States Advance Energy-efficiency Policy in 2013 Session

Research by the Center for the New Energy Economy at Colorado State University, Fort Collins, suggests state legislatures are focusing on energy-efficiency policy this session with several trends emerging. Thus far in the 2013 legislative session, policymakers in 35 states have proposed 130 bills that would promote some form of energy-efficiency policy.

These data reveal several trends. First, the majority of states considering energy-efficiency legislation are ranked in the top half of the 2012 American Council for an Energy-Efficient Economy State Scorecard, which benchmarks states and the District of Columbia according to the policies and programs that encourage the efficient use of energy in many sectors of the economy. This may be evidence of a growing disparity between those states moving forward on energy-efficiency legislation and those lagging behind. The fact that leading efficiency states continue to promote these policies suggests growing recognition of their effectiveness.

The largest single class of energy-efficiency legislation is lead-by-example bills. These policies encourage state governments to reduce energy consumption in their own facilities and operations. Because the ‘greening of state government’ is a relatively straightforward, low-hanging-fruit-type initiative, it’s not surprising these policies are the most common.

Appliance standards and building codes represent the next most popular strategies. It is reasonable to expect that fewer appliance-efficiency standards may be introduced at the state level in the future because of the provisions for standards to be set at the federal level in the Energy Policy Act of 2005. In contrast, building-code revisions are likely to remain common, given the International Code Council’s improvements in the International Energy Conservation Code, most recently in 2012.

Among the emerging trends, data-disclosure bills represent some of the more innovative measures. Disclosure policies have become common across the states, though only recently applied to energy-efficiency policy. This type of legislation is designed to provide utility customers with more information about their energy use on the theory that when customers understand their rate of energy use, they will reduce consumption through conservation or installed measures.

Also emerging are revisions to utility demand-side-management cost/benefit tests for determining the viability of energy-efficiency programs. One explanation for this trend is the fact that utilities, which previously relied heavily on lighting retrofits to achieve Energy Efficiency Resource Standard (EERS) targets, which are specific, long-term targets for energy savings they must meet through customer energy-efficiency programs, are now looking for new mechanisms to achieve those goals. Additionally, commonly used cost tests may not accurately reflect the utility’s investment in new energy efficiency; some programs may therefore be difficult to pass in the face of low avoided natural-gas prices.

Currently, 24 states have an EERS in place. This session, 11 states have proposed expanding or diminishing existing standards and some states have attempted new standards altogether. Finally, demand-side-management and energy-saving-contract legislation proposed this session generally focuses on improving the regulatory structure of state programs that implement efficiency policies. Effective management of these, and other programs, helps to determine whether a state will achieve its energy-efficiency goals.

For more information, visit cnee.colostate.edu.