EPA’s Clean Power Plan: 

States’ Tools for Reducing Costs and 

Increasing Benefits to Consumers

 

 

Analysis Group 

Paul Hibbard 

Andrea Okie 

Susan Tierney

July 2014 
Acknowledgments 

This report evaluates the Clean Power Plan – proposed by the U.S. Environmental Protection Agency on 

June 2, 2014 – from the perspective of how it might impact consumers. The report examines how states’ 

plans to control carbon emissions may affect owners of affected power plants, other market participants in 

the electric industry, and, in turn, consumers of electricity. The paper examines one particular carboncontrol program – the Northeast states’ Regional Greenhouse Gas Initiative – that has been in operation 

for several years, to illustrate how such carbon-control compliance costs and benefits have evolved over 

the initial years of that program. The paper also reviews the normal ratemaking practices and other 

regulatory policies in states across the country that are designed to mitigate rate impacts of investments 

and program costs affecting production and delivery of power to consumers. The goal of the Report is to 

reflect on recent experience to outline the tools states have to control costs and increase consumer benefits 

as they develop their plans. 

This is an independent report by Analysis Group, supported by funding from the Energy Foundation and 

the Merck Family Fund. The authors wish to thank the foundations for their interest in electricity 

consumer issues and for their support of the analysis presented in this report. In addition, the authors 

thank Laurie Burt, of Laurie Burt LLC for effective and efficient project coordination, and Caroline 

Corbett, Lucy Wagner, and Anne Williams of Analysis Group for research assistance throughout the 

project. 

The report, however, reflects the analysis and judgment of the authors only, and does not necessarily 

reflect the views of the Energy Foundation, the Merck Family Fund, or Laurie Burt LLC. 

 

About Analysis Group 

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commissions and other public agencies; tribal governments; power system operators; foundations; 

financial institutions; and start-up companies, among others. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

 

Table of Contents 

1. Executive Summary 1

2. EPA’s Proposed Clean Power Plan 8

3. Connecting the Dots: EPA’s Proposal and Potential Economic Impacts on Electricity 

Consumers 10

4. Program Design Considerations: Review of the Regional Greenhouse Gas Initiative 17

Overview 17

RGGI Background and Overview 17

Analysis of RGGI’s Economic Impacts 19

RGGI helped the Northeast states lower total fossil-fired power production and lower use of natural 

gas and oil for heating, thereby reducing the total dollars sent out of state for energy resources. 22

RGGI Program Developments Since the 2011 AG RGGI Report 22

Implications for Clean Power Plan Compliance 25

5. Fairness And Protection of Consumers 28

Overview 28

Electric Ratemaking to Allocate Costs and Benefits “Fairly and Equitably” (with a focus on energy 

efficiency programs) 29

Protecting Lower-Income Consumers 34

State Tools to Manage Potential Program Cost Impacts 35

6. Conclusion 36
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 1 

1. EXECUTIVE SUMMARY 

On June 2, 2014, the United States Environmental Protection Agency (EPA) released proposed rules 

to reduce emissions of carbon dioxide (CO2) from existing fossil power plants. EPA’s “Clean Power 

Plan” would require significant reductions in CO2 emissions from the power sector, while also 

providing each state the flexibility to determine its preferred way to comply with the new 

requirements. 

EPA’s analysis indicates that although there will be costs to comply with the Clean Power Plan, such 

costs will be much lower than the benefits to public health and to the overall economy from lower 

CO2 and other air emissions.1

 

Some observers2

 have contended that consumers will experience net costs because, in those 

observers’ view, overall compliance costs will outweigh economic and other benefits. EPA’s analysis 

indicates that customers will see slightly higher electricity rates in the near term but lower electricity 

bills over the long run with the Clean Power Plan in place. 

Based on our own analysis and experience, we believe that the impacts on electricity rates from welldesigned CO2-pollution control programs will be modest in the near term, and can be accompanied by 

long-term benefits in the form of lower electricity bills and positive economic value to state and 

regional economies. 

There are sound reasons to be confident that customers can and will benefit from states’ plans to 

lower the carbon intensity of their electric systems. First, and foremost, states have a long track 

record of using various regulatory and other policy tools to encourage utility programs and 

investments that minimize the cost of electric service, consistent with the myriad of public policies 

(tax, environmental, reliability, labor, and other areas of policy) that affect the provision of electricity. 

State officials (including utility regulators) are keenly focused on protecting electricity customers and 

will keep that objective front and center as they determine how to reduce CO2 emissions. 

Second, under the proposed Clean Power Plan, states will have the flexibility, experience and tools to 

prepare and implement State Plans that fit their circumstances, minimize costs of compliance, and 

provide benefits to customers. States can each put together the elements of plans well-suited to their 

state, and they’ll have the ability to phase in changes over the 2020-2029 period in ways that 

accommodate smooth transitions. Although states differ in many ways – including their electric 

systems, their regulatory culture, and their electric industry structure – all states have programs, 

 

1

 EPA has estimated that by 2020, compliance costs for the Clean Power Plan will fall in a range of $4.3 billion to $7.5 billion (2011$). For 

context, total expenditures on electricity in 2012 were $363.7 billion (2012$). (Source: Energy Information Administration (EIA) 861 

database on electric revenues.) EPA’s cost analysis tracks “the net change in the annualized cost of capital investment in new generating 

sources and heat rate improvements at coal steam facilities, the change in the ongoing costs of operating pollution controls, shifts between 

or amongst various fuels, demand-side energy efficiency measures, and other actions associated with compliance.” EPA’s analysis of 

benefits examines the effect of lower demand leading to lower costs to consumers, along with the expected economic, health, safety and 

environmental benefits of the rule. See EPA, Regulatory Impact Analysis for the Proposed Carbon Pollution Guidelines for Existing Power 

Plants and Emission Standards for Modified and Reconstructed Power Plants (hereafter referred to as EPA RIA), June 2014, page ES-8, 

Table ES-10, and the Executive Summary more generally. 

2

 See, e.g., Institute for 21st Century Energy (U.S. Chamber of Commerce), “Assessing the Impact of Potential New Carbon Regulations in 

the United States,” May 2014. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 2 

policies and practices that will allow them to develop plans that align well with their different 

circumstances while still complying with the new CO2 emission requirements. For example: 

 States with vertically integrated utilities have mechanisms – including but not limited to 

integrated resource planning processes – for identifying least-cost compliance strategies. States 

have considerable experience and strong practical background in evaluating portfolios of supply 

and demand resources with costs and reliability in focus, and in encouraging long-term 

investments that minimize costs and maximize electricity consumer benefits. 

 States with restructured electric industries can choose from a variety of market-based mechanisms 

that dovetail well with competitive retail and wholesale electric industry structures. 

 Not surprisingly, in both areas, there will be continued opportunities in the future to use costeffective energy-efficiency programs as part of states’ CO2 compliance strategies to help deliver 

significant benefits to customers and to local economies. Many states and utilities have deep 

experience in using energy efficiency as part of a least-cost utility resource plan or in competitive 

market contexts. Practices for design, implementation, administration, and evaluation of energy 

efficiency programs are readily transferable to states and utilities with less background in such 

programs. As the value of customer-side programs rises in the context of CO2 compliance, states 

should expect to see more opportunities for cost-effective energy efficiency – and can use 

ratemaking tools to create incentives for utilities and others to pursue them. 

 Additionally, many states are already introducing changes into their local utility systems to 

accommodate opportunities for customers to take actions – such as adopting energy efficient 

technologies in their buildings and operations – that will give customers the opportunity to be part 

of the solution in lowering carbon pollution from electricity production and use. 

Third, market-based mechanisms offer unique opportunities to minimize costs while also reducing 

CO2 emissions from existing power plants. 

 States can implement such market-based programs within state boundaries. Moreover, states can 

work together – and with the stakeholders within each state – to develop and implement workable 

multi-state programs to control CO2 emissions from existing power plants, in ways that fully 

preserve the rights of states in program design and administration. The EPA has not required 

states to develop their plans together, but the Clean Power Plan anticipates that many states may 

find it worthwhile to do so, in light of the way that electric systems and electrical resources are 

commonly shared across state boundaries. 

 Such multi-state, market-based mechanisms to control CO2 emissions can respect the 

practicalities of reliable electric system operations, and can be seamlessly integrated into both 

traditionally regulated and competitive electric industry settings. 

 Pricing carbon – and this is likely true whether through a market-based mechanism or alternative 

compliance mechanisms – will help send efficient signals for new investment in resources (like 

zero-carbon technologies such as renewables and nuclear power plants, and in deeper energy 

efficiency measures) and for shifting power system operations toward power plants with lower 

carbon emissions. 

 Market-based mechanisms – like the Regional Greenhouse Gas Initiative (RGGI) or California’s 

cap-and-trade program – can provide opportunities for states to capture the economic value of 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 3 

CO2 emission allowances, and direct those revenues for consumer and public benefit. For 

example, in states with restructured electricity markets, states may choose to rely on methods to 

move CO2 emission allowances into the market that avoid windfalls to owners of power plants. 

For the RGGI states, this has been accomplished through auctioning of CO2 allowances. In other 

states (whether they have a traditional utility structure or a restructured market), another 

competitively neutral way to provide public/consumer benefits would be to allocate allowances 

for free to electric distribution utilities, who then can sell them to power generators and capture 

the revenues for consumers. 

 Based specifically on our 

detailed analysis of states’ 

experience with RGGI and 

the design of a wide array 

of programs that insulate 

lower-income consumers, 

we believe that the impacts 

on electricity rates and bills

from well-designed CO2-

pollution control programs 

will be modest in the near 

term, especially for lowincome customers. (See 

figure as example of the 

difference between rates 

and bills.3

) 

Fourth, states are well equipped 

through long-standing utility 

ratemaking principles, practices and programs to help protect low-income customers when 

electricity costs increase. Such tools include discounted rates and arrearage management plans, 

dedicated funding for low-income energy-efficiency and weatherization programs, utility-driven 

charitable contribution programs, one-time emergency assistance programs, LIHEAP funding for 

heating and utility bill assistance, and disconnect/shut-off protection policies. Among the many 

states we found to be offering targeted energy efficiency programs for low-income customers are 

Colorado, Florida, Georgia, Illinois, Maine, Maryland, Michigan, Missouri, Montana, North Carolina, 

Ohio, and Texas. 

In the end, the states are in control. State environmental, energy and utility-regulatory agencies will 

tailor compliance approaches to their individual circumstances, and in doing so will play a significant 

role in driving down and managing the costs of Clean Power Plan compliance through their plans. 

 

3

 The difference between electricity rates and electricity bills is an important one in the context of many potential compliance approaches. 

In our prior analysis of the RGGI program, we found that while RGGI program costs initially had an increasing effect on electricity rates, 

the impact of energy efficiency investments (using RGGI allowance revenues) significantly reduced commercial and residential electricity 

use, placing downward pressure on rates over time, and combined with lower consumption, tended to generate on average much lower 

electricity bills. See: Paul Hibbard, Susan Tierney, Andrea Okie, Pavel Darling, “The Economic Impacts of the Regional Greenhouse Gas 

Initiative on Ten Northeast and Mid-Atlantic States,” November 15, 2011 (hereafter referred to as the AG RGGI Report). 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4 

Those State Implementation Plans (or simply State Plans) will define the set of actions that will work 

together to reduce emissions from fossil power plants. The components of the State Plans will affect 

compliance costs and collateral benefits. And states’ regulatory and ratemaking policies can 

influence how compliance actions undertaken by owners of power plants and other actors translate 

into increases or decreases in electricity rates and bills to different types of consumers. We note that 

EPA’s Clean Power Plan is quite different from the more typical federal air regulations affecting 

emissions from fossil power plants. Normally, owners of such plants are responsible for determining 

how to comply with regulations through investments, changes in operations, or – in some cases – a 

decision to retire a plant. Here, the states themselves may end up taking the actions to reduce 

emissions (e.g., through energy efficiency programs or appliance-efficiency standards or continued 

pursuit of renewable resources, none of which are necessarily operated or paid for by owners of fossil 

power plants). If included in a State Plan, such elements would affect the operations and costs of 

some fossil power plants, but would do so indirectly rather than through an action specifically 

undertaken by an owner of a plant subject to the EPA’s rules. And in turn, such policies adopted by a 

state could affect overall compliance costs passed through to electricity consumers – as well as the 

character of the benefits they receive through state actions under the Clean Power Plan. 

Our report explains the practical mechanics of how compliance costs tend to be passed through to 

electricity consumers in competitive and traditional electricity systems. We also draw on recent 

experience among existing carbon-control programs already in operation in some states to illustrate 

how program design and state ratemaking policies can influence the distribution of cost and benefit 

outcomes to consumers. The bottom line, in our view, is that states have the means to help ensure 

that compliance costs are as low as possible – and to provide benefits to local economies. 

How should we think about compliance costs in this context? To start with, controlling and reducing 

CO2 will tend to increase the cost of doing business for many owners of affected plants, whether 

compliance is achieved through investments to increase a plant’s efficiency, or through controls on a 

plant’s operations that reduce its output (and associated revenues), and/or through the purchase of 

CO2 allowances in a cap-and-trade program. Changes in plant operations (e.g., lower output, lower 

revenues from power sales) could also result from other components of a State Plan, for example, if a 

state were to include energy efficiency programs or renewable energy requirements or measures to 

retain existing nuclear plants as part of the power supply. These latter actions could lower the amount 

of power produced overall at fossil-fuel power plants, and help to offset potential costs associated 

with lowering the emissions from fossil-fuel power plants. States may choose to pursue these latter 

options because they could substantially help to lower the overall costs of compliance with the Clean 

Power Plan. 

How could such compliance costs translate into impacts on consumers’ electricity bills? This is a bit 

more complicated. In many parts of the U.S., there is not a straight line connecting the costs incurred 

by the owners of the power plants directly affected by EPA’s Clean Power Plan, and the costs, 

benefits and state/regional economic impacts experienced by electricity consumers and other players 

in the electric industry. In fact, the relationship between power plant owners’ compliance costs and 

consumers’ prices will vary significantly, depending upon many factors (such as whether the local 

electric utility owns any power plants, or what things a state includes in its State Plan). For example: 

 Approximately two-thirds of the nation’s electricity customers live in regions where an 

independent grid operator runs a competitive power market. In these parts of the country – 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 5 

including California, Texas, much of the Midcontinent region, the MidAtlantic area, and the 

Northeast – electricity customers pay prices based on the costs of the power plant operating on 

the margin in any hour, and thus do not necessarily reflect every dollar of compliance costs 

incurred by owners of all power plants. This results from the way that electricity prices arise in 

these markets (which we explain later in our report). 

 Ten of the nation’s states (California and the nine member states that participate in the 

Northeast/MidAtlantic region’s RGGI program) already participate in a carbon cap-and-trade 

program, with compliance costs incurred by some – but not all – power producers already 

reflected in electricity prices. 

 Across the country as a whole, approximately two-thirds of power is produced by electric utility 

companies (investor-owned utility companies, municipally owned utilities and electric 

cooperatives).4

 In these contexts, state utility regulators and boards of public-power companies 

and cooperatives typically allow pass-through of costs and investments associated with 

environmental compliance activities. However, collection of these costs from customers usually 

requires least-cost planning processes and/or other cost-minimization steps as a condition of 

recovery, in order to maintain the incentives for efficient, operations and investment, and to keep 

overall compliance costs low. 

There clearly are a number of strategies that states can include in their State Plans to at least partially 

offset the impact of program costs on consumers. Experience demonstrates that some approaches can 

even generate net benefits to electricity customers and the larger state economy. An example of the 

latter is the RGGI states’ auction of CO2 allowances and use of the auction proceeds to support 

energy efficiency and customer bill credits; we have previously concluded in our detailed study of 

RGGI’s first three years that it provided net benefits to customers and the economy of each 

participating state, and we update that prior analysis here to encompass over five years of experience 

with a CO2 market-based trading program.5

 

There are other emission-credit trading approaches focused on consumer protection, cost mitigation 

or other objectives that could be adopted and implemented by states, such as the one proposed by the 

Clean Air Task Force (CATF). CATF’s proposed mechanism would allow states “to mitigate retail 

electric rate impacts and protect all classes of electric ratepayers (industrial, commercial and 

residential) in all power markets by allowing for compensation to ratepayers...[and] to use a portion 

of the allowance allocations to compensate merchant coal generators for losses in asset value that may 

occur due to the program.”6

 In both of these approaches – one an actual program (RGGI), the other 

an alternative design – states’ voluntary agreements to use a multi-state approach helps to keep 

 

4

 In more than half of the states, the local utility owns more than 70 percent of the power plant capacity. (Source: EIA 860 database for 

2012.) Typically, state utility regulators in states with utilities that own power plants determine whether large capital investments at those 

plants are prudent, used and useful, and appropriate to be included in “just and reasonable” rates charged to customers. In many such states, 

the regulators review utilities’ plans for capital investments at power plants are part of least-cost planning processes. 

5

 AG RGGI Report. 

6

 Conrad Schneider, “Power Switch: An Effective, Affordable Approach to Reducing Carbon Pollution from Existing Fossil-Fueled Power 

Plants,” Clean Air Task Force, February, 2014, with accompanying technical analysis by Bruce Phillips, “ Alternative Approaches for 

Regulating Greenhouse Gas Emissions from Existing Power Plants under the Clean Air Act: Practical Pathways to Meaningful Reductions,” 

The NorthBridge Group, February 2014 (together, hereafter referred to as CATF Proposal). 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 6 

compliance costs low and mitigate impacts on affected entities. EPA’s own benefit/cost analysis also 

supports this conclusion.7

Finally, creative approaches by states to address potential compliance costs, mitigate impacts on all 

consumers, and achieve various policy objectives will all be layered on top of a deep level of 

commitment and practice states have in managing electric industry costs. States have many decades 

of experience with electricity rate design, program benefit and cost allocation, and compliance 

program planning and implementation that will help guide an equitable distribution of program costs 

and benefits, while protecting lower-income customers. 

We hope that our report provides states with ideas for how they might apply their experience and 

expertise in preparing State Plans to lower overall compliance costs and provide economic benefits to 

consumers and to the local economy. We assume that as states begin to consider what to include in 

their plans (as many states have already begun), they will do so by convening stakeholder processes 

to identify and weigh options and by assuring that personnel from different relevant state agencies are 

involved in those discussions. (The experience of Illinois and several other Midwest states are a few 

great examples.) 

Although EPA’s Clean Power Plan anticipates that a state’s air regulatory agency will be the entity to 

present a state’s plan to the EPA, our experience in state government8

 informs us of the value of 

ensuring that all relevant state agencies (utility regulators, state energy offices, climate policy 

advisors, consumer protection branches, in addition to state environmental regulators) participate 

fully in the development of State Plans. Given the differences that exist among states in terms of the 

scope and depth of agency authorities, skills, and expertise, and given the fact that EPA’s Clean 

Power Plan will lead to policies that directly and indirectly affect operations of the electric system 

and consumer prices, bringing more and different points of view to the task will likely improve the 

quality, costs and benefits of State 

Plans. State utility regulators, for 

example, will have a critical role in 

assuring that implementation of the 

EPA requirements occurs in a leastcost fashion and in assuring a fair 

allocation of costs and benefits of 

such actions. State energy offices 

often also have responsibility for 

many aspects of electricity use in 

appliances and buildings, and in 

managing renewable programs. 

 

7

 “The proposed emission guidelines provide states with options for establishing standards of performance in a manner that accommodates a 

diverse range of state approaches. The proposed guidelines would also allow states to collaborate and to demonstrate emission performance 

on a multi-state basis, in recognition of the fact that electricity is transmitted across state lines, and local measures often impact regional 

EGU CO2 emissions.” EPA RIA, page ES-2, Table ES-4, and the Executive Summary more generally. 

8

 Paul Hibbard was recently Chairman of the Massachusetts Department of Public Utilities (DPU), and previously had worked in the state’s 

air regulatory division. Sue Tierney previously served as Secretary of Environmental Affairs, Commissioner of the DPU, and senior 

economist at the energy office in Massachusetts, and was subsequently Assistant Secretary for Policy at the U.S. Department of Energy. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 7 

Our report describes our assessment of states’ actual experience with RGGI, and of the larger body of 

ratemaking practices in states around the country through which regulators ensure fair and equitable 

rates to customers. In the latter, we examined a wide and diverse cross-section of states (covering 

half of the states in the U.S., as shown in the figure at the right), in order to point to the many tools 

available to states to manage the distribution of compliance costs and economic benefits among 

customers. 

Clearly, State Plans approved by the EPA will create the framework for the industry’s compliance 

with EPA’s Clean Power Plan. How compliance plans are designed by the states will strongly affect 

the magnitude and distribution of costs and benefits among consumers, power plant owners, and the 

general economy. The regulatory practices for passing on costs to electricity consumers is also 

important, as it can influence the degree and allocation of program costs and benefits. 

In the following sections, we discuss the analyses that allowed us to reach the conclusions noted 

above. Section 2 briefly summarizes EPA’s proposed Clean Power Plan, and the role it anticipates 

for states in developing State Plans to control CO2 emissions from existing power plants. We 

describe the wide range of compliance options available to states. In Section 3, we explain how 

different State Plan options may affect compliance costs, and how those costs may impact consumers’ 

electricity rates and bills. Those impacts will vary across the country, due to several factors 

including: the different emission-reduction targets assigned to each state; the structure of the electric 

industry in the state (e.g., traditional utility-owned generation versus independent power production; 

vertically integrated utility operations versus wholesale competitive markets). We further highlight 

the importance of state program design on the economic benefits and costs of program 

implementation. 

Section 4 reviews the experience of RGGI in the Northeast states, with RGGI being the long-running 

market-based CO2 control program in the U.S. This discussion illustrates how a multi-state approach 

can operate seamlessly as part of the electric system, lead to efficient price signals affecting power 

plant dispatch, reduce emissions, and provide opportunities to control compliance costs and enhance 

benefits to consumers. Our review of RGGI’s experience focuses on a recent economic analysis of 

the program, supplemented with a review of up-to-date data on continuing RGGI auctions and 

spending of allowance revenues. 

Finally, in Section 5, we review state ratemaking practices and public policies that allow for fair cost 

recovery across all consumers, and for protecting low-income customers in particular. Appendix 1 

provides more detail on EPA’s proposed Clean Power Plan. Appendix 2 summarizes how RGGI 

states have used the proceeds from selling CO2 allowances (e.g., to invest in energy efficiency 

programs, to provide a credit on customers’ electricity bills and for other purposes including 

payments to the state’s general fund). Appendix 3 compares state electricity revenues and spending 

on energy efficiency program by customer class, to illustrate how states can design those programs to 

support efficiency improvements for different types of customers. Appendix 4 provides case studies 

of electricity consumer-protection policies, to illustrate the tools currently in place in half of the states 

in the U.S. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 8 

EPA’s Proposed Clean Power Plan: 

 State-specific targets to reduce CO2/MWh 

produced at existing fossil-fuel power plants. 

 Two compliance periods: 2020-2029 (averaging 

compliance over the decades, to meet an interim 

target) and another by 2030. 

 State Plans to be submitted to EPA to show how 

the state and the power plants within it will 

comply with the targets. 

 States have the flexibility to propose a wide 

variety of options in their plans, including actions 

that directly affect emissions from fossil power 

plants (EGUs) and actions that indirectly affect 

those EGUs’ emissions (such as through energy 

efficiency, policies that encourage more 

investment in zero-carbon power generation 

technologies, or changes to electric transmission 

infrastructure). 

 States may propose market-based mechanisms. 

 States may join together for regional plans. 

 States may use a “rate-based” approach (i.e., 

CO2/MWh) or a “mass-based” approach (i.e., a 

total amount of CO2 allowed to be emitted in the 

state, sometimes also called a CO2 budget or 

cap). 

2. EPA’S PROPOSED CLEAN POWER PLAN 

On June 2, 2014, the U.S. EPA proposed rules to reduce CO2 emissions from existing electric 

generating units (EGUs) through Section 111(d) of the Clean Air Act (CAA). The proposed rules, 

called the “Clean Power Plan,” are anticipated to lower CO2 emissions from the power sector by 30 

percent relative to levels in 2005. Under the CAA, EPA establishes the target level of emission 

reductions for each state, and the states develop (and submit to EPA for approval) State Plans to meet 

EPA’s requirements. 

EPA’s proposal sets state-specific standards, in terms 

of pounds of CO2 allowed to be emitted per 

megawatt-hour (MWh) of electricity produced at 

affected facilities. In setting the standards applicable 

to each state’s power plants, EPA used a 

standardized methodology based on assumptions 

about the amount of emissions reduction that could 

occur through investments and operational changes 

at affected power plants, through zero-carbon 

generating sources, and through energy efficiency. 

(EPA refers to these as the “building blocks.”9

) No 

state, however, is required to use all of those 

approaches. 

States may choose from a wide variety of potential 

compliance mechanisms, actions and investments. 

Among the many options are: modifications at 

existing EGUs to increase their power-production 

efficiency; operating limits at EGUs; real or shadow 

prices on carbon emissions; carbon taxes; emissionaveraging across power plants; participation in single 

state or multi-state market-based emission-trading programs; reliance on non-fossil alternatives, 

including ones that reduce demand through energy efficiency (and therefore reduce output at fossil 

plants), and others that retain/increase low/zero-CO2 emitting resources (e.g., new renewable energy 

and existing or new nuclear capacity). 

Each state’s choice of what elements to include in its State Plan will affect compliance benefits and 

costs in that state. On the one hand, a State Plan could require investments to improve the efficiency 

of each power plant affected by the Clean Power Plan, along with other measures to cause some of 

the most-polluting plants to operate on a restricted basis. Based on what is known at present, 

 

9

 The four building blocks EPA used to set state-specific emission-reduction targets reflect the potential to reduce emissions through: 

 Improving operating efficiency or otherwise reducing CO2/MWh at EGUs. 

 Shifting output at power plants with high CO2 emissions (e.g., at coal-fired units or inefficient gas/oil plants) through increased output 

at plants with lower CO2 emissions per MWh generated (i.e., at natural-gas combined cycle (NGCC) units). 

 Substituting output at fossil EGUs with retention or addition of output at zero-carbon generation (renewables and nuclear); and

 Reducing emissions from affected EGUs by lowering overall demand for electricity through additional energy efficiency. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 9 

however, this would not necessarily minimize overall compliance costs.10 On the other hand, using 

approaches that send appropriate CO2-related price signals could help to minimize costs. 

States may be able to layer on various approaches as part of their State Plans. For example, rather 

than requiring a certain average level of emissions at each plant, a state with vertically integrated 

utilities could decide to allow all of the plants owned by a particular company to average the 

emissions across its fleet. This might lead to retirements of some older and less efficient power 

plants, in exchange for allowing continued operation of coal-fired power plants that have recent 

investments in equipment to control mercury and other toxic emissions. States can determine how to 

adopt cost-sharing approaches so that those customers that benefit from such flexibility may share 

some of those benefits with customers of other electric companies needing to do more. 

A state also could select market-based approaches that allow pursuit of the cheapest compliance 

options first (and thus produce a lower overall compliance cost) within that single state. And states 

may decide to enter into agreements with other states that establish an overall blended-average 

emissions cap, and allow owners of plants in multiple states to trade their emissions reductions so that 

on average, all plants in the relevant states achieve the average emission-reduction target. 

Because states may choose from such a wide variety of potential compliance options, EPA’s 

cost/benefit analysis estimated outcomes under a number of assumptions about how states would craft 

their plans. Based on these analyses, EPA concluded that potential costs will be more than offset by 

reduced demand (which would lower overall production costs to consumers) and by the expected 

economic, health, safety and environmental benefits of the rule. 

Although projections of pollution program costs always rely on inherently uncertain information 

before a program actually goes into effect, prospective estimates of the costs of pollution-control 

regulations have historically exceeded actual program costs.11 This tends to occur for several reasons, 

most notably the fact that it is difficult to anticipate in advance how technology innovation will occur, 

even if it is well understood that such innovation will likely occur in response to regulation.12

In this particular case, the EPA does not know now what specific actions individual states – or groups 

of states – will incorporate into their State Plans. The actual economic costs of the Clean Power Plan 

will depend strongly on the decisions that states make in developing and implementing their State 

Plans, industry’s responses to these decisions, and the nature and pace of technological change driven 

by compliance activities. Additionally, state practices regarding review of utilities’ compliance plans 

and recovery of costs related to them will affect the magnitude and distribution of consumers’ costs. 

In all states – whether they have a vertically integrated or restructured electric industry – ratemaking 

practices can affect the impacts on different customer segments (including low-income customers). 

 

10 See, for example: Joshua Linn, Erin Mastrangelo, and Dallas Burtraw, “Regulating Greenhouse Gases from Coal Power Plants under the 

Clean Air Act,” Resources for the Future (RFF), February 2013; Dallas Burtraw, Joshua Linn, Karen L. Palmer, Anthony Paul, “The Costs 

and Consequences of Clean Air Act Regulation of CO2 from Power Plants,” RFF, January 2014. 

11 Winston Harrington, Richard Morgenstern, and Peter Nelson, “On the Accuracy of Regulatory Cost Estimates,” RFF, 1999; Hart Hodges, 

“Falling Prices: Complying with Environmental Regulations Almost Always Less Than Advertised,” Briefing Paper, Economic Policy 

Institute, 1997; Ruth Ruttenberg, “Not Too Costly After All,” prepared for Public Citizen Foundation, February 2004. 

12 National Academy of Sciences, “America’s Energy Futures Report, 2008, pages 97-102; International Energy Agency, “Experience 

Curves for Energy Technology Policy” (2000). 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 10 

3. CONNECTING THE DOTS: EPA’S PROPOSAL AND POTENTIAL 

ECONOMIC IMPACTS ON ELECTRICITY CONSUMERS 

EPA’s proposed Clean Power Plan will have various positive and negative effects on consumers and 

the economy. In its benefit/cost analysis, EPA identified a number of potential economic impacts 

(positive and negative), including: (1) direct compliance costs incurred by owners of affected power 

plants (and passed along, in part, to electricity consumers); (2) expenditures on power production 

facilities with low or no carbon emissions; (3) expenditures on energy efficiency measures; (4) 

changes in the markets for fuels (e.g., coal, natural gas) used to produce electricity; (5) the expected 

direct and indirect social, economic, health and environmental benefits from mitigation of climate 

change; and (6) public health benefits from reduction in combustion of fossil fuels.13 

Although the fundamental purpose of EPA’s proposed control of CO2 emissions is to obtain the 

benefits that come with avoiding climate change impacts (that is, capturing the impacts quantified in 

item (5) above), much attention will undoubtedly be focused on the proposal’s implications for direct 

and indirect costs relating to items (1) through (4) above. (Unfortunately, many parties will overlook 

that expected impacts that produce public health benefits (6).) The close attention paid to direct and 

indirect economic impacts is inevitable given the importance the public places on near-term energy 

costs and economic productivity. Consequently, we summarize how compliance costs translate to 

economic impacts on electricity consumers. 

There are a myriad of ways in which implementation of EPA’s Clean Power Plan will shift the flow 

of dollars associated with the production and consumption of electricity over time, generating 

additional direct and indirect economic costs and economic benefits. The impacts will ripple through 

the electric sector in many ways, for example by: 

 changing the costs to generate electricity at different power plants; 

 changing the demand for different fossil fuels; 

 prompting the retirement of some generating assets, the retention of some generating assets that 

would otherwise retire, and the addition of different electricity generation and storage resources 

than would otherwise occur; 

 

13 EPA, RIA, Executive Summary. “The annual incremental cost is the projected additional cost of complying with the proposed rule in the 

year analyzed and includes the net change in the annualized cost of capital investment in new generating sources and heat rate 

improvements at coal steam facilities, the change in the ongoing costs of operating pollution controls, shifts between or amongst various 

fuels, demand-side energy efficiency measures, and other actions associated with compliance....[The costs] represent the estimated 

incremental electric utility generating cost changes from the base case, plus end-use energy efficiency program costs (paid by electric 

utilities) and end-use energy efficiency participant costs (paid by electric utility consumers).” EIA, RIA, Page ES-8. “Implementing the 

proposed guidelines is expected to reduce emissions of CO2 and have ancillary emission reductions (i.e., co-benefits) of SO2, NO2, and 

directly emitted PM2.5, which would lead to lower ambient concentrations of PM2.5 and ozone. The climate benefits estimates have been 

calculated using the estimated values of marginal climate impacts presented in the Technical Support Document: Technical Update of the 

Social Cost of Carbon for Regulatory Impact Analysis under Executive Order 12866,...Also, the range of combined benefits reflects 

different concentration-response functions for the air pollution health co-benefits, but it does not capture the full range of uncertainty 

inherent in the health co-benefits estimates. Furthermore, we were unable to quantify or monetize all of the climate benefits and health and 

environmental co-benefits associated with the proposed emission guidelines, including reducing exposure to SO2, NOx, and hazardous air 

pollutants (e.g., mercury and hydrogen chloride), as well as ecosystem effects and visibility impairment. These unquantified benefits could 

be substantial, but it is difficult to approximate the potential magnitude of these unquantified benefits and previous quantification attempts 

have been incomplete.” EIA, RIA, pages ES-9 and ES-10. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 11 

 changing the price of power passed along to electricity customers; 

 altering the amount of electricity consumed by customers as a result of energy efficiency 

compliance investments; 

 spurring or accelerating growth in emerging technologies and industries that address carbon 

emissions at power plants or that meet electricity demand through less carbon-intensive ways; 

 accelerating consumer- and business-based investments in on-site conservation, load reduction, 

and behind-the-meter renewable generation technologies; and 

 other impacts not understood or imagined today. 

These impacts will introduce costs and benefits for different parts of the local and regional economies 

in ways that are challenging to predict with precision at the outset of the program. It is possible, 

though, to explore how such costs and benefits arise in different parts of the economy. 

In the first instance, controlling and reducing CO2 will tend to increase costs for owners of power 

plants affected by the rule. This is the part of the cost equation that usually gets the most attention in 

public discussions of environmental regulations: Compliance will increase the cost of doing business 

for affected plant owners in ways determined by a state’s plan – e.g., through on-site investments to 

increase power plant efficiency or otherwise reduce plant emissions of CO2, through company-wide 

costs incurred in an emissions averaging program, through the purchase of CO2 allowances in a capand-trade program, or through payments associated with a carbon charge, fee or tax mechanism. 

All else equal, power producers will attempt to pass along such costs in the prices they charge for 

generating electricity. In states where electric utilities own affected power plants, such costs will tend 

to be passed along to those utility’s consumers through regulated rates as a pass-through of a variable 

expense, or as recovery of and a return on compliance capital investments. (That result will 

undoubtedly occur in the parts of the country where municipally owned utilities and electric 

cooperatives end up taking actions at the power plants that they own.14) In states where non-utility 

generators’ costs are not part of a utility’s rate base or expenses, but are recovered through 

competitive wholesale energy markets, generators will include such costs in their market offers but 

these compliance costs will only flow through to consumer prices if and to the extent an affected unit 

is actually setting the price of electricity.15

Changes in the cost of operating different types of power plants will affect their dispatch. In principle 

under the normal “economic dispatch” arrangement similar to those in power systems everywhere 

 

14 This result is tied to the fact that municipal utilities do not have shareholders and must cover their costs through rates charged to 

consumers. For electric cooperatives, the members are both customers and shareholders, so the same result is true. 

