National

Action

Plan for

Energy

Efficiency

www.epa.gov/

eeactionplan

The National Action Plan for Energy Efficiency

Vision for 2025:Developing a Framework for Change

Stacy Angel

Climate Protection Partnerships Division

U.S. Environmental Protection Agency

Stanford Energy & Feedback Workshop:

End-Use Energy Reductions through Monitoring,

Feedback, and Behavior Modification

September 4, 2008

2

Quick, cheap, sizable, and clean resource

Efficiency Helps Meets Today’s

Challenges

• Environmental

– Lower carbon emissions andcriteria pollutants

– Lower water use

• Economic

– Savings to customers

– Lower cost (about half)compared to new G&T

– Downward pressure on naturalgas prices and volatility

– Improved local economy, usinglocal labor

– Benefits low–income, seniors

• Utility System Benefits

– Near-term tool with persistent, long-term benefits

– Improved security of systems

– Lower baseload and peak demand

– Reduce need for “hard to site” G&Tassets

– Targeted, modular, manageable

• Risk Management

– Diversifies utility resource portfolios

– Zero carbon emissions0

3

• Market barriers

– Split incentives (landlord–tenant,builder–buyer)

– Poor/inadequate information

– Lack of capital

– Transaction costs

• Public policy and utility regulatory barriers

– Lack of good documentation on energy efficiency policy options

– Misperception that energy efficiency is not a guaranteed, reliable cost effectiveresource

– Ratemaking policies may financially discourage utilities from investing inefficiency

– Resources planning processes may not consider energy efficiency resources

• Program barriers

– Lack of good documentation and education on demand-side programs

– Lack of knowledge about the most effective and cost-effective program portfolios

Price Signals Alone Do Not Remove

Persistent Barriers to EE Investments

•Customer barriers

–Lack of information

–Competing vendor claims

–Lack of funding

4

• Released on July 31, 2006 at theNational Association of RegulatoryUtility Commissioners meeting

• Goal: To create a sustainable,aggressive national commitment toenergy efficiency through gas andelectric utilities, utility regulators,and partner organizations

• 60 member public-privateLeadership Group developed fiverecommendations and commits totake action

• Commitments to energy efficiencyby over 120 organizations

• Releases key resources to helpparties meet commitments,including its Vision for 2025

• DOE & EPA only facilitate

National Action Plan for Energy Efficiency

Recommendations

1. Recognize energy efficiency as a high-

priority energy resource.

2. Make a strong, long-term commitment to

implement cost-effective energy

efficiency as a resource.

3. Broadly communicate the benefits of

and opportunities for energy efficiency.

4. Provide sufficient, timely and stable

program funding to deliver energy

efficiency where cost-effective.

5. Modify policies to align utility incentives

with the delivery of cost-effective energy

efficiency and modify ratemaking

practices to promote energy efficiency

investments.

National Action Plan for Energy

Efficiency Addresses Policy Barriers

5

Diverse Leadership Group Members

Agree on Need for Energy Efficiency

– Food Lion

– Great River Energy

– Idaho PUC

– ISO New England Inc.

– Iowa Office of Consumer Advocate

– Johnson Controls

– King County Department of NaturalResources and Parks, Washington

– Long Island Power Authority

– Massachusetts Division of EnergyResources

– Massachusetts Office of AttorneyGeneral

– MidAmerican Energy Company

– Minnesota Public UtilitiesCommission

– National Grid

– Natural Resources DefenseCouncil

– New Jersey BPU

– New Jersey Natural Gas

– New York Power Authority

– New York State PSC

– North Carolina Department ofEnviron. and Natural Resources

– North Carolina Energy Office

– Alliance to Save Energy

– Ameren Services

– American Council for an Energy-Efficient Economy

– American Electric Power

– Arkansas Electric CooperativeCorporation

– Arkansas PSC

– Austin Energy

– Baltimore Gas and Electric

– Bonneville Power Administration

– California Energy Commission

– California Public UtilitiesCommission

– Connecticut Consumer Counsel

– Connecticut Department ofEnvironmental Protection

– Connecticut Department ofPublic Utility Control

– Delaware General Assembly

– District of Columbia PublicService Commission

– The Dow Chemical Company

– Duke Energy

– Entergy Corporation

– Exelon

– Ohio Consumers' Counsel

– Pacific Gas and Electric

– Pepco Holdings, Inc.

– PJM Interconnection

– PNM Resources

– Puget Sound

– Sacramento Municipal UtilityDistrict

– Santee Cooper

– Seattle City Light

– Servidyne Systems

– Southern California Edison

– Southern Company

– Tennessee Valley Authority

– Texas State EnergyConservation Office

– Tristate GTA, Inc.

– USAA Realty Company

– Vectren Corporation

– Vermont Energy InvestmentCorporation

– Wal-Mart Stores, Inc.

