Report shows disparities in energy efficiency programs of 50 utilities

Major utilities, such as Pacific Gas and Electric and National Grid subsidiaries Massachusetts Electric and Narragansett Electric, are investing up to $4.80 per MWh of retail electricity sales in energy efficiency programs

Boston, November 10, 2011 — A new report comparing the energy efficiency programs of 50 electric utility companies shows wide disparities in how much money U.S. utilities are investing in energy efficiency programs, and how successful those programs are at saving energy.

Major utilities, such as Pacific Gas and Electric and National Grid subsidiaries Massachusetts Electric and Narragansett Electric, are investing up to $4.80 per MWh of retail electricity sales in energy efficiency programs, according to data furnished by utilities to the Energy Information Administration.

That's nearly 50 times more than some utilities spent in the same year, including United Electric Coop Service in Texas, and Southern Co. units Alabama Power and Georgia Power which all spent less than $0.10 per MWh of retail electricity sales in 2009.

The 50 utilities evaluated in the report achieved energy savings ranging from less than 0.1 percent of total retail sales on the low end to nearly 2 percent of total retail sales on the high end. The 10 highest-ranked utilities all achieved energy savings equal to 1 percent or more of their annual electricity sales.

"Energy efficiency provides multiple benefits, from job creation and energy bill savings to air pollution emission reduction benefits. This benchmarking report illustrates that while some utilities are aggressively pursuing energy efficiency, other utilities need to ramp up their efforts," said Dan Bakal, director, Electric Power Programs, Ceres.

The report further shows that state policies that remove unintended disincentives for a utility to pursue energy efficiency are major drivers of utility spending, particularly for regulated, investor-owned utilities. Among the 50 utilities studied, there was a general positive correlation between the strength of state efficiency policy and the level of investment and savings; though there were exceptions to the trend.

Ohio, for example, passed an energy efficiency standard in 2008 requiring the state's investor-owned utilities to achieve savings of 1 percent of annual electricity sales by 2014 and 2 percent by 2019.

Ohio Power, a subsidiary of American Electric Power, and Duke Energy Ohio demonstrated strong performance in 2010, achieving 140 percent and 280 percent, respectively, of their statutory targets.

By contrast, Ohio Edison, a subsidiary of FirstEnergy Corp., claimed to achieve only 60 percent of its 2010 statutory benchmark. Moreover, Ohio Edison's savings were largely due to programs that already existed before the efficiency standard was passed, while AEP and especially Duke launched new programs.

The report examines more recent utility efficiency programs that are not reflected in the EIA's 2009 dataset and found that many states and utilities have been expanding their investments in energy efficiency, though it is still an underutilized resource. In fact, total ratepayer energy efficiency spending in the U.S. is projected to increase from $5.4 billion in 2009 to $12.4 billion by 2020.

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