1. National Action Plan for Energy Efficiency www.epa.gov/ eeactionplan Achieving More Energy Efficiency through the National Action Plan: Opportunities for Public Power Katrina Pielli, Clean Energy Program Manager U.S. Environmental Protection Agency APPA National Conference June 26, 2007, San Antonio, TX

2. Agenda Today’s energy challenges and how energy efficiency can help National Action Plan for Energy Efficiency – Public power successes – How you can be involved

3. Today’s energy challenges and how energy efficiency can help

4. Energy demand is growing Rising utility bills Increasing generation costs – Gas and coal prices – Building cleaner generation Reliability issues Natural gas prices increasing / volatile Carbon risk Pending large transmission and generation investments in uncertain investment world Today’s Energy Challenges

5. Energy Efficiency Addresses Many Concerns Environmental – Lower carbon emissions and criteria pollutants – Lower water use Economic – Savings to customers – Lower cost (about half) compared to new G&T – Downward pressure on natural gas prices and volatility – Improved local economy, using local 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&T assets – Targeted, modular, manageable Risk Management – Diversifies utility resource portfolios – Zero carbon emissions Energy efficiency is vast Quick, cheap, and clean resource

6. Lower costs over time for customers & utilities – Average bills reduced 2 – 9% over 10-year period Positive net benefits to society – hundreds of millions of dollars in net present value Utility’s financial health can be maintained when implementing cost-effective EE programs – In some cases, requires policies to address the throughput incentive Strong Business Case for Energy Efficiency Customer Bills – Decrease Net Resources Savings – Increases Change in Utility Earnings – Results Vary Peak Load Growth and Associated Capital Investment – Decreases Source: National Action Plan for Energy Efficiency Report, 2006

7. EE Programs Can Be Bigger Part of Solution Large savings available from improving homes, buildings, industrial facilities Large Savings Potential – can avoid more than half of expected growth in demand for electricity and natural gas – From extending leading energy efficiency programs to the entire country over next 15 years – Save nearly $20 billion annually on energy bills. – Produce more than $250 billion in net societal benefits, accounting for the cost of EE – Avoid 30,000 MW -- 60 new 500 MW power plants – Avoid more than 400 million tons of CO2 annually Achievable at ~half the cost of new G&T (3 cents per kWh)

8. There is More Work to Do Important utility barriers remain – Existing electricity and gas regulations / market rules favor supply-side resources – View that energy efficiency is not a reliable, cost effective resource – Concern that energy efficiency will raise rates – Lack of good documentation and guidance on demand- side programs Barriers important to address – do not go away with carbon regulation

9. National Action Plan for Energy Efficiency - Public power successes - How you can be involved

10. Released on July 31, 2006 at the National Association of Regulatory Utility Commissioners meeting Goal: To create a sustainable, aggressive national commitment to energy efficiency through gas and electric utilities, utility regulators, and partner organizations Over 50 member public-private Leadership Group developed five recommendations and commits to take action Additional commitments to energy efficiency – exceeds 90 organizations 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

11. Sets tone and overall direction of the Action Plan Released Action Plan Report and Recommendations Co-Chaired by: – Commissioner Marsha Smith, NARUC First Vice President and Member of Idaho Public Utility Commission – Jim Rogers, President and CEO of Duke Energy Includes 50 leading electric and gas utilities, state utility commissioners, state air and energy agencies, energy services providers, energy consumers, and energy efficiency and consumer advocates – US DOE and US EPA facilitated Leadership Group

12. The Leadership Group – Exelon – Food Lion – Great River Energy – Idaho Public Utilities Commission – ISO New England Inc. – Johnson Controls – MidAmerican Energy Company – Minnesota Public Utilities Commission – National Grid – Natural Resources Defense Council – New Jersey Board of Public Utilities – New Jersey Natural Gas – New York Power Authority – New York State Public Service Commission – North Carolina Air Office – North Carolina Energy Office – Ohio Consumers' Counsel – Pacific Gas and Electric – Pepco Holdings, Inc. – PJM Interconnection – PNM Resources – Alliance to Save Energy – American Council for an Energy- Efficient Economy – Ameren – American Electric Power – Arkansas Public Service Commission – Austin Energy – Baltimore Gas and Electric – Bonneville Power Administration – California Energy Commission – California Public Utilities Commission – Servidyne Systems – Connecticut Consumer Counsel – Connecticut Department of Environmental Protection – Connecticut Department of Public Utility Control – District of Columbia Public Service Commission – Duke Energy – Entergy Corporation – Environmental Defense – Public Advocate State of Maine – Puget Sound – Sacramento Municipal Utility District – Santee Cooper – Seattle City Light – Servidyne Systems – Southern California Edison – Southern Company – Tennessee Valley Authority – Texas State Energy Conservation Office – The Dow Chemical Company – Tristate Generation and Transmission Association, Inc. – USAA Realty Company – Vectren Corporation – Vermont Energy Investment Corporation – Wal-Mart Stores, Inc. – Washington Utilities and Transportation Commission – Waverly Light and Power – Xcel Energy The Leadership Group includes 28 electric and gas utilities, 18 state agencies, and 12 other organizations:

