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Reference Case Electricity Consumption (GWh) 1000 1100 1200

Adjusted Electricity Consumption under an EERS (GWh) 950 980 1020

Annual Savings (GWh) 50 120 180

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Target Type Unit

Basis 

Type Basis

Nominal Target as 

Specified in Final Year of 

Policy§

AR Incremental Savings % Fixed 2010 Consumpt. 0.75% (2014)

AZ Annual Savings % Rolling Previous Yr’s Consumpt. 22.0% (2020)

CA Incremental Savings GWh N/A - 1,968 GWh (2014)

CO Incremental Savings GWh N/A - 549 GWh (2020)

HI Annual Savings GWh N/A - 4,300 GWh (2030)

IA Incremental Savings % Rolling Avg. of Previous 3 Yrs’ Consumpt. 1.3% (2013)

IL Incremental Savings % Rolling Previous Yr’s Consumpt. 2.0% (2015 - )‡

IN Incremental Savings % Rolling Avg. of Previous 3 Yrs' Weather-Norm. Consumpt. 2.0% (2019)

MA Incremental Savings GWh N/A - 1,275 GWh (2015)

MD Annual Savings %* Fixed 2007 Per Capita Electricity Consumpt. 15% (2015)

ME Incremental Savings GWh N/A - 139 GWh (2016)

MI Incremental Savings % Rolling Previous Yr’s Consumpt. 1.0% (2012 - )‡

MN Incremental Savings % Rolling Avg. of Previous 3 Yrs' Weather-Norm. Consumpt. 1.5% (2010 - )‡

NM Annual Savings % Fixed 2005 Electricity Consumpt. 8.0% (2020)

NY Annual Savings % Fixed 2015 Electricity Consumpt. (forecasted) 15.0% (2015)

OH Annual Savings % Rolling Avg. of Previous 3 Yrs’ Consumpt. 22.0% (2025)

OR Incremental Savings GWh N/A - 491 GWh (2014)

PA Annual Savings % Fixed June 2009 - May 2010 Consumpt. 5.3% (2016)

RI Incremental Savings GWh N/A - 189 GWh (2014)

TX Incremental Savings %† Rolling Avg. of Previous 5 Yr’s Load Growth 30% (2013 - )‡

VT Annual Savings GWh N/A - 320 GWh (2014)

WA Annual Savings GWh N/A - 8,745 GWh (2021)

WI Annual Savings GWh N/A - 1,816 GWh (2014)


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State

Final Year 

of Target

 Annual Savings 

Required in 2015

(% of State Load)

 Annual Savings 

Required in 2020

(% of State Load)

 Annual Savings 

Required in 2015

(% of State Load)

 Annual Savings 

Required in 2020

(% of State Load)

AR 2014 2.7% 2.5% 2.7% 6.2%

AZ 2020 5.3% 11.4% 5.3% 11.4%

CA 2014 4.0% 3.8% 3.0% 6.5%

CO 2020 3.7% 7.7% 3.7% 7.7%

HI 2030 11.0% 19.0% 11.0% 19.0%

IA 2013 3.8% 3.8% 5.6% 10.0%

IL 2020 6.5% 14.4% 6.5% 14.4%

IN 2019 3.8% 9.2% 3.8% 10.7%

MA 2015 10.8% 10.6% 10.8% 21.1%

MD 2015 14.2% 14.7% 14.2% 27.2%

ME 2016 7.1% 8.2% 7.1% 12.9%

MI 2020 5.1% 9.7% 5.1% 9.7%

MN 2020 8.7% 15.3% 8.7% 15.3%

NM 2020 3.6% 5.2% 3.6% 5.2%

NY 2015 15.0% 15.0% 15.0% 27.5%

OH 2025 4.6% 10.3% 4.6% 10.3%

OR 2014 4.7% 4.5% 5.7% 10.5%

PA 2016 4.3% 5.0% 4.3% 7.8%

RI 2014 8.4% 8.3% 10.8% 22.7%

TX 2020 1.1% 2.6% 1.1% 2.6%

VT 2014 9.9% 9.8% 11.8% 21.0%

WA 2021 4.7% 8.1% 4.7% 8.1%

WI 2014 2.7% 2.6% 3.3% 6.6%

Method 1 - Annual Savings Held 

Constant in Final Year of Target

Method 2 - Incremental Savings 

Held Constant in Final Year of Target


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State Responsible Entities* Covered Load Additional Notes

