Eight Approaches to Enable Greater

Energy Efficiency: A Guide for

State Government Officials

Prepared by

The National Council on Electricity Policy

November 2009

NATIONAL COUNCIL ON ELECTRICITY POLICY MEMBER ORGANIZATIONS

The National Council on Electricity Policy (National Council)
is a unique venture between the National Association of
Regulatory Utility Commissioners (NARUC), the National
Association of State Energy Officials (NASEO), the National
Conference of State Legislatures (NCSL), National
Association of Clean Air Agencies (NACAA) and the National Governors Association Center for Best
Practices (NGA). The National Council also includes participation by the Federal Energy Regulatory
Commission (FERC), U.S. Department of Energy (DOE), and the U.S. Environment Protection Agency
(EPA). Established in 1994, the National Council enables better coordination between federal and state
entities responsible for electricity policy and programs. Our members understand that improved intrastate,
regional and federal coordination can result in more informed electricity policy decisions.

The National Association of State Energy Officials (NASEO) is the only

nonprofit organization whose membership includes the Governordesignated energy officials from each state and territory. The organization
was created to improve the effectiveness and quality of state energy
programs and policies, provide policy input and analysis where requested,
share successes among the states, and to be a repository of information on
issues of particular concern to the states and all their citizens.

The National Association of Clean Air Agencies (NACAA) represents

air pollution control agencies in 53 states and territories and over 165
major metropolitan areas across the United States. State and local air
pollution
control
officials
formed
NACAA
(formerly
STAPPA/ALAPCO) over 30 years ago to improve their effectiveness
as managers of air quality programs. The associations serve to encourage the exchange of information
among air pollution control officials, to enhance communication and cooperation among federal, state, and
local regulatory agencies, and to promote good management of our air resources.

The National Association of Regulatory Utility Commissioners (NARUC) is the

association that represents State public service commissioners who regulate essential
utility services, such as electricity, gas, telecommunications, water, and transportation. As
regulators, our members are charged with protecting the public and ensuring that rates
charged by regulated utilities are fair, just, and reasonable.

The National Governors Association Center for Best Practices (NGA) develops
innovative solutions to todays most pressing public policy challenges including
analysis of state and federal policies affecting environmental protection, air
quality and greenhouse gases, energy infrastructure, energy efficiency and
renewable energy.

The National Conference of State Legislatures (NCSL) is the bipartisan organization

that serves the legislators and staffs of the states, commonwealths and territories.
NCSL provides research, technical assistance and opportunities for policymakers to
exchange ideas on the most pressing state issues and is an effective and respected
advocate for the interests of the states in the American federal system.

ACKNOWLEDGEMENTS
The National Council on Electricity Policy has developed Eight Approaches to Enable Greater
Energy Efficiency: A Guide for State Government Officials to complement its mission to assist the
four arms of state government most involved in electricity policy development and
implementation: governors, legislators, energy office officials and utility regulators. This
publication was prepared with the financial assistance from the U.S. Department of Energy and
the U.S. Environmental Protection Agency.
Authors for this report include Miles Keogh and Julie Rowlett at NARUC with significant
contribution made by Julia Friedman. Input was also received from Andrew Spahn of SRA
International and Joe Bryson of the U.S. EPA. The authors are grateful to several members of the
National Council who helped develop, guide, and review the many versions of the paper:
Commissioner Jeanne Fox, President, New Jersey Board of Public Utilities; Commissioner Phil
Giudice, Division of Energy Resources, Commonwealth of Massachusetts; Charles Gray,
Executive Director, NARUC; Kate Marks, Managing Director, NASEO; Sue Gander, Director of
Energy, Environment & Natural Resources Division, NGA Center for Best Practices; Richard
Ervin of the Massachusetts Division of Energy Resources, Chris Haun of the New Jersey Board
of Public Utilities; and Glen Andersen and Christie Rewey of the National Conference of State
Legislatures. A special thank you to Larry Mansueti, DOE and Niko Dietsch, EPA for funding
and continued support of the National Council on Electricity Policy.

Find this report and other National Council publications at www.ncouncil.org.

DISCLAIMER:
The National Council on Electricity Policy is funded by the U.S. Department of Energy and the U.S.
Environmental Protection Agency. The views and opinions expressed herein are strictly those of the
authors and may not necessarily agree with the positions of the National Council on Electricity Policy, its
committee members or the organizations they represent, the National Council funders, or those who
commented on the paper during its drafting.

Table of Contents
Introduction ..................................................................................................................... 1
1. Make Early Decisions about Your Efficiency Effort .................................................. 3

Take advantage of existing resources ............................................................................. 3

Picking vehicles for implementing your efficiency program ......................................... 4
Determine how to fund your effort sustainably .............................................................. 4
Choose short- and long-term goals and objectives ......................................................... 5
2. Create Financial Incentives for Energy Efficiency .................................................. 6
3. Strengthen and Enforce Building Codes to Encourage Energy Efficiency ........... 8
4. Lead by Example: Mandate State Facility Efficiency ........................................... 10
5. Consider adopting Energy Efficiency Resource Standards ................................. 12
6. Develop Rate Structures That Encourage Energy Efficiency ................................ 15
7. Monitor and Verify Efficiency Programs ................................................................. 17
8. Explore Innovative Approaches to Encourage Energy Efficiency ...................... 20

One-bill programs ......................................................................................................... 20

Tariff-based Efficiency Financing ................................................................................ 20
Property tax-based financing ........................................................................................ 21
Promote Energy Efficiency Workforce Development.................................................. 22
Conclusion..................................................................................................................... 23
Bibliography and Additional Resources..................................................................... 24

Introduction
In recent years, energy efficiency and conservation have taken on a new importance. As
our nation struggles with satisfying new energy demand with less-carbon intensive
approaches, state regulators, utilities, legislators and others now agree that efficiency
often provides the fastest and least expensive way to meet energy needs of states. The
benefits of energy efficiency are many: well designed energy efficiency programs can
delay the need for new power plants, gas wells, and oil rigs and expanded transmission
and distribution capacities; energy efficiency programs can be designed to meet the
unique energy profiles of each state; and energy efficiency and conservation programs
can often be a cost-effective near-term solution for energy and environmental challenges.
Yet despite their benefits, efficiency and conservation face barriers. Investments in
efficiency cost more up-front than investments in equivalent, less-efficient technologies
(e.g., efficient lights are more costly than inefficient lights, well-insulated homes cost
more to build than those with less insulation, higher efficiency furnaces and air
conditioners cost more than the least efficient models). Although homeowners, business
owners or government will usually recoup these higher costs through energy savings over
the course of a few years, they might need special financing, regulations that are friendly
to efficiency, or other government intervention to make the measures cost-effective in the
short term.
The purpose of this Energy Efficiency Guide is to provide state officials with a broad
framework to encourage energy efficiency and conservation.1 This document is a
practical resource for any state official with an interest in this topic, but it may be most
useful to those who are new to efficiency and conservation. Consequently, this guide is
not meant to be comprehensive; state officials will need to craft and tailor these
approaches to match their own needs and recognize that additional approaches to energy
efficiency exist beyond those that are included in this document.
The National Council on Electricity Policy has developed Basic Approaches to Enable
Greater Energy Efficiency: A Guide for State Government Officials (Energy Efficiency
Guide) to complement its mission to assist the four arms of state government most
involved in electricity policy development and implementation: governors, legislators,
energy office officials, and utility regulators.
The National Council provides
informational materials, such as this guide, to enable effective, innovative and more
informed energy policy decisions.2 This document is also a resource for state
environmental regulators to better understand the importance of integrating air policies
with state energy policies.

