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TABLE OF CONTENTS

3.4 Demand-side Energy Efficiency (EE).................................................................................... 2

3.4.1 Energy efficiency opportunity ............................................................................................ 2

3.4.2 State goal setting .............................................................................................................. 235

3.4.3 Impacts assessment.......................................................................................................... 373

3.4.4 Analysis considerations ................................................................................................... 418

3.4.5 CHP/cogeneration............................................................................................................ 423

3.4.6 Other ................................................................................................................................. 425
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3.4 DEMAND-SIDE ENERGY EFFICIENCY (EE)

This section discusses comments related to demand-side energy efficiency (EE), including 

opportunities for demand-side EE, annual incremental savings target rate, demand-side EE

programs as they relate to CHP/cogeneration, and analytical concerns. We have organized the 

comments in this section under six subsections, 3.4.1 to 3.4.6. Responses to the comment topics 

of these subsections are discussed below along with summaries of the specific public comments.

At proposal, we included demand-side EE in the BSER as building block 4. Consequently, many 

commenters referred to demand-side EE as building block 4 in their comments on the proposed 

rule. Although we have decided to eliminate building block 4 from the BSER in the final rule, 

we have retained the commenters original phrasing in the summaries included in this section.

3.4.1 Energy efficiency opportunity

This section includes comments that are both supportive and unsupportive of the inclusion of

demand-side EE as a part of BSER. While we are not including demand-side EE as a component 

of the BSER, we are allowing demand-side EE to be used for compliance.

Commenters have raised a number of issues related to the subsection which are organized by 

topics (comments) below. Responses are provided for these topics. A summary of comments in 

this section are listed below.

• We support EE as a part of BSER

− You should include additional EE programs in the targets, including - building 

codes, appliance standards, other innovative programs, etc.

− Need clarity of the role between BSER and compliance in state plans

• We do not support EE as a part of BSER

− It’s not adequately demonstrated because a) it’s outside the fence line, b) 

affected EGUs don’t have control of customer’s voluntary actions, c) key state 

and local factors weren’t considered in goals

− However, we do support EE as a compliance option

• It’s too difficult to achieve the savings the EPA set in the targets for a variety of 

reasons

− There are many barriers to implementing EE
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− Building codes and appliance standards reduce the ability to achieve future 

savings

− Best Practices methodology doesn’t take into account unique state 

circumstances

Comment 1: Support for DSM/EE and support for expanded EE 

Response 1: Many commenters discuss the wide variety of EE programs available that they have 

implemented for many years, achieved significant energy savings and the opportunity exists to 

achieve large amounts of energy savings in the future. However the EPA is excluding BB4 from 

BSER. See sections V.A and V.B of the final rule preamble of the CPP for the EPA’s response to 

this comment. Even though DS-EE is not used in calculating emission performance rates, the 

final rule gives states the flexibility to use DS-EE to achieve their emissions performance rates 

during compliance. See multiple subsections of section VIII of the final rule preamble of the CPP 

and the Demand-side Energy Efficiency TSD for CPP Final Rule for details. 

The following are summaries of the specific public comments under this comment:

Commenters remarked that the reduced demand associated with energy efficiency measures 

contributes to grid reliability, primarily in terms of supply adequacy. Commenters explained that 

energy efficiency measures can reduce the base load, the amount of energy required to be 

supplied, and the peak power demand. Commenters added that energy efficiency can also 

contribute to reliability at the level of local transmission and distribution (T&D) networks by 

decreasing the likelihood of failures at those points in the system. Commenters pointed out that 

the benefits of using energy efficiency to defer investments in T&D to address load growth can 

be substantial. Commenters provided an example where Consolidated Edison reduced its 

projected T&D capital expenditures after adjusting 10-year load forecasts for each of its 

distribution networks to reflect the expected impacts of system-wide efficiency programs. 

Commenters also described how Consolidated Edison employed geographically targeted 

efficiency programs to defer upgrades in more than one third of its distribution networks, with 

the resulting savings providing more than $300 million in net benefits to ratepayers.

Commenters stated "energy efficiency remains an under-appreciated but very 

important trend in power markets that will lead to structural drags on power 

demand growth impacting the outlook for competitive power market recovery and 

where utility capex will need to be allocated." Commenters stated "Credit Suisse 

notes that the slowing of demand growth places a great deal of pressure on the 

economics of utilities not only where it adds to the downward pressure on prices 

set in markets, but also in regulated states, where rate structures have relied on 

growing demand to ensure recovery of fixed costs." 

Commenters provided information on ways to incentivize the use of insulation and cited utility 

programs including rebates for energy efficiency products and sponsorships of home energy 

audits, low income weatherization programs (HWAPs), and tax credits and deductions.
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Commenters noted that energy efficiency can be an effective strategy for reducing GHG 

emissions, stating that every MWh of avoided electric generation may offset a certain amount of 

carbon-emitting generation. The Agency accounts for energy efficiency in the proposed rule by 

factoring it into the denominator, which according to commenters, means that every incremental

MWh of qualifying energy efficiency will enable states to generate additional CO2 emissions 

equal to their target rate. 

Even if building block 4 is removed from the Agency's BSER determination, however, 

commenters believed that EPA should accurately estimate and factor increases in energy 

efficiency into this rule. To do so, commenters encouraged EPA to closely examine the impact 

this rule will likely have on deployment of energy efficiency even when those measures are not 

explicitly part of the Agency's BSER determination. 

According to commenters, EPA relies on an Energy Information Administration (EIA) demand 

forecast from its Annual Energy Outlook (AEO) to project the impact of carbon emission rate 

reductions in the source category. Commenters noted that by EPA's public estimates, the AEO 

accounts for some but not all energy efficiency and demand reduction measures already 

projected to occur regardless of this rule. Commenters noted that on its website the Agency 

provides a modified state-by-state energy efficiency analysis against the AEO so that states can 

use those numbers to structure their implementation plans under the Clean Air Act.

Commenters do not disagree that more energy efficiency is possible than in EIA's base case 

estimate, but expect states and power producers to undertake additional energy efficiency 

measures as a result of this rule. Commenters also believed this rule may catalyze changes in 

technology development and deployment, and in consumer behavior.

Commenters also noted that states and power producers will remain capable of implementing 

energy efficiency measures to comply with this rule, regardless of EPA's inclusion of energy 

efficiency in BSER. Such state measures need only be enforceable, measurable, and verifiable. 

As a result, even without building block 4, commenters said states would retain the same 

flexibility that they would have had under the proposed four-building-block BSER analysis.

According to commenters, it is unclear to what degree EIA estimates include the impact of 

increasingly strict federal energy efficiency standards for appliances, electric motors, and so on. 

And, according to commenters, EIA estimates may not include the impact of structural energy 

efficiencies like building standards. Commenters believed EPA should make a complete 

accounting of all anticipated efficiency measures and produce the strongest possible projection of 

future demand. According to commenters, others will undoubtedly comment constructively on 

this point, and put forth estimates that the Agency could rely on when it constructs its projection.

Ultimately, according to commenters, EPA can use its fully fleshed-out projection to account for 

energy efficiency in other parts of the rulemaking package. Commenters noted that the Agency 

may factor energy efficiency into its base case demand projections, or as part of calculating the 

effect of this rule in the accompanying impact analysis. Regardless of what method EPA uses to 

account for energy efficiency, commenters believed based on our analysis that removing this 

Building Block will have little impact on projected and actual CO2 emission reductions.
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Commenters stated demand-side EE is an available and cost-effective mechanism for reducing 

emissions of CO2 and other harmful pollutants from the power sector - and it is a resource that 

we cannot afford to overlook.

Commenters stated EE works because it avoids the need for new generation; it is also the least 

expensive option.

Commenters stated that EE is the lowest cost compliance option for West Virginia and a 

relatively untapped resource in West Virginia; commenters stated there is no EERS in West 

Virginia, and the state was ranked No. 46 by the ACEEE Scorecard in 2013. Commenters stated 

that while West Virginians currently enjoy relatively low electricity rates, West Virginia 

residents and businesses do not enjoy low electric bills because of inadequate access to EE 

programs and resources. Commenters stated tapping into West Virginia's vast EE potential will 

be central to West Virginia's ability to meet the proposed emission reduction targets.

Commenters strongly agreed with EPA that the end-use energy-efficiency enhancements can 

substantially reduce electricity usage and the emissions generated to provide that electricity. 

Commenters stated that regardless of the amount of greenhouse gas emissions to be reduced by 

EPA Section 111(d), energy enhancements can be a way to achieve immediate and cost effective 

emissions reductions in the utility sector. Because 40 percent of all energy is used in heating and 

cooling homes and buildings, commenters stated there are many opportunities for energy savings 

and the corresponding emissions reductions. Energy efficiency also supports growth. 

Commenters stated the ACEEE recently completed a study of the EE savings that can be 

achieved in each state, the cost and the benefits of such investments and the policies and the 

impact of these efficiency investments on employment and grow state product. Commenters

stated that reducing emissions in the utilities sector has several important co-benefits, including 

improvements to grid reliability and public health. Commenters worked with others in our 

industry to update a 2003 Harvard Study that quantified the public health improvements from 

retrofitting all under-insulated homes in the U.S. to current model energy codes. Commenters

stated the researchers will be investigating both the mortality and morbidity improvements that 

accompany utility emissions reductions, the results of the update will be available in time to 

include in our formal comments, written comments to EPA.

Commenters stated they are focused on responsibly transitioning to cleaner, more diverse 

generation sources while keeping energy affordable; their Transition Plan was developed in 

conjunction with existing Missouri Integrated Resource Planning, and one of the key elements 

include continuing to offer valuable EE programs that encourage customers to consume less 

energy.

Commenters recommended EPA allow states to credit energy savings from demand response 

measures, enforcement of building codes, federal and state appliance standards, and market 

transformation in a state compliance plan through robust evaluation, measurement, and 

verification protocols.

Commenters strongly supported the implementation of Building Block 4, such as reducing EGU 

energy by the use of demand-side EE that reduces the amount of generation required (e.g., 

reduce demand for electricity through building codes, state appliance standards).
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As an inexpensive source of CO2 emission reduction that also saves money for electricity 

customers, commenters stated that end-use EE can and should play a critical role in helping the 

United States meet its emission reduction objectives. Commenters stated that through the U.S. 

DOE's Better Buildings, Better Plants Program, 143 manufacturing companies have used EE 

improvements in their facilities to reduce CO2 emissions by 18.5 million metric tons while 

saving $1.7 billion in energy costs.

Commenters stated that avoiding new energy generation costs through EE measures remains the 

cheapest option for a diverse portfolio in the electricity sector. Many states, but not all, have 

long-time EE programs. Commenters cited 2 recently published studies, one by the ACEEE and 

the other by LBNL that found savings even in states with long-term EE programs where many of 

the easy to achieve savings have already occurred. Commenters stated both of the studies utilize 

a LCSE measure, this means the calculation of the cost per kilowatt hour of an efficiency 

measure when the upfront costs are spread over the lifetime of the investment. Commenters

stated for the ACEEE study, analysis was done on 20 states electricity costs and natural gas data 

from 10 states, while the LBNL study collected data from 31 states. 

Commenters stated over the 31 states in the LBNL study, the average COSE was about 2 cents 

per kilowatt hour and in comparison, the ACEEE study estimated savings of 2.8 cents. 

Commenters stated there can be variation in states savings, but California with long-term EE 

program and planning saved 4.5 cents per kilowatt hour in the ACEEE study. Commenters

indicated the states that set aggressive goals for its electric utilities to achieve EE savings may 

longer term find it harder to achieve savings goals, but the study analysis shows that new energy 

generation is still two and three times more than efficiency measures.

Commenters stated evidence indicates that the adoption of financial mechanisms that encourage 

electric utility investment in EE, similar to those underway in several states, can facilitate the 

achievement of incremental EE.

Commenters supported consideration of EE programs both as a basis for setting the stringency of 

the power plant emission guidelines and as a compliance tool. Commenters stated EE programs 

complement other power sector carbon-reduction strategies, bringing compliance costs down and 

supporting grid reliability by reducing demand.

Commenters welcomed the inclusion of EE as an element of the EPA's determined BSER. 

Between the reinvestment of RGGI auction proceeds and the driving force of our states' existing 

aggressive EE policies, commenters indicated their states developed an early lead in realizing the 

benefits of EE as a resource and tool, are frontrunners in the implementation and adoption of EE 

programs, and eight of the RGGI states report incremental electricity savings and/or cumulative 

energy savings as a percentage of 2012 retail sales well above the national average.

Commenters stated the proposed Clean Power Plan charts a bold course for the U.S. electric 

sector. By including EE as one of the four suggested building blocks for state compliance plans, 

commenters stated the U.S. EPA has opted to tap one of the energy sector's most potent and costeffective resources. Commenters stated EE has become a cornerstone of the energy mix, and is 

increasingly being viewed as the fuel of choice around the world. Commenters stated tapping 
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into this resource helps ensure that CO2 abatement targets can be met cost-effectively and in a 

timeframe that has a meaningful impact on the urgent need to reduce global emissions.

Commenters believed that states must have flexibility to include demand side EE programs into 

their state action plans. Commenters stated programs designed to help homes and businesses use 

electricity more efficiently, or use less electricity, should be part of this plan. Commenters

developed its QA Residential Service &Installation (RSI) program to recognize HVAC 

contractors and systems that comply with industry developed quality standards for design and 

installation, as verified by an objective third party. By relying on contractors vetted for their 

knowledge, skills, and business practices, commenters stated consumers and utilities are assured 

of realized reductions in energy use.

Commenters commended the rule for its flexible design that will enable states and market actors 

to utilize the most cost-effective options to reduce power sector GHG emissions, including 

efforts to increase demand-side EE. Commenters stated demand-side EE can be deployed in a 

variety of ways, through utility programs, direct investment by companies, state led programs, 

and third-party EE projects delivered by private-sector energy service companies (ESCOs).

Commenters stated Building Block 4 focuses on EE as a means of meeting electricity demand 

and reducing emissions from CPP affected sources. Commenters stated Connecticut has 

significant experience in administering EE programs to the benefit of rate payers and the 

environment. Commenters fully supported the inclusion of EE in the BSER for reducing CO2 

emissions from existing power plants. Commenters provided additional information on its 

leadership in EE over the past decade and Green Bank initiative (See Appendix B of the 

comment letter). Commenters noted that Connecticut's wealth of experience implementing EE 

programs demonstrates that other states, especially those that have not yet seized the opportunity 

to invest in such programs, possess largely untapped and substantial potential to achieve energy 

savings through EE measures. Commenters reiterated the comments of the RGGI states with 

respect to promoting and strengthening the use of EE in the context of the CPP.

Commenters noted that there are multiple other benefits of EE improvements not mentioned by 

EPA in the proposed rules including higher productivity in the workplace, job creation and 

economic development, reduced water consumption, and risk reduction. Commenters stated for 

example, under the proposed Clean Power Plan, water consumption by the Texas power sector 

could be cut by more than 20 percent compared with water consumed in 2012, and this is about 

66,000 acre-feet per year. Commenters stated the EPA should provide flexibility to states to use 

their state planning processes to include non-energy benefits that they would like counted toward 

a state's emissions reduction target. Commenters stated for example, some states utilize adders 

to establish a conservative estimate of the value of non-energy benefits. Colorado, Iowa, Oregon, 

and Washington utilize a 10 percent adder for EE programs. Commenters stated Vermont uses a 

15 percent adder and allows for this number to be revised upwards should additional data justify 

doing so. Commenters stated other states use exact quantification, through means such as 

reduced water consumption. Commenters stated as mentioned, these are conservative estimates, 

but the point is that there are multiple approaches, whether adders or exact quantification, to 

estimate the non-energy benefits of EE; the EPA should do more than assigning a value of zero 

to these benefits. Commenters stated significant research has been conducted into the application 

of various cost-benefit tests and the inclusion of non-energy benefits. Commenters stated 
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accounting for non-energy benefits in cost-effectiveness will unlock significant EE potential 

across the country, affording states increased flexibility to meet their Clean Power Plan targets in 

the least-cost manner. Commenters stated having the EPA recognize the non-energy benefits of 

EE also provides states with greater certainty as to the types of measures and programs that will 

be acceptable to include in their state implementation plan.

Commenters stated they are already employing demand-side management and offer direct load 

control and EE programs. Commenters stated they offer a "whole home load management" 

program, and with 2,200 consumers enrolled, this program provides significant load reductions. 

Commenters stated program participants agree to let the cooperative shut off power to their 

entire home during load management events over the summer months; in return, participating 

consumers receive a lower rate year round. Commenters stated the program appears to be very 

popular and has a waiting list to join. Commenters offered a Power Shift program that includes 

direct load control of: 13,446 water heater switches; 4,694 ale switches; 546 field irrigators; 2202 

EM switches; and 16 pool pump switches. Commenters stated in total, there are 21,000 

consumers providing 40.6 MW of peak load reduction across Wabash Valley's member co-ops in 

Indiana, Illinois and Missouri.

Commenters stated in addition, they have offered EE programs since 2008 when we launched a 

high performance new residential construction program. In 2010, commenters added commercial 

and industrial (C&I) programs and residential HVAC, refrigerator/freezer recycling and 

ENERGY STAR clothes washer to the portfolio, and in 2012, after engaging a program design 

consultant, they revised their EE portfolio to focus on the most cost-effective measures from a 

wholesale power supply perspective. Commenters stated the current WVPA EE portfolio 

includes a wide variety of prescriptive offerings for both residential and commercial/industrial 

members. Commenters offered a custom incentive program for those C&I accounts whose 

project does not fit into the prescriptive programs if they can still demonstrate cost-effective 

kWh and kW savings. Commenters stated most recently in 2013, an EM&V of our programs 

revealed that these programs were cost effective with a TRC (total resource cost) of 1.7, up from 

1.4 in 2012. Commenters stated their gross annual energy savings were 22,706 MWh, which 

calculates to 0.0029 percent of WVPA's MWh sales in 2013. Commenters stated the first year 

cost of those programs is $.13/kWh, which is in line with nearby utilities and lower than our 

projection from 2012. Commenters stated if they equally allocate the 2013 EE program costs 

across our 350,000 meters, that works out to $8.43 per year per meter. 

In 2020, commenters stated their MWh sales are projected to be 8,720,485 MWh. Commenters

stated using EE to achieve 1.2 percent savings of total sales would give them a target of over 

104,600 MWh. If they maintain a cost of $0.13/kWh, Commenters would need to spend over $13 

million to achieve the annual targeted savings of 104,600 MWh. Commenters stated if they raise 

the amount we have to spend on EE programs by 463 percent, then the cost is projected to rise to 

$38.87/meter per year. Commenters stated that this cost is taxing for our members. Additionally, 

commenters encouraged USEPA to grant credit for our existing programs in the finalized 

guidelines.

Commenters stated there are several active and passive approaches to demand reduction and 

peak shaving at various stages of development or implementation today.
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Commenters stated EE and demand-side management (EE/DSM) measures effectively reduce 

electricity consumption by promoting products or programs that support efficiency or 

conservation of electricity.

Commenters noted that New York City recently launched One City: Built to Last, a 

groundbreaking plan that establishes new and expanded programs to reduce GHG emissions 

within New York City. Commenters indicated that components of this plan include: installing 

100 megawatts of onsite renewable power sources and investing in other significant energy 

saving measures at City-owned facilities; improving operations at City-owned facilities with 

robust preventative maintenance programs; providing greater access to GHG reduction program 

information, research, and financing to communities and building owners; implementing cuttingedge performance standards in the City's energy and building codes for new construction and 

enhancing code enforcement throughout the City; and developing interim energy performance 

targets for existing buildings to be met with voluntary practices and regulatory requirements.

Commenters noted that they and their Members are jointly committed to the active promotion of 

cost-effective conservation and EE by Member consumers. As reflected in a March 2014 filing 

to the FPSC, commenters stated their Members have implemented a range of EE and energy 

conservation programs that have reduced Seminole's total demand for electric energy and 

capacity. However, commenters stated EPA's assumption that Florida, and Seminole, can 

increase its EE measures to 1.5 percent per year, and achieve this increase year after year, is

erroneous, arbitrary and capricious.

Commenters stated they provide firm wholesale electric service under a single wholesale rate 

structure. Commenters stated they also provide non-firm service options to its Members under 

interruptible rate schedules. Commenters stated the rate signals contained in Seminole's rate 

schedules provide a cost-basis for our Members to gauge the cost effectiveness of demand-side 

management and EE programs. Commenters stated their Members assess the viability of these 

programs in their respective service areas and Seminole's load forecast of power supply needs 

reflects the effect of its Members' demand-side management and EE programs.

Commenters stated Seminole promotes demand-side management through two programs made 

available to our nine Member systems. Under the Coordinated Load Management Program, 

Commenters stated their members may install and operate direct control load management 

systems for the purpose of reducing coincident peak demand. Commenters stated the resulting 

reductions in Seminole's coincident peak demand lowers Seminole's requirements for system 

generating capacity (and associated reserves) and provides demand cost reductions to the 

participating Member systems. Under the Load Management Generator Program, commenters

stated their member systems may install (or partner with their retail customers to install) 

distributed peaking generation. Commenters stated these generators serve a dual need: (1) to 

enhance reliability by providing back-up generation during transmission and/or distribution 

system outages, and (2) to offset and avoid a portion of Seminole's system generation 

requirements.

Commenters stated their members have implemented a range of EE and energy conservation 

programs that have reduced Seminole's total requirements for electric energy and capacity. 

Commenters stated these reductions have not been specifically quantified or estimated but are 
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included in Seminole's load history. As such, commenters stated their load forecast effectively 

extrapolates the growth of past programs into the future. 

Commenters stated they work jointly with its Members to ensure that cost effective demand-side 

management and energy conservation/efficiency alternatives are considered as an alternative 

resource. Similarly, commenters stated that Seminole and its Members are expanding Member 

staff training, consumer education, EE, and conservation programs to mitigate growth in kWh 

usage per consumer. Commenters stated the focus of Seminole's joint program with its Members 

is to facilitate information sharing, evaluate demand-side management/conservation programs, 

and expand consumer education programs and information related to EE and energy 

conservation.

Commenters stated that including EE prominently in the Plan requirements will enable states and 

utilities to meet the emissions reduction goals at least cost and potentially with net economic 

benefits for households, businesses and the economy as a whole. Commenters stated in addition 

to economic and public health benefits, residential EE efforts can increase occupant comfort, 

improve health and safety factors, increase property values, and provide some financial relief to 

low and middle income households. Commenters stated commercial and industrial programs can 

increase worker comfort and productivity, reduce waste in production processes, and lower 

environmental compliance costs. Commenters stated all of these efforts also conserve our water 

resources, something that is always a concern in the more arid regions of the country.

Commenters stated improving the efficiency with which we use energy already being produced, 

is, in our judgment, the strategy by which the greatest gains can be achieved with the smallest 

expenditure of funds. Commenters stated the state-by-state targets for improved energy 

conservation are very modest. According to 2012 data from the Lawrence Livermore Laboratory 

and the Department of Energy, commenters stated approximately 61 percent of all energy 

produced in the US is wasted. Commenters stated residential energy use was reported as 10.6 

quads, including 4.69 from electricity. Commenters stated residences wasted approximately 35 

percent of the energy delivered. Commenters stated commercial energy use was 8.29 quads, of 

which 4.52 came from electricity. Commenters stated the commercial sector also wasted 35 

percent of its energy. Commenters stated finally, industry consumed 23.9 quads of energy of 

which 3.35 came from electricity. Industry wasted 20 percent of its energy. Commenters noted 

that a recent report from a panel of NAS estimates that cost-effective energy use reductions in 

buildings of 10 percent by 2020 and 14.7 percent by 2030 are achievable. Commenters stated the 

Panel further reported that a 7.7 percent reduction by the industrial sector was possible. 

Commenters stated clearly there are opportunities for enormous gains in efficiency. As the 

Agency works with the states to develop their individual plans to reach established goals, 

Commenters strongly encouraged the use of this modality as the prime building block given its 

lowest cost strategy.

Commenters stated EE is an embedded and crucial component of a 21st century electricity 

system. Commenters stated EE is a widely used and recognized source of reliable and costeffective emission reductions. Commenters stated these emission reductions come from a broad 

variety of EE technologies and services such as utility and state efficiency programs, privatesector-delivered ESCO services, combined heat and power (CHP), and demand response.
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Commenters offered the following examples as a sampling of the ways in which companies and 

markets have come to rely on EE: (1) in the ISO-NE region, EE is being officially forecast and 

incorporated into the Regional System Plan, with regularly released reports from ISO-NE that 

specifically note how much efficiency clears each auction; (2) EE plays a key role in forward 

capacity markets, with over 1,300 MW of efficiency (not including demand response) clearing 

the PJM market in 2014 for resources available to PJM in 2017-2018 that go above and beyond 

efficiency standards, over 99 percent of EE bids cleared the forward capacity market, and 

additional efficiency will increase the reliability of the system by reducing strain during periods 

of peak demand; (3) Energy Performance Contracts provide customers guaranteed savings, as 

ESCOs are compensated based on the outcome of the efficiency projects installed, and the ESCO 

market is a significant player in the energy industry, at $4.8 billion in 2012; (4) as of 2013, cloud 

computing and large data centers accounted for up to 3 percent of U.S. electricity usage, EE 

consulting and technology services help to reduce energy needs and keep those data centers 

running reliably, and both Google and Microsoft have pursued "chiller-less" data centers and 

utilize evaporative cooling systems that use significantly less energy than chillers alone and 

increase the reliability and longevity of the data centers; (5) EE programs have become such an 

integral part of investor-owned utilities' portfolios that many investor owned utilities (IOUs) 

report on efficiency activities to shareholders, for example, PPL, which includes Kentucky 

Utilities and Louisville Gas and Electric, includes its efficiency programs in its yearly 

stakeholder report; (6) during the 2014 polar vortex, PJM hit new winter peaks and had to issue 

three demand response dispatches over two days to manage the load, and during that same 

period, ERCOT faced similar peak problems and dispatched its demand response program as 

well as its emergency response program.

Commenters stated energy efficiency can be an effective strategy for reducing GHG emissions. 

Commenters stated every MWh of avoided electric generation may offset a certain amount of 

carbon-emitting generation. Commenters stated the Agency accounts for energy efficiency in the 

proposed rule by factoring it into the denominator, meaning every incremental MWh of 

qualifying energy efficiency will enable states to generate additional CO2 emissions equal to 

their target rate. Even if building block 4 is removed from the Agency's BSER determination, 

however, commenters believed EPA should accurately estimate and factor increases in energy 

efficiency into this rule. To do so, commenters encouraged EPA to closely examine the impact 

this rule will likely have on deployment of energy efficiency even when those measures are not 

explicitly part of the Agency's BSER determination.

Commenters stated in the proposed rule, EPA relies on an EIA demand forecast from its Annual 

Energy Outlook (AEO) to project the impact of carbon emission rate reductions in the source 

category. Commenters stated by EPA's public estimates, the AEO accounts for some but not all 

energy efficiency and demand reduction measures already projected to occur regardless of this 

rule. Commenters stated in fact, on its website the Agency provides a modified state-by-state 

energy efficiency analysis against the AEO so that states can use those numbers to structure their 

implementation plans under the Clean Air Act. Commenters did not disagree that more energy 

efficiency is possible than in EIA's base case estimate. Commenters expected states and power 

producers to undertake additional energy efficiency measures as a result of this rule. 

Commenters believed this rule may catalyze changes in technology development and 

deployment, and in consumer behavior. Commenters noted that states and power producers will 

remain capable of implementing energy efficiency measures to comply with this rule, regardless 
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of EPA's inclusion of energy efficiency in BSER. Commenters stated such state measures need 

only be enforceable, measurable, and verifiable. Commenters stated as a result, even without 

building block 4, states would retain the same flexibility that they would have had under the 

proposed four-building-block BSER analysis. Commenters stated it is unclear to what degree 

EIA estimates include the impact of increasingly strict federal energy efficiency standards for 

appliances, electric motors, and so on. Commenters stated EIA estimates may not include the 

impact of structural energy efficiencies like building standards. Commenters believed EPA 

should make a complete accounting of all anticipated efficiency measures and produce the 

strongest possible projection of future demand. Commenters stated others will undoubtedly 

comment constructively on this point, and put forth estimates that the Agency could rely on 

when it constructs its projection. Commenters stated ultimately, EPA can use its fully fleshedout projection to account for energy efficiency in other parts of the rulemaking package. 

Commenters stated the Agency may factor energy efficiency into its base case demand 

projections, or as part of calculating the effect of this rule in the accompanying impact analysis. 

Regardless of what method EPA uses to account for energy efficiency, commenters believed 

based on their analysis that removing this Building Block will have little impact on projected and 

actual CO2 emission reductions.

Commenters stated that energy efficiency is the most effective method for reducing CO2 

emissions. The commenters remarked that the least impactful and most effective way to reduce 

carbon pollution from electricity generation is to reduce demand by making homes, businesses, 

factories and workplaces, public accommodations, appliances and other goods as energy efficient 

as possible. The commenters explained that such investments save consumers and businesses 

money and generate local jobs through retrofitting, weatherization and other measures that need 

to be taken to make homes and businesses energy efficient. Commenters added that energy 

efficiency reductions are an all-around win for wildlife by reducing other harmful emissions and 

the impacts to wildlife from energy development siting, operation, extraction and transport.

Commenters stated EE is not only one of the fastest, cheapest, and safest way to reliably meet 

the state's growing electricity demand, but is a proven, low-cost investment that will accrue 

tangible economic benefits for Texas ratepayers and businesses, while also helping the state meet 

its carbon pollution reduction goals under the CPP.

Commenters stated more than half of the states have standards or goals for EE, many of which 

have shown that savings can be achieved faster and more cost-effectively than EPA assumed, so 

that less power is used.

Commenters stated they had concerns about the impacts and precedent setting nature of the CPP 

proposal for industrial manufacturers and EPA's authority to promulgate these regulations, 

however, to the extent that EPA is authorized to move forward, BMS strongly recommends an 

emissions reduction strategy focused on EE.

However, to the extent that EPA is authorized to move forward, commenters strongly 

recommended an emissions reduction strategy focused on EE. Commenters strongly supported 

and encouraged EPA's decision to highlight EE as a "building block" option to emissions 

reductions and compliance to the CPP proposal. Commenters stated EE clearly plays an integral 

role in mitigating greenhouse gas emissions - reducing energy demands directly results in less 
13

demand for fossil fuel consumption. Commenters stated as the EPA proposal outlines, there are a 

number of methods available to achieve carbon emissions reductions through EE. Commenters

stated in crafting the CPP proposal, the EPA has also correctly provided individual states 

tremendous flexibility in creating their State Implementation Plans (SIPs) to demonstrate 

compliance. Commenters stated however, that it is absolutely vital that EPA understands that not 

all EE plans are created equal and some, such as building energy codes, can provide outstanding

economic and environmental value with technology and building practices readily available.

Commenters stated the EPA properly considered the potential for reducing carbon emissions 

through demand-side EE improvements as part of BSER. Commenters stated the potential for EE 

to reduce energy demand and avoid CO2 emissions, as well as methane emissions, is now well 

established. Commenters stated for example, a 2010 report by the NAS found that a 25 to 30 

percent energy savings for the building sector as a whole could be achieved over the next 20 to 

25 years through EE measures at a cost of just 2.7 cents per kilowatt hour saved. Commenters

stated whole-building retrofits and advanced building design could result in even more 

significant energy savings. Commenters stated that like the other BSER building blocks 

proposed by EPA, improved EE would not only drive reductions in carbon pollution, but would 

also reduce emissions of dangerous co-pollutants emitted from coal-fired power plants. 

Commenters stated similarly, EE programs will have the corollary benefits of reducing utility 

bills and creating jobs.

Commenters stated EPA should retain EE as one of the Building Blocks included as BSER. 

Commenters stated numerous studies show that EE measures are one of the most cost-effective 

ways to reduce emissions from the electricity-producing sector. Commenters stated those 

customers who participate in EE programs and measures enjoy lowered electricity bills. 

Commenters stated as New Mexico has one of the highest poverty rates in the country, especially 

in rural areas, cost to consumers (as well as industry) is an important consideration.

Commenters stated it is not just human lives, but the very biosphere itself that is endangered by 

CO2 emissions. Commenters stated climate change is a major factor influencing Earth's Sixth 

Great Extinction - an impact of literal asteroid sized proportion - including the global warming's 

evil twin, ocean acidification and "deader" dead zones. In the words of AEC Executive Director 

Michael Churchman: "I've had conversations with business owners that are trying to be as 

energy efficient as possible and grow the clean energy economy. Small businesses have shared 

that they can save homeowners an average of 26 percent on their energy bills monthly, and this 

makes their homes much more comfortable through EE. When people talk about electricity rates, 

we should remember that EE is the thing that can help all of us to lower bills and should be 

pursued heavily! I also talk to a lot of people that see that renewable energy, especially solar, is 

the future. However, the rates paid to distributed producers along with the tariff charged by 

utilities in Alabama are restrictive and do not incentivize this new technology that is growing 

across the rest of the Southeast. Alabama is behind many states including Georgia. The Clean 

Power Plan would spur innovation, accelerate the clean energy economy, and create good 

American jobs." 

Commenters stated that reducing electricity demand through EE and demand side energy 

management, using only available technologies, has been demonstrated to be one of the most 

cost-effective means of reducing GHG emissions from the power sector. Commenters stated 
14

demand side EE offers potential to reduce power sector GHG emissions while simultaneously 

reducing utility bills for American families and businesses, improving grid reliability, reducing 

co-pollutant emissions, improving energy security, and creating jobs in the EE sector.

Commenters strongly supported EPA's determination that demand-side reductions in carbon 

pollution from the power sector through increased EE measures are an integral part of the BSER 

for existing power plants. Commenters stated EPA's inclusion of EE as part of the BSER under 

section 111(d) is a well- justified part of its system-wide approach to determining the level of 

emission reductions that state plans should achieve. Commenters stated EE is cost-effective; 

recent studies and states and utilities with many years of EE experience confirm there remains

vast potential to achieve significant further reductions in electricity demand; EE is economical 

and effective mechanism to reduce emissions; and several federal and state regulatory programs 

have already sought to reduce emissions by incentivizing EE. 

Commenters stated many states and utilities have already taken action to realize the opportunity 

for consumer savings and climate protection, providing further support for EPA's conclusion that 

EE is an "adequately demonstrated" and cost-effective element of the BSER. Commenters stated 

26 states have adopted EE standards or targets that require investments matching or exceeding 

EPA levels in the BSER analysis. Commenters indicated state investments in consumer-funded 

EE increased to nearly $6 billion in 2012, an increase of 28 percent in 3 years, reported 

incremental electricity savings increased by 120 percent and reaching 22 million MWh in 2011 

(equivalent to 0.6 percent of retail sales, and 14 states reporting savings of more than 1 percent 

of retail sales). Commenters stated a recent Georgetown Climate Center report provided 

numerous case studies of states and utilities that successfully implemented EE to reduce GHG 

and save customers money. Commenters cited a 2013 LBNL report that indicates utility 

investment in EE will increase to $9.5 billion by 2025 with increase of 60 percent in total 

electricity savings.

Commenters supported the EPA's determination that end-use EE constitutes a key component of 

the best system for reducing carbon pollution from existing power plants. Commenters stated 

end-use EE programs have been adequately demonstrated as cost-effective mechanisms for 

achieving substantial reductions in emissions of carbon dioxide (CO2) and other air pollutants 

from this source category.

Commenters stated thus, the EPA has reasonably concluded that: (i) states may include such 

programs as part of a proposed system for reducing carbon pollution from existing power plants 

under section 111(d) of the CAA, and (ii) EPA must account for achievable emission reductions 

from such programs when setting the stringency of its emission guidelines for existing power 

plants.

Commenters stated end-use EE programs can deliver low-cost reductions in carbon pollution 

from the power sector as well as a variety of economic, social and environmental co-benefits. 

Commenters stated in a recent study, the NRDC found that the deployment of EE programs 

could significantly reduce the cost of meeting CO2 emissions standards for existing power 

plants. Commenters stated that according to NRDC's analysis, states could use a combination of 

EE programs and other control measures to reduce nationwide CO2 emissions from the power 

sector by approximately 26 percent over 2005 levels in 2020 and 34 percent in 2025 without 
15

imposing unmanageable costs on regulated power plants. In addition, commenters stated NRDC 

found that the direct economic savings from widespread efficiency improvements would offset 

the costs of implementing these measures by 2030, and the value of societal benefits generated 

from such improvements could reach $60 billion in 2020, as much as 15x the cost of compliance. 

Commenters stated NRDC's analysis also indicated that the inclusion of EE measures in a 

section 111(d) program would reduce wholesale electricity prices by approximately 4 percent as 

compared with a reference case. Commenters stated meanwhile, EE improvements in households 

and businesses would reduce electricity consumption, lowering electricity bills and emissions at 

the same time. Commenters stated recognizing these and other benefits, clean air agencies, 

regulatory utility commissions and state energy officials across the nation have expressed 

support for the inclusion of EE programs among the mechanisms that state regulators can use to 

reduce carbon pollution from existing power plants under section 111(d).

Commenters stated end-use EE programs can deliver low-cost reductions in carbon pollution 

from the power sector as well as a variety of economic, social and environmental co-benefits. 

Commenters stated in a recent study, the NRDC found that the deployment of EE programs 

could significantly reduce the cost of meeting CO2 emissions standards for existing power 

plants. Commenters stated that according to NRDC's analysis, states could use a combination of 

EE programs and other control measures to reduce nationwide CO2 emissions from the power 

sector by approximately 26 percent over 2005 levels in 2020 and 34 percent in 2025 without 

imposing unmanageable costs on regulated power plants. In addition, commenters stated NRDC 

found that the direct economic savings from widespread efficiency improvements would offset 

the costs of implementing these measures by 2030, and the value of societal benefits generated 

from such improvements could reach $60 billion in 2020, as much as 15x the cost of compliance. 

Commenters stated NRDC's analysis also indicated that the inclusion of EE measures in a 

section 111(d) program would reduce wholesale electricity prices by approximately 4 percent as 

compared with a reference case. Commenters stated meanwhile, EE improvements in households 

and businesses would reduce electricity consumption, lowering electricity bills and emissions at 

the same time. Commenters stated recognizing these and other benefits, clean air agencies, 

regulatory utility commissions and state energy officials across the nation have expressed 

support for the inclusion of EE programs among the mechanisms that state regulators can use to 

reduce carbon pollution from existing power plants under section 111(d). 

Commenters stated the EPA has reasonably concluded that EE programs may constitute part of 

the BSER established by a state to reduce carbon pollution from existing power plants in 

accordance with section 111(d).

Commenters stated that Arizona passed an Energy Efficiency and Resource Standard in 2010 

that requires electric utility companies to reduce overall energy usage by 22 percent by the year 

2020 through the implementation of EE measures at homes and businesses. Commenters stated 

Arizona can be proud that, as the result of these standards, the state is now 4th best nationally in 

the amount of EE accomplished by the electric utilities and their customers. Commenters stated 

that Kris Mayes, former Chairman of the Arizona Corporation Commission, reports that since 

the standards were adopted, businesses and consumers saved more than half a billion dollars, and 

enough electricity has been saved to power 133,000 homes. Commenters stated EE measures are 

the most widely available and cheapest options for reducing carbon emissions. Commenters

stated this option reduces electricity systems costs and results in lower bills for utility customers.
16

Commenters strongly supported the proposed EPA Standards for EE. Commenters stated the 

strategies to achieve EE are cheaper than the investments that are required to convert power 

plants to cleaner-burning fuel. Commenters stated according to Ms. Mayes, it is five to ten times 

cheaper to save energy than it is to generate it from new power plants. Commenters stated 

increased EE also will result in lower demand for electricity, and reduced carbon pollution along 

with lower utility bills for customers. Commenters stated EE benefits local economic 

development by creating new jobs and spurring technology innovation. Commenters stated 

another economic benefit is that when consumers pay lower electric bills, the money in their 

pockets will be spent in the local economy. Federal and state incentives should be established to 

promote rapid implementation.

Commenters stated EE is the least cost resource for state compliance with the Clean Power Plan. 

As such, Commenters supported the inclusion of end-use EE as a building block. Commenters

stated DSM efficiency programs in many states have a long history of providing energy savings, 

lowering utility bills, and reducing emissions through avoided generation. Commenters stated 

DSM end-use EE programs can be a critical tool to assist states in meeting the emission 

reduction standards set in the proposed rule.

Commenters stated Building Block 4 consists of reducing demand for generation through 

policies to improve demand-side EE, which results in CO2 reductions. Commenters strongly 

supported including an EE contribution as an element of the BSER. Commenters stated that 

California and its electric utilities have a long history of implementing EE programs and 

believed, as the EPA acknowledges, that EE is a proven practice for reducing CO2 emissions as 

well as customers' electric bills. Commenters stated that California's aggressive work to reduce 

CO2 emissions through EE has resulted in relatively flat per capita electricity consumption in the 

state over the last 30 years.

Commenters stated they were pleased that EPA included the use of EE measures as one element 

of the overall emission reduction portfolio or building block approach. Commenters applauded 

the agency's encouragement of states to include end-use EE in their compliance plans.

Commenters supported the inclusion of EE resources as an effective way to reduce load and 

therefore carbon emissions from fossil-fueled EGUs. Commenters stated they first implemented 

its Iowa EE program in 1994, and MidAmerican's plan was reviewed by EPA in the development 

of the proposed rule. With its two decades of successful EE plan implementation, resulting in 

significant cost savings to customers, Commenters stated they carefully examined how EE is 

utilized in the development of state 111(d) targets. Commenters recommended EPA recognize 

the importance of EE in reducing greenhouse gas emissions and clarify how states may utilize 

EE resources for compliance purposes.

Commenters supported the current proposal to credit a range of efficiency programs including 

both utility and non-utility programs, as long as all measures include the same standards for 

EM&V. Commenters recommended a wide range of programs including behavioral programs, 

financing programs, city programs, and other voluntary programs should be credited in state 

plans. Commenters further recommended increased compliance with building codes (0.87 

percent per year in 2030) should be included in the potential emissions reductions in the BSER 
17

for Block 4 and both increased compliance and adoption of updated building codes by states and 

local governments should be credited in state plans. 

Commenters stated the least cost pathway to compliance with the rule will be increased 

deployment of renewable generation and EE, including demand response (the term "demand 

response" as used in this letter necessarily excludes fossil fuel-powered demand generation,

which is sometimes included in demand response programs). Commenters stated Building 

Blocks 3 and 4 are critical to EPA's approach under either alternate structure, in order to properly 

incentivize development and use of renewable energy sources and EE resources.

Commenters stated that in Building Block 4, EPA understates the achievable annual savings 

from EE. Commenters stated as EPA acknowledges, EE has been shown to be significantly 

lower in cost than electric generation. Commenters stated while the proposed rule itself discusses 

the numerous tools available to states to enhance EE, such as building energy codes, state 

appliance standards, tax credits, and benchmarking requirements for building energy use as part 

of the complementary mix of EE efforts, the savings rate target appears to include only 

traditional EE programs. Commenters stated moreover, the proposed rule assumes relatively 

limited and moderate growth in these programs despite their demonstrable success and their 

status as the least-cost option. Commenters stated the rule also overstates the cost of EE 

implementation and includes too slow an implementation rate for expansion of EE efforts in 

states. Commenters stated the final rule must take into account achievable savings from 

complementary efficiency efforts as well as EE programs, must project a faster implementation 

rate for EE efforts, and must reflect realistic cost data for EE. Commenters stated it is also 

important that the final rule reflect a formula that adequately counts the effects of renewable 

generation and EE on fossil generation, as proposed in the October 27, 2014 Notice of Data 

Availability.

Commenters stated end-use EE programs are critical for 111(d) success. Commenters were

pleased to see that the EPA's fourth building block aims at using electricity more efficiently, or 

reducing the growth rate of electricity demand via various efficiency measures. Commenters

stated their goal is to become the most efficient energy user among food manufacturers. 

Commenters stated they are making steady progress toward our target of reducing energy 

consumption in every product category, to achieve an overall reduction of 25 percent per metric 

ton of product by next year, compared with a 2005 baseline. Commenters stated they have 

reduced our global energy consumption by 22.6 percent since 2005, per metric ton of product. 

Commenters stated their approach includes using energy more efficiently, switching to cleaner 

fuels, and investing in renewable energy sources.

Commenters stated they have implemented a substantial number of EE projects across our 29 

retail water bottling facilities and our corporate headquarters. In addition to our corporate 

headquarters certification as a U.S. Green Building Council Leadership in Energy and 

Environmental Design (LEED) Gold building, commenters stated they operate 10 LEEDcertified bottling facilities. Across the supply chain, commenters stated their EE projects include 

establishing an energy and water efficiency tracking system at several of our plants Piloting an 

energy efficient lighting program in 2012 at one of our Nestle Waters Direct facilities in 

Connecticut. Commenters stated this lighting project alone avoided more than 70,000 lbs/CO2, 

saving about 100,000 kilowatt hours (kWh) of electricity each year--which is equivalent to 
18

saving 51,603 pounds of coal and 6,637 gallons of oil, and providing nearly 13 homes with 

electricity for a year. Commenters stated they are rolling out this efficiency program across our 

direct facilities saving money, energy and reducing GHG emissions.

While many of our EE projects are simple and low-cost, commenters stated they are achieving 

significant CO2 benefits. From powering down garage lamps during daylight hours, to installing 

timers on bottled water refrigerators, to better optimizing existing occupancy sensors, to 

swapping incandescent exit signs for LEDs, commenters stated their EE projects are saving over 

208,000 kWh and 80 metric tons (MT) of CO2 per year, and approximately $127,000 in 

electricity costs. Commenters stated their Purina headquarters has saved enough energy over the 

past eleven years through its energy management program to offset one year's use and cost of 

electricity.