AR IOUs, Co-ops 87%

AZ All LSEs except excluded 59% Entities with under $5,000,000 in annual revenue are excluded 

CA IOUs except excluded 75% Only Southern California Edison, Pacific Gas and Electric and 

San Diego Gas and Electric are included

CO IOUs 57%

HI All LSEs except excluded 96% Kauai Island Utility Cooperative is excluded 

IA IOUs 75%

IL All LSEs except excluded, State Gov. 89% LSEs with under 100,000 customers are excluded; state 

government entity - Dept of Comm. and Econ. Opportunity

IN All LSEs except excluded, 3rd Party 81% 3rd party entity - Energizing Indiana ; Munis and Co-ops not 

under the jurisdiction of the PUC are excluded

MA IOUs 88%

MD All LSEs, State Gov. 100% State Gov. – Energy Administration, Dept. of Housing and 

Community Devel., Dept. of General Services

ME 3rd Party 100% 3rd party entity - Efficiency Maine

MI All LSEs 100%

MN All LSEs 100%

NM IOUs 68%

NY IOUs, State Gov. 100% State Gov.– NYSERDA; Munis and Co-ops are excluded.

OH IOUs, Retail Power Marketers 89%

OR 3rd Party 69% 3rd party entity - "Energy Trust of Oregon"; targets apply to 

Portland General Electric and Pacific Power service territories

PA IOUS except excluded 96% IOUs with under 100,000 customers are excluded

RI IOUs 99%

TX All LSEs 100%

VT 3rd Party 94% 3rd party entity - “Efficiency Vermont”; City of Burlington 

administers its own energy efficiency programs

WA All LSEs except excluded 81% LSEs with 25,000 customers or less are excluded

WI 3rd Party 83% 3rd party entity-“Focus on Energy”; IOUs are required to fund 

“Focus on Energy,” and targets apply to their service 


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Both? Freeridership Spillover

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HI Both Yes Yes

IA Gross - -

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IN Gross - -

MA Net Yes Yes

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NM Net Yes No

NY Net Yes Yes

OH Gross - -

OR Net Yes Yes

PA Gross - -

RI Net Yes Yes

TX Both No No

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WA Gross - -

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Effects Accounted for in Net 

Savings Estimates


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26 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications. 

Table 7. Key Design Elements for Energy Efficiency Resource Standards for Electricity 

Energy Efficiency Resource Standards for Electricity: Key Design Elements

Target Specification 

An energy savings target is specified in absolute (e.g. MWh) or percent terms, and consists of a type and a basis. The type determines the vintage of measures allowed to contribute toward 

compliance. The basis is used when a target is specified as a percent, and is the quantity by which that percent is multiplied to determine an absolute amount of required savings. 

Policy Design Element Definition Key Effects, Implications, & Considerations State Examples 

Target Type 

Incremental Savings in a given year resulting from energy efficiency measures installed in that year 

ƒ Compliance assessment solely requires measurement of savings from efficiency measures installed in the given compliance year (i.e. focus on 1st-year savings) ƒ May incentivize lower cost measures that provide only short-term savings 

CA, MA, MN 

Annual 

Savings in a given year resulting from energy efficiency measures installed in that year and measures installed in prior years (as defined by the policy) that continue to provide savings 

ƒ Compliance assessment requires measurement of savings from efficiency measures installed in the compliance year and previous years (i.e. focus on lifetime savings) ƒ Incentivizes measures that provide both near- and long-term savings ƒ Enhances certainty of achieving long-term savings goals ƒ Increases complexity of EM&V and accounting due to erosion of savings of older measures 