This Guide refers to both energy efficiency, which is typically the use of technology to reduce energy use, as well as
energy conservation, which usually refers to behavioral changes that reduce energy consumption.
2
Many of these measures are discussed in the National Action Plan for Energy Efficiency
(www.epa.gov/solar/documents/napee/napee_report.pdf), the U.S. EPAs State and Local Climate Change Division
(www.epa.gov/climatechange/wycd/stateandlocalgov/index.html), the U.S. Department of Energy; Energy Efficiency
and Renewable Energy (www.eere.energy.gov).
Eight Approaches to Enable Greater Energy Efficiency:
A Guide for State Government Officials

The Energy Efficiency Guides 8 Basic Approaches to Enable Energy Efficiency:

1. Make early decisions about your efficiency effort.
2. Create financial and/or tax incentives for energy efficiency.
3. Strengthen and enforce building codes to encourage energy efficiency.
4. Lead by example: mandate state facility efficiency.
5. Consider energy efficiency resource standards.
6. Develop rate structures that encourage energy efficiency.
7. Monitor and verify efficiency program results.
8. Examine innovative approaches to encourage energy efficiency.
For every energy efficiency practice outlined in this document, the following are
explained:
What, why and how a particular approach enables efficiency
How sample states have structured their approaches to energy efficiency
Implementation challenges and opportunities
Roles of each arm of state government in addressing energy efficiency
Energy efficiency is often called the fifth fuel or even the first fuel by some States
and stakeholder groups. Improving grid reliability, reducing greenhouse gas emissions,
and saving consumers money also makes the case for greater investment in the types of
energy efficiency measures discussed in the following pages.

Eight Approaches to Enable Greater Energy Efficiency:

A Guide for State Government Officials

1. Make Early Decisions about Your Efficiency Effort

If your state is unfamiliar with how to get started with energy efficiency, here are a few
early steps to explore before taking action:

Take advantage of a wealth of existing resources,

Determine the proper vehicles for implementing efficiency,

Determine how to adequately and sustainably fund the effort, and

Set goals for targeted, short-term wins (i.e. highlighting projects with quicker
payback periods) and for enduring approaches.
The outcomes of these decisions will affect the subsequent mechanisms your state may
explore, and the steps taken to implement them.

Take advantage of existing resources

Efficiency has been gaining traction for years as supply choices become more difficult
and the obstacles to more widespread end-use efficiency become more easily overcome.
The passage of the American Recovery and Reinvestment Act of 2009 is intended to
inject billions of dollars in spending on efficiency and much of this has been routed
through state agencies. Moreover, the likelihood that national climate legislation will be
enacted soon highlights the importance of state engagement in understanding the options
available. If you are new to efficiency, this first section highlights a few key areas to
help you get engaged.
Much of the best information available has been assembled through the National Action
Plan on Energy Efficiency, an effort started in 2005 that has brought together utilities,
regulators, Governors, energy offices, customers, and other stakeholders to increase
attention to, remove barriers to, and increase investment in cost-effective energy
efficiency. Participants have developed a number of resources that can help, including
guides to:

Energy efficiency basics

Aligning incentives with demand-side resources

Resource planning with efficiency

Efficiency program evaluation

Testing programs for cost-effectiveness

These and other resources are available online at http://www.epa.gov/eeactionplan.
The National Council on Electricity Policy has also created tools and resources that can
help, including guides to financing energy efficiency programs and to state programs that
support energy efficiency, such as the 2006 State and Regional Policies That Promote

Eight Approaches to Enable Greater Energy Efficiency:

A Guide for State Government Officials

Energy Efficiency Programs Carried out by Electric and Gas Utilities 3. These are
available at http://www.ncouncil.org/resources.cfm.

Picking vehicles for implementing your efficiency program

When deciding to move efficiency forward, a key question to resolve at the earliest stages
is who will implement the programs. Several entities could play this role, though three
models have emerged among states that have sophisticated efficiency programs:
1. The electric or gas utility company or heating oil companies can be the implementing
entity.
2. A government agency, such as a state energy office, can be the implementing entity.
3. A non-governmental or quasi-governmental provider, such as an energy services
company (also called an ESCo) or the efficiency utility operated in Vermont, can
be the implementing agency.
Arguments exist for each approach. Some favor utility implementation of energy
efficiency, because as the company that provides electric power to your home it may
have unique abilities to identify and implement efficiency opportunities on a broad basis.
Others argue that utilities may be reluctant to promote efficiency when their business is
selling electricity. They suggest that the State is better positioned to provide efficiency
through a State entity such as an Energy Office. Finally, some argue that a quasi-private
provider leverages the sales-neutrality of the State while harnessing competitive forces to
encourage robust implementation. In many states a combination of two or three of these
approaches is used, with utility efforts complemented with State and non-utility
programs.

Determine how to fund your effort sustainably

Several areas have been explored for financing energy efficiency in the National
Councils 2007 document on financing energy efficiency4. The major types of energy
efficiency financing it describes - performance contracting, tax-exempt lease purchase
agreements, utility demand side management, tax incentives, system benefit funds,
capital bonding, loans, grants and Pay As You Save (PAYS) - have been authorized in a
variety of states and have unique characteristics.
One key to success in financing energy efficiency is sustained and sufficient funding for
programs. Without this, programs are less likely to be successful over time.

This resource, also called the Section 139 Study, is also available online at
http://www.oe.energy.gov/DocumentsandMedia/DOE_EPAct_Sec._139_Rpt_to_CongressFINAL_PUBLIC_RELEAS
E_VERSION.pdf
4
This document is the second in a series on financing electricity resources and focuses on programs for States to
finance energy efficiency, available online at http://www.ncouncil.org/Documents/FINAL.EE.Financing.pdf.
Eight Approaches to Enable Greater Energy Efficiency:
A Guide for State Government Officials

Choose short- and long-term goals and objectives

Before selecting efficiency programs to get started with, it may be important to set goals
and objectives for the program. Which areas will receive priority? Programs that lead to
a comprehensive and enduring approach, such as new construction codes and standards?
Or targeted programs that achieve early wins and build excitement from a quick return on
immediate action, such as commercial lighting retrofits?
How each branch of state government can make early decisions about efficiency programs
Governors
Legislators
Utility Commissions
State Energy Offices
1. Engage utilities and
1. Administer
1. Similar to #1 for
1. Convene key
other potential
weatherization and
stakeholders in planning Governors.
efficiency providers
demand-side resources
2. Consider enabling
a comprehensive
through a notice of
plans; connect these
and funding
efficiency effort.
inquiry.
with synergies in utilitymechanisms that
2. Propose and support
2. Encourage efficiency
provided programs and
provide enduring
energy office and
in utility resource
those provided by
support to efficiency
commission efforts on
planning.
others.
programs.
efficiency.
3. Review successful
2. Prioritize policy
programs in other states
objectives and broad
time-frames for meeting that are similar to
program/incentive being
goals.
considered.

