Energy Efficiency:All negawatts are created equal, but some are more equal than others

Robert WeisenmillerChair, California Energy Commission

Keith CaseyVice President, Markets and Infrastructure Development, California ISO

Edward RandolphEnergy Division Director, California Public Utilities Commission

January 28, 2013

CALIFORNIAENERGY COMMISSION

Collaboration Efforts• The CPUC, CEC and ISO are working together to

address State and Federal mandates• All collaboration takes into account multiple state

interests– Loading order, including energy efficiency and demand response

– Reliability

– Cost

– Renewable Energy

– Greenhouse Gas Reductions

– Water/Energy Nexus

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The California Energy Commission is the state's primary energy policy and planning agency. Created by the Legislature in 1974 and has eight basic responsibilities as it sets state energy policy:

California Energy Commission

• Forecasting: Forecasts future energy needs and maintains historical energy data

• Permitting: Permits thermal power plants 50 MW or larger

• R&D: Administers the research and development program, advancing science and technology in energy related fields

• Energy Efficiency: Promotes energy efficiency by setting the state's appliance and building standards (Title 20 & 24)

• Renewable Energy: Supports the development of renewables through certification of facilities and verification of generation

• Contingency Planning: Plans for and directs the State’s response to energy emergencies

• Transportation: Supports the deployment of alternative and renewable fuel sources

• IEPR: Publishes the Integrated Energy Policy Report – the State’s energy policy document

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The ISO, established in 1998, manages the flow of electricity across the high-voltage, long-distance power lines that make up 80 percent of California’s power grid. The nonprofit public benefit corporation safeguards the economy and well-being of 30 million Californians by “keeping the lights” on 24/7.

• Grid Operations: Operates the electric grid reliably, efficiently and cost effectively for about 80% of California.

• Markets: Facilitates effective spot markets for energy and reserves. Enables real-time dispatch of renewable resources.

• Transmission: Provides fair and open transmission access.

• Planning: Plan and identify future grid infrastructure needs consistent with state and federal mandates.

• Generator Interconnection: Facilitates the generator interconnection process.

• Settlements: Calculates bills, and invoices charges and payments for market and transmission-related activities between market participants and the ISO.

• Market Monitoring: Keeps a close watch on the efficiency and effectiveness of the ancillary service, congestion management and real-time spot markets.

California Independent System Operator

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The CPUC regulates privately owned electric, natural gas, telecommunications, water, railroad, rail transit, and passenger transportation companies, in addition to authorizing video franchises.

Through PU Code §380 and 454.5, the CPUC is tasked with:

System reliability: Establishes and enforces year ahead Resource Adequacy Rules.

Authorizing procurement for new resources: Through LTPP establish 10 year supply forecasts (using CEC’s forecasts and ISO TPP as base). Approve all resource procurement – through specific applications or through procurement plans.

Energy Efficiency and Demand Response: Loading order provides that utilities must first meet unmet resource needs through all available EE and demand reduction resources that are cost effective, reliable, and feasible.

California Public Utilities Commission

CPUC role in procurement:

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CEC Statewide Electricity 10-Year Peak Demand Forecast (2012-2022)

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30,000

40,000

50,000

60,000

70,000

80,000

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

CED 2011 Final High

CED 2011 Final Mid

CED 2011 Final Low

CED 2009

History

MW

2011 Weather-Normalized Peak

Forecasting EE Has Many Steps

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CEC IEPR Adopted Demand Forecast

CEC IEPR Adopted

Incremental EE Forecast

IEPR Preliminary Forecast and

Incremental EE Workshops

IEPRAssumptions

Workshop

CPUC EE Programs &

EM&V*

CEC Analysis and Demand

Analysis Working Group

CAISO Planning

Assumptions

CPUC EE Goals Study

EE and Procurement Planning Cycle

*Evaluation, measurement and verification provides an estimate of the historic accomplishment of the program activities, and is provided to the CEC for use in adjusting their base demand forecast

At each step, parties and stakeholders to the proceedings have opportunities to provide their comments through a public process