Commenters supported the establishment of context-specific goals for each state and for 

allowing flexible options for states to meet their requirements. Commenters believed that EPA's 

proposed use of the "four building blocks" approach will achieve greater carbon emission 

reductions at a lower cost than simply reducing emissions from the affected Electric Generating 

Units (EGUs). Commenters were particularly supportive of EPA allowing states to use decreased 

demand resulting from EE work to meet their requirements. We know that in Philadelphia more 

than 60 percent of carbon emissions from EGUs are generated to provide energy for buildings. 

Commenters stated the City's building energy benchmarking program has helped identify the 

large magnitude of potential carbon emission reductions from EE improvements.

Commenters stated the Agencies' comments in this section do not seem to be in line with what 

Nevada has already shown it is capable of and what other southwestern states are doing when it 

comes to EE opportunities. Commenters stated for example, the agencies cite the relative youth 

of Nevada's housing stock, noting that half of the homes in the state are less than 20 years old. 

Commenters stated to be clear, there are still many opportunities to upgrade newer housing 

stock, especially in the Las Vegas valley, where homes were built very quickly in the last two 

decades, but even if you grant that there are little to no opportunities in newer housing, half of 

the housing in the state is ripe for upgrades, and the residential sector is only one part of the 

market.

Commenters stated the reality is, Nevada used to be a leader in the region on efficiency 

measures, but has recently fallen behind, even though there are still plenty of great opportunities. 

Commenters stated the agencies imply a negative impact on consumers and the economy, but EE 

improvements are known to reduce ongoing consumer costs and support the local economy 

(based on research related to many programs, for each program dollar spent there is typically a 

$5-10 impact on the local/regional economy). Commenters stated in fact, a 2012 study, "The $20 

Billion Bonanza" report by the Southwest Energy Efficiency Project, illustrated that by putting 

"best practice" utility energy saving programs in place, using off the shelf technology, Nevada

could save a net $3.4 billion on their utility bills as a result of 11 years of investment in best 

practice EE programs, cut electricity use at the end of this period by 22 percent, cut peak demand 

by 21 percent, reduce CO2 emissions by nearly 4.4 million metric tons per year, and support 

4,680 new jobs.
19

Commenters stated there are many other studies that contradict the view of the agencies that EE 

is too costly. Commenters stated one was published in early 2014 by the ACEEE, "New Report 

Finds Energy Efficiency is America's Cheapest Energy Resource." Commenters stated another, 

recently published by LBNL, found the cost of many efficiency measures to be well under two 

cents/kWh considering only utility costs, and under five cents per kWh considering both utility 

and program participant costs. Commenters stated by maximizing investment in both utility and 

non-utility EE programs, Nevada can meet the proposed targets with net economic benefits for 

consumers and businesses in the state.

Commenters appreciated the opportunity to provide these comments to the EPA and hope that 

they are helpful as you move forward on the Clean Power Plan. Commenters stated it is 

unfortunate that the Nevada Agencies have chosen to use this unique opportunity to argue that 

our state should be required to do as little as possible when development of our clean energy 

economy would be such a net positive for Nevada's residents. Commenters indicated their state 

was blessed with world-class renewable energy resources, and there are great opportunities to 

help consumers save money on their bills by improving EE. Commenters stated the public policy 

in Nevada is squarely in the direction of reducing pollution. Commenters hoped that the final 

rule will set ambitious goals that will allow our state to continue to lead the country in pollution 

reduction.

Commenters stated EE is a least-cost resource; in a vast majority of situations, it costs less to 

save a kilowatt-hour than it does to produce that kilowatt-hour, a conclusion drawn by the 

American Council for an Energy-Efficient Economy and Lawrence Berkeley National Labs, 

among others. Commenters stated this value is even more pronounced when the full accounting 

for the lifecycle costs of coal and other fossil fuels are taken into account. Commenters stated 

encouraging EE could yield millions of jobs, which would be welcome news in Arizona, where 

the current unemployment rate is higher than the national rate. Commenters stated an updated 

analysis of the Clean Power Plan shows that increased reliance on EE and renewables will allow 

for compliance savings rather than compliance costs and allow for more than an additional 100 

TWh of energy savings with EE. By replacing the conservative estimates of EE costs with realworld data obtained by Lawrence Berkeley National Labs, commenters stated it is possible to 

implement the Clean Power Plan while simultaneously providing savings for ratepayers. 

Commenters stated implementing the Clean Power Plan such that savings are realized would be a 

tremendous boon to low-income ratepayers, not only in the effort to reduce climate impacts but 

also in the overall reduction in utility costs.

Commenters stated EPA should include all available EE opportunities in its analysis.

Commenters stated EPA should include EE (building block four) and noted EE has long helped 

in meeting energy demand in the United States. Commenters stated the ACEEE estimates that 

since 1970, about three-quarters of the new demand for electricity has been met by EE rather 

than energy generation, and at least 25 states have voluntarily adopted and funded long-term 

binding EE resource standards (EERS). Commenters stated these standards help states reduce 

power demand, thereby reducing generation, providing economic, environmental, and public 

health benefits.
20

Commenters fully supported EPA's inclusion of EE in the rule. Commenters stated a robust 

BSER should include all cost effective and proven emission reduction approaches, and the 

utilization of EE is consistent with that goal. Commenters stated the ACEEE has studied EE 

programs throughout the nation, and has reaffirmed in a recent report that EE is two to three time 

more cost effective than other traditional power generation technologies. As reviewed in the 

TSD, Commenters stated there is certainly ample evidence that EE, through programs operated 

throughout the 50 states, has been adequately demonstrated to provide cost effective GHG 

reductions. Commenters supported the additional recommendations referencing EE by other 

commenters.

Commenters supported the use of existing state- and utility-led EE programs. Commenters stated 

these mechanisms help to provide a long-term signal to the market of the importance of EE. 

Commenters encouraged the EPA to build on these existing programs.

Commenters supported the inclusion of EE and renewable energy in the CPP as cost-effective 

and necessary Building Blocks for a BSER. Commenters provided Figure 1 that shows the 

levelized costs for each renewable source and that EE is the most cost-effective form of 

electricity savings and wind energy is now cheaper than natural gas. Commenters stated EPA 

should emphasize model components facilitating state deployment of renewable energy and 

demand-side EE.

Commenters stated improving EE reduces demand for power generation and emissions. 

Commenters stated demand-side management can reduce demand at key time periods, avoiding 

peaks in power generation that would otherwise require fossil plants to ramp up and increase 

emissions.

Commenters stated EE is a low-risk, low-cost energy resource that provides direct savings to 

consumers, encourages investment across other sectors of the economy, displaces the need for 

costly investments in new energy supply infrastructure, creates new employment opportunities, 

and reduces emissions of CO2 and other harmful pollutants. Commenters indicated States are 

increasingly recognizing the value of EE as an energy resource and adopting policies to facilitate 

its deployment. In 2013, commenters stated eight of the top 10 states identified in the ACEEE's 

2013 State Energy Efficiency Scorecard had adopted binding EE resource standards. 

Commenters stated West Virginia does not have an EE resource standard and ranked #46 in the 

Scorecard.

Commenters stated West Virginia utilities currently offer consumers very few EE programs 

compared to those offered by the same utilities operating in other states. Commenters stated for 

instance, in 2009, the West Virginia Public Service Commission (PSC) approved the FirstEnergy 

subsidiaries' plan to achieve a cumulative EE savings of 0.5 percent over five years, or 0.1 

percent per year. Commenters stated FirstEnergy subsidiaries in neighboring Pennsylvania are 

achieving much higher levels of savings, at 1 percent per year. Commenters stated the Clean 

Power Plan recognizes the potential for EE to provide significant GHG emission reductions from 

the power sector. As applied to West Virginia, commenters stated the BSER assumes West 

Virginia can avoid 10.71 percent of in-state electricity consumption by 2030 through EE. 

Commenters stated under this scenario, EE would contribute 17 percent of the state's emission 

reduction goal.
21

Commenters stated EE savings above the level projected by EPA would provide additional 

emission reductions and added benefits to consumers. Commenters stated the Center supports 

EPA's inclusion of EE as part of the BSER and urged EPA to use the most up-to-date EE 

projections and costs when estimating the potential for EE as part of the BSER. Based on EE 

savings that utilities operating in West Virginia are achieving in surrounding states, in 

conjunction with estimates provided by ACEEE, commenters stated the Center's analysis 

indicates that West Virginia's could likely achieve cost-effective EE savings of 18 percent by 

2030. Commenters stated that tapping into West Virginia's vast EE potential will be central to 

West Virginia's ability to meet the proposed emission reduction targets, provide West Virginia 

residents and businesses more control over their energy consumption, will lower their electric 

bills, and will make West Virginia a more attractive state for business to locate.

Commenters stated EE is often called the "fifth fuel" and is a win-win for emissions reduction 

and consumer savings. Commenters stated the inclusion of EE as one of the building blocks for 

compliance with the proposed rule provides tremendous opportunity for states to reduce 

emissions at an affordable cost. Commenters stated in many cases, as noted in a Synapse report 

titled "Unleashing Energy Efficiency," EE is a "no regrets" policy that would save utilities and 

consumers money regardless of emission reduction targets.

Commenters stated many of the states that have the highest emission levels of carbon pollution 

also have the most inefficient electricity utilization and delivery. Commenters stated in fact, ten 

of the states in the top 25 highest carbon emissions from electricity rank in the bottom third of 

ACEEE's state rankings for EE. Commenters stated this means that states with the most room 

for improvement have a vast and affordable resource to cut emissions before they even look to 

the other building blocks.

Commenters stated investments in EE put downward pressure on rates by avoiding capital and 

operating costs for decades to come. Commenters stated that accounting for these lasting benefits 

is important for states to make sure they are investing in cost-effective EE and including all the 

benefits in allocating program investments. Commenters stated one way to account for the 

benefits of EE is to use a rubric such as the Resource Value Framework, which helps any state 

determine if an efficiency program is cost-effective by identifying costs and benefits to the 

utility, participants, and the public over a time frame within which these costs and benefits are 

likely to occur.

Commenters strongly supported the use of EE programs as part of states' efforts to achieve 

compliance with their targets. Commenters stated EE is widely recognized as the least-cost 

electric system resource, rather than imposing new expenses for the state to come into 

compliance, customers will actually experience lower bills if the state's plan includes a strong EE 

component. Commenters stated EPA has stated that to count towards compliance, each part of 

the emission standard, including EE, must be quantifiable, non-duplicative, permanent, 

verifiable, and enforceable. Commenters stated for EE, these criteria can be interpreted generally 

as follows:

• Non-duplicative: Is another state also using those same avoided megawatts hours 

or avoided emissions towards their compliance with the Clean Power Plan?
22

• Permanent: Are the savings from an installed measure ongoing during the year in 

which the state seeks to use them for compliance?

• Enforceable: is there an entity with federally enforceable commitments to 

procuring EE savings? 

Commenters stated EPA's proposed rule, technical support documents, and existing guidance do 

an excellent job of describing how EE meets these criteria.

Commenters stated EE is "Adequately Demonstrated." Commenters stated demand side EE 

programs have a long record of achieving energy savings. Commenters stated customer-funded 

EE programs provided by electric utilities have existed since the 1970s, and utility sector EE has 

evolved to become a top priority utility system resource." Commenters stated several states have 

established policies that mandate EE as first resource in the loading order of electric utility 

resources, as well as requirements that states should capture "all cost-effective energy efficiency." 

Commenters stated 26 states have adopted EERS that establish specific energy savings targets 

for utilities or independent statewide program administrators, while several others have 

established short-term EE goals.

Commenters stated that since the early 2000s, EE programs have grown at an accelerated rate. 

Commenters stated in 2006, total spending was $1.6 billion; by 2010, total budgets for electric 

customer EE programs grew to $4.6 billion; and in 2013, total budgets for these programs 

reached $6.3 billion. Commenters stated these expenditures are yielding significant energy 

savings. In 2009, the national total annual savings from these programs were 13,147 TWh or 

almost 0.4 percent of total energy sales, with five states saving 1 percent or more during that 

year. Commenters stated funding for customer EE programs is expected to continue rising, 

particularly in those states that have been minor players in this industry. Commenters stated a 

large portion of these projected increases in spending are expected to come from the Southeast, 

which historically has had relatively low levels of funding for EE.

Commenters stated EE is becoming increasingly important because of concerns with fuel price 

volatility, increased cost of construction of new power plants and doubts about the ability to 

finance and secure cost-recovery of these projects; shrinking reserve margins leading to 

reliability questions; and more stringent environmental regulations, including regulations to 

reduce carbon emissions to address climate change. Commeneters stated energy efficiency is 

now also being used as a competitive resource. Commenters stated for example, in New 

England, EE can compete in the forward capacity market, and FERC is analyzing how to 

incorporate EE in wholesale markets. Commenters stated EE is also being used specifically as a 

greenhouse gas reduction strategy. Commenters stated the RGGI includes explicit provisions for 

credits for EE that generate funding for EE savings. Commenters stated this track record 

provides valuable insights on the future potential of EE as a resource and as a carbon reduction 

option.

Commenters believed EPA should consider incorporating grid efficiency upgrades in the EE 

measures permitted under Block 4. Commenters stated fuel switching and co-firing can reduce 

emissions at individual units, and EPA should include those measures in its BSER calculation for 

Block 1 if they will be allowed for compliance. Commenters stated however, EPA should neither 
23

include new NGCC capacity in computing state targets nor should it allow states to rely on new 

NGCC units for compliance. Commenters stated it may be appropriate to exclude certain 

measures that would reduce emissions from the BSER calculation based on a robust analysis of 

cost and energy requirements, while still allowing those measures to count for compliance if 

states or affected sources choose to invest in those measures. Commenters stated that is the 

exception, however. Commenters stated as a general matter, the symmetry principle should 

control: if a measure is available for compliance, it should be included in the BSER calculation.

In order to reduce carbon emissions and the demand for power, commenters stated they needed 

EPA to support truly safe, clean, and low-emission means of energy production, such as solar, 

wind, and geothermal as well as conservation and efficiency efforts as a way to reduce carbon 

emissions.

Commenters appreciated the opportunity to comment, and supported the use of Building Block 

4, demand-side EE for state CPP compliance. Commenters stated EE is the lowest cost resource 

available to states to comply with the EPA's CPP, and states should maximize the use of EE in 

their compliance plans. Commenters stated this is particularly true in the Southeast, where SACE 

focuses its efforts. Commenters stated the Southeast has the lowest incomes on a national basis, 

but the highest percentage of income going to utility bills. By investing in EE, commenters

indicated states reduce carbon pollution, lower utility bills, create jobs and grow their local 

economy.

Commenters stated that in 2013, the South accounted for 43 percent of U.S. energy consumption 

and 43 percent of U.S. electricity consumption, but only 36 percent of the nation's population 

and only 35 percent of the U.S. GDP. Commenters stated thus, the region has high ratios of 

electricity per capita and per GDP relative to the rest of the U.S. 

Commenters stated the industrial sector in the South uses 73 percent more electricity than the 

national average to generate one unit of GDP. Commenters stated this is partly due to the 

region's higher-than-average share of electricity-intensive industries such as metals, textiles, 

paper products, and chemicals. Commenters stated the commercial and residential sectors in the 

South are also more energy intensive than the rest of the nation. Commenters stated this is partly 

because buildings in the South rely more on electricity and less on natural gas for space heating 

than the rest of the nation. Commenters stated these high levels of energy intensity also reflect 

the region's inefficient use of electricity. Commenters stated the ACEEE has ranked most 

southern states amongst the lowest third in the nation based on their EE policies and 

performance. Commenters stated the evidence of energy inefficiency in the South is 

overwhelming. Commenters stated for instance, sales data suggest a low market penetration of 

energy-efficiency products in the South. Commenters stated that for each of the ENERGY STAR 

appliances with sales data that are tracked by EPA - air conditioners, clothes washers, 

dishwashers, refrigerators, and water heaters - the South has the lowest rates of market 

penetration. 

Commenters stated evidence of weak EE policies is ample. Commenters stated twenty U.S. 

states have EERS and only two of these are in the South. Commenters stated EERS are one of 

the strongest EE policies. Commenters stated 16 states have implemented policies to "decouple" 

electricity profits from sales, but only two of these are in the South. Commenters stated 
24

decoupling or similar rate reforms are needed because current ratemaking procedures encourage 

utilities to increase electricity sales and discourage them from promoting EE and distributed 

generation, which reduce sales. Commenters stated utilities in the South spent $7 per capita on 

electric efficiency programs on 2012, while the average expenditure across the nation is $19: 

Louisiana spent less than $1 per capita and Georgia spent $3, while Arkansas spent $17. 

Commenters stated by "energy efficiency" they do not mean cold showers and warm beer. 

Commenters stated they mean getting more energy services out of the energy you consume, with 

high-efficiency fluorescent bulbs and solid state lighting, smart thermostats and building control 

systems that save energy by strategically idling equipment when it is not needed, variable speed 

motor and drive systems, and energy upgrades to industrial plants including combined heat and 

power systems that minimize energy waste.

Commenters strongly supported the EE measure. Commenters stated it only makes sense to 

make wise use of our limited resources and to conserve them for future generations. Commenters

suggested that significant gains could be made by supporting programs that help low-income 

citizens weather-proof and update their homes or to explore alternate sources of heat/energy. 

Commenters stated for example, the Band has used grant money to install a number of solar air 

heating systems on Reservation homes and has found that they perform very well, and they 

provide a clean, reliable source of heat and reduce problems resulting from propane price spikes 

and shortages.

Commenters stated EE has clearly demonstrated its reliability, efficacy, and cost effectiveness. 

Commenters stated in fact, EE is the most readily available and least expensive way to reduce 

our dependence on fossil fuels and to meet energy capacity needs. Commenters shared 

excerpted sections from a recent IEA report which described the viability of EE. Commenters

stated another recent report by the ACEEE was based on a study to assess the costs of EE 

programs and cost effectiveness of those programs from 2009 to 2012. Commenters stated the 

study reviewed EE programs in 20 states. Commenters stated the finding was that each dollar 

invested by utilities and participants in EE measures yields $1.24 to $4.00 in benefits. In 

summary, commenters stated the study concluded "the results of this analysis clearly 

demonstrate that energy efficiency programs are the least-cost resource option available to 

utilities. Electricity efficiency programs, at a range of about 2 to 5 cents per kWh and an average 

of 2.8 cents per kWh, are about one half to one third the levelized cost of alternative new 

electricity resource options." Commenters stated RE and EE clearly meet every aspect of the 

definition of best system of emission reduction. Commenters stated therefore, the Clean Power 

Plan should place more emphasis on these alternatives. Commenters stated furthermore, the 

Clean Power Plan should factor in these alternatives more vigorously in setting the carbon 

reduction goals for the states.

Commenters stated EPA should retain EE as one of the Building Blocks included as BSER. 

Commenters stated numerous studies show that EE measures are one of the most cost-effective 

ways to reduce emissions from the electricity-producing sector. Commenters stated further, those 

customers who participate in EE programs and measures enjoy lowered electricity bills. 

Commenters stated as New Mexico has one of the highest poverty rates in the country, especially 

in rural areas, cost to consumers (as well as industry) is an important consideration.
25

Commenters indicated their States have a record of successfully reducing emissions through the 

use of demand-side EE measures. Commenters indicated that State EE programs cost-effectively 

reduce carbon pollution emissions or avoid pollution increases by reducing demand for 

generation, while also lowering energy costs for consumers. Commenters cited several 

examples:

• Maryland achieved a 14.6 percent reduction in peak electricity demand from a 

2007 baseline, equivalent to avoiding one coal power plant, and has established a 

goal of reaching a 15 percent reduction in per capita energy consumption by 

2015;

• EmPOWER Maryland has offset 1.3 million metric tons of CO2 emissions, has 

funded measures that will reduce ratepayer electricity use by more than 2 million 

MWh per year and save $250 million annually, savings are projected to continue 

for years, with currently existing measures saving ratepayers $3.7 billion over 

their useful life;

• Massachusetts projects that its investment in EE from 2005 through 2015 will 

reduce electricity demand by 17.1 percent and reduce emissions by 3 million tons 

of CO2 in 2015;

• Our states have successfully tailored these efficiency programs to reach rural 

consumers, residents of low-income housing, and other under-served 

constituencies.

Commenters noted examples of tailored programs that include:

• Massachusetts' statewide EE program covers low-income residents that live in 

both single and multi-family homes, as well as new construction of low-income 

housing, in 2013 the low-income program reported over $33 million in electric 

benefits and over $92 million in benefits from all energy sources, the Efficiency 

Neighborhoods+ initiative, which began in 2013, will provide significant energysaving benefits to low- and moderate-income residents in designated urban 

neighborhoods, often with older housing stock;

• Minnesota's Conservation Improvement Program (CIP), which set EE goals for 

utilities, includes a requirement that utilities spend a minimum of 1.5 to 2 percent 

of annual gross operating revenues on efficiency programs, at least 0.2 percent 

must be spent on programs to serve low-income customers;

• Vermont's Manufactured Housing Innovation Project is a pilot project to develop 

new, energy-efficient manufactured homes to respond to the loss of homes during 

Tropical Storm Irene and to increase the supply of quality affordable housing, 

using advanced EE technology, these homes are projected to use only 29 percent 

as much energy as a typical mobile home, minimizing monthly energy costs and 

making the homes more affordable overall. 
26

Commenters stated that at least six of their states achieved incremental annual savings of greater 

than 1.0 percent of retail sales in 2012 (ME, VT, CA, CT, MN, and OR); two achieved savings 

rates of at least 1.5 percent (ME and VT); and seven of our states have policies in place that 

require incremental savings of 1.5 percent of retail sales on or before 2020 (IL, MA, MN, NY, 

RI, VT, and WA).

Commenters stated EE is truly the least expensive fuel, and that even without accounting for 

avoided emissions, our efficiency programs deliver lifetime cost savings that far exceed their 

implementation costs - currently, for every dollar invested in EE, we see a return of more than 

three dollars over the life of the projects. Commenters hoped that the many states that continue to 

under-invest in efficiency will consider greatly expanding those programs.

Commenters noted that the EPA and others have also documented the even broader range of 

benefits that energy efficiency offers, such as locally sourced jobs, increased productivity, 

heightened comfort, higher property values, reduced price volatility, and greater energy security. 

Even without monetization of all those additional benefits, commenters noted that many analyses 

have documented the cost-effectiveness of energy efficiency and shown the potential for 

efficiency to dramatically reduce the costs of achieving given levels of carbon reductions. 

Consistent with the EPA's observations in the draft rule, commenters noted that many analyses 

have found that high levels of energy efficiency, paired with high levels of renewable energy, 

can reduce costs or even produce consumer savings, with gains from efficiency offsetting any 

rate increases from other measures.

According to commenters, the economics and potential of energy efficiency are such that the 

data support energy efficiency playing a much larger role in achieving the goals of the Clean 

Power Plan than currently proposed, and more inclusive assessments of efficiency costs and 

opportunities would allow the EPA to set stronger state targets. As an example, commenters

cited an analysis by the American Council for an Energy-Efficient Economy (ACEEE), which 

showed that energy efficiency alone could achieve CO2 reductions of 26 percent below 2012 

levels by 2030--at no net cost to the economy.

Commenters stated the nucleus of the EE industry already exists and can easily ramp up. 

Commenters stated Georgia has over 4,000 people employed in improving EE, according to the 

2013 Southeast Clean Energy Industry Census. Commenters stated businesses will put people to 

work locally, not overseas, in meaningful jobs with translatable skills. Commenters stated 

improving EE in buildings and homes in Georgia can be a major component of the Clean Power 

Plan. Commenters stated this is a grand opportunity to reduce carbon emissions while creating 

jobs, saving citizens money, and growing businesses like mine.

Commenters stated EE should be a mandated building block, not just one available option. 

Commenters indicated States should meet the new standards through renewable energy and 

efficiency because this is the fastest, cleanest, and most cost-effective path. Commenters

indicated States can meet the targets without increasing use of dirty and dangerous energy 

sources like nuclear or natural gas. Commenters stated this can all be done while decreasing 

overall costs to customers and the public.
27

Commenters stated the economic, environmental, and health costs of nuclear energy, from cradle 

to grave, are too costly, EE is the optimal choice for most states. Commenters stated it is the 

cheapest and greenest unit of energy, is the unit of energy that is not used. Commenters stated 

costs are reduced, reduction targets are met, and jobs are created. Commenters stated a recent 

study by the ACEEE finds that the deployment of existing EE policies can help states meet a 

large percentage of their emission reduction targets will creating over 600,000 jobs nationwide.

Commenters were pleased to see that EPA's proposal has a role for EE, which is one of the most 

cost-effective ways to achieve emissions reductions. Commenters stated building codes and 

standards can play an important role in achieving the in-use EE targets outlined in EPA's plan.

Commenters stated that while it's not a silver bullet, broad deployment of EE measures will be 

important to reduce the impact of rising utility bills. Commenters strongly supported EE and 

serves as a resource on this issue for energy consumers, especially in the underserved 

communities. Commenters stated they can't do it alone. Commenters stated EE measures and 

education must be available to small businesses and low- and fixed-income families and 

individuals, because they are the ones that will benefit the most from energy savings.

Commenters stated there are untapped energy-source energy savings almost everywhere you 

look. At the World Trade Center, commenters installed more efficient HVAC and high-voltage 

power distribution systems. There and at many other Port Authority facilities, commenters

changed out old incandescent lights, installed modern tunnel vehicle ventilation systems, 

automated building management systems, automated toll collection systems and a cogeneration 

plant. Commenters stated that at Habitat for Humanity, in Forsythe County in North Carolina, 

every one of the more than 200 affordable homes built in the past few years have met or 

exceeded green building standards, affordable homes. Commenters wanted to assure that 

dramatic energy savings can be achieved by the private sector as well. Commenters stated this is 

being done by progressive for-profit companies across the nation.

Commenters stated it's really important that we take these renewable standards that are presented 

in the plan and the fourth building block, which is EE, and make sure that those are protected,

and eliminate the waste that we have in our society in regards to electricity production, and still 

forward and grow our economy to be strong.

Commenters stated that opponents of the rule will also state the United States is focused more on 

cheap energy. Commenters could not agree more. Commenters urged the EPA to ensure that its 

final rule maximizes the opportunity and incentives for states to comply by investing in EE. 

Commenters stated EE is the cheapest investment utilities can make to meet demand and it also 

happens to be the lowest carbon output alternative available. Commenters stated first and 

foremost states should be capturing all cost effective EE before considering any other 

compliance option.

Additionally, commenters were pleased to see demand side EE listed as a compliance 

mechanism.
28

Commenters urged EPA to call for a greater reliance on EE and renewable energy. Commenters

stated these should be the preferred solutions as states are encouraged to pursue in meeting the 

carbon reduction targets.

Commenters particularly supported provisions of section 111(d) that deal with renewable energy 

and EE. Commenters however, recommended that EE targets be strengthened. Commenters

stated if the EPA would like states to reduce energy consumption cheaply and efficiently, then 

EE is the way to go about it.

Commenters stated the most effective way to reduce carbon pollution and energy bills 

simultaneously is through EE. In their role as Chair of RGGI, Commenters stated saw firsthand 

the massive potential to reduce emissions through EE, and the economic opportunities, 

particularly in our urban communities through investments in EE. Commenters stated the EE 

assumptions in the proposed rule could be strengthened and they should strive to replicate the 

proven successes of many of the aggressive state programs and policies already in place.

Commenters stated the potential for EE to reduce energy demand and avoid carbon dioxide 

emission as well as methane emissions is now well established. Commenters stated for example 

a 2010 report by the National Academy of Scientists found that at 25 to 30 percent energy 

savings for the building sector as a whole could be achieved over the next 20 to 25 years through 

EE measures alone at a cost of just 2.7 cents per kilowatt hours saved. Commenters stated the 

whole building retrofits and advanced building design could result in even more significant 

energy savings.

Commenters stated environmental advocates, including the Clean Air Council, will push to 

ensure that the implementation plan that Pennsylvania submits to EPA ultimately will allow for 

and incentivize EE measures and renewable energy sources as a substantial part of the means by 

which Pennsylvania will meet its carbon reduction requirements. Commenters stated one of the 

challenges in such an effort, however, is the difficulty of adequately and accurately quantifying 

reductions in carbon emissions achieved by EE measures and renewables. Commenters stated 

EPA could aid these efforts by including in the final rule, standards and methods that states can 

use to measure and verify energy savings and emission reductions achieved through such means.

Commenters stated the plan needs to be restructured to make sure that the best compliance 

options are more attractive. Commenters stated EE is the building block that needs to be 

incentivized. Commenters stated benefits are many, including reduced energy use with all of its 

accompanying pollutants, as well as reduced energy cost for users. Commenters stated less 

money spent on energy is money available to spend elsewhere, providing a boost to the 

economy. Commenters stated EE programs from demand side reduction to building envelope 

improvement are inexpensive to implement and create jobs that cannot be outsourced.

Commenters urged the EPA, as it develops it section 111(d) guidelines, to tap into the existing 

EE policies and programs and even expand on those. Commenters stated that doing so would be 

a win/win/win for the state of Colorado. Commenters stated it would save consumers millions of 

dollars, even if rates go up they would still save money because they would significantly reduce 

their energy consumption. Commenters stated it would increase business revenue which would 

create thousands of jobs. And it would also reduce millions of metric tons of carbon emissions. 
29

Commenters stated it would meet EPA's goal and help the state significantly. Commenters urged 

EPA to make EE a key component of your guidelines as you move forward and please remember 

that they are here to assist EPA offered contact information.

Commenters applauded the administration for this important effort to regulate carbon emissions, 

and for the recognition in the rule that EE should be part of the answer to carbon reductions.

Commenters served as the Energy Committee Chair for the Western Chapter of the Sierra Club. 

Last year Commenters put together a report conducted by Optimal Energy which identified as 

much as five to 6,000 jobs per year created through investments in EE by our utilities. Having 

reviewed EPA's Clean Power Plan, commenters urged EPA to increase the EE component of 

those four building blocks. Commenters stated it is the best way to reduce electric power bills 

and create jobs, and clean up the environment.

Commenters supported this Clean Power Plan and encouraged EPA to enable and support state's 

deployment of demand side EE to meet the plan's pollution reduction goals. Commenters stated 

EE is the fastest, cheapest, most economically beneficial way to reduce carbon pollution, and 

commenters were pleased that EPA had put forth a plan to reduce carbon pollution and include a 

demand side EE in that efficiency can do more in Pennsylvania than EPA expects, and 

commenters looked forward to helping Pennsylvania achieve the goals set forth by EPA in the 

Clean Power Plan.

Commenters supported Pennsylvania and other states taking advantage of this range of solutions. 

Commenters stated however, demand side EE, using less energy to perform the same energy 

services presents a key area that can support our economy and reduce greenhouse gases. 

Commenters stated Pennsylvania's residents, businesses and industry spend hundreds of millions 

of dollars each year on EE investments because they make business sense. Commenters stated 

but more can be done. Commenters for instance, Rich Selverian, CFO and COO of MaGrann 

Associates, a national company, recently talked about a project his firm had done. Commenters

stated EE can save people and business a lot of money. Recently commenters did a project at a 

321 unit apartment building upgrading equipment that will save the customer an estimated 

$39,000 off their electricity bills and $150,000 off their natural gas bills every year, a percent 

reduction in their electricity bill and percent in their gas bill. Commenters this is real money and 

has the potential to actually positively innovate our economy.

Commenters stated in particular, EE can have a myriad of other benefits from helping support 

field diversity, improve reliability, reducing everyone's customer utility bills, and lastly, it can 

create and has created jobs. Commenters stated that much can be said about all these points. 

Commenters stated submitted written testimony today detailing all of them as well as offering 

some recommendations to EPA on how the proposed plan could be improved.

Commenters supported the Clean Power Plan as a commonsense solution. Commenters 

supported the plan's inclusion of demand side EE as one of the four major pollution reducing 

tools available to the states.

Commenters indicated that RGGI states have asserted, and the EPA has recognized in its 

preamble to the regulations, that the RGGI initiative is an example of the magnitude of cuts that 
30

the EPA should demand from existing sources elsewhere in this country. Commenters cited the 

RGGI comments, as follows:

• "The experience in the RGGI states show that the magnitude of emission 

reductions possible from the power sector have projected 50 percent decline in 

tons of carbon dioxide emissions and from a fossil fuel generation fleet that is 

projected to achieve compliance on par with the recently proposed resource 

performance standards for electric generating units."

• "Between 2005 and 2012, CO2 emission from the power sector in the nine 

participating RGGI states dropped more than 40 percent, from 262.5 million tons 

in 2005 to 92 million tons in 2012. The RGGI states are locking in this reduction 

by reducing the regional cap to 91 million tons in 2014, and reducing it an 

additional 2.5 percent each year thereafter to 78 billion tons in 2020."

• "In 2020, the RGGI emission caps will ensure that the regional emissions are 50 

percent lower than the 2005 emission levels."

Commenters strongly supported the proposed rules to cut carbon pollution from our power plants 

and urged EPA's national move to the alternatives of EE.

Commenters supported the Clean Power Plan as a commonsense solution for energy needs, and 

supported the plan's inclusion of demand side EE as one of the four major tools available to 

states to achieve pollution reduction.

Commenters stated that supports the inclusion of demand side energy efficiency as one of the 

major tools used by states to address pollution reduction and therefore, protect public health.

Commenters recognized that this plan can and must be stronger if we want to see our 

communities become healthier and more prosperous. Commenters therefore, one key to the 

success of the Clean Power Plan is making sure that we take full advantage of renewable energy 

and EE to minimize our reliance on polluting fossil fuels of all kinds, including natural gas. 

Commenters stated the renewable energy and EE sectors are essential to achieving climate 

success and economic prosperity, and we need to fully embrace these pathways to a healthier 

future rather than holding onto the dirty fossil fuels of our past.

Commenters stated the Clean Power Plan not only encourages states and utilities to use less 

carbon-intensive energy supplies, that is, the inside-the-fence approach, but it also encourages 

states and utilities to assist consumers in using less electricity by using it more efficiently. 

Commenters noted that they call that the "outside-the-fence approach." Commenters stated the 

role of this proposed rule, the role this proposed rule may play in creating stronger markets for 

that EE side of the solution in the South. Commenters stated in the year 2013, the South was 

home to 35 percent of the nation's population, but it consumed 43 percent of the nation's 

electricity, a very high intensity, indeed. Commenters stated the region has a great deal of 

demand reduction potential, and the documentation backing up the Clean Power Plan cites the 

commenter's work in justifying the push for EE, because the commenters have completed a lot of 

work to show how cost effective it is. Commenters believed that the documentation and the 
31

Clean Power Plan does not sufficiently reflect the opportunity for efficiency. Commenters stated 

more is actually available than is in the proposed goals for states across the country and 

particularly in the South. Commenters noted the U.S. has poor EE policies. Commenters stated 

20 states have EE resource standards, and only two of these 20 are in the South. Commenters

stated 16 states have decoupled utility profits from sales, but only two of those are located in the 

South. In 2010, commenters coauthored a study with a team of researchers from Duke and 

Georgia Tech, and looked at the potential for EE in the South. Commenters demonstrated, for 

instance, in the State of Georgia alone, an EE potential that could save Georgians $3.8 billion 

annually, if implemented.

Commenters stated the proposed cumulative goals for southeastern states will save 

approximately 10 percent of retail electric sales by 2029. Commenters believed that these goals 

are not only achievable but also fairly conservative compared to the region's full EE potential. 

Commenters believed that maximizing EE impacts is essential for our nation and particularly for 

southeastern states for several reasons.

Commenters stated that number one, end use EE should be available as a means of compliance.

Commenters strongly supported the inclusion of demand side EE as a compliance tool under the 

proposed Clean Power Plan.

Commenters strongly encouraged EPA to treat energy efficiency as a resource that can deliver 

emission reductions in the very near term, with distinct advantages over capital-intensive supplyside projects that can take years to materialize.

Commenters stated that in its findings, ACEEE reports annual technical, economic, and 

achievable potential for electricity and natural gas. The commenters stated that ACEEE, for 

electricity, finds a mean value of economic EE potential of 2.2 percent, and a median of 1.9 

percent. The commenters stated that focusing only on achievable EE potential, ACEEE identifies 

a range of 0.3 percent to 2.9 percent across all geographies studied.

Commenters applauded the EPA for developing the proposed CPP in a manner that identifies the 

least cost methods for reducing GHG emissions in the power sector by accounting for nonemitting sources of generation and energy efficiency.

Commenters noted that Virginia has a large number of federal government infrastructure, giving 

the pentagon and Naval Station Norfolk as examples. The commenters stated that although the 

EPA cannot regulate these buildings under their authority under the CAA, the EPA should 

analyze the energy savings potential of such facilities and provide a guidepost of the level of 

energy savings possible for states should there be favorable policy action and resolution of 

ongoing budget scoring issues. The commenters believed that the federal government should 

lead by example in this area as they set aggressive state goals. 

Commenters noted that EE improvement opportunities are very often identified by plant wide 

studies, however, many states forbid the expenditure of funds on studies without their first being 

tied to a funded capital project. Commenters stated this makes it difficult for plants to determine 

their EE needs, as they would need to perform such a study in order to determine how best to 

spend their money in an efficiency improvement program. The commenters requested that EPA 
32

encourage states to remove this "roadblock" to efficiency improvement efforts and any CO2 

reduction targets.

Commenters supported Building Block 4. Commenters stated that although a number of industry 

observers assert that the Plan requires specific actions by utilities, generators and states, and 

would result in the EPA controlling state and utility operations in an unprecedented manner 

(cited Sue Kelly, President and CEO of the American Public Power Association and Nick Akins, 

the Chairman, CEO and President of American Electric Power, SWEPCo's parent company). 

Commenters believed EPA's goals are modest, particularly for Arkansas. Commenters asserted 

that the proposed rules will not change the grid functions of the regional transmission 

organizations (RTOs), the capacity or energy markets, or state regulation; the RTOs (MISO and 

SPP) will continue to oversee the transmission system, although they may be somewhat busier 

reviewing the changes needed to accommodate retirements of older steam plants, additions of 

renewables, and increased imports. Commenters added that the capacity market in MISO (SPP 

does not have a capacity market) will not be affected, other than that the cost of new entry may

vary, due to changes in market energy prices, and the energy markets will operate as they do 

now, with lower loads (due to energy-efficiency programs), more renewable energy, less coal 

and more gas, and probably with the fossil plants including a regional carbon price in their 

energy bids, as generators in California and New England do now. Commenters also noted 

that state regulation will not change in any fundamental manner. Commenters stated that the 

Arkansas PSC will still review the need and economics of new generation and transmission 

projects in the state, before issuing a Certificate of Public Convenience and Necessity; determine 

whether power-purchase contracts are beneficial before allowing them in rates; determine the 

ratemaking for energy-efficiency programs; and reward or penalize utilities for good or poor 

performance, as it does now; the Arkansas DEQ will still issue permits; and it will just have one 

additional program under which it will issue permits and determine compliance, probably 

through a regional emissions-trading approach similar to that in the Regional Greenhouse Gas 

Initiative.

Commenters supported EE as an emission reduction measure. Commenters stated while the 

specific question of whether energy efficiency measures may be used to help define the "best 

system of emissions reduction" has not arisen in the past, EPA has repeatedly, under 

administrations of both parties, used efficiency measures to facilitate more cost-effective 

compliance mechanisms under the Clean Air Act. (See Jeremy M. Tarr, et. al. 2013. Energy 

Efficiency and Greenhouse Gas Limits for Existing Power Plants) commenters cited the EPA 

under both Presidents George W. Bush and Clinton released a number of guidance documents 

explaining how states could use energy efficiency measures to satisfy their obligations under the 

NOx SIP call. Commenters stated, in these guidance documents, EPA has applied energy 

efficiency approaches in other titles of the Clean Air Act, as well. Commenters said, for 

example, the Title IV Acid Rain Trading Program created a set of credits that would allow 

utilities to earn allowances in the trading program by creating qualified energy efficiency 

programs for consumers. 60 42 U.S.C. section 7651c (f) (2) (A); see David R. Wooley, The 

Clean Air Act Amendments of 1990: Opportunities for Promoting Renewable Energy (Technical 

Report NREL/SR-620-29448, Dec. 11, 2000), available at

http://www.nrel.gov/docs/fy01osti/29448.pdf.)
33

Commenters stated that Building block 4 sets goals for electricity generation savings measures to 

reduce demand for electricity. Commenters said demand side energy efficiency has long been 

recognized as a least-cost means of reducing demand for generation and thereby reducing 

greenhouse gas emissions. (8879 Fed. Reg. 34,871; Tim Woolf et al., Unleashing Energy 

Efficiency: The Best Way to Comply with EPA's Clean Power Plan, 30 Pub. Util. Fortnightly 32 

(Oct. 2014), available at 

http://synapseenergy.com/sites/default/files/Unleashing%20Energy%20Efficiency%2014-

093.pdf) 

Commenters noted that demand side energy efficiency programs currently are administered by 

many states, electric utilities, and third-party administrators, and energy efficiency resource 

standards are in place in over twenty states. 

Commenters continued, stating that for decades, California has enforced an expanding network 

of efficiency standards, which has helped minimize the energy needed to power appliances and 

buildings. (See generally Cal. Energy Commn, Tracking Progress: Energy Efficiency (2013), 

available at 

http://www.energy.ca.gov/renewables/tracking_progress/documents/energy_efficiency.pdf.) 

Energy savings are projected at nearly 70,000 GWh in 2013 alone. (Id.) Commenters said the 

California Energy Commission estimates that these efficiency standards have generated $74 

billion in savings for California consumers over the last several decades. (See Id.) Commenters 

stated that energy efficiency is the first resource California looks to as it considers its energy 

needs, and is the first resource considered in procurement proceedings under California's loading 

order. (See generally Cal. Energy Commn, Implementing California's Loading Order for 

Electricity Resources (2004), available at http://www.energy.ca.gov/2005publications/CEC-400-

2005-043/CEC-400-2005-043.PDF) 

Commenters said energy efficiency also is widely recognized as the least cost energy resource. 

Commenters said a study released earlier this year examined the costs of utility-sector energy 

efficiency programs in twenty states over a recent four-year period (2009-12). (Am. Council for 

an Energy Efficient Econ., The Best Value for America's Energy Dollar: A National Review of 

the Cost of Utility Energy Efficiency Programs, at 39-40 (Mar. 2014).) Commenters said that 

study found that energy efficiency cost an average of 2.8 cents per kWh, with a range of 1.6 to 

4.8 cents per kWh. Commenters stated, by comparison, conventional resources cost two to three 

times as much per kWh. Commenters added that the study further concluded that the data show 

that energy efficiency has remained the lowest cost resource over the past decade even as the 

amount of energy efficiency being captured has increases significantly. Commenters concluded 

that demand side efficiency is, therefore, not only cost-effective, it can achieve cost savings for 

end users.

Comment 2: EE for goal, compliance only; EE as option, not mandate

Response 2: The EPA decided to not include DS-EE in BSER in the final CPP. See sections V.A 

and V.B of the final rule preamble of the CPP for details. However, DS-EE remains generally 

available for compliance, as the EPA recognizes that a wide variety of EE measures can be cost-
34

effective emissions reductions strategies which create multiple benefits, including lower electric 

bills, positive investments and job creation. DS-EE programs are being implemented widely 

across the sector and investments are increasing. Energy efficiency measures also continue to 

offer future emissions reductions opportunities. See multiple subsections of section VIII of the 

final rule preamble of the CPP and the Demand-side Energy Efficiency TSD for CPP Final Rule

for details on use of DS-EE for compliance.

The following are summaries of the specific public comments under this comment:

Commenters recommended that energy efficiency measures should be used for compliance 

demonstration purposes only, and not used to determine the emission targets. The commenters

questioned whether Building Block 4 or demand-side energy efficiency projects should be 

included in the determination of BSER because these "affected entities" are not affected EGUs, 

as stated in the proposed rule. The commenters stated that affected entities, including demand 

side energy efficiency projects, should only be allowed in the compliance demonstrations at the 

discretion of owners and operators of affected EGUs. Commenters recommended that energy 

efficiency measures should be used for compliance demonstration purposes only, and not used to 

determine the emission targets. Commenters stated as proposed, Building Block 4 would reduce 

CO2 emissions from each state by increasing demand-side energy efficiency to 1.5 percent 

annually by using energy efficiency improvements. Commenters did not believe that Building 

Block 4, or demand-side energy efficiency projects, should be included in the determination of 

BSER because these "affected entities" are not affected EGUs as stated in the proposed rule. 

Commenters stated that "affected entities," including demand side energy efficiency projects 

should only be allowed in the compliance demonstrations at the discretion of owners and 

operators of affected EGUs. Commenters stated in addition, the evaluation, measurement, and 

verification of energy efficiency projects must be subject to high quality quantification and the 

same enforceability standards as required for affected EGUs under Building Block 1. 

Commenters stated without requisite criteria for accurate quantification and enforceability of 

energy efficiency projects, the integrity of the proposed Section 111 (d) program is further 

compromised.

The commenters stated that they find it implausible that line losses can be reduced by .09%. If 

anything, the commenters stated that because the CPP is likely to drive so many retirements of 

existing coal plants for which the existing transmission grid was designed as to increase line loss.

The commenters stated that at the same time, the potential for additional renewables bringing 

remote wind energy from its source to more populated areas in the east, longer transmission 

equates to greater, not lesser, line loss. The commenters stated that and, according to the MISO 

report on the impact of the GHG Rule, MISO cannot confirm the same reduction in demand 

through increased energy conservation practices and programs as assumed by the USEPA, 

suggesting that reduced demand cannot replace the fossil-fuel generation that will retire due to 

this rule.

