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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 Incremental Savings (GWh) 50 70 60

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

AZ Annual Savings % Ro lling 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 % Ro lling 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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AR IOUs, Co-ops 87%

AZ All LSEs except excluded 59% Entities with under $5, 000,000 in a nnual 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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AR Net Yes Yes
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ME Both Yes Yes
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NM Net Yes No
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$OWKRXJKWKHEDVLFVWUXFWXUHRI((5 6VLVFRQVLVWHQWDFURVVVWDW HV2HDFKKDVWDUJHWVREOLJDWHG HQWLWLHVRUHQWLW\DQGDQ(0	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his report is available at no cost from the NationalRenewable Energy Laboratory (NREL) at www.nrel.gov/publications.Table 7. Key Design Elements for Energy Efficiency Resource Standards for ElectricityEnergy Efficiency Resource Standardsfor Electricity: Key Design ElementsTarget SpecificationAn energy savings target is specified in absolute (e.g. MWh) or percent terms, and consists of atypeand abasis.Thetypedetermines the vintage of measures allowed to contribute towardcompliance. Thebasisis 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 ElementDefinitionKey Effects, Implications, & ConsiderationsState ExamplesTarget TypeIncrementalSavings in a given year resulting from energy efficiencymeasures installed in that yearƒCompliance assessment solely requires measurement of savings from efficiencymeasures installed in the given compliance year (i.e. focus on 1st-year savings)ƒMay incentivize lower cost measures that provide only short-term savingsCA, MA, MNAnnualSavings in a given year resulting from energy efficiencymeasures installed in that year and measures installed inprior years (as defined by the policy) that continue toprovide savingsƒCompliance assessment requires measurement of savings from efficiencymeasures installed in the compliance year and previous years (i.e. focus onlifetime savings)ƒIncentivizes measures that provide both near- and long-term savingsƒEnhances certainty of achieving long-term savings goalsƒIncreases complexity of EM&V and accounting due to erosion of savings of oldermeasuresAZ, MD, NYBasis TypeFixedThestaticquantity, typically consumption in a fixed year,by which a percentage target is multiplied to determinean absolute amount of required savingsƒProvides certainty in the amount of required savingsƒAmount of required savings is unresponsive to changes in market conditionsMD, NY, PARollingThedynamicquantity, often consumption in the previousyear, by which a percentage target is multiplied todetermine an absolute amount of required savingsƒMay create uncertainty in the amount of required savingsƒAmount of required savings adjusts to changes in market conditionsAZ, IL, OHObligated EntitiesObligated entities are the institutions ultimately responsible for compliance with an EERS. Obligated entities can include allor a subset of a state'sload serving entities(LSEs)(including investorowned utilities, electric co-ops, or municipal or state providers),state governmentoffices, or3rd partyentities.Load Serving Entities (LSEs)Investor owned utilities, electric cooperatives, andmunicipal and state electricity providersƒEstablished customer relationship decreases barriers and cost to accessingcustomers and promoting programsƒAbility to leverage existing infrastructure, staff, and relationships developedthrough past efficiency program administrationƒPotential to include EERS requirements within integrated resource planningactivitiesƒLSEs may have a disincentive to procure energy efficiency1ƒRestricts procurement of efficiency to within service territory of LSEs required tocomplyCA, CO, MA3rd PartyPrivate, non-LSE, often non-profit entities that receiveratepayer and public fundingƒHas no disincentive toprocure energy efficiencyƒProcurement of EE is possible across all service territoriesƒPotentially increases initial effort and cost of establishing the new entityƒPotential comparative advantage of an entity dedicated solely to design,implementation, and administration of EE programsMI, VT, WIState GovernmentState Government offices, often those affiliated withenergy, public housing, or potentially air qualityƒHas no disincentive toprocure energy efficiencyƒProcurement of EE is possible across all service territoriesƒFiscal, procurement, and hiring rules may limit flexibility in contracting, staffacquisition, and financial operationsƒEfficiency funding could be at risk under changing state government prioritiesIL, MD, NY27This report is available at no cost from the NationalRenewable Energy Laboratory (NREL) at www.nrel.gov/publications.Eligible Savings MeasuresElectricity savings from traditional2energy efficiency measures, such as rebate programs for energy efficient appliances, home weatherization, and light-bulb replacement programs are widelyaccepted for compliance across EERS policies. Expanding the set ofeligible measures to include building codes and appliance standards, behavior-based programs, other market transformationefforts, supply-side efficiency improvements, and combined heat and power expansion increases flexibility for compliance with the standard and can potentially reduce compliance costs, but mayalso 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 ofeligible measures may allow states to targeta