– Washington UTC

– Waverly Light and Power

– Xcel Energy

6

Observers Provide Additional

Input to the Action Plan

– AARP

– American Forest and Paper Association

– American Gas Association

– American Public Power Association

– Association of Energy Engineers

– Association of Energy Services

Professionals

– Business Council for Sustainable Energy

– Consortium for Energy Efficiency

– Demand Response Coordinating

Committee

– Edison Electric Institute

– Electric Power Research Institute

– Energy Future Coaliton

– Energy Programs Consortium

– Gas Appliance Manufacturers

– Gas Technology Institute

– GridWise Alliance

– IEEE-USA Energy Policy Committee

– National Association of Energy Service

Companies

– National Association of Regulatory

Utility Commissioners

– National Association of State Energy

Officials

– National Conference of State

Legislatures

– National Council on Electricity Policy

– National Electrical Manufacturers

Association

– National Governors Association –

Center for Best Practices

– National Rural Electric Cooperative

Association

– North American Insulation

Manufacturers Association

– North American Technical Excellence

– Steel Manufacturers Association

7

Growing National Commitment to

Energy Efficiency

63Stakeholder education

26Aggressive energy savings goals

24Energy efficiency in resource planning

5Policies to align utility incentives

17New and expanded efficiency programs

4Additional energy efficiency spending

15State-level collaborative processes

No. of

Orgs.Type of Commitment (sampling)

• Over 120 organizations havemade formal commitments toenergy efficiency under theAction Plan

– 15 utility commissions

– 27 other state/localagencies

– 35 utilities

– 7 large-end-users

– Over 38 others

• A key product of the Leadership Group is the five July 2006 Action PlanRecommendations, which many of the Leadership Group organizationsand others have endorsed.

Those making commitments and endorsements are listed on next slides

– Organizations that have made commitments only are marked with an asterisk (*)

– Organizations that have endorsed the Recommendations only are marked with a double asterisk (**)

8

Organizations Joining The GrowingNational Commitment to Energy Efficiency

• Advantage IQ

• Alliance to Save Energy

• Ameren

• American Council for an Energy-Efficient Economy

• American Electric Power**

• American Gas Association

• American Public Power Assoc.

• Arkansas Public Service Com.

• Arlington County, Virginia

• City of Aurora, Colorado

• Austin Energy

• Bonneville Power Administration

• Building Owners and ManagersAssociation International

• Cascade County, Montana

• Connecticut Departments ofPublic Utility Control,Environmental Protection, andOffice of Consumer Counsel

• Costco Wholesale

• Delaware PSC*

• City of Denver, Colorado

• Dominion Virginia Power

• EnerNOC, Inc.

• Entergy Corporation

• Exelon*

• Florida Public ServiceCommission**

• Food Lion

• Great River Energy

• Hawaii Depart. of Business,Economic Dvt & Tourism

• Hawaii PUC

• HTS Enterprise EERE Institute**

• Idaho Governor, Public UtilitiesCommission, Energy Division,Depart. of Environmental Quality

• Indianapolis Power & Light

• City of Indianapolis, Indiana

• Iowa Governor, Utilities Board

• ISO New England

• Iowa Utility Association

• Johnson Controls

• Kankakee County HousingAuthority, Illinois

• California MOU Signatories:California Governor, Public UtilitiesCommission, Energy Commission,Anaheim Public Utilities, BurbankWater & Power, Gridley MunicipalUtilities, LA Department of Water &Power, Natural Resources DefenseCouncil, Northern California PowerAgency, Pacific Gas & ElectricCompany, City of Palo Alto Utilities,Pasadena Water & Power,Sacramento Municipal Utility District,San Diego Gas & Electric Company,Southern California EdisonCompany, Southern California GasCo., Silicon Valley Power, City ofShasta Lake Electric Utility

• The Dow Chemical Company

• Duke Energy

• Eastman Kodak

• Edison Electric Institute

• Efficiency Texas

• Electric Power Research Institute

• Energetics Incorporated

• EnergySolve Companies

9

• Kansas Corporation Commission

• King County, Washington

• Large Public Power Council**

• Louisville Metro Gov’t, KY

• Maryland Governor, MarylandEnergy Administration

• City of Medford, MA

• Mid-America RegulatoryConference

• MidAmerican Energy Company

• Midwest Energy EfficiencyAlliance**

• Midwest Independent TransmissionSystem Operator

• Minnesota PUC, Department ofCommerce**

• Town of Mountain Village, CO

• National Association of EnergyService Companies

• National Rural Electric CooperativeAssociation

• National Association of StateEnergy Officials

• Natural Resources DefenseCouncil

• New England Conference of PUCs

• New Jersey Board of Public Utilities

• New Jersey Natural Gas

• New York State PSC

• North American Insulation ManufacturersAssociation

• Northeast Energy Efficiency Partnerships

• Ohio Consumers’ Counsel Office

• Oregon Governor, Public UtilityCommission, Department of Energy,Energy Trust of Oregon

• Orion Energy Systems

• Pepco Holdings, Inc.**

• PNM Resources

• Public Service Electric and Gas Co.

