MEEA Policy Webinar

The Growth of Utility Energy

Efficiency Programs in the

Midwest over the Last Ten Years

September 6, 2012

MEEA’s Role in the Midwest

• Nonprofit serving 13 Midwest states

• 10+ years serving states, energy offices, utilities and communities

• Staff of 25 in Chicago

• Actions – Designing & Administering Energy Efficiency Programs

– Evaluating & Promoting Emerging Technologies

– Regional Voice for DOE/EPA & ENERGY STAR

– Coordinating Utility Program Efforts

– Delivering Training & Workshops

– Advancing Energy Efficiency Policy

– Promoting Best Practices

The EE Story (Current)

• Now: Low hanging fruit still around

– ‘Traditional’ suite of incentive programs

• Lighting, refrigerators, C&I

– CFLs, lighting are 70%+ electric savings

– HVAC/water heaters most of gas savings

• Challenging for gas utilities to meet goals

– Some exploration of behavior change

– Some piloting of new areas

– Challenge of updated building codes and

increasing appliance standards

MEEA’s Program History Current Programs:

• Refrigerator Recycling (2002 – present)

• Building Operator Certification (2003 – present)

• Lights for Learning (2004 – present)

• HVAC Training and Retail Incentives (2008 – present)

• Home Performance with ENERGY STAR (2009-present)

• BPI and Building Science Training (2010-present)

Early Programs:

• Change A Light (2001 – 2008)

• Midwest Building Solutions (2005 – 2006)

• Room AC Recycling (2005 - 2006)

• LIHEAP CFL Program (2006 - 2007)

The EE Story (Future) • Future: Finding a new portfolio

– Lighting savings going down

– Some program saturation

– Need ‘new’ programs

• Whole home (HPwES, air sealing, etc)

• Systems work (HVAC systems, smart homes, etc)

• Behavior programs (changing the customer habit)

• Education

• Building Energy Codes (adoption, training and

compliance_

– Challenges

• Cost effectiveness (non-energy benefits not counted)

• More complex (contractors, systems, etc)

Future Midwest Efficiency Targets and Funding

2010 $1.06 billion

2015 $1.58 billion

2010 EE funding

2015 EE funding

(projected)

Sept 2011

Illinois 2% elec by 2015

1.5% gas by 2017

Iowa 1.4% elec currently

1% gas currently

Wisconsin 0.63% elec currently

0.48% gas currently Michigan 1% elec by 2012

0.75% gas by 2012

Ohio 2% elec by 2019

gas in discussion

Indiana 2% elec by 2019

gas none yet

Minnesota 1.5% elec current

1.5% gas current

Missouri IRP process

Kentucky Voluntary elec and gas

Estimated Annual Investment in Energy

Efficiency in the Midwest

January 2011

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

Admin Order

• WI Electric,

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

overturned

$1.191

$0.390

$1.581

$0.000

$0.200

$0.400

$0.600

$0.800

$1.000

$1.200

$1.400

$1.600

$1.800

20

00

20

01

2002

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

2011

20

12

2013

20

14

20

15

Bill

ion

s

Growth of MEEA Staff

5.5 7 8

10 10 10 12

15

18

24 25

0

5

10

15

20

25

30

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12

Total MEEA Staff

Growth of MEEA Membership

26

40 40 43 46 56

74

101

119

134

147

0

20

40

60

80

100

120

140

160

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12

Total Membership

Growth of MES Conference

Attendance

0 0 0

174

199

148

274

301 375

408 483

0

100

200

300

400

500

600

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12

Total MES Conference Attendance

Growth of MEEA Programs

3

5 6

5

8

5 5

6

9

13

11

0

2

4

6

8

10

12

14

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12

Total Number of Programs

Growth of MEEA Policy

Initiatives

0 0 0

3

5 5 6 6

4

12 12

0

2

4

6

8

10

12

14

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12

Policy Initiatives

Our Presenters

• Dan York, ACEEE

– Report , “Three Decades and Counting”

