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An Energy Efficiency Resource Standard (EERS) is a flexible mechanism to ensure that utilities adopt energy efficiency as a clean, cost-effective energy resource.A federal EERS would require that electricity and natural gas utilities help their customers reduce energy use by a specified and increasing amount each year, based on a percentage of total energy sales. It complements a renewable electricity standard (RES), which requires that a percentage of electricity generation be from renewable sources.EERS is a tested policy measure that has successfully reduced energy use in several states. A national EERS would lower energy costs, reduce air pollution and global warming, create jobs, and improve energy reliability throughout the nation.
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Energy Efficiency Resource Standards
Lowell UngarDirector of Policy
Alliance to Save Energy
Presentation Outline Utility and State Efficiency Programs State-level EERS programs Federal EERS—Issues
Scope and TargetsTrading and alternative complianceEM&V and Administration
Efficiency in an RES
Utility Energy Efficiency Programs Help customers save electricity or natural
gas Many kinds of programs- Consumer education
- Technical training
- Energy audits
- Appliance rebates
- Financing $3.7 billion in 2008
Why Should Ratepayers Fund Energy Efficiency?
Because it’s cheaper, quicker, and cleaner than providing more energy
Demand-Side Management (DSM) avoids 30 GW of peak load—about 100 power plants
Reported cost of about 3-4 cents per kWh
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Program Opportunities
Energy Efficiency Potential 40%
Adapted from McKinsey Analysis
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Energy Efficiency Resource Standards (EERS)
Electric and natural gas utilities required to achieve set level of customer energy savings- Similar to a Renewable Electricity Standard
(RES) Complements other policies to spur utility
programs- Public Benefits Fund- Integrated Resource Planning- Competitive bid in wholesale markets- Utility rate reforms
State-Level EERS Spreading rapidly:- ~10 states set efficiency targets- ~5 states include efficiency in
renewable standard- ~5 states have related requirements
State-Level EERS - Examples Texas – initially 10% of peak load growth,
increased to 20% Nevada – combined EERS and RES; EE
capped at 25% of total Ohio – ramps up to 2%/year target Connecticut – 1%/year target as separate
tier in RES, plus new “all cost-effective efficiency” requirement
California – CPUC sets electric and gas targets based on potential study
Federal EERS Save American Energy Act - H.R. 889 by Rep. Markey and S. 548 by Sen.
Schumer Bingaman draft RES
Federal EERS Potential Benefits
By 2020:- 117,000 MW peak demand savings
(390 power plants)
- 260 MMT CO2 emission reductions (48 million cars)
- $168 billion net savings in utility bills
- 222,000 net jobs created(ACEEE estimates for Save American Energy Act)
Bring efficiency programs to additional states and regions.
Save American Energy Act: Scope
Applies to local distribution companies (LDCs)- Regulated even in restructured-market states
- Size threshold Counts savings from:- Utility energy efficiency programs
- Combined heat & power and recycled energy
- Distribution system savings
- Building codes and appliance standards
Save American Energy Act: Targets
Requires savings rising to 15% electricity and 10% natural gas by 2020- Estimated savings from efficiency programs,
not a sales limit
- Codes and standards may account for ~5% electric and 3% natural gas
- State EERS and policies may account for ~6% electric
Save American Energy Act: Trading and Alternatives
Utilities can buy savings from customers and third parties through bilateral contracts- In-state or in power pool with PUC approval
- EM&V rules still apply
- No credit markets Buyout: 5 cents/kWh or $5/million Btu
Save American Energy Act: Implementation
DOE sets rules States administer with DOE review- If states choose not to, DOE administers
Does not affect state EERS- Same programs can qualify for both
Save American Energy Act: EM&V
DOE sets Measurement and Verification requirements- Utility played significant role
- Additional to business-as-usual practices
- May have outside (including federal) funding
- Account for useful life of measures
- May use “deemed” savings, sampling
- Third-party verification States can apply their own rules if at least as
accurate
Renewable Electricity Standard: Bingaman Draft
Energy efficiency can meet up to one-fourth of requirement (5% savings in 2020)- Customer savings, CHP, and distribution
system, but NOT codes or standards Trading of credits Applies to Load Serving Entitites Current state EERS add up to ~6%
savings No additional efficiency
H.R. 889, the “Save American Energy Act,” introduced by Rep. Edward Markey (D-MA) on February 4, 2009.
•EERS included in the Waxman-Markey in the American Clean Energy and Security Act of 2009 discussion draft.• Cosponsors include Rep. Olver (D-MA), Rep. Hirono (D-HI), and Rep. Schakowsky (D-IL). Likely others that the Markey office has not yet released.•Coalition is targeting Blue Dogs, e.g. Barrow (D-GA), Matheson (D-UT), Gordon (D-TN), Holden (D-PA), and others, e.g. Welch (D-VT), •Need for letters and visits from in-state businesses and organizations
House side EERS bill:
S. 548, the “Save American Energy Act,” introduced by Sen. Charles Schumer (D-NY) on March 9, 2009.
• Coalition meetings last week with Bingaman’s staff cracked open the door for a stand-alone bill• No official cosponsors yet - a Republican cosponsor will be critical for gaining support throughout the E&NR committee.• Coalition still supports a stand-alone bill, but if made to compromise, would take a 10% carve-out of an RPS (currently 5%)•Need for letters and visits, particularly from in-state businesses, particularly to Republican and moderate Dems.
Senate side EERS bill:
Thank You!
Lowell Ungar
Alliance to Save Energy
Phone: (202) 857-0666
Email: LUngar@ase.org
Website: www.ase.org
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