilities to implement cost-effective energy efficiency programs. According to the EIA, Florida utilities reported efficiency program savings of 364,599 MWh in 2008, 0.16% of total retail sales. Florida utilities establish demand-side management (DSM) conservation goals for summer and winter demand (MW) and annual energy sales (GWh). The Florida Public Service Commission reviews DSM goals for each utility at least once every five years and sets demand and energy sales goals that extend 10 years into the future. Within 90 days after the commission issues its order approving a utility’s DSM goals, that utility must file a plan with the commission for approval. The utilities are also required to file annual reports on their DSM programs.
Most of these DSM plans include residential, commercial, and industrial sectors. The utilities provide conservation education programs to their customers. They also typically offer incentives to encourage customers to install more efficient equipment. The utilities distribute the costs of the programs by adding a surcharge for all customers. The surcharge varies by utility.
Natural gas programs are available for residential and commercial customers in Florida and are required by both legislation and orders. Natural gas energy efficiency is required by the Florida Statutes (Section 366.81-82). It is also required by FPSC Rule 25-17.009 and by two sections of the Florida Administrative Code (Requirements for Reporting Cost Effectiveness Data for Demand Side Management Programs of Natural Gas and Energy Conservation Cost Recovery).
Reported budgets for energy efficiency programs for 2011, and electricity savings for 2010, are in the State Spending and Savings Tables.
Investor-owned electric utilities may recover reasonable expenses, including customer incentive costs, for DSM programs approved by the Florida Public Service Commission. The utilities recover these costs by adding surcharges to customer bills. Also, the FPSC conducts Energy Conservation Cost Recovery (ECCR) proceedings each November and determines an energy conservation cost recovery factor to be applied to bills during the next year. This factor is based on each utility’s estimated conservation costs for the next year.
In 2006, the cost recovery factors for various utilities ranged from 0.046 cents per kilowatt-hour to 0.169 cents per kilowatt-hour. The Consortium for Energy Efficiency reports 2010 electric program budgets totaling $123.2 million and natural gas budgets of $6.5 million. Reported budgets for energy efficiency programs for 2011 are in the State Spending and Savings Tables.
In 2006, the Florida Renewable Energy Technologies and Energy Efficiency Act established the Renewable Energy and Energy Efficiency Technologies Grants Program. This program will receive additional funding from the federal economic stimulus. In 2008–09, the program received $15 million; this will increase to $44 million in 2009–10. House Bill 7135, the 2008 Energy and Economic Development Legislation, authorized additional funding for this program.
The Florida Energy Efficiency and Conservation Act (FEECA -- Section 366.82 of the Florida Statues) sets annual demand and energy reduction goals for the residential and commercial/industrial sectors for each of the seven FEECA utilities for a ten year period. Goals are revisited by the Florida Public Service Commission at least every five years.
In July 2011, however, the Florida Public Utility Commission approved spending plans for Florida Power and Light and Progress Energy that fall far short of the funding necessary to meet goals set for these electric utilities in 2009 at 3.5% energy savings over 10 years (Docket Nos. 080407-EG—080413-EG; Order No. PSC-09-0855-FOF-EG). The goal was less than half that recommended by the Commission staff’s own expert.
Florida does not have decoupling in place for electric or natural gas utilities. HB 7135 instructed the Public Service Commission to analyze utility revenue decoupling and provide a report and recommendations to the governor and the legislature in December 2008. In 2008, the FPSC decided that existing annual cost recovery clauses made it unnecessary to introduce decoupling, though gas utilities could still request decoupling in a rate case. In 2009 the FPSC concluded that utilities may request an increase in rates in order to maintain a reasonable rate of return when efficiency programs reduce revenues. (See Final Order PSC-09-0855-FOF-EG)
HB 7135 authorized the commission to provide financial rewards and penalties and to allow gas and electric investor-owned utility to earn an additional return on equity for exceeding energy efficiency and conservation goals. Specifically the FPSC may allow utilities to earn an additional return on equity of up to 50 basis points for exceeding 20 percent of their annual load-growth through energy efficiency measures. The FPSC may also assess penalties if utilities do not meet the goals. No utilities have yet requested the additional return.
Energy efficiency is considered a resource in Florida and plays a key role in meeting the state’s growing electric energy needs. In December 2006, the FPSC endorsed the National Action Plan for Energy Efficiency, which recommends making energy efficiency a high-priority resource. Additionally, when determining the need for a new power plant, the PSC seeks to mitigate the need for additional generation.
For many years, Florida used the Ratepayer Impact Measure (RIM) test to determine the cost-effectiveness of energy efficiency programs. This requirement limited energy efficiency investments. HB 7135 effectively allows the commission to utilize a cost-effectiveness test that is is much less restrictive than the RIM test for the cost-effectiveness of energy efficiency measures and programs.
While setting energy savings goals in 2009, the FPSC used multiple cost-effectiveness tests – the RIM test, the Total Resource Cost test and the Participant Test. Examining cost-effectiveness from these multiple perspectives common practice as it yields different information valuable to program administrators and other stakeholders.
To access Commission review of numeric conservation goals, see the following: Docket Nos. 080413 -EG (JEA); 080412 -EG (Orlando Utilities Commission); 080411 -EG (Florida Public Utilities Company); 080410 -EG (Gulf Power Company); 080409 -EG (Tampa Electric Company); 080408 -EG (Progress Energy Florida, Inc.); 080407 -EG (Florida Power & Light Company).
The evaluation of ratepayer-funded energy efficiency programs in Florida relies on both legislative mandates (Florida Statutes Sections 366.82(10)and 377.703(2)(f)) and regulatory orders (Rule 25-17.0021). Evaluations are administered by each utility. Florida has established formal rules and procedures for evaluation, which are stated in Rule 25-17.0021. Florida uses three of the five classic benefit-cost tests identified in the California Standard Practice Manual. These are the Total Resource Cost (TRC), Participant (PCT), and Ratepayer Impact Measure (RIM). The rules for benefit-cost tests are stated in Rule 25-17.008. Florida specifies the TRC to be its primary cost-effectiveness test. These benefit-cost tests are required for total program level screening.