– What has happened in the Midwest

• Diane Munns, MidAmerican Energy

– Overview of Utility’s Program Approach

– Lessons Learned from 10 years of EE programs

• Karen Rhodes

– Overview of Utility’s Program Growth

– Lessons Learned

– Benefits of Utility’s Long-term Commitment to EE

Three Decades and Counting:

Midwestern Foundations of Customer

Energy Efficiency Programs

Dan York, Ph.D., Utilities Program Director

American Council for an Energy-Efficient Economy

dwyork@aceee.org 608-243-1123

http://aceee.org

15

American Council for an

Energy-Efficient Economy (ACEEE)

The American Council for an Energy-Efficient Economy is a

nonprofit, 501(c)(3) organization that acts as a catalyst to

advance energy efficiency policies, programs, technologies,

investments, and behaviors

ACEEE was founded in 1980 by leading researchers in the energy

field. Since then we have grown to a staff of more than 50.

Projects are carried out by ACEEE staff and collaborators from

government, the private sector, research institutions, and other

nonprofit organizations.

Roots of today’s customer energy efficiency

programs go back 30+ years

• Programs arose in the 1970s as responses to energy

“crises” and environmental concerns.

• Next phase was utility “demand-side management,”

(DSM) which grew rapidly in 1980s; practice became

fairly widespread.

• By 1990s DSM and “integrated resource planning”

(IRP) were well established.

16

Rise of DSM and IRP

DSM and IRP marked fundamental shifts in utility

planning and operation; two key new paradigms:

(1) Customer demand could be affected by actions and

initiatives taken by utilities working with customers; and

(2) Energy efficiency is an energy resource capable of

substituting for energy supply resources in order to meet

customer energy needs.

17

Midwestern Pioneers of Customer Energy

Efficiency Programs

DSM and IRP was not just a “coastal” idea (California,

the Pacific Northwest and the Northeast).

Three Midwestern states were among the pioneering

states to enact DSM and IRP in 1980s (with some

program roots in the 1970s):

• Iowa

• Minnesota

• Wisconsin

18

ACEEE began tracking and comparing state

utility energy efficiency programs in 2000

• ACEEE’s 1st Utility Scorecard published in 2000 based

on 1993 and 1998 data; results?

• MN #5

• IA #7

• WI #8

• ACEEE’s Utility Scorecard Update published in 2002.

No total composite scoring, but MN, IA and WI

remained among leaders.

• Same story for ACEEE’s 3rd National Scorecard on

Utility EE programs: IA, MN and WI in top 15 on

different metrics (spending and savings).

19

“Surprise” Twist in the Story of IRP and DSM:

“Deregulation” and “Restructuring”

State efforts to deregulate electricity markets led to a

50% decline in DSM spending as such programs didn’t

seem to fit the new utility business model.

Efforts to preserve customer energy efficiency programs

led to new funding mechanisms (“public benefits

charges”) and new administrative structures, in some

cases non-utility administration of programs.

20

Utility Customer Energy Efficiency Program

Spending 1993-2010

NOTE: Natural gas EE programs existed before 2006; ACEEE began tracking

natural gas programs in 2006 as data first became available for this type of national tracking.

2000s: Customer EE programs rebound and

accelerate to reach new heights

• In 2006 ACEEE published its first State Scorecard,

which included metrics for a variety of state level

policies and programs; utility programs largest single

share of score.

• Scoring for utility and public benefits energy efficiency

programs includes policies supporting such programs,

such as EERS, decoupling or lost revenue adjustment,

and shareholder incentives for successful customer

EE programs.

