The American Council for an Energy Efficient Economy – or ACEEE (“A-C-Triple E”) for short – unveiled the 8th edition of its State Efficiency Scorecard this week, and once again, Texas languishes far back in the pack with other under-performing states on its energy efficiency policies and outcomes. Falling one position from 2013, Texas ranked 34th out of 51 (DC included) states in the annual ranking of the progress of state energy efficiency policies and programs. Can our state be a leader again? Short answer: heck yeah!
First, it’s worth noting how ACEEE ranked states. They use six major benchmarks:
- Utility policies and programs
- Transportation initiatives
- Building energy codes
- Combined heat and power development
- State government-led initiatives
- State-level appliance standards
Each area is weighted with a different point value – the largest being utilities (20), followed by transportation (9), building codes (7), state-led initiatives (7), CHP (5), and appliance standards (2).
The full fact sheet on Texas can be found here. Let’s take a closer look at utilities and building codes.
Utilities
This is the most depressing benchmark, as you can see above. Out of 20 possible points, Texas earned a measly half a point. As we noted earlier this year, Texas utilities* achieved only 415 MW of energy efficiency in 2013, and their 2014 plans expect to achieve slightly less than that amount. Study after study has shown the state can and should cost-effectively save at least 1% of electric demand through energy efficiency programs (around 680 MW this year).
It wasn’t always like this.
ACEEE notes that Texas used to be a leader in energy efficiency, having adopted the first energy efficiency resource standard (EERS) in the country. The report notes:
“Texas realizes low levels of electrical savings and does not focus on natural gas efficiency. The state also allows large customers to opt out of efficiency programs, significantly minimizing the achievable savings.”
The opt-out refers to a semi-recent controversial rule adopted by the Public Utility Commission (PUC) in 2012 that allows commercial customers who are connected to an industrial facility to opt out of the programs, which means they neither pay for nor participate in any of the programs, even though they benefit from lower overall prices and increased reliability because of reduced demand and system benefits. However, as the numbers of participants is lowered, the utility budgets and goals for the programs have shrunk.
Also, as we noted back in April, the PUC “set strict cost restrictions on the amount of money utilities are allowed to charge the public for the programs, even though the programs themselves must be shown to be cost-effective and save more money than they cost.” So utilities are limited in how much money they can put into their efficiency programs (unless adjusting for inflation). Essentially, this puts a cap on utility energy efficiency spending.
This doesn’t make sense from an affordability perspective, especially in light of recent news that Centerpoint Energy reported excess revenue of $47 million and the PUC said they would do nothing about it (Centerpoint even said they'd ask for a rate increase next year). Earning this much extra cripples the argument we hear all the time at the PUC that increased energy efficiency targets hurts the ratepayer. In 2013, Centerpoint spent $37 million on its energy efficiency programs, almost $10 million less than its excess revenue.
Energy efficiency is the cheapest energy resource utilities can invest in. The average cost per kilowatt-hour (kWh) saved through utility efficiency programs in 2013 was less than 3 cents based on the 11-year average lifespan of the programs. The average cost per kWh minus efficiency was 8-12 cents from the utilities. The PUC or the Texas Legislature can and shouldraise or eliminate these artificial cost caps and require all commercial and residential customers to participate in the programs.
Building Codes: Glimmer of hope?
Regular readers of this blog and our monthly e-newsletter will know that building energy codes are also a key method to achieve more efficient homes and businesses. ACEEE notes:
“Texas earns 4 points out of 7 for its building energy code stringency and compliance efforts. In 2012, Texas began requiring single-family residential homes comply with the 2009 IRC [International Residential Code]. For all other residential, commercial, and industrial buildings, the 2009 IECC [International Energy Conservation Code] became effective in 2011. The state works with a stakeholder advisory group, has a strategic compliance plan in place, and offers training and outreach.”
Texas is improving on compliance efforts, however, whether Texas maintains or improves upon its building codes score depends heavily on whether the Comptroller updates building energy codes to 2015 standards.
You can read our take on the status of the building code update process here, but the short version is that an initial state review determined the new codes are significantly more efficient than the current codes. An official recommendation from the Energy Systems Laboratory at Texas A & M to the Comptroller Susan Combs is due soon, but it is up to her whether the state begins a rulemaking to update our codes from 2009 standards to 2015 standards. In the meantime, tired of waiting for the Comptroller to act, many cities like Houston, Austin, and San Antonio have either updated their codes or are in the process of doing so.
Road Ahead
ACEEE concludes its review of Texas energy efficiency with clear solutions:
“To encourage utilities to implement a broader portfolio of energy efficiency programs, the state could strengthen its EERS by increasing savings targets – with a focus on overall sales rather than peak savings – and couple it with performance incentives to align the utility business model with efficiency.”
As momentum builds toward the next legislative session, it will be a challenge to turn the ship around on efficiency in this political climate, but it’s a challenge the Sierra Club and its 100,000+ members and supporters are willing to accept.
*The utilities covered under the PUC energy efficiency rule are investor-owned utilities covering most, but not all, of the state. Municipally-owned utilities, such as Austin Energy and CPS Energy, as well as electric cooperatives such as Pedernales and Bluebonnet, are not subject to the PUC energy efficiency rule. Many of these public utilities do have strong energy efficiency programs and as an example, Austin Energy, met approximately 1 percent of its energy sales through energy efficiency programs.