More evidence utilities need to push energy efficiency



Quick Take:  You know this already. You know that energy efficiency costs far less than building a new power plant. You probably have numerous energy efficiency programs in place. Now we have two new reports that will further fuel efforts to mandate even larger efficiency gains by utilities.


My advice: Be sure you are talking with regulators about ways to give utilities fair recognition for energy efficiency improvements in their service territories. As it stands today, many utilities are missing opportunities to gain credit for things customers are going to do anyway. The Institute for Electric Innovation (IEI) calls this "efficiency-aligned regulatory frameworks."


One report is IEI. It documents the "impressive and steady increase in electric efficiency investments by electric utilities." You can read the release below or download the IEI summary of utility energy efficiency.


The other report is from ACEEE and stresses that energy efficiency is the most cost-effective approach. Read the release on Page 2 or download the full ACEEE energy efficiency report. - Jesse Berst


Electric Utility Efficiency Programs Increase Spending, Save Energy


A new study co-sponsored by The Edison Foundation Institute for Electric Innovation found that electric utility efficiency programs saved 126 terawatt-hours (TWh) of electricity in 2012, enough to power more than 12.2 million U.S. homes for one year, and avoided the generation of 89 million metric tons of carbon dioxide. In addition, the study, Summary of Electric Utility Customer-Funded Energy Efficiency Savings, Expenditures, and Budgets, revealed that U.S. customer-funded electric efficiency expenditures totaled nearly $5.9 billion in 2012, a 3-percent increase from 2011 levels. In five states, 2012 electric efficiency expenditures more than doubled from 2011 levels. The study also found that 2013 U.S. customer-funded budgets for electric efficiency totaled $7 billion.


"Year-over-year, we are seeing an impressive and steady increase in electric efficiency investments by electric utilities, reflecting the industry’s commitment to helping customers manage and save energy while optimizing the nation’s power grid through low-cost, demand-side resources,” said Lisa Wood, Institute for Electric Innovation Executive Director and Edison Foundation Vice President. "Electric utilities are by far the largest energy efficiency providers in the country, making up 89 percent of the total customer-funded electric efficiency expenditures nationwide in 2012.”

New Report Finds Energy Efficiency  is America's Cheapest Energy Resource


Energy Efficiency Costs Utilities 2 to 3 Times Less Than Traditional Power Sources; Average of 2.8 Cents per Kilowatt Hour


Washington, D.C. (March 26, 2014): According to a new report released today by the American Council for an Energy-Efficient Economy (ACEEE), energy efficiency is the cheapest method of providing Americans with electricity. Energy efficiency programs aimed at reducing energy waste cost utilities only about 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.


"The cheapest energy is the energy you don't have to produce in the first place," said ACEEE Executive Director Steven Nadel. "Our new report shows that when utilities are examining options on how to provide their customers with cheap, clean electricity, energy efficiency is generally the best choice."


"Why build more expensive power plants when efficiency gives you more bang for your buck?" said Maggie Molina, Utilities, State and Local Program Director and author of the report, The Best Value for America's Energy Dollar: A National Review of the Cost of Utility Energy Efficiency Programs. "Investing in energy efficiency helps utilities and ratepayers avoid the expense of building new power plants and the harmful pollution that plants emit."


The report looks at the cost of running efficiency programs in 20 states from 2009 to 2012 and finds an average cost of 2.8 cents per kWh---about one-half to one-third the cost of alternative new electricity resource options, as illustrated by the following graph from the report:



ACEEE Energy Efficiency Graph


Levelized costs of electricity resource options. Source: Energy efficiency data represent the results of this analysis for utility program costs (range of four-year averages for 2009-2012); supply costs are from Lazard 2013.


The report analyzes energy efficiency costs from states across the country, including: Arizona, California, Colorado, Connecticut, Hawaii, Illinois, Iowa, Massachusetts, Michigan, Minnesota, New Mexico, New York, Nevada, Oregon, Pennsylvania, Rhode Island, Texas, Utah, Vermont, and Wisconsin.


Other Key Findings Include:

·         At an average of 35 cents per therm, natural gas utility energy efficiency programs are also highly cost-effective (in 2013, the national average natural gas commodity price was 49 cents per therm).

·         Both electricity and natural gas efficiency programs have consistently remained low-cost resources over the past decade, which shows the reliability of efficiency as a long-term resource.

·         Each dollar invested in electric energy efficiency measures yields $1.24 to $4.00 in total benefits for all customers, which include avoided energy and capacity costs, lower energy costs during peak demand periods like heat waves, avoided costs from building new power lines, and reduced pollution.

·         Incorporating higher levels of energy efficiency in long-term planning can protect utilities and their customers against volatile and rising costs of traditional energy resources.


About ACEEE: The American Council for an Energy-Efficient Economy acts as a catalyst to advance energy efficiency policies, programs, technologies, investments, and behaviors. For information about ACEEE and its programs, publications, and conferences, visit


Jesse Berst is the founder and Chief Analyst of SGN and Chairman of the Smart Cities Council, an industry coalition.