• San Miguel County, Colorado

• Santee Cooper

• Seattle City Light

• City of Somerville, Massachusetts

• Southeastern Association of RegulatoryUtility Commissioners

• Southern Company

• Stop & Shop/Giant Foods

• Tennessee Valley Authority

• Tri-State Generation andTransmission Association

• United Cooperative Services

• United Technologies Corp.

• USAA Realty

• Utah Governor*

• Vectren Corporation**

• Vermont Energy InvestmentCorporation

• Vermont PSB

• Wal-Mart Stores, Inc.*

• Washington UTC

• Waverly Light and Power

• Western Conference of PSCs

• Whole Foods Market

• Wisconsin PSC

• Xcel Energy

• Xerox Corporation

Organizations Joining The GrowingNational Commitment to EnergyEfficiency (Cont’d)

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The Action Plan’s Vision for 2025

• Released November 12, 2007

• Long-term Aspirational Goal: To achieve all cost-effective energy efficiency

by the year 2025

• Framework for implementing Action Plan recommendations

– Puts the 5 recommendations into Action

– Is a living document; open to new ideas; will be refined

– Is a plan – need to know where you want to go in order to get there

– A challenge for new thinking

• 10 Implementation Goals

– Action needed over next 10-15 years to help lay policy foundation by 2025

– Action encouraged by various parties, utilities, utility regulators, state legislatures, governors,

energy offices, air offices, and all stakeholders

• Offers initial approach to measure progress

– Measuring progress is vital to success

– Currently being refined by Leadership Group

• Not a mandate; respects state processes – not one size fits all

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Vision’s Goals Provide Implementation

Framework for Recommendations

!"Establishing Cost-Effective Energy Efficiency as a High-Priority

Resource

#"Developing Processes to Align Utilities Incentives Equally for Efficiency

& Supply Resources

$"Establishing Cost-Effectiveness Tests

%"Establishing Evaluation, Measurement, and Verification Mechanisms

&"Establishing Effective Energy Efficiency Delivery Mechanisms

'"Developing State Policies to Ensure Robust Energy Efficiency Practices

("Aligning Customer Pricing and Incentives to Investment in Efficiency

)"Establishing State of the Art Billing Systems

*"Implementing State of the Art Efficiency Information Sharing and

Delivery Systems

!+"Implementing Advanced Technologies

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Vision’s 10 Implementation Goals

Address Information Needs

4. Establishing Evaluation, Measurement, and Verification Mechanisms

7. Aligning Customer Pricing and Incentives to Encourage Investment in Energy

Efficiency

, Examine, propose, and modify rates considering impact on customer incentives to

pursue energy efficiency.

, Create mechanisms to reduce customer disincentives to energy efficiency (e.g.

financing mechanisms)

8. Establishing State of the Art Billing Systems

, Consistent information on energy use & costs to customers

9. Implementing State of the Art Efficiency Information Sharing and Delivery

Systems

, Explore development and implementation of state of the art efficiency delivery

information, including smart grid infrastructure, data analysis, two-way

communication programs, etc.

, Explore methods of integrating advanced technologies to help curb demand peaks

and monitor efficiency upgrades to prevent equipment degradation, etc.

