The vast majority of states with EERS programs enacted legislation creating a framework for efficiency targets and implementation, while a smaller number enforce efficiency requirements by regulation only. In particular, five of the states with EERS programs currently in effect, including Arizona, Arkansas, New Hampshire, New York, and Oregon, implement their binding EERS requirements through state utility commission order without any statutory directive. At least four states—Delaware, Utah, Missouri, and South Dakota— and Washington, D.C. currently implement voluntary goals without any binding requirements. State EERS policies also diverge on a number of design elements, including the stringency of the targets set, the entities regulated, and the use of spending restrictions or requirements.
Of the 33 states currently implementing EERS policies, 21 set specific savings requirements for natural gas, the remaining 12 states set targets for electricity-only. Some states, like New Jersey, require specific incremental annual savings while other states, like Hawaii, set cumulative targets that must be met by a certain year. Annual incremental energy savings targets vary among states from less than 1% to more than 2%. Some states like Colorado and Maine also set specific targets for reduction in peak demand.
Four states have designated a third party other than the state utility commission or regulated utility to administer their EERS programs. Maine, Oregon, Vermont, and Wisconsin all rely on third-party administrators to ensure utilities meet energy efficiency targets. In these states, the EERS plans developed by the third-party administrator are reviewed and approved by the state utility commission.
At least two states, North Carolina and Nevada, currently implement binding EERS requirements through a joint Renewable Portfolio-Energy Efficiency Standard. Other states like Utah and South Dakota combined voluntary RPS and energy efficiency targets and allow for a portion of a utility’s RPS compliance obligation to be satisfied through energy efficiency or demand-side measures.
Several states—including Illinois, Iowa, Pennsylvania, Texas and Wisconsin—also set cost caps limiting efficiency program costs that may be passed onto consumers during a given time period. Other states, like Vermont and Virginia, implement their EERS through spending requirements, mandating utility expenditures on efficiency programs without establishing specific energy savings targets. Additionally, at least seven states require that regulated utilities implement all cost-effective efficiency measures.