Teleconference August 27, 2008

Midwestern Governors Association Energy & Climate Stewardship PlatformEnergy Efficiency Advisory Group

TeleconferenceAugust 27, 2008

August 27, 2008 22

Meeting Agenda• Roll Call • Approval of Notes from Previous Meeting • Purpose of Meeting• General Quantification Approach• Discussion of Policy Options Document

– Review of changes made since Kansas City meeting– Discussion of quantification issues.

• Discussion of Next Steps for EEAG Process– Finalize Options Document– Quantitative Analysis and Review

• Discussion of next in-person meeting– Date/Time/Location– Focus of Meeting

August 27, 2008 33

Purpose of Meeting

• Check that policy options text is in near-final form (except EE-7), reviewing changes adopted in Kansas City for accuracy

• Discuss approach for quantification of specific options, and solicit EEAG input on parameter/data sources

• Receive an update on the White Paper on efficiency resource potential studies.

August 27, 2008 44

General Quantification Approach

• Quantitative analysis of EE-3, -5, -6, possibly part of EE-7

• Evaluate by jurisdiction, using common formats for each jurisdiction; sum totals

• Use best data sources readily available

• Common factors– Discount rate, years covered, inflation rate– Emission factors, fuel prices, avoided costs,

T&D loss rates

August 27, 2008 55

EE-1: “Establish Quantifiable Goals for Energy Efficiency”

General Concepts• States/provinces commitment to implement

all cost-effective energy efficiency (EE) measures (with definition of “cost-effective”, including CO2 value)

• Investment in R&D toward future measures• Counting of supply- and demand-side

efficiency savings toward goals• Regional coordination in addressing goals

August 27, 2008 6


Revisions to option from July 23-24 EEAG meeting• Clarification of 2% annual energy savings goal

– Region and States/Provinces will save 2%/yr by 2015 based on rolling average of prior 3-year, weather-adjusted retail sales of energy

– Goal to be ramped up in years prior to 2015– Future years beyond 2015 will also require 2% annual

reduction, as defined above. – Applies to non-transportation energy use– Periodic EE potential assessments and review of goals – States/Provinces measure progress toward meeting goal

from all policies, may use “bottom-up” methods– T&D efficiency savings can count toward meeting goals

August 27, 2008 7


Quantification

• Option not to be quantified. Specifies overall goal and identifies initiatives to support overall energy savings efforts in the MGA states and provinces.

• Measures included in EE-1 are quantified in other EEAG options

August 27, 2008 88

EE-2: “Undertake Assessments that Quantify the Amount of Energy Efficiency that Would Cost Less

on a Unit Cost Basis than New Generation”General Concepts

• In the near term, produce a “White Paper” addressing EE/ conservation potential in Midwestern states– Objectives: Review, summarize Midwest EE potential

studies, implications for MGA goals; identify shortcomings and gaps in those studies; produce a core set of principles and methodologies for inclusion in future EE potential studies; use findings to build momentum for EE potential studies in each jurisdiction

• Longer-term goal of comprehensive EE/conservation potential assessments by utilities, energy offices, or other entities in each jurisdiction

August 27, 2008 9

EE-2: “Undertake Assessments that Quantify the Amount of Energy Efficiency that Would Cost

Less on a Unit Cost Basis than New Generation”

Revisions/updates from July 23-24 EEAG meeting• The White Paper has been funded and work has begun• The Paper should examine studies that have examined the

energy savings impact of energy education programs – Question unresolved: will the white paper include a review of

regulatory barriers to energy efficiency? – Is there a need for a central clearinghouse to collect/analyze,

distribute data related to EE potential studies?• Outline for White Paper is in preparation

Quantification: Option not to be quantified

August 27, 2008 1010

EE-3: “Require Retail Energy Providers to Make Energy Efficiency a Priority”

General Concepts• Electric, gas utility resource plans should use all

achievable cost-effective energy efficiency goals, targets, and strategies before reliance on new supply

• Mechanisms include IRP, EE standards for utilities, cost recovery, “opt-outs” (with monitoring and verification requirements) for large-volume customers, consistent measurement across jurisdictions

• Challenges include implementation under different degrees of deregulation, for publicly-owned utilities, and for non-utility providers, treatment of large-volume customers

August 27, 2008 11


Revisions from July 23-24 EEAG meeting • Energy providers should meet a 2%/yr energy

savings goal, consistent with the goal of the MGA jurisdictions

• Oil and propane should be included in energy efficiency efforts and programs (do quantitative goals apply to these fuels as well?)

• Clarification on differing regulatory environments of IOUs and non-IOU utilities, although noting that efficiency standards should be applied equally to all types of utilities

• Several elements moved from EE-1 to this option

August 27, 2008 12


Quantification:• Energy savings from programs currently

underway will be counted toward goal, but quantified separately from those actions that result directly from MGA process

• Savings from new programs to be “ramped in” • Forecasts for electricity/gas consumption by

province/state are key inputs• Data requirements: Effectiveness of existing

programs, costs of saved energy

August 27, 2008 1313

EE-4: “Remove Financial Disincentives and Enable Investment Recovery for Energy

Efficiency Program Costs”General Concepts• Provide for EE program/service cost

recovery; address lost revenue; provide new opportunities for utility earnings related to achieving EE goals; establish regulatory/incentive structure reflecting EE’s lower capital risks

• Remove disincentives to utility EE investments using tools such as rate design, decoupling of sales from revenues