, Coordinate demand response and energy efficiency programs to maximize value

to customers

13

Achieving All Cost-Effective Energy

Efficiency: Key Perspectives

• Efficient home envelope

• Efficient windows, lighting, appliances

• Efficient, properly sized/installed HVAC

• Low-standby energy use

• Verification of home energy efficiency

• Grid-connected controls and appliances

• Good information

• Whole-building design

• Lower energy bills

• Environmental benefits

• Lower greenhouse gas emissions

• Enhanced reliability

• Low-income and elderly assistance

• New jobs/growing local services

• Increased fuel diversity

• Pursue all cost-effective EE resources

• Universal efficiency services across

all customer classes

• Enhanced use of clean DG

• Modernized grid supports greater

data analysis, customer control,

utility control of peak-driving

equipment, self-healing capabilities

• Energy-efficient equipment

• Low-standby energy

• Efficient lighting systems

• Properly sized, efficient HVAC

• Commissioning/recommissioning

• Routine assessment of performance

• Grid-connected controls/equipment

• Good information

• Whole-building design

• Efficient equipment/motor systems

• Efficient lighting systems using

good design, controls, daylighting,

and efficient technology

• Processes tuned for efficiency

• Waste heat recovered and utilized

• Good information

14

Additional Discussion of AMI/

Information to Customers in Vision

• New technologies, such as

advanced meters and

smart appliances/controls

• Data collection networks

and data analysis to

enhance energy efficiency

• New customer interfaces

• Increased interoperability

• Consistent energy use and

energy cost information

available to all customers

• Customers connected with

two-way electricity grid

• Delivery of energy

efficiency enhanced

through diagnostics

• Customer energy

use is not routinely

linked to the

energy system

Demand

response,

advanced

metering,

and smart

grids

Changes to WatchLong TermNowPolicy

Area

• Excerpt from Action Plan’s Vision for 2025 Figure 3-3,

Overview of Evolving Technologies and Practices:

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Additional Action Plan Efforts of

Interest to Today’s Workshop

1. Paper on the role of energy efficiency as a low-

cost resource for reducing carbon emissions

2. Paper on coordinating energy efficiency and

demand response programs

3. Best practices for providing customers with

energy use and cost information

These new resources expected to be released in Nov. 2008

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1. Role of energy efficiency as a low-cost

resource for reducing carbon emissions

• Paper to inventory and summarize existing state and regional approaches for

implementing energy efficiency programs and policies as an element within

greenhouse gas reduction strategies across the U.S.

• Several studies support use of energy efficiency for reducing carbon

– McKinsey U.S. GHG Abatement Mapping Initiative findings:

• “…net cost to the economy being far lower if the nation can capture sizable

gains from energy efficiency.”

• “Unlocking negative cost options would require overcoming persistent barriers

to market efficiency, such as mismatches between who pays the cost of an

option and who gains the benefit (e.g., the homebuilder versus homeowner),

lack of information about the impact of individual decisions, and the consumer

desire for rapid payback …”

– EPRI Prism analysis shows great potential moderate U.S. electricity load growth

~0.4% per year through energy efficiency for CO2 savings.

– Intergovernmental Panel on Climate Change (IPCC), 4th Assessment Report’s

indicates global potential to reduce approximately 29% of the projected baseline

emissions by 2020 cost-effectively in residential and commercial sectors

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2. Paper on coordinating efficiency

and demand response programs

• Action Plan recognizes value of demand response (DR) in

definition of energy efficiency (EE):

– “Energy efficiency refers to using less energy to provide the same or

an improved level of service to the energy consumer in an

economically efficient way. As used in the Action Plan Report, the

term includes using less energy at any time, including at times of

peak demand through demand response and peak shaving efforts.”

• Action Plan “scoping study” on coordination of EE and DR will

synthesize existing literature and interviews with sample of

program administrators, service providers and large customers.

– Initial findings:

• Reveal stronger customer interest in energy efficiency due to persistent

energy/cost savings, as well as sustained environmental benefits.

• Utilities signal need for customer education on both EE and DR, flag AMI

as potential turning point

– Final results and interviews pending

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2. Cont’d – Existing Information

Reveals Limited DR/EE Coordination

Energy

Efficiency

Load

Management

Demand

Response

Frequency Daily Daily

Event-driven

(80-100

hours/year)

Motivation• Energy savings

• Environmental

protection

• TOU savings

• Peak demand

savings

• Reliability

• Price signals or

other incentives

Supporting

Infrastructure

• Energy-

efficient design

and equipment

• Energy-efficient

design and

equipment

• Building and

process controls

• Building and

process controls

• Communication

systems

• Standby

generation

Customer

Actions• Operations and

maintenance

• Limiting loads

• Shifting loads

• Limiting loads

• Shifting loads

• Shedding loads

• Displacing grid

power

Initiation • Customer • Customer• Dist utility

• ISO

Adapted from Piette (2007)

Source: 1,451 active electric DSM

programs in E Source’s DSMdatTM

database

Sample Continuum of EE to DR OptionsExisting Information

Reveal Few Programs

Explicitly Serve Multiple

Purposes

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3. Best practices for providing customers

with energy use and cost information

• Customers identified lack of consistent, standardized electronic energy

use and cost data as key barrier to energy efficiency during Action Plan’s

Sector Collaborative on Energy Efficiency. Providing this information

supports:

– New state and local initiatives on data practices

• Legislation requiring that utilities provide customers historical consumption data to

support their energy management (CA)

• Building energy use disclosure requirements (CA, DC)

– Customer building benchmarking efforts, such as EPA Portfolio Manager

• Energy performance benchmarking drive energy savings 4-30%

• Consistent utility data can facilitate widespread, on-going energy benchmarking

• Benchmarking helps identify cost-effective energy efficiency improvements for

both customers and utilities

• To provide tiers of best practice guidance, ranging from electronic

historical monthly data to automated distribution of more detailed

customer data, coupled with energy management software and

benchmarking support from utilities.