by Julia Pyper
October 05, 2017

Energy efficiency doesn’t often make front-page news, but behind the scenes, this resource is steadily transforming energy markets -- although the changes can be difficult to track. 

The American Council for an Energy-Efficient Economy (ACEEE) documented the progress states have made on efficiency measures in its latest State Scorecard.

“In the absence of a national uniform energy standard…state policies are often the key drivers in spurring investment in efficiency,” said Weston Berg, ACEEE research analyst and Scorecard lead author.

In this year’s ranking, Massachusetts edged ahead of California to reclaim its first-place position -- posting the state’s highest-ever efficiency savings of 3 percent of sales. The state’s Green Communities Act of 2008 continues to be a strong driver, as well as the $15 million Affordable Access to Clean and Efficient Energy Initiative and other affordable housing grant programs.

California, which tied with Massachusetts last year, claimed second place in the ACEEE ranking. Notably, the state undertook new building energy-use benchmarking and data-sharing mandates under AB 802, and continued efforts to double energy-efficiency savings by 2030 under SB 350. Late last year, California also became the first state to approve efficiency standards for laptops, desktop computers and monitors, which will come into effect in January 2018.

Rhode Island ranked third, for the fourth year in a row, thanks to strong utility efficiency programs. The state’s Three-Year Energy Efficiency Procurement Plan in particular helped drive utility savings to 3 percent, which is among the highest in the nation. Rhode Island has also called for additional efficiency investments through its greenhouse gas reduction plan targeting a 45 percent cut by 2035. 

Vermont and Oregon, known for their nation-leading electricity savings performance, rounded out the top five spots.

Overall, utilities across the U.S. invested approximately $7.6 billion in energy efficiency last year and saved approximately 25.4 million megawatt-hours of energy use as a result. While significant, ACEEE noted that these savings did not quite match those posted in 2015. But that shouldn’t be seen as a sign of diminishing efficiency efforts, according to ACEEE. Rather, the differences likely stem from the divergent metrics states use to report savings. But that may be an issue in and of itself (more on that below).

Another issue is that the ranking shows there is a clear set of leading states with established efficiency programs, and not too much movement at the top. On the bright side, though, several states implemented efficiency policies for the first time, and some utilities extended existing programs toward the end of the year. The benefits of those programs should start to reveal themselves this year.

ACEEE touts the benefits of energy efficiency throughout the report: job creation, cost reductions, environmental achievements and grid reliability (although some leaders at the DOE might disagree). The report does not, however, address the cost-effectiveness of state efficiency programs.

When asked about this by GTM staff writer Emma Foehringer Merchant, ACEEE Executive Director Steve Nadel said, “States differ too much on how they do cost-effective testing. When we look into trying to compare states, it becomes a hornet’s nest."

The complexity piece is precisely the issue. Efficiency industry professionals are increasingly speaking out about the archaic way that energy efficiency is measured, because it has real implications for how state money is spent and how effective those programs can be. In ACEEE’s top-ranked states, California and New York, results for efficiency programs are delivered several years after implementation.

Energy efficiency is still by far the cheapest energy resource, but it can deliver the best bang for its buck when utilities actually know what they’re saving. A closer look at cities shows that despite ambitious goals, efficiency efforts may not be achieving their desired effect.

Pointing out these performance issues is controversial, because in many places, it’s hard to get action on efficiency at all. Most utilities are disincentivized from offering efficiency programs, since lower electricity sales eat directly into their earnings.

Just this week, Southern California Gas Co. was accused of using energy-efficiency funds paid by its customers to thwart the state's other conservation efforts. A new report from the Office of the Ratepayer Advocates finds that SoCalGas has been working at cross purposes to the state’s energy savings goals for three years. The utility rejected the accusations.

There are ways to make energy-efficiency programs work for all stakeholders, but it may require going beyond a single efficiency program or target to making more fundamental changes to a state’s regulatory model. 

Retail-rate NEM ends in Utah

On November 15, retail-rate net metering will no longer be available in Rocky Mountain Power territory, under a settlement agreement unanimously approved by the Utah Public Service Commission last Friday. After November 15, new solar customers will receive a lower credit of roughly 9 cents per kilowatt-hour, while the PSC works to determine the value of solar through a study to be completed by 2020. Current rooftop solar customers will continue to receive the full-credit rate until 2035.

To justify the continuation of NEM, albeit at a lower level, the agreement allows RMP to recover some of the costs by charging all Utah customers’ power bills. The deal received broad support from stakeholders, save a few, including the Western Resource Advocates. The environmental group argued there is no evidence the utility needed to recover the costs of the solar credits. 

Massachusetts missing out on $78 million in solar projects

Massachusetts is in the process of transitioning to a new solar incentive program called SMART that will ensure the state’s solar market will continue to grow. But in the meantime, dozens of projects have stalled.

More than $78 million in solar projects are on hold in Massachusetts because utilities in the state have hit their net metering caps, according to new analysis from the Solar Energy Industries Association (SEIA).

National Grid, WMECO and Unitil have all reached the limit on net metering in their service territories, which means certain solar projects can no longer be compensated for the excess energy they produce. The caps specifically apply to commercial, industrial, public and community solar projects.

