Utilities spent $3.6 billion on energy efficiency, saving enough electricity to power 2.5 million homes

Energize Weekly, June 27, 2018

U.S utilities reported spending $3.6 billion on energy efficiency incentives for customers in 2016 and saved 27.5 billion kilowatt-hours, enough electricity to power 2.5 million homes for a year, according to the federal Energy Information Administration (EIA).

Nearly half of those funds were directed at commercial customers, while residential energy efficiency programs received 43 percent of the spending. Incentives and programs for industrial customers took up the remaining 8 percent.

The 27.5 billion kilowatt-hours saved represented 0.7 percent of nationwide retail electricity sales. The savings over the lifetime of the efficiency measures was projected at 354 billion kilowatt-hours by the EIA.

“Some measures that affect heating, cooling, and water heating equipment can provide benefits for several years,” the EIA said. “Like spending, most savings occurred in the residential and commercial sectors.”

While the national average spent per customer was $24, the range went from zero dollars in Alaska to $124 in Massachusetts. Following Massachusetts were Rhode Island at $96, Connecticut at $74 and Vermont at $65. Just above Alaska was North Dakota at 31 cents per customer.

The incremental reduction in retail electricity sales reflect the spending pattern with near-zero savings in Alaska to 3 percent reduction in electricity consumption in Massachusetts, better than four times the national average.

An analysis of the most energy efficient states, based on electricity savings, done by the American Council for an Energy-Efficient Economy (ACEEE) ranked Massachusetts first in the nation, with Rhode Island in third place, Vermont in fourth place and Connecticut in sixth. California was second and Oregon fifth.

Several states, including Arizona, Indiana, North Carolina and Delaware, require utilities to develop so-called demand side management (DSM) plans.

In Colorado, under a 2007 law, the Public Utilities Commission (PUC) sets DSM targets for investor-owned utilities. The DSM programs are financed by a charge on electric bills of about $1 on the average residential bill. If the utility meets or exceeds the target, it receives a bonus.

The Colorado PUC this month raised the DSM target for Xcel Energy, the largest electricity provider in the state, by 25 percent to 500 gigawatt-hours a year from 2019 to 2023. The company had sought to keep the target at 400 gigawatt-hours.

The commission approved a $78 million efficiency budget, with a cap that could got to about $90 million. Over the past 10 years, Xcel has spent $647 million on energy savings programs, and there has been an 11 percent reduction in energy consumption.

“Utility energy efficiency incentives can be financial, such as subsidies and rebates for energy efficient equipment, or educational, such as technical assistance, audits, or home energy scores,” the EIA survey said.

Other types of initiatives include “behavioral” programs, such as home energy reports comparing a customer to neighbors, or utility averages, using messaging to change consumer behavior.

Incentives can also be offered to building owners, building occupants, contractors or upstream or midstream retailers.

Among the programs Xcel has are rebates for the purchase of high-efficiency appliances, a “Home Energy Squad,” which conducts energy audits and makes energy improvements, a discount on LED lightbulbs, rebates for smart thermostats and a weatherization program.

Utility subsidies for LED bulbs across the country ranged from $1 to $15 per bulb in 2016, according to the U.S. Environmental Protection Agency’s ENERGY STAR program.

Some utilities also give rebates on new energy-efficient heating, ventilation and air-conditioning equipment or offer whole-building retrofits or upstream programs, the EIA said.

“Energy efficiency plays a critical role in meeting the needs of electric customers throughout the United States,” the ACEEE said in its 2017 report ranking state energy efficiency. “It is a low-cost, low-risk resource option that delivers high levels of customer satisfaction.”

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