higher level of electricity savings.Building Codes andAppliance StandardsSaving associated with improving compliance withcurrent codes and standards, or advancing the adoptionof more stringent codes and standardsƒLarge potential savingsƒIncreases challenge of attributing resulting savings to individual obligatedentitiesAZ, NY, CABehavior-Based ProgramsPrograms designed specifically to impact consumerdecision making around energy use, often through theprovision of tailored information to individual consumersƒLarge potential savingsƒUse of randomized-controlled trials3can provide robust estimates of savingsƒRecent programs have demonstrated short-term impacts; long-term impacts areunclearCA, MA, MNOther MarketTransformation ProgramsBroad activities designed to create lasting change inmarket behavior by removing identified barriers orexploiting opportunities to accelerate the adoption ofenergy efficiencyƒLarge potential savingsƒIncreases challenge of attributing resulting savings to individual obligatedentitiesNY, TX, WASupply-Side MeasuresEfficiency upgrades to generation, transmission anddistribution infrastructureƒLarge potential savingsƒCustomers benefit indirectly - there is no reduction in end-use electricityconsumptionƒRobust measurement of savings can beachieved through simple engineeringbased calculationsDE, NY, OHCombined Heat and Power;Waste Heat RecoveryFacilities simultaneously produce electricity and heatfrom a single fuel source; facilities that use otherwisewasted heat (e.g. from industrial processes) forelectricity generation (CHP, waste heat to power) or forother thermal applications (waste heat recovery)ƒLarge potential savingsƒCustomers beyond those that have CHP benefit only indirectly (there is noreduction in end-use electricity consumption), while customers that have CHPbenefit directlyƒDetermining the relative contribution tocompliance presents a challenge buthas been addressed by states such as Massachusetts, Michigan, and ConnecticutAZ, HI, MNCost Containment MechanismsCost containment mechanisms are limits placed on either the totalcost of the program or the increase in electricity rates required to recover the cost of the program. They are implemented usingrate impact caps, annual spending caps (typically a percent of operating revenue), or caps on specific components of individualprograms (e.g. administrative costs).Cost Containment MechanismsƒShields ratepayers from significant rate increasesƒIncreases the risk of under-investment in efficiency relative to program goals,limiting overall savings if mechanisms are triggeredIL, RI, WIEnsuring ComplianceCompliance with energy savings requirements can be encouraged in a variety of ways. Financialincentivesorpenaltiesoften exist that scale with compliance levels.Revenue decouplingbreaksthe link between LSE revenues and sales volume, and thereforeremoves the disincentive toprocure energy efficiency.IncentivesStructured financial award, typically a volumetric,scalable bonus tied to the level of compliance orestimated net benefits of a suite of energy efficiencyprogramsƒProvides incentive to achieve full compliance, and potentially over-complianceƒShifts a portion of benefits from ratepayers to obligated entitiesCO, MN, VTPenaltiesStructured monetary fine, typically a volumetric, scalablefine tied to the level of complianceƒProvides disincentive for non-complianceCA, MA, WARevenue DecouplingA mechanism to break the link between utility energysales and revenuesƒRemoves LSE disincentive to procure EEƒChanges the exposure to market risk faced by producers and consumersAZ, CA,RI28This report is available at no cost from the NationalRenewable 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. Savingscan be measured on either agrossornetbasis (or both). Theresponsibility for conducting EM&Vcan 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 obligatedentities, the PUC, or both, these institutions often rely ona 3rd party to carry out the evaluations.MetricGrossSavingsSavings resulting from program-related activities by allparticipating consumers, without consideration ofsavings that may have occurred in the absence of theprogram, or other secondary effectsƒReduces the complexity of estimating savingsƒDoes not account for free ridership, spillover, program overlap, or other marketeffectsAZ, OH, PANet SavingsSavings resulting from program-related activities by allparticipating consumers which deducts savings that mayhave occurred in the absence of the program andaccounts for other secondary effectsƒIncreases the complexity of estimating savingsƒCan account for free ridership, spillover, and broader market effects (e.g,rebound)CA, CO, MAResponsibilityforConductingEM&VObligated EntitiesƒCan create incentive to exaggerate savings estimates & minimize spending onEM&VƒLSEs have significant experience carrying out EM&V of rate-payer fundedprogramsCO, MA, PAPublic Utilities CommissionƒCreates incentive to seek out robust estimates of savingsHINotes:1Disincentives to procure energy efficiency result fromthe fact that successful efficiency measures reduce electricity sales and therefore the potential for earnings.These disincentives may not be aconcern 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 tonote that programs/measures considered “non-traditional” have been implemented successfully in a number of states and for manyyears.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 commonoutside of behavioral programs.

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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 A nnual Savings Requirement (% of State Load)

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