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EERS VS. IRP: WHY STATES SHOULD NOT ELIMINATE THEIR ENERGY EFFICIENCY RESOURCE STANDARDS Nicholas Dreher Presented at the 2015 ACEEE National Conference on Energy Efficiency as a Resource 1
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Page 1: EERS . IRP: W S N E R S · 2020-02-03 · 2015 7.0 million MWh Illinois 2% elec by 2015 Iowa Set on a utility basis 1.2% elec current plans Wisconsin No specific targets 0.6% elec

EERS VS. IRP: WHY STATES SHOULD NOT

ELIMINATE THEIR ENERGY EFFICIENCY

RESOURCE STANDARDS

Nicholas Dreher

Presented at the 2015 ACEEE National Conference on Energy Efficiency as a Resource

1

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Midwest Energy Efficiency Alliance

(MEEA)

2

MEEA is a nonprofit membership

organization with 150+ members,

including:

• Electric and Gas Utilities

• State and local governments

• Manufacturers and retailers

• Academic and research institutions

• Energy service companies and contractors

Since 2000, MEEA has been the leading

source for raising awareness and advancing

sound energy efficiency policies and

programs in the Midwest

MEEA balances the diverse interests of its

members and network across the public and

private sectors, creating a common ground to affect positive change for energy efficiency in the Midwest.

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MEEA’s Role as a ResourceAdvancing

Energy Efficiency

Policy Facilitating Energy

Efficiency Programs

Regional Representation

in National Dialogues

Promoting Best Practices

Coordinating Utility Programs Efforts

Evaluating & Promoting Emerging

Technology

Delivering Training and Workshops

3

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4

What is an Energy Efficiency Resource

Standard (EERS)?

Source: American Council for an Energy Efficiency Economy (ACEEE)

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Energy Savings for States with an

EERS vs. those Without

5

Source: ACEEE

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$1.40

$0.38

$1.78

$0.0

$0.2

$0.4

$0.6

$0.8

$1.0

$1.2

$1.4

$1.6

$1.8

$2.0

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01

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02

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03

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06

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09

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$Billions

Estimated Annual Utility Investment in Energy

Efficiency in the Midwest

EERS

Legislation

• IL Electric

• MN Electric,

Gas

EERS Legislation

• MI Electric,

Gas

• OH Electric

Exec Order

• IA Gas,

Electric

EERS Legislation

• IL Gas

Admin Order

• IN Electric

Voluntary Standard

Legislation

• MO Electric

Admin Order

• WI Elec,

Gas

Earlier Statewide EE

• WI

1999 - Public Benefit

Fund Adopted

Earlier Statewide EE

• IA

1990 – Initial legislation

1996 – Legislation

updated

Earlier Statewide EE

• MN

1983 – Pilot legislation

1991 – CIP requirement

adopted

Legislative

Committee

• WI EERS

adjusted

Legislation

• IN EERS

overturned

• OH EERS

frozen

6

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Midwest Efficiency Targets and Funding Levels

2010 $1.01 billion

2015 $1.78 billion

Illinois2% elec by 2015

1.5% gas by 2017

Fund sweep of

State program

proposed

IowaSet on a utility basis

1.2% elec current plans

0.85% gas current plans

WisconsinNo specific targets

0.6% elec current est.

0.5% gas current est.

Michigan1% elec by 2012

0.75% gas by 2012

Legislative rollback

proposed

OhioTwo-year “freeze” after

2014.

Future legislation &

funding unclear.

IndianaOverturned 2014

Future legislation &

funding unclearMinnesota

1.5% elec by 2010

1.0% gas by 2010

(gas goal reduced by

commission)

MissouriIRP process;

Voluntary electric

KentuckyVoluntary electric

and gas

North Dakota

South Dakota

Nebraska

KansasVoluntary energy efficiency

only

ND

SD

NE

KS

MI

MN

WI

IA

IL

MO

IN

KY

OH

7

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Midwest Efficiency Savings - Electric

2010 5.4 million MWh

2015 7.0 million MWh

Illinois2% elec by 2015

IowaSet on a utility basis

1.2% elec current plans

WisconsinNo specific targets

0.6% elec current est.

Michigan1% elec by 2012

OhioTwo-year “freeze” after

2014.

Future legislation &

funding uncertain

IndianaOverturned 2014.

Future legislation &

funding uncertainMinnesota

1.5% elec by 2010

MissouriIRP process;

Voluntary electric

KentuckyVoluntary electric

efficiency only

North Dakota

South Dakota

Nebraska

KansasVoluntary electric efficiency

only

OH

IA

IL IN

KS KY

MI

MN

MO

ND

NE

SDWI

As of August 2015

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Midwest Efficiency Savings – Natural Gas

2010 87 million therms

2015 136 million therms

Illinois1.5% gas by 2017

IowaSet on a utility basis

0.85% gas current plans

WisconsinNo specific targets

0.5% gas current est.