15 In competitive markets, there is not a one-to-one correspondence between costs incurred by owners of power plants and wholesale prices 

that are passed along to retail electricity customers. For example: in circumstances when the CO2 compliance cost per MWh for an 

inefficient coal unit is higher than for an efficient, natural gas combined cycle unit, the degree to which the CO2 control program increases 

the price of electricity in a given hour is a direct function of the extent to which a unit is setting the price of electricity (the “marginal” unit). 

In an hour when a non-emitting unit is marginal and setting the price of electricity, the impact on electricity price of the program in that 

hour is zero. But conversely, in hours when the least-efficient coal unit is setting the price of electricity, the CO2 program would affect the 

marginal electricity price. Over the course of the year, the extent to which the CO2 compliance expense (on producers) leads to increases in 

electricity prices in organized wholesale competitive markets is a function of the extent to which (and how often) CO2-emitting resources 

are on the margin and setting the price of electricity. The impact on electricity costs over the course of the year is in turn a function of this 

impact on electricity prices and the extent to which – through consumer choice or program investments (in energy efficiency or renewable 

energy) – the CO2 program leads to a reduction in electricity consumption. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 12 

around the country, the grid operator (e.g., the utility for a vertically integrated power system, or the 

independent system operator in an ‘organized’ wholesale market) schedules plants to operate so as to 

minimize the overall cost of production on the system. If it becomes more expensive to generate 

power at a particular coal plant due to a State Plan’s elements, then the grid operator will turn to a 

cheaper source of power (e.g., a gas-fired combined cycle). (This could happen in a number of ways, 

consistent with economic-dispatch principles: for example, the cost to operate the coal plant could 

rise because it faces a new price on carbon (e.g., through a state tax on carbon, or through the need to 

purchase CO2 emission allowances, or through use of a ‘shadow’ price on carbon applied in the 

dispatch equation) or because it has a new constraint on its ability to operate (e.g., through a change 

in that plant’s operating permit to limit its output over the course of a year.)16 The extent to which 

this occurs will depend on a region’s resource mix and its demand over all hours of the year. Under 

the standards proposed by EPA, it is likely that some of the more efficient coal-fired power plants 

will be able to continue to produce power relatively inexpensively for some time, and they will 

continue to be dispatched. 

Nevertheless, as these changes occur in the relative costs to produce power from different plants, 

there will be shifts in the electric system. (These have been anticipated by EPA in its application of 

the “building block” methodology used to set state-specific CO2 targets.) Some plants may retire; 

others will operate less; others will operate more. Other zero-carbon-emitting plants that tend to be 

dispatched whenever their fuel supply is available (e.g., nuclear power plants; wind turbines; solar 

panels) may not see significant changes in output. 

There is not a direct line, however, connecting the changes in costs incurred by owners of power 

plants and the actual costs, benefits and state/regional economic impacts experienced by consumers or 

other economic actors (e.g., fuel suppliers, owners of non-fossil power plants). 

For example, among electric industry participants, some plant owners will face higher costs and/or 

lose revenues, while others will gain revenues and market opportunities. Older CO2-emitting assets 

that have operated profitably for many decades may no longer be able to do so. But newer, more 

efficient and lower-emitting fossil-fired units will tend to operate more. In some parts of the country 

(e.g., the Rockies, or in the Southeast), some of those changes will occur within a single utility’s own 

power plant portfolio. In addition, depending upon how states design their State Plans, those changes 

could also arise across the power plants owned in different states by that single utility (such as might 

occur in the Southeast states). 

In states where the power plants operate as part of single state or regional ‘organized’ power market 

(shown in the colored areas of the map below), those shifts in output could occur among facilities 

owned by different power plant owners. How they shift will be influenced by the design of those 

states’ State Plans, and the resulting approaches to compliance selected by owners of affected EGUs. 

 

16 We are aware of real-world examples of several of these approaches: For example, in the RGGI states, power generators’ offer prices 

into the energy markets administered by regional transmission organizations (i.e., in the ISO New England market, in the New York ISO 

market, and in Maryland and Delaware, which are part of the PJM wholesale market), reflect a price on carbon through the generators’ 

inclusion of the opportunity cost of carbon as part of its energy offer price. In Massachusetts, some gas-fired power plants with dual-fuel 

capability have limits in their air permits that allow them to be dispatched (on oil) no more than the equivalent of 30 days at full output. In 

each case, the grid operator incorporates these factors into its economic dispatch that includes these generating units. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 13 

Compliance Cost Impacts on Owners of Assets in “Organized” Competitive Wholesale Markets: 

Assume an hour when an efficient, natural gas combined cycle power plant is the last one dispatched to meet load, and thus 

sets the price paid to all generating units operating in that hour. Assume too that the plant operates in a state with a State Plan 

that includes some form of price on its carbon emissions (as now occurs in the 9-state RGGI region) The price offered by the 

natural gas plant contains a variable cost, in dollars per MWh of generation, based on its opportunity cost related to its 

emissions of CO2 in that hour (e.g., by purchasing allowances, paying a tax or fee). This will affect various power plant owners 

in the following ways: 

 The clearing natural gas-fired unit: The unit that sets the clearing price will exactly recover its compliance cost, and the 

price increase for energy in the wholesale market will increase (relative to a no-carbon control program) by the cost of 

compliance for a natural-gas combined-cycle unit. All gas-fired units with similar heat rates will face similar circumstances. 

In effect, there may be little impact on profits for such asset owners. 

 Low/zero-emitting units: Many renewable resources (such and wind and solar) have very low operating costs, and typically 

would be operating (or inframarginal) in the same hours as the gas plant above, and would receive energy market revenues 

roughly equal to the market price times MWh output. Since the price of energy is higher with the CO2 price in effect, the 

profits for these low-emitting units are higher. Nuclear and hydro units would experience a similar effect on profits in this 

hour. 

 Inefficient coal-fired unit: An inefficient coal unit faces a higher compliance cost than the gas unit in $/MWh since it emits 

more tons of CO2 per MWh. Yet the impact of the program increases electricity prices only by the $/MWh compliance cost 

of the unit of the margin (e.g., the gas plant). Thus, the coal unit’s costs increase more than its revenues, so the effect of

the program is to decrease profits for this unit. A directionally similar impact would be felt by less efficient natural gas and 

oil units, to the extent they are operating. 

 Zero-emitting marginal unit: In hours when the price of energy is set on the margin by a zero-emitting unit (e.g., 

renewables, nuclear, hydro) – not the typical occurrence – any operating fossil-fueled unit is receiving less profits (than the

case without a carbon control requirement), and there is no price increase paid by consumers with respect to the carbon 

control program. 

Given the market-based structure 

of the wholesale electric systems in 

these regions, there are strong 

rationales for State Plans to include 

market-based mechanisms for 

controlling carbon emissions. 

Such approaches could be a singlestate or multi-state cap-and-trade 

program (e.g., like California’s or 

in the Northeast/MidAtlantic 

states) or a carbon tax (being 

considered in some regions in the 

Pacific Northwest), or a dispatch 

shadow-price approach (also under 

discussion in some states in the 

Midwest). 

In wholesale markets where state plans lead to some form of a price on carbon, owners of plants with 

lower CO2/MWh emission rates will likely increase their output to the extent they can. The changing 

market price relationships will affect the economic opportunities and profits for existing or emerging 

electricity market participants – some positively, and some negatively. (See the text box below.) 

In addition to the fact that not all compliance costs are passed on to consumers, the way a program is 

designed and implemented can actually deliver additional program cost reductions. For example, to 

the extent that State Plans directly or indirectly increase utilities and/or consumers’ investments in 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 14 

energy efficiency or technology-driven load control or behind-the-meter renewable technologies, the 

associated reduction in demand for power generation has the effect of lowering CO2 compliance 

costs, or even producing net benefits for electricity customers. This is because reducing 

consumptions lowers a business or homeowner’s electricity bill, and lowering total system demand in 

any hour will tend to reduce the clearing price for power for all users of electricity, whether they 

themselves invested in an energy efficiency measure or not. This creates opportunities for State Plans 

to incorporate elements that offset the cost impacts from other compliance actions. 

The net effect of such considerations can strongly influence the impact of EPA’s program on 

electricity costs over time.17 Depending upon the design of State Plans to include energy efficiency, 

any initial price increases experienced by electricity consumers may be more than offset over time by 

lower electricity bills. (EPA’s benefit/cost analysis indicates that “average monthly electricity bills 

are anticipated to increase by roughly 3 percent in 2020, but decline by roughly 9 percent by 2030 

because increased energy efficiency will lead to reduced usage.”18 The CATF has proposed an 

approach to CO2 compliance that would limit price impacts to no more than 2 percent.19 And in its 

recent analysis of the potential compliance strategies for ERCOT, the Brattle Group found that Texas 

could meet both resource adequacy and carbon-emissions reduction goals through a combination of 

increased reliance on gas-fired generation, demand-response, combined heat and power, and energy 

efficiency at inflation-adjusted prices that resembled those experienced in the 2010-2012 period.20) 

From the point of view of state or regional economies, the direct impact of compliance on producer 

profits and electricity consumer costs is still just one piece of the larger economic puzzle. All of the 

direct changes in costs, investments, and producer and consumer actions discussed above ripple 

through the economy in various ways. As the profits of the owners of affected units fall, for example, 

their spending in the economy drops (e.g., by perhaps deferring spending on operations and 

maintenance, or by reducing the disposal income of company shareholders), negatively affecting 

economic activity. The opposite impacts occur when other plants increase their output (e.g., greater 

demand for and production of natural gas in different regions of the country, with jobs and tax 

 

17 For example, in the RGGI Report we found that: fossil generators’ inclusion of CO2 allowance prices in their offer price tended to change 

the order of dispatch of various power plants, and tended to increase electricity prices (by less than 1 percent) in the near term; 

encouragement of energy efficiency; also, the use of the proceeds from auctioning off CO2 allowances to fun energy efficiency investments 

also altered the load profile, lowered overall demand, and in turn lowered electricity prices (because of avoiding the need to dispatch higherpriced supply on the margin). In these regions, the generation sector as a whole earned less revenues than they would have absent the RGGI 

program being in place. However, owners of low- and zero-carbon emitting plant gained substantial revenues, while fossil-fired units lost 

revenues. Since many of the zero-emitting facilities were new renewable generation assets within the affected states, the net effect of the 

program was to retain a greater share of generation sector revenues within the region, producing local economic benefits (on top of those 

provided by the local investments in energy efficiency measures). 

18 EPA RIA, page ES-24. 

19 The CATF Proposal would accomplish this through a combination of several things: providing states with the opportunity to use “massbased, fossil boiler emission budgets” as an alternative to complying with an emission rate standard; allowing interstate emissions trading; 

offering states the ability to mitigate retail ratepayer and merchant coal impacts through free allowance allocations (“Giving states an 

emissions tonnage budget provides states with “free” allowance allocations, the value of which can be used to mitigate ratepayer impacts 

and compensate merchant coal generators for lost asset value.” CATF Proposal, pages 4, 14. 

20 “In inflation-adjusted terms, prices in the Reference scenarios remain within the band observed between 2010 and 2012, from a low of 

about $42/MWh to a high of about $67/MWh under the strong carbon rule. Importantly, the inclusion of EE, DR, and CHP [energy 

efficiency, demand response and combined heat and power] in the Phase III scenario reduces the higher-priced carbon rule scenarios, as 

what would otherwise have been.” See: Ira Shavel, Peter Fox-Penner, Jurgen Weiss, Ryan Hledik, Pablo Ruiz, Yingxia Yang, Rebecca 

Carroll, and Jake Zahniser-Word (The Brattle Group, “Exploring Natural Gas and Renewables in ERCOT, Part III: The Role of Demand 

Response, Energy Efficiency, and Combined Heat & Power,” May 29, 2014, pages 6 and 77. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 15 

revenues associated with them; potentially greater need for new investment in pipelines, with 

construction jobs and equipment purchases associated with such infrastructure investment). 

Also, where revenues rise for owners of power facilities with zero carbon emissions that previously 

were undervalued or not sufficiently compensated in electricity markets, an owner may be able to 

keep the plant open (e.g., a nuclear unit that may have been previously financially challenged) or add 

new capacity in the future (e.g., a new wind turbine or solar PV system, or an uprate at an existing 

hydro facility or nuclear plant). Those will have investment and job impacts in their regions. 

Where energy efficiency is part of a State Plan, it will tend to increase economic activity in the local 

economy, through sales of efficient electric devices or insulation, and/or through jobs associated with 

audits, installations, and other parts of the energy-efficiency supply chain. In some communities, 

there will be gains in manufacturing of energy-efficient equipment. 

On the consumer side, to the extent that program implementation increases electricity costs, 

consumers will tend to have less disposable income. There are tools that states can use to partially or 

entirely mitigate the impact of program costs on consumers, and in some cases actually generate 

consumer and broader net economic benefits. As we explain further below, State Plan designs that 

flow revenues back to electricity customers (e.g., through a credit on customers’ electricity bills) can 

mitigate the impact of power supply price increases. Those that lead to increased investment in 

energy efficiency and lower consumption of electricity are particularly effective in lowering total 

customer payments for electricity and increasing disposable income (even if there are initial rate 

increases). Such income effects can increase economic benefits in local economies. 

Although most discussions of the EPA’s proposed Clean Power Plan will inevitably focus on costs of 

compliance, states should consider possible ways to design their State Plans to minimize those costs 

and increase the economic benefits of reducing CO2 emissions from the power sector. Discussions 

and analyses that only address the former without paying attention to the latter will lead to incomplete 

assessments of the proposed Clean Power Plan’s impact on consumers and the economy. A complete 

story on the impact of program implementation on electricity consumers must include a more review 

of the overall impact of the program on electricity market infrastructure and pricing dynamics, the 

investment of program revenues, the changing character of the electric industry (with much-greater 

investment by utilities, third parties and customers on the customer side of the meter) and the actions 

and response of electricity consumers. A complete story on the impact on economic productivity and 

jobs must follow how changes in investment and spending from the program – including producer 

costs/revenues, consumer income, and program investments – flow through the broader economic 

setting. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 16 

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Major Components of U.S. Average Electricity

Price

Distribution Transmission Generation

Notes & Sources:

[1] Average across all customer classes.

[2] Does not include any state- or utility-specific charges.

[3] U.S. Energy Information Administration, Annual Energy 

Outlook 2014, Reference Case, Table A8: Electrical Supply, 

Disposition, Prices and Emissions.

5.9 cents/kWh

58%

1.1 cents/kWh

11%

3.1 cents/kWh

31%

Major Components of U.S. Average Electricity Finally, it is important to keep in 

mind that the impact of the Clean 

Power Plan on electricity prices – 

through increased costs at some 

power plants – is incomplete in the 

sense that it examines and overemphasizes only one part of the 

electricity cost structure. A typical 

electricity bill includes other 

elements besides costs relating to 

electricity supply – namely, the costs 

to transmit and distribute electricity 

to the end user, and costs to manage 

power system operations and 

markets. Of the all-in price of 

electricity (on the basis of the 

national average cent/kWh), 

approximately 40 percent of the costs 

relate to the delivery (distribution and 

transmission) of electricity, and 60 

percent relate to power production. 

Thus, for a 1-percent change in the 

price of electricity generation, there 

will be a smaller change (less than 1 

percent) in the bottom-line price of electricity. 

Also, where states include in their State Plans a variety of elements that encourage cost-effective 

energy efficiency, demand-response and renewable projects on customers’ premises, these will tend 

to lower overall demand for power and in turn lower average cost of electricity supply. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 17 

4. PROGRAM DESIGN CONSIDERATIONS: REVIEW OF THE REGIONAL 

GREENHOUSE GAS INITIATIVE 

Overview 

How EPA’s proposed Clean Power Plan ultimately impacts consumers and the economy will depend 

on many things: what a state includes in its plan, how that plan alters demand for electricity, how it 

affects infrastructure investment and power system operations, and so forth. Given the flexibility 

that EPA has afforded to the states in its proposed Clean Power Plan, the choices that states make in 

shaping their State Plans could (and no doubt will) have far-reaching implications not only for CO2

emission reductions, but also for the cost of compliance. What those State Plans include also will 

affect the cost of electricity for the state’s residents and businesses, and the overall impact of the 

program on the state’s economic growth, employment, taxes and wages. 

To illustrate the potential implications of program design and implementation, we have reviewed the 

experience of Northeast states in implementing RGGI, the nation’s first CO2 emission control 

program using a cap-and-trade approach. RGGI is now in its sixth year of operations. While it is a 

coordinated, multi-state market-based program for the control of CO2 emissions from the power 

sector, the states’ design for RGGI reserved a significant degree of implementation flexibility for 

each of the states participating in the program. From the outset, RGGI allowed each state to 

determine whether and how to allocate or auction emissions allowances to owners of power plants. 

Because the states implemented the program in various ways, the RGGI experience provides insights 

about the relationship between program design and outcomes for consumers and the economy. 

In this section we summarize key elements of the RGGI program, discuss the findings and 

implications of a recent economic analysis of RGGI previously conducted by Analysis Group, review 

program design and spending changes implemented since the time of that prior report, and discuss 

implications for design considerations in the context of states’ implementation of the proposed Clean 

Power Plan. 

In focusing here on the RGGI story to illustrate how a multi-state, market-based approach has 

worked, we do not presume that other states would use this particular approach. We recognize that 

there are various other approaches that different states might use to align CO2-emission reduction 

goals with electric system operations and distribution of benefits to consumers. RGGI’s experience 

provides a workable example, from which other states can derive insights about how they might 

design approaches that work within their own electric-industry contexts. 

RGGI Background and Overview 

In 2009, ten Northeastern and Mid-Atlantic States began the Regional Greenhouse Gas Initiative as 

the country’s first market-based program to reduce emissions of CO2 from fossil-fueled power plants 

equal to or greater than 25 megawatts (MW) in size.21 The concept underlying the design of RGGI 

was that the participating states could reduce power plant emissions most efficiently (that is, at lowest 

 

21 The ten states are Connecticut, Delaware, Massachusetts, Maryland, Maine, New Hampshire, New Jersey, New York, Rhode Island, and 

Vermont. On May 26, 2011 New Jersey decided to withdraw from the RGGI program, and has not participated since the end of 2011. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 18 

cost) by introducing a price signal on carbon, and in so doing, cause the region’s economic dispatch 

of power plants to reflect the cost of a tradable carbon-emission allowances along with the other more 

traditional variable costs of operating power plants (e.g., fuel, operations and maintenance). 

Once the RGGI program was designed through a process involving state officials and industry 

participants over several years, each state that elected to join RGGI obtained authority to do so 

through its legislature and/or regulatory mechanisms. For example, RGGI developed a ‘model rule’ 

that outlined the core design elements of the program, and then each state adopted its own enabling 

authority to allow it to participate. This meant that the participating states did not need to adopt a 

formal interstate compact under federal law, while still allowing the participating states to establish a 

coordinated and common mechanism for incorporating a carbon price into their power-system 

dispatch and operations. 

The program initially limited regional emissions to 188 million short tons of CO2 annually across the 

then ten-state RGGI region. This regional cap was agreed-upon by the participating states and then 

apportioned to states based largely on CO2 emissions from the affected sources, in accordance with 

state-specific allowance budgets that were agreed upon by the states.22 

The region-wide cap on total CO2 emissions is the only ceiling on emissions.23 In other words, an 

annual pool of emission allowances was created in an amount equivalent to the regional cap, and each 

state received a share of allowances that the state could then allocate to market participants. Once the 

allowances moved from the states’ hands into the market, actual emissions in a state could be higher 

or lower than that state’s original allowance allocation, as long as the total emissions were consistent 

with the cap. 

In order to comply, every affected power plant must to surrender an allowance for every ton of CO2

emissions it emits over the three-year period. (This process occurs at the end of each three-year 

compliance period, with the first being for the 2009-2011 period.) 

As originally designed, the cap would decline by 2.5 percent per year beginning in 2015, to reach an 

overall reduction of 10 percent of CO2 emissions by 2018. The states were free to decide how each 

state’s allowances would be distributed or sold into the hands of power plant owners. In theory, each 

state could issue them to power plant owners for free, or could sell them into the market, or some 

combination of both approaches. 

Ultimately, however, each RGGI state voluntarily decided to distribute the vast majority of CO2

emission allowances through a common, centralized auction administered by the organization set up 

by states to run the program (RGGI Inc.). As a result, the owners of affected power plants have 

obtained CO2 allowances by purchasing them through the initial auctions (held quarterly), or by 

 

22 Thus, this would be different from a multi-state agreement where, under the proposed Clean Power Plan, the EPA established a CO2-

emissions-reduction target for each state, and then each cooperating state individually decided to: (a) coordinate its emissions reductions 

with other states, (b) convert its CO2/MWh emission-rate target into an equivalent mass-based CO2 target (e.g., a CO2 emission budget or 

cap for each state), and then (c) establish mechanisms through which it would formerly adopt elements in its State Plan to effectuate the 

common, coordinated and multi-state CO2-emission reduction program. We recognize that such an approach could work in the context of 

traditional investor-owned utilities that serve portions of several states and that operate as an integrated system, and/or in the context of 

multi-state competitive markets. See: Susan Tierney, “Greenhouse Gas Emission Reductions From Existing Power Plants Under Section 

111(d) of the Clean Air Act: Options to Ensure Electric System Reliability,” May 8, 2014. 

23 Under some circumstances, the regional cap could increase (i.e., if CO2 allowance prices hit a particular dollar level, at which point the 

program would issue new allowances held in reserve for that purpose). 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 19 

purchasing/transferring them in a secondary market once those allowances move into the system via 

the auction process. 

Approximately 99 percent of allowances have been initially distributed via RGGI auctions. 

Participation in the auctions is open to any company or person meeting qualification requirements 

(e.g., financial security requirements), with a ceiling of 25 percent placed on purchases by a single 

buyer or group of affiliated buyers in each auction. 

Proceeds from the quarterly auctions – which are determined by quantities sold and auction clearing 

price (subject to a reserve (floor) price) – are distributed to states, and states determine how to use the 

funds. Since the initial allowance auction took place at the end of 2008, and up through the most 

recent auction. As of June 4, 2014, total revenues from the sale of CO2 allowances has amounted to 

$1.4 billion. (See Appendix 2.) 

The proceeds from the quarterly auctions have flowed through to the individual states in proportion to 

each state’s share of the cap. 

The use of auction proceeds has varied across the states and over time, consistent with the enabling 

state legislation, regulation, and policy. Examples of how the states used their share of the RGGI 

funds include: 

 investment in energy efficiency programs, 

 a credit on each customer’s electricity bills, 

 funding of state government operations through allocation to state general funds, 

 investment in community-based installation of renewable or advanced power generation 

systems, 

 education and job training programs, and 

 other greenhouse gas reduction initiatives. 

Additionally, a small portion of the proceeds have supported administrative costs for the RGGI 

program. As explained further below, the vast majority of RGGI funds have been reinvested in 

energy efficiency in part to mitigate the impact of the program on wholesale electricity prices and 

consumer electricity costs. 

Analysis of RGGI’s Economic Impacts 

In late 2011, we published a report examining, among other things, the consumer cost and economic 

impacts of RGGI’s implementation over its first three years (the first compliance period from 2009-

2011).24 The purpose of that report was to review program implementation, quantify the impact of 

the program on wholesale electricity markets (power prices, emissions trends, operations), review the 

various ways in which states reinvested allowance auction proceeds, examine impacts on customers’ 

electricity prices, and estimate the economic impacts of program implementation on each of the 

RGGI states. The AG RGGI Report was designed to evaluate program performance in order to 

provide insights and observations that could be useful in evaluating past policy decisions and in the 

development of future policy design changes. 

 

24 AG RGGI Report. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 20 

In that report, we tracked the path of RGGI-related dollars through the supply chain: we observed the 

payments that owners of affected units made to purchase CO2 allowances and how those allowances 

affected the prices at which those power plant owners were willing to sell power. We examined the 

implications of those allowance prices on changes in the production costs of different types of power 

plants, and then on their dispatch. We observed the changes in allowance prices in the quarterly 

auctions, along with the amounts of auction proceeds that went to each state after each auction. We 

tracked how each state chose to spend those proceeds over time. Where states spent auction proceeds 

to implement energy efficiency, we examined the types of programs they supported and the impacts 

of those programs on the demand for electricity over time. Our analysis relied on actual data on 

allowance pricing, actual fossil fuel prices, revenues, state disbursement and expenditures. 

Using a comprehensive power sector production-cost model (GE MAPS), we compared the electric 

system’s demand, power plant dispatch, emissions, and overall cost first using the “real world” 

conditions which represented the “with RGGI” scenario. We compared it to a “without RGGI” 

scenario in which we backed out the price of emissions allowances and the effect of investments of 

RGGI dollars in energy efficiency and renewable energy, and identified how this changed power 

plant dispatch, production costs, and emissions. Taking the results of the “with RGGI” and “without 

RGGI” analyses, we then modeled the impacts on the states’ economies by using the IMPLAN 

input/output model. That latter analysis also examined the implications for different states’ 

economies of their choices to use the RGGI auction proceeds for energy efficiency versus generalfund support versus credits on customers’ electricity bills and other uses. 

Our analysis reached the following conclusions about the states’ implementation of RGGI during its 

initial three years of operation:25

 RGGI produced in total $1.6 billion in net present economic value (NPV) for the ten-state region, 

representing on average approximately $33 per capita in net economic benefits (i.e., taking costs 

into consideration). The use of auction proceeds for public purposes (e.g., giving customers a 

credit on their electricity bill, paying for energy efficiency measures to help reduce consumers’ 

electricity use and electricity bills) offset the modest increase in electricity prices associated with 

the RGGI program and led to myriad positive economic spillover effects. Examples included the 

increased purchasing power associated with lower electricity bills, the economic impacts of 

spending money to hire people to perform energy audits or install solar panels, and the benefits to 

businesses of increased sales of energy efficiency equipment). Our analysis reflected both direct 

spending benefits and indirect multiplier effects locally and regionally. 

 The economic benefits resulted from the fact that when the states auctioned off the allowances 

(rather than giving them to power plant owners for free), the revenues from the program could be 

used for public benefit. This allowed states to retain associated revenues for public use, with 

outcomes that provided substantial fiscal, consumer, and environmental benefits. (Note that in 

the ten RGGI states, the electric industry was restructured over a decade ago, so that most power 

plants are not owned by electric utility companies. Had the states given away the allowances for 

free to the owners of power plants, the value of those allowances would have gone to the 

shareholders of those companies, rather than to consumers of electricity in competitive wholesale 

markets. This influenced the decisions of states to use an auction to move the allowances into the 

 

25 AG RGGI Report, pages 2-8. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 21 

hands of power plant owners, leaving the states with the opportunity to use the monetary value of 

those allowances for the public benefit.) 

 Over the first three years, RGGI led to over 16,000 additional jobs (job-years) with each of the 

ten states showing net job additions. Jobs related to RGGI activities are located around the 

economy, with examples including engineers who perform efficiency audits, workers who install 

energy efficiency measures in commercial buildings, staff performing teacher training on energy 

issues, and other things. 

 CO2 allowances tended to increase electricity prices by less than 1 percent in the near term, but 

over time – as the RGGI states invested a substantial amount of the allowance proceeds on 

energy efficiency programs that led to lower electricity use – the program results in lower 

electricity prices and lower consumer payments for electricity. This resulted because the system 

avoided having to run some of the more expensive power plants, and thus lowered wholesale 

prices, plus consumers had lower electricity bills as demand went down. The analysis found 

reduced electricity expenditures equaling approximately $1.1 billion over a ten-year period, 

reflecting an average savings of $25 for residential consumers, $181 for commercial consumers, 

and $2,493 for industrial consumers. Consumers of natural gas and heating oil saved another 

$174 million, because some of the energy efficiency programs had the collateral effect of 

lowering use of those other heating services 

 Although owners of fossil-fuel power plant owners raised their prices to reflect the cost of having 

had to purchase CO2 emission allowances (and thus most of these owners ended up recovering at 

least some of their RGGI compliance costs), over time the market for their product (i.e., sales of 

electricity) ended up being lower than it would have been without RGGI, because of the states’ 

use of auction proceeds to fund energy efficiency and lower demand. Also, among power plants, 

those with zero or low carbon emissions (such as renewable facilities or nuclear plants) received 

financial benefit for this attribute through revenues in electric energy markets. 

 The scope of RGGI’s positive economic benefits varied by state and region, with those states 

investing the heaviest in energy efficiency realizing significantly higher economic benefits. 

 The form of CO2 controls – namely, a market-based program – worked seamlessly within the 

Northeast’s wholesale electricity market structures and produced relatively efficient compliance 

costs in those markets. 

 The states’ use of allowance proceeds not only provided economic benefits, but also helped them 

meet a wide variety of social, fiscal, and environmental policy goals, such as assisting lowincome customers, achieving advanced energy policy goals, addressing state and municipal 

budget challenges, and restoring wetlands. Even so, how allowance proceeds were used strongly 

affected their economic impacts, with energy efficiency investment standing out as the use with 

the highest local economic benefits. For example, use of RGGI dollars to invest in energy 

efficiency ended up lowering regional electrical demand, lowering electricity prices, and 

lowering all consumers’ payments for electricity (not just those who installed energy efficiency 

measures). These savings on electricity bills flowed through the economy as increased consumer 

disposable income (from fewer dollars spent on energy bills), lower payments to out-of-state 

energy suppliers, and increased local spending or savings. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 22 

RGGI helped the Northeast states lower total fossil-fired power production and lower use of natural 

gas and oil for heating, thereby reducing the total dollars sent out of state for energy resources. 

RGGI Program Developments Since the 2011 AG RGGI Report 

Since the time we concluded our analysis of the first three years of the RGGI program, it has 

continued to evolve in several ways. 

For example, the states undertook a comprehensive program review in 2012, examining program 

success and impacts, the effects of imports and emissions leakage, the integrity of the offset program, 

and whether additional reductions beyond 2018 should be implemented. That program review was 

completed in February 2013, and involved a comprehensive assessment of program design issues, a 

modeling of potential future RGGI program levels, CO2 allowance prices, impacts on electricity 

prices and customer bills, and the region’s economy.26 

Based on its review, the RGGI states made a number of technical changes and improvements 

designed to build on past experience and to strengthen the program moving forward, the most 

significant of which was the decision to reduce the 2014 regional CO2 emission cap by 45 percent, 

from 165 million to 91 million tons, with an additional annual decline beyond that of 2.5 percent per 

year from 2015 to 2020.27 The decision to reduce the cap reflected all states’ positive association 

with program implementation and the environmental and economic benefits flowing from the 

program’s first three years. 

Overall, revenue generation through RGGI Auctions has remained strong, and states have continued 

to invest in ways that likely generate cost savings and economic benefits for residents and businesses. 

For example, in the initial period analyzed in the AG RGGI Report (2009 - 2011), RGGI collected 

and the states spent approximately $620 million through allowance sales, across all current RGGI 

states.28 In just the subsequent two years, states have already collected and spent approximately $440 

million, reflecting in particular an increase in allowance prices. See Figure 1. 

 

26 Program impacts were modeled under a fully vetted reference case as well as a number of key sensitivities related to natural gas prices, 

electricity demand, and changes to existing generation infrastructure. 

27 Other changes included: 

 Adjusting the CO2 emissions cap to address the private bank of allowances held by participating entities, and the retirement of existing 

unsold 2012 and 2013 allowances; 

 Instituting of a cost-containment reserve (CCR) of CO2 allowances to help moderate price impacts, whereby CCR allowances would 

be made available for sale should the CO2 allowance prices exceed certain pre-established price levels; 

 Updating the RGGI offsets program, including a new forestry protocol; 

 Requiring regulated entities to acquire and hold a portion of required allowances throughout each compliance period; and 

 Committing to assessing tools to monitor for emissions associated with electricity imports and developing a mechanism to address 

such import emissions. 

RGGI Inc., “RGGI States Propose Lowering Regional CO2 Emissions Cap 45%, Implementing a More Flexible Cost-Control Mechanism,” 

Press Release, February 7, 2013. 

28 For the purpose of consistency in our comparisons of the first and (to-date) second compliance periods, we exclude New Jersey from 

these values. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 23 

Figure 1 

From 2009-2011 (Compliance Period 1), roughly half (52 percent) of allowance revenues across the 

region were invested in energy efficiency programs and measures. The other uses were: 17 percent 

for credits on electricity customers’ electricity bills (and primarily low-income consumers); 15 

percent used to offset state budget challenges; 11 percent for either clean and renewable energy 

investments or CO2 mitigation measures; and 5 percent to cover program administrative costs. See 

Figure 2. 

More recently (in 2012-2013), the RGGI states have spent more of their auction proceeds on energy 

efficiency. Based on the insights we gained from the prior AG Study, we think that this will increase 

the overall economic benefits of the RGGI program. Based on those two most recent years (2012 and 

2013), there has been a 25-percent increase in states’ spending on energy efficiency (most recently at 

68 percent of the total auction revenues of approximately $440 million), with additional increases in 

spending on clean and renewable energy (12 percent) and greenhouse gas abatement (8 percent), and 

no use of auction revenues for contribution to states’ general funds.29 See Figure 2. 

 

29 Charts and values for all states’ spending in Compliance Period 1 and Compliance Period 2 (to-date) are contained in Appendix 1. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 24 

Figure 2 

Across the RGGI region, about half of funds went to energy efficiency during first three years of the 

RGGI program (i.e., in Compliance Period 1). But in some states (especially in New England), 

virtually all allowance proceeds were spent in that category. For example, Massachusetts spent 

approximately 93 percent of auction revenues on energy efficiency in the first Compliance Period, 

and has essentially maintained that level of energy-efficiency spending over the past two years (92 

percent). See Figure 3. For New England as a whole, Compliance Period 1 spending on energy 

efficiency amounted to approximately 89 percent of total auction revenues, with a similar level since 

that time (88 percent). 

These factors had important implications for the level of state economic benefits derived from RGGI 

program implementation. We found that level of economic benefits (net economic value added, and 

jobs) per dollar of auction revenue spent was highest in those states in regions with the greatest level 

of reinvestment of auction proceeds on energy efficiency. 

Therefore, all else equal, the recent trend in the second Compliance Period (2012-2013) towards use 

of auction proceeds for energy efficiency investment will lead to increased economic benefits across 

the RGGI states. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 25 

Figure 3 

Implications for Clean Power Plan Compliance 

The RGGI experience may provide important insights as states develop their State Plans and consider 

alternative compliance approaches. EPA’s Clean Power Plan invites states to explore market-based 

mechanisms and to attempt to participate in multi-state CO2 reduction programs. One option for the 

states that now participate in RGGI would be to include this program as part of their State Plans.30 In 

addition, other states could elect to join RGGI (with corresponding changes in the cap and the state 

budget allocations). Other states may elect to set up a single-state cap-and-trade program or establish 

a new one in concert with other states. Some states served by electric-utility affiliates of a single 

holding company could establish a cap on the emissions of that company’s power plants in the 

several states, and then allow it to operate its power plants (as now) as an integrated system, allowing 

the company to dispatch its plants economically with also taking system security as well as carbon 

emissions into account. 

Insights from the RGGI experience are relevant for other states as they consider market-based 

approaches. But there are wider lessons for other approaches, as well. There are a number of 

 

30 We expect that the RGGI states would need to make technical changes in the RGGI program design, once the final Clean Power Plan is 

adopted by EPA, if some aspects of RGGI would not otherwise meet EPA’s requirements (e.g., as to the level of the cap, or the existence of 

a cost-containment mechanism that allows electric companies to purchase more allowances if prices hit a particular ceiling price). 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 26 

potential additional compliance approaches and mechanisms suggested by EPA (or that states might 

develop on their own) that could involve the investment of compliance fees or charges on affected 

units that could operate in ways akin to market-based mechanisms. States can look at the RGGI 

experience to inform their own choices regarding these various ways to introduce some sort of real or 

shadow prices on carbon emissions from power plants. 