The Midwest’s Early Pioneering States:

IA, MN and WI, have continued to be leaders for

Utility and Public Benefits Policies

• 2008 State Scorecard for just Utility and Public Benefits Policies:

• Minnesota: ranked 4th

• Iowa: 9th

• Wisconsin: 10th

• 2009 State Scorecard

• Minnesota: 5th

• Iowa: 9th

• 2010 State Scorecard

• Minnesota: 5th

• Wisconsin: 7th

• Iowa: 9th

Biggest News Story of 2000s: “Rapid Start

States” burst onto the Midwestern EE Scene

• Policies were enacted in Ohio, Michigan and Illinois that rapidly

increased the funding and commitment to customer energy

efficiency programs. Prior to these policies, there had been little

funding for such programs in these states.

• ACEEE research has shown that these states (and most others

with EERS) are largely meeting savings targets. They have

quickly ramped up programs.

• And promising recent development: Missouri is on the way with

new policies and regulatory decisions to support a greatly

expanded portfolio of customer programs and utility investment in

customer energy efficiency.

The 2011 Scorecard Rankings: All EE Policies (not just utility

and public benefits policies)

Most Improved States (2011)

Electricity DSM Budgets

2009 vs. 2010

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

Bu

dge

ts a

s %

of

Re

ven

ue

s

2010 Budgets as % of Revenues

2009 Budgets as % of Revenues

Electricity Savings 2008 vs. 2009

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

Sa

vin

gs

as

% o

f R

eta

il S

ale

s

2009 Savings as % of Retail Sales

2008 Savings as % of Retail Sales

29

Why do it? Top reason: cheapest resource available

The cost of saving energy vs. generating it from new sources.

0

2

4

6

8

10

12

Energy Efficiency

(a)

Wind Natural Gas Coal Nuclear

Le

ve

lize

d c

os

t o

f e

lec

tric

ity

(c

en

ts/k

Wh

) (2

00

7$

)

Friedrich et al. 2009 (b) Generation costs from Annual Energy Outlook 2009

What’s Ahead? Changes and Challenges

• Programs are stretching to meet and sustain high savings.

• Continuing economic slow-down dampens program activity and

impacts.

• Codes and standards are moving baseline levels of energy

efficiency upward.

• New technologies and program approaches are emerging to

capture additional savings.

30

More Changes and Challenges

• “Smart grid” anyone? Much hype on benefits, including energy

efficiency…experience to date limited, much to learn.

• As we seek high savings from programs, importance of creating a

new business model for utilities and energy efficiency becomes

more critical (effectively addressing utility financial interests)

• And what about new environmental objectives, especially the

possibility for renewed and expanded efforts to reduce GHG?

• Oh, and then there’s turmoil and changed outlooks for natural gas

markets.

31

References

Three Decades and Counting: A Historical Review and Current

Assessment of Electric Utility Energy Efficiency in the States. D.

York, P. Witte, S. Nowak and M. Kushler. June 2012. ACEEE

Report Number U123

A National Review of Natural Gas Energy Efficiency Programs. D.

York, P. Witte, K. Friedrich and M. Kushler. January 2012.

ACEEE Report Number U121

The 2011 State Energy Efficiency Scorecard. M. Sciortino, M.

Neubauer, S. Vaidyanathan, A. Chittum, S. Hayes, S. Nowak and

M. Molina. October 2011. ACEEE Research Report Number

E115

32

Energy Efficiency Programs at MidAmerican Energy Company

September 6, 2012

Diane Munns Vice President, Regulatory Relations & Energy Efficiency

Topics to be Covered

• Company overview

• Energy efficiency programs

• Efficiency achievements

• Benefits of long-term commitment to energy efficiency

34

Company Overview

35

SOUTH DAKOTA

NEBRASKA

KANSAS MISSOURI

ILLINOIS

WISCONSIN

MINNESOTA

(1) Net MW owned in operation and under construction as of Dec. 31, 2011

• Headquartered in Des Moines,

Iowa

• 3,500 employees

• 1.4 million electric and natural

gas customers in four

Midwestern states

• 7,432 net MW generation

capacity(1)

