For low-cost savings that benefit ratepayers and the planet alike, utilities embrace efficiency

Blog Post | March 25, 2016 - 10:00 am
By Weston Berg , Senior Research Analyst, State Policy

Much like the proverbial ‘juice’ by which it’s often referred, electricity can go a long way for those who make a habit of squeezing every last drop of what they have. When everyone adopts this mindset, we all win, freeing up resources to dedicate to other critical needs. That’s the commonsense approach the utility sector has increasingly recognized and embraced over the years, harnessing efficiency to avoid or defer costs such as developing new energy supplies, building transmission infrastructure, and complying with environmental rules.

Spending data from the past 20 years illustrates just how much this trend has caught on among the utility sector. Total spending for customer-funded electric efficiency programs and natural gas programs together amounted to more than $7 billion in 2014, more than five times what was invested in efficiency programs just a decade ago. Clearly utilities see the benefit of smart investments in energy efficiency. But it wasn’t always this way.

Annual electric and natural gas energy efficiency program spending

Note: natural gas spending is not available for the years 1993–2004. Sources: ACEEE Nadel, Kubo, and Geller 2000; York and Kushler 2002, 2005; Eldridge et al. 2007, 2008, 2009; Gilleo et al. 2015; CEE 2012, 2013, 2014, 2015.

Up until the mid-1990s, rigid utility business models that depended on selling more electricity each year created relatively weak incentives for cutting waste. However, as states restructured utilities, began implementing public benefits charges, and investigated ways to align the utility business model with the delivery of energy savings to customers, energy efficiency efforts ramped up. More recently, numerous states have adopted energy savings goals that have further spurred investment in efficiency.

Current trends in spending and the regulatory landscape point to an increasingly bright future for energy efficiency and its role as a utility resource. Utilities across the country, from Arkansas to Arizona to Maine, are implementing efficiency programs. And every dollar they spend on efficiency ultimately pays off, helping advance cutting-edge technologies, reducing pollution in our skies, and lowering utility bills for customers.

For more on state energy efficiency program spending, see the State Energy Efficiency Scorecard.

Data Points is a blog series focusing on the graphs and other images that tell the energy efficiency story.