Energy Efficiency
Budget and Justification for
Investment in Energy Efficiency
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December 1, 2005
CLF / VPIRG
Act 61
Removed cap on EU budget
 Legislative Intent
 All Cost Effective Measures Sec. 6. 30 V.S.A. §
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209
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“The charge established by the board pursuant to subdivision (3) of this
subsection shall be in an amount determined by the board by rule or
order that is consistent with the principles of least cost integrated
planning as defined in section 218c of this title.”
“As circumstances and programs evolve, the amount of the charge shall
be reviewed for unrealized energy efficiency potential and shall be
adjusted as necessary in order to realize all reasonably available,
cost-effective energy efficiency savings.”
December 1, 2005
CLF / VPIRG
Recommendations
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Current Spending: $17.5 million / year
Increase to $52.5 million / year by 2008
Begin increase in 2006 -- $25 million
Transition to methodology based approach
for determining budget
December 1, 2005
CLF / VPIRG
Need for Increased Investment in
Energy Efficiency
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Vermont Law
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30 V.S.A. § 202a – State energy policy
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30 V.S.A. § 209, 218 & 218c
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Efficiency programs
Act 61
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Encourage efficiency & demand side management
Broadened efficiency opportunities
December 1, 2005
CLF / VPIRG
Need for Increased Investment in
Energy Efficiency
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PSB Decisions
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Docket #5270 (1990)
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Docket #5980 (1999)
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Energy Efficiency Charge
Docket #6777 (2002)
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Potential of efficiency
Value of efficiency measures
December 1, 2005
CLF / VPIRG
Need for Increased Investment in
Energy Efficiency
Uncertain Power Supply
 Lower Electricity Costs
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2004 State Electric Plan: “Rather than always choosing to build
to meet the increasing demand for power, stakeholders
(including regulatory agencies) contemplated addressing the
problem on the customer side of the meter – where the demand
is created. If the demand for power could be lowered through
energy efficiency and load management, the costs to build new
power plants and pole and wire upgrades might be deferred.
The expected end result would be lower utility costs over
the long term for customers.”
Efficiency Vermont has lowered the cost of electricity when it is
most expensive, during summer and winter peak hours.
December 1, 2005
CLF / VPIRG
Need for Increased Investment in
Energy Efficiency
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Environmental Need
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2004 efficiency investments produced a 500,000 ton reduction in
greenhouse gases that would have otherwise been emitted by
conventional electric generation.
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These also resulted in a savings of 1.2 million gallons of
propane, 175 million cubic feet of natural gas, 600,000 gallons of
oil and 360 million gallons of water.
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PSB decisions have placed an economic value on
environmental externalities of about 5% (Docket #5270 (1990)
and $7.86 MWh for natural gas (Docket #6290 (2003).
December 1, 2005
CLF / VPIRG
Economic Benefits
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Cheapest power available
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Comparison to market rates
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Efficiency -- 2.8 cents / kWh
VY – 3.9 cents / kWh
Market ~ 8 cents / kWh
2004 Electricity savings were delivered at 37% of the cost of wholesale power
purchases
From 2004 installations Vermonters will realize $38 million in lifetime economic
value.
Assuming a similar return in ’05, with the increase in power costs the savings
delivered by the efficiency utility will be less than 30% of what the power would
cost on the wholesale market (70% savings for rate payers)
December 1, 2005
CLF / VPIRG
Economic Benefits
 Cost
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Docket #6777
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$2 million reduction in EEU budget = $900,000 net
loss
VELCO study by Optimal Energy (2003)
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of not investing in efficiency
$569 million investment = $1,207 million benefits
December 1, 2005
CLF / VPIRG
Rate Impacts
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Balance rate impacts – A. 61
Significant investment in efficiency will
lower electric bills.
Avoided Transmission investments
Failure to invest in efficiency results in
higher rates over time
Amortization options
December 1, 2005
CLF / VPIRG
Economic Benefits
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December 1, 2005
CLF / VPIRG
Success of Efficiency Investments
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EEU experience
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EEU ranked 8th in 2003 for cumulative
annual kWh savings as a % of kWh sales
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Since 2000 :
 27,000 kW reduction in summer peak capacity requirements.
 211,158,000 annual kWh saved
 $66,000,000 net benefits
 $172,275,000 lifetime economic value delivered to Vermont rate
payers
VT- 4.8%, CT- 7.8%, CA – 7.5%
December 1, 2005
CLF / VPIRG
Scale of Investment
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Current $17.5 million
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Not based on available cost effective
investment
Previous legislative cap which is now
removed
December 1, 2005
CLF / VPIRG
Scale of Investment
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Higher level of investment is justified
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Power to Save (1997) –
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DPS Study (2002-03) Optimal Study –
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Investment up to 10 times higher is cost effective
Connecticut (2004)
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Investment 3-5 times higher is cost effective
13% reduction of load possible from feasible and
cost effective efficiency investment by 2012
December 1, 2005
CLF / VPIRG
Conclusion
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All cost effective investments are required,
reasonable and prudent
Potential for efficiency is 5 to 10 times
greater than current $17.5 million
investment
EEU Budget should be tripled over next
three years beginning mid-year 2006
Transition to methodology based approach
December 1, 2005
CLF / VPIRG