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Energy Efficiency Resource Standards

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Energy Efficiency Resource Standards ( energy-efficiency-resource-standards )

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(1) The baseline for energy savings under subsections (A)(1) and (3) of this section shall be the average of the total kilowatt-hours the retail electric distribution utility delivered in the preceding two calendar years to customers in this state. (2) The baseline for energy savings under subsections (A)(2) and (3) of this section shall be the average of the total cubic feet of natural gas delivered by the natural gas utility in the preceding two calendar years to customers in this state. (3) The baseline for peak demand reduction under subsection (A)(4) of this section shall be the average of the annual peak demand of the retail electric distribution utility in the preceding two calendar years. The savings targets proposed in this section build on various studies that demonstrate significant available cost-effective savings at the state level and on actual savings targets being achieved in states with experience implementing an EERS as discussed in the introduction. Annual savings targets are provided to demonstrate the level of savings that must be achieved each year. It is useful to set annual savings targets so that utilities have short-term goals and so that progress can be monitored on an annual basis. Cumulative targets are also provided to demonstrate the overall, long- term level of savings achievable with an EERS. As experience is gained, reaching the higher savings targets can be realized as utilities eliminate programs that are not performing as anticipated and build upon initial programs that are successfully achieving savings by expanding into additional sectors. Most utilities will be able to accrue extra savings in the early years, reducing the new savings needed in the later years. The model EERS uses the average energy sales in the preceding two years as a baseline because the prior years’ sales are known with certainty at the beginning of the target year. Moreover, using the average of two years also works to smooth out yearly variations in sales due to population changes, economic variations, significant weather events, and other causes of fluctuations in energy use. Although an energy efficiency potential study is not necessary, it may be helpful as a starting point for setting energy efficiency targets. In states that haven’t established energy efficiency programs, there is a lot of room for improvement and so the level of achievable efficiency may be fairly high. A potential study conducted by individual utilities, the Commission, or an independent third-party, may help establish reasonable and achievable annual savings targets. While CHP savings may contribute to the savings required to meet the performance standard in Section 2, the intent of an EERS is to encourage utility-run energy efficiency programs for all of a utility’s customer classes. It is therefore necessary to place a limit on the amount of CHP that is eligible to count as energy savings under the standard to prevent a utility from focusing on one source of energy savings, especially in service territories that have substantial potential for CHP applications. Given that CHP can be a significant benefit to the community, especially when used in the manufacturing and institutional settings, in those areas with greater-than-average potential for CHP savings the Commission should consider increasing the percentage of savings allowed from CHP systems. 10

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