We note, for example, the a number of observations, based on our review of the economic impacts of 

the RGGI program and our research on ratemaking policies of states: 

 Market-based mechanisms offer important opportunities to minimize costs while also reducing 

CO2 emissions from existing power plants. 

 States can implement such market-based programs within state boundaries. 

 Moreover, states can work together – and with the stakeholders within each state – to develop and 

implement workable multi-state programs to control CO2 emissions from existing power plants, 

in ways that fully preserve the rights of each state. 

 Such multi-state, market-based mechanisms to control CO2 emissions can respect the 

practicalities of electric system operations, and can be seamless integrated into both traditionally 

regulated and competitive electric industry settings. 

 States with vertically integrated utilities have other tools, including integrated resource planning 

processes, for identifying least-cost compliance strategies. 

 Pricing carbon will help send efficient signals for new investment in resources (like zero-carbon 

technologies such as renewables, hydro facilities, and nuclear power plants, and in deeper energy 

efficiency measures) and for shifting power system operations toward power plants with lower 

carbon emissions. This result is likely true whether pricing carbon is accomplished through a 

market-based mechanism like RGGI or alternative compliance mechanisms. 

 Market-based mechanisms – like RGGI or California’s cap-and-trade program – can also provide 

opportunities for states to capture the economic value of CO2 emission allowances and direct 

those revenues for public and social benefit. In states with restructured electricity markets, states 

may choose to rely on methods to move CO2 emission allowances into the market that avoid 

windfalls to owners of power plants. For the RGGI states, this has been accomplished through 

auctioning of CO2 allowances. In other states (whether they have a traditional utility industry or 

a restructured market), another competitively neutral way to provide public/consumer benefits 

would be to allocate allowances for free to electric distribution utilities, who then can sell them to 

power generators and capture the revenues for consumers.31 

 Including cost-effective energy-efficiency programs as part of states’ CO2 compliance strategies 

can help deliver significant benefits to customers and to local economies. The RGGI states have 

used the proceeds from selling CO2 allowances to produce such benefits while offsetting 

compliance costs. Many other states have experience in using energy efficiency as part of a leastcost utility resource plan. As electricity prices tend to rise with CO2 compliance, states should 

 

31 See, for example, Conrad Schneider, “Power Switch: An Effective, Affordable Approach to Reducing Carbon Pollution from Existing 

Fossil-Fueled Power Plants,” Clean Air Task Force, February, 2014, with accompanying technical analysis by Bruce Phillips, “ Alternative 

Approaches for Regulating Greenhouse Gas Emissions from Existing Power Plants under the Clean Air Act: Practical Pathways to 

Meaningful Reductions,” The NorthBridge Group, February 2014. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 27 

expect to see more opportunities for cost-effective energy efficiency – and can use ratemaking 

tools to create financial incentives for utilities to pursue them. 

No matter what set of approaches a state considers including in its State Plan, state utility regulators 

will be in a position to weigh the cost implications of various programs and do what they can to 

encourage efficient and least-cost compliance options so as to minimize impacts on electricity 

consumers. This is discussed in Section 5, below. 

 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 28 

5. FAIRNESS AND PROTECTION OF CONSUMERS 

Overview 

We know that potential electricity price impacts from the EPA’s proposed Clean Power Plan will be 

the subject of intense attention: electricity costs can affect the competitiveness of businesses, 

particularly those engaged in energy-intensive activities, with implications for economic output and 

jobs. Increases and decreases in electricity rates and costs affect the disposable income of all 

residents, with ramifications tied to quality of life, ability to meet other financial obligations, and the 

degree of spending in the general economy. Lower-income individuals spend a disproportionate 

share of annual income on energy costs, and any increases in electricity costs to those customers can 

create genuine hardship, drawing away income that is otherwise needed for other basic necessities, 

and cost increases often lead to an increase in uncollected revenues for utilities. 

Although there is not a direct relationship between program compliance costs and impacts on 

consumers’ payments for electricity, it is still important to consider ways to minimize costs and 

protect consumers as much as possible from potential price increases. Careful attention to this issue 

can positively influence the design and implementation of State Plans. The lessons learned from the 

states’ experience with RGGI program, for example, illustrate how the design and operations of that 

CO2 reduction program led to net benefits for electricity customers and for those states’ economies. 

But state planning for implementation of CO2 emission-control plans should not (and likely will not) 

stop with State Plan design. States can also use their long-standing experience in utility ratemaking 

principles and practices to ensure that the costs and benefits of CO2 program compliance are 

distributed fairly among different types of customers. State can take steps to ensure that, to the 

maximum extent feasible, that compliance costs are minimized and that lower-income customers, in 

particular, are protected fairly. 

In this context, states already have the tools to address and fairly manage the distribution of 

compliance program costs and benefits among customers. These tools are a standard part of 

ratemaking by state regulators around the country. We review these tools here, to remind states that 

in the end, these ratemaking issues will be part of how they roll out implementation of CO2-control 

programs affecting their power industry and electricity consumers in their states. 

In this section, we provide a brief overview of the legal and/or regulatory foundation for setting 

electricity rates, and consider how and to what extent public utility commissions (PUC) appear to 

manage investments in (and benefits of) energy efficiency programs and measures in that context. 

Second, we review how the federal 

government, states, and PUCs 

consider the specific challenges faced 

by lower-income consumers. 

Our review of these issues is based on 

our prior experience and research into 

utility ratemaking, an understanding 

of relevant precedent and policies in 

most U.S. states, and the preparation 

of case studies for about half of the 

states in the U.S. The specific states 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 29 

on which we focused (shown in shading on the map to the right) represent a diverse cross-section of 

states by geography (covering virtually every region of the U.S.), by electric industry structures 

(competitive, investor-owned utilities, municipal electric utilities, and electric cooperatives), by type 

of local economy (e.g., industrial, rural), and by power plant mix (e.g., dominated by coal, or gas, or 

hydro/nuclear, or more of a mix). We summarize our research and findings here, and include the 

individual state case studies in Appendix 4. 

Electric Ratemaking to Allocate Costs and Benefits “Fairly and Equitably” (with a 

focus on energy efficiency programs) 

Electric customers will pay for some of the costs of CO2 compliance in a number of ways that are 

overseen by state utility regulators and/or boards of public power utilities. For example: 

 In states where the utility owns fossil-fuel power plants directly affected by the proposed EPA 

Clean Power Plan and where consumers pay a ‘bundled’ price for power, consumers’ rates will 

reflect the utility’s compliance costs (as approved by state regulators/utility boards and consistent 

with least-cost ratemaking principles). States in this category include much of the Western states, 

the Plains states and Upper Midwest, the Southeast. 

 In states with a restructured electric industry (e.g., Texas, Illinois, Ohio, the MidAtlantic and 

Northeast states), electricity customers that obtain power supply through default service offered 

by the distribution utility will pay electricity prices that reflect CO2 compliance costs included in 

competitive power supplier purchases in wholesale electricity markets, which are regulated by the 

Federal Energy Regulatory Commission and to some degree are influenced by local state policies 

(e.g., for renewable energy). 

 In states that choose to include energy efficiency as part of a State Plan, state PUCs (and in some 

instances, state efficiency providers) will play an important role in those programs. 

In most states, utility regulators endeavor to set utility rates in a manner that allocates costs to those 

customers whose usage patterns cause the costs to be incurred in the first place. For example, 

customers whose usage tends to increase during peak periods when relatively expensive powerproduction costs occur tend to end up having rates that reflect those peaking power costs. Relatively 

arcane but important ratemaking methodologies to align rates with costs are the bread-and-butter of 

regulators’ ratemaking work. 

Through general rate cases and other ratemaking proceedings, PUCs routinely evaluate utility 

investments and expenses, determine what portion of these should be borne by shareholders and what 

portion by customers, allocate such costs in a manner that approximates cost incurrence, and design 

the resulting rates so as to recover approved costs in a way that encourage efficiency in utility 

operations and management of costs. 

The obligation of PUCs to fairly and equitably allocate investments and expenses of regulated 

utilities is typically encoded in law, regulations, policies, and/or judicial precedent. Guidance is 

sometimes prescriptive, and other times general, but for many decades public utility regulation has 

followed the obligation to allocate costs and benefits in a manner that follows this concept, often 

phrased as “fair and equitable,” “not unduly preferential,” “just and reasonable,” “nondiscriminatory,” etc. Table 1 provides a sampling of legal or regulatory language included in the 

statutes and/or decisions of state PUCs. Appendix 4 contains more detailed summaries for the states 

included in our case studies. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 30 

Table 1 

Summary of State Ratemaking Practices that Address Consumer Impact Equity and Fairness 

State Bill or Recent 

Rate Case Description 

California 

Public Utilities 

Code, Division 1, 

Part 1, Chapter 4, 

739.6 

"The commission shall establish rates using cost allocation principles 

that fairly and reasonably assign to different customer classes the costs 

of providing service to those customer classes, consistent with the 

policies of affordability and conservation." 

Florida 

Florida Statute 

Title XXVII, 

§§366.03 

 "In fixing fair, just, and reasonable rates for each customer class, the 

commission shall, to the extent practicable, consider the cost of 

providing service to the class, as well as the rate history, value of 

service, and experience of the public utility; the consumption and load 

characteristics of the various classes of customers; and public 

acceptance of rate structures." 

Illinois Illinois Statute 

220 ILCS 5/1-102 

“... the health, welfare and prosperity of all Illinois citizens require the 

provision of adequate, efficient, reliable, environmentally safe and 

least-cost public utility services at prices which accurately reflect the 

long-term cost of such services and which are equitable to all citizens" 

and that "variation in costs by customer class and time of use is taken 

into consideration in authorizing rates for each class." 

Iowa 

State of Iowa 

RPU-2013-0004 

(Order Issued 

March 17, 2014) 

 Explaining a subrule related to new service, notes the provision “..is 

designed to insure that no customer receives any 'entitlement' to 

currently existing facilities, and that all customers pay their appropriate 

share of the utility's cost." 

Massachusetts 

Rate Case Order - 

Docket 11-01 

(Dated August 1, 

2011); 

“The rate structure for each rate class is a function of the cost of 

serving that rate class and how rates are designed to recover the cost to 

serve that rate class. The Department has determined that the goals of 

designing utility rate structures are to achieve efficiency and simplicity 

as well as to ensure continuity of rates, fairness between rate classes, 

and corporate earnings stability." 

Minnesota Minnesota Statute 

§ 216B.03 

 "Every rate made, demanded, or received by any public utility, or by 

any two or more public utilities jointly, shall be just and reasonable. 

Rates shall not be unreasonably preferential, unreasonably prejudicial, 

or discriminatory, but shall be sufficient, equitable, and consistent in 

application to a class of consumers." 

New Mexico NMSA 1978, §62-

8-1 

"Every rate made, demanded or received by any public utility shall be 

just and reasonable." 

North 

Carolina 

§62-1 and §62-

133.8 Subs. h-4 

 "To provide just and reasonable rates and charges for public utility 

services without unjust discrimination, undue preferences or 

advantages..." 

Texas 

Chapter 25, 

Subchapter J, § 

25.234 (effective 

July 5, 1999) 

“Rates shall not be unreasonably preferential, prejudicial, or 

discriminatory, but shall be sufficient, equitable, and consistent in 

application to each class of customers, and shall be based on cost." 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 31 

Specifically with respect to energy efficiency programs, PUCs typically consider fairness and equity 

considerations when approving utility spending on and collection of costs for energy efficiency 

programs and measures. However, although most states have some type of energy efficiency 

program operated by a utility (or a third-party energy efficiency entity, whose costs are paid for by 

electricity customers), ratemaking practices for “fairness and equity” in the design and 

implementation of energy-efficiency programs varies widely across the states. Typically, ratemaking 

and program design operate in parallel to assure a “fair and equitable” mix of energy efficiency 

programs and costs for different types of customers. 

Table 2 presents for each state a breakdown of energy efficiency spending by rate class, compared to 

the overall level of revenues collected from rate classes to cover all utility costs. Appendix 3 contains 

a summary and state-specific charts showing energy efficiency spending and overall electric utility 

revenues by rate class. 

We observe the following with respect to ratemaking practices and energy efficiency program design 

across the states: 

 Most states have at least some experience with reviewing and approving expenditures for 

implementation of energy-efficiency programs and measures, across all rate classes, and many 

states have developed energy-efficiency programs and precedent over many years, even decades. 

 In states with significant energy-efficiency expenditures, programs are implemented across all 

major customer classes. 

 Across the country, the percentage of spending on energy efficiency is roughly equivalent to the 

breakdown of revenues collected from each customer class. As shown in Table 2, the average 

dollars spent on residential, commercial, and industrial rate classes for energy efficiency 

programs is roughly 46 percent, 40 percent, and 14 percent, respectively – which is close to the 

total revenues collected for overall utility service from each rate class (45 percent, 37 percent, 

and 18 percent, respectively). 

 The types of energy-efficiency programs operated in a state vary across states. This may reflect, 

in part, that states have very different mixes and types of residential, commercial and industrial 

customers. It may also be due to the fact that in many states the energy savings benefits do not 

necessarily match the level of expenditures. For example, programs reaching large commercial 

and industrial customers may realize higher benefit/cost ratios than programs reaching smaller 

commercial and residential customers. In this case, the relative portion of total energy-efficiency 

spending may be smaller for large customers at the same time that total savings resulting from 

such spending are much higher. 

 Even in states with a long history of having supported energy efficiency programs paid for in 

electricity customers’ rates, PUCs are still finding that there are cost-effective opportunities to get 

further electric system savings. As electricity prices change over time, additional cost-effective 

energy-efficiency opportunities also increase. 

. 

 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 32 

Table 2 

State Energy Efficiency Spending by Customer Class Compared to Revenues 

2012 

State Residential Commercial Industrial Total 

Alabama $9,172 $4,625 $24,131 $37,928 

Alaska $363 $148 $0 $511 

Arizona $65,678 $70,216 $409 $136,303 

Arkansas $18,670 $9,834 $40,696 $69,200 

California $488,578 $559,873 $144,861 $1,193,312 

Colorado $44,040 $67,717 $13,452 $125,209 

Connecticut $58,083 $47,665 $14,742 $120,490 

Delaware $1,860 $0 $0 $1,860 

District of Columbia $8,423 $8,760 $0 $17,183 

Florida $281,810 $100,270 $43,436 $425,516 

Georgia $30,794 $13,128 $11,344 $55,266 

Hawaii $2,328 $4,555 $185 $7,068 

Idaho $15,859 $15,734 $32,540 $64,133 

Illinois $78,368 $75,671 $2,658 $156,697 

Indiana $59,112 $20,475 $13,880 $93,467 

Iowa $45,851 $25,852 $51,943 $123,646 

Kansas $10,767 $3,427 $5,869 $20,063 

Kentucky $29,318 $8,358 $2,307 $39,983 

Louisiana $1,065 $3 $0 $1,068 

Maine $7,630 $9,356 $4,579 $21,565 

Maryland $161,184 $66,413 $280 $227,877 

Massachusetts $114,872 $74,881 $42,373 $232,126 

Michigan $71,543 $63,338 $11,008 $145,889 

Minnesota $78,367 $94,601 $52,695 $225,663 

Mississippi $3,725 $1,567 $5,052 $10,344 

Missouri $17,576 $16,020 $254 $33,850 

Montana $6,270 $9,112 $15 $15,397 

Nebraska $6,413 $7,197 $7,741 $21,351 

Nevada $20,013 $15,461 $0 $35,474 

New Hampshire $9,447 $10,888 $339 $20,674 

New Jersey $48,397 $12,867 $3,067 $64,331 

New Mexico $14,890 $10,501 $2,250 $27,641 

New York $116,235 $338,506 $31,836 $486,577 

North Carolina $84,693 $55,883 $12,510 $153,086 

North Dakota $8,263 $9,618 $1,998 $19,879 

Ohio $71,711 $56,782 $36,361 $164,854 

Oklahoma $26,155 $12,118 $1,866 $40,139 

Oregon $40,587 $49,355 $29,584 $119,526 

Pennsylvania $140,410 $89,219 $60,161 $289,790 

 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 33 

State Residential Commercial Industrial Total 

Rhode Island $20,227 $18,740 $11,486 $50,453 

South Carolina $41,125 $19,832 $12,562 $73,519 

South Dakota $4,206 $1,701 $1,082 $6,989 

Tennessee $22,789 $15,544 $19,097 $57,430 

Texas $121,730 $78,628 $7,381 $207,739 

Utah $24,578 $14,708 $8,567 $47,853 

Vermont $14,474 $19,346 $0 $33,820 

Virginia $21,184 $6,614 $716 $28,514 

Washington $99,204 $85,276 $21,447 $205,927 

West Virginia $2,970 $2,749 $205 $5,924 

Wisconsin $40,351 $30,600 $46,831 $117,782 

Wyoming $1,784 $1,762 $1,288 $4,834 

 

Average Spending (%) 46% 40% 14% 

Average Rate Class 

Revenues (%) 

45% 37% 18% 

Notes & Sources: 

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. 

Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014. 

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load 

Management Programs as reported in EIA data. 

[3] "Average Spending (%)" shows the arithmetic mean of state percentages for EE revenues/costs by 

customer class. 

[4] "Average Rate Class Revenues (%)" takes the sum of customer class revenues/costs from all states 

and divides by the total EE revenue/costs from all states. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 34 

Protecting Lower-Income Consumers 

At least in the initial periods of CO2-compliance programs, electricity prices are expected to increase 

slightly – with longer-term impacts reversing over time. (EPA’s benefit/cost analysis estimates that 

“Average monthly electricity bills are anticipated to increase by roughly 3 percent in 2020, but 

decline by roughly 9 percent by 2030 because increased energy efficiency will lead to reduced 

usage.”32) Even modest increases in electricity costs can have a disproportionate impact in the 

budgets of lower-income customers. 

States have many tools to address cost impacts on lower-income customers, and have been using 

various approaches for many years. In Appendix 4, state summaries contain detailed descriptions of 

various programs to assist low-income customers, including the Low Income Home Energy 

Assistance Program (LIHEAP), the use of special discounted electricity rates for low-income 

customers, arrearage forgiveness and arrearage management plans, utility-sponsored charitable 

assistance programs, and dedicated funds for the targeted implementation of comprehensive electric 

and gas energy-efficiency programs in low-income residences. 

Two important findings emerge from our review of the various commitments states have made to 

protect low-income customers: First, there is widespread application of low-income assistance across 

the country. There is broad reliance on the federal LIHEAP program across states, and virtually all 

states have various programs to help low-income customers with electricity costs. These will tend to 

dampen the impacts of CO2 compliance costs on these consumers’ electricity bills; in fact, in some 

states the existence of capped rates for low-income customers could limit or even eliminate the effect 

of any potential compliance cost increases on low-income customers. 

Second, among the states, there are various ‘best-practice’ low-income assistance approaches. States 

can draw lessons from each other’s practices to design and administer programs to protect lowerincome consumers. Examples drawn from the states included in Appendix 4 include the following: 

 LIHEAP Funding for heating and utility bill assistance, and low-income home weatherization, 

administered by states with federal funding, at times supplemented with separate state funding; 

 Low-Income Rates, providing fixed discounts or caps on the rates that may be charged eligible 

low-income customers; 

 Dedicated Funding for Low-Income Energy Efficiency Programs, requiring utility spends or 

minimum contributions to the installation of energy-efficiency programs and measures in the 

building units or residences of low-income customers; 

 Arrearage Management, providing for discounting, contributions towards, or elimination of 

utility bill amounts in arrears for customers meeting minimum program requirements (such as 

making installment payments or staying current on bills going forward); 

 Utility-Driven Charitable Contribution Programs, encouraging contributions through utility bill 

stuffers to funds that help low-income customers pay energy bills; 

 Disconnect/shut-off Protection, whereby PUCs require extensive processes be followed by 

utilities before low-income customers may be disconnected for lack of bill payment; and 

 

32 EPA RIA, page ES-24. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 35 

 Miscellaneous One-Time or Emergency Assistance Programs instituted by states to help lowincome customers maintain energy services, pay bills, or otherwise acquire service. 

State Tools to Manage Potential Program Cost Impacts 

States have various traditional ratemaking tools that will help them allocate costs related to CO2

compliance in fair and equitable ways among customer classes. Additionally, states have 

considerable experience in designing energy efficiency programs to align program support with 

program benefits. Finally, states have deep experience in designing and using various mechanisms to 

protect lower-income customers. 

States are well equipped through long-standing application of ratemaking principles and practices 

governing cost allocation fairness and equity, the pursuit of widely-distributed benefits from energy 

efficiency program implementation, and a comprehensive and diverse set of programs and policies 

recognizing and addressing the disproportionate impact of energy costs on low-income customers. 

 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 36 

6. CONCLUSION 

On June 2, 2014, the EPA released proposed rules to reduce emissions of CO2 from existing fossil 

power plants. EPA’s Clean Power Plan would require significant reductions in CO2 emissions from 

the power sector, while also providing each state the flexibility to determine its preferred way to 

comply with the new requirements. 

The costs associated with EPA’s Clean Power Plan will likely be the focus of intense discussion in 

the coming months. EPA’s analysis indicates that although there will be costs to comply with the 

Clean Power Plan, such costs will be much lower than the benefits to public health and to the overall 

economy from lower CO2 and other air emissions. Yet others are suggesting that costs will outweigh 

benefits. 

Clearly, State Plans approved by the EPA will create the framework for the industry’s compliance 

with EPA’s Clean Power Plan. How compliance plans are designed by the states will strongly affect 

the magnitude and distribution of costs and benefits among consumers, power plant owners, and the 

general economy. Regulatory practices for passing on costs to electricity consumers are also 

important, as they can influence the degree and allocation of program costs and benefits. 

Based on our analysis and experience, we believe that the impacts on electricity rates from welldesigned CO2-pollution control programs will be modest in the near term, and can be accompanied by 

long-term benefits in the form of lower electricity bills and positive economic value to states’ and 

regional economies. 

We base our findings on the analysis conducted for this Report, in which we review the experience 

and expertise states have to prepare State Plans with a focus on lowering overall compliance costs 

and maximizing program economic benefits to consumers and to the states’ economies. 

There are sound reasons to be confident that customers will benefit from states’ plans to lower the 

carbon intensity of their electric systems. First, and foremost, states have a long track record of using 

various regulatory and other policy tools to encourage utility programs and investments that minimize 

the cost of electric service, consistent with the myriad of public policies (tax, environmental, 

reliability, labor, and other areas of policy that affect the provision of electricity). 

Second, under the proposed Clean Power Plan, states will have the flexibility, experience and tools to 

prepare and implement State Plans that fit their circumstances, minimize costs of compliance, and 

provide benefits to customers. Although states differ in many ways – including in terms of the 

electric systems, their regulatory culture, and their electric industry structure –all states have 

programs, policies and practices that will allow them to develop plans that align well with their 

different circumstances 

Third, market-based mechanisms offer unique opportunities to minimize costs while also reducing 

CO2 emissions from existing power plants. They can be done within a state or across a number of 

states. Pricing carbon in this way sends efficient, market-based signals for investment and operation 

of the electric system. Experience shows that such programs can be designed to achieve a number of 

state policy objectives, can lower electricity bills, and can deliver positive net economic benefits. 

Fourth, states are well equipped through long-standing utility ratemaking principles and practices and 

implementation of energy programs to help protect low-income customers when electricity costs 

increase. Such tools include low-income rates and arrearage management plans, dedicated funding 

for low-income energy-efficiency and weatherization programs, utility-driven charitable contribution 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 37 

programs, one-time emergency assistance programs, LIHEAP funding for heating and utility bill 

assistance, and disconnect/shut-off protection policies. 

In the end, the states are in control. State energy, environmental and utility regulatory agencies will 

tailor compliance approaches to their individual circumstances, and in doing so will play a significant 

role in driving down and managing the costs of Clean Power Plan compliance through their plans. 

Those State Plans will define the set of actions that will work together to reduce emissions from fossil 

power plants. The components of the State Plans will affect compliance costs and collateral benefits. 

And states’ regulatory and ratemaking policies can influence how compliance actions undertaken by 

owners of power plants and other actors translate into increases or decreases in electricity rates and 

bills to different types of consumers. 

We are confident that, based on a long history of state policymaking focused on similar issues, and on 

the experience states have with a number of tools directly relevant to the task, states will successfully 

and fairly navigate implementation of EPA’s Clean Power Plan. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group

APPENDICES 

1. EPA’s Proposed Clean Power Plan 

2. State Spending of RGGI Auction Proceeds 

3. State-Specific Data on Electricity Revenues and Energy Efficiency Spending 

4. State Case Study Summaries 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 1-1 

APPENDIX 1 

EPA’s Proposed Clean Power Plan 

On June 2, 2014, EPA announced its proposed “Carbon Pollution Emission Guidelines for Existing 

Stationary Source: Electric Utility Generating Units” (or the Clean Power Plan) to reduce emissions 

from the power sector by 30 percent by 2030, when compared to emissions in 2005. The proposed 

regulation would reduce emissions from existing fossil-fuel power plants in the U.S. 

On June 18, 2014, the U.S. EPA published its proposed rule to regulate carbon emissions from 

existing power plants in the Federal Register. This publication officially commenced a 120-day 

comment period on EPA’s proposed rule. 

The proposal will be implemented through a state-federal partnership that is designed to provide each 

state with flexibility in meeting its specific goal. Under the partnership, EPA identifies a target level 

of emission reductions from power plants located in each state, and the states identify (in State Plans) 

their preferred path for controlling emissions in their state. 

EPA’s proposal establishes each state’s emission reduction goals in two parts – an interim 

“reasonable progress” goal that states must meet on average over the ten-year period from 2020-

2029, and a final goal that states must meet at the end of that period, by 2030. The ultimate 2030 

standard is estimated to achieve CO2 emissions reductions from the power sector of 30 percent from 

CO2 emissions levels in 2005. 

Each state’s goal is a rate for the future carbon intensity of that state, expressed in pounds of CO2 per 

MWh. The EPA established a emission-reduction targets for each state using a methodology 

designed to reflect each state’s potential to reduce emissions, based on four “building blocks”: 

 Reducing the carbon intensity of generation at individual affected EGUs through heat rate 

improvements; 

 Reducing emissions from the most carbon-intensive affected EGUs in the amount that results 

from substituting generation at those EGUs with generation from less carbon-intensive 

affected EGUs (including NGCC units under construction); 

 Reducing emissions from affected EGUs in the amount that results from substituting 

generation at those EGUs with expanded low- or zero-carbon generation; and 

 Reducing emissions from affected EGUs in the amount that results from the use of demandside energy efficiency that reduces the amount of generation required. 

The emission intensity rate recognizes that CO2 emissions are a function of both how efficiently they 

operate and how much they operate, and is calculated using a formula focused on four potential CO2

emission reduction strategies, and state data related to each. EPA has requested comment on its 

approach, and in particular whether all four strategies should be considered, or just the first two. 

The proposed rule would require states to submit State Plans to propose the combination of actions 

that the state and/or owners of affected power plants will take to reduce emissions. EPA has 

provided states a wide degree of flexibility in determining appropriate compliance pathways, taking into 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 1-2 

consideration state-specific circumstances, opportunities, and objectives. Moreover, EPA will allow 

states to work individually or in groups, in order to capture potential opportunities for improved 

compliance efficiency and innovation, lower costs, and increased reliability. 

EPA identified in its proposal – by way of example, not limitation – a number of measures states can 

choose to rely on in their State Plans, including: 

 demand-side energy efficiency programs 

 renewable energy standards 

 efficiency improvements at plants 

 co-firing or switching to natural gas 

 transmission efficiency improvements 

 energy storage technology 

 retirements 

 expanding renewables or nuclear 

 market-based trading programs 

 energy conservation programs 

In addition to opening the door for states to work together on compliance, EPA has proposed to give 

states the option to convert the rate-based goal to a mass-based goal if they choose to in their State 

Plans. Adopting a mass-based goal would thus allow a state or group of states to cap their resulting 

quantity of CO2 emissions and establish a joint trading program. This could allow states with existing 

cap-and-trade programs (such as California, or the current RGGI states) to adopt compliance 

strategies that rely upon a structure similar to the existing program. Moreover, it would allow other 

states to establish cap and trade programs, or join an existing one. 

EPA’s proposed schedule for filing and compliance would require submission of State Plans by June 

30, 2016, with an opportunity for one-year extension if needed, or a two-year extension if needed to 

establish a multi-state plan. Once established, states would need to report progress at least every two 

years leading up to 2030. 

The EPA is proposing to evaluate and approve state plans based on four general criteria: 

1. The inclusion of enforceable measures that reduce EGU CO2 emissions; 

2. A projected achievement of emission performance equivalent to the goals established by the 

EPA, on a timeline equivalent to that in the emission guidelines; 

3. Assurance that emission reductions will be quantifiable and verifiable; and 

4. The inclusion of a process for biennial reporting on plan implementation, progress toward 

achieving CO2 goals, and implementation of corrective actions, if necessary. 

In addition, each state plan must follow the EPA framework regulations in the Code of Federal 

Regulations (CFR) at 40 CFR 60.23. The specific proposed components of states plans are: 

 Identification of affected entities; 

 Description of plan approach and geographic scope; 

 Identification of state emission performance level; 

 Demonstration that plan is projected to achieve emission performance level; 

 Identification of emission standards; 

 Demonstration that each emission standard is quantifiable, non-duplicative, permanent, 

verifiable, and enforceable; 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 1-3 

 Identification of monitoring, reporting, and recordkeeping requirements; 

 Description of state reporting; 

 Identification of milestones; 

 Identification of backstop measures; 

 Certification of hearing on state plan; and 

 Supporting material. 

In its proposal, EPA describes how energy efficiency and renewable energy programs and 

investments could play a role in program compliance, and seeks comment on different approaches for 

providing such crediting or administrative adjustment of EGU CO2 emissions rates for use of energy 

efficiency a compliance mechanism (as well as renewable energy or zero-carbon supply from nuclear 

power plants). EPA’s proposal leaves the door open on energy efficiency as a compliance 

mechanism in the context of individual, portfolio, state-wide, or multi-state programs. 

Key to the inclusion of energy efficiency as a compliance mechanism are mechanisms for monitoring 

and verification of energy savings, translation of savings into adjusted MWh or CO2 emissions, and 

associated state reporting mechanisms. EPA has requested input on a number of factors related to the 

use of energy efficiency and renewable energy for compliance, and commits to the development of 

guidance documents related to these potential compliance mechanisms. 

