1 WGA Clean and Diversified Energy Advisory Committee Briefing Brian Horii Energy and Environmental Economics, Inc

2 Background Clean and Diversified Energy Initiative launched in June 2004 Clean and Diversified Energy Initiative launched in June 2004 “Identifying ways to increase the contribution of renewable energy, energy efficiency, and clean energy technologies within the context of the overall energy needs of the West.” “Identifying ways to increase the contribution of renewable energy, energy efficiency, and clean energy technologies within the context of the overall energy needs of the West.” Transportation, buildings, electricity, and other needs Transportation, buildings, electricity, and other needs

3 Goals 30,000 more MW of clean energy by 2015 (EE, solar, wind, geothermal, biomass, clean coal, advanced natural gas) 30,000 more MW of clean energy by 2015 (EE, solar, wind, geothermal, biomass, clean coal, advanced natural gas) 20% electricity savings by 2020, relative to reference case 20% electricity savings by 2020, relative to reference case Ability to meet transmission needs of the West for the next 25 years. Ability to meet transmission needs of the West for the next 25 years. Better position Western energy system to respond to new environmental challenges Better position Western energy system to respond to new environmental challenges

4 Clean and Diversified Energy Advisory Committee To identify technically and financially viable policy mechanisms, stressing non-mandatory, incentive-based approaches To identify technically and financially viable policy mechanisms, stressing non-mandatory, incentive-based approaches Formed task forces for specific options such as energy efficiency Formed task forces for specific options such as energy efficiency Consider price, reliability, and the mitigation of environmental impacts of all recommendations Consider price, reliability, and the mitigation of environmental impacts of all recommendations Develop energy efficiency recommendations that take into account all types of energy used in buildings, not just electricity Develop energy efficiency recommendations that take into account all types of energy used in buildings, not just electricity Identified cost-effective energy efficiency that can reduce annual load growth in the West from 2% to 0.5%. Identified cost-effective energy efficiency that can reduce annual load growth in the West from 2% to 0.5%.

5 Task Force Recommendations – State Level Electricity Electricity Require utilities to integrate cost effective DSM into resource planning and procurement Require utilities to integrate cost effective DSM into resource planning and procurement Dedicate at least 2% of revenues to energy efficiency (if cost effective (CE)) Dedicate at least 2% of revenues to energy efficiency (if cost effective (CE)) Establish minimum savings targets Establish minimum savings targets Recommend 3-5% of projected sales in 2010 (if CE) Recommend 3-5% of projected sales in 2010 (if CE) Recommend 10-15% of projected sales in 2020 (if CE) Recommend 10-15% of projected sales in 2020 (if CE) Decouple Decouple Add incentives for implementing CE DSM programs Add incentives for implementing CE DSM programs

6 Task Force – Gas Encourage or require utilities to Encourage or require utilities to integrate EE into resource planning and procurement integrate EE into resource planning and procurement pursue EE whenever it is the lowest cost resource option pursue EE whenever it is the lowest cost resource option Recommend investing 1.5-2% of revenues on EE Recommend investing 1.5-2% of revenues on EE Recommend % savings per year (if CE) Recommend % savings per year (if CE) Decouple, add incentives for implementing CE DSM programs Decouple, add incentives for implementing CE DSM programs

7 Task Force – Building Energy Codes Adopt the 2004 International Energy Conservation Cost, and consider features of CA Title-24 Adopt the 2004 International Energy Conservation Cost, and consider features of CA Title-24 Update codes frequently (3-yr cycle suggested) Update codes frequently (3-yr cycle suggested) Implement code training and technical assistance for architects, builders and local code inspectors. Implement code training and technical assistance for architects, builders and local code inspectors. Establish a “reach code” for state-owned buildings to exceed the standards Establish a “reach code” for state-owned buildings to exceed the standards Establish a regional building code collaborative Establish a regional building code collaborative

8 Others Adopt minimum efficiency standards for appliances not covered by federal standards Adopt minimum efficiency standards for appliances not covered by federal standards Establish goals for reducing energy intensity by 2%/yr or greater in state buildings Establish goals for reducing energy intensity by 2%/yr or greater in state buildings Consider providing tax incentives Consider providing tax incentives Decouple and adopt inverted block rates for residential electricity and consider for natural gas Decouple and adopt inverted block rates for residential electricity and consider for natural gas Continue and expand education and training Continue and expand education and training Initiate, continue and expand R&D Initiate, continue and expand R&D

9 Task Force – Regional Initiatives Create regional market-transformation organizations Create regional market-transformation organizations Promote energy star, train the building sector, develop targets and standards, promote best practices, and perform R&D. Promote energy star, train the building sector, develop targets and standards, promote best practices, and perform R&D. Building energy code collaborative Building energy code collaborative Coordinated appliance standards advocacy Coordinated appliance standards advocacy Quantify air emission benefits of EE Quantify air emission benefits of EE Inclusion of EE in transmission planning Inclusion of EE in transmission planning Develop a working group to help overcome the barriers to implementing EE in commercial and public buildings. Develop a working group to help overcome the barriers to implementing EE in commercial and public buildings.