From: Joe Bryson/DC/USEPA/US To: chiggins@omb.eop.gov Cc: Jeb Stenhouse/DC/USEPA/US@EPA, Erich Eschmann/DC/USEPA/US@EPA
Date: 03/15/2011 04:09 PM Subject: suggested revisions re EE Sensitivity language in RIA (Exec Summary, Section 8.13, and Tech App. E)

Hey Cortney,

Below are what we would be comfortable with including in response to OMB comments on significant issues related to EE Sensitivity included in RIA (Exec Sum, Section 8.13, and Tech App E).

Let me know what you think. Probably best to do a quick phone call after you've had a chance to take a look.

Joe

Joe Bryson EPA/Climate Protection Partnerships Division
(202) 343-9631

RIA Section 8.13 (EE Sensitivity) and Technical Appendix E (EE Sensitivity)

***Rebound and Product Utility Issue***

Short paragraph midway on p. 37 reads:

EPA analyzed the impacts of the energy efficiency sensitivity on the electricity generation sector by conducting alternative scenarios using the Integrated Planning Model. The results from those modeling runs and the associated costs are summarized in Tables 8-16, 8-17, and 8-18.

*** Footnote to be added at end of that sentence to read: ***

EPA’s analysis may not capture the full spectrum of behavior effects associated with energy efficiency policies that can mitigate projected reductions in energy demand. These effects can include: "rebound effect" (increased use of energy efficient product as a result of perceived

energy savings, increased consumption of other energy consuming products -- from disposable income freed up by energy savings, increased production that might occur as a result of cost savings from energy efficient technologies, or changes in energy efficient product utility that lead to increased use). This analysis does, however, account for many of these effects in the estimation of the energy demand reductions associated with the federal appliance standards for products. RIA Executive SummaryCurrently there are two references to EE investments/policies in the Executive Summary as follows:

* Key Findings Box, Section 1.1, p. 1, Exec Sum of RIA *

"Effective policies to support end-use energy efficiency investments can reduce compliance costs and lessen impacts on electric rates and bills. In 2015, annualized private compliance costs to the industry are reduced by $0.3 billion (2007$) under an energy efficiency scenario." * At end of Section 1.3 (p. 9-10 in version I'm looking at): * Effective policies to support end-use energy efficiency investments can reduce compliance costs, lessen impacts on electric rates and bills, and reduce the need for new capacity. In 2015 and 2020, annualized private compliance costs to the industry are reduced by $0.3 billion (2007$) and $1.1 billion, respectively, under an energy efficiency scenario. Furthermore, the impacts of the Toxics Rule on retail electricity prices are reduced by 0.04 cents/kWh and 0.38 cents/kWh in 2015 and 2020, respectively, and the need for new capacity is reduced by 0.3 GW and 8.5 GW, respectively, in 2015 and 2020 under an energy efficiency scenario. * Footnote to be added to the Key Findings Box, at end of the 2nd

sentence*
to read:

FN: Based upon illustrative energy efficiency sensitivity discussed in Section 8.13 and Technical Appendix E.

* And add to beginning of 2nd sentence in Section 1.3 (pp 9/10):*

Results of EPA's illustrative energy efficiency sensitivity indicate that

.....