Finally, in its proposal and related documents, EPA reports on estimates of costs and benefits 

associated with program implementation under several options and scenarios related to compliance 

options, different regional and state approaches, and modeling sensitivities. As shown on “Table ES10” from the EPA’s Regulatory Impact Analysis (excerpted on the following page), EPA’s estimates 

for 2030 implementation show significant net economic benefits. Additionally, EPA’s analysis 

indicates that “Under Option 1 [which assumes states use a least-cost combination of the four 

building block strategies” in their State Plans], average nationwide retail electricity prices are 

projected to increase roughly 6 to 7 percent in 2020, and roughly 3 percent in 2030 (contiguous 

U.S.), compared to base case price estimates modeled for these same years. Average monthly 

electricity bills are anticipated to increase by roughly 3 percent in 2020, but decline by roughly 9 

percent by 2030 because increased energy efficiency will lead to reduced usage.” EPA RIA, page 

ES-24.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 1-4 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 2-1 

APPENDIX 2 

State Spending of Regional Greenhouse Gas Initiative (RGGI) Auction Proceeds 

 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 2-2 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

 Analysis Group 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

 Analysis Group 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

 Analysis Group 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

 Analysis Group 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

 Analysis Group 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

 Analysis Group 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

 Analysis Group 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

 Analysis Group 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

 Analysis Group 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

 Analysis Group 
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-1

APPENDIX 3

State Electricity Revenues and Energy Efficiency Spending
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-2

Alabama

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Alabama Electric Revenues by Customer Class

44% 29% 27%

Residential Commercial Industrial

Alabama Energy Efficiency Spending by Customer Class

24% 12% 64%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-3

Alaska

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Alaska Electric Revenues by Customer Class

37% 41% 22%

Residential Commercial Industrial

Alaska Energy Efficiency Spending by Customer Class

71% 29% 0%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-4

Arizona

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Arizona Electric Revenues by Customer Class

51% 38% 11%

Residential Commercial Industrial

Arizona Energy Efficiency Spending by Customer Class

48% 52% 0%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-5

Arkansas

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Arkansas Electric Revenues by Customer Class

47% 26% 27%

Residential Commercial Industrial

Arkansas Energy Efficiency Spending by Customer Class

27% 14% 59%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-6

California

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

California Electric Revenues by Customer Class

39% 47% 14%

Residential Commercial Industrial

California Energy Efficiency Spending by Customer Class

41% 47% 12%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-7

Colorado

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Colorado Electric Revenues by Customer Class

41% 37% 21%

Residential Commercial Industrial

Colorado Energy Efficiency Spending by Customer Class

35% 54% 11%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-8

Connecticut

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Connecticut Electric Revenues by Customer Class

48% 42% 10%

Residential Commercial Industrial

Connecticut Energy Efficiency Spending by Customer Class

48% 40% 12%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-9

Delaware

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Delaware Electric Revenues by Customer Class

48% 34% 18%

Residential Commercial Industrial

Delaware Energy Efficiency Spending by Customer Class

100% 0% 0%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-10

District of Columbia

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

District of Columbia Electric Revenues by Customer Class

19% 80% 1%

Residential Commercial Industrial

District of Columbia Energy Efficiency Spending by Customer Class

49% 51% 0%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-11

Florida

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Florida Electric Revenues by Customer Class

56% 39% 6%

Residential Commercial Industrial

Florida Energy Efficiency Spending by Customer Class

66% 24% 10%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-12

Georgia

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Georgia Electric Revenues by Customer Class

49% 36% 15%

Residential Commercial Industrial

Georgia Energy Efficiency Spending by Customer Class

56% 24% 21%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-13

Hawaii

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Hawaii Electric Revenues by Customer Class

31% 34% 34%

Residential Commercial Industrial

Hawaii Energy Efficiency Spending by Customer Class

33% 64% 3%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-14

Idaho

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Idaho Electric Revenues by Customer Class

43% 25% 32%

Residential Commercial Industrial

Idaho Energy Efficiency Spending by Customer Class

25% 25% 51%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-15

Illinois

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Illinois Electric Revenues by Customer Class

44% 34% 22%

Residential Commercial Industrial

Illinois Energy Efficiency Spending by Customer Class

50% 48% 2%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-16

Indiana

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Indiana Electric Revenues by Customer Class

40% 25% 35%

Residential Commercial Industrial

Indiana Energy Efficiency Spending by Customer Class

63% 22% 15%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-17

Iowa

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Iowa Electric Revenues by Customer Class

43% 28% 29%

Residential Commercial Industrial

Iowa Energy Efficiency Spending by Customer Class

37% 21% 42%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-18

Kansas

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Kansas Electric Revenues by Customer Class

41% 38% 21%

Residential Commercial Industrial

Kansas Energy Efficiency Spending by Customer Class

54% 17% 29%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-19

Kentucky

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Kentucky Electric Revenues by Customer Class

38% 25% 37%

Residential Commercial Industrial

Kentucky Energy Efficiency Spending by Customer Class

73% 21% 6%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-20

Louisiana

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Louisiana Electric Revenues by Customer Class

43% 32% 25%

Residential Commercial Industrial

Louisiana Energy Efficiency Spending by Customer Class

100% 0% 0%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-21

Maine

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Maine Electric Revenues by Customer Class

48% 34% 18%

Residential Commercial Industrial

Maine Energy Efficiency Spending by Customer Class

35% 43% 21%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-22

Maryland

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Maryland Electric Revenues by Customer Class

49% 45% 5%

Residential Commercial Industrial

Maryland Energy Efficiency Spending by Customer Class

71% 29% 0%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-23

Massachusetts

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Massachusetts Electric Revenues by Customer Class

40% 32% 28%

Residential Commercial Industrial

Massachusetts Energy Efficiency Spending by Customer Class

49% 32% 18%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-24

Michigan

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Michigan Electric Revenues by Customer Class

42% 37% 21%

Residential Commercial Industrial

Michigan Energy Efficiency Spending by Customer Class

49% 43% 8%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-25

Minnesota

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Minnesota Electric Revenues by Customer Class

42% 33% 25%

Residential Commercial Industrial

Minnesota Energy Efficiency Spending by Customer Class

35% 42% 23%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-26

Mississippi

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Mississippi Electric Revenues by Customer Class

44% 30% 25%

Residential Commercial Industrial

Mississippi Energy Efficiency Spending by Customer Class

36% 15% 49%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-27

Missouri

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Missouri Electric Revenues by Customer Class

50% 36% 15%

Residential Commercial Industrial

Missouri Energy Efficiency Spending by Customer Class

52% 47% 1%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-28

Montana

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Montana Electric Revenues by Customer Class

42% 39% 19%

Residential Commercial Industrial

Montana Energy Efficiency Spending by Customer Class

41% 59% 0%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-29

Nebraska

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Nebraska Electric Revenues by Customer Class

38% 30% 32%

Residential Commercial Industrial

Nebraska Energy Efficiency Spending by Customer Class

30% 34% 36%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-30

Nevada

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Nevada Electric Revenues by Customer Class

46% 26% 28%

Residential Commercial Industrial

Nevada Energy Efficiency Spending by Customer Class

56% 44% 0%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-31

New Hampshire

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

New Hampshire Electric Revenues by Customer Class

46% 39% 15%

Residential Commercial Industrial

New Hampshire Energy Efficiency Spending by Customer Class

46% 53% 2%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-32

New Jersey

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

New Jersey Electric Revenues by Customer Class

44% 48% 8%

Residential Commercial Industrial

New Jersey Energy Efficiency Spending by Customer Class

75% 20% 5%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-33

New Mexico

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

New Mexico Electric Revenues by Customer Class

38% 42% 21%

Residential Commercial Industrial

New Mexico Energy Efficiency Spending by Customer Class

54% 38% 8%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-34

New York

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

New York Electric Revenues by Customer Class

42% 54% 4%

Residential Commercial Industrial

New York Energy Efficiency Spending by Customer Class

24% 70% 7%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-35

North Carolina

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

North Carolina Electric Revenues by Customer Class

51% 34% 15%

Residential Commercial Industrial

North Carolina Energy Efficiency Spending by Customer Class

55% 37% 8%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-36

North Dakota

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

North Dakota Electric Revenues by Customer Class

35% 36% 29%

Residential Commercial Industrial

North Dakota Energy Efficiency Spending by Customer Class

42% 48% 10%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-37

Ohio

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Ohio Electric Revenues by Customer Class

44% 32% 24%

Residential Commercial Industrial

Ohio Energy Efficiency Spending by Customer Class

43% 34% 22%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-38

Oklahoma

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Oklahoma Electric Revenues by Customer Class

48% 33% 19%

Residential Commercial Industrial

Oklahoma Energy Efficiency Spending by Customer Class

65% 30% 5%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-39

Oregon

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Oregon Electric Revenues by Customer Class

48% 34% 17%

Residential Commercial Industrial

Oregon Energy Efficiency Spending by Customer Class

34% 41% 25%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-40

Pennsylvania

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Pennsylvania Electric Revenues by Customer Class

47% 28% 24%

Residential Commercial Industrial

Pennsylvania Energy Efficiency Spending by Customer Class

48% 31% 21%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-41

Rhode Island

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Rhode Island Electric Revenues by Customer Class

46% 44% 10%

Residential Commercial Industrial

Rhode Island Energy Efficiency Spending by Customer Class

40% 37% 23%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-42

South Carolina

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

South Carolina Electric Revenues by Customer Class

47% 29% 24%

Residential Commercial Industrial

South Carolina Energy Efficiency Spending by Customer Class

56% 27% 17%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-43

South Dakota

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

South Dakota Electric Revenues by Customer Class

45% 37% 18%

Residential Commercial Industrial

South Dakota Energy Efficiency Spending by Customer Class

60% 24% 15%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-44

Tennessee

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Tennessee Electric Revenues by Customer Class

45% 32% 23%

Residential Commercial Industrial

Tennessee Energy Efficiency Spending by Customer Class

40% 27% 33%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-45

Texas

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Texas Electric Revenues by Customer Class

48% 35% 17%

Residential Commercial Industrial

Texas Energy Efficiency Spending by Customer Class

59% 38% 4%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-46

Utah

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Utah Electric Revenues by Customer Class

39% 37% 23%

Residential Commercial Industrial

Utah Energy Efficiency Spending by Customer Class

51% 31% 18%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-47

Vermont

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Vermont Electric Revenues by Customer Class

45% 36% 18%

Residential Commercial Industrial

Vermont Energy Efficiency Spending by Customer Class

43% 57% 0%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-48

Virginia

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Virginia Electric Revenues by Customer Class

49% 39% 12%

Residential Commercial Industrial

Virginia Energy Efficiency Spending by Customer Class

74% 23% 3%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-49

Washington

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Washington Electric Revenues by Customer Class

47% 35% 18%

Residential Commercial Industrial

Washington Energy Efficiency Spending by Customer Class

48% 41% 10%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-50

West Virginia

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

West Virginia Electric Revenues by Customer Class

44% 26% 30%

Residential Commercial Industrial

West Virginia Energy Efficiency Spending by Customer Class

50% 46% 3%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-51

Wisconsin

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Wisconsin Electric Revenues by Customer Class

41% 35% 24%

Residential Commercial Industrial

Wisconsin Energy Efficiency Spending by Customer Class

34% 26% 40%
EPA’s Clean Power Plan: State Plans and Consumer Impacts

Analysis Group Page 3-52

Wyoming

Comparison of Customer Class Electric Revenues and Energy Efficiency Spending by State (2012)

Notes & Sources:

[2] Energy efficiency spending includes costs associated with both Energy Efficiency and Load Management Programs as reported in EIA data.

[1] Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information Administration, Electricity, available at 

http://www.eia.gov/electricity/data/eia861/, accessed May 10, 2014.

Residential Commercial Industrial

Wyoming Electric Revenues by Customer Class

22% 29% 49%

Residential Commercial Industrial

Wyoming Energy Efficiency Spending by Customer Class

37% 36% 27%
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-1

APPENDIX 4

State Case Studies

(For the States Shown in Shading Below)
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-2

ARIZONA

Summary

• State ratemaking practices

o Equitable allocation of utility costs to rate classes

o Low-income considerations for DSM charges

• Collection of energy efficiency (and other) public benefit revenues

o The Commission has overseen the collection of system benefit charges for 15 years

o Individual utilities administer their system benefit charges and related programs

• Disbursement of energy efficiency revenues

o Energy efficiency revenues from residential customers are spent in rough proportion to 

the dollars collected from that rate class

o Energy efficiency spending in 2012 was 48% residential and 52% commercial

• Protection of low-income customers

o Utilities must allocate a portion of demand side management (DSM) resources to lowincome customers

o Ratepayer-funded low-income programs totaled $33.4 million toward rate assistance and 

$3.9 million toward energy efficiency in 2012

o Utilities offer rate assistance and energy efficiency programs

o Charitable rate assistance programs also exist

o LIHEAP funding in 2014: $23,641,470

State ratemaking practices:

In Arizona, showing that rates are fair and reasonable across different customer classes is an important 

part of setting rates. In a recent Arizona Rate Case, Tucson Electric Power Company (TEP) used a 

Customer Class Cost of Service Study (CCCSS) to compare the reasonableness of the Settlement 

Agreement at issue. TEP argued that “the revenue allocation under the Settlement Agreement is equitable, 

while gradually moving towards matching customer classes to their actual costs.”1

Arizona law states that all public service corporations that provide electric service to retail customers in 

Arizona must develop DSM programs for residential, non-residential, and low-income customers, which 

should be funded by a non-bypassable mechanism. The law states that funds should be collected “from 

residential customers and from non-residential customers proportionately to those customer classes to the 

extent practicable,” and that costs for low-income customers “shall be borne by all customer classes, 

except where a customer or customer class is specifically exempted by Commission order.”2 Furthermore, 

the law states that affected utilities must “allocate a portion of DSM resources specifically to low-income 

customers.”3

 

1 Arizona Corporation Commission Rate Case Docket E-01933A-12-0291, Docketed June 27, 2013. 2 Arizona Administrative Code (AAC) R14-2-2401; AAC R14-2-2408. 3 AAC R14-2-2403.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-3

Collection of energy efficiency (and other) public benefit revenues:

In 1999, the Arizona Corporation Commission ordered utilities to assess a non-bypassable system 

benefits charge on customers in order to fund low-income assistance, energy efficiency, and renewable 

resource programs. Oversight is provided by the Arizona Corporation Commission, while programs are 

administered by individual utilities.4

Disbursement of energy efficiency revenues:

According to the EIA, energy efficiency spending in Arizona in 2012 was distributed in the following 

way: 48% of spending was on residential customers and 52% was on commercial customers.5 Energy 

efficiency spending on residential customers is in rough proportion to the electric revenues collected from 

that rate class.6

Protection of low-income customers:

LIHEAP provides federal funding to states to assist low-income utility customers with their home energy 

bills. For Arizona, funding for 2014 totaled $23,641,470. Customers whose income is not greater than 

60% of the state median income (or 150% of the Federal Poverty Level for households with 8 or more 

people) are LIHEAP-eligible. An estimated 28,781 households benefited from LIHEAP heating and 

cooling assistance in 2013. Eligible customers receive between $75 and $640 in heating and cooling 

benefits.7

The LIHEAP Clearinghouse compiles a table that provides the breakdown of ratepayer funded lowincome energy assistance and energy efficiency by state for certain states. The most recent data from 

2012 lists a total of $33.4 million in ratepayer funds dedicated toward low-income rate assistance, and 

$3.9 million in ratepayer funds dedicated toward low-income energy efficiency.8 These numbers include 

totals from state- and utility-administered programs.

Many utilities offer utility-funded rate assistance programs and energy efficiency programs for lowincome customers. Generally, utilities administer their rate assistance programs and contract with local 

community action agencies for their energy efficiency program. Examples of programs offered by 

Arizona Public Service are below:

• Arizona Public Service offers ratepayer assistance and crisis bill assistance funded by a 

volumetric “System Benefits Adjustment” on customers’ bills. Their Energy Support Program 

(ESP) offers up to 65% off on the cost of electricity for eligible low-income customers, and their 

Crisis Bill Assistance (CBA) offers up to $400 per year for eligible customers with financial 

hardship. The CBA is administered by the Arizona Community Action Association. Funding in 

2012 was $18.2 million for ESP and $254,000 for CBA.

• Arizona Public Service also offers an Energy Wise Low-Income Weatherization (EW) Program 

which is funded by an “Environmental Improvement Surcharge” paid by all non-low-income 

 

4 “Public Benefits Funds: Increasing Renewable Energy & Industrial Energy Efficiency Opportunities,” published by the US 

DOE, March 2010.

5 Percentages reflect EE and Load Management Program costs from EIA data. 

6 Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information 

Administration, Electricity, available at http://www.eia.gov/electricity/data/eia861/, accessed June 4, 2012. 7 LIHEAP Clearinghouse Arizona Profile, available at http://liheap.ncat.org/profiles/Arizona.htm, accessed June 4, 2014. 8 LIHEAP Clearinghouse “2012 State-by-State Ratepayer Funded Low-Income Energy Assistance and Energy Efficiency,” 

available at http://liheap.ncat.org/Supplements/2012/supplement12.htm, accessed June 4, 2014. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-4

customers. Services include attic insulation, testing of heating and cooling equipment, and water 

efficiency measures, among other energy efficiency measures. Funding in 2012 for EW totaled 

$2.12 million.9

In addition to ratepayer-funded programs, many utilities offer charitable rate assistance. For example, 

Trico Electric Cooperative, Sulphur Springs Valley Electric Coop, and Mohave Electric Coop all 

collected customer donations that go toward helping in-need customers pay their electric bills.10

 

9 LIHEAP Clearinghouse Arizona State Snapshot, available at http://liheap.ncat.org/dereg/states/azsnapshot.htm, accessed June 

4, 2014.

10 LIHEAP Clearinghouse Arizona Profile, available at http://liheap.ncat.org/profiles/Arizona.htm, accessed June 4, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-5

CALIFORNIA

Summary

• State ratemaking practices

o Equitable allocation of utility costs to rate classes

o Low-income considerations

• Collection of energy efficiency (and other) public benefit revenues

o The Commission has overseen the collection and spending of public benefit funding 

mechanisms for 18 years

o Public benefit funding collected from all rate classes, and all customers within rate 

classes, on a volumetric basis

• Disbursement of energy efficiency revenues

o Energy efficiency revenues are spent in rough proportion to the dollars collected within 

rate classes 

o Energy efficiency spending in 2012 was 41% residential, 47% commercial, and 12%

industrial

• Protection of low-income customers

o Low-income rates and programs are protected with oversight of the Low-Income 

Oversight Board

o Ratepayer-funded low-income programs totaled $1.2 billion toward rate assistance and 

$250 million toward energy efficiency in 2012

o “The Big Four” IOUs, municipals and coops, and smaller utilities offer ratepayer funded 

rate assistance and energy efficiency programs

o Utilities also offer rate assistance programs through charitable organizations

o LIHEAP funding in 2014: $153,591,640

State ratemaking practices:

Enacted in 1988, the California Public Utilities Code, Division 1, Part 1, Chapter 4, 739.6 states, “The 

commission shall establish rates using cost allocation principles that fairly and reasonably assign to 

different customer classes the costs of providing service to those customer classes, consistent with the 

policies of affordability and conservation.”1 In addition to providing provisions relating to equity across 

customer classes, the PUC code also has provisions to protect conservation and energy efficiency efforts 

and to protect low-income customers. The PUC Division 1, Part 1, Chapter 4, 739.9 code states that when 

electric utilities alter their rates for residential customers, “The commission shall ensure that any 

approved charges do all of the following: (1) reasonably reflect an appropriate portion of the different 

costs of serving small and large customers. (2) Not unreasonably impair incentives for conservation and 

energy efficiency. (3) Not overburden low-income customers.”2

 

1 California PUC Division 1, Part 1, Chapter 4, 739.6, effective June 28, 1988. 2 California PUC Division 1, Part 1, Chapter 4, 739.9, effective January 1, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-6

Collection of energy efficiency (and other) public benefit revenues:

California established its first public benefit fund in 1996. Called the Public Goods Charge (PGC), the 

fund was overseen by the California Public Utilities Commission (CPUC) and was non-bypassable. 

Proceeds from this fund went toward energy efficiency and low-income assistance programs which were 

administered by individual utilities and renewable energy and RD&D which were administered by The 

California Energy Commission.3 DSIRE reports that these rates varied by utility and customer type, but 

lists the following approximate charges: for Renewables, ~1.6 mills/kWh; for Efficiency, ~5.4 mills/kWh; 

and for RD&D, ~1.5 mills/kWh. Annual proceeds from the PGC toward renewables averaged $65.5 

million annually from 2008-10; for energy efficiency, $228 million annually; and for RD&D, $62.5 

million annually.4

Legislation had extended collections from the PGC through 2011, but the California legislature did not 

pass any additional measures to fund the PGC beginning in 2012. In practice, however, the CPUC still 

has the authority to levy charges for a public benefits fund through the PUC code 381 which has no 

expiration date. Funds from the new Electric Program Investment Charge Fund (EPICF) will go toward 

renewable energy and RD&D projects. From 2010-2012, the CPUP approved the use of funds from the 

Procurement Energy Efficiency Balancing Account (PEEBA) to replace energy efficiency funds 

previously obtained through the PGC.5

Disbursement of energy efficiency revenues:

According to the EIA, energy efficiency spending in California in 2012 was distributed in the following 

way: 41% of spending was on residential customers, 47% was on commercial customers, and 12% was on 

industrial customers.6 This is in rough proportion to the electric revenues collected from each rate class.7

Protection of low-income customers: 

LIHEAP provides federal funding to states to assist low-income utility customers with their home energy 

bills. For California, funding for 2014 totaled $153,591,640. Customers whose income is not greater than 

60% of the state median income are LIHEAP-eligible. An estimated 194,189 households benefited from 

LIHEAP heat assistance in 2013. As an example, the average money spent on heating for LIHEAP 

customers in 2012 was $424. In addition, 2012 customers could receive up to $1,000 to deal with a 

crisis.8

The LIHEAP Clearinghouse compiles a table that provides the breakdown of ratepayer funded lowincome energy assistance and energy efficiency by state for certain states. The most recent data from 

2012 lists a total of $1.2 billion in ratepayer funds dedicated toward low-income rate assistance, and $250 

 

3 “Public Benefits Funds: Increasing Renewable Energy & Industrial Energy Efficiency Opportunities,” published by the US 

DOE, March 2010.

4 California Public Benefits Fund Page, DSIRE database, available at 

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=CA05R&re=1&ee=1, accessed June 4, 2014. 5 California Public Benefits Fund Page, DSIRE database, available at 

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=CA05R&re=1&ee=1, accessed June 4, 2014. 6 Percentages reflect EE and Load Management Program costs from EIA data. 

7 Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information 

Administration, Electricity, available at http://www.eia.gov/electricity/data/eia861/, accessed June 4, 2014. 8 LIHEAP Clearinghouse California Profile, available at http://liheap.ncat.org/profiles/California.htm, accessed June 4, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-7

million in ratepayer funds dedicated toward low-income energy efficiency.9 These numbers include totals 

from state- and utility-administered programs.

California has several ratepayer funded low-income assistance programs that are administered by utilities 

with regulatory oversight. Participating utilities include the state’s large Investor-Owned Utilities (IOUs) 

as well as several smaller utilities, and programs are funded through a “public purpose surcharge on all 

regulated utilities,” in which all customers contribute, except for those who qualify for CARE (see 

below). Several of such programs are listed below:

• The California Alternate Rates for Energy (CARE) provides a 20% discount on gas and electric 

utility bills for qualifying low-income households. Funding from the state’s largest utilities 

totaled $1.2 billion in 2012.

• The Family Electric Rate Assistance Program provides an additional electric rate discount for 

qualifying low-income households for customers of the state’s largest electric IOUs. Funding 

from these IOUs totaled $11 million in 2012.

• The Energy Savings Assistance Program (formerly Low Income Energy Efficiency or LIEE) 

funds the “Repair and replacement of gas and electric heating and water heating systems, air 

conditioners and evaporative coolers, refrigerator and lighting upgrades, weatherization and 

energy efficiency education.” Funding from the state’s largest utilities totaled $250.6 million in 

2012.10

In addition to the above ratepayer funded utility-administered programs, smaller utilities and municipal 

utilities offer low-income rate assistance and energy efficiency programs. A few examples are below:

• Sacramento Municipal Utility District (SMUD) has several programs to help with rate assistance, 

including a payment program for overdue utility bills and the Energy Assistance Program Rate 

(EAPR) where qualifying customers can receive a discount of more than 30% on their energy bill. 

SMUD also offers a Medical Equipment Discount Rate for customers with high electric costs 

resulting from running medical equipment.

• Alameda Municipal Power’s Energy Assistance Program (EAP) is an intervention program that 

provides a “one-year 25 percent electric rate reduction home energy audit,” along with a 

replacement of certain appliances and weatherization for homes with electric heat. They also offer 

a Medical Discount Program for customers not benefitting from EAP that offers a 10% discount 

for customers running energy-intensive health devices. 

• The Banning Electric Alternative Rate Program in the City of Banning is funded by the statemandated electric public benefits charge and results in up to $200 annual savings on eligible 

customers’ electric utility bill.11

 

9 LIHEAP Clearinghouse “2012 State-by-State Ratepayer Funded Low-Income Energy Assistance and Energy Efficiency,” 

available at http://liheap.ncat.org/Supplements/2012/supplement12.htm, accessed June 4, 2014. 10 LIHEAP California State Snapshot, available at http://liheap.ncat.org/dereg/states/casnapshot.htm, accessed June 4, 2014. 11 LIHEAP Clearinghouse California Profile, available at http://liheap.ncat.org/profiles/California.htm, accessed June 4, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-8

Many utilities also offer charitable assistance, funded through organizations like the Salvation Army or 

through donations and subsidies from shareholders, employees, and/or customers. A few examples are 

listed below:12

• SMUD offers EnergyHELP which provides eligible low-income customers with up to $200 in 

yearly assistance toward unpaid bills. This program is offered in conjunction with The Salvation 

Army, Sacramento Food Bank Services, Travelers Aid and Folsom Cordova Community 

Partnership.

• San Diego Gas and Electric’s Neighbor to Neighbor program is subsidized by shareholders and 

employees and helps customers experiencing temporary financial hardship to pay their bills.

• Los Angeles Department of Water and Power offers rate assistance to low-income and 

unemployed elderly customers through funds collected from customers and city employees.

As an additional measure to protect low-income utility customers, the California legislature established 

the Low Income Oversight Board to advise the PUC on their low-income programs and to serve as a 

liaison between low-income customers and representatives.13

 

12 LIHEAP Clearinghouse California Profile, available at http://liheap.ncat.org/profiles/California.htm, accessed June 4, 2014. 13 See the LIOB website, available at http://www.liob.org/, accessed June 4, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-9

COLORADO

Summary

• State ratemaking practices

o Fair and reasonable allocation of utility costs to customers

o Equitable allocation of DSM costs to all customer classes

o Low-income considerations

• Collection of energy efficiency (and other) public benefit revenues

o The Commission oversaw the collection and spending of funds collected from Xcel 

energy from 2004-2013

o The City of Boulder collects funds from all customers, on a volumetric basis with varying 

rates based on customer class

• Disbursement of energy efficiency revenues

o Energy efficiency revenues are spent in rough proportion to the dollars collected within 

rate classes 

o Energy efficiency spending in 2012 was 35% residential, 54% commercial, and 11% 

industrial

• Protection of low-income customers

o Ratepayer-funded low-income programs totaled $5.47 million toward rate assistance and 

$6.33 million toward energy efficiency in 2012

o Utilities offer ratepayer-funded rate assistance, arrears management, and energy 

efficiency programs

o Utilities also offer charitable rate assistance programs

o LIHEAP funding in 2014: $46,377,830

State ratemaking practices:

Colorado law demands that rates charged by utilities be fair to customers. As summarized in the Colorado 

Revised Statutes, §40-3-101.1, “All charges made, demanded, or received by any public utility for any 

rate, fare, product, or commodity furnished or to be furnished or any service rendered or to be rendered 

shall be just and reasonable.”1 In addition, the Public Utilities Commission (PUC) takes into account lowincome customers when setting rates. Specifically, the Colorado Department of Regulatory Agencies 

PUC code states, “Electric utilities with Colorado retail customers shall file with the Commission a 

proposal to provide low-income energy assistance by offering rates, charges, and services that grant a 

reasonable preference or advantage to residential low-income customers,” which is permitted by CRS 

§40-3-106.

2

In 2007, the General Assembly of the State of Colorado amended the CRR §40-1-102 to declare that costeffective Demand-Side Management Programs (DSMs), which include any combination of energy 

efficiency, energy conservation, load management, and demand response programs, “will save money for 

 

1 Colorado Revised Statutes §40-3-101.1, effective April 19, 2013. 2 Colorado Department of Regulatory Agencies PUC CCR 723-3, Part 3.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-10

consumers and utilities and protect Colorado’s environment.” As utilities develop their DSM programs 

and implement incentive mechanisms, which can include cost-adjustment, the Commission “shall ensure 

that utilities develop and implement DSM programs that give all classes of customers an opportunity to 

participate and shall give due consideration to the impact of DSM programs on Nonparticipants and on 

low-income customers.”3

Collection of energy efficiency (and other) public benefit revenues:

While Colorado does not have a true Public Benefits Fund, Xcel Energy agreed to spend $196 million on 

energy efficiency programs from 2004 to 2013 as part of a settlement and levied a charge on customers to 

recover these costs. The utility administered these funds, which were collected for energy efficiency and 

load management programs, and the PUC served as the oversight body.4

Additionally, in 2006 citizens of the City of Boulder voted in favor of a tax levied on electricity 

customers in the form of a charge based on electric usage. Proceeds go to programs to increase energy 

efficiency, increase renewable energy, and decrease motor vehicle emissions. Maximum tax rates for 

electricity customers as reported in DSIRE are as follows: for residential customers, $0.0049/kWh; for 

commercial customers, $0.0009/kWh; and for industrial customers, $0.0003/kWh. In 2010, proceeds from 

this tax totaled $1.8 million.5

Disbursement of energy efficiency revenues:

According to the EIA, energy efficiency spending in Colorado in 2012 was distributed in the following 

way: 35% of spending was on residential customers, 54% was on commercial customers, and 11% was on 

industrial customers.6 This is in rough proportion to the electric revenues collected from each rate class.7

Protection of low-income customers:

As mentioned above, there are laws in place to protect low-income customers when it comes to the setting 

of utility rates. In addition, federally-funded LIHEAP funds go toward protecting low-income utility 

customers. Colorado LIHEAP funds for 2014 totaled $46,377,830, and benefit customers who are below 

150% of the Federal Poverty Level. In Colorado, this money is spent on heating, with an average 

spending in 2013 of $302 per household.8

The LIHEAP Clearinghouse additionally also compiles a table that provides the breakdown of ratepayer 

funded low-income energy assistance and energy efficiency by state for certain states. The most recent 

Colorado data from 2012 lists a total of $5.47 million in ratepayer funds dedicated toward low-income 

rate assistance, and $6.33 million in ratepayer funds dedicated toward low-income energy efficiency.9

 

3 CRS §40-1-102 as Amended by House Bill 07-1037, effective 2007. 4 “Public Benefits Funds: Increasing Renewable Energy & Industrial Energy Efficiency Opportunities,” published by the US 

DOE, March 2010.

5 City of Boulder – Climate Action Plan Fund webpage, DSIRE database, available at 

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=CO37R&re=1&ee=1, accessed June 4, 2014. 6 Percentages reflect EE and Load Management Program costs from EIA data. 7 Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information 

Administration, Electricity, available at http://www.eia.gov/electricity/data/eia861/, accessed June 4, 2014. 8 LIHEAP Clearinghouse State Profile, available at http://liheap.ncat.org/profiles/Colorado.htm, accessed June 4, 2014. 9 LIHEAP Clearinghouse “2012 State-by-State Ratepayer Funded Low-Income Energy Assistance and Energy Efficiency,” 

available at http://liheap.ncat.org/Supplements/2012/supplement12.htm, accessed June 4, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-11

Individual utilities have low-income programs that include some combination of rate assistance, arrears 

management, and energy efficiency. Many of these programs are administered in partnership with 

Colorado LIHEAP and/or Energy Outreach Colorado10, a non-profit that helps raise funds to help lowincome Coloradans meet their energy needs.11 A few examples of programs offered by Colorado utilities 

are provided below:

• Black Hills Energy offers a Black Hills Energy Assistance Program (BHEAP) and Low-Income 

Weatherization (LIWAP) Program. 

o BHEAP is administered in partnership with Colorado LIHEAP, and qualifying customers 

receive both rate assistance through a fixed monthly credit on customers’ bills and a 

monthly arrearage credit equal to 1/24 of the pre-existing arrearage. This program is 

funded through a “BHEAP Funding Fee” charged to all customers. 

o LIWAP is administered through partnership with community action agencies, and 

qualifying customers receive weatherization services such as refrigerator replacement and 

evaporative cooler installations. This program is funded through a “Demand-Side 

Management Cost Adjustment” charge to all customers.

o Estimated 2012 funding for BHEAP was $234,000 and for LIWAP was $424,000.

• Xcel Energy also offers low-income rate assistance, arrears management, and energy efficiency 

programs.

o The Electric Affordability Program (EAP) is administered in partnership with Colorado 

LIHEAP and provides several options for rate-assistance and arrears management for 

qualifying customers. For rate assistance, the Percentage of Income Payment Plan (PIPP) 

allows customers to receive a bill credit related to the difference between their customer 

bill and 3% of their annual income, while the Step Bill Discount (SBD) gives qualifying 

households a percentage discount based on their last twelve months of energy usage. For 

arrears management, PIPP credits are designed to eliminate outstanding balances over the 

course of 12 or 24 months, while SBD provides a one-time credit of up to $200 to arrears. 

The cost of EAP is built into the “Service and Facility Charge” charged to all customers. 

Estimated 2012 funding for EAP was $6.4 million.

o The Low-Income Segment (LIS) is a low-income energy efficiency program that is 

administered in partnership with the Governor’s Energy Office and Energy Outreach 

Colorado. This program offers services including the distribution of energy-saving kits

and weatherization assistance, and is funded through a “Demand-Side Management Cost 

Adjustment” charged to all customers. Estimated 2012 funding for LIS was $5.54 

million.12

 

10 LIHEAP Clearinghouse State Snapshot, available at http://liheap.ncat.org/dereg/states/cosnapshot.htm, accessed June 4, 2014. 11 See Energy Outreach Colorado About Us webpage, available at http://www.energyoutreach.org/about, accessed June 4, 2014. 12 LIHEAP Clearinghouse State Snapshot, available at http://liheap.ncat.org/dereg/states/cosnapshot.htm, accessed June 4, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-12

Many utilities also offer charitable programs to help with rate assistance. A few examples are provided 

below:

• Black Hills Energy’s Black Hills Cares program matches customer and employee donations to the 

program and provides assistance to eligible customers to pay their energy bills or pay energyrelated expenses.

• The City of Longmont’s COPE program offers utility bill payment assistance to customers who 

have a disconnect notice. 

• Yampa Valley Electric offers a Caring Customers program, where customers can elect to round 

their electric bills up to the nearest dollar, and an appointed board of directors determines whom 

to deliver funds to.13

 

13 LIHEAP Clearinghouse State Profile, available at http://liheap.ncat.org/profiles/Colorado.htm, accessed June 4, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-13

CONNECTICUT

Summary

• State ratemaking practices

o Equitable allocation of utility costs to rate classes

o Low-income considerations

• Collection of energy efficiency (and other) public benefit revenues

o Separate energy efficiency and renewable energy funds exist

o The Clean Energy Finance and Investment Authority has overseen the collection and 

spending of the Connecticut Clean Energy Fund for 16 years

o The Energy Conservation Management Board has helped the relevant utilities oversee the 

Connecticut Energy Efficiency Fund for 16 years

o Public benefit funding collected from all rate classes, and all customers within rate 

classes, on a volumetric basis

• Disbursement of energy efficiency revenues

o Energy efficiency revenues are spent in rough proportion to the dollars collected within 

rate classes 

o Energy efficiency spending in 2012 was 48% residential, 40% commercial, and 12% 

industrial

• Protection of low-income customers

o Ratepayer-funded low-income programs totaled $20.8 million toward rate assistance and 

$19.1 million toward energy efficiency in 2012

o Utilities offer energy efficiency and arrears management programs

o Charitable fuel assistance programs also exist

o LIHEAP funding in 2014: $77,412,553

State ratemaking practices:

Connecticut has laws in place to protect utility customers by requiring that rates be fair. In Chapter 277, 

Section 16-19a of the General Statutes of Connecticut, the law commands that at least once every four 

years, the Public Utilities Regulatory Authority (the Authority) “conduct a complete review and 

investigation of the financial and operating records of each such company and hold a public hearing to 

determine whether the rates of each such company are unreasonably discriminatory or more or less than 

just, reasonable and adequate" for gas and electric companies of a certain size.1 In addition to requiring 

that rates be just and reasonable, there is an additional concern about protecting low-income customers. In 

particular, Section 16-19e states that “The authority shall determine whether existing or future rate 

structures place an undue burden upon those persons of poverty status and shall make such adjustment in 

the rate structure as is necessary or desirable to take account of their indigency.”2

 

1 General Statutes of Connecticut, Chapter 277, Section 16-19a. 2 General Statutes of Connecticut, Chapter 277, Section 16-19e.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-14

Information from a recent rate case provides an example of the importance of equity in ratemaking 

practices. The Authority used information obtained from a utility’s cost of service study to assess whether 

the proposed rates were equitable for all customers. In fact, in its Order, the Authority disallowed certain 

rate proposals made by the utility because the rates were “inexact pricing schemes that inequitably 

discount bills for one subset of customers to create an opportunity to inequitably overcharge a different 

subset of customers in the name of price signaling,” and that “neither subset of customers is treated 

equitably.” When this happens, the Authority then works with the Company “to implement cost based 

customer and demand rates across all customer classes.”3

Collection of energy efficiency (and other) public benefit revenues:

The Connecticut Clean Energy Fund (CCEF) and the Connecticut Energy Efficiency Fund (CEEF) are 

two Public Benefits Funds created in 1998. The CCEF is administered and governed by the Clean Energy 

Finance and Investment Authority, and proceeds from the fund go toward investments in renewable 

energy and alternative fuels produced in Connecticut and used for electricity generation. Ratepayer funds 

can also “be leveraged to raise private investment and further support renewable and clean energy 

development in the state.” The charge for this fund is “not less than” $0.0001/kWh for Connecticut Light 

and Power and United Illuminating customers. Revenues for the fund total approximately $20 million 

annually.4

The CEEF has the mission “to advance the efficient use of energy, to reduce air pollution and negative 

environmental impacts, and to promote economic development and energy security.” CEEF is funded by 

rate surcharges on Connecticut Light and Power and United Illuminating customers. Utilities then develop 

plans for energy efficiency programs with assistance from the Energy Conservation Management Board.

The fund is supplemented by money from other sources, including RGGI and ISO New England’s 

forward capacity market. The charge for this fund is $0.003/kWh for Connecticut Light and Power and 

United illuminating customers, with varying charges for municipal utility customers. CEEF funds totaled 

$154 million in 2011, with $130.3 million coming from ratepayer collections.5

Disbursement of energy efficiency revenues:

According to the EIA, energy efficiency spending in Connecticut in 2012 was distributed in the following 

way: 48% of spending was on residential customers, 40% was on commercial customers, and 12% was on 

industrial customers.6 This is in rough proportion to the electric revenues collected from each rate class.7

Low-income programs:

LIHEAP provides federal funding to states to assist low-income utility customers with their home energy 

bills. LIHEAP funds for Connecticut in 2014 totaled $77,412,553. Funds are available for customers 

below 150% of the Federal Poverty Level, or 200% of the Federal Poverty Level for certain families with 

 

3 Connecticut Rate Case 13-01-19, Order Issued August 15, 2013. 4 Connecticut Clean Energy Fund Page, DSIRE database, available at 

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=CT03R&re=1&ee=1, accessed June 4, 2014. 5 Energy Efficiency Fund Page, DSIRE database, available at 

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=CT12R&re=1&ee=1, accessed June 4, 2014. 6 Percentages reflect EE and Load Management Program costs from EIA data. 