August 27, 2008 14

EE-4: “Remove Financial Disincentives and Enable Investment Recovery for

Energy Efficiency Program CostsRevisions from July 23-24 EEAG meeting• Goals clarified to say that states should consider and

implement standards to remove disincentives to energy efficiency and that the MGA should – develop a set of guiding principles for rate design– Develop a menu of options for providing utilities with

incentives based on experience in other states

Quantification• Option not to be quantified. Option supports and

enables utility energy efficiency programs carried out under EE-3, but will not be separately analyzed

August 27, 2008 1515

EE-5: “Strengthen Building Codes, Appliance Standards and Requisite Training, Quality

Assurance and Enforcement”General Concepts• Strengthening of Building Energy Codes and Code

Adoption—improve building energy efficiency by 30% relative to 2006 IECC standards, most recent ASHRAE Commercial Codes, and update regularly

• Provide Training related to Building Energy Code Implementation

• Appliance/Equipment Efficiency Improvement• Certification programs for energy-efficient appliances,

equipment, buildings• Upgrading Existing Buildings, and “Beyond Code”

Construction, including incentives, upgrades at sale

August 27, 2008 16

EE-5: “Strengthen Building Codes, Appliance Standards and Requisite Training, Quality

Assurance and Enforcement”

Revisions from July 23-24 EEAG meeting • Recommendation: all jurisdictions should adopt a

jurisdiction-wide building energy code • Increased emphasis on enforcement and training for

building codes • Consider codes that set energy standards for rental housing

• Develop means of assuring compliance with codes• Questions unresolved: Need to address code inspector

training, timing of code implementation • Question unresolved: Need to flesh out or discuss Energy

Efficiency Partnership (p. 25)

August 27, 2008 17

EE-5: “Strengthen Building Codes, Appliance Standards and Requisite Training,

Quality Assurance and Enforcement”Quantification• Use data from BCAP to assist in quantification of

building codes improvement– Will need to interpret current status of codes in each

jurisdiction

• Use data from Appliance Standards Awareness Project to assist in quantification of appliance standards.

• Key Data: Home sales, commercial floor area, and growth in both; improvement due to code changes

August 27, 2008 1818

EE-6: Have the Public Sector Lead by Example

General Concepts • Applies to government-owned and non-government buildings

with >20% of construction costs funded with government money

• Make new buildings/major retrofits meet stringent energy, water performance standards (recommissioning goal, regular certification)

• Set energy, water efficiency procurement guidelines based on performance standards for equipment purchases

• Fund and demonstrate existing and new technology – pilot and education

• EE for new/existing low-income housing, with specific energy use goals, funding to support EE measures.

• Encourage energy conservation via education/outreach

August 27, 2008 19


Revisions from July 23-24 EEAG meeting • Substantial reorganization of section • Question unresolved: Should the section set a

hard target for a reduction in energy consumption in gov’t. buildings?

• Question unresolved: Should gov’t. buildings exceed current codes by a specified percent? Should there be a date certain for benchmarking of gov’t. buildings?

• Flesh out section on Related Policies/Programs with regard to MN program.

August 27, 2008 20


Quantification • Estimates of energy savings relative to what

would have happened in absence of EE-6– Existing buildings upgrades, “beyond (new) code” for

new buildings– Savings from purchase of Energy Star devices

• Data/Parameter needs– Estimates of new, existing public housing units, public

building space, fraction participating per year– Average energy savings in participating buildings– Average savings from purchase of Energy Star devices

August 27, 2008 2121

EE-7: “Accelerate Adoption of Energy Efficiency Technologies and Best Practices by Commercial,

Residential, and Industrial Customers”General Concepts• Expand network of organizations providing energy efficiency

outreach/consumer awareness beyond utilities• Provide public benefit funds directly to manufactures and

service providers in addition to utilities• Create/reinforce education programs at K-12 levels on energy

efficiency, climate change mitigation relationship • Provide information to building professionals on building EE

opportunities (best practices brochure/website), regulatory/financing incentives for adopting energy-efficient building practices (TIF link)

• Provide information to building occupants (including commercial) to help assess energy costs of a building

August 27, 2008 22


Residential, and Industrial Customers”

Revisions during/since July 23-24 EEAG meeting

• Substantial reorganization of elements, including moving elements from other options

• Addition of industrial customers to coverage

• A conference call was held on August 21 among a sub-group to focus on this option. A second meeting of this group will take place on August 28 to flesh out financing elements in this option.

August 27, 2008 23


Residential, and Industrial Customers”

Quantification

• Most elements support other options, and therefore would not be quantified, but

• This may change with further definition of Policy Option

• Possible quantification of “market transformation” element based on experience in other regions

August 27, 2008 2424

EEAG Next Steps and Timeline• Incorporate comments from this teleconference into

draft text, circulate to EEAG– Continue work on EE-7 Financing/incentives element

• Begin work on analysis of “quantifiable” policy options, with data and other input from EEAG members– Could include EEAG review of partial draft analyses via

e-mail

• Goal of complete text of recommendations to MGA, draft analysis before September 29-30 EEAG meeting

August 27, 2008 2525

Next EEAG Meeting• In-person meeting, September 29-30, Purdue

University, Indianapolis Campus• Time to be confirmed, but likely 11 AM or noon to 6

PM on 29th, 8 AM to 2 PM on 30th

• Finalize text of Options Document to the extent possible

• Review/discuss quantification inputs, structure, and results

• Discussion of System Dynamics Modeling Effort• Decide on next steps for EEAG (preparation of Final

Report to MGA?)

August 27, 2008 2626

Energy Efficiency Advisory Group Facilitation Team

• Lola Schoenrich– [email protected]

• Jennifer Johnson– [email protected]

• Matthew Brown– [email protected]

• David Von Hippel– [email protected]

Documents

Teleconference August 27, 2008