13. Observers – American Gas Association – American Public Power Association – Association of Energy Engineers – Business Council for Sustainable Energy – Consortium for Energy Efficiency – Council of Energy Resource Tribes – Demand Response Coordinating Committee – Edison Electric Institute – Electric Power Research Institute – Energy Programs Consortium – Gas Appliance Manufacturers Association – Gas Technology Institute – National Association of Energy Service Companies – National Association of Regulatory Utility Commissioners – National Association of State Energy Officials – National Council on Electricity Policy – National Electrical Manufacturers Association – National Rural Electric Cooperative Association – North American Insulation Manufacturers Association – Steel Manufacturers Association

14. Year One Accomplishments Reviewed key barriers to energy efficiency and surveyed policies and programs that have overcome these barriers Advanced the five (5) Action Plan Recommendations Announced over 90 public statements and commitments to advance energy efficiency through the Action Plan Recommendations Produced new resources to support commitments – National Action Plan for Energy Efficiency Report – Energy Efficiency Benefits Calculator – Consumer Energy Efficiency Fact Sheet

15. Commitments to Energy Efficiency Commitments made by stakeholders across 47 states – State Utility Commissions – AR, CA, CT, FL, HI, IA, KS, MN, NJ, NY, OR, VT, WA, WI – Utilities – Austin Energy, BPA, Duke Energy, Entergy, Great River Energy, New Jersey Natural Gas, PNM, Santee Cooper, SMUD, Xcel Energy, Waverly Light & Power, etc – Other state agencies – OH and CT Consumers’ Counsel; CA agencies; CT DEP; HI, MN, and OR energy departments; Governors in CA, IA, OR, and UT – ISO-NE and MISO – End-users – Dow, Eastman Kodak, Food Lion, Wal-Mart, etc – Additional partner organizations, including APPA, AGA, EEI, NRECA, etc

16. Commitments to Energy Efficiency (2) Include: – Establishing state-level collaborative processes to explore how best to increase investment in energy efficiency – Investigating increased funding for cost-effective efficiency – Conducting formal investigation on ways utilities can remove the link between revenues and sales volume – Including energy efficiency on a consistent and comparable basis with supply-side resources in future resource planning activities – Meeting energy savings goals within the range of 10-35% – Proactively educating consumers on the benefits Progress is already being made

17. Public Power Achieving Success: SMUD Sacramento Municipal Utility District Made commitment under Action Plan as part of California MOU;18 signatories: – Governor Arnold Schwarzenegger – California Public Utilities Commission – California Energy Commission – Anaheim Public Utilities – Burbank Water & Power – Gridley Municipal Utilities – Los Angeles Department of Water & Power – Natural Resources Defense Council – Northern California Power Agency – Pacific Gas & Electric Company – City of Palo Alto Utilities – Pasadena Water & Power – Sacramento Municipal Utility District – San Diego Gas & Electric Company – Southern California Edison Company – Southern California Gas Company – Silicon Valley Power – City of Shasta Lake Electric Utility

18. Public Power Achieving Success: SMUD (2) State passed bill (AB2021) that requires utilities to achieve all cost-effective EE. Muni’s will: – Develop a potential study every 3 years – Identify all potentially achievable cost-effective EE savings & adopt 10-year targets for EE savings and demand reduction By June 1, 2007 – Report annually to CA Energy Commission on EE: Expenditures and programs Cost-effectiveness methodology Forecasted and actual savings Results of independent evaluations