7 Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information 

Administration, Electricity, available at http://www.eia.gov/electricity/data/eia861/, accessed June 4, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-15

disabled family members, seniors, or young children. Funds go toward heating costs, with between $350 

and $575 spent in each household helped.8

The LIHEAP Clearinghouse also compiles a table that provides the breakdown of ratepayer funded lowincome energy assistance and energy efficiency by state for certain states. The most recent data for 

Connecticut, from 2012, lists a total of $20.8 million in ratepayer funds dedicated toward low-income rate 

assistance, and $19.1 million in ratepayer funds dedicated toward low-income energy efficiency.9

As mentioned above, CEEF is funded in part through a charge levied on Connecticut Light and Power and 

United Illuminating customers. One energy efficiency program funded through CEEF is the Home Energy 

Solutions Income Eligible (HSE-IE) which addresses energy-efficient issues such as water heating, 

refrigeration and insufficient insulation. In addition, proceeds from surcharges on Connecticut Light and 

Power and United Illuminating customers can be used for arrearage forgiveness. The Matching Payment 

Program (MPP) is a mandated arrearage forgiveness program for eligible low-income customers. Both the 

HSE-IE and MPP are administered by the utilities with oversight from the Authority. Funding from 

electric utilities in 2012 was $12.8 million for arrears management and $14.8 million for energy 

efficiency.10

In addition to ratepayer-funded low-income programs, several charitable programs exist to provide rate 

assistance to low-income utility customers. A few examples of such programs are below:

• State legislation requires that all gas and electric utilities with over 75,000 customers facilitate 

customer donation to Operation Fuel, which provides help paying energy bills to low-income 

customers not eligible for other rate assistance programs.

• In Westport and Weston, community donations to the Warm Up Fund provide funds for fuel 

assistance.

• Donations to the Windsor Community Service Counsel go toward the Windsor Fuel Bank, which 

provides fuel assistance for low-income customers not eligible for other rate assistance 

programs.11

 

8 LIHEAP Clearinghouse State Profile, available at http://liheap.ncat.org/profiles/Connecticut.htm, accessed June 4, 2014. 9 LIHEAP Clearinghouse “2012 State-by-State Ratepayer Funded Low-Income Energy Assistance and Energy Efficiency,” 

available at http://liheap.ncat.org/Supplements/2012/supplement12.htm, accessed June 4, 2014. 10 LIHEAP Clearinghouse Connecticut Snapshot, available at http://liheap.ncat.org/dereg/states/ctsnapshot.htm, accessed June 4, 

2014. 

11 LIHEAP Clearinghouse Connecticut Profile, available at http://liheap.ncat.org/profiles/Connecticut.htm, accessed June 4, 

2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-16

FLORIDA

Summary

• State ratemaking practices

o Equitable allocation of utility costs to rate classes 

• Collection of energy efficiency (and other) revenues

o The Commission oversees the collection and spending of funds collected by utilities for 

energy efficiency, RD&D, and low-income programs

• Disbursement of energy efficiency revenues

o Energy efficiency revenues are spent in rough proportion to the dollars collected within 

rate classes 

o Energy efficiency spending in 2012 was 66% residential, 24% commercial, and 10% 

industrial

• Protection of low-income customers

o Programs resulting from state-mandated FEECA provide energy efficiency savings to 

low-income customers

o Charitable rate assistance programs are also available

o LIHEAP funding in 2014: $77,350,999

State ratemaking practices:

Florida law mentions the importance of addressing equity and fairness in ratemaking. In particular, 

Florida Statute Title XXVII, §366.03 states that “All rates and charges made, demanded, or received by 

any public utility for any service rendered, or to be rendered by it, and each rule and regulation of such 

public utility, shall be fair and reasonable.” The Florida Public Service Commission accomplishes the 

goal of “fixing fair, just, and reasonable rates for each customer class” by “consider[ing] the cost of 

providing service to the class, as well as the rate history, value of service, and experience of the public 

utility; the consumption and load characteristics of the various classes of customers; and public 

acceptance of rate structures.”1

Collection of energy efficiency (and other) revenues:

The Florida Energy Efficiency and Conservation Act (FEECA) requires that utilities offer energy 

efficiency, R&D, and low-income programs, which are funded through a charge on customers’ utility 

bills. Programs resulting from this act are administered by the utilities, and the Public Service 

Commission provides oversight.2

 

1 Florida Statute Title XXVII, §366.03 and §366.06, 2010 Florida Statutes. 2 “Public Benefits Funds: Increasing Renewable Energy & Industrial Energy Efficiency Opportunities,” published by the US 

DOE, March 2010; Florida Energy Efficiency Goals webpage, DSIRE database, available at 

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=FL25R&re=1&ee=1, accessed June 4, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-17

Disbursement of energy efficiency revenues:

According to the EIA, energy efficiency spending in Florida in 2012 was distributed in the following 

way: 66% of spending was on residential customers, 24% was on commercial customers, and 10% was on 

industrial customers.3 This is in rough proportion to the electric revenues collected from each rate class.4

Low-Income Programs:

LIHEAP provides federal funding to states to assist low-income utility customers with their home energy 

bills. For Florida, funding for 2014 totaled $77,350,999. Customers whose income is not greater than 

150% of the Federal Poverty Level are LIHEAP-eligible. LIHEAP funds go toward both heating and 

cooling, and between $150 and $300 is spent per household.5

As mentioned above, FEECA requires that utilities of a certain size meet certain goals relating to energy 

efficiency, among other things. All five of the state’s investor owned utilities (IOUs) and two municipal 

utilities are subject to this law, and below is an example of one company’s implementation.6

• Tampa Electric is one of the IOUs that falls under FEECA. Tampa Electric has a Neighborhood 

Weatherization program, where free energy-savings kits are distributed. Tampa Electric partners 

with non-profit Tampa Hillsborough Action Plan (THAP) for this program.7

Outside of FEECA, other IOUs and municipal utilities offer their own energy efficiency and rate 

assistance programs. For example, City of Tallahassee Utilities has a Good Neighbor Program where 

they offer a 25% credit on electric service for qualified customers when funds are available. This 

program additionally provides weatherization and energy efficiency measures.8

Many utilities also offer charitable programs to help with energy assistance. Examples include:

• Some programs, such as the City of Lake Worth Utilities’ Share to Care Program, are funded 

through customer donations and are used to help needy families pay their energy bills. Share to 

Care is administered by the Salvation Army.

• Other programs, like Fort Pierce Authority’s Project Care, are funded by business and religious 

and civic organizations, in addition to individuals.9

 

3 Percentages reflect EE and Load Management Program costs from EIA data. 

4 Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information 

Administration, Electricity, available at http://www.eia.gov/electricity/data/eia861/, accessed June 4, 2014.

5 LIHEAP Clearinghouse State Profile, available at http://liheap.ncat.org/profiles/Florida.htm, accessed June 4, 2014. 6 Florida Energy Efficiency Goals webpage, DSIRE database, available at 

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=FL25R&re=1&ee=1, accessed June 4, 2014. 7 LIHEAP Clearinghouse Florida Profile, available at http://liheap.ncat.org/profiles/Florida.htm, accessed June 4, 2014. 8 LIHEAP Clearinghouse Florida Profile, available at http://liheap.ncat.org/profiles/Florida.htm, accessed June 4, 2014. 9 LIHEAP Clearinghouse Florida Profile, available at http://liheap.ncat.org/profiles/Florida.htm, accessed June 4, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-18

GEORGIA

Summary

• State ratemaking practices

o Equitable allocation of utility costs to rate classes

o Low-income considerations

• Disbursement of energy efficiency revenues

o Energy efficiency spending in 2012 was 56% residential, 24% commercial, and 21% 

industrial

• Protection of low-income customers

o Ratepayer-funded low-income programs totaled $11.4 million toward rate assistance and 

$1.75 million toward energy efficiency in 2011

o Senior citizen discount rates for qualifying customers over 65

o Weatherization services distributed by the Georgia Environmental Finance Authority

o HEAT and SHARE programs help customers with energy assistance

o LIHEAP funding in 2014: $61,157,824

State ratemaking practices:

Georgia has laws and practices in place to protect its utility customers. In Georgia State Code §46-2-20c, 

the law states that the Commission “may, either by general rules or by special orders in particular cases, 

require all companies under its supervision to establish and maintain such public services and facilities as 

may be reasonable and just.”1 This is supported in a recent rate case, where the Commission writes that, 

in general, “a Settlement Agreement must be considered as a whole, and examined as to whether its 

adoption serves the public interest by resulting in just and reasonable rates for all classes of ratepayers.” 

Further, in reviewing the cost of service study provided as part of a recent rate case and in listening to the 

opinions of interested parties, the Commission found that “that the allocation of costs and rate design 

contemplated in the Settlement Agreement are reasonable and in the best interests of all customer 

groups.”2

In addition to ensuring equity across customer classes, the Commission also considers the rate-paying 

abilities of low-income customers. In the aforementioned rate case, for example, the Commission ordered 

that the low-income senior discount “be increased by an amount sufficient to offset the impact of the rate 

increases specified in the Settlement Agreement” to protect this class of customers.3

Disbursement of energy efficiency revenues:

According to the EIA, energy efficiency spending in Georgia in 2012 was distributed in the following 

way: 56% of spending was on residential customers, 24% was on commercial customers, and 21% was on 

industrial customers.4 This is in rough proportion to the electric revenues collected from each rate class.5

 

1 Georgia State Code §46-2-20c. 2 Georgia Rate Case Docket 36989, Order Issued November 18, 2013.

3 Georgia Rate Case Docket 36989, Order Issued November 18, 2013. 4 Percentages reflect EE and Load Management Program costs from EIA data. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-19

Low-income programs:

LIHEAP provides federal funding to states to assist low-income utility customers with their home energy 

bills. For Georgia, funding for 2014 totaled $61,157,824. Customers whose income is not greater than 

60% of the state median income are LIHEAP-eligible. An estimated 156,649 households benefited from 

LIHEAP heating and cooling assistance in 2013. The average among spent on heating for LIHEAP

customers in 2013 was $345, and customers received a maximum of $350 for cooling.6

The LIHEAP Clearinghouse compiles a table that provides the breakdown of ratepayer funded lowincome energy assistance and energy efficiency by state for certain states. The most recent data from 

2011 lists a total of $11.4 million in ratepayer funds dedicated toward low-income rate assistance, and 

$1.75 million in ratepayer funds dedicated toward low-income energy efficiency.7 These numbers include 

totals from state- and utility-administered programs.

Since 1989, the Georgia Commission has also required that all major utilities waive their monthly service 

charge for qualifying low-income customers over the age of 65.8 For example, qualifying customers of 

Georgia Power and Savannah Electric are eligible to receive a $14.00 discount on their electric bills.

Funding in 2011 for this program totaled $16 million across electric and gas utilities.9

In addition, many charitable rate assistance and energy efficiency programs exist throughout the state. 

These programs are offered both through state agencies and through individual utilities. Examples of 

these programs are below:

• The Georgia Department of Human Resources also administers the statewide Heating Energy 

Assistance Team (HEAT) program, which uses funds from private citizens and the natural gas 

industry to help customers with energy assistance.10

• The Georgia Environmental Finance Authority also distributes funds for weatherization 

assistance through Community Action Agencies.11

In addition, most electric and gas utilities give customers the opportunity to make charitable donations 

through their electric bills. This program, Project SHARE, is administered by the Salvation Army.12 Some 

utilities, like Georgia Power Company and Atlanta Gas Light Company, also match the donations of their 

customers. This money then goes toward energy assistance for low-income customers.13

 

5 Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information 

Administration, Electricity, available at http://www.eia.gov/electricity/data/eia861/, accessed June 4, 2014. 6 LIHEAP Clearinghouse Georgia State Profile, available at http://liheap.ncat.org/profiles/Georgia.htm, accessed June 4, 2014. 7 LIHEAP Clearinghouse “2012 State-by-State Ratepayer Funded Low-Income Energy Assistance and Energy Efficiency,” 

available at http://liheap.ncat.org/Supplements/2012/supplement12.htm, accessed June 4, 2014. 8 LIHEAP Clearinghouse Georgia State Profile, available at http://liheap.ncat.org/profiles/Georgia.htm, accessed June 4, 2014. 9 LIHEAP Clearinghouse Georgia State Snapshot, available at http://liheap.ncat.org/dereg/states/gasnapshot.htm, accessed June 

4, 2014.

10 LIHEAP Clearinghouse Georgia State Profile, available at http://liheap.ncat.org/profiles/Georgia.htm, accessed June 4, 2014. 11 Georgia Public Service Commission, Consumer Advisory, available at 

http://www.psc.state.ga.us/consumer_corner/cc_advisory/payassist.asp, accessed June 4, 2014. 12 LIHEAP Clearinghouse Georgia State Profile, available at http://liheap.ncat.org/profiles/Georgia.htm, accessed June 4, 2014. 13 Georgia Public Service Commission, Consumer Advisory, available at 

http://www.psc.state.ga.us/consumer_corner/cc_advisory/payassist.asp, accessed June 4, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-20

ILLINOIS

Summary

• State ratemaking practices

o Equitable allocation of utility costs to rate classes 

• Collection of energy efficiency (and other) public benefit revenues

o The Department of Commerce and Economic Opportunity has overseen the collection 

and spending of public benefit funding mechanisms for 17 years

o Public benefit funding for energy efficiency is collected from utilities using a pro rata 

share of $3 million

o Public benefit funding for renewables is collected from all rate classes, and all customers 

within rate classes, as a set fee that varies by rate class 

• Disbursement of energy efficiency revenues

o Energy efficiency revenues from residential customers are spent in rough proportion to 

the dollars collected within that rate class 

o Energy efficiency spending in 2012 was 50% residential, 48% commercial, and 2% 

industrial

• Protection of low-income customers

o Ratepayer-funded low-income programs totaled $58.9 million toward rate assistance and 

$13.7 million toward energy efficiency in 2012

o State-mandated SLEAF provides funds to help with bill assistance and weatherization

o Utility-specific arrears management and energy efficiency components

o LIHEAP funding in 2014: $167,457,747

State ratemaking practices:

Illinois Statute 220 ILCS 5/1-102 mandates equitable utility service stating “The General Assembly finds 

that the health, welfare and prosperity of all Illinois citizens require the provision of adequate, efficient, 

reliable, environmentally safe and least-cost public utility services at prices which accurately reflect the 

long-term cost of such services and which are equitable to all citizens.” Part of determining equitable 

pricing is determining how rates should vary across different customer classes, and the law further 

clarifies that “variation in costs by customer class and time of use is taken into consideration in 

authorizing rates for each class.”1

When a utility seeks to change its rates, the Illinois Commerce Commission hears a rate case, which is 

when the above laws are enforced. In one recent rate case, the Commission evaluated Commonwealth 

Edison Company’s Embedded Cost of Service Study and found that it “reasonably allocates costs among 

customer classes and is approved.”2

 

1 Statute 220 ILCS 5/1-102, effective June 30, 2001. 2 Illinois Rate Case Docket 13-0318, Order Issued December 18, 2013.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-21

Collection of energy efficiency (and other) public benefit revenues:

In 1997, Illinois established non-bypassable public benefits funds for energy efficiency, renewable 

energy, and low-income assistance programs. The funds are administered and overseen by the 

Department of Commerce and Economic Opportunity (DCEO).3

The restructuring legislation of 1997 created separate funds for energy efficiency and renewable energy. 

Money for the Energy Efficiency Trust Fund (Trust) comes from electric utilities and alternative retail 

electric supplier contributions on a pro-rata basis based on the amount of energy sold. In addition to 

receiving funds from electric utilities, the Trust may receive contributions resulting from the Energy 

Efficiency Portfolio Standard (EEPS). From 1998-2015, contributions to the Trust are expected to total 

$54 million. The EEPS fund stood at $95 million for 2012. The total yearly contribution of all utilities to 

the Trust is $3 million.4

In addition to creating the Trust, the 1997 legislation created the Renewable Energy Resources Trust Fund 

(RERTF). This fund supports renewable energy through grants, loans, and other incentives, and is funded 

by a mandatory surcharge on IOUs’ customers’ electric and gas bills, that varies based on customer class. 

Municipal utilities and electric cooperatives also have the option of participating. Half of the proceeds 

collected fund the RERTF, while the other half fund the Coal Technology Development Assistance Fund. 

The RERTF generally receives between $5 million and $5.5 million annually, and surcharges on electric 

customers vary by rate class in the following way: $0.05/month for residential customers, $0.50/month 

for nonresidential customers with less than 10 MW peak demand during the previous year, and 

$37.50/month for nonresidential electric service with at least 10 MW of peak demand during the previous 

year.5

Disbursement of energy efficiency revenues:

According to the EIA, energy efficiency spending in Illinois in 2012 was distributed in the following way: 

50% of spending was on residential customers, 48% was on commercial customers, and 2% was on 

industrial customers.6 Energy efficiency spending on residential customers is in rough proportion to the 

electric revenues collected from that rate class.7

Low-income programs:

LIHEAP provides federal funding to states to assist low-income utility customers with their home energy 

bills. For Illinois, funding for 2014 totaled $167,457,747. Customers whose income is not greater than 

150% of the Federal Poverty Level are LIHEAP-eligible, and receive up to $100 for heating.8

The LIHEAP Clearinghouse compiles a table that provides the breakdown of ratepayer funded lowincome energy assistance and energy efficiency by state for certain states. The most recent data from 

2012 lists a total of $58.9 million in ratepayer funds dedicated toward low-income rate assistance, and 

 

3 “Public Benefits Funds: Increasing Renewable Energy & Industrial Energy Efficiency Opportunities,” published by the US 

DOE, March 2010.

4 Energy Efficiency Public Benefits Fund, DSIRE database, available at 

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=IL10R&re=1&ee=1, accessed June 4, 2014. 5 Renewable Energy Resources Trust Fund, DSIRE database, available at 

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=IL01R&re=1&ee=1, accessed June 4, 2014. 6 Percentages reflect EE and Load Management Program costs from EIA data.

7 Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information 

Administration, Electricity, available at http://www.eia.gov/electricity/data/eia861/, accessed June 4, 2014. 8 LIHEAP Clearinghouse Illinois Profile, available at http://liheap.ncat.org/profiles/Illinois.htm, accessed June 4, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-22

$13.7 million in ratepayer funds dedicated toward low-income energy efficiency.9 These numbers include 

totals from state- and utility-administered programs.

Utility restructuring created the Supplemental Low-Income Energy Assistance Fund (SLEAF). Gas and 

electric utilities deposit a monthly surcharge from customers into the fund. This money, along with 

federal LIHEAP funds, gets distributed to low-income customers to help with bill payment assistance and 

weatherization. Money spent from the fund totals around $76 million annually. SLEAF funds are spent 

only on customers whose utilities contribute to the fund.10

In addition to rate assistance programs stemming from SLEAF, utilities offer low-income arrearage 

management and energy efficiency components. Below is a summary of ratepayer funded low-income 

programs offered by Ameren Illinois, ComEd, Nicor Gas, and Peoples Gas/North Shore Gas:11

• The Percentage of Income Payment Plan (PIPP) is open to customers whose income is at or 

below 150% of the Federal Poverty Level. Participants pay no more than 6% of their income on 

their utilities bill, and participants who make PIPP payments on time receive a credit of 1/12th of 

overdue bills and can receive up to $1,000 annually for past due statements. PIPP is funded by a 

flat fee on customers’ bills that varies based on customer classes, and is overseen by the DCEO.

• The DCEO also oversees federal Weatherization Assistance Programs, which are supplemented 

by ratepayer funds from the above utilities.

ComEd offers a Residential Special Hardship, where customers who are experiencing hardship such as 

job loss or illness and making less than 250% of the Federal Poverty Level are eligible to receive up to 

$500 on a biannual basis to deal with that hardship.12

 

9 LIHEAP Clearinghouse “2012 State-by-State Ratepayer Funded Low-Income Energy Assistance and Energy Efficiency,” 

available at http://liheap.ncat.org/Supplements/2012/supplement12.htm, accessed June 4, 2014. 10 LIHEAP Clearinghouse Illinois Profile, available at http://liheap.ncat.org/profiles/Illinois.htm, accessed June 4, 2014. 11 LIHEAP Clearinghouse State Snapshot, available at http://liheap.ncat.org/dereg/states/ilsnapshot.htm, accessed June 4, 2014. 12 LIHEAP Clearinghouse State Snapshot, available at http://liheap.ncat.org/dereg/states/ilsnapshot.htm, accessed June 4, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-23

MAINE

Summary

• State ratemaking practices

o Just and reasonable allocation of utility costs to rate classes 

o Low-income considerations

• Collection of energy efficiency (and other) public benefit revenues

o The Commission has overseen the collection and spending of public benefit funding 

mechanisms for 17 years

o Public benefit funding is collected from consumers on a voluntary basis and from utilities 

through both alternative compliance payments and charges collected on a volumetric 

basis

• Disbursement of energy efficiency (and other) public benefit revenues

o Energy efficiency spending in 2012 was 35% residential, 43% commercial, and 21% 

industrial 

• Protection of low-income customers

o Ratepayer-funded low-income programs totaled $8.3 million toward rate assistance and 

$930,000 toward energy efficiency in 2011

o Low income rates: ratepayer- and utility-funded programs offer low-income discounts on 

utility bills

o Minimum levels of energy efficiency spending on low income customers: a minimum of 

20% of Maine Efficiency Trust funds must go toward energy programs for low-income 

customers and another minimum of 20% must go toward energy programs for small 

business customers.

o Charitable emergency assistance for heat, electricity, and other items is offered to 

communities in crisis

o LIHEAP funding in 2013: $39,195,339

State ratemaking practices:

The state of Maine works toward just and reasonable allocation of utility costs to rate classes. Enacted in 

1987, the Maine Title 35-A, Part 1, Chapter 3 states, “The rate, toll or charge, or any joint rate made, 

exacted, demanded or collected by any public utility for production, transmission, delivery or furnishing 

of electricity, gas, heat or water; for communications service; or for transportation of persons or property 

within this State or for any service rendered or to be rendered in connection with any public utility, shall 

be just and reasonable.”1 In addition to mandating low-income assistance in the form of funds collected 

through system benefit charges, which will be described in more detail below, the “Needs-Based LowIncome Assistance” section of the Maine Title states that no low-income assistance should be prohibited: 

“Nothing in this section may be construed to prohibit a transmission and distribution utility from offering 

 

1 Maine Title 35-A, Part 1: Public Utilities Commission Heading, Chapter 3: Rates of Public Utilities Heading, 1987, §301.2.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-24

any special rate or program for low-income customers that is not in effect as of the effective date of this 

chapter, subject to the approval of the commission.”2

Collection of energy efficiency (and other) public benefit revenues:

Maine established its first Public Benefit Fund, known as the Renewable Resource Fund (Fund), in 1997. 

The development and implementation of the Fund’s energy efficiency programs was originally divided 

amongst three entities – the State Planning Office (SPO), the state’s electric utilities, and the Maine 

Public Utilities Commission (PUC).3 However, legislative amendments directed full administration to the 

PUC in 2002.4

Renewable energy programs are supported by revenues generated through both utilities customers and the 

utilities themselves. Utility customers generate revenue for the Fund through voluntary contributions on 

top of their monthly utilities bill. Additionally, public benefit revenues are also generated from utilities 

through any alternative compliance payments (ACP) made to comply with the state’s renewable portfolio 

standard.5 Collections through these voluntary utility customer contributions and utility ACPs generated 

approximately $800,000 in 2009, an estimated $1.325 million during 2010 and approximately $800,000 

in 2011.6

In 2009, Maine established a larger fund under Public Law 372, known as the Efficiency Maine Trust 

(Trust). The Trust has no expiration date and collects funds for all of Maine’s energy efficiency and 

renewable energy programs.7 By statute, the Trust must direct at least 20% of the funds to energy 

programs for low-income residents and at least another 20% towards energy programs for small business 

customers. A large source of the Trust’s funds for energy efficiency programs result from PUC 

assessments of 0.145 cents per kilowatt-hour from utilities. Revenue from utility assessments accounted 

for approximately $12.4 million in 2010, $12.9 million in 2011, and $13.2 million in 2012. The Trust also 

manages funds received from RGGI auctions and miscellaneous grants. In 2012, an approximate total of 

$34 million was collected from all sources to support Maine’s energy efficiency and renewable energy 

programs.8, 9

Disbursement of energy efficiency (and other) public benefit revenues:

According to the EIA, energy efficiency spending in Maine in 2012 was distributed in the following way: 

35% of spending was on residential customers, 43% was on commercial customers, and 21% was on 

industrial customers.10

 

2 Maine Title 35-A, Part 1: Public Utilities Commission Heading, Chapter 3: Rates of Public Utilities Heading, 1987, §3214.3. 3 Maine Public Benefits Fund Page, DSIRE database, “Efficiency Maine Trust – Renewable Resource Fund,” available at 

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=ME07R&re=1&ee=1, accessed June 3, 2014.

4 Maine Public Benefits Fund Page, DSIRE database, “Efficiency Maine Trust,” available at 

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=ME11R&re=1&ee=1, accessed June 3, 2014.

5 Public Law 403 established the Renewable Portfolio Standard alternative compliance payment in 2007. 6 Maine Public Benefits Fund Page, DSIRE database, “Efficiency Maine Trust – Renewable Resource Fund,” available at 

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=ME07R&re=1&ee=1.

7 As of July 1, 2010, all of the funds in the Renewable Energy Fund were transferred to the Efficiency Maine Trust. 8 Maine Public Benefits Fund Page, DSIRE database, “Efficiency Maine Trust,” available at 

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=ME11R&re=1&ee=1, accessed June 3, 2014. 9 “Public Benefits Funds: Increasing Renewable Energy & Industrial Energy Efficiency Opportunities,” published by the US 

DOE, March 2010. 

10 Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information 

Administration, Electricity, available at http://www.eia.gov/electricity/data/eia861/.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-25

Protection of low-income customers:

LIHEAP provides federal funding to states to assist low-income utility customers with their home energy 

bills. Maine LIHEAP funding is currently set at $39,195,339 for 2014. To be LIHEAP-eligible, utility 

customers must have a household income of no greater than 60% the state median income. Additionally, 

Maine offers LIHEAP eligibility to households with incomes between 150% and 170% of the federal 

poverty guidelines if a member is susceptible to hypothermia (e.g. elderly or children under the age of 

two) or with the guidance of a doctor’s note. In 2013, an estimated 44,556 households benefited from 

LIHEAP heat assistance. These households received an average LHIHEAP heating benefit of $556, a 

minimum benefit of $144, and a maximum benefit of $1,656.11

The LIHEAP Clearinghouse compiles a table that provides the breakdown of ratepayer funded lowincome energy assistance and energy efficiency program by state, where applicable. The most recent 

Maine data from 2011 lists a total of $8.3 million in ratepayer funds dedicated toward low-income rate 

assistance, and $930,000 in ratepayer funds dedicated toward low-income energy efficiency programs. 

These numbers include totals from state- and utility-administered programs.12 Participating utilities 

include Central Maine Power Company and Emera Maine,13 which cover 95% of the state, as well as 10 

consumer-owned utilities. 

Maine has several low-income rate assistance and energy efficiency programs that are administered by 

utilities with regulatory oversight. The ratepayer funded programs, their funding mechanisms and 

administration, are listed below:

• The Low Income Assistance Program (LIAP) offers rate assistance benefits that vary by utility, 

but are most often a credit to or discount on an electric bill. To be eligible for LIAP, individuals 

must be LIHEAP-eligible customers of participating electric utilities and not reside in subsidized 

housing. 

o Funding mechanism: funds for LIAP are generated by a customer charge based on 0.5% 

of a utility’s annual revenue. Funding for LIAP totaled $8.3 million in 2012.

o Administration: LIAP is administered by the Maine State Housing Authority, in 

coordination with local delivery agencies.

• The Low-Income Weatherization energy efficiency program offers appliance replacement and 

updates to building envelop and heating systems for single and multi-family dwellings.

o Funding mechanism: funds for the Low-Income Weatherization program stem from the 

system benefit charge. Funding for the program totaled $930,311 in 2012. 

o Administration: the Low-Income Weatherization program is administered by the 

Efficiency Maine Trust.14

 

11 LIHEAP Clearinghouse Maine Profile, available at http://liheap.ncat.org/profiles/Maine.htm, accessed June 3, 2014. 12 LIHEAP Clearinghouse “2012 State-by-State Ratepayer Funded Low-Income Energy Assistance and Energy Efficiency,” 

available at http://liheap.ncat.org/Supplements/2012/supplement12.htm, accessed June 3, 2014.

13 Emera Maine is the corporate parent to once separate utilities, Bangor Hydro-Electric Company and Maine Public Service Co. 14 LIHEAP Maine State Snapshot, available at http://liheap.ncat.org/dereg/states/mesnapshot.htm, accessed June 3, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-26

In addition to the ratepayer funded programs listed above, utilities also offer rate assistance and energy 

efficiency programs to low-income customers. Examples of each include, but are not limited to, the 

following:15

Low-Income Rate Assistance:

• Central Maine Power’s Electricity Lifeline Program offers qualified low-income customers a 

credit on their electric bill. This credit is based on household income and estimated electricity 

usage and is applied to your bill for the same amount each month, up to 12 months.

• Unitil’s Discount Rate Program offers LIHEAP recipients a 30% discount on gas that is effective 

for a 12 month period. 

Low-Income Energy Efficiency:

• Maine’s Low Income Refrigerator Replacement program replaces inefficient refrigerators and 

installs energy efficient lighting for qualifying low-income consumers.16 This program is made 

possible by the collaborative efforts of Efficiency Maine, the Maine State Housing Authorities 

and Community Action Programs throughout the state.

• Unitil offers no-cost home energy assessments and installation of weatherization measures to 

qualifying households.

In addition to the ratepayer- and utility-based programs listed above, the state also has charitable 

assistance in the event of crises. For example, Maine Sea Coast Mission offers “emergency assistance for 

heat, electricity, food and other emergency circumstances for island and coastal communities from midto Downeast coastal Maine.”17

 

15 LIHEAP Clearinghouse Maine Profile, available at http://liheap.ncat.org/profiles/Maine.htm, accessed June 3, 2014. 16 All LIHEAP applicants are automatically considered for the Appliance replacement program. 17 LIHEAP Clearinghouse Maine Profile, available at http://liheap.ncat.org/profiles/Maine.htm, accessed June 3, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-27

MARYLAND

Summary

• State ratemaking practices

o Equitable allocation of utility costs to rate classes 

• Collection of energy efficiency (and other) public benefit revenues

o The Public Service Commission has overseen the collection of universal service funds 

used to help low-income utility customers for 15 years

o Universal service program funding is collected from all rate classes, and all customers 

within rate classes, on a volumetric basis

• Disbursement of energy efficiency revenues

o Energy efficiency spending in 2012 was 71% residential and 29% commercial

• Protection of low-income customers

o Ratepayer-funded low-income programs totaled $37 million toward rate assistance and 

$15 million toward energy efficiency in 2012

o State-mandated programs providing low-income rate assistance, arrearage management, 

and energy efficiency programs as a result of 1999 restructuring

o Utility-funded rate assistance and weatherization programs exist

o Charitable rate assistance and weatherization programs also exist

o LIHEAP funding in 2014: $68,513,491

State ratemaking practices:

In a recent rate case in which Baltimore Gas and Electric (BGE) requested adjustments to its base rates, 

BGE filed two cost of service studies (COSSs) to “determine the costs a customer class, or in some cases 

a jurisdiction, imposes upon a company.” The results of the COSSs were then used by the Public Service 

Commission (Commission) “as a guide in developing appropriate customer class rates.” Based upon this 

COSS, the Commission determined “that BGE has appropriately allocated its electric and gas plant . . . 

because the Studies fairly and reasonably distribute costs among its customer classes and are consistent 

with previous Company COSSs approved by the Commission.”1 In this way, the State of Maryland 

ensures through its Commission that rates are reasonably assigned to different customer classes based on 

cost.

Collection of energy efficiency (and other) public benefit revenues:

In 1999, the Maryland state legislature created a public benefit fund for low-income assistance and energy 

efficiency as a part of utility restructuring. The Maryland Public Service Commission serves as the 

oversight body. 2 Initially, the restructuring law provided $34 million for low-income programs, and was 

 

1 Public Service Commission Rate Case 9326, Order no. 86060, Issued December 13, 2013. 2 “Public Benefits Funds: Increasing Renewable Energy & Industrial Energy Efficiency Opportunities,” published by the US 

DOE, March 2010.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-28

increased to $37 million in 2005-2006. The majority of funding—74%—comes from industrial and 

commercial customers, while 26% comes from residential customers.3

Disbursement of energy efficiency revenues:

According to the EIA, energy efficiency spending in Maryland in 2012 was distributed in the following 

way: 71% of spending was on residential customers and 29% was on commercial customers.4

Protection of low-income customers:

LIHEAP provides federal funding to states to assist low-income utility customers with their home energy 

bills. For Maryland, funding for 2014 totaled $68,513,491. Customers whose income is not greater than 

175% of the Federal Poverty Level are LIHEAP-eligible. An estimated 113,787 households benefited 

from LIHEAP heat assistance in 2013 and received an average of $496 in heating assistance.5

One LIHEAP-affiliated Maryland program is the Universal Service Protection Program, which subtracts 

the LIHEAP benefit from customers’ bills and divides the remainder by twelve months in order to even 

out monthly utility payments.6

The LIHEAP Clearinghouse compiles a table that provides the breakdown of ratepayer funded lowincome energy assistance and energy efficiency by state for certain states. The most recent data from 

2012 lists a total of $37 million in ratepayer funds dedicated toward low-income rate assistance, and $15 

million in ratepayer funds dedicated toward low-income energy efficiency.7 These numbers include totals 

from state- and utility-administered programs.

The Electric Universal Service Program was authorized during utility restructuring in 1999 and includes 

bill assistance, arrears management, and weatherization services.8 As mentioned above, the EUSP is 

funded by surcharges on all customer classes. Eligible low-income customers receive discounts of 17% to 

35% of their bill, with an average benefit of $334. Arrearage retirement programs also exist, where 

customers at least $300 in arrears and can receive a maximum benefit of $2,000 once every seven years. 

These programs are administered by the Office of Home Energy Programs in the Department of Human 

Resources.9

EmPower Maryland Low Income Energy Efficiency Programs (LIEEP) is administered by the Maryland 

Department of Housing and Community Development and is available to customers of BGE, Southern 

Maryland Electric Cooperative, Delmarva Power, Potomac Edison, and Potomac Electric Power 

Company. This program is funded by a surcharge on all customer classes and provides weatherization 

 

3 LIHEAP Clearinghouse Maryland PBF Overview, available at http://www.liheap.ncat.org/dereg/states/maryland.htm, accessed 

June 4, 2014.

4 Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information 

Administration, Electricity, available at http://www.eia.gov/electricity/data/eia861/, accessed June 4, 2014. Percentages reflect 

EE and Load Management Program costs from EIA data.