SEIA found the waiting list totals 124 projects, which have a capacity of 51.2 megawatts and could power nearly 5,400 homes. The counties with the largest stranded investment include Berkshire County ($28.1 million), Worcester County ($12.8 million) and Hampshire County ($9.1 million). 

SEIA, on behalf of its more than 45 member companies in Massachusetts, has proposed to raise the statewide net metering cap by 5 percent for public and private projects, the same level proposed in the bills S. 1824/H. 2712.

“Massachusetts has been one of our nation’s clean energy leaders, but one of its fastest-growing industries is being stifled by delayed action on net metering,” said Sean Gallagher, SEIA’s vice president of state affairs. “With projects now on hold in more than half the state, the legislature should raise the net metering caps this year."

Illinois acts on renewables, coal pollution and the grid

The Illinois Power Agency has posted a draft of its “Long-Term Renewable Resources Procurement Plan” that lays out how the state will pay for renewable energy projects and structure renewable energy programs under the Future Energy Jobs Act passed last year.

Part of the plan seeks to correct a longstanding issue with the state’s RPS, which allowed electric customers to switch service, reducing the eligible population covered by the RPS, making compliance more difficult. PV Magazine reports the RPS goal of 25 percent renewables by 2025 must now be met by “forward procurements” from new projects. The IPA also tightened requirements on qualifying projects in adjacent states to give greater priority to Illinois-based systems.

The draft plan also adjusts the Adjustable Block Program for community solar projects, moving from competitive bidding to an administratively determined pricing scheme. The IPA plan also addresses the state’s net metering policies and a new rebate for smart inverters, among other things. Public hearings on the draft will be held on October 26, October 31 and November 3. Comments are due by November 13.

Illinois seeks to ease up on coal pollution

Another major element of the Future Energy Jobs Act legislation was to subsidize Exelon-owned nuclear power plants in Illinois. During the negotiations, independent power producer Dynegy also sought subsidies for its coal plants, but did not get its wish. But the company may have just secured a lifeline for its plants through another avenue.   

Gov. Bruce Rauner's administration is pushing to revise stringent limits on pollution from some of the state’s last remaining coal-fired power plants. A proposed amendment would ditch limits on the rate of pollution produced by eight of Dynegy’s coal plants in central and southern Illinois, and would impose annual caps instead. The seemingly subtle change could have a significant impact on lung-damaging sulfur dioxide and nitrogen oxide emissions from Dynegy’s fleet by setting the caps higher than what the coal plants emitted in the past two years, according to a Chicago Tribune analysis.

Alec Messina, director of the Illinois Environmental Protection Agency, told the Tribune that the goal is to keep Dynegy’s financially struggling coal plants open by giving the company more flexibility to operate plants that are not equipped with modern pollution controls. Messina previously worked as a lobbyist on behalf of a trade group that represents Dynegy’s interests in Illinois.

The Illinois Clean Jobs Coalition is among those pushing back against the proposed changes, which are expected to be formally introduced later this month.

"After having worked for more than two years in an open, transparent process to pass historic clean energy legislation, the Illinois Clean Jobs Coalition is deeply disappointed to learn of backroom negotiations taking place between Gov. Rauner's political appointees at the Illinois EPA and Houston-based Dynegy Inc., which would result in massive new air pollution for the state of Illinois and beyond,” according to a statement from the group.   

Illinois launches a “utility of the future” study

The Illinois Commerce Commission has launched a "utility of the future study" at the recommendation of Rauner’s transition committee. The 18-month-long study is set to “explore how advances in distributive resources, energy efficiency, smart devices, microgrids, electric vehicles, big data and analytics, and other innovations will all converge to shape the future of both utilities and consumers in Illinois and the Midwest.” 

"The Illinois Commerce Commission has positioned its NextGrid policy study to serve as a leading think tank on 21st century energy-sector reinvention, addressing the industry’s most significant issues on behalf of Illinois consumers," said Anne Pramaggiore, ComEd president and CEO. "We at ComEd are enthusiastic about the study and about the track record of collaboration and consensus-building that has been a hallmark of Illinois energy policy development over several decades."

Changes to the value of solar in Oregon

During the last session, the Oregon legislature chose not to extend a tax credit for residential solar panel installation. The credit provides up to $6,000 per system, which enables customers to get a payback within five to 10 years, said Jon Miller, executive director of the Oregon Solar Energy Industries Association, in an interview on the Oregon radio show Think Out Loud. Without the credit, the payback period is expected to stretch to 18-20 years, he said.

Doing away with the credit “will definitely impact sales,” which has installers worried, said Miller.

In a related development, the Oregon Public Utility Commission issued a final ruling on the first phase of the state’s value-of-solar proceeding. According to Advanced Energy Economy’s PowerSuite, the proceeding was initiated on January 27, 2015 to investigate: 1) the resource value of solar (RVOS); 2) the extent of cost shifting, if any, that occurs when customers with solar facilities participate in Oregon's net metering program; and 3) impacts to system reliability from solar.

The proceeding is broken into two phases: Phase 1 examines elements and methodologies and Phase 2 will examine specific values around the approved methodologies. The September 15 decision adopted an RVOS methodology based on a 25-year marginal levelized value for small-scale solar resources. The PUC further ordered Portland General Electric, PacifiCorp and Idaho Power to make initial RVOS filings with preliminary calculations in new utility-specific dockets by November 30, 2017. 

Some of the latest state energy policy news