CEC Incremental EE

Forecast

ISO Transmission

Planning Process

CPUC Long Term

Procurement Proceeding

CEC Analysis

CPUC Resource Authorization &

Procurement Plans

ISO New Transmission Authorization

CPUC EE Programs &

EM&V*CEC IEPR Adopted Demand Forecast

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2012/2013 Transmission Plan Cycle

Phase 1

Development of ISO unified planning assumptions and study plan

•Incorporates State and Federal policy directives

•CEC Adopted Demand Forecasts

•CPUC/CEC Renewable Resource Portfolios

• Input from stakeholders

•Ongoing stakeholder meetings

Phase 3

Receive proposals to build identified policy and economic transmission projects.

Technical Studies and Board Approval

•Reliability analysis

• Renewable delivery analysis

• Congestion analysis

• Publish comprehensive transmission plan

• ISO Board approval

Continued regional and sub-regional coordination

October 2013

Coordination of Conceptual Statewide Plan

May 2012

Phase 2

March 2013

ISO Board Approval of Transmission Plan

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Energy Efficiency procurement process1. CPUC EE Portfolio Guidance Decision (most recent was for 2013, 2014)

- Sets portfolio goals based on potential study- Identifies program areas that utilities should target in proposed programs (e.g., financing, whole house focus, etc.)- Refines existing program rules as needed (cost-effectiveness inputs, reporting requirements, etc.)

2. Utility Applications- Propose programs to meet goals and conform with other directives in Guidance Decision- Calculate cost-effectiveness of proposed portfolios using adopted cost-effective formulas and inputs

3. CPUC Application Decision- Authorizes portfolios, adjusted as deemed appropriate by the CPUC

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Energy Efficiency avoided costs & cost-effectiveness

• EE programs provide two types of energy benefits – they avoid new infrastructure costs (power plants and transmission lines) AND they reduce the amount that existing plants run.

• Reduced electricity and gas consumption accounts for the majority of EE-driven bill reductions.

• Our EE cost-effectiveness calculator was augmented in 2010 to adjust avoided costs by climate zone, so measures that reduce peak demand (such as air conditioners) in warmer areas receive extra credit.

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2012 LTPP demand forecast with and without Energy Efficiency*

12 *Megawatts for CPUC’s jurisdictional area

Energy Commission efficiency programs

• Title 20 Appliance Efficiency Standards• Title 24 Building Efficiency Standards• AB 758 Comprehensive Efficiency for Existing Buildings• Energy Conservation Assistance Act plus American

Reinvestment and Recovery Act funding• SB 1037/AB 2021 – Energy efficiency investments by

public utilities

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CEC Demand Forecast Greatly Reduced Capacity Growth Expectations

Source: 1981 Energy Commission Biennial Report, p. 86

Growth rate of

7.38%

Growth rate of

1.47%

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California’s Per Capita Electricity Consumption Remains Flat

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CA Added Fewer Power Plants than United States Over last 20 Years

Location 1990 # of Generators

1990 Nameplate capacity (MW)

2010 # of generators

2010 Nameplate capacity (MW)

Percent capacity change

California 739 55,026 803 72,570 31.9%

United States

5318 783,012 6,417 1,138,638 45.4%

Source: U.S. Energy Information Administration, see http://www.eia.gov/electricity/data/state/ 16

Collaborative Activities• Energy Principals

• California Global Warming Solutions

Act (AB 32)

• Desert Renewable Energy

Conservation Plan

• Transmission Planning Process

• Integrated Energy Policy Report

• Energy Efficiency Building Retrofits (AB

758)

• Summer Reliability Planning: San

Onofre Nuclear Generating Station

Outage

• Statewide Advisory Committee on

Cooling Water Intake Structures

• Long-Term Procurement Plan

• Bay Delta Hydro• South Coast Air Emission needs (AB

1318)

• Operating Flexibility / Renewable Integration

• Distribution level interconnection (Rule 21 Interconnection)

• Climate Action Team

• Water-Energy Team

• Combined Heat and Power Task Force• Demand Response• Distributed Generation Deliverability

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