Commenters stated EPA cannot restrict the energy efficiency measures that a state might use to 

comply with their state goal to less than what EPA assumed in establishing the state goals using 

Block 4. Commenters stated that while the TCEQ recommends the EPA not include energy 

efficiency assumptions in the state goal calculation, if the rule is finalized with Building Block 4 

then the states' ability to use energy efficiency programs as compliance strategy under the section 
35

111(d) rule must be on the same basis as the EPA assumed in setting the state goals. Commenters

noted that EPA did not consider any restrictions on energy efficiency programs when evaluating 

measures in Block 4. Commenters stated EPA's Block 4 assumptions would be invalid unless 

EPA can show that their assumed energy efficiency growth corresponds to the programs that are 

allowed to be used by the states in the final rule. Commenters indicated that states' ability to 

comply with the state goals would be adversely impacted by the EPA restricting measures that 

can be included in the state plan when no such restriction was assumed by the EPA in 

establishing the state goals.

Commenters stated EPA's Building Block 4 goals are based on a very aggressive implementation 

of energy efficiency. Commenters stated energy efficiency programs tend to drive up rates, even 

when weighed against avoided generation and fuel savings. Commenters stated although 

program participants' bills may decrease, the fixed cost of paying for existing assets is spread 

over a smaller pool of purchases, and some customers may never have a meaningful opportunity 

to participate. Commenters stated these non-participants then pay more than they would have had 

traditional resources been purchased instead. Commenters stated this adversely affected group 

includes some of our poorest citizens who cannot afford energy efficiency investments, and 

industries and other consumers that may already be doing all they can to save electricity.

Commenters suggested that the impact of these problems can be decreased by eliminating 

renewable energy sources and energy efficiency from the emissions reduction goal, but still 

allow them to be counted towards compliance with the overall goal. Commenters stated this will 

allow states to determine the appropriate level of energy efficiency and renewable energy 

sources based on the characteristics of each state, and will eliminate the incentive to build 

renewable infrastructure in sub-optimal locations.

Commenters stated that it is critically important to ensure that energy consumer demand-side 

management and other carbon savings be voluntary and fully compensated. Commenters said 

EPA noted the importance of demand-side management and renewable energy efforts to meet the 

substantial 30 percent carbon reduction under the proposed rule. So that large energy consumers 

do not face a double burden of increased energy costs and required demand-side management 

under the proposed rule, commenters stated that it is important the EPA make clear that all 

energy consumer demand-side activities are to be voluntary. Equally important, commenters said 

EPA must make clear that energy consumers are to receive the full economic value of any 

demand-side management or other carbon-reducing activities they pursue. In order to do this, 

commenters said EPA must clarify that energy consumers that implement energy-efficiency, 

renewable energy or other carbon-reducing activities are to be considered the owner of the 

carbon-emission reductions associated with those efforts. Commenters stated that, only if this 

occurs will energy consumers, who are the ones ultimately burdened by the cost impacts of the 

proposed rule be able to at least partially mitigate those costs.

Commenters stated EPA should not use demand-side energy efficiency to calculate state goals. 

Commenters stated the proposal seeks to incentivize the conversion of energy from coal to 

natural gas, nuclear, renewables such as wind and solar, and energy efficiency. While the plan 

only lists energy efficiency as an "option" not a mandate, commenters noted the state goals 

cannot be achieved by relying only on reductions from affected EGUs, or even reductions from 

affected EGUs and re-dispatch with natural gas (Building Blocks 1 & 2). Commenters stated 
36

EPA admits as much by calculating different, less stringent goals when relying only on Building 

Blocks 1 and 2 as BSER. (calculating Blocks 1 & 2 only state goals before entering nuclear, 

renewable, and EE into the denominator).

Commenters stated the inclusion of Building Block 4 works better as a carrot, that is, a way to 

reward states for implementing these programs, and not as a stick, that is, by including EE in the 

goal setting process. Commenters cited EPA's words,

"Measures that avoid CO2 emissions from affected EGUs, such as quantified and 

verified end-use energy savings and renewable energy generation, could be used 

to adjust the CO2 emission rate of an affected EGU when demonstrating 

compliance with a rate-based CO2 emission limit. Alternatively, a state could use 

the effect of such measures as a basis for administratively adjusting the average 

CO2 emission rate of affected EGUs when demonstrating achievement of the 

required emission rate performance level in a state plan."

Commenters stated this logic applies to demonstration of lower carbon intensity, not to setting a 

goal based on faulty, overstated assumptions.

Commenters indicated that states may be resistant to allowing EPA to enforce energy efficiency 

programs, and suggested that EPA consider removing energy efficiency from the BSER building 

blocks, and instead encourage adoption of energy efficiency programs (such as the robust 

program in Washington State) as alternative, flexible compliance options.

Commenters stated that in light of the uncertainties associated with Building Block 4, demandside EE requirements should be included as an optional means of compliance with a performance 

standard grounded in the statute. Commenters agreed that EE is an important goal and supported 

use of demand-side EE as a means of reducing demand for electricity. Commenters stated it is 

not appropriately incorporated as a requirement into a CAA section 111(d) standard of 

performance, but rather, EPA should consider EE programs, along with other measures that 

reduce emissions of CO2 discussed in the following section, as an optional means of compliance 

with a CAA section 111(d) standard. Under this scenario, commenters stated they would be able 

to adjust the emission rate based on avoided MWh across its members by adding the avoided 

MWh to the denominator of the pounds per CO2/MWh emission rate.

Commenters stated that Ameren customer primary market research shows that the annual load 

reduction targets from Build Block 4 are unlikely to be able to be met in a cost effective manner, 

absent the ability to count energy savings achieved beginning in 2012 towards meeting the EPA 

goals and absent creative reporting practices followed by states with Energy Efficiency Resource 

Standards legislation. Commenters stated in addition, the assumptions and methodology 

underlying EPA's assessment of EE/DR in calculating individual states' goals is flawed. 

Commenters stated each state has methods to determine the cost-effectiveness of energy 

efficiency, as well as methods for verifying the levels of reduction that should be, but are not, 

respected by the rule. Commenters stated moreover, companies can offer a full menu of 

efficiency programs, but if the end user does not implement them, the efficiency targets will not 

be reached. Commenters stated thus, the proposed rule does not give full effect to the intent of 

and application of existing state efficiency and demand response rules. For the reasons set forth 
37

below, commenters suggested that the proposal allow owners and operators of affected sources 

to use EE/DR measures to demonstrate compliance with rate-based state goals, but not rely on 

EE/DR measures to calculate state goals.

Commenters provided comments that may be somewhat outside the scope of this section. 

According to these commenters EE should be allowed as an option for state plans, but should not 

be included in EPA's goal setting.

Commenters remarked that the EPA incorrectly calculated the assumed benefits of future energy 

efficiency improvements in Block 4 because the EPA applied the energy savings to the entire 

electrical generation fleet in 2012 without accounting for the fact that some of the future 

generation would be from new units, which would not be subject to the rule. Energy efficiency 

programs should be allowed as an option for a state's compliance but not as a component of the 

EPA's BSER determination. The commenters added that, even at the base level, the calculation is 

incorrect because it is based on total 2012 net sales of electricity, but excluded generation from 

existing hydroelectric power and most nuclear power plants. The commenters added that the 

EPA compounded this error by assuming that, in the future, the savings from energy efficiency 

measures can be solely attributable to the fossil fuel-fired fleet, despite the fact that significant 

retirements of units is expected. Commenters explained that, even though the new EGUs brought 

online will be outside of the fleet of units subject to the state goal requirements, the new units 

will still provide power to the electrical grid as a whole, and any energy savings from future 

energy efficiency savings would also affect the generation of the new units as well. The 

commenters stated that even further complicating this issue is the fact that some of the savings 

from energy efficiency measures will be attributable to future renewable energy generation that 

the EPA assumed for Block 3. The commenters stated that, by applying all the energy efficiency 

savings to only the affected fleet of EGUs, the EPA's calculation biases the state goal low 

because all energy savings are included in the denominator, but only CO2 emissions from the 

affected EGU fleet are included in the numerator. Commenters added that, if states are required 

to make adjustments to account for only the energy efficiency attributable to affected units, when 

the EPA did not account for this issue in setting the state goals, the discrepancy between state 

goal calculations and compliance demonstrations would further bias the rule against states. For 

this and other reasons, the commenters suggested that the EPA abandon its attempt to 

incorporate energy efficiency measures in the state goal calculation. Commenters stated that, 

instead, energy efficiency measures should be allowed as an option for state plans, but should not 

be included in the EPA's BSER determination.

Commenters stated that the EPA should discourage the use of state mandates to reduce electricity 

use and should clearly indicate that voluntary private sector-run energy efficiency projects, 

including those conducted by industrial operations within a state, should constitute approvable 

components of state compliance plans. Commenters expressed appreciation for allowing states 

broad discretion to design plans that work best for their power supply mix and energy customer 

base, but explained that the EPA's aggressive assumptions regarding the availability of end-use 

energy efficiency, and the Agency's focus on often ineffective state and utility energy efficiency 

programs, risk sending inappropriate signals to states as they draft their compliance plans. 

Commenters were concerned that, in order to secure approval of their compliance plans from the 

EPA with minimal uncertainty, states would feel obligated to impose only restrictive commandand-control energy efficiency regulations or would rely primarily on state- or utility-run 
38

programs. Commenters stated that such programs are often less effective and more expensive at 

generating energy savings from large industrial facilities.

Commenters believed that EPA's efforts to force demand-side energy efficiency 

improvements were counterproductive since it is certain to precipitate a waste of valuable 

resources in lengthy legal battles. Rather than this path, commenters encouraged resource 

investment in voluntary energy efficiency improvement programs like EPA's existing ENERGY 

STAR program. Commenters also stated that EPA should encourage projects/programs that lead 

to energy efficiency improvements, such as streamlining permit approval of innovative 

technologies and applications through various CAA programs. Commenters concluded by giving 

some specific examples of their technology which could be used to reach EE goals.

Commenters were concerned with the proposed guidelines as written because they will eliminate 

the flexible, voluntary nature of the demand side management (DSM) programs in place and 

instead force a federal requirement with enforceable mandatory components that will 

significantly alter the function of most state plans. Commenters were also concerned with the 

ramifications this treatment will have on program implementation and participation that could 

undermine the efficacy of these programs. Commenters stated that by design, DSM programs are 

intended to incentivize and encourage the adoption of new technology, equipment, or practices 

that result in reductions across factors such as consumer costs, energy consumption, need for 

additional generation, and EGU emissions levels. By mandating them, DSM's would risk losing 

their flexibility and ability to motivate and encourage innovation. 

Comment 3: Commenters did not support EE and stated the EPA should eliminate BB4 goal.

Response 3: The EPA decided to not include DS-EE from the proposed BB4 in BSER in the 

final CPP. See sections V.A and V.B of the final rule preamble of the CPP for details. However, 

DS-EE remains generally available for compliance, as the EPA recognizes that a wide variety of 

DS-EE measures have been achieving significant energy savings for years with additional 

opportunity to achieve energy savings in the future. Further DS-EE programs are being 

implemented widely across the sector and investments are increasing. See Demand-Side Energy 

Efficiency TSD for more information on energy efficiency potential. See multiple subsections of 

section VIII of the final rule preamble of the CPP for details on using DS-EE for compliance.

The following are summaries of the specific public comments under this comment:

Multiple commenters did not support use of EE. 

Multiple commenters stated EPA should eliminate the BB4 goal.

Commenters noted that moving more motor vehicles to electric vehicles (EV) only works if the 

electrical generation grid is generating clean energy versus high carbon energy. According to 

commenters, the US electric generation grid today is not a clean energy solution.

Commenters noted that building block four wrongly assumes that selective and unsustained 

demand site energy efficiency results from only three states can be achieved continuously in 
39

every state in the nation. According to commenters, demand side energy efficiency 

programs have historically been very difficult to implement, enforce, monitor and verify. 

According to commenters, efforts to reach the assumed levels are sure to raise costs for our 

customers, almost half of which have household incomes of less than 40,000 a year.

Commenters noted that Building Block 4 assumes state-level increases in demand-side energy 

efficiency to achieve annual incremental savings of 1.5%. From perspective of commenters, 

there were other potential impediments to achieving EPA's assumed avoided electricity sales 

from energy efficiency. Commenters noted that while the assumed avoided electricity sales from 

energy efficiency is technically feasible, market adoption of the technologies necessary to 

achieve this level of savings are untested. Commenters noted that the ability to achieve EPA's 

assumed avoided electricity sales form energy efficiency is a scenario for which Florida, and 

most other states, has not experienced. Additionally, commenters noted that achieving this level 

of saving is not cost free. According to commenters, the likely result will be to put tremendous 

pressure on customer bills due to program operating costs, incentives to encourage investment in 

energy efficient technologies, and unrecovered fixed costs. Commenters noted that assuming 

some of the energy efficiency savings would come from stricter building codes and appliance 

efficiency requirements, the costs of home and business construction is likely to increase, 

affecting housing affordability.

Commenters stated that the fourth Building Block in the Proposed Rule is energy 

efficiency/demand side management ("EE/DSM") that is intended to reduce demand for 

generation by end-users. Conceptually, according to commenters, a reduction in demand would 

result in a reduction in generation, which in turn would result in a reduction in emissions. 

According to commenters, EPA estimated energy efficiency in the twelve leading states to 

achieve annual incremental electricity savings of at least 1.5% per year. According to 

commenters, EPA's concept of BSER assumes that many states increase their current annual 

savings rate by 0.2% starting in 2017 and continuing until reaching a maximum rate of 1.5%, 

which then continues through 2030, quoting EPA as follows, "States already at or above the 

1.5% annual incremental savings rate ... realize a 1.5% rate in 2017 and maintain that rate 

through 2029." 

Commenters noted that after explaining that EPA's estimates of potential energy efficiency 

savings are "potentially overstated" for several reasons, NERC adds that EPA's theory that even 

these overly optimistic predictions will counteract normal load growth is counter to the 

predictions of other electric system experts.

Commenters quoted NERC as stating the following:

"With potentially overstated expectations for energy efficiency savings, the EPA's 

demand forecast results in a decline in electricity use between 2020 and 2030. 

While other major power market forecasters' electricity sales compounded annual 

growth rates (CAGR5) for the period between 2020 and 2030 are strictly positive 

(AEO 2013: 0.7 percent, EPRI: (achievable potential) 0.4 percent, NERC average 

of assessment studies: 1.5 percent), the EPA assumes a CAGR of -0.2 percent for 

the same time period. Between 2020 and 2030, the EPA assumes incremental 

year-over year reductions from energy efficiency to be almost 41 TWh nationally 
40

on average, outpacing year-over-year national electricity sales growth of 31.6 

TWh, on average. The main reason for this result is the EPA's assumption of 

states being able to sustain an annual incremental growth rate in energy 

efficiency savings of 1.5 percent once achieved. As mentioned above, this 

sustainability is not supported by any peer-reviewed or technical studies of 

energy efficiency potential."

Commenters noted that Entergy's utility companies operate reflecting varying levels of 

implementation of energy efficiency programs within their respective jurisdictions. According to 

commenters, Entergy Texas began implementation in 2000; Entergy Arkansas in 2007; Entergy 

New Orleans in 2011; and Entergy Mississippi has begun its implementation in 2014. 

Commenters noted that Entergy Louisiana and Entergy Gulf States Louisiana are awaiting an 

implementation order. Commenters noted that these programs are specific to and dependent upon 

the approval of the state utility regulators.

Commenters stated that EPA estimated potential EE/DSM outcomes by state. Commenters

included a comparison of the estimated potential EE/DSM available as included in the Integrated 

Resource Plans ("IRP") for each of the Entergy utility companies. According to commenters, 

when one considers the internal estimates prepared for inclusion in the IRP cases, it is clear that 

EPA's estimates for EE/DSM are overly optimistic. According to commenters, this is especially 

apparent for the Arkansas and Texas utility companies, which have the most experience with the 

EE/DSM efforts. According to commenters, with the exception of Entergy Mississippi, EPA 

estimates exceed the reference cases included in the IRPs. According to commenters, for the two 

Entergy companies that have the most robust history (Entergy Arkansas and Entergy Texas), 

EPA's estimates exceed the IRP high cases. Commenters noted that for the Entergy Louisiana 

companies (Entergy Gulf States Louisiana, Entergy Louisiana, and Entergy New Orleans), EPA's 

terminal values are higher than the reference case, but lower than the expected high cases.

Commenters noted that while EPA's estimates may be achievable theoretically, the cost for this 

level of EE/DSM would be prohibitive. According to commenters, the experience garnered from 

Texas and Arkansas indicates that the most cost-effective "low hanging fruit" of efficiency 

measures already has been harvested. Commenters noted that additional EE/DSM "harvests" are 

expected to come at a much higher cost. For each additional KWh saved, commenters noted that 

the costs per KWh for these savings are increasing. Included below is a graphic that shows the 

experience from Entergy Arkansas and Entergy Texas, demonstrating how the cost of EE/DSM 

has escalated over time. According to commenters, the Entergy utility companies in Louisiana 

and Mississippi have had only limited experience with the programs to date and, therefore, do 

not have sufficient history for comparison.

According to commenters, the primary concern regarding the Building Block 4 implementation 

(as opposed to goal-setting, discussed above) is the ambiguity of regulatory authority. According 

to commenters, the primary responsibility for implementation of and compliance with the 111(d) 

plan for a state falls to the environmental regulatory bodies, such as, in Entergy's utility states, 

the Arkansas Department of Environmental Quality, the Louisiana Department of Environmental 

Quality, the Mississippi Department of Environmental Quality, and the Texas Commission on 

Environmental Quality. According to commenters, each of these environmental regulatory 
41

agencies has authority only for "inside the fence" environmental operations and lacks the 

authority for the "outside the fence" obligations of Building Block 4 (EE/DSM).

Commenters noted that in contrast, the authority for establishing and providing recovery 

mechanisms for traditional utility costs, as well as the costs associated with Building Block 4 and 

the other proposed Building Blocks, belongs to the utility regulatory commissions (e.g., the 

Arkansas Public Service Commission, the Louisiana Public Service Commission, the Mississippi 

Public Service Commission, the New Orleans City Council Utility Committee, and the Public 

Utility Commission of Texas).

Commenters noted that the ambiguity of responsibilities among the various agencies will be 

difficult to manage. According to commenters, the "beyond the fence" regulation has the 

potential to require generators to answer to two (or more) masters. Commenters noted that the 

utility regulatory bodies will be responsible for the cost recovery and goal setting and 

administration, while compliance with the statewide emissions rate falls to the environmental 

regulatory bodies. According to commenters, this concern applies not only to Building Block 4, 

but to the entire proposed regulatory scheme.

Commenters noted, in addition, the impacts to the generators and utilities will be difficult to 

discern in regions where there is not a match of service boundaries to political boundaries (i.e., 

state borders). According to commenters, the regulators likely will require a common approach 

with which all participants comply to allow for the summation of the results for the entire state.

Commenters stated while EE is an important tool for lowering costs to society, it is not a legally 

valid option for the purposes of setting a state goal. Commenters stated that as an outside the 

fence activity, it is not subject to being part of a mandated state goal process under Section 

111(d).

Commenters stated the EE reductions intended to achieve compliance with EPA emission 

guidelines must be real and verifiable. Commenters recognized that EE plays and important role 

in an "all the above" energy plan and that many states and utilities have valuable demand side EE 

programs. Commenters stated the incorporation of these valuable programs into regulations 

under the Clean Air Act requires consideration that goes beyond the overall merits of the 

programs and their goals. Commenters stated as previously stated, EPA has no legal authority to 

include EE measures in its calculation of state goals under section 111(d). Commenters stated 

however, standard aside, should states elect to include these EE programs in their compliance 

plans, EPA must ensure that claimed EE reductions are real, verifiable, and based on consistent 

methodology. Commenters stated these "reductions" are effectively credits for energy not used, 

and in any circumstance where you are measuring and assigning credit for something that did not 

occur, care must be taken to ensure the "non-occurrence" is in fact real and resulting from a 

particular action taken or program developed to incent the "non-occurrence."

Commenters stated that Alaskan homes and businesses are already built to withstand the long 

winters, and the State of Alaska's Home Energy Rebate Program reimburses homeowners for 

making energy efficiency upgrades that save energy and lower power and heating bills. 

Commenters stated new efficiency programs will do little to reduce carbon dioxide emissions.
42

Commenters stated that because they provide our product at cost, every additional cost that 

incurred must be passed on to the customer. Commenters stated the nature of this model has 

incentivized us to naturally create energy efficiency and conservation programs over our nearly 

70 years of existence that make economic sense to our customers, reducing their cost, not adding 

to it. Commenters felt that, based on the diversity of electrical providers, this should continue to 

be our role, and not that of the EPA.

Commenters stated the inclusion of DSM energy efficiency in the EPA's definition of a "best 

system of emissions reduction" should be removed. Commenters stated the inclusion of DSM 

energy efficiency creates a "standard for emissions of air pollutants" that cannot be a measure. 

Commenters stated DSM energy efficiency is not a measurable standard because measurement of 

these types of programs is based on multiple layers of estimates. Commenters stated this fact is 

recognized by the EPA when it states "many states with energy efficiency programs use different 

input values and assumptions" to estimate energy savings from such programs. Commenters

stated DSM energy efficiency doesn't yield the emission reduction results EPA estimates. 

Commenters stated DSM energy efficiency is infeasible as a compliance option because it is not 

dispatchable and is not measurable in any meaningful way. Commenters stated therefore, DSM 

energy efficiency should be removed from EPA's building blocks and resulting emission 

reduction calculations.

Commenters stated EPA's assumptions regarding demand-side EE improvements are arbitrary 

and capricious. Commenters stated EPA does not justify its assumptions of increased demandside EE in the administrative record. Commenters stated EPA's insufficient record makes its 

assumptions regarding demand-side EE arbitrary, capricious, and unreasonable. Commenters

stated EPA relies on data from the recent recession and slow economic recovery and fails to 

account for how energy efficiency rates might be impacted during other, more positive economic 

conditions.

Commenters stated building block 4 has not been adequately demonstrated and must, therefore, 

be stricken. Commenters stated EPA's assumed end-user energy savings are unachievable. 

Commenters stated programs for demand-side efficiency gains have been in place for decades, 

and the energy gains achievable through the use of those sorts of programs have been nearly 

maximized, especially for rural electric cooperatives where there are no meaningful efficiency 

gains left to capture. Commenters also stated EPA has left unanswered critical implementation 

questions, not the least of which is under what authority states/utilities will force consumers to 

use less electricity.

Commenters concluded that Building Block 4 would pose the following reliability challenges:

• EPA appears to overestimate the reduction in electricity demand from energy 

efficiency that is achievable over the compliance time frame, which has 

implications for future electric transmission and generation infrastructure needs;

• Substantial increases in energy efficiency programs exceed recent trends and 

projections; in fact, several sources, including but not limited to NERC, EIA, 

EPRI, and various utilities, have published reports, analysis, and forecasts for 
43

energy efficiency that do not align with the EPA's assumed declining demand 

trend;

• The NOPR's assumption appears to underestimate costs and may underestimate 

the capital investments that would be required by utilities to sustain energy 

efficiency performance through 2030; and

• The offsetting requirements in more coal retirements, along with expansions in 

natural gas and VERs, in a constrained time period could potentially result in 

reliability or constraints on the provision of ERSs.

Commenters stated that given the aggressive nature of the NOPR's proposed emission reduction 

targets, many States will have no choice but to pursue demand-side energy efficiency 

improvements. Under those circumstances, commenters indicated States may be inclined to 

focus energy efficiency efforts on energy intensive industry sectors such as those represented by 

ELCON's members because, from a regulatory perspective, it may appear more efficient to focus 

on a limit number of large industrial sources. Commenters stated they have documented that 

such efforts can be counterproductive. Commenters stated the higher rates that industrial 

consumers pay to their utility to comply with the State-mandated energy efficiency programs (or 

to subsidize utility investments in renewable resources) reduce the funds available to the 

customer for investing in higher value projects that may be more aligned with EPA's objectives. 

Commenters stated thus, industrial consumers would be forced to "borrow" money from the host 

utility to fund the energy efficiency measures in a SIP at an effective cost of capital that exceeds 

the consumer's own cost of capital.

Commenters stated Building Block 4 and the utilization of EE measures should not be part of 

establishing the performance standards for this rule. Commenters stated it would involve 

requiring the EGU's to control their product downstream of the facility. While energy efficiency 

measures are a very cost effective way to reduce energy consumption, commenters stated they 

are not pollution control measures and are outside the intent and precedence of Section 111 of 

the Act. Commenters stated currently, these measures are under the authority of the Mississippi 

Public Service Commission and the Mississippi Development Authority. Commenters stated 

including energy efficiency measures in the CPP creates intrastate authority issues, in addition to 

creating burdens and increased cost to resources without any benefit to the State since these 

measures would have been implemented regardless of the CPP. Commenters stated EE measures 

should be left to the State Public Service Commissions and Energy Offices and not included as 

part of a pollution control standard.

Commenters stated that EPA has determined that significant improvements in end-use energy 

efficiency (EE) are to be a primary means of achieving greenhouse gas emission reductions even 

though these requirements are based on the conduct of consumers of electricity rather than 

generators of electricity, and are beyond the control of EPA, most state environmental agencies, 

and utilities. Commenters stated that Section 111 does not authorize EPA to extend its 

jurisdiction beyond the stationary source by attempting to regulate demand for the good, service, 

or product that source produces. Commenters continued, stating virtually every business, 

institution and household in the country requires energy in the form of electricity, and that 

energy is provided by existing EGUs. Commenters stated, using EPA's logic in Building Block 
44

4, which requires increases in end-user energy efficiency and other efforts to reduce demand, this 

proposal could well apply to every consumer of electricity and is well beyond EPA's authority. 

Commenters concluded that without the reliance on the outside-the-fence-line consumer end-use 

efficiency that EPA assumes States can achieve, EPA's analysis and justification for state 

emission limits falls apart, undermining the emission reduction targets set forth in the rule.

Commenters stated that inclusion of Building Block 4 is ultra vires, and that EPA has no 

authority under the CAA to regulate, or require investment in, EE, and consequently, EPA has no 

authority to impose on states under Section 111(d) an obligation to do the same or, as EPA 

suggests, achieve equivalent emission reductions through other, jurisdictional means. (Inclusion 

of Building Block 4 is ultra vires for the same reasons that inclusion of Building Block 3 is ultra 

vires. See Section 2.IV.B, supra. These arguments are incorporated by reference and will not be 

repeated here.)

Commenters stated that the EPA should not include energy efficiency in its basis for state goals 

and should not accept state plans which include energy efficiency as CAA enforceable 

programs.

Commenters stated the assumptions behind building block 4, demand-side energy efficiency 

improvements, create a number of measurement and verification concerns. Commenters stated 

EPA's analysis suggests a perverse dichotomy in which available energy efficiency 

improvements would not be realized in the absence of this proposal, but would be adopted 

completely with the proposal. Commenters stated this may be a limitation of EPA's analytical 

capabilities, but it most surely contradicts reality.

Commenters noted that according to the ACEEE, states spent $6.3 billion on electricity 

efficiency programs in 2013, even without the influence of EPA's proposal. Efficiency 

improvements are obviously cost effective without the CPP in place. Commenters stated in fact, 

NERA Economic Consulting found that, "rational consumers would adopt the [efficiency] 

changes without the need for a government program." Commenters stated the result of this 

analytical limitation is that it is now impossible to compare EPA's work to analyses that capture 

cost-effective efficiency in the baseline, and we have a poor understanding of the proposal's 

costs. Commenters stated moreover, EPA's analysis considers only the cost of the efficiency 

investments themselves and not the program costs necessary to overcome barriers to those 

investments at present. Commenters stated this undoubtedly hides the true costs of efficiency 

programs that will contribute to compliance.

Commenters stated that while it is recognized that EPA will respond that the building blocks are 

presented as way to meet compliance in a portfolio approach, one must wonder and question if 

this building block approach is viable if the example developed by EPA itself turns out to be a 

formula that for all the reasons above cannot achieve EPA's objective. Commenters stated EPA's 

failure to apparently consider these many issues and the inter-related nature of all these factors 

make the premise not credible. While it is understood that the underlying issue is the 

performance targets, Commenters questioned whether states can be expected to find viable 

approaches and solutions if EPA cannot?
45

Commenters stated Building block 4 establishes a goal for demand-side energy efficiency 

programs with a cumulative target for Kansas of 9 percent. Commenters stated the Kansas 

legislature passed House Bill 2482 in the 2014 session. Commenters stated the new law provides 

utilities the opportunity for cost recovery for demand side management programs. It establishes a 

voluntary program that is in the initial stages of implementation. Commenters stated it has no 

compliance provisions that could be adapted into a state 111(d) plan. Commenters stated 

transitioning from a voluntary program in its developmental stages to a regulatory program with 

hard targets to meet the interim goals contained in the proposal would be a great challenge. 

Commenters stated in addition to these general issues KDHE has concerns regarding EPA's legal 

authority to mandate energy efficiency, EPA's disregard for certain studies developing the goal 

for this building block, and the source of EPA's data that serves as the basis for the building 

block 4 goal calculations and verification of energy efficiency savings.

Commenters stated EPA notes in the preamble that some stakeholders have argued that CAA 

section 111(a)(l) does not authorize the EPA to identify re-dispatch, low- or zero-emitting 

generation, or demand-side energy efficiency measures (building blocks 2, 3, and 4) as 

components of the BSER. Commenters stated EPA has not identified their authority for 

regulating customer end-uses of electricity. Commenters stated energy policies that include EE 

programs and goals are traditional areas of regulation reserved for states, and included in 

integrated planning processes in states with vertically integrated utilities. Commenters stated 

however, not all states have integrated planning or all vertically integrated utilities, including the 

State of Kansas. Commenters stated thus, the use of building block four in setting the section 

111(d) proposed standards for all states is not appropriate.

Commenters stated reducing emissions from affected EGUs in the amount that results from the 

use of demand-side energy efficiency that reduces the amount of generation required. 

Commenters stated that while EPA believes reduced demand on power plants is a proven, lowcost way to reduce emissions, which will save consumers and businesses money and mean less 

carbon pollution, this concept is a little naive. Commenters stated too often in the past, 

businesses and even consumers have gone to behind the fence generation where these units did 

not meet the same emission levels or are as well-controlled as EGUs. Commenters stated the net 

result has been increases in NOx emissions, as well as CO2 emissions, as such units are not as 

efficient or as well controlled as much of the fossil fuel EGU generation. Commenters stated the 

net result would be increases in GHG emissions occurring at the same time as these Units run 

and fossil fuel units curtail or do not run.

Commenters stated the last adjustment made by the EPA in calculating the final state emission 

rate goal is energy efficiency measures, BSER Building Block Four. Commenters stated that EE 

makes up a considerable portion of the BSER, and many of EPA's assumptions to derive the 

projected state EE goals such as for ramping up, annual target rates, EE grows faster than 

electricity demand, annualized costs, are tenuous.

Commenters firmly believed that EPA should exclude efficiency projects that are not associated 

with existing sources of power generation. Commenters stated CO2 emission goals should be 

achievable with commercially available technology with a demonstrated achievement capability 

in order to facilitate emission reductions, rather than encouraging emission avoidance. 
46

Commenters stated standards should be altered in a realistic manner as more advanced 

technologies are developed.

Commenters stated EPA's analysis underlying Building Block 4 is flawed, arbitrary, and 

capricious, and therefore the inclusion of end-use energy efficiency as an element of BSER for 

purposes of setting emission rate goals is invalid. Commenters stated EPA's method of equating 

end-use energy efficiency directly to greenhouse gas emission reductions is flawed. 

Commenters stated that as the purpose of EPA's rule is to regulate GHG emissions, EPA has 

conflated the end-use electrical energy efficiency with greenhouse gas emissions in a way that 

breaks with the physical reality of energy production and use and the emission of greenhouse gas 

associated with electricity generation. Commenters stated the uncertainty that a specific end-use 

energy efficiency measure will lead to any emissions reduction at all depending on the electricity 

generation source and whether the consumer decides to spend the dividend from the efficiency 

on conservation or additional output or comfort shows that end-use energy efficiency is not a 

proper component of BSER.

Commenters stated the erosion of the viability of EE reductions over time and incremental higher 

costs for EE after early actions and initial program implementation. Commenters stated EPA 

does not adequately address the risks of lack of persistence of the energy savings involved with 

energy efficiency programs. Commenters stated that once an energy efficiency measure is 

installed, there is a significant risk that the energy savings will not persist. Commenters stated 

that homes implementing energy efficiency measures can be remodeled and businesses can go 

under or change out their equipment for any number of reasons; in either scenario, equipment 

and appliances can be operated at different levels than anticipated, such as if new occupants are 

added or removed from a home, weather events cause changes in heating or cooling needs, or 

equipment is not maintained. Commenters stated all of these scenarios would lead to end-use 

efficiency measures not leading to the greenhouse gas emission reductions anticipated by EPA or 

utilities and outside of state control, and for that reason analysis based on the assumptions are 

flawed and the measures themselves are not BSER.

Commenters stated demand side energy efficiency is not an appropriate standard of performance. 

Commenters fully supported demand-side energy efficiency programs and has invested heavily 

in these programs over the past 17 years, however, EPA's proposal to require 1.5 percent in 

annual energy savings from demand-side energy efficiency programs is not an appropriate basis 

for a CAA section 111(d) standard of performance. Commenters stated first, this requirement is 

not "adequately demonstrated." Commenters stated that EPA admits this target is highly 

uncertain and not supported by firm data. Commenters stated second, Basin Electric does not 

market at the retail level and is governed by a three-tier structure that precludes it from imposing 

energy efficiency programs on its members (who do sell at the retail level). Commenters stated 

Basin Electric has spent millions promoting demand-side savings through its members and has 

achieved only about 0.5 percent in energy savings. Commenters stated EPA's demand-side 

energy savings assumption exceeds EPA's authority to impose, has never been adequately 

demonstrated, and is impossible to achieve in Basin Electric's experience.

Commenters stated EPA block 4 analysis also assumes that all energy efficiency programs are 

cost-effective; clearly, that is not the case. Commenters stated Iowa and Minnesota state law 

require energy efficiency programs to be cost effective as part of the state rate protection for 
47

consumers. Commenters stated if the EPA assumes that the 1.5 percent must be achieved 

regardless of cost effectiveness, then the assumptions have failed to meet the adequately 

demonstrated requirement of BSER. 42 U.S.C. 7411(a) (1). Commenters stated at a minimum, 

EPA must include an economic safety valve in its proposal to protect consumers.

Commenters stated the technical feasibility of the buildings blocks mandated by the EPA is not 

proven, in that the EPA is overestimating benefits from demand side EE established by policydriven top-down predictions, rather than engineered bottom-up estimates.

Commenters indicated that EPA acknowledges that there are practical, economic, and market 

barriers to tracing the effects of EE deployment, but fails to fundamentally address these issues. 

Commenters stated that without addressing these issues, EPA has not shown that the proposed 

goals are achievable or adequately demonstrated.

Commenters stated the Market Potential Studies (MPS) that were relied upon to propose future 

levels of EE do not provide an adequate basis for use in establishing a regulatory compliance 

target. Commenters stated that much of the data and information was supplied by EE advocacy 

organizations and others with a similar focus, and was not subject to a peer review process. 

Commenters stated EPA notes that nearly all of these studies represent a "top-down, policybased approach" and do not account for all of the practical factors that are necessary to build 

functioning EE programs; the metrics adopted by EPA largely comport with these findings, and 

differ substantially from the "bottom-up" engineering based analysis that has been conducted on 

the topic.

Commenters stated that EPA chose to use 1.5 percent as the "best practice level" but the MPS do 

not prove empirically that these levels of EE are achievable or sustainable. Commenters stated 

the MPS are not precise engineering analysis undertakings, and that substantial differences in the 

models, assumptions, data sources, interpretations, etc. by various authors often make significant 

differences in the results. Commenters noted that in an ACEEE study that reviewed 45 publicly 

available market potential studies performed since 2009, ACEEE found that "for electricity, [the] 

average annual maximum achievable savings range [was] from 0.3 percent to 2.9 percent", and 

that is nearly a 1000 percent variation, depending on the assumptions and methodologies 

employed in the study.

Commenters stated there is a significant lack of transparency on major model inputs such as 

forecasting participation rates, incentive level estimates, impacts of codes and standards, 

emerging technologies, utility avoided cost estimates, and policy limitations, and even modest 

deviations from these point-in-time assumptions, estimates and projections, will compound over 

time and significantly affect the results, especially with projections made over 15 or more years, 

as EPA has done. Commenters noted that due to these factors, it is generally understood that 

MPS are most applicable to and best suited for short-term program planning rather than longterm policy application. Commenters pointed out that EPA itself acknowledges the substantial 

variation in potential estimates, driven by lack of broad empirical evidence and significantly 

varying assumptions and methodologies. Commenters stated EPA ignored these limitations, and 

instead proposed to set legally enforceable requirements based upon such studies. Commenters

stated EPA must re-evaluate the basis for its proposed goals, and examine the full range of 
48

studies that have been performed, rather than selecting the highest projected rates and applying 

them indiscriminately across the country.

Commenters stated additional reduction in customer electrical demand is limited. Commenters

stated they have been successfully operating energy efficiency programs since 1992. Because 

these programs have been in place for over 20 years, commenters believed that the reductions 

suggested by EPA are not possible for Interior Alaska. Commenters stated instead, most 

members have already implemented cost effective energy efficiency measures. In addition, 

commenters stated the high cost of energy in the Interior is a major factor in reducing energy 

consumption. Commenters stated for example, essential heating of residences is typically 

accomplished through oil, wood, or coal-fired heaters instead of electric heat. Commenters

stated the downside of this reduction in electric energy demand, however, is the Fairbanks 

airshed classification as a PM2.5 non-attainment area caused primarily by the emissions from 

residential heaters. Commenters stated driving electric costs up even further by implementation 

of the proposed Performance Goals will likely have a negative impact on PM2.5 attainment.

Commenters stated they have an active program that has been encouraging customers for many 

years to reduce the use of electricity by making energy efficient decisions. Commenters stated to 

date, over $6 million have been allocated to our energy efficiency programs and about 

107,878,652 cumulative kilowatt-hours (kWh) have been saved. While energy efficiency can 

always be improved as new products are brought to the market and techniques are developed and 

made available, Commenters believed substantial reductions in electrical demand are limited. 

Commenters intended to continue to work on demand reduction programs.

Commenters stated EPA's approach to EE conflicts with Section 205 of the Federal Power Act 

by causing consumers to pay unjust and unreasonable rates. Commenters stated EPA's proposed 

rule to regulate existing EGUs under Section 111(d) of the Clean Air Act will conflict with 

Section 205 of the Federal Power Act, 16 U.S.C. section 824d (a), because it’s required 

deployment of demand-side EE will result in unjust and unreasonable rates for electricity. 

Commenters stated the Goal Computation TSD ("State Goal TSD") accompanying the proposed 

rule sets forth a methodology for calculating state goals for emissions reduction. Commenters

stated Step 5 of the methodology considers demand-side EE to be avoided sales that displace 

generation from more carbon-intensive EGUs. See State Goal TSD at 16-19. Commenters stated 

indeed, because of the unreliable and underperforming nature of EE resources, EPA's proposed 

rule will force consumers to pay for both the initial investment in EE resources, as well as the 

backup generation required for when EE fails to perform.

Commenters stated the proposed rule correctly assumes that significant investments will be 

necessary to achieve EE reductions, and acknowledges that the cost of these investments will be 

paid by ratepayers. Commenters stated the proposed rule explains that such investments are 

justified because the costs will be offset by "reductions in average bills across all end-use 

sectors." Commenters stated however, the reality is that the increase in rates attributable to 

utility energy efficiency spending may offset the bills of customers who participate in the 

program but customers who do not participate will both receive an increase in electric rates and 

in electric bills. Commenters stated furthermore, participation in EE programs generally is 

shared, requiring customers to spend their own money in order to participate, with customers 

receiving a rebate or a portion of the costs back in some form such as a tax credit. Commenters
49

stated the customers left receiving no benefit are those who most likely need the benefit of EE, 

i.e., low and fixed income customers. Commenters stated finally, there is a specific energy 

efficiency cost-effectiveness test called the Ratepayer Impact Measure (RIM) Test, sometimes 

referred to as the Non-Participant Test, which attempts to quantify the impact of energy 

efficiency programs on nonparticipating customer electric rates and bills. Commenters stated this 

test typically produces results that show that costs exceed benefits by a margin of 2 to 1.

Commenters indicated that some have suggested demand-side EE programs, which reward the 

consumer beyond cost reductions in their utility bill by allowing them to generate credits that 

could be traded on the CO2 market. While such a policy may have a lofty and admirable goal, 

Commenters stated such a course is not within the regulatory purview of many state 

environmental agencies when establishing standards of performance for existing EGUs. 

Commenters stated the same level of reduction can be achieved, with much less complexity, 

through the application of a supply-side (mass-based) trading program as outlined above. 

Commenters indicated States and sources, by whatever means they determine as cost-effective, 

would still be free to encourage consumers to implement energy efficiency programs in their 

homes or businesses, thereby, reducing emissions though demand reduction.

Commenters stated EPA should eliminate EE from the state goals [in context of interstate 

accounting]. 

Commenters stated building block 4 is not feasible or adequately demonstrated. Commenters

stated DSEE cannot be considered in EPA's BSER because: (1) it unlawfully is based on 

reductions of electricity from the grid; (2) it is not technically feasible at EPA's expected levels; 

(3) it is not Adequately Demonstrated; and (4) it is exorbitantly costly. Commenters stated DSEE 

is influenced by many factors well beyond the scope and control of the local utility. Commenters

cited federal compliance standards and state building codes that have a major impact on DSEE 

availability are completely beyond the utility's control; DSEE is market-drive, as customers 

voluntarily choose whether or not to adopt DSEE and in most cases use their own investment 

dollars to participate in the program, and while utilities have the ability to influence the market to 

some degree through awareness and education campaigns, financial incentives to customers, and 

even training of skill laborers involved in the building industry, adoption of DSEE is ultimately 

voluntary and cannot be relied upon with the same degree of confidence as "inside-the-fence" 

emissions control technologies. Commenters stated it is completely illogical to attempt to 

predict the market response to DSEE over such a long planning horizon, as there are many 

factors that can impact customer response to program adoption. Commenters stated that 

assuming any states can repeat results year over year, at any cost, is at best pure speculation. 

Commenters stated EPA's determinations regarding DSEE are unsupported, and the fundamental 

problem with EPA's assumptions regarding the availability and cost of DSEE is that they are 

based on a very small sample of states (three states - Arizona, Maine, and Vermont) and assume 

past, short-term performance is an indicator of future achievability. Commenters stated the three 

states used to justify EPA's proposed DSEE targets have recently achieved the annual 

incremental energy savings levels prescribed in the proposed rule, and sustainability of these 

levels remains to be seen. Commenters stated that for Arizona, the Arizona Corporation 

Commission staff issued a proposal on November 4, 2014, to revoke the state's requirement that 

electric utilities achieve a 22 percent cumulative reduction in energy use by 2020, and instead, 
50

the utilities will be able to propose energy efficiency programs that make economic sense in their 

biannual integrated resource plans.

Commenters stated EPA's expectation that West Virginia could achieve an equally staggering 

increase in EE is arbitrary and capricious. Commenters stated their state is not alone in its 

concern about the level of EE assumed by EPA; the costs of EE are grossly underestimated by 

EPA and there are significant reliability concerns regarding the extent of retirement of base-load 

coal plants, expansion of natural gas generation, and expansion of variable energy resources. 

Commenters stated these concerns were also expressed in the NERC evaluation of the section 

111(d) proposal.

Commenters stated Block 4 imposes a burdensome, expensive, and unachievable goal for Texas.

Commenters discussed Building Block 4 cost effectiveness. 

Commenters stated that the approach that EPA takes in setting the EE goal raises questions about 

the cost-effectiveness of building block 4. Commenters noted that states with ambitious existing 

energy efficiency programs tend to have a larger obligation than states where energy efficiency 

policies are less advanced. Commenters stated that how these differences will impact costeffectiveness at the national level is an open question. Commenters stated that one might expect 

there to be more low-cost opportunities for saving energy in the inexperienced states where 

energy-using equipment and buildings are presumably less efficient than in the more experienced 

states. Commenters stated that it could also be the case that more experience with running energy 

efficiency programs results in learning by doing and greater future energy savings at a lower 

cost. Commenters also noted that both factors could be at play simultaneously with the ultimate 

answer depending on the balance between the two. 

Commenters stated that EPA's analysis underlying Building Block 4 is flawed, arbitrary, and 

capricious, and therefore the inclusion of end-use energy efficiency as an element of BSER for 

purposes of setting emission rate goals is invalid. Commenters stated that EPA ignores the 

significance of the "rebound effect" on achieving emission reductions. Commenters stated that 

the rebound effect is acknowledged and then largely dismissed in EPA's proposal. Generally 

speaking, commenters stated that EPA characterizes a "direct rebound" as an improvement in 

energy efficiency that reduces cost and therefore boosts its demand, while an "indirect rebound" 

reflects energy efficiency savings that are used elsewhere in the economy and may increase 

energy consumption. Commenters stated that EPA doesn't explain how or if it accounts for the 

"rebound effect" in the Proposed Rule, but instead simply references several studies that find the 

rebound effect to be "relatively modest" compared to the importance of energy efficiency as an 

effective way of reducing energy consumption and CO2 emissions. Commenters stated that this 

arbitrarily dismisses the potential impact of the "rebound effect" when EPA sets the state goals. 

