Energy efficiency is a clearly demonstrated, cost-effective means to meet future electricity needs. Most states that have started to implement electric restructuring have set up policies to finance energy-efficiency improvements for residents and businesses. However, most of these programs fall far short in tapping the vast benefits that energy efficiency can provide in terms of electric reliability and savings for consumers.

Initially many of the financing mechanisms - usually additional charges on utility bills - for efficiency programs were to be discontinued after five years or so. And funding levels for the efficiency programs have typically been set at low levels compared to the peak years of spending on efficiency which took place in most cases between 1993 and 1995.

With the electric power crisis of 2001, many states are re-thinking this strategy and have begun to take a second look at the enormous benefits that energy efficient technologies can have on the economy and the environment. In early 2001, New York's Public Service Commission voted unanimously this morning to extend energy efficiency and energy assistance programs (commonly referred to as public benefit programs) for 5 more years at an annual level of funding of $150 million which is approximately twice the level for the past three years but still below peak spending of 1994. New Jersey has also comitted to increased spending of 70 percent over current levels and California's Governor is expecting the legislature to pass a comprehensive package of energy efficiency spending and incentives to help solve that state's power crisis.

States have three core decisions to make when designing their efficiency funding programs. First, how much should they spend; second, how long should they provide funding; and third, who should have control over spending.

The New Rules Project believes that states should invest in energy at levels at least as high as expenditures in the peak year (usually 1994). State efficiency funds should also not include a sunset date, unless certain performance benchmarks are first met.

RULES:

• Efficiency Vermont
  The Vermont Public Service Board (Board) ordered the creation of the energy efficiency utility in response to a request from the Department of Public Service, all of the state's 22 electric utilities, and a dozen consumer and environmental groups. Through Efficiency Vermont, consumers, businesses, manufacturers, and farmers across the state can participate in the same seven energy and money-saving programs. More...
• State Appliance and Equipment Efficiency Standards - ACEEE, March 2006
  The Appliance Standards Awareness Project and the American Council for an Energy Efficient Economy's (ACEEE) report shows how states have led the nation to improved energy efficiency and identifies 15 additional products for which new state energy-saving standards make sense. Only 3 of these are currently covered by Federal standards. The most dramatic energy savings potential comes from increasing the standard on residential furnaces and boilers, metal halide lamp fixtures and liquid filled distribution transformers. For each newly recommended standard, the report provides detailed information on the product, market and the specifc technical standard. [see also the Executive Summary and Impacts Data for Each State]
• Building Energy Code - Minnesota
  Minnesota once had a model of energy efficient code when compared to other states. Minnesota Statute required that the Minnesota Energy Code "be designed to equal or exceed the most energy-conserving codes adopted by any other state." More...
• Utility Revenues Tied To Increased Efficiency Not Sales
  Oregon may have found the solution to the problem of the need for electric utilities to sell electricity rather than help people use it more efficiently. In mid-1998, the Oregon Public Utilities Commission adopted a performance-based ratemaking (PBR) tariff for PacifiCorp's electricity distribution functions which didn't penalize the utility for selling less energy. More...

Other Resources:

• Seeing the Light: Regaining Control of Our Electricity System
  is the newest book from the New Rules Project by David Morris.
  Order Online Now! $15.00
• Summary Table of Public Benefit Programs and Electric Utility Restructuring - American Council for an Energy-Efficient Economy, March 2001 (ongoing updates)
• U.S. Electric Utility Demand-Side Management: Trends and Analysis - EIA, December 1997
• State Scorecard on Utility Energy Efficiency Programs Executive Summary - ACEEE, April, 2000