Eight Approaches to Enable Greater Energy Efficiency:

A Guide for State Government Officials

2. Create Financial Incentives for Energy Efficiency

Financial incentives for energy efficiency come in the form of tax incentives, grants and
rebates, and loan programs. These incentives are among the most common ways that
states promote energy efficiency. Currently, 22 states have a tax incentive to promote
energy efficiency.5 In all but 7 states and the District of Columbia, the State and/or the
utilities offer a loan program of some kind. Finally, either the state or the utilities in
every state except Arkansas, South Carolina, and West Virginia offer a rebate or grant
program to encourage energy efficiency.6 The variety among these programs is
tremendous. Examples of several types of energy efficiency financial incentives, taken
from the Database of State Incentives for Renewables & Efficiency (DSIRE), are
highlighted in Table 1.7
Table 1: A Sample of State Energy Efficiency Incentives
State
Tennessee

Incentive Description
Offers a 0% interest business loan in designated communities, capped at $300,000, to
cover the full cost of energy efficiency measures identified through an energy audit.

New York

Offers a maximum rebate of up to $850,000 for upstate residents and $1.65 million for
Con Edison customers who meet the requirements of the Energy $mart New
Construction Program that encourages energy efficient building practices.

Oregon

Oregon's Business Energy Tax Credit (BETC) is for investments in energy

conservation, recycling, renewable energy resources, sustainable buildings, and lesspolluting transportation fuels. The maximum incentive provided is $20 million for
renewable energy equipment manufacturing facilities and $10 million for other projects.

Buildings consume over 40 percent of the nations energy, so addressing energy

efficiency in buildings and the appliances used inside them is critical to any state
efficiency plan. Energy efficient buildings or appliances often cost more than their nonefficient equivalents. Although the people who purchase them will benefit over a period
of several years from energy savings, the high up-front costs of energy efficiency can
make the efficient purchase unattractive to many consumers. Loans that cover these up
front costs and allow people to pay back principal and interest from energy savings,
rebates that cover incremental costs, and tax incentives that do the same can overcome
this first-cost hurdle. Since energy bills are lower for energy efficient buildings, net
operating costs for efficient buildings (mortgage plus utility bills) are usually lower,
making energy efficiency a smart economic decision if financing is available.
Gaining political support for certain financial incentives is sometimes difficult, especially
during a slow economy. In such circumstances it can be hard justify a tax measure or fee
increase to support energy efficiency. States also need to be careful that they are not
5

Financial Incentives for Energy Efficiency. Database of State Incentives for Renewables & Efficiency. April 15,
2009. http://dsireusa.org/summarytables/FinEE.cfm?&CurrentPageID=7&EE=1&RE=1
6
Ibid.
7
Ibid
Eight Approaches to Enable Greater Energy Efficiency:
A Guide for State Government Officials

subsidizing too much of what people would do even in the absence of the subsidy. States
should consider measuring the effect that their programs have on influencing purchasing
decisions and saving energy in order to evaluate such programs cost effectiveness.
How each branch of state government can create financial incentives for energy efficiency
Governors
Legislators
Utility Commissions
State Energy Offices
State energy offices
1. Propose and support
1. Consider adoption of 1. Utility commissions
often administer energy
have almost no role in
adoption of efficiency
energy efficiency loan,
efficiency loan or rebate
tax programs to support
loan, grant or tax
grant or tax incentive
programs. In a limited
energy efficiency.
incentive programs.
programs. State
number of states, such
However, they may
legislatures are the only
as Maryland, they may
have an important role
body that can approve a
in overseeing efficiency certify buildings or other
tax incentive.
facilities as being
financing programs
2. Establish these
eligible to receive a tax
through which utilities
programs based on best
credit.
offer financial
practices in states that
incentives and seek
have been operating
recovery of the costs of
similar programs for
those incentives through
many years (example
rates.
states are listed above).

Eight Approaches to Enable Greater Energy Efficiency:

A Guide for State Government Officials

3. Strengthen and Enforce Building Codes to Encourage

Energy Efficiency
Energy efficiency standards for homes and commercial buildings are set in state building
energy codes. States and/or local governments adopt their own building codes but
generally base them on a nationally accepted residential or commercial model code. The
national residential model code is known as the International Energy Conservation Code
(IECC), most recently updated in 2009.8 The commercial model code is set by the
American Society of Heating, Refrigerating, and Air Conditioning Engineers (ASHRAE).
The latest ASHRAE commercial building code is ASHRAE 90.1-2007, Energy Standard
for Buildings except Low-Rise Residential Buildings.9 These two national organizations
adopt a new residential or commercial code approximately every three years, which are
then certified by the U.S. Department of Energy.
New iterations of the codes tend to be more stringent than their predecessors. For
example, the 2009 IECC residential code is approximately 15% more stringent than the
2006 version.10 The 2004 version of ASHRAE 90.1 is about 12% more stringent than the
1999 version. A state may opt to adopt the new code as it is written, adopt is with
modifications, or not adopt it at all. Finally, local governments may adopt their own
codes in the absence of statewide building codes.
While Florida and California are the only two states to reference the 2009 IECC
residential code, a total of 31 states and the District of Columbia reference a 2003 IECC
or better. On the commercial side, again, Florida and California are the only two states
that reference the ASHRAE 90.1 2007 standard. Thirty-four states and the District of
Columbia reference an ASHRAE 90.1 standard that is no older than 2001. For both the
commercial and residential sector, a number of States have no statewide code (leaving
adoption and enforcement to local city and/or county governments) or the codes in place
are significantly less stringent than the most recent IECC and ASHRAE codes and
standards.11
Why develop building codes for energy efficiency? Building codes create a uniform set
of standards for new buildings within the jurisdiction that adopts them, providing
assurance to homebuyers or businesses moving into new construction that the facilities
meet a certain minimum standard. While there are upfront costs associated with
upgrading buildings to comply with codes, the payback periods are relatively short. One
study in Nevada found that upgrading commercial buildings to be compliant with their

International Code Council. April 15, 2009. http://www.iccsafe.org/news/nr/2009/0128_2009IECC.html

American Society of Heating, Refrigerating, and Air Conditioning Engineers. 2009. April 15, 2009.
http://www.ashrae.org/
10
International Code Council. April 15, 2009. http://www.iccsafe.org/news/nr/2009/0128_2009IECC.html
11
Status of State Energy Codes. Building Energy Codes Program. February 27, 2009. U.S. Department of Energy.
April 15, 2009. http://www.energycodes.gov/implement/state_codes/index.stm. Please note that the Building Codes
Assistance Project has slightly different numbers which can be found at http://bcap-energy.org/node/5.
9

Eight Approaches to Enable Greater Energy Efficiency:

A Guide for State Government Officials

energy efficiency codes would have a payback period of only two years.12 Building
codes also save money for homeowners. For example, a Government Accountability
Office study estimated that households in Louisiana and Mississippi could save from
$167 to $233 per household per year by updating to the 2006 model residential codes.13
Energy efficient building codes can significantly reduce building energy load growth and
carbon dioxide emissions while boosting the local economy through job creation and
spending cost savings locally (money that might have been spent on out of state energy
services this is a highly questionable assertion).14
Building codes face several challenges:

Some homebuilders may object to stringent building energy codes, claiming that
they add to the cost of building new homes.