Comment 4: Portfolio approach for state plans--states select/adopt/enforce EE 

policies/programs, rather than the EPA

Response 4: The EPA decided to not include DS-EE in BSER in the final CPP. See sections V.A 

and V.B of the final rule preamble of the CPP for details. However, DS-EE remains generally 
51

available for compliance, as the EPA recognizes that a wide variety of EE programs and projects 

have been achieving significant energy savings for years with additional opportunity to achieve 

energy savings in the future. DS-EE measures must meet the eligibility requirements and 

provisions related to demand-side EE programs and projects and the requirements and criteria 

related to proper quantification and verification of MWhs from demand-side EE savings as 

described in Section VIII of the final rule preamble of the CPP. 

The following are summaries of the specific public comments under this comment:

Commenters noted that calculating the impact of federal standards within each state can be 

complicated. Commenters indicated that factors influencing the impact on each state include 

considerations such as the market penetration of a particular piece of equipment or appliance and 

the climactic zones within the state. Rather than allowing states to receive compliance credit for 

energy savings resulting from the standards, and attempt to address all the uncertainties that 

doing so would entail, commenters stated that it would be far simpler and more accurate to leave 

the standards out of the Building Block 4 assumptions (as the EPA has done in the proposed 

Clean Power Plan) and likewise not allow states to receive compliance credit for energy savings 

resulting from the federal standards.

Commenters stated that EPA's assumptions about end-use efficiency growth appear to be based 

on flawed logic. Commenters stated that EPA uses the EIA Form 861 data to determine historical 

incremental end-use efficiency reductions, but these are self-reported numbers for the utilities 

and there is no uniformity from state to state. Commenters stated that even the term 

"incremental" is problematic. Commenters stated that it is defined by EIA in the instructions for 

Form 861 as the annualized effect of any measure initiated or a new participant in an existing 

program in a given year, and does not include the effect of any programs that diminish or are 

terminated. Therefore, commenters stated that "incremental" changes reported on Form 861 do 

not equate to the difference in actual energy savings in consecutive years, as clearly explained by 

EIA in the instructions for Form 861. Commenters stated that the difference between reported 

incremental energy savings and year-on-year changes in actual annual reported energy savings 

can be very large, even for states that have mature Energy Efficiency Resource Standard 

programs.

Comment 5: The effect of EE is limited as programs fully penetrate markets, which can initially 

produce significant efficiency improvements, but that becomes limited later in programs. 

Response 5: The commenters state that the EPA has overstated the estimation of energy 

efficiency represented in BB4. The EPA decided not to include DS-EE in BSER for the final 

rule. A response is not provided here on how different EE is reflected in BSER as this comment 

is now outside the scope of the CPP. See sections V.A and V.B of the final rule preamble of the 

CPP for details. DS-EE remains generally available for compliance, including different types of 

EE programs and projects. The EPA recognizes that a wide variety of DS-EE measures have 

been achieving significant energy savings for years with additional opportunity to achieve energy 

savings in the future. Further DS-EE programs are being implemented widely across the sector 

and investments are increasing. See Demand-Side Energy Efficiency TSD for more information 
52

on energy efficiency potential. See multiple subsections of section VIII of the final rule preamble 

of the CPP details on using DS-EE for compliance.

The following are summaries of the specific public comments under this comment:

Commenters stated that the EPA did not properly account for the "pinching" effect of codes and 

standards on achievable EE savings rates. 

Commenters stated barriers to implementation may undermine efforts to expand EE programs. 

Commenters stated existing EE programs have already penetrated markets for EE measures, and 

thus there may be few markets in which to expand EE programs. Commenters provided an 

example, noting that utility-sponsored EE programs traditionally have relied heavily upon 

lighting programs for the vast majority of their savings, and with the adoption of new lighting 

standards from the EISA, the potential to achieve electricity savings through lighting retrofit 

programs will be greatly reduced. Commenters also stated that increasingly stringent building 

codes and EE standards for appliances and other technologies are increasing baseline EE 

performance. Commenters stated that finding participants for EE programs has become more 

difficult because of the greater investment required to achieve more stringent standards, and 

because potential participants already have made efficiency upgrades.

Commenters stated that as codes and standards progress and energy efficient technologies realize 

greater market share and reduced costs, the ability of utilities to realize cost-effective, 

incremental benefits from energy efficient technologies is diminished.

Commenters stated there are temporal challenges in extrapolating past EE achievements into the 

future, and noted there has been a significant increase in overall baseline efficiency codes and 

standards, which will inherently reduce energy consumption irrespective of the impacts of 

utility-sponsored EE programs. Commenters stated the most significant changes have occurred in 

lighting EE efficiency standards, which have historically produced the greatest utility-sponsored 

EE achievements. Commenters stated appliance efficiency standards and building codes have 

become increasingly more stringent, and DOE has issued numerous new EE standards over the 

last few years, which will affect energy use as new homes are built and equipped with such 

appliances, and existing homes undertake replacement of appliances in the ordinary course. 

Commenters noted that DOE has proposed new efficiency standards for commercial rooftop air 

conditioners that would reduce energy consumption by 30 percent, achieving the largest national 

energy savings of any standard ever issued.

Commenters stated that EPA utilized historic achievements built largely upon low-cost and 

readily available EE lighting measures when making its projections for EE savings potential in 

future years. Commenters stated there are market potential studies that assert plentiful and 

inexpensive EE savings opportunities available from other EE measures in the future, however, 

there is no empirical evidence that any utility-sponsored EE programs relying upon these nonlighting measures can achieve EE levels even approaching those levels achieved through lighting 

programs. Commenters noted that in the absence of further evidence of the availability of other 

programs that can deliver similarly substantial savings, EPA clearly fails in its requirement to 

demonstrate the technical achievability of its proposed standard under the EE codes and 

standards currently in effect.
53

Commenters stated West Virginia's two largest electric utilities, Appalachian Power and 

FirstEnergy, both offer EE programs to their customers that saved a combined 77 GWh of 

electricity in 2013. Commenters stated these programs are new to the West Virginia market and 

thus have the potential to increase savings. Commenters stated however, reaching the EPA 

proposed goal of 243 GWh of savings from new programs in 2020 and expanding to an average 

of 450 GWh saved per year from 2023 to 2030, would be quite challenging due to the lightingcentric nature of savings to date and to low participation rates in appliance rebate 

programs. Commenters stated that a portion of energy savings for all programs were from 

lighting projects: for Appalachian Power programs, 85 percent of energy savings (27.9 out of 

50.8 million net kWh) came from lighting measures; for the Commercial and Industrial (C&I) 

Prescriptive program, 72 percent of savings was from lighting retrofits and 309 of 357 projects 

completed were for lighting, even though average project incentives were larger for HVAC and 

variable-frequency drive projects; a portion of energy savings from Residential HomeSMART 

and Weatherization programs were from compact fluorescent lights; and Non-Residential High 

Efficiency Lighting and Residential Low Income also focus on lighting retrofits.

Commenters stated the ERISA 2007 standards reduce the ability to achieve future savings in the 

same way that the 2013 lighting savings were achieved; future program savings will have to be 

achieved largely through entirely new initiatives, and at higher cost portfolio approach for 

promoting a wider variety of bulbs.

Commenters stated that, while not part of EPA's assessment about the achievable annual 

incremental EE savings rate, which focused on utility-sponsored EE, EPA noted appliance and 

equipment standards and building codes have the potential to reduce electricity consumption in 

the states. According to commenters, EPA asserted that "if we were to capture the potential for 

state or local building codes to contribute additional reductions beyond those resulting from 

energy efficiency programs, we could reasonably increase the targeted annual incremental 

savings rate beyond 1.5 percent." Commenters indicated that EPA believes that the savings from 

building codes and appliance and equipment standards can be added to the savings from EE 

programs.

Commenters stated EPA does not understand the relationship between codes and standards and 

customer EE programs; these reductions are not additive, but can limit future customer EE 

growth potential as they will decrease EE savings opportunities in the future. Commenters stated 

accordingly, EPA cannot assert that the target rate is "less stringent than a level would be that 

accounted for" codes and standards (See Abatement Measures TSD at 5-38).

Commenters stated building codes and appliance and equipment standards historically have, and 

will continue to, save electricity for consumers. Commenters cited a 2012 study by ACEEE and 

the Appliance Standard Awareness Project (ASAP), which stated that codes and standards in 

effect in 2010 reduced electricity consumption by about 280 TWh in 2010. According to 

commenters, the study also projected that new codes and standards adopted between 2012 and 

2016 would save about 212 TWh in 2025 and 306 TWh in 2035.

Commenters stated that while these savings are meaningful and important, a "side effect" of 

increasing minimum codes and standards, which set the minimum efficiency levels for newly 

constructed buildings and a large range of residential, commercial and industrial energy 
54

consuming appliances, is that this significantly decreases the energy savings opportunities that 

would be available to EE program administrators, while driving up the costs to acquire additional 

energy savings above the new minimum efficiency levels.

Commenters stated, for example, EPRI has noted that "Appliance codes and standards coming 

into effect over the next five years increase baseline equipment efficiency, impacting the forecast 

for energy consumption out to 2035. In addition, with more efficiency baseline requirements 

there is less room for cost-effective energy efficiency. Refrigerators and freezers had shown the 

highest level of savings, with achievable potential in all five major appliance categories. Now 

there are no savings found for refrigerators and clothes washers as a result of codes and 

standards."

Commenters stated that standards for refrigerators and freezers have had a "pinching effect" that 

reduces opportunities for customer EE. Commenters also indicated that as IEE noted, new codes 

and standards "shift the starting point and this changes the potential for savings from rate-payer 

funded programs." Commenters stated it is reasonable to assume that the effect of future codes 

and standards for other appliances and equipment types will produce similar "pinching effects" 

on customer EE potential. Commenters stated that instead of increasing the target EE annual 

incremental savings rate, as EPA argues, future codes and standards should result in EPA 

lessening this target to reflect diminution of achievable EE. Commenters stated this does not 

mean, however, that states should not be able to include codes and standards in compliance 

plans.

Commenters stated that using building energy codes for achieving demand-side energy 

efficiency is problematic. Commenters were particularly concerned with EPA's inclusion of 

building energy codes as a strategy for achieving demand-side energy efficiency under this 

proposal. Commenters indicated there are some unique characteristics to the development, 

adoption, and implementation of building energy codes that go beyond the concerns the 

commenters had with Building Block 4 and the inclusion of energy efficiency programs as 

federally enforceable components of a state plan.

Commenters stated that the most cost-effective gains in residential energy efficiency have 

already been made. Commenters stated that over the years there have been significant advances 

in energy efficiency technologies such as better insulation, energy efficient appliances, and better 

heating, ventilation, and air conditioning (HVAC) equipment. Commenters also noted that the 

2012 International Energy Conservation Code (IECC) is 30 percent more efficient that the 2006 

IECC. As a result, commenters stated that new housing is inherently more efficient than existing 

housing. Commenters cited a recent NAHB economic study, which said "[o]n a per square foot 

basis, the newer the home is the less energy it uses." According to commenters, the study went 

on to note specifically that, while the size of new homes has generally increased over time, 

average energy consumption per square foot has declined steadily by year built. Commenters

indicated a similar trend was seen in both total energy used in homes as well as energy used 

specifically for HVAC.

Commenters said these advances do not come without a cost, however, as more stringent and 

prescriptive building codes have raised the cost of housing substantially. According to 

commenters, a comparison of the cost effectiveness of the 2012 IECC relative to the 2009 IECC 
55

clearly illustrates that consumers are already facing significant incremental construction costs 

due to more stringent and prescriptive codes. Commenters referred to Table 1 in their comments 

(2012 IECC cost effectiveness relative to 2009 IECC), which illustrated that on average 

nationally the incremental construction costs of building to the 2012 IECC, relative to the 2009 

IECC, is $5,668 for a single family home, which led to an annual energy savings of $427 and a 

simple payback rate of 13.3 years. When accounting for regional differences based on climate 

zone (see Figure 1, U.S. DOE Climate Zone Map), commenters estimated it will take anywhere 

from 8.9 to 17.3 years for homeowners to break even on the incremental costs of the 2012 IECC 

which exceeds, and in some cases more than doubles, home buyers' expected rate of return. 

While EPA assumes a typical payback period of about 10 years on energy efficiency 

investments, commenters noted that an NAHB consumer survey shows that while consumers 

indicate they are willing to pay two to three percent more for a home with energy-efficient 

features, the expectation is that the savings will result in a 7-year simple payback. Commenters

also referred to a further NAHB analysis, which shows that related rates of return observed in 

housing markets, like the rate households with debt are paying on that debt and rent-to-value 

ratios in residential rental properties, are also well in excess of 10 percent, implying a payback 

period of less than 10 years. 

According to commenters, the impacts of these incremental energy efficiency changes on 

construction costs have real world implications for housing affordability and the economy. 

Commenters estimated that every $1,000 increase in the price of a home keeps about 206,000 

potential buyers from qualifying for a mortgage. As a result, commenters noted that more 

stringent energy conservation requirements for new homes can have a reverse effect retarding 

filtering and keeping people in older, less energy-efficient homes." 

Commenters said the disproportionate impacts of these costs need to also be viewed in the 

context of the fact that new homes only account for a small share of the total housing inventory. 

According to commenters, it is not surprising that new housing stock accounts for only a small 

share of the total annual energy consumption and, subsequently, the emissions attributable to 

housing. Commenters’ recent economic reports concluded that while the residential sector 

accounts for 22 percent of energy consumption in the U.S. combined, all single family and 

multifamily housing built in the last 10 years accounts for just 3.2 percent of energy 

consumption. 

Commenters also stated that these distributional costs do not result in insignificant impacts and 

they clearly illustrate the potential for this rule to directly affect all aspects of the economy. 

Commenters noted that multiple Executive Orders, which guide the regulatory planning and 

review process, call for the analysis of such distributional impacts of various regulatory 

alternatives (see both Executive Order 12866 issued by President Clinton in 1993 and reaffirmed 

in E.O. 13563 issued by President Obama in 2011). Commenters also pointed that that even 

proponents who would recommend policymakers consider adopting or updating building energy 

codes caution that "States should explicitly evaluate the costs, benefits, and distributional aspects 

of potential building energy code revisions for various building sectors and stakeholders. . . . it is 

important for states to understand and account for their cumulative impacts on up-front costs and 

design flexibility." 
56

Commenters urged EPA to not ignore these clear economic impacts as it determines the 

reasonableness of its proposal. Should EPA finalize the proposed section 111(d) guidelines in a 

manner that retains requirements that extend "beyond the fence line," commenters recommended 

that EPA, and subsequently the states in their planning processes, evaluate the cost implications 

of applying the BSER on housing costs and affordability in determining whether adoption of 

more stringent building codes should be included as an option in Building Block 4. If the cost 

analysis does not or cannot account for these factors, commenters recommended that Building 

Block 4 be removed from BSER, as the statute clearly states that the administrator should 

establish a BSER considering the cost of such reduction. Absent the elimination of Building 

Block 4, commenters recommended that EPA limit the range of efficiency-related measures to 

utility operated demand-side energy efficiency programs.

According to commenters, the energy efficiency industry is maturing. Commenters pointed out 

that many consumers have already taken advantage of energy-efficient lighting, appliance 

recycling, and other long-standing programs to deliver energy efficiency. Commenters noted that 

he lower-cost and easy-to-adopt programs have been the most widely adopted programs, which 

is why some states have historically experienced high percentages of avoided energy demand 

savings. Commenters referred to data provided on the California Public Utility Commission's 

Energy Efficiency Data Portal, which stated that energy efficiency savings in California were 

achieved mostly by indoor lighting in the commercial and residential sectors. 

According to commenters, indoor lighting has reached a point of saturation that cannot be 

sustained unless a new technology can create light more efficiently than LED technology. 

Commenters noted that LED technology creates efficiency savings compared to CFL 

technology; however, the incremental savings are significantly smaller than the historical savings 

generated from moving from incandescent lights to CFLs and then to LEDs. As an example, the 

commenters noted that usage of 60 watts for an incandescent became 13 watts (78 percent 

reduction) with the move from incandescent to CFL, but the move from a 13 watt CFL to a 10 

watt LED (which costs significantly more than an equivalent CFL) resulted in only 3 watts of 

savings (an incremental 23 percent reduction). Commenters said the savings potential does exist, 

but it is much smaller.

Assuming a typical residential customer uses 12,500 kWh per year and converts 15 bulbs from 

incandescent to CFL, commenters estimated the resulting annual savings would be roughly 43 

kWh/year (60 watts to 13 watts, 2.5 hours per day) per bulb, for a total savings of approximately 

643 kWh/year- roughly five percent of the customer's average usage. Commenters expected that 

by 2017 the overwhelming majority of residential households will have already achieved these 

savings. Commenters estimated that the move from CFL to LED would result in only an 

additional 3 kWh/year per bulb (13-10 watts, 2.5 hours per day) for a total annual savings of only 

an incremental 41 kWh/year, which is roughly 0.3 percent of the customer's average usage, net of 

the CFL savings already achieved.

According to commenters, this example shows that the move from CFLs, a technology that is 

already widely adopted, to the next rung on the efficiency ladder, LEDs, will result in only very 

minor increases in EE savings. Commenters estimated this same trend applies to many other 

technologies, including HVAC equipment, which represents a major driver for the higher energy 

use of residential customers in Florida.
57

Despite these mature programs, commenters indicated that some consumers are still unwilling to 

adopt energy efficiency measures. When deciding whether to purchase a unit of electricity or to 

invest in energy efficiency, commenters said many consumers will respond by purchasing the 

unit of electricity and spending their dollars on other goods and services that have a higher 

perceived value.

Commenters also noted that EPA's proposed rule alludes to adopting and enforcing local 

building energy codes. According to commenters, public utilities historically have not enforced 

state or local building energy codes, and have neither the expertise nor the authority to enforce, 

verify, and/or analyze energy savings associated with code development and enforcement. 

However, commenters noted that, as the codes and energy savings standards advance, it will 

become increasingly more difficult for public utilities to create cost effective demand-side 

energy efficiency programs to meet EPA's proposed regulations because most states only allow 

utilities to incentivize and take credit for the energy savings that are over and above the baselines 

set by the codes. As those baselines increase, commenters estimated the incremental cost of 

exceeding those baselines will also increase. Even if EPA regulations allowed the utilities to 

count the savings difference between a customer's current state ("as found") and the more 

efficient piece of equipment, unless there is a drastic shift in the existing laws and regulations in 

most states, commenters stated the program would need to be cost-effective based on only the 

difference between the baseline and the more efficient equipment.

Commenters began their EE programs in earnest in 2008 with the development of their Bright 

Energy Solutions program. Commenters has engaged with residential, commercial and industrial 

consumers, as well as trade allies. Commenters estimated that these efforts have resulted in a 

savings, from calendar year 2009-2013 of 26,330.454 kWh at an average annual cost of 

approximately $600/kWh. While these efforts represent significant savings over time, 

commenters noted that appliance, motor, compressor and other efficiency elements embodied in 

various codes eventually reach a "maximum efficiency" level due to technology constraints, 

thermal limits, size limits, and economic and other conditions, such as diminishing 

returns. Commenters noted that the results are also skewed because state programs - as well as 

EPA's proposal - do not capture the real value of replacement savings rather than the difference 

between the current standard and the efficient model incentivized.

Due to the reduced availability of cost-effective energy efficiency gains as energy standards are 

approaching "max tech," and increased EE standards that will become effective in the 2015-2018 

time frame, commenters said the ability to achieve more efficiency has been significantly limited 

than was contemplated by EPA in its goal setting process. According to commenters, the dual 

effect of these limitations, when taken together with early action to implement EE well before 

the baseline year of 2012 or the effective date of 2020, means that the EE assumptions that lie at 

the heart of Building Block 4 do not represent the actual conditions in the industry for those 

utilities that have been proactive. Commenters stated that EPA needs to reconsider its proposed 

best practices level of EE performance to reflect actual conditions and feasibility of further 

efforts.

Commenters also stated that changes in manufacturing codes and building codes means that 

customers only have certain options available to them. For example, as appliances fail, 

commenters said most residential customers would only find EnergyStarTM certified appliances 
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available to them. Commenters stated that it is nearly impossible for utilities to take EE credit for 

this customer "choice." Also, as customers choose more efficient appliances, windows or other 

options, commenters said the availability of the next increment of savings declines and makes 

the incentive for that next increment more expensive. As the low-hanging fruit gets picked, 

commenters said the next increment of savings becomes more difficult, less cost-effective, and 

less likely for customer buy-in if it involves significant investment or consumer behavioral 

changes.

According to commenters, California's experience has shown that, as EE measures are 

implemented, they yield lower amounts of savings as the market is saturated; new measures are 

needed if the same rate of EE savings is to be maintained. For example, commenters noted that 

in recent years, behavioral EE programs have achieved substantial energy savings in California 

and will be a major factor in the state's ability to meet its goals. If EE is limited to a subset of 

existing and potential measures, commenters estimated it will not provide the incentives 

necessary to ensure that states continue to renew their EE portfolios and explore innovative EE 

programs that could produce sustainable energy savings over the long-term.

Commenters noted that more stringent state and federal standards already have captured the 

largest potential drivers of demand side efficiency. Commenters said the projected impacts of 

federal and state energy efficiency codes and standards are both significant and increasing. 

According to commenters, this reduces both the physical and financial (i.e., cost effective) 

potential for utility energy efficiency programs to reduce electricity sales. Commenters indicated 

this impact is particularly significant in Florida because such a high percentage of electrical sales 

are for air conditioning load and recent changes in energy efficiency codes and standards have 

largely targeted the efficiency of air conditioning equipment with dramatic results. Commenters

stated that this necessarily and substantially lowers the potential of air conditioning-based utility 

DSM programs in Florida to reduce electricity sales.

According to commenters, lower operating costs at Florida Power & Light (FPL) mean less 

utility-sponsored conservation is cost effective. Commenters determined that the cost 

effectiveness of utility-sponsored energy efficiency programs is significantly lower than it was 

previously due to lower fuel prices and more efficient generation on FPL's system. Commenters

said this is the same shift in their generating portfolio that already has produced a much lower 

emissions profile, positioning FPL to reach the targeted compliance levels. Thus, commenters

estimated a significant implementation of non-cost-effective utility energy efficiency will result 

in higher electric rates for all FPL customers and significantly higher bills for nonparticipants in 

those programs. If conservation is to be counted towards lower CO2 emissions, commenters

stated there should be no reason to distinguish between utility-sponsored energy efficiency and 

state mandated efficiency. In either case, commenters said the avoided kWh achieves the policy 

objective of lower emissions.

Commenters disagreed with EPA's assumption that EE savings will continue to grow at the same 

rate (1.5% of retail sales) for years into the future. According to commenters, only three of the 

twelve states EPA relies on have reported EE savings of 1.5%, and there is no evidence that 

these states can maintain that level of EE savings. While nine of the twelve states have 

legislatively established 1.5% EE goals, commenters contended that the mere establishment of a 
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goal does not mean it can or will be achieved. As an example, commenters noted that Indiana 

recently modified its EE targets and goals for electricity suppliers due to cost considerations. 

Commenters also noted that the types of EE measures that have been installed to date and those 

that are likely to be installed in the future will likely be different. Commenters pointed out that 

North Carolina electric service providers, like others around the country, have relied heavily on 

lighting measures to generate EE savings. According to commenters, approximately 70% of the 

EE savings reported by the IOUs and GreenCo were realized from lighting measures. 

Commenters noted that, while transition away from incandescent bulbs to compact fluorescent 

bulbs (CFL) has produced significant EE savings, as the lighting programs mature, fewer new 

opportunities will exist to replace incandescent bulbs because there will be fewer of those bulbs 

in use. While there can be additional transition to light emitting diode (LED) bulbs, commenters

said the additional amount of savings above CFL bulbs is smaller than the transition from 

incandescent to CFL. Commenters further noted that the phasing in of the federal prohibition on 

sale of incandescent bulbs lowers baseline lighting consumption, in effect reducing or 

eliminating the opportunity for EE savings from lighting in future years with respect to utilitybased EE lighting programs. Commenters contended that the diminishing returns for EE savings 

from lighting measures is just one example of why it is incorrect to assume that the amount of 

new EE savings can continue to grow at a 1.5% rate for many years into the future.

According to commenters, EPA's assumption that EE savings will continue to grow at an 

incremental 1.5% rate for years into the future is also contradicted by the changing baseline for 

building and appliance energy codes North Carolina updated in 2012 and is affected by 

equipment and appliance efficiency standards developed by the federal government. With 

successive changes to the regulatory requirements for energy-consuming equipment or 

construction standards, commenters said the likelihood of EE opportunities through utility EE 

programs is diminished. Commenters contended that the changing baselines mean it is 

increasingly less likely that states can achieve a growing or constant rate of incremental additions 

to EE savings.

Commenters stated that energy efficiency goals are inhibited by the fact that federal and state 

building codes, as well as appliance efficiency standards, are not viable compliance options, as 

such metrics are already captured elsewhere; these codes and standards are built into the electric 

sales forecasts. Therefore, commenters concluded, quantifying these codes and standards into a 

compliance option would result in states double-counting savings as energy efficiency programs 

and as embedded load reductions to the sales forecasts. Commenters argued that this approach is 

confusing because it is not consistent with President Obama's Climate Action Plan (CAP), the 

blueprint for greenhouse gas reduction under which the CPP is being pursued. Commenters

noted that the CAP devotes an entire section to "cutting energy waste in homes, businesses, and 

factories," including efficiency standards for appliances and federal buildings, new approaches to 

the delivery of cost-effective residential energy, and increasing the energy efficiency of 

commercial and industrial buildings. Despite the President's emphasis on these modes of energy 

efficiency, commenters contended that EPA is dis-incentivizing companies from earnestly 

pursuing them by not counting them towards compliance under the CPP.

Commenters stated that energy building codes also impact energy savings. In New Jersey's 

program, as in most EE programs, commenters noted the energy savings are calculated as the 
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difference between the energy efficiency equipment and the energy building code requirement 

for that equipment. As the energy building codes improves the energy efficiency that is required 

to be installed in new and retrofit construction, commenters said the energy savings an EE 

program can claim is getting smaller and smaller. Commenters stated that the cost to acquire 

these savings is also increasing. According to commenters, some states calculate the energy 

savings based on the difference between the energy efficient equipment to be installed and the 

efficiency of the unit it is replacing. However, commenters said that it requires a more complex 

measurement and verification method than the deemed energy savings calculation method 

currently used by the NJCEP and other state EE programs. Commenters contended this increases 

the program administration costs and reduces the dollars available for EE direct incentives.

Commenters noted that their cooperative encourages energy efficiency by their 

members. According to commenters, most cooperatives have aggressive EE programs targeted 

specifically for the demographics of the cooperative. Commenters asked EPA to keep in mind 

that, given the very diverse load profiles of their membership, not all EE measures have the same 

benefit. Commenters believed EPA had overstated the value of EE in the Clean Power 

Plan. Commenters stated that many of the low cost EE measures have been adopted in 

Colorado. Therefore, commenters determined there is a diminishing return on investment for 

expanded measures.

Commenters stated that EPA should reconsider its assumptions in Building Block 4 to reflect 

diminishing returns on energy efficiency programs outside the "fence line" of power systems.

Commenters stated that energy efficient lighting can achieve significant energy savings potential. 

Commenters said that solid-state lighting is five to six times more efficient than incandescent 

bulbs and up to 1.5 times as efficient as CFLs. Depending on what an LED is replacing, 

commenters estimated that high-efficiency lighting typically reduces electricity use by 25 

percent to 80 percent. According to commenters, quality LED lights can also last up to 25 times 

longer than traditional incandescent bulbs. 

Commenters stated that, in 2013, lighting technologies were responsible for 17 percent of total 

U.S. electricity, using approximately 609 terawatt-hours of site electricity, or about 6.9 quads of 

source energy. While the electricity consumed by the lighting sector is significant, commenters

indicated that the adoption of LEDs based on anticipated improvements in LED technology 

efficacy as well as established technology diffusion rates present equally significant energy 

savings potential and GHG abatement tool.

Commenters referred to a DOE study published in August 2014 that forecasted the expected path 

of LED adoption in the U.S. marketplace, and estimated the energy savings offered by LED 

products out to year 2030. Commenters noted that, by 2030, DOE anticipates LEDs will 

dominate lighting sales, comprising 84 percent of all sales by lumen-hours, and dramatically 

lower national energy consumption. 

According to commenters, the market penetration of LEDs is projected to drive a 40 percent 

reduction in energy consumption, or a total energy savings of 3.0 quads, in 2030 alone, which is 

nearly the total energy consumed by 24 million homes today, worth over $26 billion in savings at 
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today's energy prices. Without LEDs, commenters said DOE's model projects that the energy 

consumption of the lighting sector would grow to approximately eight quadrillion Btu (quads). 

As further evidence, commenters noted that the American Council for an Energy Efficiency 

Economy (ACEEE) concluded a survey in 2014 of existing studies of the technical, economic, 

and achievable energy efficiency potential of lighting products and found considerable potential 

savings from lighting, even after the effects of federal lighting standards were incorporated, in 

the range of 8-77 percent of total maximum achievable potential savings for the residential sector 

and 34-63 percent for the commercial sector. 

Commenters also stated that states can--and should--use end-use EE programs under section 

111(d). According to commenters, extensive research and practical results from existing EE 

programs continue to demonstrate reducing carbon emissions through EE measures cost 

significantly less than through other means. Commenters noted that a number of studies have 

concluded that EE programs deliver economic benefits of $2 to $4 (or more) for each $1 

invested, on average. 

Commenters noted that at least 44 states and the District of Columbia currently operate energy 

efficiency programs, with budgets totaling over $7.7 billion. According to commenters, policies 

and programs to increase end-use EE adopted by states include adoption of energy efficiency 

resources standards (EERS), utility and public benefit programs and policies, adopting updated 

building codes and compliance, and financial incentives for private installation of more efficient 

appliances like LEDs.

Commenters stated that the adoption of energy efficient lighting technologies like LEDs have--

and will continue to--increasingly contribute to GHG emission reductions through state-level EE 

programs. Based on recent analyses by DOE and ACEEE, commenters estimated that the 

adoption of LED technologies alone could account for a 30 percent reduction in greenhouse gas 

(GHG) emissions by 2030. A summary of these and other analyses is presented below:

• A DOE study shows the significant, near-term potential for LEDs to contribute to 

reducing GHG emissions through increased efficiency of end-use lighting 

technologies. DOE projects that energy savings associated with projected market 

penetration of LED lighting would reduce GHG emissions by 180 million metric 

tons of carbon dioxide (MMTCO2). 

• A study by the American Council for an Energy Efficiency Economy (ACEEE) 

found that rapidly deployable energy efficiency policies can yield an overall 26 

percent reduction in greenhouse gas (GHG) emissions relative to 2012 baseline--

avoiding 600 MMTCO2, obviating the need for 494 power plants, and saving 925 

million MWh of electricity. 

• An analysis by ICF International concluded that in 2030, if energy efficiency 

measures were used as a compliance mechanism for section 111(d), electricity 

system cost savings would be $5.67 billion greater due to EE's ability to displace 

other, more expensive compliance options under a national standard scenario. The 
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incremental value of additional EE as a compliance option in 2030 is 

$12.10/additional MWh saved. 

• The Rhodium Group and the Center for Strategic and International Studies 

analysis of the 111(d) regulations concluded that including EE crediting as a 

compliance option reduces the amount of abatement that needs to occur through 

changes in sources of power generation--a more expensive compliance option. 

Further, RHG found that crediting EE could likely increase electricity prices, as 

utilities add the cost of efficiency programs to their customers' electricity bills, but 

could decrease overall costs as those customers buy less electricity. 

Because of the significant energy usage by the lighting sector and the significant opportunity to 

reduce GHG emissions at the lowest compliance cost compared to other section 111(d) Building 

Blocks and EE measures, commenters asserted that EPA should consider DOE's market adoption 

and technology projection forecasts of LED energy savings and CO2 emissions potential when 

setting BSER performance standard stringency under section 111(d). 

Commenters stated that other factors including the enforcement of building codes and customer 

opt-outs were not factored into the EPA's analysis. Commenters noted that the EPA's Proposed 

Guidelines allude to adopting and enforcing local building energy codes. Historically, 

commenters noted that public utilities have not enforced state or local building energy codes, and 

have neither the expertise nor the authority to enforce, verify, and/or analyze energy savings 

associated with code development and enforcement. However, commenters noted as the codes 

and energy savings standards advance, it will become increasingly more difficult for public 

utilities to create cost- effective demand-side energy efficiency programs to meet the EPA's 

proposed targets, because most states only allow utilities to incentivize and take credit for the 

energy savings that are over and above the baselines set by state and local building energy 

codes. As those baselines increase, the commenters stated that the incremental cost of exceeding 

them will also increase. Commenters stated that even if utilities are allowed to count the savings 

difference between the customer's current state ("as found") and the more efficient piece of 

equipment, unless there is a drastic shift in the existing laws and regulations in most states, the 

program would still need to be cost effective based on only the difference between the baseline 

and the more efficient equipment before it could be offered.

Commenters stated that the Proposed Guidelines do not take into account the fact that some state 

regulations allow certain industrial and commercial customers to opt-out of public utility offered 

energy efficiency programs. Commenters stated that the process of opt-out is handled very 

differently in each jurisdiction. Commenters noted that counting the impacts, if any, related to 

opt-out is not addressed in the proposal. Further, the commenters stated that the Proposed 

Guidelines do not contemplate who is going to account for energy efficiency for opt-out 

customers in the future. Historically, commenters noted that public utilities have not counted the 

impacts associated with opt-out and should not be required to track these savings in the future 

unless the costs can be recovered from the industrial and commercial sectors through state ratemaking mechanisms and only if these savings are counted toward the statewide goal.

Commenters stated that these levels are likely not achievable over the long-term, and even less 

likely on a cost effective basis. Commenters noted that by 2020, the Energy Independence and 
63

Security Act 2007 lighting standards will be fully implemented, leaving utilities with little, if 

any, opportunities to take advantage of residential or commercial lighting measures. Commenters

stated that advancing building energy codes also will deplete the savings potential of residential 

and commercial new construction programs as they strive for net-zero energy consumption by 

2030.

Commenters stated that achieving 1.50% in later years will likely come with a substantial 

increase in portfolio costs. By their nature, commenters stated that EE measures typically require 

a substantial upfront investment in exchange for savings that accrue over the lifetime of the 

deployed measure. Commenters stated that aggressive codes and standards will diminish savings 

potential and limit the number of measures that are cost-effective for the customer and the utility. 

Commenters stated that the EE assumptions used in the goal setting calculations need to be set at 

more realistic and reasonable levels since energy savings will be more challenging to deliver 

over the next 15 years as markets mature and federal equipment standards erode potential 

creditable savings.

Commenters stated that the impact of this phenomenon is most acute for lighting standards 

resulting from Energy Independence and Security Act (EISA) of 2007. Commenters stated that 

utility-sponsored EE programs have traditionally heavily relied upon lighting programs (most 

significantly residential CFL, and commercial T-8 fluorescent lighting programs) for a very 

significant portion of their EE achievements. Commenters stated that while specific 

disaggregated data on program administrator reliance on lighting measures is typically not 

disclosed, indications are that many residential programs may have relied upon lighting measures 

for over half of their EE achievements in the past. Commenters noted that one study conducted 

on the subject in the northeastern U.S. indicated that the two EE programs reviewed relied upon 

lighting for 94% of the EE achievements. Commenters stated that with the adoption of the EISA 

2007 lighting standards, standard incandescent bulbs and T-12 commercial lighting fixtures are 

no longer able to be manufactured or imported into the U.S. Therefore, the commenters stated 

that this large and inexpensive market for utility-sponsored EE savings is being substantially 

eroded as the baseline efficiency level increases to the new standard. It is anticipated that by 

2020 or soon thereafter, CFL devices will become the standard (or baseline), further limiting 

future efficiency improvements from these programs. 

Commenters listed other options for the invalid extrapolations. Commenters stated that nonlighting measures have been aggressively pursued by many utilities; however capturing these 

savings is much more difficult. Commenters stated that non-lighting savings have not been 

achieved in significant quantities in any state, and most cost substantially more on a per-MWh 

basis. These measures are primarily comprised of thermal efficiency measures, such as heating, 

air conditioning, and other appliance efficiency upgrades, and weatherization measures. 

Commenters noted that they are expensive, requiring a relatively large capital investment by 

customers for new appliances and equipment. This is problematic, as customers customarily 

avoid such large expenditures until a precipitating event occurs (appliance or equipment failure, 

etc.). Therefore, the commenters stated that utilities would need to offer a much higher incentive 

payment to encourage customer participation. Commenters stated that these are the types of EE 

measures that will need to be increasingly relied upon to achieve ongoing incremental 

improvements going forward as dependence on abundant an inexpensive lighting measures 

declines significantly.
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Comment 6: Commenters noted barriers to implementation of EE.

Response 6: The commenters cite various barriers to implementing energy efficiency. 

Commenters cite various studies that discuss the wide range of market barriers that exist for 

adopting energy efficiency practices. For discussion on barriers and potential of energy 

efficiency, see Demand-side Energy Efficiency TSD for CPP Final Rule. The EPA decided not 

to include DS-EE in BSER for the final rule. See sections V.A and V.B of the final rule preamble 

of the CPP for details. EPA recognizes how DS-EE strategies are being designed and 

implemented to reduce the barriers to greater investment in energy efficiency. DS-EE remains 

generally available for compliance, as DS-EE programs are being implemented widely across the 

sector and investments are increasing. See multiple subsections of section VIII of the final rule 

preamble of the CPP for details on using DS-EE for compliance.

The following are summaries of the specific public comments under this comment:

Commenters stated there are barriers to expanding EE programs. 

Commenters stated EPA has ignored technical barriers to achieving DSEE levels. Commenters

stated numerous barriers exist that hinder states from sustainably achieving the DSEE levels 

prescribed by EPA. Commenters stated the barriers include: climate differences, building codes, 

state-level regulatory frameworks, customer mix, DSEE evaluation method for cost 

effectiveness, economy/market factors, and electricity rates and rate structures.

Commenters stated the Proposed Rule does not reflect the challenges associated with utilizing 

the existing state Energy Efficiency Resource Standards, policies and procedures, in the energy 

efficiency framework in the Proposed Rule.

Commenters stated that for over 30 years, economists, engineers and policy analysts have 

described a phenomenon in energy markets that came to be known as the "energy paradox" or 

the "efficiency gap." Commenters stated engineering/economic analyses showed that 

technologies exist that could potentially reduce the energy use of consumer durables (from light 

bulbs to air conditioners, water heaters, furnaces, building shells and automobiles) and producer 

goods (like motors, HVAC, and heavy duty trucks). Commenters stated because the reduction in 

operating costs more than offset the initial costs of the technology, resulting in substantial 

potential net economic benefits, we confront the paradox: "Why don't consumers purchase more 

economically efficient durable goods that result in net economic savings?”

Commenters provided a figure showing that several major research institutions estimate that 

there is a large potential to reduce the consumption of each of the forms of energy consumed by 

most households (electricity, natural gas, gasoline, and diesel), all of which are substantial 

emitters of carbon. Commenters provided another figure showing that a 20 to 30 percent 

reduction in consumption for energy sources consumed directly by households is technically 

feasible and economically practicable. Commenters stated the potential long-term reduction in 

consumption of diesel fuel, which is used by heavy duty trucks is considerably larger, primarily 

because the first fuel economy standards were only recently adopted, almost forty years after the 

first fuel economy standards for light duty vehicles were adopted.
65

Commenters stated that recently, energy efficiency standards have become a hot topic in energy 

policy circles. Commenters stated they had a very prominent place in the recent articulation of 

the Administration's climate policy and several major standards are moving through analytic and 

regulatory reviews at the federal and state levels. Commenters stated among the most prominent 

examples are major appliance efficiency standards in Washington D.C. and Sacramento, a sharp 

increase in energy efficiency building codes, and National Research Council review of the fuel 

economy of medium and heavy duty trucks tied to the first ever fuel economy standards for these 

vehicles.

Commenters stated at the same time, the cost benefit analysis used to support recent performance 

standards across a broad range of consumer durables has been criticized, with a great deal of 

attention placed on the recent increase in CAFE standards that governs cars and pickup trucks 

(light duty vehicles). Perplexed by the fact that in the EPA/NHTSA light duty vehicle fuel 

economy standard analysis "the preponderance of the estimated benefits stems from private 

benefits to consumers," commenters stated that the Mercatus Center argued that the market 

cannot possibly perform his poorly with respect to energy efficiency.

Commenters questioned how can it be that consumers are leaving billions of potential economic 

gains on the table by not buying the most energy-efficient cars, clothes dryers, air conditioners, 

and light bulbs? Commenters stated moreover, how can it also be the case that firms seeking to 

earn profits are likewise ignoring highly attractive opportunities to save money? Commenters

stated if the savings are this great, why is it that a very basic labeling approach cannot remedy 

this seemingly stunning example of completely irrational behavior? It should be quite simple to 

rectify decisions that are this flawed.

Commenters stated the Mercatus view is that since "the preponderance of the assessed benefits is 

derived from an assumption of irrational consumer choice" and such behavior is easily rectified 

by labeling programs, which already exist, "the main failure of rationality is that of the regulators 

themselves." Commenters stated in Mercatus' view, the fault lies in the agencies, whose analysis 

must be wrong because it was prepared under legal mandates structured so that "government 

officials act as if they are guided by a single mission myopia that leads to the exclusion of all 

concerns other than their agency's mandate."

Commenters stated the other and correct answer to the question is well-known. Commenters

stated energy markets are imperfect, riddled with barriers and obstacles to efficiency, especially 

the market for electricity. Commenters stated market imperfections lead to market failures and 

underinvestment in energy saving technologies. Commenters stated McKinsey and company 

offered the following framing in one of a series of analyses addressing various aspects of the 

ongoing transformation of the electricity sector:

"The highly compelling nature of energy efficiency raises the question of why the 

economy has not already captured this potential, since it is so large and 

attractive. In fact, much progress has been made over the past few decades 

throughout the U.S., with even greater results in select regions and applications. 

Since 1980, energy consumption per unit of floor space has decreased 11 percent 

in residential and 21 percent in commercial sectors, while industrial energy 

consumption per real dollar of GDP output has decreased 41 percent. As 
66

impressive as the gains have been, however, an even greater potential remains 

due to multiple and persistent barriers present at both the individual opportunity 

level and overall system level. By their nature, energy efficiency measures 

typically require a substantial upfront investment in exchange for savings that 

accrue over the lifetime of the deployed measures. Additionally, efficiency 

potential is highly fragmented, spread across more than 100 million locations and 

billions of devices used in residential, commercial, and industrial settings. This 

dispersion ensures that efficiency is the highest priority for virtually no one. 

Finally, measuring and verifying energy not consumed is by its nature difficult. 

Fundamentally, these attributes of energy efficiency give rise to specific barriers 

that require opportunity-specific solution strategies and suggest components of an 

overarching strategy." 

Commenters stated even in the industrial sector, where firms are considered to be motivated 

primarily by economic profitability incentives, the efficiency gap is evident. A recent review of 

160 studies of industrial energy efficiency investments conducted for the United Nations 

Industrial Development Organization (UNIDO) framed the analytic issues by posing and 

answering the key questions as follows:

• Why do organizations impose very stringent investment criteria for projects to 

improve energy efficiency?

• Why do organizations neglect projects that appear to meet these criteria?

• Why do organizations neglect energy efficient and apparently cost-effective 

alternatives when making broader investment, operational, maintenance and 

purchasing decisions?

Commenters stated because of barriers to energy efficiency these seemingly profitable measures 

are not being adopted. Commenters stated there is a large body of literature on the nature of 

barriers to energy efficiency at the micro and the macro level, which draws on partly overlapping 

concepts from neo-classical economics, institutional economics (including principal-agent theory 

and transaction cost economics), behavioral economics, psychology and sociology. Commenters

stated that barriers at the macro level involve price distortions or institutional failures. 

Commenters stated in comparison, the literature on barriers at the micro level tries to explain 

why organizations fail to invest in energy efficiency even though it appears to be profitable 

under current economic conditions determined at the macro level.

Commenters stated the Mercatus critique of the efficiency gap concept embodies a second flaw 

that the efficiency gap analysts have overcome in the past decade - defining the problem as 

solely a consumer information problem. Commenters stated in fact, in the last decade the 

important role that market imperfections play on the supply-side of the market has been noted. 

Commenters stated the market outcome reflects both the supply of and demand for technologies. 

Commenters stated as Carl Blumstein has noted: 

"But what if the energy-efficiency gap was regularly framed as a supply-side 

problem, such as a concern about whether problems in the supply-chain create a 
67

gap between the energy-efficiency potential of goods and services and the 

adoption of energy-efficient goods and services? After all, in many instances 

consumer choices are constrained because it is not practical for manufacturers to 

produce a continuum of choices; suppliers can only provide a limited set of 

discrete choices within a range of prices, functionality and energy efficiency. In 

addition, even when the choice set of energy users is not constrained, limitations 

related to the behavior of actors in the supply chain may restrict consumer 

choices." 

Commenters stated when the market barriers and imperfections on the supply and demand sides 

of the energy market are properly comprehended, it is clear that the performance standards are 

not an example of "overriding consumer preferences with energy regulations," based on an 

assumption of consumer irrationality as Mercatus claims, rather, even without significant 

externalities (like climate change). Commenters stated energy performance standards are a welljustified effort to overcome severe market obstacles constraints and cognitive limitations on 

human decision making that impose huge, unnecessary energy costs on consumers and the 

economy.