Michigan0.75% gas by 2012

OhioVoluntary gas efficiency

only

IndianaOverturned 2014.

Future legislation &

funding uncertain.Minnesota

1.0% gas by 2010

(gas goal reduced by

commission)

MissouriVoluntary gas

efficiency only

KentuckyVoluntary gas efficiency

only

North Dakota

South Dakota

Nebraska

KansasVoluntary gas efficiency only

MI

IA

IL IN

KS KY

MN

MO

ND

NEOH

SD WI

As of August 2015

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Indiana

2009: Administrative order creates

Energizing Indiana

2012: Energizing

Indiana Program

Implemented

2015: DSM plan

and IRP rule making process begins

2014: Legislature

repeals EERS. All investor

owned utilities file DSM

plans with IN Utility

Regulatory Commission

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Energizing Indiana

• From 2012-2013, for every

$1 spent on the Energizing

Indiana programs, residents

and businesses reaped

$3.02 in benefits.

• Effective policy increased

Indiana’s electricity savings

over 25-fold from 2009

levels, the year before

electric energy efficiency

was required under the

EERS.

11

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Energy Savings Reduced in Indiana after the

Repeal of their Energy Efficiency Resource

Standard

*Indiana & Michigan Power has not yet filed a plan for 2016

12

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Indiana Electric Efficiency Spending

and Savings by Customer Class

13

$M

illio

nG

Wh

C&I Residential Low Income T&D Indirect Costs

Source: Utility Filings in IURC Causes 42693-S1, 43955-DSM 02, 44486, 44495, 44497, and 44501.

0

50

100

150

2010 2011 2012 2013 2014 2015

0

200

400

600

800

1000

1200

2010 2011 2012 2013 2014 2015

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14

What is an Integrated Resource Plan (IRP)?

Source: Bruce Biewald and Rachel Wilson, Regulatory Assistance Project (RAP), 2013.

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0.02%

0.06%

0.09%

0.24% 0.30% 0.40%

0.59%

0.90% 1.00%

1.05%

1.10%

1.28%

1.31%

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

KS ND SD KY NE MO IN WI IL IA OH MI MN

Energy Efficiency in Midwest StatesSaved electricity as percent of total retail electricity sales, 2013

Sources: MEEA, 2015; EIA, 2015

EERS

Neither IRP nor EERS

IRP Only

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Minnesota• Minnesota has adopted both an IRP

model as well as a Conservation

Improvement Plan standard plus

other goals

• MN incorporates existing 1.5%

energy efficiency standard goal as

an input within each utility’s IRP

• Electric savings more than doubled

between 2007 and 2012

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IRP Best Practices: Lessons from

Minnesota and Beyond

• Existing Methodology: if a state already uses resources

such as a technical reference manual, utilities should

use values reflected in the technical reference manual in

their IRP inputs.

• Commission Authority: the state utility regulatory

commission should have the authority to approve, reject,

request more information, and modify utilities’ IRPs.

• Energy Efficiency Resource Standards: incorporate

existing or future energy efficiency resource standards

as a load reduction input to IRP modeling.

17

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A good electric system IRP should

include…

Load forecast

Reserves and reliability

Demand side

management

Supply options

Fuel prices

Environmental costs and

constraints

Uncertainty

Existing Resources

Valuing and selecting

plans

Action plan

Documentation

Time frame

18

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IRP Challenge:

Maximization of Energy Efficiency Savings

• In 2013, the 26 states with EERS policies in place, showed more than 3.5 times as much program spending (2.63% vs. 0.76%) and savings (1.11% vs. 0.30%) as the 24 states without an EERS policy, regardless of whether the state had an IRP policy.

• The states with an IRP or other long-term planning requirement that also had an EERS spent and saved over 3 times as much as states that had an IRP requirement but no EERS requirement (2.66% of revenues vs. 0.76%; and 1.16% of sales vs. 0.35%).

• For states without IRP process, those with EERS spent over 3 times as much and saved nearly five times as much (0.90% vs. 0.19%) as states with no IRP/planning requirement and no EERS.

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Conclusions

• EERS produce more cost-effective savings than an IRP

• IRP is a planning framework used to evaluate supply-side and demand-side resources

• IRP only as strong as the targets/standards incorporated

• If a state moves toward IRP, it should incorporate an EERS as a load reduction measure so the plan includes targets

• The good news – they can work together to achieve significant savings in a cost-effective, thoughtful way.

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Questions and Contact Information

Nicholas Dreher

Policy Manager

Midwest Energy Efficiency Alliance

[email protected]

www.mwalliance.org

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