Where building code compliance rates are low, adopting a new building code
provides little assurance that this code will actually be implemented. Some states,
such as Minnesota, have proactive training programs to help builders understand
and meet their stringent residential energy code.

In some states, the state government adopts the building code but the local
government enforces the code.

Building energy codes may apply only to new construction which, while an
important part of the building stock, does nothing to reduce energy use in existing
commercial and residential buildings.
How each branch of state government can strengthen and enforce building codes to encourage EE
Governors
Legislators
Utility Commissions
State Energy Offices
1. Limited role except
1. Propose and support 1. Consider legislation
1. State energy offices
to adopt the most recent to the extent that utilities often serve as support to
adoption of
may be entitled to cost
versions of statewide
statewide building
the office of state
recovery for research,
codes modeled after building energy codes.
building inspector,
outreach, education or
Include in such
the most recent,
which is responsible for
legislation a mechanism other methods related to training and
nationally accepted
to fund training,
building energy codes.
residential and
enforcement of building
outreach and
commercial codes.
energy codes.
enforcement of these
2. Support
mechanisms to fund codes.
education, outreach
and enforcement of
such building
energy codes.

12

Building Codes for Energy Efficiency. National Action Plan for Energy Efficiency. July 17, 2008. U.S.
Environmental Protection Agency. April 15, 2009.
http://www.epa.gov/cleanenergy/documents/buildingcodesfactsheet.pdf
13
Important Challenges Must Be Overcome to Realize Significant Opportunities for Energy Efficiency Improvements
in Gulf Coast Reconstruction. GAO-07-654. June 2007. United States Government Accountability Office. April 15,
2009. http://www.gao.gov/new.items/d07654.pdf
14
Building Codes for Energy Efficiency. National Action Plan for Energy Efficiency. July 17, 2008. U.S.
Environmental Protection Agency. April 15, 2009.
http://www.epa.gov/cleanenergy/documents/buildingcodesfactsheet.pdf
Eight Approaches to Enable Greater Energy Efficiency:
A Guide for State Government Officials

4. Lead by Example: Mandate State Facility Efficiency

Lead by example energy efficiency programs set goals for reducing energy use in state
government facilities. These goals come in the form of: (1) requirements for high
performance new construction; (2) requirements to reduce energy use across the board
(e.g., require a 15% reduction in energy use across all state agencies); (3) requirements to
purchase energy efficient products; and (4) requirements to purchase efficient vehicles.
These programs are common, with more than 40 states operating under some type of goal
to reduce energy consumption in state facilities. A number of states require new statefunded buildings and renovations to meet Leadership in Energy and Environmental
Design (LEED) standards, which usually result in a 20-30 percent energy efficiency
improvement over most state energy codes. States often use performance contracting to
pay for their energy savings programs. In a performance contract, a private company
conducts an energy audit of a state building, installs energy efficiency upgrades and
retrofits, and guarantees the energy and cost savings. The company takes a portion of
those savings to repay the capital that it invested in the energy efficiency equipment, and
the state benefits immediately from the energy savings without paying an upfront cost.
Table 2: Sample Lead by Example Programs
State
California

Minnesota

New York

Incentive Description
Californias Executive Order S-20-04 requires the
state to reduce grid-based electricity usage in state
buildings by 20% by 2015 (compared to a baseline
year of 2003).
Minnesotas Executive Order 05-016 set a goal of
reducing energy use in state government facilities,
on a weather-normalized Btu per square foot basis,
by 10% reduction by 2006, using 2005 as a baseline
year.
Executive Order 111 by Governor George Pataki,
continued via Executive Orders 1 and 9 by
Governor Patterson, required state agencies and
authorities to cut their energy use by 35% by 2010,
using a baseline year of 1990.

States adopt lead by example programs for a number of reasons. First, these types of
programs demonstrate to the private sector that energy use reduction programs are
practical. Second, the government gains credibility when requiring or incentivizing the
private sector to undertake programs to reduce energy use. Third, states adopt lead by
example programs in order to reap the financial, environmental and energy security
benefits of energy use reduction programs.
States face several challenges and considerations related to lead by example programs
that fall into the following categories:
1. States need to secure financing to cover the initial costs of lead by example
programs. In addition, state governments often are prohibited from engaging in
multi-year agreements to finance energy efficiency improvements, since they
operate on an annual budget.
Eight Approaches to Enable Greater Energy Efficiency:
A Guide for State Government Officials

10

2. Year to year state budgets that provide a set budget for utility costs do not provide
an incentive to reduce energy bills. Agencies would have a greater incentive to
invest in efficiency if they could carry over their energy bill savings from one
year to another.
How each branch of state government can lead by example and mandate state energy facility
efficiency
Governors
Legislators
Utility Commissions
State Energy Offices
1. Serve as the primary
1. Utility commission
1. Adopt Executive
1. Consider adopting
involvement in this area outreach and technical
Orders to require
legislation to require
will be limited except to resource to state
reductions in energy use state facilities to reduce
agencies that are tasked
the extent that
in state government
energy consumption or
with reducing their
facilities.
meet enhanced building commissions may
energy consumption.
approve rates and rates
2. Fund the Lead by
efficiency standards,
2. Often serve as the
structures that allow
Example program so
such as LEED or Green
state entity in charge of
regulated utilities to
that state facility
Globes.
monitoring progress
offer financial
managers have access to 2. Consider legislation
towards meeting goals
incentives to state
capital (perhaps through that would provide a
set out in statute or
agencies that reduce
a loan or other financing financing mechanism
executive order.
energy consumption.
program). Include
like performance
3. May serve as the
funding to operate the
contracting to help state
central source for
lead by example
agencies make energy
information about
program that supports
efficiency
financing mechanisms
outreach to state
improvements.
for energy efficiency in
agencies, technical
state facilities.
support and monitoring
of steps towards meeting
goals.

Eight Approaches to Enable Greater Energy Efficiency:

A Guide for State Government Officials

11

5. Consider adopting Energy Efficiency Resource

Standards
What are energy efficiency resource standards?
An Energy Efficiency Resource Standard (EERS) requires that energy providers in a state
meet a quantified energy efficiency goal. This goal can be applied to electricity
consumption, natural gas consumption or both fuels. States can express the goal as a
percentage reduction in total energy or peak energy usage or they can express it in terms
of a reduction in growth of energy usage. They usually develop this goal after an
assessment of the magnitude of their energy savings potential (see Approach 1 in this
guide). In 2008, for instance, Michigan adopted an Energy Efficiency Resource Standard
mandating savings of 0.75% of prior year electricity sales and 0.5% of prior year natural
gas sales by the year 2011, and becoming increasingly more stringent over time.15
An EERS is really a policy that aims to stimulate a series of programs and efforts to reach
the efficiency goalutility financing programs, rebates and grants, technical assistance
or other similar programs. States typically impose EERS on investor owned, regulated
utilities. Some states adopt an EERS as part of a renewable portfolio standardso that
utilities have the option to meet their portfolio obligation through either energy efficiency
or by building or buying renewable energy.
States can design an efficiency resource standard that allows utilities to comply by using
a market based system of white tags. In this system, one white tag would be equal to
one MWh of energy savings and the utility would be required to hold enough white tags
to demonstrate that it has met its total energy savings goal, denominated in MWh. The
utility could either generate its own verified energy savings to produce white tags or it
could buy them from homes, businesses or others that had produced verified energy
savings. Currently, only Connecticut has a working market based system for energy
efficiency white tags.
Eighteen states have an EERS in place and five states have the policy pending.16 The
EERS is a relatively new policy in most cases, with little demonstrated experience few
EERS policies were in place prior to 2006. Texas was the first state to adopt an EERS, in
1999, followed by Vermont in 2000.