5 LIHEAP Clearinghouse Maryland Profile, available at http://liheap.ncat.org/profiles/Maryland.htm, accessed June 4, 2014. 6 LIHEAP Clearinghouse Maryland Profile, available at http://liheap.ncat.org/profiles/Maryland.htm, accessed June 4, 2014. 7 LIHEAP Clearinghouse “2012 State-by-State Ratepayer Funded Low-Income Energy Assistance and Energy Efficiency,” 

available at http://liheap.ncat.org/Supplements/2012/supplement12.htm, accessed June 4, 2014. 8 LIHEAP Clearinghouse Maryland Profile, available at http://liheap.ncat.org/profiles/Maryland.htm, accessed June 4, 2014. 9 LIHEAP Clearinghouse Maryland State Snapshot, available at http://liheap.ncat.org/dereg/states/mdsnapshot.htm, accessed 

June 4, 2014. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-29

services such as attic, floor, and wall installation and lighting retrofits. LIEEP funding in 2012 totaled $15 

million.10

In addition to the above programs, many utilities offer additional rate assistance and energy efficiency 

programs. A few examples are below:11

• BGE, along with many smaller utilities, offers deposit, reconnect fee, and application fee waivers 

to qualifying low-income customers.

• PEPCO offers a Residential Aid Discount Program which provides eligible customers that do not 

have all-electric heating with a 63% discount on the first 400 kwh of energy usage in the summer 

and a 32% discount in the winter. Discounts for customers with all-electric heating are 38% on 

the first 700 kwh of energy used in the summer and a 51% discount in the winter.

• BGE and Colombia bas both offer free weatherization programs for qualifying low-income 

customers.

Lastly, many charitable energy assistance programs exist to help low-income customers. For example, the 

Fuel Fund of Maryland, Inc. consists of fuel funds from several counties and provides help for customers 

that use oil. The Victorine Q. Adams Fuel Fund similarly provides up to $125 for clients facing energy 

shut-offs, and also helps with arrears management and emergency energy situations. Other utilities offer 

matching programs from customer donations that go toward low-income rate assistance.12

 

10 LIHEAP Clearinghouse Maryland State Snapshot, available at http://liheap.ncat.org/dereg/states/mdsnapshot.htm, accessed 

June 4, 2014. 

11 LIHEAP Clearinghouse Maryland Profile, available at http://liheap.ncat.org/profiles/Maryland.htm, accessed June 4, 2014. 12 LIHEAP Clearinghouse Maryland Profile, available at http://liheap.ncat.org/profiles/Maryland.htm, accessed June 4, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-30

MASSACHUSETTS

Summary

• State ratemaking practices

o The DPU works to equitably allocate utility costs to rate classes 

• Collection of energy efficiency (and other) public benefit revenues

o The DPU along with the utilities and Massachusetts Clean Energy Center have overseen 

the collection and spending of public benefit funding mechanisms for 17 years

o Public benefit funding is a non-bypassable charge and collected on a volumetric basis 

• Disbursement of energy efficiency revenues

o Energy efficiency revenues are spent roughly in proportion to the dollars collected from

rate classes 

o Energy efficiency spending in 2012 was 49% residential, 32% commercial, and 18% 

industrial

• Protection of low-income customers

o Low-income rates: there is a low-income discount on natural gas and electricity bills 

o Minimum energy efficiency spending: the low-income sector is allocated at least 10% of 

the funds for electric energy efficiency programs and 20% of the funds for gas energy 

efficiency programs

o Ratepayer-funded low-income programs totaled $103.6 million toward rate assistance 

and $36.6 million toward energy efficiency in 2012

o Massachusetts also has arrearage management and low-income demand side management 

programs

o LIHEAP funding in 2014: $140,014,388 

State ratemaking practices:

The Massachusetts Department of Public Utilities (DPU) works to equitably allocate utility costs to the 

different customer classes. In particular, Massachusetts state law requires that the DPU, “design base 

distribution rates using a cost-allocation method that is based on equalized rates of return for each 

customer class.” 1 Furthermore, the DPU considers the impacts of their actions on low-income electricity 

customers. The law states, “In all decisions or actions regarding rate designs, the department shall 

consider the impacts of such actions, including the impact of new financial incentives on the successful 

development of energy efficiency and on-site generation. Where the scale of on-site generation would 

have an impact on affordability for low-income customers, a fully compensating adjustment shall be 

made to the low-income rate discount.” Lastly, the department requires electric distribution companies to 

include a low-income customer discount. “The department shall require that distribution companies 

provide discounted rates for low income customers comparable to the low-income discount rate in effect 

prior to March 1, 1998.”2

 

1 The Commonwealth of Massachusetts, General Laws, Part I, Title XXII, Chapter 164, Section 94I. 2 The Commonwealth of Massachusetts, General Laws, Part I, Title XXII, Chapter 164, Sections 1F and 141.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-31

Collection of energy efficiency (and other) public benefit revenues:

As part of electric industry restructuring, Massachusetts established a public benefit fund in 1997 to fund 

renewable energy, energy efficiency, and low-income assistance programs. The charge is non-bypassable, 

and is administered by two entities. The renewable energy programs are administered by the 

Massachusetts Clean Energy Center, while the energy efficiency and low-income assistance programs are 

administered by the utilities.3 DSIRE reports that the charge for renewables is 0.5 mill/kWh, while the 

energy efficiency and low-income assistance charge is 2.5 mills/kWh.4

The public benefit fund receives additional revenues from RGGI auction proceeds since Massachusetts is 

a participating state.5

Disbursement of energy efficiency revenues:

According to the EIA, energy efficiency spending in Massachusetts in 2012 was distributed in the 

following way: 49% of spending was on residential customers, 32% was on commercial customers, and 

18% was on industrial customers. This is roughly proportional to the electric revenues collected from 

each customer class.6

Protection of low-income customers:

LIHEAP provides states with federal funding to assist low-income utility customers with their home 

energy bills. For Massachusetts, funding for fiscal year 2014 totaled a little over $140 million. For 2013, 

this funding reached an estimated 190,432 households. In particular, LIHEAP benefits included a 

minimum of $450 for deliverable fuel, $260 for gas and electric, with a maximum of $750 and $430 for 

fuel, and gas and electric, respectively. Customers eligible for LIHEAP are those whose income is not 

greater than 60% of the state median income.7

The LIHEAP Clearinghouse compiles a table that provides the breakdown of ratepayer funded lowincome energy assistance and energy efficiency by state for certain states. The most recent data from 

2012 lists a total of $103.6 million in ratepayer funds dedicated toward low-income rate assistance, and 

$36.6 million in ratepayer funds dedicated toward low-income energy efficiency. These numbers include 

totals from state- and utility-administered programs.8

Massachusetts has several low-income rate assistance and energy efficiency programs that are 

administered by utilities with regulatory oversight. Participating utilities include a number of gas, electric 

and combination IOUs in Massachusetts. The utility rate discounts total nearly $40 million per year, and 

 

3 “Public Benefits Funds: Increasing Renewable Energy & Industrial Energy Efficiency Opportunities,” published by the US 

DOE, March 2010. 4 “Renewable Energy Trust Fund,” Database of State Incentives for Renewables & Efficiency (DSIRE), Massachusetts 

Incentives/Policies for Renewables & Efficiency, available at 

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=MA07R&re=1&ee=1, accessed June 3, 2014. 5 “Public Benefits Funds: Increasing Renewable Energy & Industrial Energy Efficiency Opportunities,” published by the US 

DOE, March 2010.

6 Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information 

Administration, Electricity, available at http://www.eia.gov/electricity/data/eia861/.

7 LIHEAP Clearinghouse Massachusetts Profile, available at http://liheap.ncat.org/profiles/Mass.htm, accessed June 3, 2014. 8 LIHEAP Clearinghouse “2012 State-by-State Ratepayer Funded Low-Income Energy Assistance and Energy Efficiency,” 

available at http://liheap.ncat.org/Supplements/2012/supplement12.htm.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-32

the discounts reduce the low-income customer’s bill between 20% and 42%.9 A selection of such lowincome assistance programs are listed below:

• Utilities including National Grid, NStar, Unitil, Western Massachusetts Electric, Berkshire Gas, 

Columbia Gas, and New England Gas offer discount rates for low-income customers through a 

Residential Discount Rate.

o Annual funding in 2012 for the low-income discount was $103 million and served 

406,000 households.

• NSTAR offers a Forgiveness Program for those customers experiencing difficulty paying their 

utility bill. Those with an income that falls within 60% of the state median income are eligible to 

participate in the program.

• Arrearage Management Programs

o NSTAR and Berkshire Gas have programs in place that provide financial assistant to 

qualifying low-income customers that have outstanding bills in arrears.

o This program reached 12,632 electric and 4,692 gas households in 2012.

In addition to the above utility-administered low-income rate assistance programs, many who receive the 

low-income discount rate are also eligible for free energy efficiency services.10 A few examples of 

utilities’ programs are included below:

• Berkshire Gas’ energy efficiency program will cover 100% of installed costs for energy-saving 

measures to low-income heating customers.

• Unitil provides eligible low-income customers with free energy efficiency services, including 

energy audits, electric baseload measures, appliance efficiency services, and heating system 

replacement.

• National Grid’s free home weatherization program offers low-income customers free home 

weatherization from a license and insured local company, paid for my National Grid.

NSTAR’s energy efficiency program provides customers who qualify for NSTAR’s discount rate with a 

free home energy consultation. The consultation could include the installation of energy-saving measures.

 

9 LIHEAP Massachusetts State Snapshot, available at http://liheap.ncat.org/dereg/states/masnapshot.htm, accessed June 3, 2014. 10 LIHEAP Clearinghouse Massachusetts Profile, available at http://liheap.ncat.org/profiles/Mass.htm, accessed June 3, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-33

MICHIGAN

Summary

• State ratemaking practices

o The Michigan PSC works to equitably allocate utility costs to rate classes

• Disbursement of energy efficiency revenues

o Energy efficiency revenues are spent in rough proportion to the dollars collected within 

rate classes 

o Energy efficiency spending in 2012 was 49% residential, 43% commercial, and 8% 

industrial

• Protection of low-income customers

o Ratepayer-funded low-income programs totaled $23.7 million toward energy efficiency 

in 2012

o There are a number of emergency charitable assistance programs in place

o LIHEAP funding in 2014: $165,443,927

State ratemaking practices:

Michigan state law requires that the PSC consider all customer classes and set rates in a just and 

reasonable fashion. In particular, the Commission ensures “all persons in this state are afforded safe, 

reliable electric power at a reasonable rate.” Furthermore, utilities must consider low-income and senior 

citizen customers when filing for changes in rates. The law states that “[u]pon filing of a rate increase 

request, a utility shall include proposed eligible low-income customer and eligible senior citizen customer 

rates and a method to allocate the revenue shortfall attributed to the implementation of those rates upon 

all customer classes.”1

Disbursement of energy efficiency revenues:

According to the EIA, energy efficiency spending in Michigan in 2012 was distributed in the following 

way: 49% of spending was on residential customers, 43% was on commercial customers, and 8% was on 

industrial customers. This is in rough proportion to the electric revenues collected from each rate class.2

Protection of low-income customers:

LIHEAP provides states with federal funding to assist low-income utility customers with their home 

energy bills. For Michigan, funding for fiscal year 2014 totaled $165 million. Customers whose income is 

110% of the federal poverty guidelines qualify for LIHEAP heating assistance. Crisis assistance goes to 

customers whose income is 150% of the federal poverty guidelines. An estimated 623,549 households 

benefited from LIHEAP heat assistance in fiscal year 2013. As an example, LIHEAP benefits for fiscal 

year 2013 included a maximum of $850 for heating assistance.3

 

1 Act 3 of 1939 - Add. 2000, Act 141 (effective June 5, 2000); Act 3 of 1939 - Add. 2008, Act 286 (effective October 6, 2008). 2 Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information 

Administration, Electricity, available at http://www.eia.gov/electricity/data/eia861/.

3 LIHEAP Clearinghouse Michigan Profile, available at http://liheap.ncat.org/profiles/Michigan.htm, accessed June 11, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-34

The LIHEAP Clearinghouse compiles a table that provides the breakdown of Ratepayer Funded LowIncome Energy Assistance and Energy Efficiency by state for certain states. The most recent data from 

2012 lists a total of $23.7 million in ratepayer funds dedicated toward low-income energy efficiency.4

These numbers include totals from state- and utility-administered programs.

Michigan has several low-income assistance programs that are administered by utilities with regulatory 

oversight. All utilities, including IOUs, municipals, and co-ops, participate in low-income energy 

efficiency programs.5

• Detroit Edison has two rate assistance programs and one energy efficiency assistance program in 

place.

o Under the Residential Income Assistance Credit program, low-income customers may 

qualify for a $6 per month credit on their electric, and/or a $10.50 per month credit on 

their natural gas accounts.

o The Senior Citizen Electric Service Rate program provides seniors 62 and older with 

savings up to 32%.

o Detroit Edison offers energy efficiency assistance through the EEA Home Performance 

Rebate Program (includes an audit of effective energy improvements for one’s home), 

Test and Tune-up Program (provides cleaning and tune-up of natural gas furnace), and 

Energy Star Refrigerator Replacement Program

In addition to the above utility-administered programs, the state offers low-income rate assistance 

programs. A few examples are below:6

• The Department of Treasury makes payments to eligible customers through the Home Heating 

Credit.

• Michigan has a State Emergency Relief fund that provides payments for heating fuel, electricity, 

and home repairs among other services. Customers must submit an application for assistance.

There are also a number of emergency charitable assistance programs in Michigan that offer low-income 

assistance. A few examples are below:7

• Consumers Energy works with the Salvation Army to provide bill credits for low-income gas and 

electric customers under the PeopleCare program.

• Indiana Michigan Power provides eligible low-income customers with electric bill assistance 

through their Energy Share program.

• Lansing Board of Water & Light’s Pennies for Power Program provides low-income families 

with utility shutoff protection.

The Heat and Warmth Fund is a non-profit organization that offers bill-payment assistance in addition to 

promoting energy conservation, weatherization and energy efficiency education.

 

4 LIHEAP Clearinghouse “2012 State-by-State Ratepayer Funded Low-Income Energy Assistance and Energy Efficiency,” 

available at http://liheap.ncat.org/Supplements/2012/supplement12.htm. 5 LIHEAP Michigan Snapshot, available at http://liheap.ncat.org/dereg/states/misnapshot.htm, accessed June 11, 2014. 6 LIHEAP Clearinghouse Michigan Profile, available at http://liheap.ncat.org/profiles/Michigan.htm, accessed June 11, 2014. 7 LIHEAP Clearinghouse Michigan Profile, available at http://liheap.ncat.org/profiles/Michigan.htm, accessed June 11, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-35

MINNESOTA

Summary

• State ratemaking practices

o Equitable allocation of utility costs to all customers

o Low-income considerations

• Collection of energy efficiency (and other) public benefit revenues

o Xcel Energy administers a renewable development fund supported by Xcel customers

• Disbursement of energy efficiency revenues

o Energy efficiency revenues are spent roughly in proportion to the dollars collected from

rate classes 

o Energy efficiency spending in 2012 was 35% residential, 42% commercial, and 23%

industrial

• Protection of low-income customers

o Low-income rates: Xcel must provide a 50% discount to low-income customers on the 

first 300 kwh consumed each month

o Beginning in 2010, a utility or association that furnishes electric service must spend 0.2% 

of its gross operating revenue from residential customers in the state on low-income 

programs

o Ratepayer-funded low-income programs totaled $16.85 million toward rate assistance 

and $6.25 million toward energy efficiency in 2012

o Arrearage management programs are in place for Minnesota low-income customers

o LIHEAP funding in 2014: $114,540,746 

State ratemaking practices:

The Minnesota Public Utility Commission (Commission) works to allocate utility costs equitably to the 

various rate classes. Since 1974, Minnesota law has required that “[e]very rate made, demanded, or 

received by any public utility, or by any two or more public utilities jointly, shall be just and reasonable. 

Rates shall not be unreasonably preferential, unreasonably prejudicial, or discriminatory, but shall be 

sufficient, equitable, and consistent in application to a class of consumers.”1 Furthermore, laws require 

special consideration of low-income customers. In addition to mandating that utilities fund affordability 

programs for low-income ratepayers, the law requires that the Commission “must consider ability to pay 

as a factor in setting utility rates and may establish affordability programs for low-income residential 

ratepayers in order to ensure affordable, reliable, and continuous service to low-income utility 

customers.”2

 

1 Minnesota Statute § 216B.03.

2 Minnesota Statute § 216B.16 Subd. 15.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-36

Collection of energy efficiency (and other) public benefit revenues:

In 1999, Xcel Energy established the Renewable Development Fund to promote the “start up, expansion 

and attraction of renewable energy projects and companies in the Xcel Energy service area.”3 The fund is 

financed by Xcel Energy ratepayers, and revenues are generally split between new development projects 

for renewable energy and research and development. Expenditures from the fund must be approved by the 

Commission.4

Disbursement of energy efficiency revenues:

According to the EIA, energy efficiency spending in Minnesota in 2012 was distributed in the following 

way: 35% of spending was on residential customers, 42% was on commercial customers, and 23% was on 

industrial customers. This is roughly proportional to the electric revenues collected from each customer 

class.5

Protection of low-income customers:

LIHEAP provides states with federal funding to assist low-income utility customers with their home 

energy bills. For Minnesota, funding for 2014 totaled $114.5 million. In 2013, this funding reached 

147,636 households and included a minimum of $100 and maximum of $1,200 for heating assistance. 

Customers eligible for LIHEAP are those whose income is not greater than 60% of the state median 

income.6

The LIHEAP Clearinghouse compiles a table that provides the breakdown of Ratepayer Funded LowIncome Energy Assistance and Energy Efficiency by state for certain states. The most recent data from 

2012 lists a total of $16.85 million in ratepayer funds dedicated toward low-income rate assistance, and 

$6.25 million in ratepayer funds dedicated toward low-income energy efficiency.7 These numbers include 

totals from state- and utility-administered programs.

Minnesota state law requires that the PUC ensure “each utility and association provides low-income 

programs...Beginning in 2010, a utility or association that furnishes electric service must spend 0.2 

percent of its gross operating revenue from residential customers in the state on low-income programs.”8

Minnesota has several low-income rate assistance programs that are ratepayer funded.9 Several of such 

programs are listed below:10

 

3 “Overview,” Xcel Energy Renewable Energy Development Fund, available at 

https://www.xcelenergy.com/Environment/Renewable_Energy/Renewable_Energy_Grants/Renewable_Development_Fund, 

accessed June 4, 2014. See also, “Renewable Development Fund (RDF),” Database for State Incentives for Renewables & 

Efficiency (DSIRE), available at, accessed June 3, 2014.

4 “Overview,” Xcel Energy Renewable Energy Development Fund, available at 

https://www.xcelenergy.com/Environment/Renewable_Energy/Renewable_Energy_Grants/Renewable_Development_Fund, 

accessed June 4, 2014. See also, “Renewable Development Fund (RDF),” Database for State Incentives for Renewables & 

Efficiency (DSIRE), available at, accessed June 3, 2014.

5 Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information 

Administration, Electricity, available at http://www.eia.gov/electricity/data/eia861/.

6 LIHEAP Clearinghouse Minnesota Profile, available at http://liheap.ncat.org/profiles/Minn.htm, accessed June 3, 2014. 7 LIHEAP Clearinghouse “2012 State-by-State Ratepayer Funded Low-Income Energy Assistance and Energy Efficiency,” 

available at http://liheap.ncat.org/Supplements/2012/supplement12.htm.

8 Minnesota Statute § 214B.241 Subd. 7.

9 LIHEAP Minnesota Snapshot, available at http://liheap.ncat.org/dereg/states/mnsnapshot.htm, accessed June 3, 2014. 10 LIHEAP Minnesota Snapshot, available at http://liheap.ncat.org/dereg/states/mnsnapshot.htm, accessed June 3, 2014. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-37

• LIHEAP eligible customers qualify for up to 37% discounts based on usage and a reduced 

monthly service charge fee under the Customer Affordability of Resident Electricity (CARE) 

program. Annual funding in 2012 for CARE was $282,130 and reached 2,760 households.

• All natural IOUs in Minnesota must provide a Gas Affordability Program (GAP) under a law 

passed in 2007. It reduces natural gas payments to no less than 6% of eligible customer’s income.

o Annual funding in 2012 for GAP was $7.7 million and reached 32,502 households.

• Xcel’s Low-Income Senior Discount offers an additional discount of 50% on monthly electric 

consumption, up to kwhs per billing period, for those low-income residential electric and gas 

customers who are 62 years of age or older.

• The PowerOn Program provides LIHEAP customers various benefits based on energy use, 

income, and amount of arrears. The program served nearly 15,000 households in 2012.

In addition to the PowerOn program listed above that includes arrears management, Minnesota also 

facilitates arrears management through the Gas Affordability Program.

Low-income customers, who may receive rate assistance through the ratepayer funded programs

described previously, may also qualify for several energy efficiency programs.11 A few examples are 

below:

• Both Great Plains Natural Gas and Minnesota Energy Resources offer low-income weatherization 

programs. This includes weatherization measures such as insulation, caulking, weather-stripping, 

and storm windows and doors.

• Otter Tail Power Company’s House Therapy Program provides customers with high bill concerns 

and high energy use with an energy analysis. The analysis may include the installation of energysaving insulation and weather-stripping.

Many utilities also offer emergency charitable assistance that is to provide last resort emergency funds for 

low-income customers.12 A number of emergency charitable programs in Minnesota are listed below: 

• Minnesota law established Reach Out for Warmth in 1992, aiming to provide people in need with 

emergency energy assistance and furnace repair. The program is administered by the Energy 

Program Unit of the Department of Economic Security along with local energy assistance 

agencies.

• Minnesota utilities fund the “last resort” HeatShare program that is administered by the Salvation 

Army. The program provides money to help pay for electricity bills along with natural gas, oil, 

propane, wood, and emergency furnace repairs.

• Agralite Electric, Benco Electric, and Kandiyohi Power Cooperatives use customer donations to 

provide funds for individuals and organizations in need through Operating Round Up.

 

11 LIHEAP Clearinghouse Minnesota Profile, available at http://liheap.ncat.org/profiles/Minn.htm, accessed June 3, 2014. 12 LIHEAP Clearinghouse Minnesota Profile, available at http://liheap.ncat.org/profiles/Minn.htm, accessed June 3, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-38

MISSOURI

Summary

• State ratemaking practices

o Inquiry into impact of utility rates on vulnerable citizens

• Disbursement of energy efficiency revenues

o Energy efficiency revenues from residential customers are spent in rough proportion to 

the dollars collected within that rate class

o Energy efficiency spending in 2012 was 52% residential, 47% commercial, and 1%

industrial

• Protection of low-income customers

o Ratepayer-funded low-income programs totaled $600,000 toward rate assistance and $4.3 

million toward energy efficiency in 2012

o Utilities offer rate assistance and energy efficiency programs

o Charitable rate assistance programs offered through organizations, utilities, cities, and 

counties also exist

o LIHEAP funding in 2014: $70,882,484

State ratemaking practices:

In 2012, the Missouri Public Service Commission (Commission) “ordered an inquiry into the impact 

higher utility rates will have on older or low-income citizens and established a docket to consider rate 

design changes and methods other states use to reduce the impact of higher utility rates on financially 

vulnerable citizens.”1 In this way, the Commission is looking after low-income customers when it comes 

to utility rates.

Disbursement of energy efficiency revenues:

According to the EIA, energy efficiency spending in Missouri in 2012 was distributed in the following 

way: 52% of spending was on residential customers, 47% was on commercial customers, and 1% was on 

industrial customers.2

Protection of low-income customers:

LIHEAP provides federal funding to states to assist low-income utility customers with their home energy 

bills. For Missouri, funding for 2014 totaled $70,882,484. Customers whose income is not greater than 

135% of the Federal Poverty Level are LIHEAP-eligible. An estimated 145,279 households benefited 

from LIHEAP in 2013, and the maximum heating benefit was $450.3

The LIHEAP Clearinghouse compiles a table that provides the breakdown of ratepayer funded lowincome energy assistance and energy efficiency by state for certain states. The most recent data from 

 

1 “PSC Orders Inquiry Into Impact of Higher Utility Rates on Missouri’s Low-Income Citizens,” Missouri Public Service 

Commission Press Release, August 9, 2012.

2 Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information 

Administration, Electricity, available at http://www.eia.gov/electricity/data/eia861/. 3 LIHEAP Clearinghouse Missouri Profile, available at http://liheap.ncat.org/profiles/Missouri.htm, accessed June 4, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-39

2012 lists a total of $600,000 in ratepayer funds dedicated toward low-income rate assistance, and $4.3 

million in ratepayer funds dedicated toward low-income energy efficiency.4 These numbers include totals 

from state- and utility-administered programs.

Many Missouri utilities offer rate assistance and energy efficiency programs. Several examples are 

provided below:5

• Ameren Missouri’s Keeping Current Program provides credits to low-income customers who 

remain current with payments during the heating and/or cooling seasons. The Dollar More 

agencies help determine qualifying customers. Ameren also offers a $500 credit on utility bills to 

military families.

• Independence Power & Light offers qualified low-income elderly or disabled customers a 50% 

discount on their electric bill through their Independence Rate Assistance Program 

• Ameren Missouri provides weatherization for its customers through Operation Winter Survival 

Other charitable rate assistance programs exist and are listed below. These include programs run by 

charitable organizations, along with programs specific to certain cities, counties, or coops:6

• HeatShare provides rate assistance for elderly or disabled low-income customers, along with 

customers unable to pay bills due to unexpected events, such as a birth or death in the family. In 

addition, HeatShare may offer grants to repair energy related equipment.

• Boone County offers a Heat Energy and Light Program to provide one-time assistance to lowincome families with young children, and also offers a Citizens Assisting Seniors and 

Handicapped which provides assistance to low-income seniors and people with disabilities.

• City Utilities of Springfield offers a community supported rate assistance program called Project 

Share.

 

4 LIHEAP Clearinghouse Missouri Profile, available at http://liheap.ncat.org/profiles/Missouri.htm, accessed June 4, 2014. 5 LIHEAP Clearinghouse Missouri Profile, available at http://liheap.ncat.org/profiles/Missouri.htm, accessed June 4, 2014. 6 LIHEAP Clearinghouse Missouri Profile, available at http://liheap.ncat.org/profiles/Missouri.htm, accessed June 4, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-40

MONTANA

Summary

• State ratemaking practices

o Low-income considerations

• Collection of energy efficiency (and other) public benefit revenues

o The PSC has overseen the collection and spending of public benefit funding mechanisms 

for 18 years

o Public benefit funding is collected through a 2.4% surcharge rate based on electric 

utilities’ 1995 revenue

• Disbursement of energy efficiency revenues

o Energy efficiency spending in 2012 was 41% residential and 59% commercial 

• Protection of low-income customers

o $5.64 million in ratepayer funds dedicated toward low-income rate assistance in 2012

o $1.66 million in ratepayer funds dedicated toward low-income energy efficiency in 2012

o Low income rates: ratepayer- and utility-funded programs offer low-income discounts on 

utility bills

o Charitable emergency assistance offered to communities in crisis

o LIHEAP funding in 2014: $23,654,004

State Ratemaking Practices:

Montana includes low-income considerations in its ratemaking practices. For example, as ordered in 

2011, the Department of Public Service Regulation Rate Case states, “As noted in Finding of Fact No. 

211, MDU is not ordered to rebate the difference between the rates approved in the Interim Order and this 

Final Order. Rather, MDU must remit $5,000 to the state Department of Revenue for deposit in the lowincome energy assistance fund administered by the state Department of Health and Human Services to be 

used for the benefit of customers in MDU's electric service territory.”1

Collection of energy efficiency (and other) public benefit revenues:

Montana established its first public benefit fund in 1996. Called the Universal System Benefits Program 

(USBP), all electric utilities (including cooperatives) are required by law to charge customers a nonbypassable surcharge on electricity use. The fund is fully administered by the individual utilities and 

overseen by the Public Service Commission. Revenues generated by the USBP are directed towards 

research and development efforts and energy efficiency, conservation, renewable energy, and low-income 

energy assistance programs. Utilities may use a portion of USBP revenues to fund internal or eligible 

external programs. Large-scale utilities customers with loads exceeding one megawatt may also use a 

portion of the USBP-generated revenues for eligible internal programs. In 2011, the USBP generated 

approximately $9.4 million in revenue.

 

1 Department of Public Service Regulation Rate Case - D2010.8.82 (Final Order Issued May 9, 2011).
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-41

The USBP was originally set to expire on December 31, 2009, but that expiration date has since been 

extended indefinitely.2, 3

Disbursement of energy efficiency revenues:

According to the EIA, energy efficiency spending in Montana in 2012 was distributed in the following 

way: 41% of spending was on residential customers and 59% was on commercial customers.4

Protection of low-income customers: 

LIHEAP provides federal funding to states to assist low-income utility customers with their home energy 

bills. Montana LIHEAP funding is currently set at $23,654,004 for 2014. To be LIHEAP-eligible, utility 

customers must have a household income of no greater than 60% the state median income. Additionally, a 

household of seven or more members may be LIHEAP-eligible if their income is no more than 150% of 

the federal poverty level. In 2013, an estimated 21,700 households benefited from LIHEAP heat 

assistance. These households received an average heating benefit of $541, a minimum benefit of $50, and 

a maximum benefit of $1,500.5

The LIHEAP Clearinghouse compiles a table that provides the breakdown of Ratepayer Funded LowIncome Energy Assistance and Energy Efficiency by state for certain states. The most recent Montana 

data from 2012 lists a total of $5.64 million in ratepayer funds dedicated toward low-income rate 

assistance, and $1.66 million in ratepayer funds dedicated toward low-income energy efficiency. These 

numbers include totals from state- and utility-administered programs.6 Participating utilities include 

NorthWestern Energy, Montana-Dakota Utilities, Energy West, and 24 rural electric cooperatives.

Montana has several low-income rate assistance and energy efficiency programs that are administered by 

utilities with regulatory oversight. The ratepayer funded programs, their funding mechanisms and 

administration, are outlined below:

• The Low Income Discounts program offers a 25% electric bill discount for the months of 

November through April to LIHEAP-eligible customers of NorthWestern Energy. Other utilities, 

which include cooperatives, offer discounted electric bills and rate assistance to low-income 

customers as well.7

o Funding Mechanism: Funding for the program is generated from the USBP charge 

imposed on all electric and natural gas IOU ratepayers and rural electric cooperatives.

o Administration: The Commission administers this program in coordination with LIHEAP 

and additional utilities.8

• The Free Weatherization Program (FWP) is offered to NorthWestern Energy customers who 

make no more than 200% of the federal poverty level. The LIHEAP Clearinghouse reports that 

 

2 “Public Benefits Funds: Increasing Renewable Energy & Industrial Energy Efficiency Opportunities,” published by the US 

DOE, March 2010.

3 Montana Public Benefits Fund Page, DSIRE database, “Universal System Benefits Program,” available at 

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=MT01R&re=1&ee=1, accessed June 4, 2014.

4 Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information 

Administration, Electricity, available at http://www.eia.gov/electricity/data/eia861/, accessed June 4, 2014.

5 LIHEAP Clearinghouse Montana Profile, available at http://liheap.ncat.org/profiles/Montana.htm,accessed June 4, 2014. 6 LIHEAP Clearinghouse “2012 State-by-State Ratepayer Funded Low-Income Energy Assistance and Energy Efficiency,” 

available at http://liheap.ncat.org/Supplements/2012/supplement12.htm, accessed June 4, 2014. 7 Low Income Discounts are offered under the Universal Systems Benefit Program (USBP).

8 LIHEAP Montana State Snapshot, available at http://liheap.ncat.org/dereg/states/mtsnapshot.htm, accessed June 4, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-42

the FWP “provides audits, air-sealing, hot water conservation, insulation, CFLs, heating 

equipment tune-up/ repair, [and] fuel switching (electric heat to gas) as appropriate.” Additional 

utilities offer weatherization programs in coordination with Montana’s Weatherization Assistance 

Program.

o Funding Mechanism: Funding for the program is generated from the USBP charge on all 

electric and natural gas IOU ratepayers and rural electric cooperatives.

o Administration: The Commission administers this program in coordination with LIHEAP 

and the larger utilities involved with WAP.9

In addition to the ratepayer funded programs listed above, utilities also offer rate assistance and energy 

efficiency programs to low-income customers. Examples of each include, but are not limited to, the 

following:10

Low-Income Rate Assistance:

• Flathead Electric Cooperative offers low-income residents at or below 150% of the federal 

poverty level with a credit to their monthly electric bill. 

• Park Electric Co-op offers a Senior Income Eligible Discount to LIHEAP-eligible co-op members 

over the age of 60. 

• Lincoln Electric Co-op offers a 10% energy bill discount to low-income seniors over 65 and 

permanently disabled residents.

• Vigilante Electric Cooperative, Inc. offers energy assistance to low-income households in the fall 

months.

Low-Income Energy Efficiency:

• Energy West and Montana-Dakota Utilities each run Furnace and Water Heater Safety and 

Efficiency Programs in which low-income household appliances are inspected and replaced if 

deemed unsafe. 

• NorthWestern Energy, in collaboration with Montana’s state weatherization program, offers a 

Free Weatherization Program to eligible homeowners. 

In addition to the ratepayer- and utility-based programs listed above, the state also has charitable 

assistance in the event of crises. For example, Energy Share of Montana is a non-profit organization that 

provides one-time needs-based assistance to state residents. Assistance may come in the form of 

appliance repairs or installation, but most often comes in the form of help with heating bill payments.

Additionally, Flathead Electric offers the Keep the Lights On program “provides help in emergencies for 

low-income members who are in disconnect status.”11

 

9 LIHEAP Montana State Snapshot, available at http://liheap.ncat.org/dereg/states/mtsnapshot.htm, accessed June 4, 2014. 10 LIHEAP Clearinghouse Montana Profile, available at http://liheap.ncat.org/profiles/Montana.htm, accessed June 4, 2014. 11 LIHEAP Clearinghouse Montana Profile, available at http://liheap.ncat.org/profiles/Montana.htm, accessed June 4, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-43

NEVADA

Summary

• State ratemaking practices

o Just and reasonable rates for all customers

• Collection of energy efficiency (and other) public benefit revenues

o The PUC oversees the collection and spending of the Fund for Energy Assistance and 

Conservation 

• Disbursement of energy efficiency revenues

o Energy efficiency spending in 2012 was 56% residential and 44% commercial

• Protection of low-income customers

o Low-income rates: Certain utilities offer low-income customers annual credits

o Ratepayer-funded low-income programs totaled $9.1 million toward rate assistance and 

$3.25 million toward energy efficiency in 2012

o Nevada has low-income rate assistance, energy efficiency, arrears management, and 

emergency charitable programs available for eligible low-income customers

o LIHEAP funding in 2014: $11,103,694

State ratemaking practices:

Nevada law requires that the Public Utilities Commission (Commission) set rates to be “just and 

reasonable” for all customers.1

Collection of energy efficiency (and other) public benefit revenues:

Nevada established the Fund for Energy Assistance and Conservation (Fund) which is administered by 

the Division of Welfare and Supportive Services. Fund revenues come from the universal energy charge, 

a surcharge of 0.39 mills on each kwh of electricity for retail customer purchases for consumption in 

Nevada. Nevada law mandates that 75% of the money in the Fund be distributed to assist eligible 

households for natural gas and electric payments.