19. Scenarios for 10-Year Goals and Estimated Impacts Description (Avg. % GWh reduction /yr) Current Goal (0.6%) State Goal (1.0%) 150% of State Goal (1.5%) 2008 Portfolio Budget ($ MM)$25$35$45 Avg. Annual GWh Savings86 130 194 Avg. Annual of MW Savings 22 3957 Avg. Greenhouse Gas reduction (tonnes/yr 2007)*36,00054,00080,000 * One Metric tonne CO2-equivalent equals 1.1 English tons Public Power Achieving Success: SMUD (3)

20. Sources for Additional Savings Economic Potential for Energy Savings by Sector/Technology Numbers in parentheses are percent of economic potential that would be captured by 2017 if we continued with business as usual Other percentages are of full economic potential Public Power Achieving Success: SMUD (4)

21. Public Power Achieving Success: SMUD (5) Meeting Commitments: – Embarked on a collaborative process for developing a framework for integrated resource planning within the company which fully values and incorporates demand side resources. – Pilot testing several rates that are designed to promote EE and reduce peak demand (residential rates that go beyond the current 3-tier inclining block rate). – Commissioned new EE potential study (basis for setting new EE goals for the next ten years). – Offer variety of rebates for EE tech and comprehensive (multiple EE measures) projects.

22. Public Power Achieving Success: SMUD (6) Meeting Commitments: – Paid over $20 million in hook-up fee discounts for projects that exceed California’s strict EE standards. – Working with a Community College District to develop EE curriculum - required for science & finance majors. Working to develop a two-year EE/RE/sustainability/environmental program. – Providing grants to local high schools for projects that incorporate renewable energy and energy efficiency in school programs. – Working closely with K-12 educators to provide classes and relevant training on energy efficiency topics.

23. Public Power Achieving Success: WLP Waverly Light and Power Made commitment under Action Plan : WLP will achieve 15% EE by the year 2020 WLP will continue efforts to reduce overall demand (kW) in its service territory as part of a strategy to reduce the need for new electric generating capacity. As of 2005, WLP has reduced its peak demand by 6.68% through a number of EE programs. In 2006, WLP Board passed a resolution for the utility to reach a goal of 20% of its energy to come from renewable resources by the year 2020. WLP also participates in the annual Voluntary Reporting of Greenhouse Gases Emissions and Reductions (EIA-1605)).

24. Public Power Achieving Success: WLP (2) Meeting Commitments: New residential inverted rate design (effective July 07) “House of Green” – demonstrated EE and passive solar. – Monitor home’s energy & demand use for 2 years; use results to educate customers on real-time energy savings. Two CFL campaigns: – National Change a Light in fall – Gave customers 2 CFL’s in exchange for incandescent if customer came to offices – gave WLP staff opportunity to educate customer directly about EE

25. Public Power Achieving Success: WLP (3) Meeting Commitments: Curriculum for 6 th grade students on EE and the environment – Part of Festival on the Green 2006 and 2007 GoodCents program – National marketing program utilized by more than 300 utilities to promote specific energy conservation measures in the construction of a new home, or the improvement of an existing home. – Qualified customers receive a 10% rate reduction on electric energy costs for 10 years – The home must meet Thermal Performance Standards and HVAC Equipment Standards – Include new changes to program to address inside of home, such as new construction requiring fluorescent lighting.

26. Public Power Achieving Success: Austin Energy Austin Energy Made commitment under Action Plan: The City of Austin commits to establish a task force to investigate the feasibility of a series of building code changes so that by 2015 all new single family residential homes are constructed as net zero energy homes.

27. Public Power Achieving Success: Austin Energy (2) Meeting Commitments: A task force representing key stakeholders was created and began meeting in September 2006. Developed a charter laying out 3 high level deliverables: – Recommendations to council regarding proposed local amendments to the 2006 International Energy Conservation Code (IECC) for adoption as City of Austin Energy Code – Goals for EE improvements for the code cycles 2009, 2012, and 2015 – A process and plan for passing responsibility for implementation oversight of the project to the City of Austin Resource Management Commission

28. Public Power Achieving Success: Austin Energy (3) Meeting Commitments: Between October 2006 and April 2007 the task force reviewed, discussed and approved a package of local amendments to the IECC that will improve overall (electric and gas) efficiency of homes built to that code by 11%. Use of electricity will be reduced by 19% and use of gas reduced by 1%. Energy savings per home are 2515 kWh of electricity and 4 therms gas. This will reduce energy costs per typical home by $227.68. The local amendments will increase the cost of building a home by $1,179. The simple payback period for these amendments is 5.2 years.