15
Energy Efficiency Resource Standards. October 24, 2008. Pew Center on Global Climate Change. April 15, 2009.
http://www.pewclimate.org/what_s_being_done/in_the_states/efficiency_resource.cfm
16
Nadel, Steve. Energy Efficiency Resource Standards. February 2009. American Council for an Energy Efficient
Economy. April 15, 2009. http://www.narucmeetings.org/Presentations/EERS%20NARUC%202-09.pdf. Please note
that the Federal Energy Regulatory Commission (www.ferc.gov/market-oversight/mkt-electric/overview/elec-ovreeps.pdf) and the Pew Center on Global Climate Change
(http://www.pewclimate.org/what_s_being_done/in_the_states/efficiency_resource.cfm) have slightly different
reporting methods.

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Table 3: Sample of State Energy Efficiency Resource Standards17

State
EERS Description
Utilities must procure a minimum 1% of electricity
Connecticut

Illinois
Minnesota
New Mexico
Texas

sales from Class III resources in 2007, 2% in 2008,

3% in 2009 and 4% in 2010. Class III resources
include both efficiency and distributed generation.
Utilities must meet annual savings goals of 0.2% of
energy delivered in 2008, 0.4% in 2009, rising to
2% annually for 2015 and subsequent years.
Legislation requires 1.5% annual energy savings
from electric and natural gas sales starting in 2010,
1% of which must come from energy efficiency.
Utilities must achieve savings of 5% of 2005
electricity sales by 2014 and 10% by 2020.
Initial EERS requirement of 10% of load growth,
subsequently boosted to 20% of load growth by
2009. Further studies will determine feasibility of a
30% and 50% standard by 2011 and 2016
respectively.

An EERS sets a clear policy statement and quantified goal for utilities to follow and for
utility commissions to enforce. Rather than mandating specific programs, it is intended
to allow utilities flexibility to pursue a variety of programs.
The success of an efficiency resource standard depends on two factors:
1. Programs within the resource standard framework: An energy efficiency resource
standard depends on the success of other policies and regulations that may
encourage or discourage utilities from making investments in energy efficiency.
2. Measurement of the goals: An Energy Efficiency Resource Standard can be
measured by summing up the results of all energy efficiency programs to see if
they meet the goal, or by comparing energy consumption between years in order
to see if the utilities have met their reduction. The former approach is more
difficult to measure but is also independent of other factors such as reductions in
energy use that could result from an economic slowdown or unusually cool
weather.

17

State Energy Efficiency Resource Standard (EERS) Activity. May 2008. American Council for an Energy Efficient
Economy. April 15, 2009. http://aceee.org/energy/state/policies/EERS_Summary_5-7-08.pdf
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How each branch of state government can be influential in state adoption of EERS
Governors
Legislators
Utility Commissions
State Energy Offices
1. State energy offices
1.
Pursuant
to
state
law,
1. Propose and support
1. Consider laws
may have a limited role
adopt rules to enforce
adoption of an energy
creating an energy
in actual implementation
the efficiency resource
efficiency resource
efficiency resource
of adoption of the
standard.
standard.
standard.
standard.
2. Consider
2. Consider
2. State energy offices
complementary policies complementary
may lead or participate
such as those that would regulatory practices to
in energy efficiency
develop ratemaking
enable utility regulators
practices that encourage potential studies that
to adopt rate
help determine the
(or do not discourage)
mechanisms that
energy efficiency
utility investments in
encourage utilities to
resource standard goals.
energy efficiency.
invest in energy
efficiency.

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6. Develop Rate Structures That Encourage Energy

Efficiency
Traditional utility regulations often reward utilities for increasing their sales (or
throughput) of electricity and natural gas. Energy efficiency efforts often run counter
to this conventional rate structure and have the effect of reducing electricity and gas
sales, thereby reducing a utilitys revenue stream and profit. Under this conventional
model of utility regulation, not only is there no incentive for utilities to pursue energy
efficiency, there is a strong disincentive for them to pursue efficiency programs.
There are a number of approaches that a State can take to remove this disincentive and/or
actually incentivize energy efficiency. State efforts to reform their regulations in this
area can come in three general categories:

Ensure cost recovery for energy efficiency investments. Regulated utilities

will be more likely to invest in efficiency if they have confidence that state
regulators will allow them to recover their costs for those investments.

Prevent lost sales as a result of energy efficiency from hurting providers.

Mechanisms to address lost margins can help keep utilities revenues stable and
remove the disadvantages of reducing sales.

Provide performance incentives for energy efficiency results. Rather than

simply removing the disadvantages of energy efficiency investments and
addressing concerns about cost recovery, some states have gone further and given
utilities financial incentives to invest in energy efficiency.
Table 418 illustrates several state approaches to developing rate structures that allow for
cost recovery, provide incentive recovery mechanisms or address the throughput
incentive.
Table 4: Examples of State Approaches to Regulatory Incentives for Energy
Efficiency
State
California

Connecticut

Massachusetts

Incentive Description
Decoupled utilities revenues from utilities profits.
To do so, the utilities collect revenues based on
revenue forecasts rather than actual sales. The
utility commission periodically resets the utilities
rates based in part on the difference between actual
and forecasted revenues.
Utilities can earn performance management fees if
they meet between 70% and 130% of their
predetermined goals tied to lifetime energy savings,
demand savings, among other metrics.
Allows utilities to recover revenues lost as a result
of energy efficiency investments for all gas
efficiency programs. Utilities track lost revenues

18
Chapter 2: Utility Ratemaking & Revenue Requirements. July 2006. National Action Plan for Energy Efficiency.
April 15, 2009. http://www.epa.gov/cleanenergy/documents/napee/napee_chap2.pdf. A complete state-by-state list is
available on the website of the Institute for Electrical Efficiency, http://www.electric-efficiency.com/

Eight Approaches to Enable Greater Energy Efficiency:

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New York

Nevada

Washington

and then must recover those revenues, through rates,

within three years.
Distribution utilities collect a higher proportion of
their revenues as a result of fixed rates rather than
through variable rates subject to increase or
decrease as electricity sales fluctuate. This reduces
their incentive to increase their electricity sales.
Allows a bonus rate of return for energy efficiency
investments. This bonus rate of return is 5% higher
than the standard rate of return.
Tariffs include a rider that allows for adjustment of
rates to recover energy efficiency costs that may
exceed any amounts included in rates.