Disbursement of energy efficiency revenues:

According to the EIA, energy efficiency spending in Nevada in 2012 was distributed in the following 

way: 56% of spending was on residential customers and 44% was on commercial customers.2 This is in 

rough proportion to the electric revenues collected from each rate class.3

Protection of low-income customers:

LIHEAP provides states with federal funding to assist low-income utility customers with their home 

energy bills. For Nevada, funding for fiscal year 2014 totaled $11,103,694. Customers whose income is 

150% of the federal poverty level are LIHEAP-eligible. An estimated 30,000 households benefited from 

 

1 Nevada State Law, Chapter 704 – Regulation of Public Utilities Generally, Section 120. 2 Percentages reflect EE and Load Management Program costs from EIA data. 3 Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information 

Administration, Electricity, available at http://www.eia.gov/electricity/data/eia861/.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-44

LIHEAP heat assistance in fiscal year 2013. As an example, LIHEAP benefits for fiscal year 2013 

included a minimum of $180, but average of $684 in benefits.4

The LIHEAP Clearinghouse compiles a table that provides the breakdown of Ratepayer Funded LowIncome Energy Assistance and Energy Efficiency by state for certain states. The most recent data from 

2012 lists a total of $9.1 million in ratepayer funds dedicated toward low-income rate assistance, and 

$3.25 million in ratepayer funds dedicated toward low-income energy efficiency.5 These numbers include 

totals from state- and utility-administered programs.

Nevada has several ratepayer funded low-income rate assistance and energy efficiency programs. 

Participating utilities include NV Energy and Southwest Gas.6 A sampling of such programs is listed 

below:

• Low-income rate assistance comes from Nevada’s Energy Assistance Program.

o The program provides annual credits for low-income customers. The program reduces 

participants’ percentage of income paid on utility bills to the state median percentage of 

income spent on such bills.

• There are two main ratepayer funded programs that address energy efficiency in Nevada.

o The UEC Weatherization Assistance Program provides various services to improve 

health and safety measures. The program served 756 households with $3 million in 

funding for 2012.

o There are also a number of demand side management programs in place for households.

In 2012, Southwest Gas demand side management program funding was $247,500 and 

reached 269 households.

In addition to the above utility-administered programs, there are multiple emergency charitable assistance 

programs in place.7 A few examples are below:

• NV Energy helps facilitate energy assistance programs.

o Project REACH helps adults by providing relief through energy assistance and is 

administered by the United Way of Southern Nevada. Eligible customers include 

individuals over the age of 62 that are isolated, medically fragile in need of emergency 

energy assistance.

o The Community Services Agency administers the Special Assistance Fund for Energy.

The program is a low-income energy assistance programs were shareholder funds match 

public donations on a dollar for dollar basis up to $100,000.

• Southwest Gas’s Energy Share program offers direct assistance to those with unexpected 

financial difficulties. The program is administered by the Salvation Army.

• Valley Electric Associations works with county social service agencies to provide assistance to 

customers that are having difficulty paying their electric bill.

 

4 LIHEAP Clearinghouse Nevada Profile, available at http://liheap.ncat.org/profiles/Nevada.htm, accessed June 3, 2014. 5 LIHEAP Clearinghouse “2012 State-by-State Ratepayer Funded Low-Income Energy Assistance and Energy Efficiency,” 

available at http://liheap.ncat.org/Supplements/2012/supplement12.htm.

6 LIHEAP Nevada Snapshot, available at http://liheap.ncat.org/dereg/states/nvsnapshot.htm, accessed June 3, 2014. 7 LIHEAP Clearinghouse Nevada Profile, available at http://liheap.ncat.org/profiles/Nevada.htm, accessed June 3, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-45

NEW HAMPSHIRE

Summary

• State ratemaking practices

o Fair and reasonable allocation of utility costs to customers.

• Collection of energy efficiency (and other) public benefit revenues

o The Commission has overseen the collection and spending of public benefit funding 

mechanisms for 18 years

o Public benefit funding collected from customers on a volumetric basis

o Additional energy efficiency funding was made available through the conversion of the 

state’s greenhouse gas emissions fund in 2012

• Disbursement of energy efficiency revenues

o Energy efficiency revenues from residential customers are spent in rough proportion to 

the dollars collected within that rate class 

o Energy efficiency spending in 2012 was 46% residential, 53% commercial, and 2%

industrial

• Protection of low-income customers

o Ratepayer-funded low-income programs totaled $15.1 million toward rate assistance and 

$3.9 million toward energy efficiency in 2012

o State-mandated ratepayer-funded rate assistance and energy efficiency programs

o Charitable rate assistance programs also exist

o LIHEAP funding in 2014: $25,536,004

State ratemaking practices:

New Hampshire has laws in place to ensure fair ratemaking practices. New Hampshire Statutes, §378:10

states, “No public utility shall make or give any undue or unreasonable preference or advantage to any 

person or corporation, or to any locality, or to any particular description of service in any respect 

whatever or subject any particular person or corporation or locality, or any particular description of 

service, to any undue or unreasonable prejudice or disadvantage in any respect whatever.”1

Collection of energy efficiency (and other) public benefit revenues:

Electric restructuring legislation in 1996 created a system benefit charge (SBC) that supports low-income 

rate assistance and energy efficiency programs. The efficiency fund took effect in 2002 and is funded by a 

$0.0018/kWh charge on electric utility customers, with a separate $0.0015/kWh customer charge to fund 

low-income energy assistance. This adds up to approximately $19 million collected annually from the 

surcharges. The New Hampshire Public Utilities Commission (PUC) approves programs that receive 

funding from the SBC and oversees these utility-administered programs. The PUC also provides annual 

reports on the SBC to the Legislative Oversight Committee on Electric Restructuring.2

 

1 New Hampshire Statutes, Title XXXIV, §378:10. 2 DSIRE database, New Hampshire System Benefits Charge, available at 

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=NH07R&re=1&ee=1, accessed June 9, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-46

In 2012, New Hampshire legislation converted the greenhouse gas emissions fund into an energy 

efficiency fund, which will provide additional funding for energy programs funded by SBCs.3

Disbursement of energy efficiency revenues:

According to the EIA, energy efficiency spending in New Hampshire in 2012 was distributed in the 

following way: 46% of spending was on residential customers, 53% was on commercial customers, and 

2% was on industrial customers.4 This is in rough proportion to the electric revenues collected from each 

rate class.5

Protection of low-income customers:

LIHEAP provides federal funding to states to assist low-income utility customers with their home energy 

bills. For New Hampshire, funding for 2014 totaled $25,536,004. Customers whose income is not greater 

than 200% of the Federal Poverty Level are LIHEAP-eligible. An estimated 36,805 households benefited 

from LIHEAP heat assistance in 2013. Eligible customers in 2013 received a minimum heating benefit of 

$120, with $500 awarded on average.6

A state statute from the 1840’s mandates that New Hampshire cities and towns provide emergency 

welfare services to the poor. This assistance is funded through local property taxes and includes utility 

payment assistance, food and clothing vouchers, and burial expenses.7

The LIHEAP Clearinghouse compiles a table that provides the breakdown of ratepayer funded lowincome energy assistance and energy efficiency by state for certain states. The most recent data from 

2012 lists a total of $15.1 million in ratepayer funds dedicated toward low-income rate assistance, and 

$3.9 million in ratepayer funds dedicated toward low-income energy efficiency.8 These numbers include 

totals from state- and utility-administered programs.

Many utilities participate in rate assistance and energy efficiency programs funded through a system 

benefits charge of $003.3/kWh. These programs are administered by the utilities with PUC oversight. 

Programs for Public Service Company of New Hampshire, Granite State Electric, Unitil Energy Systems, 

Inc., and New Hampshire electric Cooperative are summarized below:

• The Electric Assistance Program (EAP) provides monthly electric bill discounts for low-income 

customers with household income at or below 175% of the federal poverty level. Discounts range 

from 7 to 70 percent off the first 700 kWh of energy used, with discounts ranging based on 

income level and size of household. EAP funding in 2012 totaled $13.6 million.

• The Home Energy Assistance (HEA) program provides up to $5,000 in energy efficiency 

improvements for customers of participating utilities whose income is less than 200% of the 

 

3 DSIRE database, New Hampshire System Benefits Charge, available at 

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=NH07R&re=1&ee=1, accessed June 9, 2014. 4 Percentages reflect EE and Load Management Program costs from EIA data. 

5 Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information 

Administration, Electricity, available at http://www.eia.gov/electricity/data/eia861/. 6 LIHEAP Clearinghouse New Hampshire Profile, available at http://liheap.ncat.org/profiles/NH.htm, accessed June 9, 2014. 7 LIHEAP Clearinghouse New Hampshire Profile, available at http://liheap.ncat.org/profiles/NH.htm, accessed June 9, 2014. 8 LIHEAP Clearinghouse “2012 State-by-State Ratepayer Funded Low-Income Energy Assistance and Energy Efficiency,” 

available at http://liheap.ncat.org/Supplements/2012/supplement12.htm, accessed June 9, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-47

federal poverty level. Improvements include insulation, weatherization, appliance upgrades, and 

health and safety measures. HEA electric utility funding in 2012 totaled $3 million.9

In addition to the state-mandated ratepayer funded programs listed above, charitable programs for rate 

assistance are also available. Many of New Hampshire’s utilities participate in Neighbors Helping 

Neighbors, which is a “last resort” fund to help protect low-income customers from disruption in energy 

service once other funds have fun out. New Hampshire Electric Cooperative’s Project Care works 

similarly, providing help to members to avoid disconnection in service. Project Care is funded through the 

Round Up program, where members choose to “round up” their utility bills to the nearest dollar to help 

with funding.10

 

9 LIHEAP New Hampshire State Snapshot, available at http://liheap.ncat.org/dereg/states/nhsnapshot.htm, accessed June 9, 2014. 10 LIHEAP New Hampshire State Snapshot, available at http://liheap.ncat.org/dereg/states/nhsnapshot.htm, accessed June 9, 

2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-48

NEW JERSEY

Summary

• State ratemaking practices

o Just and reasonable allocation of utility costs to rate classes 

• Collection of energy efficiency (and other) public benefit revenues

o The Board of Public Utilities has administered the public benefit fund for 15 years 

o Public benefit funding is a non-bypassable charge and collected on a volumetric basis 

• Disbursement of energy efficiency revenues

o Energy efficiency spending in 2012 was 75% residential, 20% commercial, and 5% 

industrial 

• Protection of low-income customers

o Low-income rates: there is a low-income discount on natural gas and electricity bills 

o Ratepayer-funded low-income programs totaled $273.15 million toward rate assistance 

and $30 million toward energy efficiency in 2012

o New Jersey also has arrearage management programs

o LIHEAP funding in 2014: $ 124,569,647

State ratemaking practices:

The state of New Jersey works toward just and reasonable allocation of utility costs to rate classes. New 

Jersey Statute states, “The board may, after hearing... [f]ix just and reasonable individual rates, joint 

rates, tolls, charges or schedules thereof, as well as commutation, mileage and other special rates which 

shall be imposed, observed and followed thereafter by any public utility, whenever the board shall 

determine any existing rate, toll, charge or schedule thereof, commutation, mileage or other special rate to 

be unjust, unreasonable, insufficient or unjustly discriminatory or preferential.”1

Collection of energy efficiency (and other) public benefit revenues:

As part of electric-utility restructuring legislation, New Jersey established a public benefit fund in 1999 to 

fund renewable energy, energy efficiency, and low-income assistance programs through the New Jersey 

Clean Energy Program (NJCEP). The NJCEP is administered by the Board of Public Utilities (BPU). 

NJCEP funds are generated from collection of what is known as the “societal benefits charge” (SBC). 

DSIRE reports that the SBC is a non-bypassable, per-kWh surcharge imposed on customers of NJ’s seven 

investor-owned gas and electric public utilities. The magnitude of the SBC varies as the BPU sets threeyear period funding targets. From 2001-2004, a total of $482 million was collected and from 2005-2008, 

a total of $745 million was collected. The 2009-2012 budget was set at $1.213 billion with approximately 

80% of funds directed to energy efficiency programs and 20% to renewable energy programs. DSIRE 

notes that New York’s NJCEP target budgets may also be affected by a variety of factors over the course 

of a funding period, including: interest accruals, budget re-allocations, alternative compliance payment 

 

1 New Jersey Statute §48:2-21.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-49

funds, and amounts routed out of the fund to external state needs.2 Until state Governor Chris Christie 

withdrew New Jersey from the RGGI program in 2011, the SBC received additional revenues from RGGI 

auction proceeds.3

Disbursement of energy efficiency revenues:

According to the EIA, energy efficiency spending in New Jersey in 2012 was distributed in the following 

way: 75% of spending was on residential customers, 20% was on commercial customers, and 5% was on 

industrial customers.4

Protection of low-income customers:

LIHEAP provides federal funding to states to assist low-income utility customers with their home energy 

bills. New Jersey LIHEAP funding is currently set at approximately $124.5 million for 2014. To be 

LIHEAP-eligible, utility customers must have a household income of no greater than 200% the federal 

poverty guidelines. For fiscal year 2013, this funding reached an estimated 190,432 households. For fiscal 

year 2012, LIHEAP households received an average benefit of $275 for heating and $160 for “medically 

necessary cooling.”5

The LIHEAP Clearinghouse compiles a table that provides the breakdown of Ratepayer Funded LowIncome Energy Assistance and Energy Efficiency by state for certain states. The most recent data New 

Jersey data from 2012 lists a total of approximately $273.15 million in ratepayer funds dedicated toward 

low-income rate assistance and $30 million in ratepayer funds dedicated toward low-income energy 

efficiency.6 These numbers include totals from state- and utility-administered programs.

New Jersey has several low-income rate assistance programs, an energy efficiency program, and arrears 

management that are administered by utilities, state departments, and non-profit entities with regulatory 

oversight. Participating utilities include a number of gas and electric providers: “PSE&G, Elizabethtown 

Gas, NJ Natural Gas, South Jersey Gas, Atlantic City Electric, Jersey Central P&L, Rockland Electric.” 

Funding for all of the ratepayer programs is generated from the SBC on all electric and natural gas 

consumers.7 The current programs for each category are outlined below:

Rate Assistance

• Universal Service Fund (USF) offers energy bill credits of up to $1,800 annually to customers 

who fall under the 150% federal poverty guidelines and direct more than 6% of their income to 

gas and electricity. The USF is administered by the Department of Community Affairs as a 

LIHEAP grantee. In 2012, the USF received $197 million in funding and served an estimated 

221,451 households.

 

2 “Societal Benefits Charge,” Database of State Incentives for Renewables & Efficiency (DSIRE), New Jersey Incentives/Policies 

for Renewables & Efficiency, available at 

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=NJ04R&re=1&ee=1, accessed June 11, 2014.

3 “Public Benefits Funds: Increasing Renewable Energy & Industrial Energy Efficiency Opportunities,” published by the US 

DOE, March 2010.

4 Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information 

Administration, Electricity, available at http://www.eia.gov/electricity/data/eia861/. 5 LIHEAP Clearinghouse New Jersey Profile, available at http://liheap.ncat.org/profiles/NJ.htm, accessed June 13, 2014. 6 LIHEAP Clearinghouse “2012 State-by-State Ratepayer Funded Low-Income Energy Assistance and Energy Efficiency,” 

available at http://liheap.ncat.org/Supplements/2012/supplement12.htm.

7 LIHEAP New Jersey State Snapshot, available at http://liheap.ncat.org/dereg/states/njsnapshot.htm, accessed June 13, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-50

• Temporary Relief for Utility Expenses (TRUE) offers one-time credit of $1,500 to overdue 

electric or gas bills to customers who may be ineligible for LIHEAP or USF support, but have a 

record of timely energy bill payments. TRUE is administered by the Affordable Housing 

Alliance. In 2012, TRUE received a “one-time funding” amount of $25 million for the 2011-2015 

period. 

• Lifeline offers elderly and disabled customers up to $225 in rate assistance. The program is 

administered by the Department of Human Services. In 2012, Lifeline received $65 million in 

funding and served an estimated 281,855 households.

Arrearage Management

• Fresh Start offers arrearage forgiveness to first-year enrollees of the USF if a customer enters the 

program with at least $60 in overdue, but pays all monthly utility bills in full and on time for the 

course of a year. Fresh Start is managed by the Department of Community Affairs as a LIHEAP 

grantee. In 2012, the Fresh Start program received $12.4 million in funding and served an 

estimated 24,360 households.

Energy Efficiency

• Comfort Partners repairs, replaces, and installs energy efficient appliances of customers with 

income no greater than 225% of the federal poverty guidelines, prioritizing USF participants with 

higher energy use. Comfort Partners is administered by utilities and the office BPU Office of 

Clean Energy. In 2012, Comfort Partners received $33.3 million in funding and served an 

estimated 7,897 households. 

In addition to the ratepayer funded programs listed above, utilities also offer rate assistance and energy 

efficiency programs to low-income customers. An example includes, but is not limited to, the following: 

• Payment Assistance for Gas & Electric offers assistance to “low-to-moderate income” state 

residents experiencing economic hardship and facing difficulty paying utility bills. To be eligible 

for assistance, customers must have overdue bills or be in disconnect status, must have a recent 

history of consistent payments prior to hardship, meet specific program income guidelines, and 

not have received USF within 6 months.8

Charitable Assistance

In addition to the ratepayer- and utility-based programs listed above, New Jersey also has charitable 

assistance in the event of crises. For example, New Jersey SHARES offers temporary energy bill 

assistance to non-welfare residents of the state who are experiencing financial hardship, but have 

“demonstrated a good faith effort to pay their energy bills.” Additionally, New Jersey Natural Gas offers 

the Gift of Warmth program which provides utility bill assistance to low-income customers experiencing 

financial hardship.9

 

8 LIHEAP Clearinghouse New Jersey Profile, available at http://liheap.ncat.org/profiles/NJ.htm, accessed June 13, 2014. 9 “[The Gift of Warmth] program is administered by the United Way through local Community Action Program (CAP) 

agencies.” LIHEAP Clearinghouse New Jersey Profile, available at http://liheap.ncat.org/profiles/NJ.htm, accessed June 13, 

2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-51

NEW MEXICO

Summary

• State ratemaking practices

o Equitable allocation of utility costs to rate classes

o Low-income considerations

• Collection of energy efficiency (and other) public benefit revenues

o Public Regulation Commission and utilities have overseen the collection and spending of 

public benefit funding mechanisms for 9 years

o Different policies are in place for IOUs, distribution co-ops and electric co-ops

o Charges are collected by utilities

• Disbursement of energy efficiency revenues

o Energy efficiency spending in 2012 was 54% residential, 38% commercial, and 8%

industrial

• Protection of low-income customers

o Ratepayer-funded low-income programs totaled $1.8 million toward energy efficiency in 

2012

o State-mandated ratepayer funded energy efficiency program

o Charitable rate assistance programs also available

o LIHEAP funding in 2014: $16,734,368

State ratemaking practices:

The New Mexico statutes help ensure fair ratemaking practices for all utility customers. The law states, 

“Every rate made, demanded or received by any public utility shall be just and reasonable.”1 In addition, a 

specific clause covering discrimination outlines that “No public utility shall, as to rates or services, make 

or grant any unreasonable preference or advantage to any corporation or person within any classification 

or subject any corporation or person within any classification to any unreasonable prejudice or 

disadvantage,” and further clarifies that “No public utility shall establish and maintain any unreasonable 

differences as to rates of service either as between localities or as between classes of service.” Finally, the 

law provides special considerations concerning the protection of low-income ratepayers, stating “Nothing 

shall prohibit, however, the commission from approving economic development rates and rates designed 

to retain load or from approving energy efficiency programs designed to reduce the burden of energy 

costs on low-income customers pursuant to the Efficient Use of Energy Act.”2

Collection of energy efficiency (and other) public benefit revenues:

In 2005, the Efficient Use of Energy Act created a public benefits charge that utilities could levy to 

implement energy efficiency programs. Utilities are allowed to charge customers to obtain funding for 

energy efficiency and load management programs, with a tariff that cannot exceed $75,000 per year per 

customer. All programs must be approved by the Public Regulation Commission (Commission) before 

 

1 New Mexico state statutes, 62-8-1. 2 New Mexico state statutes, 62-8-6.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-52

they can be implemented by utilities, and all IOUs have established programs and received approval by 

the Commission.3

Approval for electric cooperative energy efficiency programs resides with each co-op’s governing body, 

but the co-ops must also provide written submission of their programs to the Commission. Distribution 

co-ops are allowed to collect a renewable energy and conservation fee of up to 1% of the customer’s bill, 

and are allowed to spend the funds on projects and programs related to renewable energy, load 

management, and energy efficiency.4

Disbursement of energy efficiency revenues:

According to the EIA, energy efficiency spending in New Mexico in 2012 was distributed in the 

following way: 54% of spending was on residential customers, 38% was on commercial customers, and 

8% was on industrial customers.5

Protection of low-income customers:

LIHEAP provides federal funding to states to assist low-income utility customers with their home energy 

bills. For New Mexico, funding for 2014 totaled $16,734,368. Customers whose income is not greater 

than 150% of the federal poverty level are LIHEAP-eligible. An estimated 68,462 households benefited 

from LIHEAP heat assistance in 2013. The amount of money spent on heating and cooling for LIHEAP 

customers ranged between $32 and $224, and customers could receive up to $224 to deal with a crisis.6

The LIHEAP Clearinghouse compiles a table that provides the breakdown of ratepayer funded lowincome energy assistance and energy efficiency by state for certain states. The most recent data from 

2012 lists $1.8 million in ratepayer funds dedicated toward low-income energy efficiency.7 These 

numbers include totals from state- and utility-administered programs.

As mentioned above, public benefits funds are collected by utilities for energy efficiency programs. In 

addition, many charitable low-income assistance programs exist. A few examples are provided below:

• The Public Service Company of New Mexico (PNM) has a Good Neighbor Fund, where 

customer donations are matched by PNM and funds go toward rate assistance for low-income 

customers between November and April. The Fund is administered by the Salvation Army.

• Several programs for help exist in Bernalillo County:

o St. Vincent De Paul, a Catholic aid organization, provides electricity, gas, and water 

assistance.

o The Home Education Livelihood Program (HELP) provides utility rate assistance, rent 

assistance, or food vouchers once per year for eligible low-income households.

 

3 DSIRE database, New Mexico Efficient Use of Energy Act, available at 

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=NM09R&re=1&ee=1, accessed June 9, 2014. 4 DSIRE database, New Mexico Efficient Use of Energy Act, available at 

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=NM09R&re=1&ee=1, accessed June 9, 2014. 5 Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information 

Administration, Electricity, available at http://www.eia.gov/electricity/data/eia861/. Percentages reflect EE and Load 

Management Program costs from EIA data. 6 LIHEAP Clearinghouse New Mexico Profile, available at http://liheap.ncat.org/profiles/NM.htm, accessed June 9, 2014. 7 LIHEAP Clearinghouse “2012 State-by-State Ratepayer Funded Low-Income Energy Assistance and Energy Efficiency,” 

available at http://liheap.ncat.org/Supplements/2012/supplement12.htm. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-53

o Silver Horizons provides assistance to residents over age 60 who have received a 

disconnection notice.

• El Paso Electric’s Project Care matches employee and customer donations with contributions by 

EPE shareholders to help families unable to pay their electricity bills because of medical or 

financial problems. The El Paso County General Assistance administers the fund.8

 

8 LIHEAP Clearinghouse New Mexico Profile, available at http://liheap.ncat.org/profiles/NM.htm, accessed June 9, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-54

NEW YORK

Summary

• State ratemaking practices

o Low-income considerations

• Collection of energy efficiency (and other) public benefit revenues

o The public benefit fund was established by the Comission18 years ago and is 

administered by the New York State Research and Development Authority

o The Commission establishes “ annual collection targets” for participating utilities

o Public benefit funding is collected as a surcharge on energy bills issued to the customers 

of participating utilities 

• Disbursement of energy efficiency revenues

o Energy efficiency spending in 2012 was 24% residential, 70% commercial, and 7% 

industrial 

• Protection of low-income customers

o Low-income rates: there is a low-income discount on gas and electricity bills 

o Ratepayer-funded low-income programs totaled $112 million toward rate assistance and 

$40 million toward energy efficiency in 2012

o Arrearage management and forgiveness

o Charitable emergency assistance - for heat, electricity, and other items - is offered to 

communities in crisis

o LIHEAP funding in 2014: $366,843,330 

State ratemaking practices:

New York works toward low-income considerations. A 2014 Con Edison rate case ordered low-income 

considerations into effect by stating, “In addition to stabilizing delivery charges to customers, other 

benefits for customers include: Improving and increasing the discounts associated with the electric and 

gas low-income programs...”1

Collection of energy efficiency (and other) public benefit revenues:

New York’s Public Service Commission (PSC) established a public benefit fund in 1996 to support 

energy efficiency, education and outreach, research and development, and low-income energy assistance 

programs. The fund is administered by the New York State Research and Development Authority 

(NYSERDA). Revenue for the fund is generated through a system benefits charge (SBC) issued to

customers of the state’s six investor-owned utilities (IOUs) as a surcharge on utility bills. Only the IOU 

customers paying the SBC are eligible for program benefits. Customers of municipal utilities and electric 

cooperatives are not eligible beneficiaries. Additionally, customers of Long Island Power Authority 

(LIPA) and the New York Power Authority (NYPA) are not eligible to benefit from SBC-funded 

 

1 Con Edison Rate Case - Docket 13-E-0030 (Final Order Issued February 20, 2014).
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-55

initiatives, but are offered separate programs.2 The public benefit fund receives additional revenues from 

RGGI auction proceeds since New York is a participating state.3

The SBC has evolved over the years, with multiple iterations released since its inception in 1996. While 

the charge was first set to run through 2011, the PSC extended the program term out to 2016 in 2011.4

Throughout the years, the efforts of the fund have also evolved to avoid duplicity with other state 

programs that support energy efficiency and renewable energy efforts, such as the Energy Efficiency 

Portfolio Standard (EEPS) and the Renewable Portfolio Standard (RPS). Iterations of the SBC have 

shifted various programs to be under domain of these additional state programs. Additionally, the PSC 

orders that any uncommitted SBC funds be directed towards efforts external to the fund, such as the 

Technology and Market Development Portfolio.

Each year, the PSC establishes public benefit fund “collection targets” for participating utilities. The 

fund’s budget has grown over its years in existence: the SBC budget totaled $234 million between 1998 

and 2001, $750 million by 2006, and $1.89 billion by 2011. Moreover, these budget totals are not 

reflective of the complete universe of programs that the state offers to support energy efficiency and 

renewable energy.5

Disbursement of energy efficiency revenues:

According to the EIA, energy efficiency spending in New York in 2012 was distributed in the following 

way: 24% of spending was on residential customers, 70% was on commercial customers, and 7% was on 

industrial customers.6

Protection of low-income customers:

LIHEAP provides federal funding to states to assist low-income utility customers with their home energy 

bills. New York LIHEAP funding is currently set at approximately $366.8 million for 2014. LIHEAP

funding reached an estimated 2,564 household with cooling assistance in 2014 and an estimated 1.46 

million households for heating in 2013. LIHEAP heating benefits for 2013 included a minimum of $50 

and an average of $338. Maximums of LIHEAP heating benefits varied by fuel type with a maximum of 

$6,000 for oil, kerosene, or propane; $500 for wood, coal, or other deliverable fuels; and $400 for natural 

gas and electric. Customers eligible for LIHEAP are those whose income is not greater than 60% of the 

state median income.7

The LIHEAP Clearinghouse compiles a table that provides the breakdown of Ratepayer Funded LowIncome Energy Assistance and Energy Efficiency by state for certain states. The most recent New York 

 

2 “Systems Benefits Charge,” Database of State Incentives for Renewables & Efficiency (DSIRE), Massachusetts 

Incentives/Policies for Renewables & Efficiency, available at 

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=NY07R&re=1&ee=1, accessed June 3, 2014.

3 “Public Benefits Funds: Increasing Renewable Energy & Industrial Energy Efficiency Opportunities,” published by the US 

DOE, March 2010.

4 Order Continuing the System Benefits Charge and Approving an Operating Plan for a Technology and Market Development 

Portfolio of System Benefits Charge Funded Programs, State of New York Public Service Commission, Case 10-M-0457 - In the 

Matter of the System Benefits Charge IV, October 13, 2011. 5 Order Continuing the System Benefits Charge and Approving an Operating Plan for a Technology and Market Development 

Portfolio of System Benefits Charge Funded Programs, State of New York Public Service Commission, Case 10-M-0457 - In the 

Matter of the System Benefits Charge IV, October 13, 2011. 6 Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information 

Administration, Electricity, available at http://www.eia.gov/electricity/data/eia861/.

7 LIHEAP Clearinghouse New York Profile, available at http://liheap.ncat.org/profiles/NY.htm, accessed June 10, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-56

data from 2012 lists a total of $112 million in ratepayer funds dedicated toward low-income rate 

assistance, and $40 million in ratepayer funds dedicated toward low-income energy efficiency.8 These 

numbers include totals from state- and utility-administered programs.

New York has several low-income rate assistance and energy efficiency programs that are overseen with 

regulatory oversight. Participating utilities include: Consolidated Edison, National Grid, New York State 

Electric and Gas, KeySpan Energy New York, KeySpan Energy Long Island, National Fuel Gas, Central 

Hudson, Orange and Rockland, Rochester Gas and Electric, Corning and St. Lawrence. Assistance 

offered is outlined below. 

Rate Assistance Programs

• Individual utilities administer a variety of monthly gas and electric bill discounts to customers 

facing financial difficulty or recipients of other assistance such as LIHEAP, Supplemental Social 

Security Income, Temporary Assistance for Needy Families, Supplemental Nutrition Assistance 

Program, Medicaid, or Veterans benefits. The rate assistance programs are funded by individual 

rate case settlements. 

Energy Efficiency

• EmPower New York offers energy education, and appliance and insulation assessment and 

replacement to utility customers whose income is 60% or less of the state median income, is 

eligible to receive LIHEAP or utility rate assistance program benefits, and lives in a building with 

less than 100 units. EmPower New York is administered by NYSERDA and funded by revenues 

generated from the SBC on utility customers. 

Arrearage Management

• New York has a variety of arrearage management programs, offering various degrees of 

assistance. LIHEAP Clearinghouse reports the following list of programs:

9

• EPOP: 1/24th of arrears forgiven monthly

• On-Track: Up to $400 in 4 payments over 18 months

• LICAAP: 1/24th of arrears forgiven monthly

• AffordAbility: Matching credit up to $30/ month

• NYSEG EAP: 1/24th of arrears forgiven monthly (up to $750)

• RG&E EAP: 1/24th of arrears forgiven monthly (up to $750)

 

8 LIHEAP Clearinghouse “2012 State-by-State Ratepayer Funded Low-Income Energy Assistance and Energy Efficiency,” 

available at http://liheap.ncat.org/Supplements/2012/supplement12.htm.

9 LIHEAP New York State Snapshot, available at http://liheap.ncat.org/dereg/states/nysnapshot.htm, accessed June 13, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-57

Charitable Assistance

In addition to the ratepayer- and utility-based programs listed above, various entities within the state also 

offer charitable assistance in the event of crises. For example, various utility companies and counties offer 

state residents experiencing difficulty paying utility bills a range of assistance including, but not limited 

to, one-time payment assistance and/or appliance repair.10, 11

 

10 LIHEAP Clearinghouse New York Profile, available at http://liheap.ncat.org/profiles/NY.htm, accessed June 10, 2014. 11 LIHEAP Clearinghouse lists the following utilities as participating in emergency charitable assistance programs: Central 

Hudson Gas & Electric, KeySpan, Long Island Power Authority, National Fuel Gas Company, National Grid, New York State 

Electric and gas, Niagara Mohawk Power Corporation, Orange County Fuel Fund, Orange and Rockland Utilities, and Rochester 

Gas and Electric Corporation. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-58

NORTH CAROLINA

Summary

• State ratemaking practices

o Just and reasonable rates for all customers

• Collection of energy efficiency (and other) public benefit revenues

o The Commission has overseen public benefit funding since 1980

• Disbursement of energy efficiency revenues

o Energy efficiency revenues are spent in rough proportion to the dollars collected from

rate classes 

o Energy efficiency spending in 2012 was 55% residential, 37% commercial, and 8%

industrial

• Protection of low-income customers

o Multiple energy efficiency and charitable assistance programs are in place

o Duke Energy recently made a $10 million contribution to assist low-income customers

o LIHEAP funding in 2014: $88,270,604

State ratemaking practices:

The North Carolina Utilities Commission (Commission) works to “provide just and reasonable rates and 

charges for public utility services without unjust discrimination, undue preferences or advantages, or 

unfair or destructive competitive practices and consistent with long-term management and conservation of 

energy resources by avoiding wasteful, uneconomic and inefficient uses of energy.”1

Collection of energy efficiency (and other) public benefit revenues:

In 1980, the Commission established a public benefit fund for renewable energy programs. The 

Commission provides oversight, but the fund is administered by the North Carolina Advanced Energy 

Corporation. The charge is 0.03 mills per kWh.2

Disbursement of energy efficiency revenues:

According to the EIA, energy efficiency spending in North Carolina in 2012 was distributed in the 

following way: 55% of spending was on residential customers, 37% was on commercial customers, and 

8% was on industrial customers.3 This is roughly proportional to the electric revenues collected from each 

customer class.4

 

1 North Carolina state law §62-1 and §62-133.8 Subs. h-4. 2 “Public Benefits Funds: Increasing Renewable Energy & Industrial Energy Efficiency Opportunities,” published by the US 

DOE, March 2010.

3 Percentages reflect EE and Load Management Program costs from EIA data. 4 Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information 

Administration, Electricity, available at http://www.eia.gov/electricity/data/eia861/.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-59

Protection of low-income customers:

LIHEAP provides states with federal funding to assist low-income utility customers with their home 

energy bills. North Carolina LIHEAP funding is currently set at approximately $88.27 million for 2014. 

LIHEAP eligible customers for heating and cooling include those at 135% of the federal poverty level. 

An estimated 88,260 households benefited from LIHEAP heat assistance in 2013, and 35,242 households 

benefited from cooling. As an example, LIHEAP benefits for 2013 included a minimum benefit of $200 

and a maximum of $400.5

There are a number of utility run low-income energy efficiency programs in place in North Carolina. 

Examples of such programs are included below:

• In addition to general energy efficiency programs, Duke Energy offers a low-income energy 

efficiency and weatherization program.

• Duke Energy Progress initiated a new Residential Neighborhood Energy Saver program after 

Senate Bill 3 passed in 2007. The program is targeted at low-income customers. Between 2009 

and 2013, program expenditures totaled $10.1 million.

• In 2011, the Commission approved Dominion’s residential low-income energy efficiency 

program.6

North Carolina has several charitable assistance programs in place. A few examples are below:

• A number of electric co-ops and utilities participate in Operating Roundup. The program uses 

customer donations to provide funds for individuals and organizations and include activities such 

as heating system repair.

• Cape Hatteras Electric facilities the Cape Hatteras Electric Foundation which uses customer 

donations to pay for humane needs.

• Wake County uses citizens’ voluntary contributions to supply families and individuals with funds 

to cover heating costs during the winter.

