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 27 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 five states—Delaware, Utah, Missouri, South Dakota and Virginia— 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 27 states currently implementing EERS policies, 18 set specific savings requirements for natural gas, the remaining nine 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.
Challenges in EERS Implementation
While more than half of the nation’s states have successfully established EERS polices, some states have been unsuccessful in fully implementing EERS programs after passing enabling legislation. For example, Alaska enacted House Bill 306 in 2010, committing to a statewide 15% increase in per capita energy efficiency between 2010 and 2020, but never codified this commitment or implemented regulations to facilitate such efficiency increases. Other states, like Delaware, did codify their EERS targets, but never adopted regulations necessary to enforce the standards. Note that Delaware is currently in the process of developing binding EERS requirements. Additionally, some states have backtracked after enacting legislation that requires state energy efficiency targets. While Florida law requires the state to set efficiency targets, the Florida Public Service Commission recently approved utility plans with negligible requirements, effectively eliminating the state’s EERS program.