Regulatory incentives for energy efficiency can not only remove disincentives for utilities
to invest in energy efficiency (by addressing cost recovery issues and by addressing the
throughput incentive) but may also be structured to provide an impetus for investment in
energy efficiency. This fundamental shift in the utility incentive structure could give
utilities the financial incentive to support requirements for energy efficiency.
State officials face several challenges and considerations in developing these policies:
Clear signals need to be sent to give efficiency providers confidence that they will
be rewarded for their investments.
Addressing the throughput incentive (wherein electric utilities have an incentive
to sell more electricity, rather than implement efficiency programs that may
diminish those sales) is complicated. Some proposals to reform rate structures to
address the throughput incentive may have unintended consequences that lead to
increased energy use; other approaches may need to be designed to eliminate
shifting risk between customer classes and between the utility and consumers.
The design of performance based incentives should ensure that utilities are not
over-compensated for investments in energy efficiency that they should, perhaps,
be making for other economic or legal reasons. Incentives are typically structured
to give utilities a reward for exceeding mandates.
How each branch of state government can aid in developing rate structures to encourage EE
Governors
Legislators
Utility Commissions
State Energy Offices
1. Propose and support
1. Consider the need to
1. Consider rate
1. Serve as the standard
adoption of rate
provide legislative
designs, through rate
setting, education,
structures that
authorization to state
cases or investigative
compliance and
accommodate energy
utility commissions to
proceedings, to
enforcement arm for
efficiency.
approve rate designs that accommodate or
appliance standards.
accommodate energy
promote energy
efficiency.
efficiency.

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7. Monitor and Verify Efficiency Programs

Evaluation, Measurement & Verification or EM&V is the ongoing process by which
energy efficiency (EE) programs and projects are assessed to determine their merits. One
of the primary barriers for widespread acceptance of energy efficiency by utilities and
regulators is maintaining proof that it can be a reliable source of energy savings. This
reliability can be proven through consistent and accurate EM&V, which can extend the
life of successful programs while reevaluating and improving programs in need of work.
EM&V is traditionally used by regulators and utilities to provide real measurements for
energy efficiency projects such as reductions in energy and demand usage measured in
kW, kWh, and therms and therms per hour and gallons.19 Impact Evaluations are
commonly used when determining directly achieved program benefits such as kWh or
therms saved or avoided emissions. Indirect measurement of the energy efficiency
program compares energy use before and after the implementation of a new program.20
Through the determination and documentation of results, successes, and challenges,
evaluation provides accountability for ongoing or completed programs and allows for
improvements. Determining the effects of an EE program will disclose its reliability as an
energy resource; it will also identify key improvement areas for application to current and
future programs.21 Measurement and Verification (M&V) assess the merits of individual
projects through the data collection, monitoring and analysis used to determine gross
energy and demand savings.22 Measurements determine the value of an energy efficiency
resource, while verification confirms the value is achieved.23 States adopt their own
EM&V programs, as do Independent System Operators (ISO) and Regional Transmission
Organizations (RTO). Proven energy efficiency resources are necessary when using
energy efficiency in forward capacity markets and system planning performed by ISOs
and RTOs, attaching strong value to EM&V.

19
National Action Plan for Energy Efficiency (2007). Model Energy Efficiency Program Impact Evaluation Guide.
Prepared by Steven R. Schiller, Schiller Consulting, Inc. <www.epa.gov/eeactionplan>
20
National Action Plan for Energy Efficiency (2008). Overview of EE Program Impact Evaluation Guide. \
21
National Action Plan for Energy Efficiency (2007). Model Energy Efficiency Program Impact Evaluation Guide.
Prepared by Steven R. Schiller, Schiller Consulting, Inc. <www.epa.gov/eeactionplan>
22
Ibid.
23
PJM Interconnection (2009). Energy Efficiency Measurement & Verification. Prepared by PJM Forward Markets
Operations. <http://www.pjm.com/documents/~/media/documents/manuals/m18b.ashx>

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Table 5: Sample EM&V programs

State
California24

Delaware25

New York26

EM&V Program Description

The California Public Utilities Commission is responsible for managing and contracting
all EM&V studies, which are used to measure and verify energy and peak load savings,
populate data for cost-effectiveness inputs, evaluate the merits and achievements of
energy efficiency programs, and determine if goals are met within the program. The
CPUC awarded EM&V contracts for 13 energy efficiency program areas in August 2007,
including emerging technologies, agricultural, and residential retrofit. The Energy
Division staff at CPUC approves program evaluations, performed by evaluation
contractors. All evaluations are required to report annual electric and gas savings in a
standardized format Impact Report Table. The CPUC receives input from ad hoc
technical committees throughout a programs lifetime.
The Sustainable Energy Utility in Delaware has an Energy Efficiency Administrator who
manages portfolio level EM&V plans, as well as individual EM&V programs. The
Administrator is responsible for selecting evaluation firms consistent with protocols and
overseeing the verification of program goals, load impacts, and cost-benefits.
Managed by NYSERDA, EM&V programs are planned based on an 8-page template. An
engineering director assigned to each project, along with NYSERDAs impact evaluation
manager, reviews the M&V plans. New York includes macroeconomic co-benefits in
their evaluations, which tends to increase the value of saved energy and validate increased
investment in energy efficiency. The Department of Public Service serves with others on
NYSERDA review panels to select evaluation contractors and assists in budget allocation,
evaluation activities, and timelines.

Electricity deployment in some states follows a plan established by the utilities years in
advance that seeks to identify in advance the most cost-effective resource for meeting
predicted demand for electricity. The primary barrier to entry for energy efficiency
projects within that utility planning is proving that the investment in energy efficiency is
more valuable than building another power plant. This barrier can be overcome through
well-managed EM&V programs that are designed to document and prove energy savings
and avoided emissions. EM&V can enable improvement for energy efficiency programs,
as well as accountability for the use of resources. EM&V can be applied to numerous
stakeholder group programs, including utility-operated energy efficiency programs,
government-led, ISO forward capacity markets, greenhouse gas mitigation programs,
private company-led, and energy service company-led.27
Projections for energy savings can be difficult to ascertain. Energy savings can only be
determined indirectly by measuring before and after energy usage within energy
efficiency programs. This presents a challenge of quantifying data that could never be
24