Commenters provided a table that summarizes a 1996 paper prepared by analysts at the LBNL 

(see Table II-1, LBL Market Barriers to Energy Efficiency). Commenters stated the analysis was 

framed in terms of the role of policy intervention to promote efficiency as states restructured the 

electricity market. Commenters stated the paper "focuses on understanding to what extent some 

form of future intervention may be warranted and how we might judge the success of particular 

interventions." Commenters stated restructuring did not spread throughout the utility industry 

and in the past few years, reliance on interventions in the market to increase efficiency and 

renewables has grown, even in the deregulated states. Commenters stated the growth of market 

interventions is consistent with the conclusions in the LBL paper.

Commenters concluded that there are compelling justifications for future energy-efficiency 

policies. Commenters stated that nevertheless, in order to succeed, they must be based on a 

sound understanding of the market problems they seek to correct and a realistic assessment of 

their likely efficacy.

Commenters provided a paper, the Golove and Eto paper identified four broad categories of 

factors that inhibited investments in energy efficiency - barriers, transactions costs, market 

failures, and behavioral (noneconomic) factors. Commenters stated it identifies about two dozen 

specific factors spread roughly equally across these four categories. Commenters stated a key 

aspect of the analysis is to identify each of the categories as coming from a different tradition in 

the economic literature. Commenters stated the barriers category is made up of market structural 

factors. Commenters stated the market failure category is made up of externalities and imperfect 

competition. Commenters stated however, the LBL paper bases a substantial part of its argument 

on a transaction cost perspective as a critique of neo-classical economics. 

Commenters stated neo-classical economics generally relies on the assumption of frictionless 

transactions in which no costs are associated with the transaction itself. In other words, 

commenters stated the cost of activities such as collecting and analyzing information; negotiating 

with potential suppliers, partners and customers; and risk are assumed to be nonexistent or 
68

insignificant. Commenters stated this assumption has been increasingly challenged in recent 

years. Commenters stated the insights developed through these challenges represent an important 

way to evaluate aspects of various market failures (especially those associated with imperfect 

information).

Commenters stated starting from the observation that "transaction costs are not insignificant but, 

in fact, constitute a primary explanation for the particular form taken by many economic 

institutions and contractual relations", the LBNL paper identifies such costs and information as 

a critical issue, pointing out that "the key issue surrounding information is not its public goods 

character, but rather its asymmetric distribution combined with the tendency of those who have 

it to use it opportunistically."

Commenters stated a second analytic framework that rests on a technology investment approach 

was offered more recently by other analysts at LBNL. Commenters provided Figure II-2 (titled: 

“Penetration of Mitigation Technologies: A Conceptual Framework”) that shows one can use a 

technology investment framework to assess the factors that cause investment in energy efficiency 

to fall well short of the technical potential. As shown in in Figure II-2, the LBL study identified 

broad categories of market imperfections, barriers, and obstacles that are important in 

determining the level of investments - economic, transaction cost, and social cultural and 

institutional. As shown in in Figure II-2, the analysis emphasizes the important role that policy 

can play in determining where the market will settle. Commenters stated thus, there are six broad 

categories of factors that must be incorporated into the analysis of the level of investment in 

energy saving technologies. Commenters stated market performance is influenced by: behavioral 

factors (social, cultural & institutional), economic factors, transaction cost, externalities (nonenergy costs), technological change, public policy.

Commenters stated a more recent paper from Resources for the Future (RFF), entitled "Energy 

Efficiency Economics and Policy," addresses exactly the same issues as the earlier LBNL paper, 

i.e., the debate over the efficiency gap observed in energy markets. Commenters stated the 

authors of the RFF paper characterize the efficiency gap debate as follows: 

"Much of the literature on energy efficiency focuses on elucidating the potential rationales for 

policy intervention and evaluating the effectiveness and cost of such interventions in practice. 

Within this literature there is a long-standing debate surrounding the commonly cited "energy 

efficiency gap..." Within the investment framework, the energy efficiency gap takes the form of 

under investment in energy efficiency relative to a description of the socially optimal level of 

energy efficiency. Such under investment is also sometimes described as an observed rate or 

probability of adoption of energy-efficient technologies that is "too slow."

Commenters noted that Table II-2 presented their summary of the RFF framework. Commenters

stated the RFF paper suggests three broad categories of market failures - the individual, the 

interaction between economic agents and the fit between economic agents and society. 

Commenters referred to these three levels as the behavioral, the market structural, and the 

societal levels. In the present context, commenters considered behavioral failures to represent 

consumer behavior that is inconsistent with utility maximization, or in the current context, 

energy service cost-minimization. Commenters stated in contrast, market failure analysis is 

distinct in presupposing individual rationality and focusing on the conditions surrounding 
69

interactions among economic agents and society. Commenters stated the societal level market 

failures are closest to what the traditional sources of the economic literature refers to as market 

failure. Commenters stated these are primarily externalities and public goods. In the market 

failure category, the Figures show the distinction between the structural and societal levels 

suggested by the paper. Commenters stated it also includes a few more specific failures that were 

discussed in the text, but not included in the original table. Commenters stated there are about a 

dozen specific market failures spread across these categories. Commenters stated these were also 

considered market failures in the LBL framework. Commenters stated the LBNL barriers and 

transaction costs fit in the category of interactions between economic agents, as would imperfect 

competition.

Commenters stated one obvious point is that, as in the case of the LBNL framework, information 

problems occur in all categories of the RFF analysis, with several manifestations in each. 

Commenters also noted that RFF ties the investment framework to the innovation adoption 

framework. Commenters stated in this analysis they do so through the analysis of market 

imperfections.

Commenters stated that a fourth comprehensive approach that adds depth to the analysis is the 

framework offered in a detailed analysis of efficiency in the building sector prepared by 

McKinsey and Company, and provided in a table. Commenters stated the McKinsey 

conceptualization of barriers and obstacles to energy efficiency uses three broad categories -

structural, behavioral and availability. Commenters stated there are about two dozen specific 

barriers described. Commenters stated moreover, McKinsey identifies nine different clusters of 

activity in the building sector. Commenters stated the manifestation of the barriers is different in 

the clusters, so McKinsey ends up with fifty discrete barriers.

Commenters provided a table that presents the framework utilized by the California Energy 

Institute in evaluating policies to increase energy efficiency in businesses. Commenters stated it 

is notable in two respects. Commenters stated first, it is oriented toward businesses, which is a 

useful antidote to the overemphasis on residential consumers in the efficiency gap debate. 

Commenters stated second, it explicitly endeavors to summarize and compile the various 

approaches to analyzing the "efficiency gap," used by others. Commenters stated in doing so, it 

returns to the traditional distinction that is made between market failures, which are recognized 

in neoclassical approaches, and other obstacles to investment in energy efficiency in.

Commenters provided input on externalities. Commenters stated the large negative externalities 

associated with the fossil fuel-based electricity sector are the proximate cause of the need to recenter the sector on alternative resources. Commenters stated the need for change is great and 

urgent. Commenters stated however, the negative externalities are not the only obstacles that the 

transformation confronts. Commenters stated other market barriers and imperfections must be 

overcome to control the cost and speed the transition to a new electricity system.

Commenters stated there is a very large literature on the externalities associated with energy 

consumption. Commenters stated importantly, it goes well beyond the negative national security 

and environmental externalities, which are frequently noted in energy policy analysis. 

Commenters stated the central observation on the supply-side is that many of the benefits of 

alternative generation technology resources or the processes by which their costs would be 
70

reduced, e.g., public goods qualities of research and development, learning by doing, network 

effects, are positive externalities themselves. Commenters stated this means the private sector 

will underinvest. Commenters stated long lead times for technology development, increasing 

returns to scale and network effects make entry difficult.

Commenters stated the macroeconomic effects of energy consumption and energy savings are 

important externalities of the efficiency gap, as are health and welfare effects. Commenters

stated there are two macroeconomic effects that have begun to receive a great deal of attention -

multipliers and price effects. Commenters stated the ability to increase macroeconomic activity 

or, more importantly in the case of climate change, moderate reductions in macroeconomic 

activity that flow from the need to shift energy resources is an important policy consideration.

Commenters stated that choosing least cost approaches to decarbonization is critically important 

from the macroeconomic perspective. Commenters stated reducing energy consumption tends to 

reduce economic activities that have relatively small multipliers (especially when energy imports 

are involved as in the transportation sector) and increase economic activities that have large 

multipliers (including the direct effects of spending on technology and the indirect effect of 

increased household disposable income).

Commenters provided input on the slow responses on the demand-side. Commenters stated 

consumers and producers are poorly informed, influenced by social pressures and constrained in 

their ability to make the calculations necessary to arrive at objectively efficient decisions. 

Commenters stated consumers and producers apply heuristics that reflect rationality that is 

bounded by factors like risk and loss aversion. Commenters stated inattention to energy 

efficiency is rational, given the magnitude, variability, and uncertainty of costs, as well as the 

multi-attribute nature of energy consuming durables. Commenters stated the product is a bundle 

of attributes in which other traits are important and energy costs are hidden costs. Commenters

stated the resulting energy expenditures are important components of total household spending. 

Commenters stated important benefits of energy consuming durables may be "shrouded" in the 

broader multi-attribute product.

Commenters stated consumers are influenced by social norms and advertising. Commenters

stated consumers respond sluggishly to price increases, so the shifting of the risk of price 

volatility onto the consumers does not have the hoped for effect in stimulating demand for 

alternative resources. Commenters stated the undifferentiated nature of the product makes it hard 

for new entrants to secure a foothold (niche) from which to build scale and learn-by doing. 

Commenters stated energy consuming durables have long lives, and consumers frequently do not 

make the purchase decision. Commenters stated the agents who make the purchase decisions and 

consumers are first cost sensitive and have difficulty projecting energy prices and quantities to 

make lifecycle cost calculations. Commenters stated the demand-side does not receive the 

attention commensurate with its importance as a source of market failure or its potential impact 

on the transition to a decarbonized sector.

Commenters stated these factors weaken the ability of price to deliver the first best outcome and 

trigger the search for second best solutions. Commenters stated moreover, while "picking 

winners" is fraught with dangers, setting the right level of the tax is equally difficult and the 

benefits of overcoming inertia and other barriers to cost reducing innovation are large. 
71

Commenters stated a portfolio of policies that includes both carbon taxes and targeted 

intervention to stimulate innovation, is widely seen as the best approach.

Commenters stated the empirical evidence on consumer rationality in the literature paints a 

picture that bears little resemblance to the rational maximizer of neoclassical economics. 

Commenters found a risk averse, procrastinating consumer, who responds to average, not 

marginal prices, who is heavily influenced by social pressures, with discount rates that vary 

depending on a number of factors and has difficulty making calculations, not to mention the fact 

that the most important decision, which energy consuming durable is made by someone else.

Commenters stated firms suffer similar problems. Commenters found organization structure 

matters a great deal in routine bound, resource strapped organizations confronted with 

conflicting incentives and a great deal of uncertainty about market formation for new 

technologies. Commenters stated knowledge and skill to implement new technologies is lacking 

and firms have little incentive to create it because of the difficulty of capturing the full value. 

Commenters stated public policy efforts to address these problems have been weak and 

inconsistent. Commenters stated the supply-side does not escape these factors and it exhibits the 

added problem of powerful vested interests and institutional structures that are resistant, if not 

adverse to change.

Commenters stated given this, it is little wonder that the centerpiece of traditional economic 

analysis, the discount rate, which is supposed to express the way the utility maximizer 

maximizes value is a shambles. Commenters stated it is claimed to represent the value people 

place on efficiency, which is presumed to be correct, but for externalities, which do not enter into 

the private calculation, or information problems, which frustrate the calculation. Commenters

stated the empirical analysis of discount rates shows that this claim suffers from two fundamental 

flaws. Commenters stated we have no solid basis to answer two basic questions.

Commenters stated the market exhibits a high "implicit" discount rate, which commenters

interpret as the result of the many barriers and imperfections that retard investment in efficiency 

enhancing technology. Commenters stated there are several aspects of the high discount rate that 

deserve separate attention. Commenters stated there is a low willingness to pay and a low 

elasticity of demand. Commenters stated in a sense the discount rate is the centerpiece of the 

market fundamentalist objection to performance standards.

• How big is the discount rate?

• How big should it be? 

Commenters stated estimates of the discount rate vary widely, from zero to well over 100 percent 

and the discount rate appears to be influenced by a wide number of personal and situational 

factors. Commenters provided several tables, including Table V-1, Empirical Evidence 

Supporting the Efficiency Gap; Table V-2, Key Characteristics of and Findings of Empirical 

Studies on Efficiency Gap; and Table V-3, Market Barriers and Imperfection in Climate Change 

Analysis).
72

Commenters stated there could be political impediments to expanding EE programs, for 

example, state and local governments, as well as homeowner associations, may have restrictions 

in effect to protect historic properties and preserve neighborhood character. Commenters stated 

these restrictions can limit how residences and buildings can be modified to be more energy 

efficient. 

Commenters stated EPA has proposed increasing demand-side energy efficiency (DSEE) to 

unreasonable levels based on the short-term, unsustainable experience of only three states, one of 

which is not even subject to this proposal. Commenters stated EPA's assumptions ignore the 

practical barriers to achieving and maintaining such levels. Commenters stated BSER for 

existing sources, moreover, cannot include "reductions of electricity from the grid."

Comment 7: Engaging Customer Participation is Voluntary; the EPA should consider unique 

circumstances of states and COOPs.

Response 7: The EPA decided not to include DS-EE in BSER for the final rule. See sections

V.A and V.B of the final rule preamble of the CPP for details. However, the EPA recognizes that 

DS-EE may be considered as a cost-effective emissions reductions strategy which create multiple 

benefits, including lower electric bills, positive investments and job creation. DS-EE remains 

generally available for compliance, with flexibility to given to consider unique circumstances 

within states. DS-EE measures must also meet the eligibility requirements and provisions, if 

applicable, and the requirements and criteria related to proper quantification and verification of 

MWhs from demand-side EE savings as described in Section VIII of the final rule preamble of 

the CPP. See the Demand-Side EE TSD for information on unique circumstances of states and 

co-ops and their roles in delivering cost-effective EE.

The following are summaries of the specific public comments under this comment:

Multiple commenters noted the difficulty in engaging customer participation in EE programs.

Commenters stated there are customer economic challenges for EE, and that neither EPA nor the 

states can force customers to achieve higher levels of EE, as it is completely outside their 

control.

Commenters stated that non-lighting initiatives had lower participation than expected for 2013; 

only 252 of 1,727 customers who received the in-home energy assessment received rebates.

Commenters stated these low participation rate is a concern about the state's or utility's ability to 

induce homeowners to invest in EE, particularly for households near the poverty line for 

appliance replacement. Commenters stated West Virginia is more rural, has low population 

density; and has smaller average household size, all making EE deployment more challenging, 

particularly for rural, low-income households. Commenters stated that sustaining an average of 

450 GWh in new savings from 2023 through 2030 is a very aggressive goal compared to the 

experience of the existing programs.

Commenters provided input on customer behavior impacts adoption of demand-side energy 

efficiency programs. Commenters agreed that demand-side energy efficiency programs have the 
73

potential to reduce CO2 emissions as well as help to minimize the long-run cost of supplying 

electricity, however, utility driven installation of energy efficiency measures requires customer 

participation for this to occur. Commenters stated customer adoption of measures in utility 

energy efficiency programs is voluntary. Commenters stated utilities are limited to offering the 

programs, promoting the programs and providing incentives. Commenters stated the ultimate 

decision of whether to adopt an energy efficiency measure rests entirely with the customer. To 

illustrate this point, commenters provided two examples:

1. CFL Light Bulb Program. Since 2009, Duke Energy has been offering free or highly 

discounted CFL bulbs to residential customers and have provided customers with nearly 

39 million compact florescent lights. This program has reached over 63 percent of our 

active residential customer accounts. Of that 63 percent, over 56 percent have received 15 

CFLs, the maximum number of bulbs a single residential account can receive. Over 90 

percent of these bulbs have been mailed directly to the customer's home eliminating the 

need for customers to take any significant action -such as taking a coupon to a store. This 

extremely successful program is designed to eliminate barriers to participation and make 

it as easy a process as possible by allowing customers to simply enroll on the company's 

website, respond to a mailed offer, or place an order over the phone. Even though it is 

free and easy, over one third of customers have not participated in the program.

2. Residential Appliance Recycling Program. In 2012, Duke Energy launched residential 

appliance recycle programs in several states. Duke Energy offers to pick up old 

appliances at the customer's home and pay them a cash incentive. Initial program 

research indicated that customers are mostly motivated by the free in- home pick-up and 

potential energy savings from removing the inefficient appliance. Even with a robust 

marketing plan that included bill inserts, direct mail, electronic offers and mass media 

TV/radio spots, the program struggled to meet even 50 percent of the targeted 

participation. Customers did not respond to an offer that provided simple enrollment, 

free home pick up, $100 annual electric bill savings and a paid cash incentive. A pricing 

study was then conducted to better understand the elasticity of program enrollment when 

the incentives were increased. The new research indicated that the cash incentive was 

more important than previously thought, so by changing the incentive from $30 to $50 

per appliance the program participation improved by more than 200 percent but overall 

saturation is still low. Since launching in 2012, just over 40,000 appliances have been 

recycled through this program.

Commenters stated voluntary customer participation is only one of the reasons why it is not 

appropriate for the EPA to have proposed that demand-side energy efficiency be a component of 

its proposed BSER for coal-fired EGUs. Commenters stated its adoption is beyond the control of 

the regulated source. Commenters stated even if it were lawful, it is simply not appropriate for 

the EPA to establish CO2 emission limits for coal- fired EGUs that are based in part on 

something which the plants have no control over. Commenters stated in its Proposed Guidelines, 

the EPA has failed to take into account that customer behavior is beyond the control of public 

utilities or states. Commenters stated instead, customer adoption of energy efficiency programs 

depends on a number of factors including, but not limited to, the cost of electricity, the maturity 

of the programs, the incremental cost of the technology to the customer, the availability of more 

energy efficient equipment, the climate, the customer mix, and the socioeconomic demographics 
74

within a jurisdiction. Commenters stated these factors vary significantly from one state to 

another, and can even vary across utility service area within a state. Commenters stated grand 

macro assumptions applied across all states and service areas do not properly reflect the efforts 

to obtain the maximum benefits of energy efficiency at the least cost, and they invariably result 

in assumptions that are incorrect and inapplicable for some areas. Commenters stated 

nevertheless, the EPA's Proposed Guidelines would require that these macro assumptions be 

applied in every state.

Commenters stated the price of electricity is an important factor affecting adoption of energy 

efficiency measures. Commenters stated that probably the most important factor affecting 

adoption of demand-side energy efficiency measures is the price of electricity. Commenters

stated the higher the price of electricity, the more customers will likely find that the installation 

of energy efficient measures is cost-effective for their circumstances. Commenters stated this is 

analogous to the measure of price elasticity often found in utility econometric-based load 

forecasting models. Commenters stated as the price of electricity (in real dollars) rises over time, 

usage per customer is projected to decline. Commenters stated customers can achieve these 

price-driven energy use reductions, in part, by installing more energy efficient 

equipment. Commenters stated rising prices reduce the payback period and make the measures 

more economically attractive. Commenters indicated that in states where electricity prices have 

remained relatively low, customer adoption of energy efficiency programs, measured as a 

percentage of retail electricity sales, historically has been lower than in states where electricity 

prices are much higher. Commenters stated in its Proposed Guidelines, the EPA refers to data 

reported by utilities to the EIA showing that in 2012, the five states (California, Connecticut, 

Minnesota, Rhode Island, and Vermont) with the highest cumulative energy efficiency savings 

had achieved, on average, a cumulative reduction in load of 13.4 percent. Commenters stated the 

EPA refers to this data as evidence of what can be achieved and implies that all states can 

achieve this level of load reduction. Commenters stated a closer look at the data from the EIA 

Form 861 shows that the average retail electricity prices for those same five states in 2012 was 

12.98 cents per kWh (while the average retail price in Minnesota, one of the five states, is near 

the average for the nation, it does not refute the fact that higher electric prices make it easier for 

customers to cost-justify investments in energy efficiency, which makes implementation of 

energy efficiency programs easier in states with higher retail prices. Also, it is important to note 

that Minnesota's achievement includes codes and standards). Commenters stated this is over 50 

percent higher than the average for 34 states, or two-thirds of the 50 states plus the District of 

Columbia. Commenters stated the EIA data strongly suggest that higher electricity prices are 

linked to a higher rate of customer installation of energy efficiency measures. Commenters stated 

also, it is important to note that in 2012, these same five states achieved incremental savings as a 

percentage of retail sales of 1.28 percent on average, not the 1.5 annual percentage increase the 

EPA has proposed as the basis for setting state energy efficiency targets for its preferred 

Building Block 4 approach. Commenters stated this calls into question the technical basis for 

EPA's proposed 1.5 percent annual incremental savings rate target because the EPA has not 

demonstrated that the leading states can sustain the targeted level of projected energy efficiency 

savings. Commenters stated to achieve the annual 1.5 percent incremental savings rate the EPA 

has proposed, customers in all sectors (residential, commercial, and industrial) must be willing to 

aggressively adopt programs offered by the utility. Commenters stated customer behavior is 

difficult to predict, but when the cost of energy increases, customers have a larger incentive to 

reduce energy consumption to save money. Commenters stated the EPA has focused primarily 
75

on energy efficiency policies and programs that increase the energy efficiency of buildings, 

appliances, and industrial operations and has paid little or no attention to customer behavior, 

which will ultimately determine the level of efficiency gains that can be achieved.

Commenters stated the EPA has not accounted for the fact that demand-side energy efficiency 

programs are maturing. Commenters stated the demand-side energy efficiency industry is 

maturing. Commenters stated many customers have already taken advantage of energy-efficient 

lighting, appliance recycling, and other long-standing programs to deliver greater energy 

efficiency. Commenters stated the lower-cost and easy-to-adopt programs have been the most 

widely adopted programs, which is why some states have historically experienced high 

percentages of avoided energy demand savings. Commenters stated according to data provided 

on the California Public Utility Commission's Energy Efficiency Data Portal, energy efficiency 

savings in California were achieved mostly by indoor lighting in the commercial and residential 

sectors. Commenters stated the rate of energy savings due to indoor lighting has reached a point 

of saturation that cannot be sustained without a new technology that can create light more 

efficiently than light- emitting diode (LED) technology. Commenters stated while LED 

technology creates efficiency savings compared to compact fluorescent (CFL) technology, the 

incremental energy savings when going from CFL to LED lighting are significantly smaller than 

the historical savings generated from moving from incandescent lights to CFLs; for example, the 

electricity usage of a 60 watt incandescent bulb became 13 watts (a 78 percent incremental 

reduction) with the move from incandescent to CFL, but, the move from a 13 watt CFL to a 10 

watt LED (which costs significantly more than an equivalent CFL) results in only 3 watts of 

savings (only a 23 percent incremental reduction). Commenters stated while there is a savings 

opportunity when moving from CFL to LED lighting, the incremental savings will be relatively 

small, and certainly will not support the rate of year-to-year energy efficiency savings that have 

been achieved historically. Commenters stated that to illustrate further, assume that a residential 

customer uses 12,500 kWh per year (average usage for Duke Energy residential customers) and 

the customer converts 15 bulbs from incandescent to CFL. Commenters stated based on an 

annual savings of roughly 43 kWh/year per bulb (60 watts to 13 watts, 2.5 hours per day), the 

customer realizes a total savings of approximately 643 kWh/year or roughly 5 percent of the total 

annual electricity usage. Commenters stated by 2017, it is expected that the overwhelming 

majority of residential households will have already achieved these savings. Commenters stated 

the move from CFL to LED would result in only an additional 3 kwh/year per bulb (13-10 watts, 

2.5 hours per day) for a total annual savings of only an incremental 41 kWh/year, which is 

roughly 0.3 percent of the customer's annual electricity usage, net of the CFL savings already 

achieved. Commenters stated this illustration shows that the move from CFLs, a technology that 

is already widely adopted, to the next rung on the lighting efficiency technology ladder, LEDs, 

will result in only a marginal incremental increase in energy savings. Commenters stated this 

same technology development and adoption trend applies to many other end-use technologies, 

including heating, ventilation and air conditioning (HVAC) equipment which represents a major 

driver for the higher energy use of residential customers in Duke Energy's service territories. 

Commenters stated despite the maturity of energy efficiency programs such as lighting, Duke 

Energy has found that some customers are still unwilling to adopt even these relatively low-cost 

energy efficiency measures. Commenters stated unlike lighting, HVAC and large appliances 

represent durable goods that represent a significant cost for most consumers. Commenters stated 

when deciding whether to purchase a unit of electricity or to invest in energy efficiency, many 
76

customers will respond by purchasing the unit of electricity and spending their dollars on other 

goods and services that they perceive have a higher value for them.

Commenters stated the potential lack of availability and the cost of more energy-efficient 

equipment impacts customer adoption. Commenters stated in its Proposed Guidelines, the EPA 

did not assume any particular type of demand-side energy efficiency policy, but the EPA did 

note that appliance standards is a policy that has been used at the federal and state levels to 

accelerate the deployment of demand-side energy efficiency technologies. Commenters stated 

what the EPA did not appear to take into account is that it may take years for more energyefficient appliances such as refrigerators, air conditioners, washing machines, and clothes dryers 

to come to the market and even longer for customers to embrace them. Commenters stated the 

EPA's Proposed Guidelines ignore the length of time it takes for more energy- efficient 

equipment to enter the market, and compounds that mistake by ignoring consumer preference 

and assuming that consumers will readily purchase these types of appliances, particularly in 

situations where the purchase of a more efficient appliance would occur prior to the end of the 

useful life of the existing appliance. Commenters stated customers do not go out and 

immediately purchase a new washer and dryer simply because a more energy efficient one has 

become available. Commenters stated additionally, as has been the case with new efficiency 

technologies that have already entered the market, the incremental savings that can be achieved 

through technological advancement declines over time relative to earlier advancements. 

Commenters stated as discussed above, moving from CFLs to LEDs provides little relative 

improvement in efficacy when compared to moving from incandescent bulbs to CFLs. 

Commenters stated similarly, early heat pump technology was relatively inefficient compared to 

today's standards, but the 1980's vintage heat pumps have been largely replaced with drastically 

more efficient heat pumps. Commenters stated as a result, replacement of today's more efficient 

heat pumps will likely result in only a modest improvement in efficiency.

Commenters stated regional climate impacts the adoption of energy efficiency programs. 

Commenters stated the climate in a given jurisdiction has a significant impact on the 

development of and the adoption of energy efficiency programs and the energy savings that can 

be achieved with certain programs. Commenters stated that in its Proposed Guidelines, however, 

the EPA does not take into account that climate impacts customer behavior, thus affecting the 

ability of a jurisdiction to meet the Agency's proposed energy efficiency goals.

Commenters stated in regions where summers are typically hot, consumers will generally use 

their air conditioners and/or heat pumps regardless of the efficiency of their equipment. 

Commenters stated to be comfortable, consumers may choose not to adjust their thermostat or

allow the utility to adjust their usage even if financial incentives are offered. Commenters stated 

in jurisdictions with hot and/or humid climates where air conditioners consume a significant 

portion of the utility's load, it is difficult to develop cost-effective energy efficiency programs 

that provide enough of an incentive for customers to adopt demand-side energy efficiency 

programs because of the large customer out- of-pocket cost required to purchase the more 

efficient equipment. Commenters stated as a result, once the savings from indoor lighting have 

been achieved, additional energy efficiency savings are difficult to achieve in climates where 

HVAC equipment is a major driver of the customer's usage.
77

Commenters stated customer mix impacts the savings each state is able to achieve through 

demand-side energy efficiency measures. Commenters indicated each state has a different 

customer mix (i.e., residential, commercial, industrial, and agricultural). Commenters stated the 

EPA's Proposed Guidelines do not take into account customer segmentation and how this 

impacts each state's energy efficiency savings potential; for example, Duke Energy's service 

territories include a large number of industrial customers. Commenters stated in most of Duke 

Energy's jurisdictions, state regulations allow certain larger energy using industrial and 

commercial customers to elect not to participate in public utility-offered energy efficiency 

programs (commonly referred to as "opt-out") and hence be relieved of the obligation for paying 

the costs of the utilities' demand-side energy efficiency programs. Commenters stated for 

industrial customers electing to opt-out, utilities are not involved in either offering or measuring 

the impact of demand-side energy efficiency programs, if any, they may adopt. Commenters

stated the EPA's Proposed Guidelines do not clearly state how demand-side energy efficiency 

will be addressed where entire classes of customers are eligible to opt-out, however, any EPA 

rule that requires electricity savings from end-use energy efficiency measures must make it clear 

that the targeted energy savings only apply to sales net of the loads that have opted-out of the 

program. Commenters stated in addition, since utilities are not required to verify, measure, or 

report the energy efficiency impacts associated with opt-out customers as part of their energy 

efficiency achievements, it is unclear how any energy efficiency savings associated with opt-out 

customers would be tracked for the purpose of the EPA's rule. Commenters stated establishing a 

requirement for the utility to verify, measure, and report the impacts associated with opt-out 

customers is contrary to state statutes, in some cases, and at a minimum, would require the 

establishment of a mechanism to allow a utility to recover the costs for tracking these energy 

savings from the industrial and commercial sectors.

Commenters stated however, the energy use reductions achieved as a result of these opt out 

customers' demand-side energy efficiency programs need to be factored into the calculation of 

the overall state goals, as these savings may be a significant contributor to the CO2 reduction 

achieved through energy efficiency. Commenters stated therefore, the EPA needs to determine 

how, and by whom, these savings should be reported.

Commenters stated socioeconomic demographics impacts customer behavior. Commenters

stated in its Proposed Guidelines, the EPA failed to recognize that each state has a different 

socioeconomic demographic which impacts customer behavior. Commenters stated buying new 

appliances, retrofitting a home with energy efficient features, and/or buying a new home that 

meets new building standards may not be affordable depending on the socioeconomic mix of 

customers in the state. Commenters stated the greatest opportunity for electricity savings, for 

example, often comes from older manufactured homes which are typically occupied by lower 

income individuals or families that are unlikely to be able to afford costly energy efficiency 

investments. Commenters stated consequently, certain households are less likely to invest in 

costly energy efficiency measures or programs.

Commenters stated that consumer behavior determines adoption of demand-side energy 

efficiency programs. Commenters agreed that demand-side energy efficiency programs have the 

potential to reduce CO2 emissions as well as help to minimize the long-run cost of supplying 

electricity. However, commenters contended that utility driven installation of energy-efficiency 
78

measures requires customer participation. Commenters pointed out that customer adoption of 

measures in utility energy efficiency programs is voluntary.

According to commenters, the EPA's proposal fails to take into account that consumer behavior 

is beyond the control of public utilities. Commenters stated that customer adoption of energy 

efficiency programs depends instead on a number of factors including, but not limited to, the cost 

of electricity, the maturity of the programs, the incremental cost of the technology to the 

customer, the availability of more energy-efficient equipment, the climate, the customer mix, and 

the socioeconomic demographics within a jurisdiction. Commenters said these factors vary 

significantly from one utility service area to another. According to commenters, grand macro 

assumptions applied across all service areas do not properly reflect the efforts to obtain the 

maximum benefits of energy efficiency at the least cost.

Commenters stated that the climate in a jurisdiction also has a big impact on the development of 

and the adoption of energy efficiency programs and the amount of energy savings that can be 

derived from certain programs. According to commenters, the EPA's proposal does not take into 

account that climate impacts consumer behavior, thus affecting the ability of a jurisdiction to 

meet its proposed energy efficiency goals. Commenters noted that consumers use electricity to 

be comfortable. In states such as Florida with hot and long summers, commenters said 

consumers use their air conditioners regardless of whether the units are energy efficient. 

Commenters pointed out that to be comfortable, consumers may choose not to adjust their 

thermostats or allow the utility to adjust their usage even if incentives are offered. In jurisdictions 

where air conditioners consume a significant portion of the utility's load due to the hot and/or 

humid climates, commenters said it is difficult to develop cost-effective energy efficiency 

programs that incentivize consumers to adopt demand-side energy efficiency programs because 

of the large customer out-of-pocket cost to purchase the more efficient equipment. As a result, 

once the savings from indoor lighting have been achieved, commenters concluded that additional 

energy efficiency savings would be difficult to achieve in climates where HVAC equipment is a 

major driver of the customer's usage.

Commenters stated that customer mix also impacts each state's ability to achieve goals. 

Commenters noted that each state has a different customer mix (i.e., residential, commercial, 

industrial, and agricultural). According to commenters, the EPA's proposal does not take into 

account customer segmentation and how this impacts each state's goals. For example, 

commenters noted that regulations in many states allow certain industrial and commercial 

customers to choose not to participate in public utility-offered energy efficiency programs 

(commonly referred to as "opt-out"). For consumers who choose to opt-out, commenters said 

utilities are not involved in demand-side energy efficiency measures, if any, adopted by the 

consumer. Commenters argued that EPA's proposed rules do not clearly state how demand-side 

energy efficiency will be addressed for customers who are eligible to opt-out. Commenters said 

that public utilities historically have not measured and included the impacts associated with optout as part of their energy efficiency achievements and should not be required to track these 

savings in the future unless the costs for tracking energy savings can be recovered from the 

industrial and commercial sectors through state rate-making mechanisms. However, commenters

recommended that the energy use reductions as a result of these consumer driven efficiency 

programs should be included in the overall state goals as a contributor to the CO2 reduction; 

therefore, EPA needs to determine how, and by whom, these savings should be reported.
79

Finally, commenters stated that socioeconomic demographics impact consumer behavior. 

According to commenters, the EPA's proposal fails to recognize that each jurisdiction has a 

different socioeconomic demographic that impacts consumer behavior. Commenters noted that 

buying new appliances, retrofitting a home with energy efficient features, and/or buying a new 

home that meets new building standards may not be affordable for many consumers. In fact, 

commenters pointed out that the opportunity to save the most electricity often comes from older 

manufactured homes which are typically occupied by lower income individuals or families that 

are unlikely to be able to afford costly energy efficiency investments. Commenters also noted 

that the cost to comply with EPA's proposed rule will ultimately result in much higher energy 

prices and higher customer bills, even when customers take advantage of energy efficiency 

opportunities. Commenters said higher energy bills will absorb more of the disposable income 

that households use to pay essential expenses. Consequently, commenters concluded that certain 

households are less likely to invest in costly energy efficiency measures or programs. According 

to commenters, EPA fails to recognize that consumer spending on energy efficient measures 

depends on the financial means of the consumer, which varies by jurisdiction and will be 

adversely impacted by these regulations.

Commenters stated that EPA's proposed Clean Power "building blocks" for state emission 

reductions contain unrealistic assumptions on the potential for large-scale renewable energy and 

energy efficiency development within the short timetable of the EPA rule. Commenters stated 

that lower-income seniors are among those least likely to make major investments in new energy 

efficiency programs with long investment payback times, as envisioned by EPA's Clean Power 

Plan. Commenters stated the suite of new regulations EPA is now pursuing inevitably will lead 

to ever-higher utility prices for America's elderly population, exceeding the modest cost-of living 

(COLA) adjustments that many 65+ retirees depend upon just to keep up with inflationary 

pressures.

Commenters stated that, while EPA used state-specific data from EIA Form 861 for establishing 

starting points for EE levels, it applied "national" estimates of EE potential to this data and 

applied an EE growth rate historically only experienced in other best-practice states. 

Commenters argued that the applicability of both these metrics has some fundamental flaws, 

based on the variability of state-specific factors, such as customer economic challenges. 

Commenters stated that EE improvements are expensive for customers, often requiring 

significant capital investment. Commenters said this is problematic. According to commenters, 

customers usually avoid such large expenditures until a precipitating event occurs (HVAC 

failure, for example). And with current economic conditions, commenters said this is even more 

challenging. Longer-term, commenters anticipated continued difficulty in motivating customers 

to pay premiums for such EE improvements due to significant portions of their service territory 

being economically disadvantaged. For example, commenters noted that households served by 

their subsidiaries in Texas have household incomes 25 percent below the US national average.

Commenters noted that most utility-based EE programs rely on an analysis of customer behavior. 

According to commenters, predicting the intensity of customer adoption of new EE technology is 

not precise, and is based on an assessment of the customer's purchasing power, the ability of the 

available technology to meet customer needs and service expectations. Commenters pointed out 

that the technology itself must produce savings through demonstrated reductions in energy 

usage. Commenters argued that establishing a firm emissions performance standard, even in part, 
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that is based on customer behavior and the willingness of substantial portions of the population 

to adopt new technologies is unreasonable--for Georgia and perhaps for any state.

Commenters stated that the percentage of impoverished residential customers will affect the 

viability of EE programs. Commenters noted that Oglethorpe Power Corporation (OPC) provides 

electricity to 38 electric distribution cooperatives that provide electric service to the most rural 

areas of Georgia. Commenters pointed out that about 1/2 of Georgia's EMCs provide service to 

customers whose average annual income is 28% below the national average, and 25% below the 

State (Georgia) average. Commenters also noted that the poverty rate experienced by such 

customers is about 27%--7 percentage points higher than the national poverty level and 10 points 

higher than the state poverty level. Therefore, commenters concluded, on average EMC members 

have considerably less purchasing power than other Georgia citizens who purchase their power 

from other utilities. While participation in energy saving programs could benefit lower income 

customers, commenters contended that the investment required by them to upgrade from 

standard equipment to more energy saving equipment can pose a significant barrier for 

introduction--even with aggressive financial incentives. Commenters also pointed out that these 

customers make up a larger proportion of the EMCs' customer base than for other Georgia 

utilities. Commenters concluded that this fact leads to lower participation rates and higher costs 

for EMC sponsored energy efficiency programs.

Commenters noted that utility sponsored energy efficiency programs typically include financial 

incentives, education and sometime behavior changing programs. As noted by commenters, 

financial incentives are designed to encourage customers to reduce energy use through the 

purchase of energy saving lighting, water heating or heating/cooling equipment. Commenters

stated that this equipment typically costs more than "standard" equipment. According to 

commenters, financial incentives will help some customers to purchase more expensive 

equipment today to achieve energy saving benefits in the future.

Commenters stated that customer mix between residential and commercial and industrial can 

also affect the viability of EE programs. The commenters said that a significant cost of these 

programs is in the advertising and promotion of the program. According to commenters, 

attracting residential customers to participate in such programs can cost 5-7 times more than for 

commercial and industrial customers. Commenters also noted that each commercial and 

industrial customer, on average, uses 5 times more energy than a single home for cooperatives in 

Georgia (and 9 times more energy for Georgia's IOUs). Commenters said this higher usage per 

customer contributes to higher participation rates and cost advantage for those systems that have 

higher concentrations of commercial and industrial customers. Commenters noted that typical 

studies indicate that 75% or more achievable energy savings from utility energy efficiency 

programs is expected to come from commercial/industrial customers. Commenters said that 

cooperatives generally have fewer opportunities to implement EE measures, due to their 

traditional customer base (over 90% of Georgia cooperative customers are residential, providing 

far fewer opportunities to implement EE measures than commercial and/or industrial customers).

Commenters also commented on the limitations of demand-side energy efficiency (EE) 

programs. To put the availability of EE programs in context, commenters pointed to one 

potentially viable example of a program that their cooperative might implement, specifically the 

replacement of incandescent bulbs with compact fluorescent light (CFL) bulbs in poultry houses. 
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Commenters noted that their member systems are currently serving approximately 4,000 poultry 

houses. Using data from past studies, commenters estimated and determined that 52,896 MWh of 

generation could be avoided in a single year. Commenters estimated this retrofit would cost $500 

per house to the poultry farmers. Commenters also estimated that the MWh of generation 

avoided would be equivalent to approximately 1 percent of their cooperative's net generation in a 

single year, given 100 percent participation by the poultry farmers (although historic 

participation in such programs has been significantly less than 100 percent). Optimistically 

assuming 100 percent participation in the program, which is the single most effective program 

identified, commenters indicated their cooperative would still be incapable of achieving the 

Building Block 4 compliance goal for one year, and the commenters said it is unclear to them 

that any other viable programs exist and can be implemented to achieve necessary reductions for 

compliance in future years. Therefore, commenters concluded, the few viable Energy Efficiency 

programs that they have identified may be thought of as "one and done." Commenters were also 

concerned about maintaining continued participation with Energy Efficiency improvements 

already made from year to year. Thus, commenters contended that implementation of such a 

program is fraught with problems.

Commenters also argued that, despite their cooperative's efforts to encourage demand-side 

energy efficiency, it is ultimately up to the consumers whether they want to participate in these 

programs. While the current measures come nowhere close to achieving the 1.5 percent annual 

reduction goal in the first year, much less the cumulative total of a 15 percent reduction over ten 

years as required by EPA, commenters contended that their cooperative has no authority to ration 

its consumers' energy or force them to implement certain measures. Even if consumers adopt 

efficiency strategies, commenters indicated they may simply consume more energy with the 

additional disposable income. For example, commenters noted that their cooperative can help 

customers install more efficient air conditioners, but questioned what prevents the consumer 

from taking advantage of those efficiencies by, for example, lowering their temperature settings 

from 75 degree F to 73 degree F, leaving total energy consumption constant. Commenters noted 

that the State of Alabama, ADEM, and EPA are similarly lacking such authority. Accordingly, 

commenters indicated it is unclear how EPA expects to hold the states accountable for something 

over which they have no control: the energy consumers themselves. Commenters argued that this 

is a drastic overreach of EPA's authority and, in addition to being unachievable for their 

cooperative and the states, is illegal. Commenters stated that EPA cannot seek to regulate the 

entire electricity sector. According to commenters, this is clearly not within the powers 

delineated to the Agency by Congress. As such, commenters concluded that EPA's proposal is a 

drastic overreach and cannot lawfully be implemented.

Commenters stated that energy-saving programs exist at their City utility, but the goal of 9.98% 

of avoided electricity sales from energy efficiency appears to be unrealistically high. 

Commenters noted that customer adoption of these measures is voluntary. While they 

encourages energy efficiency, commenters said individual consumer usage is beyond their 

control.

Commenters stated that they will continue to conduct integrated resource planning and expand 

cost-effective efficiency efforts before building new generation. Commenters argued that the 

proposal does not appear to take into account economic development goals for growing a 

municipality's or state's economy nor expected population increases like they experience in 
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Florida. If a program requires utility-specific or even state-wide energy efficiency goals, the 

commenters said they are very concerned that it would stifle economic development, which 

means less industry, fewer jobs, and a lowered standard of living. Commenters said that they are 

opposed to any program that would stifle economic development or population growth. Even if 

economic and population growth is not considered, however, commenters said neither they nor 

the state can replace enough of society's energy-consuming appliances to cut emissions by 6 

percent, and certainly not by 38 percent; it's just not feasible.

Commenters stated that, at the end of the day, it is not them or their municipal utility members 

that will achieve the projected 0.7 % savings--but the end-use customers. Commenters contended

that the utilities can only provide incentives and encouragement to prompt customers to make 

investments or behavioral changes in electric energy use. According to commenters, undertaking 

those actual investments or changes lies solely in the free will of the customer; their studies on 

energy efficiency potential necessarily take into account the "buy-in" that customers are willing 

to make based not only on economics but also on other barriers that are customer-specific, as 

well as the historical achievements to date. However, commenters stated, block 4 is based on the 

unproven assumption that customer buy-in and action will be consistent in its impact on energy 

use and generation needs regardless of cost or other barriers and taking only into account 

availability of technology. Commenters said their studies are based on their actual customers, 

use, and load, and show otherwise. Commenters argued that EPA reliance on block 4 

overestimates the ability of the state or the utilities to change the habits of individuals or to cause 

the consumer to undertake investment in savings in order to consistently achieve 1.5 % per year 

savings, and consequently overestimates the savings available from block 4 in setting target 

goals. Commenters contended that EPA failed to undertake any engineering studies on what is 

actually achievable and instead based the 1.5 % per year savings by cherry-picking the most 

optimistic policy review.

Commenters stated that, as a responsible electrical utility, they encourage their customers to save 

energy, offer incentives to retire old appliances, provide energy audits, participate in the Focus 

on Energy program, support customers that want to install distributed generation resources, 

distribute energy efficient bulbs, and cogenerate to provide steam to schools, government 

buildings and businesses. According to commenters, the expectation that they can somehow 

force their customers to use electricity efficiently per block 4 is not realistic. Commenters argued 

that what is realistic is that these regulations will make electricity so expensive that their lowincome ratepayers will be forced to cut electrical consumption to maintain the most basic 

necessities.

Commenters argued that utilities should not be put in a position of doing anything more than 

providing information and programs that will both increase consumer awareness of their energy 

consumption or encourage the installation of equipment that is mutually beneficial. Commenters

stated that there are limits of utility influence on the consumption levels of individual 

households.

Commenters stated that EPA should help states achieve energy savings goals through 

educational programs and products--the responsibility associated with the smart grid of the 

future, use and care, is no different than teaching a society to turn lights off, and lower the 

thermostat, or buy CFL, LED, etc.
83

Commenters noted that they are a member of the Reenergize Coalition locally, which is working 

to drive a market demand for energy efficiency. Commenters participated in the 2030 Challenge 

sponsored by the Green Building Alliance locally, which is one of three efforts across the 

country where, in their region, more than half of the downtown businesses commercial property 

owners have committed to reducing their carbon footprint by 50 percent by the year 2030, the 

same year named in the EPA rule.

Commenters stated that "any efficiency standard aimed at industrial consumers should recognize 

the extent of improvements already implemented" and industrial sources "are different from 

residential consumers who may not yet have implemented an array of energy-saving measures 

that regulatory programs can target in the future."