29. Public Power Achieving Success: Santee Cooper Made commitment under Action Plan: Santee Cooper is committed to a comprehensive conservation program. – In partnership with the 20 South Carolina electric cooperatives, distributed more than 60,000 CFLs last year – CFLs will be given to all new residential and commercial customers to encourage EE. – Conservation messages are being used in all internal and external communications, executive speeches and giveaways at landfill dedication events.

30. Public Power Achieving Success: Santee Cooper (2) Action Plan commitment cont’d: Santee Cooper commits to undertaking several new residential and commercial demand side management (DSM) programs beginning this year and continuing over the next several years. – Developing comprehensive new energy efficiency program – Reducing the interest rate on energy efficiency loan program – Distributing CFLs to new customers – Developing a duct sealing program – Promoting LEED certified construction – Offering meter monitoring services – Providing certified ENERGY STAR ratings for ENERGY STAR homes and for federal tax credit. Santee Cooper is spearheading South Carolina's first solar Green Power site. Solar panels, totaling 16 kW, have been placed atop four pavilions at Coastal Carolina University in Conway, SC and a dedication event was held in September 2006.

31. Public Power Achieving Success: Santee Cooper (3) Meeting Commitments: Implementing new residential prog’s: – Promoting LEED certified construction through builders; summer 07 marketing roll-out – Distributed 70,000 CFLs to new customers – Low Interest Good Cents Loans – expanding to include solar PV and self-generation (wind)

32. Public Power Achieving Success: Santee Cooper (4) Meeting Commitments: Future DSM/EE Programs and Strategies – Purchasing high efficiency distribution transformers – Net billing program (announced June 07) – Offer low interest loans to install renewable energy – Develop new Energy Efficient Home Program – Evaluate feasibility of offering rebates for high efficiency heat pumps, air conditioners, and water heaters – Low interest loans for solar water heaters – Commercial CFL's

33. Upcoming Resources & Activities Aligning Utility Incentives with Energy Efficiency Investment (Summer 07) Guidebook on Energy Resource Planning and Procurement Processes (integrating energy efficiency) (Summer 07) Guidebook for Conducting Potential Studies for Cost-Effective Energy Efficiency (Summer 07) Guidebook on Energy Efficiency Measurement and Verification Protocols (Summer 07) Building Codes and Energy Efficiency Fact Sheet (Summer 07) Educational Briefings, sample docket material, and resource lists (Summer 07) Sector Collaborative on Energy Efficiency (June 07, kickoff meeting)

34. Year Two Work Plan Assist leading organizations in achieving their commitments–meaningful progress by summer 2007 Engage more organizations in making commitments Develop new resources to support implementation of the Action Plan recommendations Explore approaches to address demand response Outreach on the Action Plan and its progress – Regional Implementation Meetings Recognize leadership Develop the 20-year vision and plan for where the Action Plan could take energy efficiency over the next twenty years.

35. Sector Collaborative on Energy Efficiency An opportunity for utilities and end-users from key sectors to pursue the benefits of energy efficiency by: – Exploring barriers to cost-effective energy efficiency – Identifying tools for evaluation and implementation of cost- effective energy efficiency – Sharing approaches to effective energy efficiency programs – Identifying and pursuing new commitments and partnerships to increase investment in energy efficiency Sectors include: Hospitality, Retail, Commercial real estate, Grocers, and Cities

36. How You Can Get Involved Make a commitment under the Action Plan Leverage activities by other utilities – Set an Energy Efficiency goal – ex. SMUD, WLP – Education – ex. curriculum for local schools and colleges – Rate design – ex. inclining block – New programs – ex. low-interest loans, CFL campaigns, ENERGY STAR resources – Improved building codes – ex. Austin Energy Participate in Regional Meetings (West, SE)

37. Assistance is Available to Help Advance Action Plan Commitments Leadership Group and other organizations will: – Conduct peer-to-peer information sharing and support – Provide education and outreach per their commitments DOE/EPA will: – Continue to facilitate the Action Plan process, including support for new resources and activities – Provide technical assistance to state policy makers and utilities (expanding existing efforts) – Share free resources from the ENERGY STAR, buildings, and clean energy programs to utilities and states

38. For More Information www.epa.gov/eeactionplan Katrina Pielli Pielli.Katrina@epa.gov 202-343-9610 Stacy Angel Angel.Stacy@epa.gov 202-343-9606 Larry Mansueti US Department of Energy Lawrence.Mansueti@hq.doe.gov