• The most effective energy savings targets are paired with financial incentives that encourage program administrators to exceed targets.

• Spending limits and policies that allow large customers like factories to opt-out of efficiency programs artificially limit energy savings potential.

• Policies can be tailored to meet the needs of geographically and politically diverse states.

Texas was the first state to set efficiency targets, also called an energy efficiency resource standard (EERS), in 1999. Since then, half of the states in the country have followed suit, setting long term targets designed to spur electricity and natural gas savings.

Prompted by EERS policies, utilities in these states have invested in energy efficiency programs ranging from simple rebates to whole-building retrofits. In Arkansas, utilities worked with customers to replace water heaters, weatherize homes, and find energy savings for poultry producers. In Wisconsin, Focus on Energy programs have helped residents and businesses achieve more than $730 million in savings by replacing refrigerators, offering incentives for energy-efficient heating, and conducting free energy assessments for small businesses.

Despite EERS policies that are providing energy savings in all the states profiled in the report, energy efficiency programs have not been embraced across the country, and some are encountering resistance from opponents. In Indiana, legislators recently passed a bill which terminated energy efficiency programs that had been established by a prior regulatory commission order, eliminating the state’s EERS.

Some utilities have also claimed that energy efficiency targets are too costly to implement. However, another recent report by ACEEE finds that programs aimed at reducing energy waste cost utilities less than three cents per kilowatt hour, while generating the same amount of electricity from sources such as fossil fuels can cost two to three times more.

“Opponents of energy efficiency savings targets ignore the costs of building expensive new power plants, which are paid for through charges on utility bills,” said Martin Kushler, ACEEE senior fellow. “Because saving energy through efficiency improvements is much cheaper than building a new power plant, energy efficiency programs end up resulting in lower utility bills for customers.”

The new report analyzes energy efficiency targets from states across the country, including: Arizona, Arkansas, California, Colorado, Connecticut, Hawaii, Iowa, Illinois, Indiana, Massachusetts, Maryland, Maine, Michigan, Minnesota, Nevada, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, Texas, Vermont, Washington, and Wisconsin.

To read the full report, go to http://aceee.org/research-report/u1403.

Publication date: 4/21/2014

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