• Generating capacity by fuel

type(1)

– Coal 45%

– Natural gas 17%

– Wind 31%

– Nuclear and other 7%

IOWA

Programs

36

• Iowa, Illinois, South Dakota and Nebraska

• Gas and electric programs

• For every customer class, low income

• Audits, education and training

• Incentives (prescriptive, custom and dealer)

• Pilots

Achievements

37

Since 1990, MidAmerican Energy’s Iowa energy efficiency

programs have:

• Saved approximately 10.5 million MWh and

approximately 500 million therms

• Been utilized approximately 395,000 times by electric

customers and 315,000 times by gas customers

• Installed or rebated approximately 2.5 million compact

fluorescent bulbs

• Audited approximately 125,000 existing homes

• Certified approximately 30,000 energy-efficient new homes

• Planted more than 520,000 trees through community and

residential tree-planting programs

Long-Term Benefits

38

• Regulatory confidence and support

• Customer awareness

• Company culture change

• Trade ally, contractor, architect, builder awareness

• Customer satisfaction

• Economic development

• Market transformation

Energy Efficiency Portfolio Growth at Xcel Energy

Karen Rhodes Manager, Energy Efficiency Marketing

September 6, 2012

40

Xcel Energy

Combination electricity and natural gas energy company

3.4 million electricity customers

1.9 million natural gas customers

Serve 8 states: CO, MI, MN, NM, ND, SD, TX, WI

Energy efficiency outreach

Both fuels as applicable

Longest running portfolio in MN

41

Next Generation Energy Act of 2007

Provides goals for energy efficiency programs in Minnesota

Sets minimum energy savings goal of 1.0% of retail energy sales

Establishes target energy savings goal of 1.5%

Applies to both electricity and natural gas

42

MN Electric Portfolio Achievements

0

50

100

150

200

250

300

350

400

450

500

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

En

erg

y &

Dem

an

d S

avin

gs

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90$ (M

illion

s)

MW GWh Expenditures

•Since 2000,

energy savings

have increased

90%

•Cost per kWh

has only

increased 24%

43

MN Gas Portfolio Achievements

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Dth

Savin

gs

$0

$2

$4

$6

$8

$10

$12

$14

$ (M

illion

s)

Dth Expenditures

•Since 2000,

gas savings

have increased

150%

•Cost per Dth

has increased

160%

44

Key Success Factors

Regulatory compact

Administrative oversight of programs

Continuity in the market

Builds awareness of energy efficiency programs

Increases customer willingness to make financial investment

Trade partner engagement

Innovative and evolving offerings

45

Questions & Discussion

• Please type your question into the question

box.

• This Webinar is being recorded, and the

slides will be posted to the MEEA website

early next week.

Upcoming MEEA Policy

Webinars

• Thursday, October 11 at 1pm CDT

– A Midwest Look at the Better Buildings

Challenge

• Thursday, November 29 at 1pm CDT

– The New Political Landscape for Energy

Efficiency

Join the MEEA Policy Committee

Open to all MEEA Members

• Current Committee Chair – Diane Munns

• Next Call Scheduled for Monday, September 17 at

10 am CDT.

• If you would like to participate, please contact Jessica

Collingsworth at jcollingsworth@mwalliance.org or

(312)784-7247

The EE Story (Future) • Future: Finding a new portfolio

– Lighting savings going down

– Some program saturation

– Need ‘new’ programs

• Whole home (HPwES, air sealing, etc)

• Systems work (HVAC systems, smart homes, etc)

• Behavior programs (changing the customer habit)

• Education

• Building Energy Codes (adoption, training and

compliance)

– Challenges

• Cost effectiveness (non-energy benefits not counted)

• More complex (contractors, systems, etc)

Contact Info

Stacey Paradis

Deputy Director

Midwest Energy Efficiency Alliance

312-784-7267

sparadis@mwalliance.org

www.mwalliance.org