AZ, MD, NY 

Basis Type 

Fixed 

The static quantity, typically consumption in a fixed year, by which a percentage target is multiplied to determine an absolute amount of required savings 

ƒ Provides certainty in the amount of required savings ƒ Amount of required savings is unresponsive to changes in market conditions 

MD, NY, PA 

Rolling 

The dynamic quantity, often consumption in the previous year, by which a percentage target is multiplied to determine an absolute amount of required savings 

ƒ May create uncertainty in the amount of required savings ƒ Amount of required savings adjusts to changes in market conditions 

AZ, IL, OH 

Obligated Entities

Obligated entities are the institutions ultimately responsible for compliance with an EERS. Obligated entities can include all or a subset of a state's load serving entities (LSEs) (including investor 

owned utilities, electric co-ops, or municipal or state providers), state government offices, or 3rd party entities. 

Load Serving Entities (LSEs) Investor owned utilities, electric cooperatives, and municipal and state electricity providers 

ƒ Established customer relationship decreases barriers and cost to accessing customers and promoting programs ƒ Ability to leverage existing infrastructure, staff, and relationships developed through past efficiency program administrationƒ Potential to include EERS requirements within integrated resource planning activities ƒ LSEs may have a disincentive to procure energy efficiency1ƒ Restricts procurement of efficiency to within service territory of LSEs required to comply 

CA, CO, MA 

3rd Party Private, non-LSE, often non-profit entities that receive ratepayer and public funding 

ƒ Has no disincentive to procure energy efficiency ƒ Procurement of EE is possible across all service territories ƒ Potentially increases initial effort and cost of establishing the new entity ƒ Potential comparative advantage of an entity dedicated solely to design, implementation, and administration of EE programs 

MI, VT, WI 

State Government State Government offices, often those affiliated with energy, public housing, or potentially air quality 

ƒ Has no disincentive to procure energy efficiency ƒ Procurement of EE is possible across all service territories ƒ Fiscal, procurement, and hiring rules may limit flexibility in contracting, staff acquisition, and financial operations ƒ Efficiency funding could be at risk under changing state government priorities 

IL, MD, NY 
27 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications. 

Eligible Savings Measures

Electricity savings from traditional2 energy efficiency measures, such as rebate programs for energy efficient appliances, home weatherization, and light-bulb replacement programs are widely 

accepted for compliance across EERS policies. Expanding the set of eligible measures to include building codes and appliance standards, behavior-based programs, other market transformation efforts, supply-side efficiency improvements, and combined heat and power expansion increases flexibility for compliance with the standard and can potentially reduce compliance costs, but may also increase the complexity of measuring savings. In addition, these additional measures have the potential to create market-scale and long term impacts. As a result, broadening the set of eligible measures may allow states to target a higher level of electricity savings. 

Building Codes and 

Appliance Standards 

Saving associated with improving compliance with current codes and standards, or advancing the adoption of more stringent codes and standards 

ƒ Large potential savingsƒ Increases challenge of attributing resulting savings to individual obligated entities 

AZ, NY, CA 

Behavior-Based Programs 

Programs designed specifically to impact consumer decision making around energy use, often through the provision of tailored information to individual consumers 

ƒ Large potential savingsƒ Use of randomized-controlled trials3 can provide robust estimates of savings ƒ Recent programs have demonstrated short-term impacts; long-term impacts are unclear 

CA, MA, MN 

Other Market 

Transformation Programs 

Broad activities designed to create lasting change in market behavior by removing identified barriers or exploiting opportunities to accelerate the adoption of energy efficiency 

ƒ Large potential savingsƒ Increases challenge of attributing resulting savings to individual obligated entities 

NY, TX, WA 

Supply-Side Measures Efficiency upgrades to generation, transmission and distribution infrastructure 

ƒ Large potential savingsƒ Customers benefit indirectly - there is no reduction in end-use electricity consumption ƒ Robust measurement of savings can be achieved through simple engineering based calculations 

