Energy Efficiency Resource Standard - H.B. 2210

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Energy Efficiency Resource Standard in West Virginia

We are calling on the West Virginia legislature to adopt an Energy Efficiency Resource Standard (EERS) which would require utility companies to provide programs to their customers to help them save money on their utility bills by making their homes, businesses and buildings more energy efficient. The EERS will set a timeline for achieving energy efficiency and demand response goals.  Energy efficiency and demand response programs could be administered by our electric and natural gas utilities, or the legislature could set up a third party agency to administer the programs (as has been done with great success in Vermont, Oregon, and other states). 

The proposed standard would require utility companies reduce 2010 electricity sales (number of kWh) and peak demand by 15% by 2025.  Initially the program would start with smaller annual reduction targets (achieving a 5% savings by 2018) and then ramp up to achieve deeper savings in later years. 

Successful EERS programs in Ohio and Pennsylvania 

Both Ohio and Pennsylvania have very successful EERS programs. Ohio has set a goal for 22% savings by 2025 and in the first two years  of the program, the utility companies achieved over 0.8% electricity sales and peak demand reductions and created 1,700 jobs! In Pennsylvania, the utility companies were required to meet a 1.0% reduction in the first two years, which the majority of the utility companies were able to achieve. Additionally, 4,000 jobs were created in the first two years of this program.

The utility companies in West Virginia, AEP (the parent company of Appalachian Power) and FirstEnergy (the parent of Mon Power and Potomac Edison), also operate in Pennsylvania and Ohio, where these Energy Efficiency Resource Standards are already saving people money and creating jobs. West Virginians deserve the savings and job creation too! Mon Power and Potomac Edison are required to achieve 0.5% savings in 5 years - this is nothing compared to our neighboring states and we deserve more!

Today the states with the best-performing energy efficiency standards are achieving savings of 1-2% per year. As shown in the graph below, over half the states in the country have Energy Efficiency Resource Standards. In the majority of these states, the utility companies are achieve or exceeding the reduction goals.
Over half the states in the country have an EERS. In over half of those 
states, the utility companies have exceeded their reduction goals.

How to Achieve the Savings

Under an Energy Efficiency Resource Standard, there are many programs that utilities or the third-party program administrator could undertake to meet their targets.  For example, they can offer incentives or financing for residential customers to invest in weatherization measures, more efficient appliances, or comprehensive home energy retrofits.  They can offer rebates for high-efficiency lighting and HVAC systems to commercial and industrial customers.  Fortunately, as the map above shows, many other states have already adopted these standards, so program administrators already have experience in knowing how to meet them.  In fact, West Virginia's utilities are subsidiaries of American Electric Power and FirstEnergy, both of which also operate in Ohio and Pennsylvania, where Energy Efficiency Resource Standards are already in place.

An Energy Efficiency Resource Standard would require that energy efficiency programs be cost-effective. This means that the cost of installing the measures and administering the program is less than the benefits in terms of utility avoided costs (avoided costs of purchasing more power or constructing new power plants). In other words, the net benefit is positive and the measures that are adopted will inherently be beneficial to the state overall.  For customers participating in the energy efficiency programs directly, they could see savings of 20-30% on their electricity bills.

A 2009 study sponsored by the Appalachian Regional Commission gives a sense of the size of the economic benefits that are likely to accrue from deeper investments in energy efficiency in West Virginia. In the energy efficiency scenario explored in this study for the entire Appalachian region, electricity consumption is reduced 11-15% by 2020 and 27-33% by 2030; natural gas consumption is reduced to 5-7% below forecasted sales in 2020 and 14-20% by 2030. Under this scenario, annual consumer energy bills savings for the region are more than $27 billion by 2030. The scenario also leads to job creation, with an average of 60,000 net new jobs created per year from 2020-2030 (see our Links and Resources page for the full report).

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