• Duke Energy has a number of programs in place in North Carolina:

o Share the Warmth uses contributions for heating bill assistance. The Duke Energy 

Foundation matches individual contributions dollar-for-dollar up to $50, and matches 

corporate contributions up to $500,000 each year.

o Duke also has a Fan-Heat Relief Program that uses up to $40,000 annually for the 

purchase of fans for senior citizens.7

o In a recent rate case settlement agreement, Duke Energy made a one-time $10 million 

contribution to assist low-income customers.8

 

5 LIHEAP Clearinghouse North Carolina Profile, available at http://liheap.ncat.org/profiles/NC.htm, accessed June 3, 2014. 6 Biennial Report of the North Carolina Utilities Commission to the Governor of North Carolina and the Joint Legislative 

commission in Governmental Operations Regarding Proceedings for Electric Power Suppliers Involving Energy Efficiency and 

Demand-Side Management Programs, Cost Recovery and Incentives, August 30, 2013. 7 LIHEAP Clearinghouse North Carolina Profile, available at http://liheap.ncat.org/profiles/NC.htm, accessed June 3, 2014. 8 “Rate Case Update,” Duke Energy North Carolina, available at http://www.duke-energy.com/north-carolina/nc-rate-case.asp, 

accessed on June 6, 2014. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-60

OHIO

Summary

• State ratemaking practices

o Reasonable rates for all customers

o Low-income considerations

• Collection of energy efficiency (and other) public benefit revenues

o PUC has overseen the collection and spending of public benefit funding mechanisms for 

15 years

o Public benefit funding collected from utility customers on a flat fee bases

• Disbursement of energy efficiency revenues

o Energy efficiency revenues are spent in rough proportion to the dollars collected within 

rate classes 

o Energy efficiency spending in 2012 was 43% residential, 34% commercial, and 22%

industrial

• Protection of low-income customers

o Ratepayer-funded low-income programs totaled $477 million toward rate assistance and 

$58 million toward energy efficiency in 2012

o State-mandated ratepayer-funded programs on regulated utilities related to rate 

assistance, arrearage management, and energy efficiency

o Smaller utilities and co-ops offer energy efficiency programs

o Charitable rate assistance programs also exist

o LIHEAP funding in 2014: $154,313,750

State ratemaking practices:

It is Ohio state policy to “Ensure the availability to consumers of adequate, reliable, safe, efficient, 

nondiscriminatory, and reasonably priced retail electric service.”1 Special attention is also paid to lowincome ratepayers: for example, Duke Energy has a separate rate class for rate low-income residential 

service.2

Collection of energy efficiency (and other) public benefit revenues:

The Ohio Advanced Energy Fund was established by legislation in 1999 as a result of electric 

restructuring. This fund supports energy efficiency, renewables, and low-income assistance programs. A 

flat fee is charged to electric utility customers and is determined by dividing target aggregate revenue by 

the number of customers.3 The fund was authorized to collect $15 million each year from 2001-2005 and 

 

1 Ohio Revised Code (ORC), Title 49, 4928.02. 2 Ohio Rate Case 12-1682-EL-AIR, order issued May 1, 2013. 3 “Public Benefits Funds: Increasing Renewable Energy & Industrial Energy Efficiency Opportunities,” published by the US 

DOE, March 2010.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-61

$5 million per year from 2006-2010, and additional have been added from the Advanced Energy Research 

and Development Taxable Fund. The Ohio Development Services Agency administers the fund.4

Disbursement of energy efficiency revenues:

According to the EIA, energy efficiency spending in Ohio in 2012 was distributed in the following way: 

43% of spending was on residential customers, 34% was on commercial customers, and 22% was on 

industrial customers.5 This is in rough proportion to the electric revenues collected from each rate class.6

Protection of low-income customers:

LIHEAP provides federal funding to states to assist low-income utility customers with their home energy 

bills. For Ohio, funding for 2014 totaled $154,313,750. Customers whose income is not greater than 

175% of the Federal Poverty Guidelines are LIHEAP-eligible. An estimated 454,520 households 

benefited from LIHEAP heat assistance in 2013. As an example, LIHEAP benefits for 2013 included an 

average of $292 in heating benefits, along with winter crisis average assistance of $450 for regulated 

utilities and summer crisis average assistance of $175 for regulated utilities.7

The LIHEAP Clearinghouse compiles a table that provides the breakdown of ratepayer funded lowincome energy assistance and energy efficiency by state for certain states. The most recent data from 

2012 lists a total of $477 million in ratepayer funds dedicated toward low-income rate assistance, and $58 

million in ratepayer funds dedicated toward low-income energy efficiency.

8 These numbers include totals 

from state- and utility-administered programs.

Regulated electric utilities are required to participate in the Percentage of Income Payment Plan (PIPP) 

and related programs funded by the electric universal service rider. These state-mandated programs 

provide rate assistance, energy efficiency, and arrearage management, and are highlighted below:9

• Rate Assistance: PIPP Plus sets the maximum rate that low-income customers must pay to the 

greater of 6% of their monthly income or $10 (for customers that heat with natural gas), or the 

greater of 10% of their monthly income or $10 (for customers with all-electric homes). PIPP Plus 

is administered by Ohio’s LIHEAP office.

• Arrearage Management: On-time PIPP Plus payments are rewarded with an incentive credit and 

an arrearage credit. When a monthly PIPP Plus payment is made on-time and in full, the customer 

no longer owes the rest of that month’s billed amount and receives credit for 1/24th of old debt, so 

that on-time payments for 24 months would eliminate all arrearages.

• Energy Efficiency: The Electric Partnership Program (EPP) is available to PIPP participants, and 

consists of base load efficiency component audits and insulation weatherization measures for 

participants with moderate to high energy usage related to heating.

 

4 DSIRE database, Ohio Advanced Energy Fund, available at 

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=OH11R&re=1&ee=1, accessed June 6, 2014. 5 Percentages reflect EE and Load Management Program costs from EIA data.

6 Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information 

Administration, Electricity, available at http://www.eia.gov/electricity/data/eia861/, accessed June 6, 2014. 7 LIHEAP Clearinghouse Ohio Profile, available at http://liheap.ncat.org/profiles/Ohio.htm, accessed June 5, 2014. 8 LIHEAP Clearinghouse “2012 State-by-State Ratepayer Funded Low-Income Energy Assistance and Energy Efficiency,” 

available at http://liheap.ncat.org/Supplements/2012/supplement12.htm., accessed June 6, 2014. 9 LIHEAP Clearinghouse Ohio Profile, available at http://liheap.ncat.org/profiles/Ohio.htm, and LIHEAP Clearinghouse Ohio 

State Snapshot, available at http://liheap.ncat.org/dereg/states/ohsnapshot.htm, accessed June 6, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-62

• Participating utilities include Cleveland Electric Illuminating Company, Dayton Power & Light, 

Duke Energy Ohio, Ohio Edison Company, Toledo Edison Company, Columbus Southern Power 

Company, and Ohio Power Company.

In addition to the above state-mandated ratepayer funded programs, many regulated utilities offer 

additional programs. See examples below:10

• Dayton Power & Light offers an arrearage management program for customers who are no longer 

PIPP-eligible.

• Duke Energy provides rate assistance to customers who are below 200% of the federal poverty 

guidelines but are not enrolled in PIPP.

Other utilities not required to participate in PIPP offer energy efficiency programs in addition to the statemandated EPP. Two examples are below:11

• American Electric Power offers weatherization assistance and repair services to customers 

enrolled in PIPP, the Home Weatherization Assistance Program, or the state LIHEAP program.

• Vectren also offers free energy efficiency measures to households whose income is 300% or less 

of the federal poverty level.

Finally, many utilities offer charitable programs to help with rate assistance. A selection of these 

programs is below:12

• American Electric Power’s Neighbor to Neighbor Program is offered in partnership with the 

Dollar Energy Fund. Eligible customers receive a utility assistance grant on their electric bill.

• Ohio Edison, Cleveland Electric Illuminating Company, and Toledo Edison all offer one-time 

assistance to low-income or disabled customers who are at risk of disconnection. This program is 

administered through the Salvation Army.

• Consolidated Electric Cooperative receives customer donations to The People Fund, which is 

used for community needs not met through other agencies.

As a final measure of protection, in 2001 the State of Ohio created the Public Benefits Advisory Board, 

“which has the purpose of ensuring that energy services be provided to low-income consumers in this 

state in an affordable manner consistent with the policy specified in section 4928.02” of the ORC.13

 

10 LIHEAP Clearinghouse Ohio Profile, available at http://liheap.ncat.org/profiles/Ohio.htm, accessed June 6, 2014. 11 LIHEAP Clearinghouse Ohio Profile, available at http://liheap.ncat.org/profiles/Ohio.htm, accessed June 6, 2014. 12 LIHEAP Clearinghouse Ohio Profile, available at http://liheap.ncat.org/profiles/Ohio.htm, accessed June 6, 2014. 13 ORC 4928.58.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-63

PENNSYLVANIA

Summary

• State ratemaking practices

o Equitable allocation of utility costs to rate classes 

• Collection of energy efficiency (and other) public benefit revenues

o Four public benefit funds were established in 1996 as a result of utility restructuring 

o Public benefit funding collected from all rate classes, and all customers within rate 

classes, on a volumetric basis

• Disbursement of energy efficiency revenues

o Energy efficiency revenues are spent in rough proportion to the dollars collected within 

rate classes 

o Energy efficiency spending in 2012 was 48% residential, 31%commercial, and 21% 

industrial

• Protection of low-income customers

o Ratepayer-funded low-income programs totaled $339.7 million toward rate assistance 

and $42.5 million toward energy efficiency in 2011

o State-mandated ratepayer funded rate assistance and energy efficiency programs

o Charitable rate assistance and crisis management programs exist

o LIHEAP funding in 2014: $203,071,386

State ratemaking practices:

Pennsylvania law provides protections for utility ratepayers. In the Public Utilities section of the 

Pennsylvania Consolidated Statutes, the law states, “Every rate made, demanded, or received by any 

public utility, or by any two or more public utilities jointly, shall be just and reasonable, and in 

conformity with regulations or orders of the commission.”1 The law provides even more detail related to 

ratemaking practices in specific instances. It reads that any distribution system improvement charge “shall

be applied equally to all customer classes as a percentage of each customer’s billed revenue.”2

Additionally, when setting rates related to energy efficiency and conservation programs, the law states 

that cost recovery must be structured “to ensure that measures approved are financed by the same 

customer class that will receive the direct energy and conservation benefits.”3

Collection of energy efficiency (and other) public benefit revenues:

During electrical restructuring in 1996, settlements with Pennsylvania’s five large distribution utilities 

resulted in the creation of four “Sustainable Energy Funds.” The goals of these funds were to advance the 

development of clean and renewable energy, promote energy efficiency and conservation, and promote 

sustainable-energy business. Funds are collected through utilities’ distribution rates on a per-kilowatthour basis. For example, the surcharge included in Pennsylvania Power & Light’s (PP&L) distribution 

 

1 Pennsylvania Consolidated Statutes, Title 66, § 1301.

2 Pennsylvania Consolidated Statutes, Title 66, § 1358.(d)(1). 3 Pennsylvania Consolidated Statutes, Title 66, § 2806.1.(a)(11).
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-64

rates was $0.0001/kWh in 2005 and $0.00005/kWh in 2006. Each utility has an oversight board and a 

designated administrator for the funds, and the Pennsylvania Sustainable Energy Board oversees 

communication between the funds. The Board also provides annual reports on the projects supported by 

the funds, and has created guidelines with regard to the funds’ business practices which were approved by 

the Public Utility Commission (PUC) in 2007.4

Total revenues collected from the four funds through 2012 totaled approximately $99 million. Currently, 

“the funds are transitioning toward a revolving loan and investment fund model in order to sustain their 

capital,” and no revenue is currently being collected.5

Disbursement of energy efficiency revenues:

According to the EIA, energy efficiency spending in Pennsylvania in 2012 was distributed in the 

following way: 48% of spending was on residential customers, 31% was on commercial customers, and 

21% was on industrial customers.6 This is in rough proportion to the electric revenues collected from each 

rate class.7

Protection of low-income customers:

LIHEAP provides federal funding to states to assist low-income utility customers with their home energy 

bills. For Pennsylvania, funding for 2014 totaled $203,071,386. Customers whose income is not greater 

than 150% of the Federal Poverty Guidelines are LIHEAP-eligible. An estimated 391,461 households 

benefited from LIHEAP heat assistance in 2013. For 2014, estimated LIHEAP benefits are $100-$1,000 

for heating and $25-$500 for crisis.8

The LIHEAP Clearinghouse compiles a table that provides the breakdown of ratepayer funded lowincome energy assistance and energy efficiency by state for certain states. The most recent data from 

2011 lists a total of $339.7 million in ratepayer funds dedicated toward low-income rate assistance, and 

$42.5 million in ratepayer funds dedicated toward low-income energy efficiency.9 These numbers include 

totals from state- and utility-administered programs.

 

4 DSIRE database, Pennsylvania Public Benefits Programs, available at 

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=PA01R&re=1&ee=1, accessed June 9, 2014. 5 DSIRE database, Pennsylvania Public Benefits Programs, available at 

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=PA01R&re=1&ee=1, accessed June 9, 2014. 6 Percentages reflect EE and Load Management Program costs from EIA data. 

7 Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information 

Administration, Electricity, available at http://www.eia.gov/electricity/data/eia861/, accessed June 9, 2014. 8 LIHEAP Clearinghouse Pennsylvania Profile, available at http://liheap.ncat.org/profiles/Penn.htm, accessed June 7, 2014. 9 LIHEAP Clearinghouse “2012 State-by-State Ratepayer Funded Low-Income Energy Assistance and Energy Efficiency,” 

available at http://liheap.ncat.org/Supplements/2012/supplement12.htm. 
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-65

Pennsylvania’s major gas and electric utilities are required by law to provide Customer Assistance 

Programs to their low-income customers. These programs generally include rate assistance based on a 

percentage of income payment plan or a percentage of bill plan, and can also include arrearage 

management or bill credits. A few examples are below:10

• Duquesne Light offers arrearage forgiveness over time, reduced monthly payments based on 

customers’ ability to pay, and protection against loss of electrical service. They also waive the 

security deposit for customers who qualify.11

• PECO offers a discounted residential tariff rate for low-income customers, with four different 

percentage discounts based on customers’ household income.12

• Rate assistance funding totaled $234.4 million for electric utilities in 2012.13

Pennsylvania’s major gas and electric utilities are also required to participate in the Low-Income Usage 

Reduction Program (LIURP). LIURP includes application assistance and education to address energy 

savings and regular bill payment behavior.14 Programs are administered by the participating utilities, and

energy efficiency funding totaled $26.5 million for electric utilities in 2012.15

In addition to the state-mandated ratepayer-funded rate assistance and energy efficiency programs, there 

are also charitable programs associated with the major utilities, smaller utilities, and coops that are 

available and provide rate assistance, along with programs unaffiliated with utilities that also provide 

assistance. A selection of these programs is below:16

• PP&L’s Operation Help programs combines funds from PP&L, its customers, its employees, and 

its retirees to help customers pay any type of home heating bill. This program is administered by 

a network of social service agencies community groups throughout eastern and central 

Pennsylvania.

• Claverack Electric Cooperative collects member donations which go toward helping low-income 

and other in-need families with their electric bills.

• The Dollar Energy Hardship Fund is the fourth largest fuel fund in the US. Utilities partner with 

the fund and match customer donations and also provide donations to cover administrative 

expenses of the fund.

• The Philadelphia Utility Emergency Services Fund was created by utility companies, public 

officials, business leaders, and community organizations to help with energy crisis benefits. The 

three largest utilities in the state have a dollar-to-dollar matching programs for funds raised.

 

10 LIHEAP Clearinghouse Pennsylvania Profile, available at http://liheap.ncat.org/profiles/Penn.htm, accessed June 9, 2014. 11 Duquesne Light Customer Assistance Program, available at 

https://www.duquesnelight.com/forYourHome/SaveEnergyAndSaveMoney/AssistanceHelpForYourEnergyNeeds/CustomerAssis

tanceProgram.cfm, accessed June 9, 2014. 12 LIHEAP Clearinghouse Pennsylvania Profile, available at http://liheap.ncat.org/profiles/Penn.htm, accessed June 9, 2014. 13 LIHEAP Clearinghouse Pennsylvania State Snapshot, available at http://liheap.ncat.org/dereg/states/pasnapshot.htm, accessed 

June 9, 2014.

14 LIHEAP Clearinghouse Pennsylvania Profile, available at http://liheap.ncat.org/profiles/Penn.htm, accessed June 9, 2014. 15 LIHEAP Clearinghouse Pennsylvania State Snapshot, available at http://liheap.ncat.org/dereg/states/pasnapshot.htm, accessed 

June 9, 2014.

16 LIHEAP Clearinghouse Pennsylvania Profile, available at http://liheap.ncat.org/profiles/Penn.htm, accessed June 9, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-66

TEXAS

Summary

• State ratemaking practices

o Equitable allocation of utility costs to rate classes 

o Low-income considerations

• Collection of energy efficiency (and other) public benefit revenues

o The Commission has overseen the collection and spending of public benefit funding 

mechanisms for 15 years

o Public benefit funding collected from retail electric customers of municipal utilities or 

coops in deregulated parts of Texas, on a volumetric basis

o In addition to the PBF, Texas’ EERS requires that funds be spent on energy efficiency. 

These mandated funds are collected through a charge approved by the PUC

• Disbursement of energy efficiency revenues

o Energy efficiency spending in 2012 was 59% residential, 38% commercial, and 4%

industrial

• Protection of low-income customers

o Ratepayer-funded low-income programs totaled $73.6 million toward rate assistance and 

$25.9 million toward energy efficiency in 2012

o Ratepayer funded rate assistance and energy efficiency programs exist

o Smaller utilities, municipals and coops also offer rate assistance and energy efficiency 

programs

o Charitable rate assistance programs are also offered 

o LIHEAP funding in 2014: $128,686,252

State ratemaking practices:

The Texas Administrative Code has laws in place to ensure equity in ratemaking practices. When 

considering rate design, TAC Chapter 25, Subchapter J, §25.234 states, “Rates shall not be unreasonably 

preferential, prejudicial, or discriminatory, but shall be sufficient, equitable, and consistent in application 

to each class of customers, and shall be based on cost.”1

In addition to ensuring equity across customer classes, special consideration is given to low-income 

customers. The Public Utilities Regulatory Act (PURA) highlights various protections for low-income 

customers, including mandated rate reduction in conjunction with the system benefit fund. In particular, 

PURA states, “The reduced rate for a retail electric provider shall result in a total charge that is at least 10 

percent and, if sufficient money in the system benefit fund is available, up to 20 percent, lower than the 

amount the customer would otherwise be charged.”2

 

1 TAC Chapter 25, Subchapter J, §25.234. 2 Public Utilities Regulatory Act (PURA), Title II, Sec. 39.903(h), effective September 1, 2013.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-67

Collection of energy efficiency (and other) public benefit revenues:

Texas has a public benefit fund (PBF) which was established in 19993 during utility restructuring to 

provide funding for the Public Utility Commission’s (PUC) Low-Income Discount Program, education 

programs, weatherization, and energy efficiency programs, along with helping to fund the cost of the 

restructuring. Utilities administer energy efficiency aspects of the PBF, and the PUC administers the lowincome aspects and serves as the oversight body. The fee of up to $0.65/Mwh is levied on retail electric

customers of municipal utilities or coops in deregulated parts of Texas. Estimated appropriations to the 

fund in 2013 were $86.1 million. Expenditures in 2012 totaled $69.7 million and were apportioned in the 

following way: 86.7% of funds went toward the Low-Income Discount Program, 12.8% went toward the 

PUC, and 0.6% was apportioned to customer education.4

In addition to the PBF, Texas enacted an Energy Efficiency Resource Standard (EERS) in 1999 that 

requires IOUs to meet energy efficiency goals related to reductions in peak demand. Currently, the EERS 

requires a 30% reduction in annual growth in demand.5 Utilities fund the EERS through an energy 

efficiency cost recovery factor that is “directly assigned to each rate class that receives services under the

programs to the maximum extent reasonably possible.”6

Disbursement of energy efficiency revenues:

According to the EIA, energy efficiency spending in Texas in 2012 was distributed in the following way: 

59% of spending was on residential customers, 38% was on commercial customers, and 4% was on 

industrial customers.7

Protection of low-income customers:

LIHEAP provides federal funding to states to assist low-income utility customers with their home energy 

bills. For Texas, funding for 2014 totaled $128,686,252. Customers whose income is not greater than 

125% of the Federal Poverty Level are LIHEAP-eligible. An estimated 165,835 households benefited 

from LIHEAP cooling assistance in 2013, while an estimated 26,870 households benefitted from heating 

assistance. LIHEAP benefits for included maximum heating and cooling benefits of $1,000.8

The LIHEAP Clearinghouse compiles a table that provides the breakdown of ratepayer funded lowincome energy assistance and energy efficiency by state for certain states. The most recent data from 

2012 lists a total of $73.6 million in ratepayer funds dedicated toward low-income rate assistance and 

$25.9 million in ratepayer funds dedicated toward low-income energy efficiency.9 These numbers include 

totals from state- and utility-administered programs.

 

3 PURA, Sec. 39.903. 4 Issue Brief from the Legislative Budget Board Staff on the Texas System Benefit Fund, February 2013, available at 

http://www.lbb.state.tx.us/Documents/Publications/Issue_Briefs/343_System_Benefit_Fund.pdf, accessed June 5, 2014. 5 DSIRE database Texas Energy Efficiency Goal, available at 

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=TX28R&re=1&ee=1, accessed June 5, 2014. 6 TAC Chapter 25, Subchapter J, §25.181. 7 Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information 

Administration, Electricity, available at http://www.eia.gov/electricity/data/eia861/, accessed June 5, 2014. Percentages reflect 

EE and Load Management Program costs from EIA data.

8 LIHEAP Clearinghouse Texas Profile, available at http://liheap.ncat.org/profiles/Texas.htm, accessed June 5, 2014. 9 LIHEAP Clearinghouse “2012 State-by-State Ratepayer Funded Low-Income Energy Assistance and Energy Efficiency,” 

available at http://liheap.ncat.org/Supplements/2012/supplement12.htm.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-68

Texas has several ratepayer funded low-income rate assistance and energy efficiency programs offered by 

electric utilities. Several of such programs are listed below:

• LITE UP Texas is administered Solix with oversight by the PUC and provides a 10% discount on 

electrical bills for eligible low-income customers between May and August. Electric utilities 

participate in this program. Funding in 2012 totaled $73.6 million, and an estimated 920,000 

households were served.

• The SBC weatherization program is offered in conjunction with the federal Weatherization 

Assistance Program and provides additional funds to help low-income customers with 

weatherization measures. Estimated funding in 2012 totaled $11.7 million.

• Utilities also offer low-cost weatherization and energy efficiency measures for Hard-to-Reach 

customers. Estimated funding for Hard-to-Reach programs in 2012 totaled $14.2 million.10

In addition to the above utility-administered programs, smaller utilities and municipal utilities offer lowincome rate assistance programs. A few examples are below:

• El Paso Electric offers a Low Income Rider program where eligible low-income customers are 

exempt from the residential service customer charge.

• Reliant energy will not disconnect electricity service for critical-care customers, low-income 

elderly customers, and other low-income customers who agree to a payment plan.

Many utilities and coops also offer charitable rate assistance programs. Some examples are provided 

below:

• Several coops offer Operation Round Up programs where donations by members go toward 

community service projects, other community programs, and emergency assistance.

• Denton Municipal forwards customer donations to Interfaith Ministries, which distributes funds 

to families experiencing hardship in order to help with utility bill assistance.11

 

10 LIHEAP Clearinghouse Texas State Snapshot, available at http://liheap.ncat.org/dereg/states/txsnapshot.htm, accessed June 5, 

2014.

11 LIHEAP Clearinghouse Texas Profile, available at http://liheap.ncat.org/profiles/Texas.htm#state, accessed June 5, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-69

WASHINGTON

Summary

• State ratemaking practices

o Equitable allocation of utility costs to customers

o Low-income considerations

• Collection of energy efficiency (and other) public benefit revenues

o In 2006, voters passed initiatives requiring that utilities meet certain renewable and 

efficiency standards, which utilities are allowed to fund through a customer surcharge

• Disbursement of energy efficiency revenues

o Energy efficiency revenues are spent in rough proportion to the dollars collected within 

rate classes 

o Energy efficiency spending in 2012 was 48% residential, 41% commercial, and 10% 

industrial

• Protection of low-income customers

o Ratepayer-funded low-income programs totaled $47.5 million toward rate assistance and 

$6.4 million toward energy efficiency in 2010

o Ratepayer-funded rate assistance and energy efficiency programs exist

o State general funds are matched by utility funds for energy efficiency programs

o Charitable rate assistance programs also exist

o LIHEAP funding in 2014: $59,124,210

State ratemaking practices:

The Washington Utilities and Transportation Commission (Commission) is tasked with ensuring that rate 

increases proposed by utilities are reasonable to customers. In particular, whenever the Commission finds 

that rates are “unjust, unreasonable, unjustly discriminatory or unduly preferential,” the Commission 

determines the just rates.1 Furthermore, the Commission has the authority to approve discounted rates for 

low-income customers, and low-income senior customers.2

Collection of energy efficiency (and other) public benefit revenues:

In 2006, voters passed an initiative requiring utilities to meet certain targets related to energy efficiency 

and renewable energy, which utilities are allowed to recover through a customer surcharge. Utilities 

administer the specific programs, while the Transportation Commission provides oversight.3

Disbursement of energy efficiency revenues:

According to the EIA, energy efficiency spending in Washington in 2012 was distributed in the following 

way: 48% of spending was on residential customers, 41% was on commercial customers, and 10% was on 

industrial customers.4 This is in rough proportion to the electric revenues collected from each rate class.5

 

1 RCW 80.28.020: Commission to fix just, reasonable, and compensatory rates.

2 RCW 80.28.068: Low-income customers. 3 “Public Benefits Funds: Increasing Renewable Energy & Industrial Energy Efficiency Opportunities,” published by the US 

DOE, March 2010.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-70

Protection of low-income customers:

LIHEAP provides federal funding to states to assist low-income utility customers with their home energy 

bills. For Washington, funding for 2014 totaled $59,124,210. Customers whose income is not greater than 

125% of the Federal Poverty Level are LIHEAP-eligible. An estimated 71,592 households benefited from 

LIHEAP heat assistance in 2013, and heating benefits for 2013 ranged from $25 to $1,000, with an 

average of $450 spent per household served.6

The LIHEAP Clearinghouse compiles a table that provides the breakdown of ratepayer funded lowincome energy assistance and energy efficiency by state for certain states. The most recent data from 

2010 lists a total of $47.5 million in ratepayer funds dedicated toward low-income rate assistance, and 

$6.4 million in ratepayer funds dedicated toward low-income energy efficiency.7 These numbers include 

totals from state- and utility-administered programs.

As mentioned above, utilities are required to meet certain goals related to renewable energy and energy 

efficiency. In addition, utilities use ratepayer funds for low-income rate assistance. Examples of rate 

assistance programs for IOUs, Municipals/Co-ops, and Public Utility Districts (PUDs) are listed below:8

• Investor-Owned Utilities

o Puget Sound Energy offers rate assistance to customers with incomes at or below 50% of 

the local median income. The benefit is calculated in relation to annual energy use.

o PacifiCorp’s Low-Income Bill Assistance program provides discounts to low-income 

customers that is applied to every kWh over 600 kWh of energy used. The discount 

varies based on household income and is available to customers with incomes at or below 

100% the federal poverty guideline.

o All five regulated IOUs provide rate assistance and/or discounts.

• Municipals/Cooperatives

o The city of Richland offers a 33% discount on electric bills for low-income customers 62 

years of age or older.

o Seattle City Light offers a 60% discount on bills to customers with household incomes at 

or below 70% of the state median income.

• Public Utility Districts

o The Low-Income Senior Discount is offered by 11 PUDs and provides discounts that 

range from 5 to 60% off on home energy bills for customers of at least 62 years of age 

that have household incomes at or below 125% of the federal poverty guideline 

(discounts and eligibility requirements vary based on PUD).

 

4 Percentages reflect EE and Load Management Program costs from EIA data. 

5 Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information 

Administration, Electricity, available at http://www.eia.gov/electricity/data/eia861/, accessed June 9, 2014. 6 LIHEAP Clearinghouse Washington Profile, available at http://liheap.ncat.org/profiles/WA.htm, accessed June 9, 2014. 7 LIHEAP Clearinghouse “2012 State-by-State Ratepayer Funded Low-Income Energy Assistance and Energy Efficiency,” 

available at http://liheap.ncat.org/Supplements/2012/supplement12.htm, accessed June 9, 2014. 8 LIHEAP Clearinghouse Washington Snapshot, available at http://liheap.ncat.org/dereg/states/wasnapshot.htm, accessed June 9, 

2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-71

o The Low-Income Disabled Discount is offered by 8 PUDs and provides discounts that 

range from 5 to 40% off home energy bills for customers that meet disability and lowincome requirements (discounts and income-eligibility requirements vary based on PUD)

o 12 PUDs offer some form of low-income discount.

Utilities also offer ratepayer-funded energy efficiency programs. As an example, Avista, PacifiCorp, and 

Puget Sound Energy have a Low-Income Weatherization program that provides insulation, installation of 

energy efficient appliances, and heating and cooling upgrades to low-income customers.9 Many utilities 

also provide funds to the Energy Matchmaker Program, which matches state general funds and provides 

weatherization services to low-income households.10

Many utilities also offer charitable rate assistance programs that are funded through customer, employee, 

and/or community donations. These programs are often administered in conjunction with community 

action councils or entities like the Salvation Army.11

 

9 LIHEAP Clearinghouse Washington Snapshot, available at http://liheap.ncat.org/dereg/states/wasnapshot.htm, accessed June 9, 

2014.

10 LIHEAP Clearinghouse Washington Profile, available at http://liheap.ncat.org/profiles/WA.htm, accessed June 9, 2014. 11 LIHEAP Clearinghouse Washington Profile, available at http://liheap.ncat.org/profiles/WA.htm, accessed June 9, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-72

WISCONSIN

Summary

• State ratemaking practices

o The Wisconsin Public Service Commission works to equitably allocate utility costs to 

rate classes

• Collection of energy efficiency (and other) public benefit revenues

o The Commission has overseen the collection and spending of public benefit funding 

mechanisms for 15 years

• Disbursement of energy efficiency revenues

o Energy efficiency revenues are spent in rough proportion to the dollars collected within 

rate classes 

o Energy efficiency spending in 2012 was 34% residential, 26% commercial, and 40% 

industrial

• Protection of low-income customers

o Each electric IOU is required to spend 1.2% of the latest 3-year average of its gross 

operating revenue on energy efficiency and renewable energy programs

o Ratepayer-funded low-income programs totaled $45.2 million toward rate assistance and 

$50 million toward energy efficiency in 2012

o There are a number of emergency charitable assistance programs in place

o LIHEAP funding in 2014: $103,103,118 

State ratemaking practices:

The Wisconsin Public Service Commission (PSC) works to ensure that “in rate-making orders that an 

energy utility recovers from its ratepayers the amounts the energy utility spends for programs.” In 

particular, the PSC works to equitably distribute recovery amounts between the different customer 

classes. The purpose being to “ensure that customers of an energy utility within a particular class are 

treated equitably with respect to customers of other energy utilities within the same class.” 1

State law requires that the Wisconsin PSC ensure that “the cost of energy efficiency and renewable 

resource programs is equitably divided among customer classes so that similarly situated ratepayers 

contribute equivalent amounts for the programs.” 2

Collection of energy efficiency (and other) public benefit revenues:

Wisconsin established a public benefit fund in 1999 that provided energy assistance programs for lowincome residents in addition to funds for programs that promote renewable energy and energy efficiency. 

Today’s program, known as Focus on Energy, became effective in July 2007 and replaced the public 

benefit programs in place at the time. Focus on Energy receives oversight and approval from the PSC, but 

programs and created and funded by the utilities. Furthermore, each electric IOU is required to spend 

 

1 Wisconsin State Legislature, Chapter 196, Regulation of Public Utilities, Section 374, (5) Cost Recovery.

2 Wisconsin State Legislature, Chapter 196, Regulation of Public Utilities, Section 374, (5) Cost Recovery.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-73

1.2% of the latest 3 year average of its gross operating revenue on renewable energy and energy 

efficiency programs.3

Wisconsin municipal utilities and electric cooperatives can also participate in “commitment-tocommunity” programs similar to Focus on Energy. These programs are not overseen by the PSC, but they 

do submit annual reports to the PSC.4

Disbursement of energy efficiency revenues:

According to the EIA, energy efficiency spending in Wisconsin in 2012 was distributed in the following 

way: 34% of spending was on residential customers, 26% was on commercial customers, and 40% was on 

industrial customers. This is in rough proportion to the electric revenues collected from each rate class.5

Protection of low-income customers:

LIHEAP provides states with federal funding to assist low-income utility customers with their home 

energy bills. For Wisconsin, funding for 2014 totaled $103 million. Customers whose income is not 

greater than 60% of the state median income are LIHEAP-eligible. An estimated 214,531 households 

benefited from LIHEAP heat assistance in 2013. As an example, LIHEAP benefits for 2013 included a 

minimum of $30 for heating, while the average and maximum were $336 and $2,085, respectively.6

The LIHEAP Clearinghouse compiles a table that provides the breakdown of Ratepayer Funded LowIncome Energy Assistance and Energy Efficiency by state for certain states. The most recent data from 

2012 lists a total of $45.2 million in ratepayer funds dedicated toward low-income rate assistance, and 

$50 million in ratepayer funds dedicated toward low-income energy efficiency. These funds served 

212,816 households in rate assistance, and 7,196 in energy efficiency and weatherization assistance.7

These programs provide non-heating electric bill assistance based on a household’s income, size, and 

electric costs. Energy efficiency funds include refrigerator replacements, insulation, upgrades to furnaces 

and lighting, and energy education. Participating utilities include We Energies, Alliant Energy, Xcel 

Energy, Madison Gas & Energy, Northwestern Electric, 15 electric cooperatives and 54 municipal 

utilities, among others.8

In addition to the above utility-administered programs, there are a number of emergency charitable 

assistance programs in Wisconsin. A few examples are below:9

• Wisconsin’s Keep Wisconsin Warm/Cool Fund is a voluntary and community program that 

provides energy assistance to low income people. Business and individuals make contributions to 

the fund.

 

3 “Wisconsin Incentives/Policies for Renewables & Efficiency, Focus on Energy Program.” Database for State Incentives for 

Renewables & Efficiency, DSIRE, available at 

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=WI15R&re=1&ee=1, accessed June 10, 2014. 4 “Wisconsin Incentives/Policies for Renewables & Efficiency, Focus on Energy Program.” Database for State Incentives for 

Renewables & Efficiency, DSIRE, available at 

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=WI15R&re=1&ee=1, accessed June 10, 2014. 5 Electric power sales, revenues, and energy efficiency Form EIA-861 detailed data files, U.S. Energy Information 

Administration, Electricity, available at http://www.eia.gov/electricity/data/eia861/. 6 LIHEAP Clearinghouse Wisconsin Profile, available at http://liheap.ncat.org/profiles/Wisconsin.htm, accessed June 10, 2014. 7 LIHEAP Clearinghouse “2012 State-by-State Ratepayer Funded Low-Income Energy Assistance and Energy Efficiency,” 

available at http://liheap.ncat.org/Supplements/2012/supplement12.htm.

8 LIHEAP Wisconsin Snapshot, available at http://liheap.ncat.org/dereg/states/wisnapshot.htm, accessed June 10, 2014. 9 LIHEAP Clearinghouse Wisconsin Profile, available at http://liheap.ncat.org/profiles/Wisconsin.htm, accessed June 10, 2014.
EPA’s Clean Power Plan: State Plans and Consumer Impacts 

Analysis Group Page 4-74

• Menasha Utilities’ Project Share Fund allows customers to donate monthly or annually to the 

fund which assists local families with energy bills.

• Helping Hand is run by River Falls Municipal Utilities and matches customers’ payments on an 

account to help bring the account to a current status.