DE, NY, OH 

Combined Heat and Power; 

Waste Heat Recovery 

Facilities simultaneously produce electricity and heat from a single fuel source; facilities that use otherwise wasted heat (e.g. from industrial processes) for electricity generation (CHP, waste heat to power) or for other thermal applications (waste heat recovery) 

ƒ Large potential savingsƒ Customers beyond those that have CHP benefit only indirectly (there is no reduction in end-use electricity consumption), while customers that have CHP benefit directly ƒ Determining the relative contribution to compliance presents a challenge but has been addressed by states such as Massachusetts, Michigan, and Connecticut 

AZ, HI, MN 

Cost Containment Mechanisms 

Cost containment mechanisms are limits placed on either the total cost of the program or the increase in electricity rates required to recover the cost of the program. They are implemented using 

rate impact caps, annual spending caps (typically a percent of operating revenue), or caps on specific components of individual programs (e.g. administrative costs). 

Cost Containment Mechanisms 

ƒ Shields ratepayers from significant rate increases ƒ Increases the risk of under-investment in efficiency relative to program goals, limiting overall savings if mechanisms are triggered 

IL, RI, WI 

Ensuring Compliance

Compliance with energy savings requirements can be encouraged in a variety of ways. Financial incentives or penalties often exist that scale with compliance levels. Revenue decoupling breaks the link between LSE revenues and sales volume, and therefore removes the disincentive to procure energy efficiency. 

Incentives 

Structured financial award, typically a volumetric, scalable bonus tied to the level of compliance or estimated net benefits of a suite of energy efficiency programs 

ƒ Provides incentive to achieve full compliance, and potentially over-compliance ƒ Shifts a portion of benefits from ratepayers to obligated entities 

CO, MN, VT 

Penalties Structured monetary fine, typically a volumetric, scalable fine tied to the level of compliance ƒ Provides disincentive for non-compliance CA, MA, WA 

Revenue Decoupling A mechanism to break the link between utility energy sales and revenues ƒ Removes LSE disincentive to procure EE ƒ Changes the exposure to market risk faced by producers and consumers AZ, CA,RI 
28 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications. 

Evaluation, Measurement, and Verification (EM&V)

Evaluation, Measurement, and Verification (EM&V) is the process by which the amount and cost-effectiveness of savings from energy efficiency programs are estimated and evaluated. Savings can be measured on either a gross or net basis (or both). The responsibility for conducting EM&V can fall on either the regulator, the obligated entity, or in some cases a combination of the two; although the ultimate responsibility falls on either the obligated entities, the PUC, or both, these institutions often rely on a 3rd party to carry out the evaluations. 

Metric 

Gross 

Savings 

Savings resulting from program-related activities by all participating consumers, without consideration of savings that may have occurred in the absence of the program, or other secondary effects 

ƒ Reduces the complexity of estimating savings ƒ Does not account for free ridership, spillover, program overlap, or other market effects 

AZ, OH, PA 

Net Savings 

Savings resulting from program-related activities by all participating consumers which deducts savings that may have occurred in the absence of the program and accounts for other secondary effects 

ƒ Increases the complexity of estimating savings ƒ Can account for free ridership, spillover, and broader market effects (e.g, rebound) 

CA, CO, MA 

Responsibility 

for 

Conducting 

EM&V 

Obligated Entities 

ƒ Can create incentive to exaggerate savings estimates & minimize spending on EM&V ƒ LSEs have significant experience carrying out EM&V of rate-payer funded programs 

CO, MA, PA 

Public Utilities Commission ƒ Creates incentive to seek out robust estimates of savings HI 

Notes: 1Disincentives to procure energy efficiency result from the fact that successful efficiency measures reduce electricity sales and therefore the potential for earnings. These disincentives may not be a concern for not-for-profit LSEs including co-ops, munis, and other publicly owned LSEs. 2Although we refer to programs/measures such as home-weatherization, light-bulb replacement, and appliance rebates as “traditional” measures, and other as “non-traditional” it is important to note that programs/measures considered “non-traditional” have been implemented successfully in a number of states and for many years. 3Randomized controlled trials can also be used to calculate robust estimates of the savings resulting from other types of measures/programs as well, although historically this has not been common outside of behavioral programs. 


