Energy Efficiency Target Setting NH PUC EERS Working Group Session - - PDF document

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Energy Efficiency Target Setting

NH PUC EERS Working Group Session 13 August 2015

Presentation Overview

Regional context What are we aiming for? Where can we start? Where do we go next?

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New England leads the nation in EE…

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0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 2009 2010 2011 2012 2013 2014 Electric savings as a % of sales Rhode Island Massachusetts Connecticut Maine Vermont

…but New Hampshire is an outlier

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0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 2009 2010 2011 2012 2013 2014 Electric savings as a % of sales Rhode Island Massachusetts Connecticut Maine Vermont New Hampshire

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Good policy balances the needs of stakeholders

Benefits

Cost

Environment

Equity

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Beginning with a common understanding

Much of NH load served by utilities achieving high savings Funding constraints ≠ all cost-effective efficiency EE is cheapest supply, particularly in light of… A changing landscape

– Clean Power Plan – Inexpensive but constrained gas supply – Distributed and customer-owned/sited generation – “Naturally-occurring” efficiency

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Suggested target-setting process

Set targets Allow PAs to develop portfolio and budgets

– Encourage, but don’t require, multiple sources

PUC reviews, approves, and establishes necessary funding, considering all factors

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Targets higher than Staff proposal are possible

“Mature” incremental annual savings of 2% electric, 1% of gas Five year “ramp-up” is feasible

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0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 2015 2016 2017 2018 2019 2020 Rhode Island Massachusetts Maryland NH (OEI) Delaware NH (Staff)

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Other considerations in target-setting

Long-term targets are good

– Potential is already established – Consider update in mid-term

Short-term targets should be at least 3 years

– More certainty, advantages of multi-year contracts and planning – Consider cumulative targets as benchmark

Up-front agreement on what “counts”

– Minimum average measure life or other “floor” – “Before-the-meter” savings (e.g., CVR/Volt-VAR) – Fuel-switching, CHP, other DG, codes and standard

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Other considerations, continued

Consider mandatory targets with penalties and incentives

– Beware of perverse incentives – Consider non-financial “penalties”

Decoupling to address lost revenue

– Provides other ratepayer and utility benefits – Reduction in PI may be needed if decoupled

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What is cost-effective?

Total Resource Cost (TRC) test best reflects overall economic impact

– Include all reasonably-quantifiable costs and benefits (NEBs, DRIPE) – Lost revenue is not a cost – Focus on program and portfolio – Flexibility for measures and for LI programs

…and you don’t need a potential study!

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Lost revenue is not a cost

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0% 20% 40% 60% 80% 100% 120%

EE, no LR No EE EE, LR

Revenue as a % of "No EE" revenue

EE spending variable costs LR adjustment fixed costs

8/10/2015 7 Optimal Energy, Inc. 10600 Route 116, Suite 3 Hinesburg, VT 05461 802-482-5600

Thanks, we hope this has been helpful! Phil Mosenthal, Jeff Loiter