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 2008, Efficiency Vermont saved 150 GWh at a cost of 2.9 cents per kilowatt-hour (over the life of the measures) according to its annual reports. In 2009, Efficiency Vermont saved 90 GWh at a cost of 3.8 cents per kilowatt-hour. In 2010, Vermont's electric utilities budgeted $34 million on efficiency programs. Vermont Public Service has tentatively approved a 2012-2014 budget for Efficiency Vermont, which will achieve approximately 2.2% annual savings (VT Public Service Board Docket EEU-2010-06, Order Entered 8/1/2011).
Vermont has natural gas efficiency programs 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.
Reported budgets for energy efficiency programs for 2011, and electricity savings for 2010, are in the State Spending and Savings Tables.
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 oversees "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 were 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.
The Efficiency Vermont Lighting Plus Program was discontinued in 2011. Prior to that it offered turn-key lighting retrofit services targeting small and medium-sized customers in Vermont that were located in demand constrained areas. The Efficiency Vermont–Agricultural Services Program offers loans to Vermont farmers interested in completing energy efficiency improvements on farms. More information on these programs can be found in the ACEEE report, Energy Efficiency Financing Programs.
Large energy consumers may self-administer their energy efficiency programs through two programs. The first allows customers who pay an average annual energy efficiency charge (EEC) of at least $5,000 to apply to self-administer their programs through an Energy Savings Account (ESA). Customers in the program still pay their EEC but may transfer up to 70% of it to their ESA to fund efficiency projects at their facilities. Customers are required to use the funds within 24 months. The second program allows eligible customers to be exempt from their EEC provided they commit to spending an annual average of at least $3 million over a three-year period on energy efficiency investments. Additionally customers must demonstrate that they have a comprehensive energy management program with annual objectives. Eligible customers are transmission level customers who paid over $1.5 million in EEC in 2008 and are willing to pay the $50,000 fee to participate. More information on large customer self-direct programs can be found in the ACEEE report, Follow the Leaders: Improving Large Customer Self-Direct Programs.
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). In total, Vermont's electric utilities spent $27.1 million on energy efficiency in 2009. The Consortium for Energy Efficiency reports 2010 electric utility energy efficiency program budgets totaling $34 million. Vermont Public Service has tentatively approved a 2012-2014 budget for Efficiency Vermont, which will achieve approximately 2.2% annual savings (VT Public Service Board Docket EEU-2010-06, Order Entered 8/1/2011).
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. Budgets for natural gas programs in 2010 totaled $2.1 million.
Reported budgets for energy efficiency programs for 2011 are in the State Spending and Savings Tables.
Summary: ~6.6% cumulative savings from 2012 to 2014
Vermont does not have traditional EERS legislation with a set schedule of energy-savings percentages for each year. Instead, Vermont law requires EEU budgets to be set at a level that would realize "all reasonably available, cost-effective energy efficiency." Compensation and specific energy-savings levels—not “soft” goals or targets—are then negotiated with EEU contractor Vermont Energy Investment Corporation (VEIC). There is not an explicit penalty for non-performance. However, a portion of the compensation Vermont pays the administrator is contingent on meeting stated goals, subject to a monitoring and verification process. If the administrator does not meet stated goals, the state will withhold compensation, and the administrator potentially will be replaced at the end of the three-year period (DSIRE 2011).
Vermont Public Service has tentatively approved a 2012-2014 budget for Efficiency Vermont, which will achieve approximately 2.2% annual savings (VT Public Service Board Docket EEU-2010-06, Order Entered 8/1/2011).
Moving forward, the goal-setting process will change due to Vermont’s new “order of appointment” franchise-like structure. Every 3 years, a “demand resources plan” proceeding will be held. The proceeding will set budgets and goals for the next 20 years, coinciding with the long-range transmission plan to allow for integration of forecasting (EEU Structure (Docket 7466).
Vermont has no Natural Gas EERS.
Central Vermont Public Service (CVPS) received approval for a three-year alternative regulatory plan in September 2008, under which it may adjust rates every year based on forecast costs and sales. The plan period ends December 31, 2011 (Docket No. 7336).
Green Mountain Power’s Alternative Regulation Plan, implementing partial revenue-per-customer decoupling, was approved by the PSB on December 22, 2006. The plan was for a period of three years expiring on December 31, 2009. A later revision to the accounting period extended the plan until September 2010. GMP has applied for a three-year extension. The plan included two annual adjustments to rates, the Earnings Sharing Adjustor and the base rate adjustment, both calculated on a yearly basis (Docket Nos. 7175, 7176. Order 7438).
On September 21, 2006, an Alternative Regulation Plan for Vermont Gas Systems, Inc. was approved. This Plan included two different rate-setting mechanisms providing for quarterly rate adjustments to flow through to ratepayers increases or decreases in Vermont Gas' actual gas costs and providing annual adjustments to rates based on whether Vermont Gas earned more or less than its allowed rate of return on equity in the prior year. The term of this Plan was from October 1, 2006 through September 30, 2009. It was then extended through September 30, 2011 and a request for a one-year renewal is currently pending.
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. For the period January 1, 2009 to December 31, 2011, VEIC can earn up to $2,180,000 in awards for meeting electric energy saving goals, calculated by a weighted formula and net of free riders. The contract is available on the PSB Web site.
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."
The evaluation of ratepayer-funded energy efficiency programs in Vermont relies on both legislative mandates (30 V.S.A. §209) and regulatory orders (Process and Administration of an Order of Appointment). Evaluations are mainly administered by the Vermont Department of Public Service. There are no specific legal requirements for these evaluations in Vermont. Statewide evaluations are conducted. Vermont uses three of the five classic benefit-cost tests identified in the California Standard Practice Manual. These are the Utility/Programs Administrator (UCT), Participant (PCT), and Social Cost (SCT). Vermont specifies the SCT to be its primary test for decision making. The benefit-cost tests are required for overall portfolio, total program, and customer project level screening, with some exceptions for low-income programs, pilots, and new technologies. The rules for benefit-cost tests are stated in 30 V.S.A. §§ 203and 218band Docket No. 5980. Vermont has a “non-resource acquisition” (NRA) category that designates funding for activities that are worthwhile but do not necessarily return quantifiable savings.