Commenters stated that Block Four assumes that the demand for energy can be reduced by 

improving demand-side efficiencies. Commenters stated that in other words, EPA assumes that 

as the energy system as a whole grows more efficient through initiatives like subsidizing energyefficient appliances and implementing energy efficiency standards for new construction, this will 

translate into a decreased demand for energy. Commenters stated that the most glaring 

assumptions in Block Four are that these types of reductions would be within the scope of EPA's 

power and the states' control. Commenters stated that EPA has not identified any authority which 

would allow it to control the consumer-end uses of electricity-a regulatory power that has always 

been reserved for the states. Commenters stated that there have also been reliable claims that the 

numbers used by EPA to generate these energy efficiency rates in Block Four come from data 

and methods developed by special interest organizations.

Commenters discussed how EE goals are unrealistic and should not be enforceable.

Commenters stated that EE cannot be an enforceable compliance measure. Commenters stated 

that regardless of how much time, effort and money is committed to EE, there is no way to know 

how effective it will be. Commenters noted that even in current EE programs it is difficult to 

measure energy savings and it is impossible to enforce energy savings targets from EE programs.

Commenters stated that for G&Ts it is even more difficult to enforce EE goals because member 

co-ops own and operate the distribution systems. Commenters noted that PowerSouth has 

implemented a number of EE programs, and the one commonality is that participation is low, 

regardless of efforts made to notify members. Commenters noted that PowerSouth has over

380,000 residential members. Commenters stated that in 2013, it processed 888 residential 

HVAC rebates totaling over $500,000, representing a savings of over 1,847,000 kWhs (1,847 

mWhs). Commenters stated that PowerSouth is budgeting for 1,180 rebates in 2015. 

Commenters stated that despite PowerSouth's efforts to notify its residential members about this 

program, in 2013 the participation rate was 0.2%. Commenters stated that this participation rate 

may overstate the number of homes that participated, because many of the rebates processed 

came from multiple units within a single home.

Commenters stated that in 2007, PowerSouth implemented a water heater demand-side program 

called H2O Plus through which load control devices are added to water heaters to allow 

PowerSouth to remotely control usage during peak hours to minimize demand. Commenters

noted that through this program, PowerSouth prevents energy usage during peak times when the 
84

cost of generation is highest. Commenters stated that despite efforts to notify members, only 

about 3% of Power South's total residential members participate in this program.

Commenters stated that most of PowerSouth's programs, and programs that it may consider 

implementing if necessary are "one and done" meaning continued increase in EE is not likely 

after all programs are implemented. Also, commenters stated that it may be difficult to sustain 

residential consumer participation. Commenters noted that Power South's experience 

demonstrates the difficulties of implementing a widespread EE program, let alone enforcing EE 

goals.

Commenters stated that SMEPA and its member systems have had EE programs in place for 

over 25 years. Commenters stated that SMEPA offers the following programs to its customers: 

(1) Comfort Advantage Program; (2) Pre Pay Program; (3) Time of Use Rate; (4) Energy Audits; 

(5) Automated Metering Infrastructure; (6) Energy Efficiency Education; and (7) Distributed 

Generation. Commenters stated that the Comfort Advantage System offers incentives for EE and 

energy efficient HVAC systems in new home construction and energy efficient HVAC 

equipment upgrades in existing homes. Commenters noted that through the Pre-Pay Program, 

some of SMEPA's member systems allow their members to pay for electricity before they use it,

which reduced their bills by 10-15% because end-users become more aware of their usage. 

Commenters stated that by employing the Time of Use Rate program, SMEPA allows its 

members to avoid or reduce load during the on-peak period and increase load during the off-peak 

to save cost which allows current generating facilities to operate more efficiently. Commenters

stated that most of SMEPA's member systems conduct free energy audits for their customers. 

Commenters stated that some of SMEPA's member systems have installed automated metering 

infrastructure that allows members to access their energy use 24 hours a day, 7 days a week. 

Commenters stated that all of SMEPA's member systems provide EE education for their 

customers and encourage them to purchase energy efficient products and build energy efficient 

homes. In the spring of 2009, commenters stated that SMEPA and its member systems developed 

common contractual documents addressing distributed generating resources for residential 

installations up to 10 kilowatts.

Commenters stated that together, SMEPA's programs reduce the average residential kWh. 

Commenters stated that the decrease is driven by replacement of older less efficient appliances 

and equipment with more energy efficient models. Commenters noted that by implementing and 

administering these EE programs, SMEPA has found that EE programs must make economic 

sense for the rate payer for the program to be effective. Commenters stated that if an EE program 

must be heavily subsidized, it will most likely result in higher rates, which will no longer benefit 

the customers. Commenters stated that given the extensive EE programs SMEPA already has in 

place, it is unlikely that SMEPA can implement additional EE projects that will result in the 

reductions contemplated in the CPP.

Commenters stated that East Kentucky Power Cooperative (EKPC) also has some members who 

have implemented pre-pay programs. The commenters stated that EKPC has seen an average 

reduction of 12% in electricity usage, similar to SMEPA's experience with pre-pay programs. 

Commenters stated that a pre-pay program encourages end-users to be disciplined and frugal 

with their energy usage.
85

Since 2008, commenters stated that Hoosier Energy has also voluntarily implemented an EE and 

demand side management program. Between 2009 and 2013, the program has saved over 

130,000 MWhs, with a program cost of over $32 million.

Commenters stated that even though substantial investments have already been made, the CPP, 

as proposed, does not give any members of the commenters' group, credit for EE programs 

already in place and savings that are already being achieved.

Commenters stated that the CPP has grossly overestimated the energy efficiency reductions 

achievable in rural areas due to population densities, income levels and economies of scale for 

large commercial/office energy users. Commenters noted that only three (3) states have achieved 

a 1.5% energy efficiency goal (AZ,CT,VT) and those states have had programs for over 20 

years. Commenters stated that California which is often used as an example of model energy 

efficiency programs has only achieved a 1% reduction with most other states realizing only a 

0.5% gain. Commenters stated that the 1.5% reduction may be achievable over time but not in 

the time allowed in the CPP. Commenters recommended that the CPP remove or modify 

building block 4 to a realistic energy efficiency target that can be achieved by electric 

cooperatives.

Commenters stated that the CPP requires energy efficiency programs that are impractical and 

overstated in rural areas with low meter density. Commenters stated that the EPA uses in its 

regional averaging for energy efficiency targets from urban areas with large office and 

manufacturing buildings that can achieve much higher reduction efficiencies at a lower cost due 

to economies of scale. Commenters requested that the EPA evaluate rural areas with meter 

densities less than 10 per mile and establish realistic energy efficiency targets in those areas as to 

not over predict the reductions that can be made by rural consumers.

Comment 8: EM&V Guidance

Response 8: DS-EE remains generally available for compliance, according to the eligibility 

requirements and criteria related to proper quantification and verification of MWhs from 

demand-side EE savings as described in Section VIII of the final rule preamble of the CPP. 

Comment 9: Commenters had concerns with EM&V for EE Programs

Response 9: Commenters are concerned regarding data used to inform BB4 in the proposed rule. 

The EPA decided not to include DS-EE in BSER for the final rule. A response is not provided as

this comment is now outside the scope of the CPP. See sections V.A and V.B of the final rule 

preamble of the CPP for details. DS-EE remains generally available for compliance, see multiple 

subsections of section VIII of the final rule preamble of the CPP for details. DS-EE measures 

must meet the eligibility requirements and provisions related to demand-side EE programs and 

projects and the requirements and criteria related to proper quantification and verification of 
86

MWhs from demand-side EE savings as described in Section VIII of the final rule preamble of 

the CPP.

The following are summaries of the specific public comments under this comment:

Multiple commenters did not support use of EM&V and pointed out issues or concerns. 

Commenters stated that quantifying energy savings from efficiency measures can be difficult. 

Commenters stated the projected value of energy savings can vary significantly based on criteria 

used to determine eligible programs, technologies and standards. Commenters stated the value 

may also vary based on the relative stringency of measurement and verification. Commenters

stated for example, the ACEEE's reported incremental energy efficiency savings in 2012 was 7 

percent higher than the EIA's reported incremental savings (22,978 and 21,478.5 GWs 

respectively). Commenters stated using a different approach from EIA Form 861 may lead some 

states to report a higher number of MWh actually reduced versus EPA's projection, leading to 

higher CO2 emissions than anticipated and a higher quantity of CO2 "offsets" generated 

compared to the rate setting formula.

Commenters provided input on EE avoided generation quantification and verification. 

Commenters acknowledged that it is possible to quantify and verify avoided generation due to 

some EE measures such as hardware upgrade, replacement and repair. Commenters stated, 

however, many types of EE measures being implemented are more "soft"' and do not provide a 

sufficient level of accuracy required to stand up to legal challenges. Commenters in addition, the 

quantification and verification methods that would be required to make an EE measure legally 

defensible may make certain measures too burdensome and/or costly to implement. Commenters

questioned whether the actual impact on the overall CO2 rate for existing EGUs make these 

measures worth the effort given the burdensome and costly requirements to make legally 

enforceable BSER demonstrations at affected EGUs. Commenters stated EE is generally seen as 

a means to limit the growth of generation (i.e., avoid building new power plants) and not to 

decrease existing generation.

Commenters stated that even if Basin Electric had data demonstrating that it could meet the 1.5 

percent reduction in annual energy savings, Basin Electric is not subject to the type of 

measurement and verification (M&V) requirements on which EPA proposes to rely for purposes 

of verifying compliance. Commenters stated EPA asserts that "most EE programs (including all 

investor-owned utilities which account for more than 75 percent of reported savings) are 

overseen by state utility commissions, which review and approve program plans, projected 

impacts, and associated budgets; and establish annual reporting and M&V requirements," and 

"State commissions define and oversee the analysis and reporting requirements for energy 

efficiency programs . . . . One typical requirement is the application of recognized" M&V 

protocols. Commenters stated that Basin Electric, however, is a wholesale power producer and is 

not overseen by a state utility commission. Commenters stated moreover, its three-tier 

cooperative structure would make it impossible to impose the type of M&V program on its 

members that EPA repeatedly references as a means of ensuring compliance with the 1.5 percent 

requirement. Commenters stated the difficulty in assessing compliance with such an amorphous 
87

standard is yet another indicator that application of EE as part of BSER is practically and legally 

unsupportable.

Commenters stated energy EMV is extremely difficult to quantify. Commenters stated 

estimating the amount of energy not consumed due to EE measures is an art, not a science. 

Commenters stated the process of quantifying EE is uncertain. Commenters stated EPA claims 

that in calculating the 1.5 percent savings rate, it used EM&V data that reflected savings only 

from EE programs and that do not account for savings from other policies for which EM&V 

protocols are less consistently required or applied (for example, building energy codes). 

However, commenters stated the 26 states with Energy Efficiency Resource Standards in place 

have very liberal reporting policies that overstate the amount of EE savings directly attributable 

to utility EE programs. Commenters stated nonetheless, EPA also admits that "energy savings 

data are estimates." Commenters stated EPA further concedes that EE values "should be 

reported as 'expected values' - that is energy efficiency values are expected to be correct within a 

certain range of certainty." Commenters stated adding to the difficulty, there is no uniform way 

of estimating energy savings. Commenters stated 5 different energy EM&V contractors are 

likely to estimate five different levels of energy savings for the same EE program. Commenters

stated for example, energy savings for an efficient central air conditioner may be estimated using 

equipment metered data, customer bill analysis data, or building simulation modeling, all 

yielding different results. Commenters stated to further complicate the issue, weather has a 

direct impact on air conditioning usage. Commenters stated there are a myriad of approaches that 

can be used to attempt to "normalize" weather to estimate "normal" air conditioning usage in 

either a hotter or cooler summer season. Commenters stated finally, the most subjective 

component in the evaluation of energy savings from utility EE programs is the estimate of the 

net-to-gross ("NTG") ratio which attempts to quantify how many efficient air conditioners were 

purchased by customers as a direct result of the utility EE program versus what customers would 

have naturally purchased in the absence of any such utility program. Commenters stated as with 

the other evaluation components, there are a myriad of subjective approaches to estimate NTG, 

none of which are objective or that can be quantified with discrete accuracy and precision. 

Commenters stated EPA recognizes the difficulty and requests comment on a variety of 

approaches to EE programs.

Commenters stated that EPA should require that a state ensure utilities update form 861 energy 

efficiency data as part of the state compliance plan. Commenters stated that accurate data is 

critical to effective oversight by regulatory agencies. Commenters stated that as part of 

compliance with Washington's Energy Independence Act, every two years Washington utilities 

subject to the law must verify energy efficiency savings and submit the savings total to the 

regulatory agencies. Commenters noted that the Washington reports are due in June of even 

numbered years. Commenters noted that utilities must file the Energy Information 

Administration (EIA) form 861 by April 30, following the end of the calendar year. Commenters

stated that due to the timing of the Washington Energy Independence Act reporting and 

verification of savings, the efficiency savings data reported on form 861 are not necessarily 

accurate. Commenters noted that for example, in 2012 one state utility reported to the EIA 

11,551 MWh of total energy efficiency savings, and 15,703 MWh to the Washington State 

Department of Commerce. Commenters stated that another utility did not report any savings to 

the EIA but 80,836 MWh to the state. Commenters stated that discrepancies between the EIA 

reported savings and actual savings are substantial. Commenters stated that in 2012, including 
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Bonneville Power Administration (BPA) savings on behalf of its non-Energy Independence Act 

utilities, Washington achieved 1,031,621 MWh, or 175,000 MWh more than utilities reported to 

the EIA on form 861. To minimize discrepancies, commenters stated that streamline reporting 

requirements and ensure accurate data, EPA should require the use and timely reporting of 

energy efficiency data on form 861.

Commenters stated that EPA is using information reported in particular fields of EIA form 861 

to set the baseline for state EE programs. Commenters asked which particular "Schedule," 

"Part," and "Question Number" on Form 861 are used for EE baselines? Commenters noted that 

it appears EPA only intends to count strictly EE programs (i.e., Schedule 6, Part A. EE 

Programs), while other DSM programs like demand response (Schedule 6, Part B. Demand 

Response Programs) and other customer focused behavioral programs (i.e. Schedule 6, Part C. 

Dynamic Pricing Programs and Schedule 6, Part D. Advanced Metering and Customer 

Communications) may not be included. Commenters stated that the reporting form instructions 

do not clearly distinguish how to separately report these programs, and the EPA proposal does 

not clearly outline what has been included/excluded from the baseline number used in goal 

setting. Commenters asked if EPA can please explain exactly how they got to the EE baseline 

number? Commenters also asked if information included in Form 861 is self-reported, is there 

ever a circumstance where EIA revises or modifies information reported by a respondent?

Commenters stated that they are concerned about the baseline EE data relying on EIA Form 861, 

which collects information provided by EE program administrators. Commenters noted that for 

example, in Massachusetts, data from Northeast Utilities (one of the State's two largest utilities) 

are not included for 2012, significantly under-counting incremental EE. Commenters stated that 

this not only underestimates the baseline in Massachusetts, but suggests that the 1.5 percent 

target based on state best practices may not take into account all data and is therefore lower than 

it should be. Commenters stated that the ACEEE's annual state ranking report provides annual 

incremental EE savings that better reflect the experiences of some NESCAUM states compared 

to EIA Form 861.

Commenters stated that the EPA's approach for calculating achievable efficiency savings is 

problematic. Commenters stated that the EPA's calculation of achievable efficiency savings are 

based on EIA-861 data, which include values reported by many different entities that may not be 

using consistent definitions of baselines or efficiency savings. Commenters stated that EIA-861 

historical data provides an unreliable basis for forecasts of future energy efficiency savings 

potential.

The commenters stated that they do not know why there is a large discrepancy between the two 

data sources. Commenters noted that it does point out the difficulty of tracking EE savings data 

in a reliable manner. Commenters stated that using EIA Form 861 data to establish state-specific 

BSER from EE, when EPA acknowledges that the data is not complete/reliable, is not a legal 

determination of BSER for each state. 

The commenters stated that the source of the base data that EPA relied upon for EE achievement 

data is not reliable. Commenters noted that EPA uses EIA Form 861 data as the baseline level of 

the amount of EE achievements by utility EE programs. Commenters noted that EPA 

acknowledges the consistency and quality issues with EIA Form 861 data, as utilities rely upon
89

differing methodologies in measuring the net impact of their EE programs; however EPA does 

not fundamentally address this issue.

Comment 10: Commenters note unique state circumstances, deference to state programs, 

experience. Commenters also support municipal cooperatives implementing EE

Response 10: Comments received are supportive of energy efficiency, including programs 

administered by Cooperative and Public Power Utilities and unique aspects of various EE 

programs across different states. The EPA decided not to include DS-EE in BSER for the final 

rule, see sections V.A and V.B of the final rule preamble of the CPP. DS-EE remains generally 

available for compliance, with flexibility provided to states to consider a variety of factors and 

approaches. See multiple subsections of section VIII of the final rule preamble of the CPP for 

details. DS-EE measures must meet the eligibility requirements and provisions related to 

demand-side EE programs and projects and the requirements and criteria related to proper

quantification and verification of MWhs from demand-side EE savings as described in Section 

VIII of the final rule preamble of the CPP.

The following are summaries of the specific public comments under this comment:

Multiple commenters noted that there are unique state circumstances related to energy efficiency 

programs, and the EPA should provide deference to existing state programs and consider the 

level of experience with such programs. 

Commenters stated that electric cooperatives differ in size, load characteristics and growth, 

wholesale power supply arrangements, and member demographics. Commenters stated it is 

typical for electric cooperatives to assess energy efficiency programs in terms of whether they 

are the most cost-effective alternatives available (i.e., by utilizing the rate impact measure test) 

and/or whether their member-consumers find the demand-side alternatives desirable. 

Commenters stated these differences are a core consideration when developing energy efficiency 

programs and how the EPA's 1.5 percent goal does not properly account for them.

Commenters stated that in the EPA's development of individual state targets for carbon dioxide 

emissions, the EPA presumes a uniform energy efficiency target of 1.5 percent across all states 

which inexplicably fails to account for the broad differences that likewise exist from state to state 

in the consumption of energy. Commenters stated these differences, not just among states, but 

also among utilities within the same state, play a key role in determining the appropriate level of 

cost-effective, achievable, and sustainable energy efficiency.

Commenters stated electric cooperatives are member-owned, not-for-profit organizations that 

serve primarily rural communities. Commenters stated electric cooperatives, which number over 

900 and span the nation, are committed to providing safe, reliable, and affordable electricity to 

their members. Commenters stated any program/project that creates greater cost than benefit 

leads to upward pressure on retail electric rates and this burden falls directly upon the electric 

cooperative's members. Commenters stated electric cooperatives strive to minimize this burden 

and therefore routinely rely on the Rate Impact Measure (RIM) test to evaluate the cost-
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effectiveness of energy efficiency programs. Commenters stated the RIM test provides the best 

indication of how an energy efficiency program will affect retail rates and is closely dependent 

upon characteristics of individual utilities.

Commenters stated that just as utilities vary greatly across the nation, so does the costeffectiveness of energy efficiency programs. Commenters stated the EPA should be more 

mindful of this before setting a national energy efficiency goal that does not accurately account 

for this variability.

Commenters pointed out some of the differences between cooperatives and IOUs. Commenters

stated the nation's cooperatives have less available opportunity for energy efficiency savings than 

IOUs, and have a very different consumer base, which is predominately rural. Commenters

stated cooperatives have a larger residential base, whereas IOUs serve larger portions of 

commercial and industrial customers. Commenters stated commercial and industrial customers 

present a much greater opportunity to achieve cost-effective energy efficiency savings due to 

their size and energy intensity, and the electric bill represents a huge cost center for commercial 

and industrial customers, so it makes sense that commercial and industrial customers actively 

seek to implement energy savings opportunities as the benefits can quickly outweigh the costs. 

Commenters stated residential customers, especially those in rural communities, pose a greater 

challenge to deliver cost effective energy efficiency solutions due their dispersed proximity and 

lower savings potential. Commenters stated that since the majority of cooperatives are relatively 

small and located in rural areas, affordable electric rates are at the forefront of any policy 

decision. Commenters also noted that the majority of electric cooperatives have rates below the 

national average, with only 9.7 percent of cooperatives having residential retail rates which equal 

or exceed the national average.

Commenters noted they are obligated to ensure that it can comply with whatever final state plan 

is adopted to meet the final EPA Interim and Final Goals. Commenters noted their options are 

limited by what it can physically build within the proposal's time lines, what it can financially 

achieve, what its members and their customers and the ACC will accept, and the fact that it is a 

generation cooperative without direct customers, which eliminates most EE programs from 

consideration. In this part of their comments, Commenters have:

1. Evaluated available options; and 

2. Prepared high level analyses of the two principal compliance strategies available to it: 

comply with the program as written; or shut down existing units to exit the program. 

Commenters stated the cost of electricity is an important factor affecting adoption of EE 

measures. Commenters stated the higher the cost of electricity, more consumers will likely find 

that the installation of energy efficient measures is cost-effective. Commenters stated this is 

analogous to the measure of price elasticity often found in utility econometric-based load 

forecasting models. Commenters stated as the price of electricity (in real dollars) rises over time, 

usage per customer is projected to decline. Commenters stated consumers can achieve these 

price-driven energy use reductions, in part, by installing energy efficient equipment. 

Commenters stated rising prices reduce the payback period and make energy-efficient measure 

installations more economically attractive. Commenters noted that in states where energy prices 
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have remained relatively low, consumer adoption of EE programs, measured as a percentage of 

retail electricity sales, historically has been lower than other states where energy prices are much 

higher. Commenters stated in its proposed rule, EPA refers to data reported to the EIA that show 

in 2012, five states (California, Connecticut, Minnesota, Rhode Island, and Vermont) had, on 

average, achieved a cumulative reduction in load of 13.4 percent. Commenters stated EPA refers 

to this information as evidence of what can be achieved and implies that all states can achieve 

these savings. A closer look at the data from the EIA shows that the average retail electricity 

price for those same five states in 2012 is 12.98 cents per kWh. Commenters stated this is over 

50 percent higher than the average for 34 states or two-thirds of the 50 states plus the District of 

Columbia. Commenters stated this implies that higher energy prices are linked to higher 

consumer installation of EE measures. Commenters stated also, it is important to note that in 

2012, the aforementioned five states achieved incremental impacts of 1.27 percent on average, 

not 1.5 percent or above. Commenters stated this raises the question of whether or not the 

leading states have gained the "low hanging fruit" (i.e., indoor lighting) and are now beginning 

to struggle to keep up the pace. 

To achieve the annual incremental savings in EPA's proposed rule, commenters stated customers 

in all sectors (residential, commercial, and industrial) must be willing to adopt programs offered 

by the utility. Commenters stated consumer behavior is difficult to predict, but when the cost of 

energy increases, consumers have a larger incentive to reduce energy consumption to save 

money. Commenters stated EPA has focused primarily on EE policies and programs that 

increase the EE of buildings, appliances, and industrial operations and has paid less attention to 

consumer behavior, which will ultimately impact how and when the efficiency impacts are 

realized.

Commenters supported EE/DSM measures, as well as the combined efforts of DOE and EPA to 

encourage these policies and programs as a means to decrease load and/or abate emissions, 

however, the commenters do not endorse EPA's proposal to use EE as a factor to determine state 

goals as it currently stands in the Proposed Rule. Commenters stated that there are a number of 

assumptions in the proposal that ignore situational factors states and utilities may have to face 

during the actual application of these programs and measures. Commenters stated each utility 

and/or entity involved in EE for the state has a unique situation that must be assessed before 

determining the real potential for demand-side efficiency improvements.

Commenters stated climate differences could limit potential DSEE, as climate plays a significant 

role in determining the potential DSEE. Commenters stated the Southeast has a very different 

climate compared to many other regions. Commenters stated at a minimum, this difference 

suggests that EPA needs to evaluate potential DSEE at the state-level as opposed to a generic 

nationwide analysis. Commenters stated for example, in Florida, the FPSC staff recognized the 

state-specific issues associated with climate consideration in the "Florida Investor-Owned 

Utilities' Demand-Side Management Achievements Comparative Analysis" study that was 

published in January 2011. Commenters stated the study identifies Florida as having a unique 

weather profile compared to other states. Commenters stated Florida has the highest cooling 

degree days and lowest heating degree days of any state in the continental U.S. Commenters

stated the number of cooling degree days and heating degree days affect the potential savings 

associated with many DSEE measures. Commenters stated the study also highlights that Florida's 

energy usage tends to exhibit higher variation than other states due to state-specific weather 
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patterns and the high reliance on electricity for cooling and heating. Commenters stated the study 

concludes that given the greater variation in customer usage patterns, the benefits associated with 

reducing peak demand are particularly important in Florida. Commenters stated similar 

conditions exist among all of the southeastern states. Commenters stated for these reasons, it is 

important to consider state-specific data when estimating the potential DSEE. Commenters stated 

the International Energy Conservation Code ("IECC") and Building America also recognize the 

significance of climate in developing efficiency standards. Commenters stated these 

organizations categorize all regions of the country based on climate differences including 

temperature and humidity. Commenters stated these classifications support the fact that much of 

a state's DSEE potential varies based on state-specific weather characteristics.

Commenters stated customer mix impacts potential DSEE. Commenters stated a state's customer 

mix will also greatly affect potential DSEE. Commenters stated States with a high percentage of 

industrial customers, for example, may have difficulty reaching arbitrary goals because many 

industrial customers have already implemented cost-effective DSEE measures. Commenters

stated Southern Company's operating companies have large portions of retail sales that come 

from the industrial sector. For example, the industrial sector represents approximately 50 percent 

of Mississippi Power's retail sales.

Commenters stated further, in states served by multiple entities, EE programs may be less 

effective because they do not cover all of the state's customers. Commenters stated for example, 

Southern Company's four subsidiaries do not serve all of the customers in the states in which 

they operate and are not regulated in the same way as other entities in those states. Commenters

stated Georgia Power, for example, is the only investor-owned utility in the state of Georgia. 

Commenters stated Georgia Power serves approximately half the residential customers of the 

state and provides roughly two-thirds of the energy for Georgia. Commenters stated the other 

entities that serve customers in the state, EMCs and municipalities, are not regulated by the PSC 

and in most cases do not currently have DSEE programs. Commenters stated under current state 

law, no one would have authority to force these entities to implement DSEE programs. 

Commenters stated Alabama Power is similarly situated, providing 63 percent of the energy in 

the state of Alabama, with a number of municipal providers and cooperatives also providing 

energy to customers. Commenters stated Mississippi Power and Gulf Power are also in states 

that have other investor-owned utilities that are regulated by state commissions as well as 

cooperatives and municipal providers.

Commenters stated DSEE evaluation method for cost effectiveness varies by state. Commenters

noted States evaluate the cost effectiveness of DSEE programs in very different ways. 

Commenters stated while some states evaluate programs on the portfolio level, other states may 

require measures meet a cost effectiveness test. Commenters stated "cost effective" is defined 

differently between states. Commenters stated while some states may measure the cost 

effectiveness of DSEE programs using the Total Resource Cost ("TRC") method, Southern 

Company and its operating companies believe the Rate Impact Measure ("RIM") test is a more 

appropriate method of evaluating DSEE programs. Commenters stated EE policies based on the 

RIM test ensures that both EE program participants and non-participants benefit through 

downward pressure on all customers' electricity rates over time, thus the RIM test is called the 

"no losers" test. Commenters indicated a state's DSEE potential may change depending on the 

cost effectiveness test employed.
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Commenters stated economy and market factors vary by state. Commenters noted that the state 

of the economy, as a whole, influences the success of DSEE programs. Commenters stated for 

example, in the case of the new home market, builders may come in and out of the market as 

customer demand waxes and wanes. Commenters stated similarly, commercial activity also 

fluctuates. Commenters stated because the economy changes due to a number of uncontrollable 

factors, this adds uncertainty to a state's ability to achieve arbitrary DSEE targets. Commenters

stated furthermore, as the energy needs and the number of Southern Company's customers grow, 

the ability to meet those needs cost effectively becomes increasingly important. Commenters

stated that same growth would place additional requirements on potential DSEE targets because, 

as proposed, the targets are a percentage of retail sales.

Commenters stated electricity rates and rate structures vary by state. Commenters stated 

electricity rates and rate structures, which vary widely across states, are also significant factors in 

assessing cost-effective DSEE potential. Commenters stated according to the May 2014 EIA 

report, average electricity rates in the U.S. ranged from $0.0733/kWh in Washington to 

$0.1757/kWh in Connecticut. Commenters stated this wide variation in rates creates vastly 

different economic incentives for customers when it comes to EE decisions and resource 

planning. Commenters stated States with higher electricity rates present customers with shorter 

payback periods for DSEE investments which reduces the need for utility-provided incentives. 

Commenters stated given that the participant payback period and incentives play significant roles 

in determining the cost-effectiveness of DSEE measures and targets, electricity rates are clearly a 

significant factor that is overlooked by EPA's simplistic assessment of DSEE potential and 

subsequent establishment of one-size-fits-all targets. Commenters stated for example, in 

Massachusetts the average residential electricity rate for March 2014 was $0.1733/kWh. 

Commenters stated at this rate, an EE expenditure that resulted in 200 kWh/month of reduced 

usage would result in electricity bill savings of almost $416 per year for a customer participant. 

Commenters stated in Washington, that same energy savings expenditure would result in annual 

bill savings of $209, barely half of the Massachusetts savings.

Commenters stated Southern Company's four operating company's electricity rates are below the 

national average. Commenters stated EPA did not recognize that the average retail electricity 

rates for all sectors in Arizona, Maine, and Vermont are 27 percent higher than the average retail 

electricity rates for all sectors in Alabama, Florida, Georgia, and Mississippi. Commenters

stated moreover, Vermont's residential retail electricity rates are 65 percent higher than 

Mississippi's, leading to longer payback periods for EE measures and less customer interest. 

Commenters stated clearly, similar DSEE measures will have different impacts on customers' 

rates depending on where they are being implemented.

Commenters stated EPA's compliance with BB#4 assumes that demand side management can 

reduce electric usage by about 10 percent by 2030. Commenters stated however, EPA's CPP 

does not take into account states with high economic growth or states that are expected to 

experience high population growth, subjecting these states to comparatively negative treatment. 

Commenters stated in addition, many states have had robust EE programs for years. Commenters

stated there is no recognition of this in the rule, leading to the concern that this rule is based on 

"one size fits all."
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Commenters stated additionally, statewide efficiency requirements disproportionately impact 

some communities more than others. Commenters shared the case of a group of North Carolina 

cities that invested in nuclear power in the early 1980s. Commenters stated these cities derive all 

of their power from non-GHG emitting resource and, as a result of slow economic growth, 

actually have more power than they need. Commenters stated yet EPA proposes a model that 

presumes GHG benefits from additional investments in demand-side EE by these all-nuclear 

communities. Commenters stated in reality, the opposite is the case; these communities will 

have to undertake new programs to lower consumption of product that they already own in 

excess. Commenters stated they are not alone; North Carolina cooperatives largely own 

emissions-free technologies and in South Carolina a similarly situated group of communities 

own only nuclear power. Commenters stated EPA, in its model, failed to consider circumstances 

of this nature and, as such, has failed to "adequately demonstrate" the achievability of the 

standard.

Commenters stated although a few of our utilities have implemented EE programs much more 

can be done in this regard. Commenters stated however, in the past the economics did not exist 

since we have had several years of surplus power to meet the growing demands of our cities. 

Commenters stated when implementing EE, we should apply the same standards from past 

practices with best available energy efficient equipment and technology available to date. 

Commenters stated in other words, EE programs for cities and urban areas are likely not all 

applicable to rural areas. Commenters stated a best practice approach to this should be 

implemented for rate making and consumer education.

Commenters provided input regarding relative industrial, commercial, and residential 

consumption. Commenters stated some states have higher manufacturing and industrial 

consumption than others (such as the Northeast) with higher levels of service-economy 

industries. Commenters noted that states with larger commercial and industrial usage increases 

the base substantially (greater overall consumption levels due to more energy-intensive loads), 

which then increases the absolute EE goal levels as well. Commenters noted also, states that 

currently allow industrial customers to opt out of utility programs may have to re-visit these 

determinations and encounter resistance from these customers. Commenters stated implementing 

utility-sponsored EE at manufacturing and industrial facilities is more challenging and costly. 

Commenters stated many such customers have already implemented economically justified EE 

improvements for cost-competitiveness reasons because they often have better access to capital, 

at lower rates, and are generally better informed of the options.

Commenters stated state-level targets under building block 4 are not differentiated based on the 

potential for associated carbon reductions. Commenters stated indeed, states with some of the 

highest building block 4 requirements, including Maine, California, and Connecticut, have some 

of the lowest historic CO2 emissions rates. Commenters stated in contrast, some high emitting 

states, including Wyoming and West Virginia, have some of the lowest efficiency potentials. 

(Commenters stated this latter observation is not surprising as high emissions rates tend to be 

correlated with low electricity prices and thus weak economic incentives to encourage energy

savings through investments in efficiency, setting aside environmental arguments for such 

investments.) Commenters stated across the 50 states, there is a small negative correlation 

between efficiency potential and average CO2 emissions rates in 2012. Commenters stated this 
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lack of correlation raises a question of whether a more targeted approach would improve both the 

effectiveness and cost-effectiveness of this building block.

Commenters were concerned about demand-side EE programs mandated by the proposal. 

Commenters stated that while most traditional utilities serve a mix of both residential and 

commercial customers, rural electric cooperatives like Darke Rural Electric Cooperative serve 

mostly residential customers. Commenters stated this customer base significantly limits the 

opportunities for obtaining reductions through demand-side EE programs that are available to 

more traditional utilities. Commenters stated thus, EPA's assumption that a 1.5 percent-perannum emission reduction can be obtained across-the-board cannot be squared with the 

particular circumstances that Darke Rural Electric Cooperative faces.

Commenters stated EE would be better addressed as part of the state plan processes. 

Commenters stated a case-by-case evaluation of the potential for EE for each state should be 

included in the final guidelines. Commenters stated EPA should allow states to provide input to 

this assessment for the final goal computation, based on data and specific circumstances 

applicable to individual affected utility companies.

Commenters stated EPA ignores sectoral composition and its impacts on states' abilities to 

achieve the EE savings rate. Commenters indicated that EPA implies that the sectoral 

composition of a state is not a factor in whether that state can achieve an annual 1.5 percent 

incremental EE savings rate. Commenters stated EPA cannot use generalized regional data to 

demonstrate that any particular state can achieve the target EE savings rate. Many studies find 

that the potential for EE savings varies across different customer sectors, for example, IEE has 

detailed the varying potential for codes and standards to improve the efficiency of residential, 

commercial and industrial projects. Commenters stated given that different sectors have different 

opportunities for EE, it would be unreasonable to assume that an individual state's sectoral 

composition had no bearing its ability to achieve and sustain 1.5 percent annual incremental 

increases in EE. Commenters indicated that States with little or no manufacturing will not be 

able to achieve the portion of EE potential estimates attributable to that sector. Commenters

stated at minimum, EPA should allow states to demonstrate that sectoral composition will 

impede attainment of the target incremental savings rate.

Commenters stated the EPA employs EE improvements as its 4th Building Block to achieve the 

state goal for target emissions of CO2; EPA has assumed a 1.5 percent annual energy savings 

rate based on a "best practices" level of the 12 states with the highest level of EE; the current 

mean national average saving rate is 0.58 percent in 2012; South Carolina currently has a 0.35 

percent savings rate; and States below the 1.5 percent rate are assumed to be able to reach 1.5 

percent with an assumed 0.2 percent "pace of development". Commenters stated these 

assumptions on best practices rate and pace of development are not tested and are unsupported as 

being appropriate on a state by state basis. Commenters stated the sustainability of a 1.5 percent 

savings rate over a long period of time (until 2030 under the proposal) is also unexamined. 

Commenters stated it is also a concern that federal and state budgets will not keep pace with 

assistance necessary to make these EE investments possible in lower income areas such as those 

areas served by many of our electric cooperative members. Commenters stated clearly many of 

these programs to spur EE are not utility driven and depend on federal money to stimulate the 

home improvements required.
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Commenters believed that EE is an essential component of its plans to curb supply side cost 

commitments. Commenters stated it has invested with the Electric Cooperatives of South 

Carolina in a Help My House energy savings program and has instituted an on bill financing 

measure that has become a national model. Commenters stated they are convinced of the need 

for EE, however we are concerned that the EPA assumes a rate which works in Colorado or 

Washington has direct relevance to South Carolina. Commenters stated one of our primary areas 

of concern is that we may be pushed to rely on EE more heavily than other states to meet the 

state goal because of the limitations we have in using the other Building Blocks, particularly 

Renewable Energy, efficiency improvements in our existing coal fleet, and increased utilization 

of NGCC units. Commenters stated as with most programs, EE improvements are most cost 

effective when low hanging fruit is picked. Commenters stated the more central must rely on EE 

beyond what would be traditionally considered "prudent and cost effective" programs, the more 

likely we are to have to adjust our rates upward to a customer base which may not be able to 

afford those increases.

Commenters stated it is also important to note that the mix of customer base will significantly 

impact the percentage of EE improvements that can be expected. Commenters stated South 

Carolina has a higher percentage (36.2 percent in 2012) of industry electric use than the national 

average (27.7 percent). Commenters stated industry typically achieves smaller annual reductions 

in EE because as a practice it addresses this significant cost component where it sees an 

opportunity. Commenters stated as a consequence, it will be harder for South Carolina to achieve 

the 1.5 percent saving rate. Commenters stated EPA should examine the differences in the states 

and adjust the building block to reflect a reasonably achievable EE savings rate. For the reasons 

stated, Commenters believed the EE goals within the Building Blocks for determining the 

emission performance goal for South Carolina are arbitrarily reached, inadequately documented, 

and are applied without a demonstration of fairness to South Carolina.

Commenters stated the use of a uniform incremental savings rate for all states is flawed because 

it ignores the different potential for cost effective EE caused by different avoided cost rates. 

Commenters noted States used by EPA to derive the 1.5 percent EE incremental savings rate 

very likely have avoided cost rates that are greater than those in North Carolina. Commenters

stated EE programs are more cost effective in states with higher avoided costs rates, compared to 

states with lower avoided cost rates. Commenters stated avoided costs are EE benefits; they 

represent energy dollars saved by not generating electricity. Commenters noted a state with 

higher avoided energy costs will therefore have relatively more opportunity for cost effective EE, 

making higher incremental EE savings rates more likely than for a state with lower avoided cost 

rates.

Commenters noted the states used by EPA have retail rates that are higher than those in North 

Carolina. Commenters stated higher retail rates would drive utility customers to participate in EE 

measures in greater numbers in order to save more on their electricity bills, and greater 

participation for a given measure results in higher EE savings. Commenters stated that is, where 

a given EE installation produces roughly the same kWh savings in all states, those kWh savings 

equate to more dollar savings in the states with the higher retail rates. Commenters stated the use 

of a uniform incremental savings rate for all states is flawed, because it ignores the different 

potential for the amount of EE savings caused by different retail electric rates.
97

Commenters stated a comparison of retail rates and estimation of avoided cost rates illustrates 

the previous two points. North Carolina's avoided cost rates are roughly 5.8 cents per kWh. 

Commenters stated a review of the retail rates reported to the EIA shows the average North 

Carolina retail rate to be 9.68 cents per kWh while the average rate for the eleven states with 1 

percent or greater incremental EE savings have an average retail rate of 12.10 cents per kWh, or 

25 percent greater than North Carolina. Commenters stated presuming a similar relationship 

between avoided costs rates and retail rates, the avoided energy rate for those others states would 

be 7.3 cents per kWh, as the avoided energy cost rate is approximately proportional to the retail 

rate. Commenters stated these data show the states used by EPA to derive the 1.5 percent 

incremental EE savings goal would have more EE programs that are cost effective, and more EE 

participation than North Carolina. Commenters stated the result is to impose on North Carolina 

an expected EE savings rate that is too high, as it does not reflect relevant utility costs in North 

Carolina.

Commenters stated the eleven states identified by EPA are located in areas other than the 

southeastern part of the country. Commenters stated all of the eleven states cited in the GHG 

TSD have a much lower HVAC load than North Carolina and other southeastern states, as 

customers in those northern states use less air conditioning and they are more likely to use 

natural gas for space and water heating. Commenters stated this means a higher proportion of 

their electric bills represents lighting load. Many utilities across the country, including North 

Carolina have realized that the greatest EE savings have come from lighting measures. 

Commenters noted that States where a higher proportion of electricity use is for lighting will 

therefore have a better opportunity for a higher EE savings rate. Commenters stated that to base 

an EE savings rate on those states, and apply it to a state such as North Carolina where lighting is 

a much lower proportion of total electricity use, overstates the potential for EE savings in North 

Carolina.

Commenters stated EE savings from lighting point to a further problem in the EPA analysis. 

Commenters stated given the significant contribution lighting measures have had to the savings 

achieved by many states, including the eleven states cited by EPA with 1 percent or more in EE 

savings, the application of a "one-size-fits-all" approach fails to recognize the variability of 

lighting end-uses across the country. Commenters stated a report by the US DOE concluded that 

the variability among lighting preferences, size of homes, the concentration of housing (multifamily verses single family dwellings) were just some of the criteria impacting lighting end-uses. 

Commenters stated the EPA cannot simply ignore these regional and physical differences when 

applying its one-size-fits-all approach to future EE savings potential.

Commenters stated a similar concern is the omission of EE savings from customers what are 

allowed by North Carolina statute to opt-out of IOU EE programs. Commenters stated large 

commercial and industrial customers are allowed to opt-out of paying for the EE programs of 

electric service providers if they attest to implementing their own EE measures. Commenters

stated this includes approximately 35-40 percent of the state's electric load requirements. 

Commenters stated North Carolina has not quantified the amount of EE savings from these optout customers because it was not necessary in the absence of requirements to reduce carbon 

emissions. Commenters stated however, measurable EE savings will be relevant under the 

Proposed Rule, so omission of EE savings achieved by opt-out customers in North Carolina 

would, again, understate North Carolina's EE achievements. Commenters stated North Carolina 
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should be given time to quantify the EE savings of "opt-out" customers so those savings can be 

credited toward compliance with the Proposed Rule.

Commenters noted they have substantial experience in delivering conservation programs and an 

informed understanding of available and achievable conservation within its markets. 

Commenters stated from this, it is apparent that not all states have the same savings opportunities 

and market conditions conducive to the acquisition of cost-effective EE resources, particularly at 

the level EPA suggests is achievable. Commenters stated with the exception of Oregon, none of 

PacifiCorp's six states have shown a capability to deliver sustained savings at or near 1.5 percent 

of retail sales or to increase savings at 0.2 percent annually, as proposed. Commenters stated this 

is despite all PacifiCorp states having access to similar program services and incentives and the 

company capitalizing on the savings opportunities in those states. Commenters stated to 

illustrate this, the EE acquisition rates achieved and forecasted (2014) for the PacifiCorp's 

service territories in six states are shown below.

Commenters provided a table that shows how five western states in the PacifiCorp service area 

besides OR had annual EE savings for each year in 2009-2014 ranging between 0.09 to 1.12 

percent. Commenters stated these results reflect significant differences between states and utility 

service areas that can affect the ability to acquire EE resources. Commenters stated for example, 

more urban markets with substantially greater amounts of residential and commercial loads or a 

better balance of residential, commercial and industrial loads tend to perform better than rural 

states and markets with a greater percent of industrial and/or agricultural loads.

Commenters stated furthermore, markets and market opportunities vary between states, making 

an equal metric for their assessment and sustained results over the 111(d) timeframe unrealistic.

Commenters supported inclusion of EE in the development of the 111(d) targets, but in a more 

equitable manner to assess that opportunity. Commenters stated for some states, increasing 

reported savings from EE by 0.2 percent a year is likely an insurmountable task, requiring a 

doubling or tripling of current results in a short timeframe. Commenters stated rather than an 

increase of a fixed percent of retail sales, PacifiCorp recommended an approach of limiting 

growth rates to 20 to 30 percent of base year results, allowing those states with fewer 

opportunities and/or more rural service areas with numerous and scattered energy providers an 

opportunity to pursue longer lead time but more sustainable savings.

Commenters supported EPA's consideration of EE resources as an effective way to reduce load 

and therefore reduce carbon emissions from EGUs. Commenters stated NV Energy is a utility 

that has actively worked with its customers and the PUCN across Nevada to promote energy 

conservation resources and manage peak loads for the last several decades. Commenters stated 

that while results have varied over the years as a result of market and industry conditions, NV 

Energy has substantial experience in delivering conservation programs and an informed 

understanding of what is available and achievable at cost effective levels within our unique 

residential and industrial markets. Commenters stated as such, NV Energy has concerns 

regarding the quantification methodology used in the development of state 111(d) targets.

Commenters stated in applying Building Block 4, EPA assumes the same level of annual savings 

may be achieved by states with significantly different generation and load profiles. Commenters
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stated in reality, the level of achievable and cost effective demand side management resources 

and EE is highly dependent on the load profile in each state. Commenters stated therefore the 

annual savings assumption may not be realistic for all states, and, similar to EPA's renewable 

energy growth projections, needs to be tied to real load growth projections.

Commenters noted they periodically commission independent third-party demand-side resource 

potential assessments used to inform the development of the company's integrated resource plan, 

where demand-side resources offset supply-side alternatives in the development of the 

company's least-cost, least-risk resource plan. Commenters stated through this work and 

experience, it has become apparent to the company that not all states or regions have the same 

savings opportunities and market conditions conducive to the sustained acquisition of cost 

efficient EE resources, particularly at the level EPA suggests is achievable across the country. 

Commenters stated further, given the number of years that Nevada has promoted these types of 

programs and the effectiveness of strengthened codes and standards that have raised efficiency 

baselines, the cost of any new reductions will likely be higher than what may be experienced 

historically and in other parts of the country.

Commenters stated their experience highlights differences within our own service area that can 

affect the ability to acquire EE resources. Commenters stated the most cost-effective 

opportunities for EE exist in two urban centers in the state of Nevada: Las Vegas and Reno. 