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State

Final Year 

of Target

 Annual Savings 

Required in 2015

(% of State Load)

 Annual Savings 

Required in 2020

(% of State Load)

 Annual Savings 

Required in 2015

(% of State Load)

 Annual Savings 

Required in 2020

(% of State Load)

AR 2014 2.7% 2.5% 2.7% 6.2%

AZ 2020 5.3% 11.4% 5.3% 11.4%

CA 2014 4.0% 3.8% 3.0% 6.5%

CO 2020 3.7% 7.7% 3.7% 7.7%

HI 2030 11.0% 19.0% 11.0% 19.0%

IA 2013 3.8% 3.8% 5.6% 10.0%

IL 2020 6.5% 14.4% 6.5% 14.4%

IN 2019 3.8% 9.2% 3.8% 10.7%

MA 2015 10.8% 10.6% 10.8% 21.1%

MD 2015 14.2% 14.7% 14.2% 27.2%

ME 2016 7.1% 8.2% 7.1% 12.9%

MI 2020 5.1% 9.7% 5.1% 9.7%

MN 2020 8.7% 15.3% 8.7% 15.3%

NM 2020 3.6% 5.2% 3.6% 5.2%

NY 2015 15.0% 15.0% 15.0% 27.5%

OH 2025 4.6% 10.3% 4.6% 10.3%

OR 2014 4.7% 4.5% 5.7% 10.5%

PA 2016 4.3% 5.0% 4.3% 7.8%

RI 2014 8.4% 8.3% 10.8% 22.7%

TX 2020 1.1% 2.6% 1.1% 2.6%

VT 2014 9.9% 9.8% 11.8% 21.0%

WA 2021 4.7% 8.1% 4.7% 8.1%

WI 2014 2.7% 2.6% 3.3% 6.6%

Method 1 - Annual Savings Held 

Constant in Final Year of Target

Method 2 - Incremental Savings 

Held Constant in Final Year of Target


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State

Final Year 

of Target

This Analysis

(Method 1)

This Analysis

(Method 2)

Palmer et al. 

(2013)

Sciortino et al. 

(2011)

AR 2014 2.5% 6.2% 6.2% 6.8%

AZ 2020 11.4% 11.4% 18.2% 22.0%

CA 2014 3.8% 6.5% 16.2% 12.9%

CO 2020 7.7% 7.7% 14.9% 14.9%

HI 2030 19.0% 19.0% 21.0% 18.0%

IA 2013 3.8% 10.0% 13.4% 16.1%

IL 2020 14.4% 14.4% 16.1% 18.0%

IN 2019 9.2% 10.7% 12.6% 13.8%

MA 2015 10.6% 21.1% 22.3% 26.1%

MD 2015 14.7% 27.2% 26.9% 26.7%

ME 2016 8.2% 12.9% 13.4%

MI 2020 9.7% 9.7% 9.6% 10.6%

MN 2020 15.3% 15.3% 14.7% 16.5%

NM 2020 5.2% 5.2% 8.7% 8.1%

NY 2015 15.0% 27.5% 27.3% 26.5%

OH 2025 10.3% 10.3% 11.1% 12.1%

OR 2014 4.5% 10.5% 10.4%

PA 2016 5.0% 7.8% 8.2% 10.0%

RI 2014 8.3% 22.7% 23.0% 25.3%

TX 2020 2.6% 2.6% 4.6%

VT 2014 9.8% 21.0% 25.3% 27.0%

WA 2021 8.1% 8.1% 17.2%

WI 2014 2.6% 6.6% 13.5%

2020 Annual Savings Requirement

(% of State Load)


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