Study shows states in Midwest meeting new efficiency standards
by Ilene Grossman ~ October 2011 ~ Stateline Midwest
Over the last few years, one trend in state energy policy has been to establish new efficiency standards and goals.
Those plans appear to be working, the American Council for an Energy-Efficient Economy concludes in a recent report. Goals are being met or exceeded, resulting in more savings for customers and less of a need to build more power plants.
Twenty-six states, including seven in the Midwest, have established some type of Energy Efficiency Resource Standard (EERS). All 26 states have an EERS for electric utilities; in 13, there is also a standard for natural gas.
In the Midwest, Illinois, Indiana, Michigan, Minnesota, Ohio and Wisconsin have a statewide EERS, while Iowa tailors efficiency targets for individual utilities. Iowa is one of six states taking this approach, which can be used when utilities operate under varied conditions — different load projections, for example.
An EERS sets specific efficiency targets for utilities, which they meet by offering incentives to their customers to reduce utility bills. The incentives include offering rebates or discounts to residential customers to buy energy-efficient appliances and heaters and programmable thermostats, or to better insulate their homes. Another mechanism is to offer low- or no-cost energy audits to households, as well as incentives to small businesses and industrial users to retrofit buildings.
Unlike traditional efficiency programs, which focus more on reducing costs, an EERS makes conserving energy the target, and consumer cost savings follow.
Still, EERS programs have a cost-benefit standard to meet. They must cost less to operate than it would to generate the electricity that would have been used without the programs in place. For example, the council found that energy consumers in Ohio saved $56 million in 2009 and 2010 after the costs of operating the state’s efficiency programs were factored in.
“These programs are funded through a systems or public benefit charge,” says Michael Sciortino, lead author of the report, which was released in June.
According to the council, there are some common elements of successful programs:
• buy-in from key players, especially utilities and state regulators;
• expanding the stakeholders involved in the process to include architects, engineers, contractors and manufacturers; and
• raising consumer awareness about the programs and making them easily accessible.
“Utilities and regulators recognize that their marketing needs improvement,” Sciortino says. “They need to reach a broader base of consumers and ramp up their efforts.”
According to the report, 20 states have had an EERS in place for at least two years, and 13 of them have reached or surpassed their goal, including four states in the Midwest. Minnesota, one of two states “in the midst of major program ramp-ups,” is slightly under its goal.
The report cautions, though, that some of the most difficult work lies ahead. Some states set low targets at the outset of their programs; much more vigorous goals have been set for later years.
“Most utilities have already reaped the lowest-hanging fruit through lighting programs, such as the move to compact fluorescent lights,” Sciortino says. “The next phase will be more challenging.”
But though those next steps are likely to be more difficult, they could have a more significant and longer-lasting impact on energy use. Sciortino cites three approaches that are already being tried: deep retrofits of buildings, the installation of smart meters in homes and stronger building codes.