California Public Utilities Commission (2009). Energy Efficiency 2006-2007 Verification Report. Prepared by
Energy Division. < http://www.cpuc.ca.gov/NR/rdonlyres/D0943818-BF3E-4E17-839AB2802C16217A/0/EE_Verification_Report_Final_020509.pdf>
25
Sustainable Energy Utility (2009). <http://www.seu-de.org/>
26
New York Department of Public Service (2008). Energy Savings from Energy Efficiency Programs. Prepared by
New York Evaluation Advisory Contractor Team: Nick Hall, Pete Jacobs, Paul Horowitz, Rick Ridge, Gil Peach, and
Ralph Prahl.
<http://www3.dps.state.ny.us/PSCWeb/PIOWeb.nsf/20b9016ae2129d5c852573db00779ee1/a4756ca0f43b7628852574
b9006ffe45/$FILE/NY_Standard_Approach_for_Estimating_Energy_Savings_12-08.pdf>
27
National Action Plan for Energy Efficiency (2007). Model Energy Efficiency Program Impact Evaluation Guide.
Prepared by Steven R. Schiller, Schiller Consulting, Inc. <www.epa.gov/eeactionplan>
Eight Approaches to Enable Greater Energy Efficiency:
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proved - the amount of energy that would have been consumed without energy efficiency
project cannot be quantified. 28 Inevitably, in a program that requires input from many
stakeholders, EM&V may face challenges with timely and accurate submission of
information for measurement and verification, as well as cooperation from the complex
web of all involved parties. Additionally, when designing an EM&V program in a state or
region, designating who will manage and operate the program could face jurisdictional
issues, particularly as national EM&V standards are being considered currently in the
U.S. Senate.
When developing an EM&V program, there is ongoing debate about separating
consideration of financial incentives for efficiency from EM&V progress and
recommendations. California is one state currently debating this issue, with some
claiming that there is a flaw in the administration of their EM&V program and arguing it
cannot serve as a tool to simultaneously determine awards or penalties while producing
accurate energy savings estimates without stakeholder dispute.
How each branch of state government can encourage EM&V
Governors
Legislators
Utility Commissions
State Energy Offices
1. Propose and support
1. Consider the need to
2. PUCs can
1. Some SEOs serve as
adoption of EM&V
provide legislative
administer or monitor
the central database
for energy efficiency
authorization for
these programs if
point for all EM&V
state programs.
EM&V programs or
there is not a state
data, while others are
2. Draft RFPs for
to authorize state
entity to do so.
involved as reviewers
EM&V for state
utility commissions
of EM&V proposals,
programs.
to administer
cost estimates, and
EM&V programs.
final review of
EM&V studies.

28

California Public Utilities Commission (2009). Proposed Energy Efficiency Risk-Reward Incentive Mechanism and
EM&V Activities. Prepared by The Energy Division. <http://docs.cpuc.ca.gov/efile/RULINGS/99882.pdf>

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8. Explore Innovative Approaches to Encourage Energy

Efficiency
The first seven items in this Guide described programs that are seeing widespread use
across the country. The final approach suggests additional, innovative energy efficiency
program designs that states might consider. This section is structured to simply present
these options, and will more succinctly, but less explicitly, address questions of the
benefits and challenges of these program options than previous sections. This section
briefly explores:

One-bill programs

Tariff-based efficiency financing

Property tax-based efficiency financing

Promoting energy efficiency workforce development.

Sales tax reductions on energy efficient equipment

Reduced property taxes for energy efficiency upgrades

These program designs and financing structures are explored in more detail below.

One-bill programs
While numerous states offer energy efficiency loan programs, a few such as Connecticut,
Massachusetts and California, now offer energy efficiency financing through the utility
bill. Such programs typically offer a subsidized interest rate that might be combined with
an energy efficiency rebate to put customers in an immediate cash-positive position
meaning that the energy savings derived from installing an energy efficiency measure
exceeds the principal and interest charges for financing that energy efficiency investment.
Utilities administer one-bill programs so that customers pay only one bill for their energy
and efficiency financing costs. The fact that utilities must administer such programs is an
advantage to customer/borrower because it streamlines the borrowing and bill payment
process. Since customers tend to pay their utility bill, one-bill financing programs also
tend to have low default rates. On the other hand, utilities often hesitate to take on the
administration and risk of a loan program for fear that administering such programs may
be beyond their typical expertise, the added liability of a customer defaulting on the loan,
and because many utility billing systems are not set up to handle an energy loan program.

Tariff-based Efficiency Financing

Utilities in a few states such as New Hampshire, Kansas and Hawaii have begun to offer
financing for energy efficiency through tariff based programs. Tariff based programs
require a utility commission to authorize a chargeoften called an Energy Service
Chargethat customers may voluntarily assume in order to pay for certain qualified
efficiency measures on their premises. For example, a municipal customer might install
highly efficient streetlights, or a small business might install a new, efficient lighting
Eight Approaches to Enable Greater Energy Efficiency:
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system. Instead of paying the utility back through loan payments, the customer pays the
utility back through the Energy Service Charge. This tariff-based charge is tied to the
electric metermeaning that if the customer moves, the new occupant takes up the
obligation, just as that occupant would assume the obligation to pay the electric bill on
the premises. Tariff based programs also typically provide for an immediate cashpositive position for the customer.
The best known of the tariff-based systems is known as Pay-As-You-Save (PAYS) and
has been piloted in New Hampshire and Hawaii.29 However, numerous variations on the
program exist. The idea of the PAYS program may appear similar to a one bill
program, but is distinct in several ways. The key distinction is the fact that payments are
tied to the meter. This has the effect of offering extended payment terms that allow for
multiple measures to qualify for the program. The disadvantage of such programs is that
utilities may have some of the same concerns about these that they have about one-bill
programs; they may see drawbacks in a program that puts them in a position of loan
program and portfolio administrator (e.g., they face the risk of businesses shutting down
before making all payments, and the risk of homeowners moving before the loan period
has ended).

Property tax-based financing

Property tax-based financing programs take advantage of the local governments taxing
authority to create a mechanism to finance energy efficiency. A local government
establishes and operates a loan program to finance its residents investments in energy
efficiency and renewable energy. Residents install the efficiency or renewable energy
measures in their home using capital provided by the loan program, and then pay back the
loans on their property tax bill. Residents agree to place a lien on their home when they
sign up to participate in the loan program, thereby ensuring that the loans are secured.
Such a financing mechanism has the advantage of creating a secure revenue stream for
the lenders as payments attached to property taxes are among the most secure revenue
streams available. Like tariff-based systems, the property tax-based loan programs also
allow for a long term loan since the obligation to pay the property tax transfers to the new
homeowner in the case of a sale. In many cases the local government can also take
advantage of federal tax free bonds, Private Activity Bonds, to capitalize the loan
program.
While this financing mechanism may not be as ubiquitous as others, one pilot program is
operating in Berkeley, California, and other local governments in the state are
considering similar programs.30 In 2008, legislation passed in Colorado to enable local
governments to operate similar programs.31 Time will tell if the administrative burdens

29

PAYS America. April 16, 2009. http://www.paysamerica.org/.

Berkeley FIRST. April 16, 2009. http://www.berkeleyfirst.renewfund.com/.
31
Clean Energy Municipal Financing. April 2, 2009. Electric Utility Consultants, Inc. April 16, 2009.
http://blog.euci.com/?p=52.
30

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placed on local governments to operate the loan program prove too onerous, or if this
mechanism can be successful around the country.