Commenters stated the remainder of the state consists of rural communities. Commenters

supported a focused and aggressive pursuit of EE resources as a means for states to achieve their 

carbon reduction targets, however, absent a more equitable manner to assess opportunity, NV 

Energy does not support their inclusion in the development of these targets. Commenters

suggested reducing state targets by the initial calculation of the contribution of the fourth 

building block from each state's target, but requiring state plans to contain an EE component 

receiving an enhanced (e.g., 1.5 to 2 times) value for these resources in meeting a state's carbon 

reduction target. Commenters stated this type of market based program recognizes the important 

of EE programs as a compliance tool and would accomplish the same effect of encouraging a 

greater reliance on EE programs in state plans while also providing incentives for new or 

innovative technology implementation.

Commenters stated public power utilities and cooperatives also have significant advantages over 

investor-owned utilities that should enable them to at least match, and possibly exceed, national 

EE gain averages. Commenters stated cooperatives are well placed to embark on significant EE 

programs for many of the same reasons they can be leaders in incorporating renewable 

generation: they have access to federal funding and development support that can be harnessed to 

make them leaders in the efficiency space. Commenters stated for instance, in December 2013 

the U.S. Department of Agriculture expanded its RUS, which provides funding, loan guarantees, 

and administrative support to rural electricity cooperatives, by adding an Energy Efficiency and 

Conservation Loan Program. Under this program, Commenters stated the Department plans to 

provide up to $250 million in EE loans specifically to rural cooperatives in 2014 alone, with 

more expected in future years. Commenters stated as with renewables, cooperatives can obtain 

additional funding from the National Rural Utilities Cooperative Finance Corporation, which 

raises funds from capital markets to supplement the loan programs offered by RUS. In addition 

to these federal initiatives, Commenters stated many cooperatives are part of broader selfcoordinated EE efforts, most notably including that orchestrated by Touchstone Energy. 
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Commenters stated that Touchstone Energy, founded in 1998, is a massive alliance of almost 750 

local cooperatives, and acts both as a unified advocate for cooperative utility interests externally, 

and as a facilitator of inter-cooperative cooperation and standards setting. Commenters stated it 

has been a leader in developing EE standards for its cooperatives, through its "Together We 

Save" program. Commenters stated started in 2009, and the first (and to-date the only) utilitydriven national effort to improve EE, the program offers model efficiency standards, individual 

consulting, and other support for local cooperatives seeking to increase EE at homes, farms, 

commercial and industrial facilities, and public facilities (airports, jails, etc.).

Commenters stated municipal and public utilities do not always have the same access to rural 

development assistance that cooperatives have, but they have other key advantages that should 

enable them to achieve significant efficiency improvements more easily than investor-owned 

utilities. Commenters stated as with renewable energy, a substantial chunk of EE investments 

have long-term payback windows, and municipal utilities are well suited to make those 

investments with low-interest bond issuances. Commenters stated but beyond that, unlike 

generation projects, which are usually centralized (the rise of distributed generation 

notwithstanding) and easily orchestrated by a single entity, efficiency programs require small 

improvements by thousands, or even millions, of individual electricity consumers. Commenters

stated private and cooperative utilities can establish incentive programs to achieve these gains, 

but municipal utilities are often directly connected to, or at least affiliated with, their municipal 

governments. Commenters stated as a result, they are more likely than other owners of covered 

facilities to be able to directly implement local regulations and measures that can achieve 

substantial efficiency gains.

Commenters stated as with cooperatives, public utilities also have access to federal and peer 

assistance to help implement effective EE measures. Commenters stated most notably, the DOE 

and EPA are facilitating the State and Local Energy Efficiency Action Network (SEE Action), 

which is a stakeholder-driven initiative (with municipal utilities like the Los Angeles Department 

of Water and Power and Tacoma Power in its executive group along with state utility 

commissions and other efficiency experts) that provides state and local governments with tools 

and resources to assist in implementing EE measures. Commenters stated SEE Action has 

established a goal of achieving all available "cost-effective" EE improvements by 2020. 

Commenters stated as a result of all of these programs, many cooperatives lead the nation in EE 

efforts. Commenters stated part of this leadership has come, as might be predicted, from federal 

assistance programs. Commenters stated just over a month ago, the U.S. Department of 

Agriculture announced that it had issued its first two loans under the Energy Efficiency and 

Conservation Loan Program. Commenters stated the Department will lend $4.6 million to the 

North Arkansas Electric Cooperative to fund installation of new geothermal and air pumps, 

efficient lighting, weatherization measures, and other efficiency improvements throughout the 

region. Commenters stated it will lend $6 million to North Carolina's Roanoke Electric 

Membership Corporation to finance improvements to HVAC systems, appliance replacements, 

and building improvements. Commenters stated separately, the Alaska Village Electric 

Cooperative received a $200,000 grant from the Department of Agriculture Rural development 

unit to conduct energy audits of 42 businesses in native communities and identify key efficiency 

improvement opportunities.
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Commenters stated even without federally subsidized programs, however, cooperatives still have 

achieved significant EE gains in recent years. Commenters stated as of 2012, over 96 percent of 

cooperatives had EE programs in place, 70 percent offered financial incentives to promote 

additional efficiency, and 73 percent had made public plans to significantly expand their existing 

programs over the next several years. Commenters stated as with renewable energy, NRECA has 

produced an interactive map detailing hundreds of programs run by cooperatives, noting 

additionally which ones are part of broader programs like the "Together We Save" program. 

Commenters stated to give just one example, in Minnesota, Great River Energy in 2008 spent 

$20 million on conservation and demand response programs, including nearly $7 million spent 

on lighting and pump improvements and distributed solar generation, enabling it to reap 636 

million kilowatt-hours of lifetime savings and to reduce summer peaks by nearly 13 percent.

Commenters supported coops doing EE.

Commenters stated similarly, there are several municipal agencies who have taken positions of 

leadership in the field in pushing for significant EE improvements. Austin Energy has been a 

leader for decades in improving EE; by its own calculations, the utility reduced demand by 700 

MW between 1982 and 2007, and it has set a goal of saving an additional 800 MW of demand by 

2020. Commenters stated to accomplish this, the utility spends upwards of $36 million, 

composing almost 3 percent of its total budget, capturing energy savings opportunities, including 

by providing rebates that encourage individual consumers to weatherize their homes, upgrade 

lighting, and make other such improvements. Commenters stated in California's Central Valley, 

the Sacramento Municipal Utility District is another example of a leading municipal utility in 

this area, obtaining large demand reductions with a similar portion of their budget; this effort 

notably included a program incentivizing developers to make new buildings up to 30 percent 

more efficient than would be required under local energy codes. Commenters stated and again, 

these success stories are not limited to large municipalities: Holyoke Gas & Electric has one of 

the most generous efficiency programs in the country, offering zero-interest loans to both 

commercial and residential customers to make various EE improvements.

Commenters stated EPA should consider how to equally evaluate all electric service providers 

including investor owned utilities, municipal utilities, and rural electric membership cooperatives 

that supply power to the grid. Commenters stated these types of utilities are unique and may 

require special considerations, particularly rural cooperatives and smaller municipal utilities. 

Commenters stated these types of facilities generally service a lower number of members per line 

than larger utilities. Commenters stated most of those serviced are rural customers that are in the 

lower income bracket. Commenters stated these utilities also service far fewer industrial 

customers than other utilities. Commenters stated as a result, the ability to implement Building 

Block 4 for these utilities is far more difficult and costly than for other utilities. Commenters

stated given the demographic make-up of the customers for these utilities, increases in rates will 

be felt much more deeply than for other utility customers since they not only have less income to 

pay for higher rates, but also less means to invest in EE measures. Commenters stated the 

economy of scale dictates that the costs for energy efficiencies for these areas will be much 

higher without the industrial component factored in.

Commenters stated the final building block of the CPP is that electricity savings from enhanced 

EE measures are assumed to significantly reduce electricity generation, and thereby lower carbon 

emissions. Commenters stated much like what was constructed with the RE targets, the EPA has 
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cherry-picked a small sample of existing state EE programming (AZ, ME and VT) and has 

declared, without deep analysis, that those states' one-year EE programming experience of 1.5 

percent can be replicated throughout all SO states each year through 2030. Commenters stated 

the energy-savings potential from EE programming are very specific to each state based on 

customer mix, EE efforts already taken, and levels of subsidies. Commenters stated it is hard to 

imagine that the EPA performed no analysis on each state's actual EE market environment. 

Commenters stated it is highly unlikely that the targeted goals of EE assumed in the CPP of 108 

Twh/year in 2020 (from a base of 22 Twh/year in 2012), 283 Twh/year (2025) and 380 Twh/year 

(2030) can be met.

Commenters stated from an implementation prospective, EE programming takes place at the 

distribution side of the industry. Commenters stated programs, incentives, energy audits, etc. all 

take place in the customer interface with retail distribution. Commenters stated carbon emission 

goals/targets and enforcement takes place at the generation side of the industry. Commenters

posed the following questions: unless a utility is vertically integrated, how will broad, 

aggressive EE goals work; and what incentives are there for distribution-only utilities like 

BGMU? Commenters stated TVA can design and incentivize a local power company like 

BGMU all they want, but unless a distribution-only utility and its customers actually want to 

participate, not much is going to happen.

Commenters noted that states will need to conduct case by case analyses to evaluate both the 

potential for what EE savings can be achieved, as well as potential costs associated with 

developing and implementing such programs, including quantitative and qualitative 

justifications.

Commenters stated when committing to the nationwide 1.5 percent energy savings goal, the EPA 

failed to accurately account for the extreme variations in demographics, regulatory 

environments, load growth, and usage patterns among states and utilities. Commenters stated this 

omission on EPA's behalf directly impacts the resulting carbon emissions targets as it places 

more dependency on the other three carbon-reducing building blocks. Commenters stated 

assuming every state can achieve persistent 1.5 percent annual energy savings potentially 

overstates the state-level carbon emissions targets. Commenters stated given the numerous 

examples of states' and utilities' inability to achieve and sustain a 1.5 percent energy savings 

level the EPA would be well served to utilize a more realistic state-by-state evaluation when 

including the EE component in the overall carbon emissions calculation.

Commenters stated publicly-owned utilities and rural cooperatives can save energy on par with 

investor-owned utilities, and EPA should not modify the best practices scenario for these 

utilities. Commenters recommended that assumptions used for publicly-owned utilities and rural 

cooperatives for the Block 4 targets should not differ from investor-owned utilities. 

Commenters stated municipal utilities and rural cooperatives, as EPA states, "have multiple 

options for reducing CO2 emissions," including the ability to employ EE. Commenters stated in 

states where municipal or cooperatively-owned utilities operate under similar regulatory (by 

local boards or councils) or customer pressure to implement demand-side EE programs as their 

investor-owned utility counterparts, these utilities have implemented robust EE programs. 

Commenters stated in California, for example, Senate Bill 1307, signed in 2005, requires 
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municipally and cooperatively-owned utilities, in procuring energy, to first capture all EE 

resources that are cost-effective, reliable, and feasible. Commenters stated Assembly Bill 2021, 

signed in 2006, requires municipally and cooperatively owned utilities to establish 10-year EE 

targets and report progress to the California Energy Commission. Commenters stated under this 

framework, California's publicly-owned utilities, ranging in size from the Los Angeles 

Department of Water and Power (LADWP), the nation's largest municipal utility, to TruckeeDonner Public Utility District, which provides electric power to 13,200 customers, have 

implemented robust EE efforts. Commenters stated over the past three years, LADWP's annual 

savings have increased 40 percent per year, and last year LADWP's programs saved around one 

percent of sales. Commenters stated LADWP's board recently adopted 10-year energy-saving 

targets that will have the utility ramp up annual savings to 1.7 percent of sales. Commenters

stated Truckee-Donner's EE programs saved three percent of sales in 2008, more than two 

percent of sales in 2009 to 2011, 1.9 percent of sales in 2012, and 1.7 percent of sales in 2013. 

Commenters stated in 2009, Truckee-Donner devoted 4.5 percent of gross electric sales to EE 

programs, and implemented 16 EE programs. California's publicly-owned utilities as a group 

invested almost $140 million in EE programs in 2013. Best practices in the sector include 

working with other utilities, including investor-owned utilities that operate in the same region. 

Commenters stated southern California's publicly-owned utilities, together as the Southern 

California Public Power Authority, jointly issue requests for proposals for EE programs, jointly 

apply for grant monies, jointly train staff, and meet regularly to exchange information. 

Commenters stated since 2010, Northwest publicly-owned utilities (municipals and cooperatives) 

and the Bonneville Power Administration (BPA) have saved at least 560 average megawatts of 

electricity, greatly surpassing the five year goal of 510 average megawatts set by the NWPCC in 

its Sixth Power Plan. Commenters stated the NWPCC estimates EE is now one of the top three 

electricity resources in this region with some of the lowest electricity rates in the nation, having 

already avoided more than 10 to 12 large power plants. Commenters stated according to 

NWPCC, the average cost of efficiency improvements is $.017/kWh, about five times less than 

the cost of power from a new gas-fired plant. Commenters stated and without these savings, it 

would have to generate enough additional electricity to power 3.6 million Northwest homes. 

Commenters stated BPA and Northwest publicly owned utilities administer programs that pursue 

cost-effective energy savings in all sectors of the economy in support of public power's share of 

the region's EE target, which is roughly 42 percent of the total regional target.

Commenters stated other municipally- and cooperatively-owned utilities around the country have 

had similar successes. Commenters stated in fiscal year 2012, Austin Energy (TX) invested 

$17.7 million in EE rebates and its programs saved 0.83 percent of load. Commenters stated 

Iowa also provides an example of municipal and cooperative utilities active in promoting EE and 

achieving meaningful savings. Maquoketa Valley Electric Cooperative achieved savings of 1.45 

percent and 1.87 percent of their sales in 2011 and 2012 respectively, while staying within 

budget and close to or above their energy savings targets. Commenters stated it is also possible 

for municipal utilities and cooperative utilities in a region to work with a third party to provide 

EE programs region-wide, as is the case with Efficiency Vermont, which serves the entire state 

of Vermont, including the territories of 22 municipal, coop and investor-owned utilities. 

Commenters stated Efficiency Vermont has achieved significant savings over the last 14 years, 

and its 2012 to 2014 plan includes approximately 2.2 percent annual savings. A study by the 

National Rural Electric Cooperative Association (NRECA) showed that over 90 percent of its 

member cooperatives offered at least one EE program, and over 70 percent of members planned 
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to expand their EE programs further. Commenters provided tables that use EIA Form 861 Data 

for municipal utilities, cooperatives, and political subdivisions (see Table 7.3, 2011 and 2012 

Energy Savings for Leading Municipal Utilities; Table 7.4, 2011 and 2012 Energy Savings for 

Leading Cooperative Utilities; Table 7.5, 2011 and 2012 Energy Savings for Leading Political 

Subdivision Utilities).

Commenters recommended that municipal utilities and rural electric cooperatives be subject to 

the rule in the same manner (no special treatment), consistent with the performance of leading 

municipal utilities and cooperatives. 

Commenters stated that most smaller utilities do not have the capital to initiate a demand-side 

management program, without long-term budgeting and capital expense planning. Commenters

stated depending on the nature of each individual Power Purchase Agreement, the development 

of any such demand-side management program would have to be weighted, along with a cost 

benefit analysis completed, as to not overly burden rural ratepayers.

Commenters stated that as with EPA's renewable energy discussion, EPA presumes to dictate 

"best practices" to states for energy conservation programs. Commenters stated that as with 

renewable energy, EPA neither has the expertise nor the authority to dictate to states what "best 

practices" are for adopting programs that conserve energy. Commenters noted that as a Montana 

public utility commissioner recently testified:

"Each state's utility commission of which I am aware has evaluated the potential 

energy savings available to the utilities it regulates, and the possibilities depend 

on many variables, from climate of the region, to the hours of daylight at the 

particular latitude, to the mix of consumers (industrial versus residential) served 

by the utilities. That is why each state has a utility commission, and why it makes 

sense to house this kind of decision-making at the state or local level, and not in a 

federal agency. Unfortunately, Building Block 4 is perhaps the banner example of 

the BSER's supposition of an arbitrary target that lacks meaningful substantiation 

in the real world. The Public Service Commission in Montana (and the 

comparable agency in many other states) already obligates the utilities that it 

regulates to acquire all cost-effective energy efficiency available to them. The 

EPA's rule supposes that there is a substantial amount beyond this available for 

the taking. This assumption is only thinly evidenced in the EPA's rule."

Commenters stated that indeed, some state public service commissions, such as Florida's, based 

on their own considerably more informed and in-depth analyses than EPA has performed, are 

reducing their energy efficiency targets.

Furthermore, commenters stated that currently no study exists to support the 1.5 percent net 

savings goal between years 2020-2030. Commenters stated that the EPA does not confirm or 

support whether EE is cost-effective at this savings level. Commenters stated that Federal 

building codes and standards will diminish the 1.5 percent net savings opportunity over the 

years, resulting in making achievement of goals even more challenging if not impossible.
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Commenters stated that EPA relies on inconsistent and flawed data for evaluating "best 

practices" around energy efficiency. Commenters noted that EPA uses EIA Form 861 data as the 

baseline level of the amount of energy efficiency achievements by utility demand-side 

management programs. Commenters noted that EPA acknowledges the consistency and quality 

issues with this data resulting from the self-reported sourcing and differing methodologies in 

estimating these data. Commenters stated that EPA does not fundamentally address this issue.

Commenters stated that while EPA did use state-specific data from Form 861 for establishing 

starting points for EE levels, it applies "national" estimates of EE potential to this data and 

applied an EE growth rate historically only experienced in other best-practice states. 

Commenters stated that the applicability of both these metrics has some fundamental flaws, 

based on the variability of state-specific factors, such as the following:

• Lighting standards: Utility-sponsored EE programs have traditionally relied 

heavily upon lighting programs for the vast majority of their savings (generally, 

compact fluorescent lamp programs for residential customers and T-8 lighting 

retrofit programs for commercial customers). With adoption of new lighting 

standards from the Energy Independence and Security Act (EISA), this broad, 

inexpensive EE resource will largely fade quickly. Statements made regarding EE 

achieved "historically," due largely to lighting programs, ignore the impact of 

EISA lighting standards and other code changes that limit future EE potential. 

There is no empirical evidence of any future utility-sponsored EE programs 

achieving levels even approaching those achieved through lighting programs of 

the past.

• Other EE options: Other options need to be relied upon to achieve incremental 

improvements going forward. Utilities will need mostly to default to thermal 

efficiency measures, such as heating, ventilation and air conditioning (HVAC) 

upgrades and weatherization measures, which typically have a higher cost to 

achieve. As other energy efficiency options and technologies emerge, EPA should 

allow states to incorporate these into a state's Section 111(d) compliance plan.

• Customer economic challenges: EE improvements are also expensive for 

customers, often requiring significant capital investment. This is problematic. 

Customers usually avoid such large expenditures until a precipitating event occurs 

(HVAC failure, for example). As current economic conditions continue to 

challenge residents and businesses in Michigan, this capital investment barrier 

may prohibit reaching full energy efficiency potential.

Commenters noted that in its Proposed Guidelines, the EPA has proposed a one-size-fits-all 

demand-side energy efficiency target based on combining bits and pieces of historical data 

without performing a detailed analysis of what is achievable in each jurisdiction based on all 

relevant facts and circumstances that impact the ability to realize demand-side energy savings. 

Commenters stated that neither the EPA's proposed 1.5 percent nor alternative 1.0 percent annual 

energy efficiency growth rates are suitable for across the board application in every

state. Commenters stated that while they believed that the use of demand-side energy efficiency 

in setting BSER for fossil fuel-fired EGUs under section 111(d) exceeds the EPA's authority, 
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commenters recommended that if the EPA continues to include demand-side energy efficiency 

as part of its BSER determination, it should finalize neither the 1.5 percent nor 1.0 percent 

growth rates and instead, allow each state, with input from impacted utilities, to develop its own 

demand-side energy efficiency target based on state-specific market potential

studies. Commenters noted that market potential studies analyze applicable market conditions 

within a jurisdiction to develop economically and technologically feasible goals and are an 

industry accepted practice for determining achievable savings from the adoption of energy 

efficiency programs.

Commenters also stated that the data reported on EIA Form 861 contain historical data regarding 

energy efficiency and demand-side management, but do not provide forward-looking

data. Commenters recommended that the EPA instead allow each state, with input from affected 

utilities, to develop their own demand-side energy efficiency targets based on state-specific 

market potential studies. Commenters noted that these studies have been conducted on a regular 

basis by many states and utilities since the 1980s to quantify the size of the energy efficiency 

resources in their territories and to identify major opportunities for energy savings. Commenters

noted that such studies would help states and utilities set achievable and cost-effective goals, 

design efficiency policies and programs, and determine appropriate funding levels for efficiency 

programs and policies.

Commenters stated that there is no support for the EE assumptions and EPA's Technical Support 

Documents are unable to explain how the numbers are derived. Commenters noted that EPA 

determines a state-specific value reflecting the total MWh sales that could potentially be avoided 

through DSM. Commenters noted that these values increase each year from 2020 to 2029. 

Commenters stated that once the savings are determined, the numbers are scaled up 7.51 percent 

to convert retail sales to a total net generation that accounts for transmission and distribution 

losses. Commenters stated that the lesser of the

1. avoided net generation value, or 

2. the avoided net generation multiplied by the state's generation share of its sales is added 

to the denominator. 

Commenters stated that for Kentucky, EPA determines that the percentage of potential avoided 

MWh sales from EE savings to be 1.91 percent in 2020, increasing to 10.02 percent in 2029. 

Commenters noted that EPA proposes a substantial increase in EE savings. Commenters stated 

that this goal is unrealistic given the unique difficulties that co-ops have achieving energy 

reductions. 

Commenters discussed the varying energy efficiency landscape in the United States.

Commenters stated that the nation's cooperatives supply 58% of their energy requirements to 

residential customers and are often located in rural areas. Commenters stated that residential 

customers typically do not consider household energy efficiency measures with payback periods 

longer than 2-3 years, which is a major limiting factor in the residential sector.

Commenters stated that in 2012, Connecticut residents had one of the highest electric residential 

retail rates at 17.34 cents/kwh, approximately 40% higher than the national average and 70% 
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higher than the bottom half of the US, who pay an average of 10.04 cents/kwh. Commenters

stated that due to the cost prohibitive nature of electricity in Connecticut, less utility-sponsored 

incentive is required to encourage the more expensive energy efficiency programs due to the 

accelerated payback period of the energy efficiency measures. Commenters stated that this is 

evident by the 8.14% energy savings achieved by Connecticut, compared with Missouri who 

only achieved 0.55% energy efficiency savings while paying 10.32 cents/kwh for electricity.

Commenters stated that the correlation of energy efficiency program participation and high 

electric retail rates can be seen in the 12 states that the EPA used as a basis for setting the 

national goal. Commenters stated that the average residential retail rate across the 12 states are 

30% higher than the average bottom half of the United States' residential retail rates. 

Commenters stated that the majority of these states are on the top 15 list for the highest retail 

electric rates in the country and have a very different demographic profile than the rest of the 

country. Commenters stated that the majority of these states are located in the Northeast and 

Western regions where a significant portion of their energy consumption is met with natural gas 

instead of electricity. Commenters stated that the consumption of natural gas to electricity is 

almost 2:1 in the Northeast and just the opposite in the South where energy efficiency programs 

are less favorable.

Commenters stated that the bulk of the Northeast's electric end-use consumption primarily exists 

in electronics, lighting, and appliances, whereas the South's electric end-use primarily exists in 

other areas such as air conditioning, space heating, and water heating. Commenters stated that 

the energy efficiency has a higher economic and achievable potential in the Northeast because 

consumers can save a larger portion of their electricity usage through measures that are less 

capital-intensive and have a quicker payback period. Commenters noted that electric consumers 

in the South would have to spend more to save more energy by investing in more expensive 

measures like hot water heaters, HVAC systems, etc. because the majority of their end-use 

consumption comes from those systems. 

Commenters stated that energy efficiency measures are not one-size fits all and energy efficiency 

savings vary across four key characteristics: customer type, appliance and end-use technology 

saturations, climate conditions, and regulatory environment/mandates. Commenters stated that 

energy efficiency opportunity exists in every state, but each state and the utilities within each 

state have a different energy use profile which dictates the amount of technical, economical, and 

achievable energy efficiency potential. 

Commenters stated that the ideal electric energy efficiency landscape would include a larger 

portion of industrial and commercial customers, consisting of primary electric consumption in 

lighting, appliances, and other areas where the payback period is minimal, and contain a natural 

gas footprint across the more expensive space and water heating systems such that the energy 

efficiency savings claimed are from other more economical programs ("low-hanging fruit") that 

have a larger savings impact relative to total retail sales.

Commenters stated that regions with natural gas space and water heating are at an advantage 

because those units displace the otherwise electrical systems that exist in other regions of the 

country. For instance, commenters noted that those states with high penetrations of electric space 

heating and cooling systems must focus on more expensive energy efficiency measures, such as 
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HVAC retrofits and home weatherization and insulation improvements. Commenters stated that 

according to the EIA's report for Household Site Fuel Consumption in the U.S., residential 

consumers in the Northeast consume 17% more electricity primarily in lighting and other enduses than residents in the South. In 2012, commenters noted that lighting accounted for 80% of 

the total energy efficiency savings in Vermont and 60% of the energy efficiency savings in 

Maine. Commenters stated that lighting remains one of the most inexpensive, popular, and 

successful measures, which is why Maine and Vermont can attribute the majority of their energy 

efficiency savings to inexpensive lighting measures.

Commenters stated that climate conditions vary across regions and play a significant role in both 

the total electric footprint and the electricity end-use consumption profile in each state. 

Commenters noted for example, the South has a hot, humid, and seasonally cold climate, 

compared to the Northeast that has a moderate and freezing climate. Commenters stated that the 

South consumes 3.5 times more electricity than the Northeast (Figure 2), and a large part of this 

consumption is tied up in space heaters, water heaters, and air conditioning (Figure 3). 

Commenters stated that the South uses 7 times more electricity in space heaters, water heaters, 

and air conditioning units than the Northeast.

Commenters stated that the replacement of a water heater or HVAC system requires a larger 

upfront customer investment and has a longer customer payback period than a CFL light bulb. 

Commenters stated that the amount of energy efficiency savings potential from small appliances 

and light bulbs is much greater in the Northeast (65%) than the South (48%).

Commenters stated that the EPA evaluated the cost effectiveness of the industry's "best 

practices" energy efficiency measures, but did not property account for the penetration levels 

available to each state based on the end-use consumption profiles. Commenters stated that this 

oversight favors states with a greater electric footprint in small appliances and light bulbs, 

because they can claim energy efficiency savings achieved from more economical measures such 

as lighting and appliance replacements. Commenters stated that the EPA should utilize a stateby-state evaluation, specifically considering the number of cost effective energy efficiency 

measures available and the threshold at which the measures put upward pressures on retail rates 

(RIM test).

Commenters noted that the EPA relied on 12 state studies to set its expanded annual program 

target savings improvement rate at 1.5 percent per year. Commenters stated however, that the 

EPA appears to overestimate most states' energy efficiency savings potential versus prior energy 

efficiency projections, resulting in setting performance targets too high for individual states. 

[Electric Power Research Institute (EPRI) and EIA. Commenters noted that savings potentials 

are highly state specific in their consumer mix, credit for measures already taken, and levels of 

subsidies provided. Commenters stated that the EPA applies one national energy efficiency 

growth factor to all state situations and does not consider energy efficiency program performance 

or cost. Commenters stated that the discrepancies are subsequently compounded by extrapolating 

these annual energy efficiency performance targets as incremental improvements that can be 

sustained through 2030 -- beyond the 12 studies evaluated. Commenters stated that out of 12 

studies, 11 contain multiple scenarios with different sets of assumptions to demonstrate wide 

ranges of what is achievable under alternative financial, technological, and behavioral 

environments. Commenters stated that there is no documentation on how each study's respective 
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average annual improvement rate was calculated, which was used as the foundation to calculate 

the incremental performance improvement target of 1.5 percent per year.

Commenters stated that while the studies on energy efficiency consider different potentials for 

the three main sectors (residential, commercial, and industrial), the CPP uses one number across 

all sectors in its emission rate calculation. Commenters stated that industrial processes are 

designed to use as little energy as possible in order to maximize profits of daily operations and 

may have already invested in energy efficiency programs, leaving minimal and costly 

opportunities remaining for incremental improvement. Commenters stated that applying the 

same energy efficiency potential percentage for all three sectors indirectly provides incentives 

for industrial utility customers to reduce their energy load proportional to residential customers, 

but by a much greater magnitude per capita.

Commenters noted that the underlying state and regional studies used as the base for calculating 

the 1.5 percent potential include the full range of financial incentives from 25 to 100 percent, 

when considering base, low, and high cases. Commenters noted that since the EPA uses an 

averaging method in translating from the observed studies, sector and scenario findings to the 

final average annual projected potential, it is difficult to evaluate the financial incentives that are 

assumed in both the Building Block calculations and study results.

Commenters discussed increasing demand side energy efficiency.

Commenters stated that the EPA assumes that each state could implement additional EE 

measures each year up to a maximum of 1.5% annual incremental savings, resulting in an 11% 

decrease in generation in 2030. Commenters stated that they in conjunction with their Member 

Systems have invested in rebates, advertising, training and personnel toward the goal of reducing 

peak demand and providing EE programs to benefit the residents and businesses of Mississippi. 

Commenters stated that in addition to the EE programs offered by individual Member Systems, 

commenters administer certain EE programs that are available to all Member Systems.

Commenters stated that each Member System is committed to EE and pursues those EE 

programs that make sense for its members taking into account the unique characteristics of its 

system, including but not limited to member characteristics, varied geography, weather patterns, 

local economic conditions, existing and new building construction, system load profiles, and 

energy use patterns. Commenters stated that EE programs currently in effect include:

1. Comfort Advantage Program

Commenters stated that they offer the Comfort Advantage Program that is a recognized standard 

for energy efficient construction and quality products for the home. Commenters stated that this 

EE program, the benefits of which are promoted by commenters’ Member Systems, offers 

incentives for EE and energy efficient HVAC Systems in new home construction and energy 

efficient HVAC equipment upgrades in existing homes. Since 1988, commenters’ participation 

in the Comfort Advantage Program (initially known as the Good Cents Program), that is made 

available to all Member Systems, has added over 25,000 energy efficient homes to the meters 

that Member Systems already serve. Commenters stated that Comfort Advantage programs and 

services offer consumers knowledge, cash incentives, peace of mind and energy savings. 
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Commenters estimated that each of these homes saves 3,000kWh per year or cumulatively 

77,000,000 kWh per year. Commenters stated that the Comfort Advantage program drives the 

incorporation of energy efficient building techniques and features such as building shell sealing, 

window area limitations, window thermal and radiant efficiency requirements, robust insulation, 

and energy efficient water heaters and heat pumps in non-Comfort Advantage homes. 

Commenters stated that this program raises the EE bar for construction of new homes in the 

region whether they are Comfort Advantage homes or not.

2. Pre-Pay Programs

Commenters stated that some of their Member Systems have Pre-pay programs that allow their 

members to pre-pay for electricity before they use it. The commenters stated that experience has 

shown that Pre-pay customers actually reduce their bills by 10-15% simply because they become 

more aware of their usage.

3. Time of Use Rate 

Commenters stated that they have a Wholesale Rate Time-Of-Use (TOU) Rider which is 

available for use by their Member Systems. Commenters stated that the Member Systems 

offering a TOU rate allow its members to avoid or reduce load during the On-Peak period and 

increase load during the Off-Peak to save cost. Commenters stated that by shifting electricity use 

off-peak, they and the Member Systems prolong the need to build new generation plants and 

increased off-peak use allows current generating facilities to operate more efficiently.

4. Energy Audits

Commenters stated that most of the Member Systems also conduct free energy audits available to 

all members to help them establish an effective energy management plan to reduce monthly 

electricity use.

5. Automated Metering Infrastructure

Commenters stated that some of the Member Systems have installed Automated Metering 

Infrastructure (AMI). Commenters stated that the automated metering structure allows members 

to access their energy use data 24/7 through a portal.

6. Energy Efficiency Education

Commenters stated that all Member Systems provide EE education for their members which 

consists of a variety of programs and services, brochures, resources and communications. 

Commenters stated that Member Systems also produce information educating and encouraging 

their members to purchase energy efficient products and build energy efficient homes.

7. Distributed Generation
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Commenters stated that in the spring of 2009, they and the Member Systems developed common 

contractual documents addressing distributed generating (DG) resources for residential 

installations up to 10 Kilowatts. Commenters stated that they and the Member Systems have also 

developed similar documents for DG resources greater than 10 kW and up to 10 MW. 

Commenters stated that these documents include an application, an interconnection and 

operating agreement, interconnection requirements for DG resources, a Power Purchase 

Agreement (PPA) and a rate schedule for purchase by the commenters of excess electric energy 

generated by DG resources and delivered into the electric grid. 

Commenters stated that the current EE programs and the existing government mandated EE 

standards already in place appear to be working to reduce average residential kWh. For the years 

2006 through 2009 average residential kWh use decreased even though degree days increased 

(06-07) or were virtually flat (07, 08 and 09). Commenters stated that average residential use 

from 2011 to 2013 decreased even though degree days for the two years (2011 and 2013) were 

almost flat. Commenters stated that the trend from 2006 through 2013 has been for average 

residential kWh use to decrease. 

Commenters stated that the decrease is driven by replacement of older less efficient 

appliances/equipment with more energy efficient products -- lighting, HVAC, refrigerators, 

water heaters, TVs, computers and other electric consuming products. Commenters stated that 

improved energy efficient building techniques -- weatherization, insulation, etc. -- due to 

improved building codes and technology improvements encouraged by the Comfort Advantage 

program also contributes to the decrease. Commenters stated that the loss or extensive damage to 

homes as a result of Hurricane Katrina accelerated the building of new homes and replacement 

of appliances all with better EE standards.

Commenters stated that they should be given credit for EE work that began in 1988 and for this 

reduced electric energy use in homes using appliances and electric equipment built to existing 

government mandated EE standards. Commenters stated that much of the benefit from this work 

has already been achieved as shown by the reduction in residential energy usage. Commenters

stated that the usage is now less responsive to changes in degree day totals. Commenters

estimated that the annual system wide reduced energy to be about 249,000 MWh (based on the 

difference between average residential electric use from 2006 to 2013). 

Commenters stated that they and the Member Systems agree that EE measures can be beneficial 

to all members, provided they are cost effective and do not result in cross subsidization between 

members of the Member Systems. Commenters stated that benefits may be provided either 

directly or indirectly through avoidance of expensive on-peak energy and reduced need for or 

complete avoidance of future generating capacity. Commenters stated that EE goals must be 

achieved through programs that make economic sense and can provide lasting impacts for energy 

and capacity savings. Commenters stated that EE Programs that must be heavily subsidized in 

order to make them attractive enough for rate payer acceptance would most likely result in 

higher rates for all. Commenters stated that under this scenario, few benefit at the expense of 

many. Commenters stated that this would not comply with the cooperative principles, nor would 

it be effective.
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Commenters stated that in 2009 their Board of Directors approved a plan to investigate 

additional programs to produce more efficient use of electric energy and help avoid increased 

capacity requirements. Commenters stated that the intent of this new program was to seek ways 

of reducing the need for new generating facilities, or at least delaying the time before new 

generation became necessary. Commenters stated that the Coordinated EE and Demand 

Response (CEEDR) program was launched with the formation of the CEEDR Cabinet consisting 

of representatives from each Member System and the commenters. Commenters stated that the 

CEEDR Cabinet is a guidance committee that works to identify potential EE and demand 

response programs that can be implemented by the commenters and/or its Member Systems. 

Commenters stated that the CEEDR Cabinet hired a consultant to perform an Energy Efficiency 

and Demand Response Potential Study (Potential Study) to determine the potential for electric 

energy and demand savings from multiple programs. Commenters stated that residential, 

commercial, and industrial customers were surveyed to identify the saturation of energy-efficient 

appliances and building practices in customer homes and businesses. Commenters stated that key 

issues and common characteristics of homes and businesses with high energy usage were 

identified and used to develop ways to improve EE and lower costs for consumers. Commenters

stated that the survey results were used to develop a comprehensive portfolio of potential 

performance and prescriptive based programs. Commenters stated that after the Potential Study 

was completed another consultant developed Pilot Programs to test and affirm the results from 

the Potential Study. Commenters stated that the results of each pilot project will then be used by 

the commenters and its Member Systems to determine whether to implement a full scale program 

utilizing the concepts of the pilot project.

Commenters stated that the following Pilot Programs are currently underway:

1. The Commercial and Industrial (C&I) Lighting Pilot Program. The C&I Direct Installed 

Lighting Pilot measures have been installed. A consultant is in the process of evaluating 

the pilot results and a draft full scale business lighting program would follow the 

evaluation.

2. The C&I Custom Measures energy efficiency projects Pilot Program. The C&I Custom 

Pilot measures should be completed and a final report received by the commenters by the 

end of 2014. An evaluation of the C&I Custom Pilot Project will follow, and any 

development of a full scale program would follow the evaluation.

3. Residential Pilot Program. The Residential Pilot includes installation of EE measures and 

should be completed by the end of 2014. After meter data is gathered for 12 months 

following the installation phase an evaluation of the Residential Pilot will follow and any 

development of a full scale program would follow the evaluation. 

Commenters’ Member Systems rural service areas are not densely populated, in many cases, 

resulting in great distances between meters. Commenters stated that this presents an added 

challenge to the implementation and cost of many EE programs. Commenters stated that its 

Member Systems have a low average member density of 7.3 meters per mile of distribution line 

(range is 4.8-11.6 meters/mile compared to investor owned utility customer densities exceeding 

39 customers per mile of distribution line). 
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Commenters stated that they have learned that the energy savings from the EE programs 

included in the portfolio of programs suggested by the Potential Study may not be as optimistic 

as first studied. The commenters stated that this is based on direct experience from the 

commenter's Residential, C&I Direct Install Lighting and C&I Custom Pilot Programs. 

Commenters stated that much has been learned, as well, from the EE program experiences of 

other utilities.

Commenters stated that they have learned from another utility that implemented a HVAC TuneUp program that it may not be cost effective. Commenters stated that the utility found that the 

program required an inspector to follow-up behind the HVAC technicians performing the HVAC 

system tune-up. Commenters stated that the inspector found many instances where the HVAC 

system was not operating as efficiently as desired because of incorrect tune-up 

adjustments/Freon charging made during the HVAC tune-up. As a result, commenters stated that 

the energy savings expected for many of the tuned HVAC systems were neutral or negative. 

Commenters stated that the expense of needing the follow-up inspector and the minimal energy 

savings would make the program cost ineffective for the commenters and their Member Systems 

especially given the distance between homes. 

Commenters stated that the distance between businesses had an impact on administering the 

commenter's Commercial and Industrial (C&I) Direct Install Lighting Pilot Program. 

Commenters noted that installing energy efficient lighting fixtures at commercial and industrial 

locations separated by many miles added to the cost and logistic challenges of the Direct Install 

Lighting Pilot Program. As a result, commenters stated that it is most likely that the full scale 

commenter's C&I lighting program will be a prescriptive program as opposed to the direct install 

program tested in the pilot. Commenters stated that in a prescriptive lighting program, incentives 

are provided for each type of energy efficient lighting fixture installed (by the business owner) to 

replace inefficient lighting fixtures. Commenters stated that achievement of energy savings goals 

from the prescriptive lighting program will most likely vary from the anticipated rate of 

installations from a direct install lighting program. Commenters stated that until experience is 

gained, it is not known how quickly cumulative energy savings from a prescriptive lighting 

program will result in energy savings.

Commenters stated that its Residential Pilot program is testing two energy savings retrofits:

1. Seal air leakage in HVAC ducts in home attics.

2. Seal the ceiling between the building shell and the attic and add insulation to attain an 

R38 insulating value between the attic and the building shell.

Commenters stated that this concept should work in most cases as HVAC ductwork is leaky, 

attics are not sufficiently sealed from the building shell and many attics in existing homes have 

inadequate insulation. However, commenters stated that installing such energy savings features 

may create higher humidity in homes with oversized air conditioning systems. Commenters

stated that the oversized air conditioning systems cool the home quickly, but do not run long 

enough to adequately remove accumulated moisture from the conditioned air. Commenters stated 

that the increased humidity impacts comfort. Commenters stated that as a result the homeowner 

may adjust his thermostat lower, thus making the unit run longer and reducing energy savings.
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Commenters stated that some challenging aspects of a full scale residential program are the 

relatively high number of members of the Member Systems living in poverty, the high 

percentage of members living in mobile homes, and the low number of meters per mile (low 

member density) in the Member Systems' service territories. Commenters stated that according 

to the American Fact Finder; DP04 Selected Housing Characteristics; 2008-2012 American 

Community Survey, mobile homes in Mississippi make up 15.3% of the total housing stock and 

the national average is 6.5%. According to the Census Bureau Quick facts, detached homes in 

Mississippi make up 69.7% of the housing stock and the national average is 61.7%. Commenters

stated that of the detached homes located in Member Systems' territories identified in the 

Potential Study 69,500 are mobile homes and 288,855 are single family homes. Commenters

stated that because 19.3% of the detached homes are mobile homes in Member Systems' service 

territories and miles separate many of the homes, it makes the residential program harder to 

administer.

Commenters stated that achieving the EE goals dictated for Building Block 4 by the EPA's Clean 

Power Plan will be particularly daunting for the commenters and their Member Systems. 

Challenges include:

• Geographic dispersion and poverty rates/average income

• Willingness to participate

• Impact on rates

• Impact of Member issues on measurement and verification

• Enforcement of mandated EE goals on rate payers

Commenters stated that two of the greatest challenges to a successful EE program for the 

commenters are geographic dispersion and prevailing poverty throughout the Member Systems' 

territories. Commenters stated that members living at or below the poverty level will have a hard 

time investing in EE measures even if incentives are given. Commenters stated that members 

living above the poverty level may be unwilling or unable to spend the money to make efficiency

improvements to their homes and businesses because of their below average per capita and 

median household incomes. Also, commenters stated that renters are unlikely to invest even if 

financially able. Commenters stated that low member density presents challenges of distance, 

logistics and resulting increased cost to administer an EE program.

Commenters stated that EE programs require willing participation by the members. Commenters

stated that willingness to participate in an EE program will not only be influenced by member 

resources but also will be influenced by the availability and cost of programs and incentives 

offered by the commenters and the Member Systems. Commenters stated that the cost impact of 

EE programs on retail electric rates will be a roadblock to willing participation for the members 

and Member Systems. Commenters stated that since it is the members who own the Member 

Systems, the Member Systems realize that these member-owners are struggling to pay their bills. 

Commenters stated that in order to keep electric rates from increasing, there will be budget 

constraints as to the number of EE programs that can be implemented. Commenters stated that 
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the upfront costs of delivering additional programs including administration, marketing, tracking 

systems, monitoring and evaluation, and more personnel may preclude some programs from 

being implemented. 

Commenters stated that there are practical issues with members, measurement and verification 

challenges, and logistics. Commenters stated that even in current EE programs, it is difficult to 

measure energy savings. Commenters noted for example, if savings calculators and SEER levels 

are used, assumptions are made as to the number of cooling and heating hours for heat pumps 

and run time for appliances. Commenters stated that each member controls their own usage and 

the assumptions may be incorrect. Commenters stated that simply monitoring usage before and 

after EE measures are implemented is not totally accurate. Commenters stated that the size of the 

household may change or the member may lower the thermostat in summer and raise it in winter 

to make his house more comfortable and use the same amount of energy he used prior to the EE 

measures. Commenters stated that the member may convert from gas heat to a heat pump and 

their electricity usage goes up even though his house is more energy efficient.

Commenters stated that the challenges in implementing, administering and paying for an EE 

program when coupled with the geographic dispersion, member willingness to participate, high 

poverty rate, low median household income, measurement and verification realities and potential 

adverse retail electric rate impacts will render impossible the enforcement of energy savings 

targets from mandated EE programs.

Commenters stated that a mandate under the Clean Power Plan requiring a reduction in MWh as 

a result of EE to achieve a reduction in CO2 emissions from the commenters' generating 

resources is not workable for the above reasons. Commenters stated that EE cannot, nor should it 

be, an enforceable compliance measure and therefore it should be removed from calculation of 

state goals.

Commenters stated that there are several flaws in the analysis used by EPA to establish the level 

of EE measures to be used in the calculation of state goals. Commenters noted that the 

cumulative effect of these flaws is that EPA has substantially overstated the amount of EE that 

could be achieved by states. 

Commenters stated that the extrapolation of EE achievement levels between states results in 

invalid comparisons. Commenters noted EPA suggests that a certain level of EE can be achieved 

by all states based on its evaluation of "best practices" achieved in certain states. Commenters

stated the assertion that the experience in these states can be easily replicated in others is based 

on simplistic assumptions, not detailed analyses. Commenters stated that there are fundamental 

flaws in such extrapolations when inherent real-world differences among the states are properly 

considered. Commenters stated that the relative size of the different classes of customers 

(industrial, commercial, and residential) is substantially different between states and across 

utility service territories; and the relative potential and costs to achieve EE savings across these 

customer classes varies substantially. Commenters noted that many states (such as those in the 

Midwest) deliver a much higher percentage of their electricity to industrial and manufacturing 

facilities. Commenters noted that other states (such as those in the Northeast) have a much larger 

percentage of commercial and service-based entities in their customer mix. Commenters noted 

that States with higher industrial and manufacturing activity tend to have higher overall 
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electricity consumption levels because the EE target levels are based on total retail sales, this 

increases the EE target levels as well. In addition, commenters stated that implementing utilitysponsored EE at these industrial and manufacturing facilities can be much more challenging and 

costly, as they tend to be facility specific measures that are based on unique circumstances, such 

as replacing pumps, motors, and drives in manufacturing equipment with more efficient models.