Promote Energy Efficiency Workforce Development

As States and utilities increasingly recognize the benefits of energy efficiency as a
resource, a trained and highly-skilled workforce will be required to manage and
implement efficiency deployments. Many states already have workforce training
programs up and running, and many others are in the development phase. State
governments have dedicated billions to clean energy workforce programs in hopes of
growing a robust industry in their state that will transfer wealth to its citizens.
Training programs are sprouting up around the country. Private workforce training
programs offer intensive training courses, lasting a few days to weeks. One such
program, Boots on the Roof, offers installation, sales, and law classes for PV and wind
turbine technologies.32 Some community colleges also offer training programs, such as
Mesalands Community College in New Mexico, where wind power technicians are being
trained for virtually guaranteed employment at General Electric. Because skilled trades
people in wind are in high demand, wind turbine manufacturer GE has promised to hire
every graduating technician from Mesalands for the next three years.33 Many other states
are involved in similar training programs aimed to increase the clean energy workforce
for shovel-ready projects and a future green economy.
Table 6: Examples of State approaches to workforce development
State
Michigan34
North Carolina35

Virginia
Iowa

Workforce Development Initiatives

Department of Labor and Economic Growth invested $6 million for green jobs,
part of which is dedicated to workforce training to spur a green economy in
Michigan.
The North Carolina Green Business Fund (NCGBF), established in 2007,
awards competitive grants to N.C. organizations with innovative projects focused
on three priority areas, including biofuels, green buildings, and private sector
investment in clean technology and business. In 2008, $1.3 million was
distributed to grant applicants.
The Virginia Sustainable Building Network carries out multiple training classes
throughout the year for workforce development in energy efficient buildings.
Legislation was passed to appropriate $2.5 million from $100m dedicated from
2008-2011 to the workforce training and economic development funds of
community colleges to expand targeted energy industry areas.

32

http://www.bootsontheroof.com/
Dickerson, Maria. Los Angeles Times. In Blue Economy, Green Jobs are in Play. 3 January 2009.
http://www.dallasnews.com/sharedcontent/dws/bus/stories/010409dnnatgreenjobs.2124064.html
34
http://www.naruc.org/Publications/Energy%20Efficiency%20Training%20-%20NARUC%20Survey%20Results.pdf
35
North Carolina Green Business Fund. http://www.ncscienceandtechnology.com/gbf/index.htm
33

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How each branch of state government can encourage innovative approaches to EE

Governors
Legislators
Utility Commissions
State Energy Offices
1. Develop and take
1. Propose and support
1. Encourage
1. Consider the need to
advantage of emerging
adoption of programs at provide legislation
exploration of
financing mechanisms.
State agencies and
innovative billing and
authorization for
2. Leverage connections
community colleges and property-tax based
financing through
with workforce and
higher educational
notices of inquiry and
efficiency programs
economic development
institutions to offer
dockets exploring
2. Provide sustained
programs to ensure a
learning opportunities in funding support to
efficiency.
trained workforce for
workforce development. workforce development
2. Support tariff and
implementation exists.
one-bill financing
and job-creation
programs relating to the programs proposed by
utilities.
efficiency sector.

Conclusion
Many see energy efficiency as a cost-effective strategy for meeting growing energy
demands, reducing strains on the energy grids, increasing energy independence, and
reducing greenhouse gas emissions. State policy-makers and energy officials have a
number of tools available to promote energy efficiency. The approaches presented above
are presented as a menu of options, by no means exclusive, and states can select the
policies and programs that are best suited to the individual needs and goals of the state. It
may be important that each individual state agency understands the role they play in
implementing each energy efficiency approach and work in concert with the other entities
responsible for implementation.

Eight Approaches to Enable Greater Energy Efficiency:

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Bibliography and Additional Resources

American Society of Heating, Refrigerating, and Air Conditioning Engineers. 2009. April 15, 2009.
http://www.ashrae.org/.
Berkeley FIRST. April 16, 2009. http://www.berkeleyfirst.renewfund.com/.
Boots on the Roof: Training for the Renewable Energy Industry.
http://www.bootsontheroof.com/.
California Public Utilities Commission (2009). Energy Efficiency 2006-2007 Verification Report. Prepared
by Energy Division. http://www.cpuc.ca.gov/NR/rdonlyres/D0943818-BF3E-4E17-839AB2802C16217A/0/EE_Verification_Report_Final_020509.pdf.
California Public Utilities Commission (2009). Proposed Energy Efficiency Risk-Reward Incentive
Mechanism and EM&V Activities. Prepared by The Energy Division.
http://docs.cpuc.ca.gov/efile/RULINGS/99882.pdf.
Clean Energy Municipal Financing. April 2, 2009. Electric Utility Consultants, Inc. April 16, 2009.
http://blog.euci.com/?p=52.
Dickerson, Maria. Los Angeles Times. In Blue Economy, Green Jobs are in Play. 3 January 2009.
http://www.dallasnews.com/sharedcontent/dws/bus/stories/010409dnnatgreenjobs.2124064.html.
Energy Efficiency Resource Standards. October 24, 2008. Pew Center on Global Climate Change. April
15, 2009. http://www.pewclimate.org/what_s_being_done/in_the_states/efficiency_resource.cfm.
Financial Incentives for Energy Efficiency. Database of State Incentives for Renewables & Efficiency.
April 15, 2009. http://dsireusa.org/summarytables/FinEE.cfm?&CurrentPageID=7&EE=1&RE=1.
Important Challenges Must Be Overcome to Realize Significant Opportunities for Energy Efficiency
Improvements in Gulf Coast Reconstruction. GAO-07-654. June 2007. United States Government
Accountability Office. April 15, 2009. http://www.gao.gov/new.items/d07654.pdf.
International Code Council. April 15, 2009. http://www.iccsafe.org/news/nr/2009/0128_2009IECC.html.
Nadel, Steve. Energy Efficiency Resource Standards. February 2009. American Council for an Energy
Efficient Economy. April 15, 2009. http://www.narucmeetings.org/Presentations/EERS%20NARUC%20209.pdf.
The National Council on Electricity Policy, State Policies for Financing Electricity Resources, Volume II.
http://www.ncouncil.org/Documents/FINAL.EE.Financing.pdf.
The National Council on Electricity Policy, State and Regional Policies That Promote Energy Efficiency
Programs Carried out by Electric and Gas Utilities (also referred to as Section 139).
http://www.ncouncil.org/Documents/139_Rpt.pdf.
National Action Plan for Energy Efficiency. Building Codes for Energy Efficiency. July 17, 2008. U.S.
Environmental Protection Agency. http://www.epa.gov/RDEE/documents/buildingcodesfactsheet.pdf.
National Action Plan for Energy Efficiency. Chapter 2: Utility Ratemaking & Revenue Requirements.
July 2006. April 15, 2009. http://www.epa.gov/cleanenergy/documents/napee/napee_chap2.pdf. A
complete state-by-state list is available on the website of the Institute for Electrical Efficiency,
http://www.electric-efficiency.com/.

Eight Approaches to Enable Greater Energy Efficiency:

A Guide for State Government Officials

24

National Action Plan for Energy Efficiency (2007). Model Energy Efficiency Program Impact Evaluation
Guide. Prepared by Steven R. Schiller, Schiller Consulting, Inc. www.epa.gov/eeactionplan.
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Eight Approaches to Enable Greater Energy Efficiency:

A Guide for State Government Officials

25

For copies of this publication, please contact Miles Keogh (mkeogh@naruc.org)

or Julie Rowlett (jrowlett@naruc.org).
Visit the National Council on Electricity Policy at www.ncouncil.org.