Commenters noted that many states have determined that larger commercial and industrial 

customers should be not be required to participate in the utility-sponsored EE programs, because 

these customers typically have the sophistication and resources available to implement their own 

EE measures, have better access to capital, and better rates, and are generally better informed as 

to their EE options. In these instances, commenters stated that EPA should exclude commercial 

and industrial sales, or allow the requirement for EE implementation to be placed directly on 

those customers. Commenters stated that in any event, the expected penetration rate for required 

EE programs should be consistent with the base of sales that can be addressed by those 

programs.

Commenters stated that the average temperatures and relative use patterns for specific electricity 

consuming devices among many of the states used to define "best practice" for EE are 

fundamentally different from the average temperatures and use patterns in other states. 

Commenters noted that foremost among these differences is the significant variation in space 

heating and cooling requirements and their relative contribution to electricity loads. Commenters

noted that space heating and cooling are by far the largest energy consuming loads in most 

households and many commercial establishments. Commenters stated that EPA's failure to 

account for these differences leads to a flawed assessment of the percent of EE reductions that 

can be achieved across different states. Commenters noted that regarding electricity consumption 

for space cooling, the differences are stark. For instance, commenters noted that Massachusetts 

has significantly fewer cooling degree days than Texas. Commenters noted that in 

Massachusetts, electricity used for space cooling accounts for only 1% of average household 

electricity consumption; over 20% of homes have no air conditioning; the majority of the 

remainder use smaller window/wall units sparingly; and only 20% having larger central air 

conditioning units. Commenters noted that in contrast, in Texas electricity used for space cooling 

accounts for 18% of average household electricity consumption; over 80% of homes have central 

air conditioning; and those units are used much more extensively throughout a longer cooling 

season. As such, commenters stated that electricity needs for space cooling are significantly 

higher in Texas than in Massachusetts. Regarding home heating, commenters stated that there 

are significant differences as well. Commenters noted that Massachusetts experiences 

significantly more heating degree days than Texas. However, commenters noted that a 

significant percent of residential heating is met using natural gas (>50%) and fuel oil (31%), 

while electricity is used very sparingly (10%). In contrast, commenters noted that in Texas 

electricity provides a significant portion of the energy to meet residential heating needs (50%), 

with relatively smaller percentages of natural gas usage (~42%) and virtually no heating oil. 

Therefore, commenters stated that due to a combination of average temperatures and prevalence 

and type of space heating and cooling equipment, households in Massachusetts rely on electricity 

significantly less than those in Texas to meet basic space heating and cooling needs of homes.

Commenters stated that phenomena discussed above are directly relevant to the issue of EE 

achievement potential. Commenters noted that lighting has historically been among the most 
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widespread and successful utility-sponsored EE measures. Commenters noted that if the same 

EE lighting measure (such as a CFL light bulb) is installed in a low electricity-use household in 

Massachusetts, it will contribute a far greater percent reduction in electricity usage than that 

same measure installed in a higher-electricity-use household in Texas. Commenters noted for 

example, all other things being equal, since household electricity consumption in Massachusetts 

is only about half that of Texas, the exact same EE measures installed in a typical Massachusetts 

household that resulted in a 1 percent reduction in electricity consumption would produce only a 

0.5 percent reduction in a typical Texas household. Commenters noted that if the identical types 

and levels of EE measures are implemented in a state that has double the energy consumption 

than another, the impact on a percentage-basis would be half that experienced in the original 

state. Commenters stated that these stark differences are particularly relevant because what EPA 

characterizes as EE is a misnomer. Commenters stated that when EPA professes that a certain 

state has achieved a certain percent of energy efficiency, in actuality what is measured is the 

reduction in electricity consumption relative to the base of all electricity consumption. 

Commenters stated that other energy sources are completely ignored. Commenters stated for 

example, though the average household consumes only about one-half the electricity in 

Massachusetts as it does in Texas, when one compares the total energy consumption (on a British 

thermal unit "BTU" basis) the comparison is completely different. Massachusetts uses 22 percent 

more energy per household than the US national average, while Texas households use 14 percent 

less than the US average.

Commenters stated that EPA should base each state's renewable and energy efficiency targets on 

the policies already adopted in each state, and that EPA should not use formulas for state targets 

that assume less generation and energy efficiency savings in 2030 than what the state has already 

achieved today.

Commenters stated that, because EE targets would be based on the current retail sales of 

electricity from all utilities in the state, the responsibility for meeting the target should be 

proportionally shared by those utilities, including investor owned utilities, municipalities, rural 

cooperatives, and competitive retail suppliers. Commenters explained that, otherwise, certain 

customers would be unfairly burdened. Commenters added that, in many states, only investorowned utilities are required to implement such programs, while municipal utilities, rural 

cooperatives, and other suppliers often are not.

Commenters responded to the EPA's request for comment on the issue of whether there are 

special issues for municipal utilities and rural electric cooperatives that merit modifications in 

Building Block 4. Commenters stated that these utilities have the ability to cost-effectively 

implement energy efficiency programs, and therefore do not need special consideration. The 

examples commenters cited were:

• The City of Fort Collins Utilities (FCU) in Colorado which has a comprehensive 

set of EE programs totaling a savings of 32,700 MWh in 2013, equal to 2.2% of 

their electricity total consumption, on a gross basis

• The Sacramento Municipal Utility District (SMUD) in California which saved 

about 174,000 MWh per year or 1.4% of electricity sales in 2013 on a net basis
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• The state of Iowa, in which rural electric cooperatives owned by wholesale power 

providers are able to provide savings to customers totaling over 1.1%

• The states of Oregon and Minnesota, the latter of which saved 315,000 MWh per 

year or 1.4% of electricity sales through energy efficiency programs implemented 

in 2010

Commenters concluded by stating that rural electric cooperatives and municipal utilities 

throughout the country can replicate what these leading utilities are achieving with respect to 

energy savings. Thus commenters stated no adjustment in the proposed Building Block 4 targets 

is warranted to reflect a difference in energy savings potential between IOUs and municipal 

utilities or rural electric cooperatives. Commenters also noted that as many of these entities are 

not regulated in the same manner as the IOUs, EPA and states should give some consideration as 

to how these utilities will be treated in the state plans and implementation efforts. Due to the 

varying regulatory practices, commenters stated municipal utilities and rural cooperatives may, 

in fact, have greater latitude in the types of programs they implement. Commenters believed that 

it may be more appropriate to have an authority other than the state public utilities commission 

(PUC), such as the state energy office, certify that appropriate evaluation, measurement, and 

verification (EM&V) procedures were followed and that the energy efficiency credits resulting 

from efficiency programs implemented by municipal utilities or rural electric cooperatives are 

legitimate

Comment 11: State Regulatory Framework impact the ability to implement EE programs

Response 11: Commenters stated that the regulatory framework varies across states impacting 

the scope and breadth of ratepayer-funded EE programs. Since, the EPA decided not to include 

DS-EE in BSER for the final rule, this comment is now outside the scope of the CPP. DS-EE 

remains generally available for compliance. See multiple subsections of section VIII of the final 

rule preamble of the CPP for details. Further, the EPA recognizes that regulatory options do 

exist, and are generally available for states to consider in support of greater use of DS-EE 

policies and programs. See the Demand-side Energy Efficiency TSD for CPP Final Rule for 

more information on state regulatory frameworks and energy efficiency. 

The following are summaries of the specific public comments under this comment:

Commenters stated that a state's regulatory framework impacts its ability to use and implement 

EE measures and programs.

Commenters opposed EPA's end-use efficiency assumptions and argued that EPA's approach 

does not recognize that there are different rate methodologies, regulatory models, and different 

rate structures across the states. Commenters stated some states have rate and/or regulatory 

structures that make the implementation of utility-based energy conservation programs more cost 

effective or have different tests and stringency levels for determining ratepayer impacts. In those 

circumstances, commenters stated, implementation of large-scale energy conservation programs 

can be more readily justified to state regulatory commissions as cost effective, resulting in 
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greater energy savings potential over time. Commenters presented information on Virginia's 

energy efficiency approval process as an example and states that energy efficiency measures are 

more appealing and cost effective in states where electricity prices are high. Commenters also 

argued that a one-year snapshot of data does not provide any historic context on the time needed 

to achieve the rates, nor does it provide justification that such a level of savings can be 

maintained making it difficult to evaluate whether the achievements of a few states can be 

reasonably replicated across all other states. Commenters further argued that achieving the 

energy efficiency targets envisioned in EPA's proposal may require a state commission to 

approve programs that are not otherwise cost-effective to reach the state's target. Commenters 

stated this requirement usurps the state commission's authority to protect ratepayers and to make 

case-specific judgments as to the cost effectiveness of individual programs within its jurisdiction.

Commenters stated differing state-level regulatory frameworks skew potential DSEE.

Commenters stated regulatory frameworks vary widely across states and are significant factors in 

energy efficiency goals and achievements. Commenters stated utility planning processes are 

directly related to the regulatory framework of each respective state. Commenters stated in some 

states, the generation, transmission, and distribution portions of the electric system are not 

controlled by the same entity. Commenters stated furthermore, in some states, like Vermont, 

energy efficiency program delivery is provided through a third-party, further detaching the 

energy efficiency resource from each utility's planning process. Commenters stated within 

Southern Company's region, each state PSC determines the amount of energy efficiency activity 

each utility should pursue based on the state's regulations and policies. Commenters stated a 

state's regulatory framework and associated utility planning process may impact the structure of 

DSEE measures.

Commenters stated energy efficiency targets vary widely across states from those based on a 

percentage of retail sales to states that have no defined energy efficiency targets. Commenters

stated in some cases, like New Jersey, these targets are advisory and utilities have not formulated 

any plans to achieve the targets. Commenters stated Maryland's target is based on achieving a 

per-capita reduction calculated against a prior year baseline. Commenters stated in North 

Carolina, energy savings can be counted towards compliance with the state's REPS. Commenters

stated Michigan allows achievements in excess of the state-required target to be banked for credit 

in future years. Commenters stated this variety in DSEE accounting makes basing a national 

standard on the snap shot results of three states all the more arbitrary.

Commenters stated EPA ignored the critical role of supportive state regulatory frameworks in 

increasing state EE savings rates. Commenters stated EPA's discussion of the potential for 

increased EE savings focuses only on technical potential and ignores the reality of how EE 

savings are actually achieved. Commenters stated electric utilities (including investor-owned 

utilities, municipal utilities and cooperatives) are by far the largest providers of EE in the country 

- they are responsible for 89 percent of the total customer-funded EE nationwide. Commenters

stated electric utility customer-funded EE programs - both EE and DR programs, such as load 

control and price-responsive demand - saved 126 TWh of electricity avoided 89 million mt CO2 

in 2012. Commenters stated electric utility ratepayer-funded, or customer- funded, EE programs 

have been in place for over two decades in some states, and the costs of administering the 

programs are paid for by a utility's ratepayers, usually through a fixed charge added to electric 
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bills, and are routinely reviewed by PUCs to ensure that such programs pass a cost-benefit 

test. Commenters stated many states, working with their electric utilities, likely will include EE 

programs in 111(d) compliance plans.

Commenters stated that no EE savings will be achieved unless current state- and administratorrun EE programs are both continued and expanded. Commenters stated the regulatory 

environment in each state determines the size of the budget for customer-funded EE programs; 

the budget determines the scope and breadth of EE programs. Commenters indicated that 

regulatory frameworks that support utility investments in EE programs (through cost recovery 

mechanisms or performance incentives), therefore, are the key to achieving actual EE savings. 

Commenters pointed out that despite this clear relationship between supportive regulatory 

policies and EE savings, EPA's analysis does not make any mention of this. Commenters stated 

that as a practical matter, annual incremental state EE savings rates cannot be increased without 

supportive regulatory frameworks and the EE program budgets they create.

Commenters stated EPA has not addressed how a failure to align regulatory policy and EE goals 

in some states will inhibit states' abilities to achieve the target annual EE savings rate. 

Commenters noted that 33 states allow for some type of fixed cost recovery (either decoupling or 

a lost revenue adjustment mechanism), and 28 states have EE performance incentives. 

Commenters stated that in order for states to achieve and maintain the target savings rates, 

regulatory environments in all states must allow for some type of fixed cost recovery.

Commenters stated furthermore, municipally-owned utilities and electric cooperatives are not 

currently subject to state jurisdiction for energy efficiency. Commenters stated this could require 

new state legislation in many states to extend this jurisdiction (which MRES does not support), 

which will amount to a major change and increased compliance costs for these non-jurisdictional 

entities. Commenters stated EPA must resolve this issue by stating that the building blocks can 

only be used as optional compliance tools, and that the use of the blocks cannot be mandated in 

state plans. Commenters stated without that definitive clarity, states will be without a way to 

demonstrate the enforceability of EE measures, for example.

Commenters stated EPA's discussion of the potential for increased savings from demand-side 

energy efficiency focuses only on technical potential and ignores the reality of how energy 

savings are actually achieved. Commenters stated EPA has not addressed how a failure to align 

regulatory policy and EE goals in some states, especially those in the TVA service territory, will 

inhibit states' abilities to achieve the target annual EE savings. Commenters indicated States 

should be allowed to adopt current measurement and verification mechanisms already in place 

by electric utilities.

Commenters were concerned with the application of BSER under Building Block 4 of the 

proposed rule. Commenters stated in 2012, the year that U.S. EPA chose to garner data from, 

Indiana had a state-mandated energy efficiency program in place called Energizing Indiana. 

Commenters stated, however, the Indiana General Assembly passed legislation which brings the 

program to an end as of December 31, 2014, meaning Indiana will no longer have a state 

mandated energy efficiency program. Commenters stated because of this, Indiana no longer has 

any regulatory authority to mandate any type of demand-side energy efficiency measures, 

therefore, even though many utilities have decided to continue the program voluntarily, Indiana 
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is uncertain how the state would receive credit in the state plan for reduced energy use for 

voluntary measures that the state has no control over. Commenters stated even if the state 

legislature were to approve a new state-mandated energy efficiency program in the 2015 

legislative session, Indiana would not have sufficient time to implement the program before state 

plan submissions would be due. Commenters stated due to the proposed timeline and uncertainty 

of enforceability under Building Block 4, the state goal calculation may be unrealistic, and 

Indiana may not be able to rely on this building block at all in the state plan.

Commenters indicated that Delaware could be very helpful in providing ideas on what works. 

Commenters stated Delaware has been a national leader on energy efficiency, for example, 

Delaware Electric Cooperative has over 49,000 members participating in its "Beat the Peak" 

voluntary energy efficiency program to help reduce energy demand during peak times. 

Commenters encouraged you and your EPA staff to meet with Delaware Electric Cooperative 

and our state officials to understand how Delaware's efficiency programs work and what 

regulatory framework is best to replicate our programs nationwide. Commenters stated they 

would be pleased to help in facilitating that meeting this fall if that would be helpful.

Commenters stated the proposed requirement for expansion of end-use energy efficiency 

programs interferes with state authority to determine the nature and extent (if any) of these 

programs. Commenters indicated State legislatures are the appropriate venues for making 

determinations about the design and goals of energy efficiency programs beyond those already 

required by state and federal legislation.

Commenters stated that as the Analysis Group also demonstrates through in-depth case studies, 

these periods of high energy savings growth often followed changes in state-level policies that 

were specifically intended to spur investment in energy efficiency. Commenters stated thus, the 

experience of these states suggests that state-level decisions, such as programs and regulatory 

policies that will be adopted as part of state plans under section 111(d), can have a decisive 

impact on the pace and performance of energy efficiency investments. As an example, 

Commenters noted that the state of Arizona has rapidly become a national leader in energy 

efficiency over the last seven years, increasing its state-wide energy savings by 1.57 percent of 

retail sales between 2006 and 2013 (reflecting an annual average rate of increase of over 0.2 

percent per year). Commenters stated as the Analysis Group report demonstrates, this increase in 

energy savings directly followed the adoption of an expanded system benefits charge in 2006 

that significantly expanded the resources available for utility-sponsored energy efficiency 

programs. Commenters stated that in 2010, Arizona took the further step of enacting a rigorous 

energy efficiency resource standard (EERS) that requires cumulative energy savings to reach 22 

percent of sales by 2020. Commenters stated these two policies combined have helped Arizona 

sustain a rapid upward trajectory of energy savings growth, helping Arizona exceed EPA's 1.5 

percent target in both 2012 and 2013.

Commenters stated under existing Texas law, EPA's proposed incremental and cumulative 

savings targets for energy efficiency are not achievable. Commenters stated extensive 

amendments to both the statute and the PUCT's rule would be required to revise the electric 

utilities' energy efficiency savings goal, allow direct marketing by the utilities, and either require 

adoption of the EM&V framework yet to be established by EPA or revisions to the EM&V 

framework enacted by the Texas Legislature in 2011. Commenters stated additional amendments 
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to the PUCT's rule would be required to adjust the cost caps for residential and commercial 

customers, as well as to adjust the administrative cost cap to promote increased outreach and 

marketing by the utilities. Commenters stated due to the time required for the Texas Legislature 

to pass legislation to amend current statute and for the PUCT to adopt conforming rules and 

approve programs, as well as the extraordinarily high cost required to implement this block, 

which would undoubtedly result in significant rate shock to electric consumers, the demands of 

Rule 111(d)'s Block 4 are simply not realistic.

Commenters noted that New Jersey's Clean Energy Program for EE and RE is a statewide 

program administered by the NJBPU. According to commenters, it is not just one or two utility 

areas or one managed by one or two electric or gas utilities in various franchise areas, but a 

statewide electric and natural gas EE and RE program. Commenters noted that the EE incentive 

and rebates offers are the same for Cape May Point (the southernmost point of New Jersey) to 

High Point (the northern most point of New Jersey). Commenters stated that this has an impact 

on an EE savings that can be achieved in New Jersey versus a state with a new EE program in 

just one utility franchise area that has a more specific focused approach to address one electric 

generation plant.

Commenters’ utility companies operate reflecting varying levels of implementation of energy 

efficiency programs within their respective jurisdictions. Commenters’ Texas company began 

implementation in 2000; its Arkansas company in 2007; its New Orleans company in 2011; and 

its Mississippi company in 2014. Commenters’ Louisiana and Gulf States Louisiana companies 

are awaiting an implementation order. Commenters stated that these programs are specific to and 

dependent upon the approval of the state utility regulators.

Commenters requested that EPA carefully review the alignment of incentives between utilities 

and EE program operators. They stated that in many states, regulatory rate designs do not 

provide utilities with the proper incentives to aggressively deploy EE. Commenters asked that at 

the very least, utility disincentives, such as having volume rates with no ability to be made whole 

for the fixed costs of the system, should be removed in order for utilities to maintain their 

financial viability. Commenters stated that the preferred condition is one in which the utility 

incentives are aligned with the deployment of EE so that all stakeholders can gain a benefit from 

EE deployment.

Commenters stated, because California has decoupled utility profits from energy sales, its 

investor-owned utilities have strong incentives to pursue these savings. (See Am. Council for an 

Energy-Efficient Econ., State Energy Efficiency Database: California (2013), available at 

http://aceee.org/sector/state-policy/california) 

Comment 12: Commenters stated that the EPA doesn't have the authority to include BB4 in 

BSER for Non-Utility Measures

Response 12: The EPA decided to not include DS-EE in BSER in the final CPP. See sections

V.A and V.B of the final rule preamble of the CPP for further discussion of the decision. We 
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note, however, DS-EE remains generally available for compliance, see multiple subsections of 

section VIII of the final rule preamble of the CPP for details.

The following are summaries of the specific public comments under this comment:

Multiple commenters stated that EPA does not have legal authority over non-utility energy 

efficiency programs.

Commenters asked a series of questions regarding BB4, including: Why is it appropriate for EPA 

to use these EE programs in setting state-specific EE savings goals, given that responsible 

officials and affected EGUs do not necessarily have control over these programs? EPA's GHG 

Abatement TSD indicates that: "EE programs are administered by a variety of entities" including 

utilities, nonprofit and for-profit third parties, and state and local government agencies as well as 

that "Most EE programs...are overseen by state utility commissions..." Which EE programs are 

not overseen by PUCs?

Commenters stated in establishing energy efficiency as the final building block for the purposes 

of setting the state goal, EPA proposes to utilize activities completely outside the power 

generation sector, an action of dubious legal authority. Commenters stated EPA proposed 

alternatives to fill Building Block 4 could include actions such as enhanced building codes, 

energy efficiency programs, demand response programs and other actions that have the general 

impact of lowering power consumption. 

Commenters argued that EPA has exceeded the scope of any authority it has under section 

111(d) in its regulatory approach regarding demand-side energy efficiency. Commenters noted 

that demand-side energy efficiency programs would reduce generation from existing fossil fuelfired EGUs by reducing the demand for that generation and reducing CO2 emissions. According 

to commenters, EPA estimates that the costs of CO2 emission reductions from building Block 4 

would range from $16 to $24 per metric ton. Commenters stated that this approach relies on 

electricity customers lessening their power demands. To make Building Block 4 work, 

commenters said states would have to establish demand-side energy efficiency polices. 

Commenters contended that, here again, EPA is building its proposed rule around entities that 

are not the targeted existing source.

Commenters argued that EPA does not have authority over energy efficiency programs as 

mentioned in Building Block 4. According to commenters, energy efficiency programs in 

Indiana, at least, were under the governor's authority, although his office had recently announced 

that this program would be eliminated in 2015.

Even if these building blocks could be managed under the authority of IURC or Indiana Utility 

Regulatory Commission instead of IDEM, commenters stated that cooperatives such as Wabash 

Valley Power and its 26 member cooperatives are not under IURC purview. Commenters asked 

whether EPA or IDEM could see the difficulty here. Commenters stated that other states may be 

in the same predicament.

Commenters’ primary concern regarding the Building Block 4 implementation is the ambiguity 

of regulatory authority. According to commenters, the primary responsibility for implementation 

of and compliance with the section 111(d) plan for a state falls to the environmental regulatory 
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bodies, such as, in the commenters’ utility states, the Arkansas Department of Environmental 

Quality, the Louisiana Department of Environmental Quality, the Mississippi Department of 

Environmental Quality, and the Texas Commission on Environmental Quality. Commenters

noted that each of these environmental regulatory agencies has authority only for "inside the 

fence" environmental operations and lacks the authority for the "outside the fence" obligations of 

Building Block 4 (EE/DSM).

In contrast, commenters noted that the authority for establishing and providing recovery 

mechanisms for traditional utility costs, as well as the costs associated with Building Block 4 and 

the other proposed Building Blocks, belongs to the utility regulatory commissions (e.g., the 

Arkansas Public Service Commission, the Louisiana Public Service Commission, the Mississippi 

Public Service Commission, the New Orleans City Council Utility Committee, and the Public 

Utility Commission of Texas).

Commenters stated that the ambiguity of responsibilities among the various agencies will be 

difficult to manage. According to commenters, the "beyond the fence" regulation has the 

potential to require generators to answer to two (or more) masters. Commenters noted that the 

utility regulatory bodies will be responsible for the cost recovery and goal setting and 

administration, while compliance with the statewide emissions rate falls to the environmental 

regulatory bodies. Commenters said that this concern applies not only to Building Block 4, but to 

the entire proposed regulatory scheme.

Comment 13: Commenters Supported EE Guidelines for Inside the Fence

Response 13: Commenters stated that EPA doesn’t have the authority to include outside the 

fenceline EE as a building block in the BSER. The EPA decided to not include DS-EE in BSER 

in the final CPP. See sections V.A and V.B of the final rule preamble of the CPP for a detailed 

discussion of our decision. Sources will have flexibility to utilize EE measures inside the 

fenceline that they deem suitable and that are approved for implementation in the state plan. DSEE remains generally available for compliance in state plans. See multiple subsections of section 

VIII of the final rule preamble of the CPP for details on use of DS-EE for compliance and see the 

Demand-side Energy Efficiency TSD for CPP Final Rule for details on DS-EE potential, 

opportunity, history, and energy savings.

The following are summaries of the specific public comments under this comment:

Commenters stated that EE programs should be utility based.

Commenters stated that the energy efficiency guidelines should be based "inside the fence." 

Commenters further stated that the guidelines should allow for flexibility in implementation.

Commenters noted that EPA, in establishing energy efficiency as the final building block for the 

purposes of setting the state goal, proposed to utilize activities completely outside the power 

generation sector, an action of dubious legal authority. According to commenters, EPA proposed 

alternatives to fill Building Block 4 could include actions such as enhanced building codes, 
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energy efficiency programs, demand response programs and other actions that have the general 

impact of lowering power consumption.

Commenters noted that EPA's compliance Building Block 4 assumes that demand side 

management can reduce electric demand by 10% by 2030. However, commenters said EPA's 

CPP does not take into account states with high economic growth or states that are expected to 

experience high population growth, subjecting these states to comparatively negative treatment. 

Commenters also noted that many states have had robust energy efficiency programs for years. 

According to commenters, there is no recognition of this in the rule, leading to the concern that 

this rule is based on "one size fits all."

While energy efficiency is an important tool for lowering costs to society, commenters argued it 

is not a legally valid option for the purposes of setting a state goal. Even if it were, as proposed, 

commenters contended that the building block is an inappropriate tool for lowering GHG 

emissions. Commenters argued that energy efficient investments, in keeping with an appropriate 

reading of the law, should be undertaken at the source, not at the point of customer demand.

Commenters also noted that statewide efficiency requirements disproportionately impact some 

communities more than others, citing the case of a group of North Carolina cities that invested in 

nuclear power in the early 1980s. According to commenters, these cities derive all of their power 

from non-GHG emitting resource and, as a result of slow economic growth, actually have more 

power than they need. Commenters pointed out that these communities will have to undertake 

new programs to lower consumption of product that they already own in excess. Commenters

said they are not alone; North Carolina cooperatives largely own emissions-free technologies and 

in South Carolina, a similarly situated group of communities own only nuclear power. 

Commenters contended that EPA, in its model, failed to consider circumstances of this nature 

and, as such, has failed to "adequately demonstrate" the achievability of the standard.

Commenters were concerned that the EPA has taken a position to set emissions guidelines that 

are not achievable at the affected source-the electric generation unit (EGU) and seeks to hold 

utilities accountable for the actions of their consumers as part of energy efficiency or 

conservation programs. Commenters said the proposal raises numerous legal and practical issues 

with regard to enforcement, and argued that EPA fails to address these issues in a meaningful 

way.

Commenters argued that EPA must base the emission guidelines on CO2 control measures that 

can be applied within the fence-line of existing plants, taking into consideration costs of control, 

physical limitations, geographical location, or similar factors and remaining useful life. 

Commenters stated that the basis of the emission guidelines should be inside the fence-line 

efficiency improvements over which companies have primary control. Commenters further 

stated that demand-side reductions from outside the fence-line, over which companies have little 

or no control, should not be used to set the emission guidelines. According to commenters, 

establishing emission guidelines based on demand-side reductions does not allow sources 

certainty in their compliance options, nor does it allow states certainty in establishing standards 

of performance. Further complicating the issue, according to commenters, is the problem of 

quantifying demand-side reductions occurring in other states where the electricity generated 

would have been used.
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Commenters argued that, with the exception of Building Block 1, each of the measures that EPA 

has proposed to adopt as part of the BSER for existing affected EGUs reaches beyond the 

individual regulated sources themselves, and therefore is not a "system of emission reduction" 

under section 111 of the Act. According to commenters, Building Block 4 (demand side energy 

efficiency programs) especially presents enforcement difficulties, particularly to G & T electric 

cooperatives, such as the commenters.

Commenters noted that G & T electric cooperatives serve at wholesale, and the development and 

implementation of policies regarding end-use energy efficiency are the responsibility of the local 

cooperative and PPDs that ultimately provide customer service at the retail level. Although 

commenters’ cooperative has implemented demand side energy efficiency programs,

commenters said there are no mechanisms to ensure that the member-owner (customer) will 

implement the measures. Commenters assumed that the member-owner does implement the 

measure in question, but indicated there is no guarantee and no way in which they can know for 

certain. For these reasons, commenters indicated it would be impossible for a G & T cooperative 

such as theirs to meet any sort of requirement that requires reductions from demand side energy 

efficiency programs. According to commenters, Building Block 4 represents an unfair burden on 

their cooperative and other entities.

According to commenters, another category of EE activities not accounted for in EPA's Building 

Block 4 is privately-delivered energy efficiency, such as energy savings performance contracts, 

industrial energy efficiency and privately contracted-for efficiency that has traditionally not been 

accounted for in ratepayer-funded energy efficiency programs. Commenters cited a white paper 

released in May 2014 by the National Association of Clean Air Agencies (NACAA), National 

Association of Regulatory Utility Commissioners (NARUC), and the National Association of 

State Energy Officials (NASEO), which urges EPA to "encourage states to develop a clear path 

for inclusion, crediting, and administrative review" of these activities. Although EPA's Building 

Block 4 target is based on ratepayer-funded EE programs, commenters noted that EPA does 

acknowledge that it considered EE activities outside of ratepayer-funded programs as further 

assurance that a 1.5 percent annual target is achievable. In contrast to building codes and state 

appliance standards, commenters indicated this category of EE activities is something that the 

owners and operators of EGUs can implement, by offering the upfront capital needed to 

weatherize, retrofit, and upgrade buildings for efficiency purposes. Commenters also noted that 

there is a large market of unmet demand for weatherization of low-income homes and small 

businesses, which affected EGU operators could serve by offering financing or outright grants. 

Because similar measures are offered through ratepayer-funded EE programs, commenters noted 

there are already well-established EM&V protocols for retrofits, weatherization, and replacement 

of inefficient appliances.

Comment 14: Commenters recommended adding EE measures, include non-utility EE, provide 

flexibility

Response 14: Comments suggested DS-EE measures in addition to ratepayer-funded energy 

efficiency programs to include in BSER. The EPA decided not to include DS-EE in BSER for 

the final rule, so comments are now outside the scope of the CPP. See sections V.A and V.B of 
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the final rule preamble of the CPP for details. DS-EE remains generally available for 

compliance, including different types of EE programs, projects, and technologies. Such measures 

must meet the eligibility requirements and provisions related to demand-side EE and the 

requirements and criteria related to proper quantification and verification of MWhs from 

demand-side EE savings as described in Section VIII of the final rule preamble of the CPP.

The following are summaries of the specific public comments under this comment:

Multiple commenters supported use of expanded EE measures, non-utility EE programs, and EE 

flexibility. Commenters supported measures not typically included in ratepayer-funded 

programs. 

Commenters stated No. 4 of the building blocks identified by the EPA reads "Reduce electricity 

demand by using electricity more efficiently." Commenters stated the need for the U.S. to reduce 

emissions is obvious and many solutions are undiscovered at this point. Commenters stated there 

are alternative ways to create a solution for the amount of energy needed to run each individual 

states' transportation; one example comes from railroads. Commenters stated it would be easy to 

lighten the load of each rail car by using magnetics to lift the rails carts slightly. Commenters

stated the effects of using opposing magnets under the carriage of the train cars could lift the car 

itself just enough to create less resistance, and keep the cars on track, in order to lessen the 

inertia needed to pull the modified cars. Commenters stated the modifications could actually 

reduce the noise of train travel by a great amount if the magnetic solution worked. Commenters

stated this could have the effect of straining the existing railways steel but it might be a cheaper 

solution to reinforce existing rails to hold the additional strain magnetics would inflict on it. 

Commenters stated if changes like these were imposed while still maintaining the proposals to 

become 30% more efficient by the year 2030, the goal could be achieved by an even greater 

percentage.

Commenters noted that not including EE occurring outside of traditional utility energy efficiency 

programs fails to account for significant additional sources of energy efficiency, which are 

already large contributors to overall energy savings in the economy and which could grow 

substantially with appropriate policy signals. Commenters urged EPA to address the exclusion of 

major energy efficiency industry segments, and that adjusting these assumptions will ensure that 

the emission targets in the final rule more accurately capture the full potential of energy 

efficiency as a cost-effective emissions reduction mechanism.

Commenters stated if utilities are going to move from an energy efficiency program with a 

purported goal of reducing the need for new generation and system investments to one that is 

focused on reducing carbon intensity, it merits a more comprehensive look at the tools that are 

available to utilities to influence their daily load curves. Commenters stated comprehensive 

demand-side management necessitates an "all of the above" approach to utility load curve 

modification, which includes not only targeted energy efficiency incentive programs, but also 

robust demand response initiatives and appropriate economic signals coupled with a broad base 

of consumer education. Commenters stated these approaches should encourage end-use 

electrification of fossil fueled combustion technologies to efficient technologies that are 

integrated with an increasingly renewable electric grid. Commenters stated such an approach 

does not fit well with the established methods of quantifying energy savings. In conjunction with 
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the development of implementation plans, Commenters stated new methodologies should be 

developed that quantify the carbon reductions associated with technologies that move consumers 

from fossil fuel combustion to electricity consumption.

Commenters stated EPA should develop mechanisms that take account of and provide incentives 

for advance appliance efficiency standards, build energy codes, and combined heat and power 

applications implemented by the states.

Commenters stated it is critical for the Proposed Rule to recognize and account all of a state's EE 

savings, which results in part from the evolution of the utility customers from "energy customer"

to "energy partner." Commenters stated the combination of clean energy policies and 

technological innovations has created new opportunities for electricity customers to directly 

manage their energy usage. Commenters stated advanced energy management systems empower 

customers across classes to reduce their overall usage and/or reduce their peak demand thereby 

avoiding peak demand charges, for the most part utilizing technologies that have been subsidized 

and encouraged to meet broader energy-policy objectives. Commenters stated the continued 

growth of distributed generation - in particular, rooftop solar photovoltaic systems - represents 

another option for customers to reduce their reliance of utility-generated energy and the 

associated monthly bill. Commenters stated similarly, energy storage systems can provide a 

myriad of services to customers, including shifting peak demand and stabilizing rooftop solar 

generation, which can result in significant GHG emission reductions. Commenters stated the 

same, the nascent deployment of plug-in electric vehicles (PEVs) is poised for dramatic growth 

over the next decade as federal and state incentives and more affordable models level the playing 

field for PEVs; in addition, the steady addition of public and workplace fast-charging 

infrastructure will expand the serviceable range of PEVs. Commenters stated collectively, these 

trends are driving transformative changes is customer energy usage patterns. Commenters stated 

that many of these changes also shift emissions from the transportation sector to the electricity 

sector, and while this shift should result in statewide and nationwide efficiencies and reductions 

in overall GHG emissions, it also results in higher emissions for the electricity sector.

Whether it is energy efficiency and conservation, demand reduction, low/zero carbon distributed 

generation, customer-sited energy storage, or electric vehicles, commenters stated there are 

current and emerging opportunities for customer energy investments to reduce greenhouse gas 

emissions. Commenters stated the federal, state, and local governments, together with utilities 

and a broad network of stakeholders can, and should, support these customer investments. 

Commenters stated in failing to recognize this fundamental shift, the Proposed Rule does not 

fully capture those opportunities for GHG emission reductions. Accordingly, commenters stated 

the Clean Power Plan should be modified to either broadening the scope of building block 4 to 

include additional demand-side management and customer resources beyond energy efficiency, 

or further clarify how other demand-side management resources that reduce greenhouse gas 

emissions will be counted towards a states' compliance with the Clean Power Plan.

Commenters were encouraged to see that operational savings (also known as "retrocommissioning") are included in the TSD (p. 49) in a list of time-tested ECMs. Commenters

stated including operational / retro-commissioning savings is a critically important and laudable 

choice and one that FirstFuel supports because it furthers the objectives of the Clean Power Plan 

in the most cost-effective manner. Commenters stated by their own estimates, as much as one-
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half of the savings potential in buildings is operational, and requires no or low up-front 

investment. Commenters stated capturing this savings is essential to achieving high savings rates 

in a cost-effective manner and we encourage EPA to provide guidance to states to include 

operational savings programs in Building Block 4. Commenters stated finally, with a longer list 

of ECMs, energy efficiency programs also benefit from a "portfolio diversification" effect. 

Commenters stated blending deep retrofit and operational energy efficiency measures increases 

the likelihood of achieving savings at all hours of the day, including both peak and off-peak 

periods.

Commenters recommended that EPA provide greater explanation and detail in regards to the 

types of EE projects that EPA anticipates will be undertaken in response to the final guidelines, 

including the costs, potential and scale of these projects. Commenters also stated EPA should 

provide a mechanism for allowing and accounting for compliance purposes EE measures that are 

undertaken without the direct supervision of the state, and/or are not run through utilities. 

Commenters stated there are many EE programs undertaken by third parties that provide 

substantial energy savings, and states should be able to take credit for those efforts, provided 

there are adequate safeguards to ensure the accuracy of their accounting.

Commenters stated other energy efficiency improvements that EPA has not considered include 

demand management, voltage optimization, combined heat and power ("CHP"), and the 

emerging potential of energy efficiency technologies such as smart meters.

Commenters stated the EPA determined that energy efficiency programs could eliminate 1.5% of 

retail electricity use. Commenters stated as with renewable energy, the Council believes that this 

estimate is too conservative. Commenters stated in reaching its determination, EPA failed to take 

into account several important avenues for energy efficiency measures including building codes, 

potential for increased efficiencies in transmission and distribution, voltage optimization, and 

combined heat and power. When it issues the final rule, Commenters strongly urged EPA to 

include all possible energy efficiency opportunities in its analysis of the energy efficiency 

building block. If it does, Commenters believed EPA will find that the potential emissions 

reductions achievable through these measures are substantially greater than currently projected.

Commenters supported the inclusion of end-use energy efficiency as a building block and the 

beyond-the-fence-line approach taken by EPA in the proposed rule.

While the proposed 1.5 percent savings scenario is based on historic utility EE program results 

and targets, commenters stated the EPA should recognize that state and national C&S are critical 

to achieving electricity savings across a state. Commenters stated this is particularly true in 

California, where C&S account for the majority of in-state annual energy savings, and where 

California's future efforts regarding C&S are expected to be aggressive. Commenters stated for 

example, California policymakers have established a policy requiring the construction of zeronet-energy new homes and buildings in the timeframe of the Proposed Rule, and are increasing 

efforts to target energy savings in existing buildings with appliance standards for building 

retrofits. Commenters stated these goals will lead to an increase in savings from C&S in 

California, and a corresponding decrease in savings from utility programs. Commenters stated 

therefore, it will be essential that the savings attributable to C&S are equitably counted towards 
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California's EE savings during compliance; otherwise, a 1.5 percent goal for Building Block 4 is 

not realistic.

Commenters stated that offering energy efficiency as a compliance tool is critical to least-cost 

implementation. Commenters applauded EPA's vision to go outside the fence line and capitalize 

on economic emissions-reduction opportunities from power-sector players such as energy 

efficiency and renewable resources. Commenters stated energy efficiency is the cheapest and 

fastest resource available to reduce emissions. That said, commenters were concerned that the 

current draft rule undervalues energy efficiency; the agency must change the rule to more 

effectively capture the full value of energy efficiency.

Commenters believed that for meaningful emission reductions to occur, EPA's proposed "outside 

the fence line" approach to identifying possible reductions must remain intact. Commenters

stated failure to do so would render Building Blocks 3 and 4 meaningless, and in our view those 

Building Blocks are where true reductions will be achieved. Were the Clean Power Plan to be 

restricted to activities inside the fence line at the plant level, commenters stated the GHG 

reductions would likely be limited to 4 percent or less - far below the goals identified in the 

Clean Power Plan.

Commenters stated that MEEIA also provides opportunity for customers to "opt-out" of IOU 

demand-side programs when certain criteria are met. Commenters suggested the final rules 

provide flexibility for states to receive credit for non-utility efforts toward reducing CO2 

emissions.

Commenters stated all reductions in end-use electricity consumption should be recognized. As 

they reduce demand for fossil generation, Commenters recognized that all energy efficiency and 

demand reduction measures are implicitly recognized in the Proposal. Due to the importance of 

energy efficiency in reducing emissions from the power sector and putting downward pressure 

on electricity bills, commenters appreciated that in many cases energy efficiency measures are 

also explicitly credited in the Proposal as essentially a form of zero-carbon electricity generation.

Commenters stated EPA should explore methods to encourage more aggressive efficiency 

programs. Commenters stated they are not suggesting that EPA change its proposed 

determination of building block four, but that EPA enable states to build flexibility, or "adaptive 

management," into their efficiency strategies as part of their plans, especially if they choose to be 

aggressive in driving demand reduction programs beyond assumptions made in the BSER 

determination.

Commenters stated one of the building blocks referenced in this rule is the expansion of energy 

efficiency programs. Commenters believed this building block will be the key provision that will 

allow states to obtain long term GHG reductions. Commenters stated the environmental benefits 

of an energy efficiency program go well beyond just GHG reduction, and at minimum will lead 

to the overall improvement in our air quality. Commenters stated one of the best ways to 

maximize these potential benefits is to broaden the scope of what an allowable energy efficiency 

program can utilize. Commenters stated by allowing states to fully account for the emission 

reduction from switching to cleaner burning fuel, the EPA would further promote technologies 

such as natural gas appliances, small scale CHP, and micro-grids. Commenters stated by moving 
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the fuel source closer to the end user, the emissions profile will drop. Commenters advocated for 

expanding the energy efficiency program provisions to cover all energy types. Commenters

stated by expanding the energy efficiency program scope, the EPA could make an immediate 

impact on how consumers shop for appliances, as well as influence how states utilize high 

efficiency and clean energy programs to help curb air pollution.

Commenters believed that the BSER building block 4 creates some confusion regarding "nontraditional" energy efficiency programs. Commenters encouraged EPA to stress in the final rule 

that states are not limited to energy efficiency resource standards (EERS) with respect to using 

energy efficiency for compliance with the proposed rule, even if these policies are the basis for 

how building block 4 contributes to setting emissions targets. Commenters noted that while EPA 

based building block 4 on state EERS typically overseen by state public utility commissions or 

other designated entities, states are not limited to programs that fall under EERS policies for 

energy efficiency compliance options. Commenters indicated State Energy Offices typically 

oversee and implement other energy efficiency and renewable energy program options, (e.g., 

energy savings performance contracting, building energy codes, residential retrofits, financing 

programs) and are in a position to work with their partner state air agencies on approaches for 

how to include these programs in state 111(d) compliance plans. Commenters encouraged EPA 

to expand its treatment of "Incentives and Finance Mechanisms for Energy Efficiency" that was 

included in the State Plans Considerations TSD to provide more detail on programs delivered 

outside of EERS policies and to provide additional guidance on how states can leverage these 

types of programs for 111(d) compliance. Commenters pointed out that more energy efficiency is 

implemented outside of the utility programs in the United States than through these programs.

Commenters stated the new technologies, such as smart meters and home energy management 

devices are emerging every day in the market place, are providing crucial communications 

between utilities and homeowners, and can assist with program design and carbon measurement. 

Commenters strongly recommended that the EPA recognize this nascent revolution and ensure 

that the proposed rule does not close the door to new technologies and program designs that have 

encouraged this kind of innovation.

Commenters provided examples of several existing or emerging technologies that have 

significant potential for additional energy savings, including Volt/VAR optimization, wholebuilding energy retrofits, intelligent energy management, high-performance rooftop HVAC, and 

dynamic windows. Commenters explained that Volt/Var optimization (VVO) involves the 

management of various electric distribution system assets and advanced control technologies to 

"right-size" the voltage delivered to end-use electric customers, resulting in reduced energy 

consumption without having to changes in customer consumption behavior. Regarding wholebuilding retrofits, commenters commented that there is widespread recognition that building 

energy efficiency can be dramatically improved by carefully integrating improvements to 

multiple building systems at once. Commenters noted that these types of deep retrofits, yielding 

energy savings as high as 30 to 50% of baseline energy consumption, have been demonstrated in 

many buildings over the last two decades. Commenters explained that intelligent energy 

management, using advanced sensors and control systems, are now enabling building owners and 

operators to optimize their energy use in real-time, achieving reductions in building electricity 

use of as much as 30 percent. Regarding high-performance rooftop HVAC systems, commenters

stated that, as a result of an initiative by DOE, two manufacturers are now producing rooftop 
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HVAC systems that can help reduce energy consumption for cooling by as much as 50% relative 

to current industry standards. Finally, commenters explained that dynamic windows, which 

change opacity automatically in response to electronic controls or thermal conditions can 

significantly limit heat gain and improve comfort in buildings with significant light exposure, 

and a recent study found that this technology could reduce heating and cooling electricity 

consumption by about 10 percent compared to modern high-efficiency windows.

Commenters stated that building codes and appliance standards can make significant 

contributions to total energy savings. Commenters cited a 2011 Edison Foundation's Institute 

study that indicated 8.6 to 13.6 percent of total electricity demand in 2025 (351 to 556 TWh) 

could be achieved by adopting new energy building codes and appliances at the state level; these 

savings are comparable to total savings EPA projects from ratepayer-funded programs alone in 

2030 (500 TWh). Commenters stated another demonstrated technology is Voltage/VAR 

optimization; the commenters provided a table showing VVO is cost-effective (see Table 7 of the 

comment letter), and noted Xcel Energy projects energy savings of 1.8 percent of its retail load 

by 2020 for a proposed voltage optimization project.

Commenters stated EPA should implement the full suite of demand-side energy-efficiency 

programs. Commenters stated some states have been leaders in adopting strong energyefficiency programs, while others have lagged behind. Commenters stated each state should 

review and, if appropriate, quickly adopt the suite of demand-side energy-efficiency policies that 

others have successfully employed. Commenters stated since buildings account for more than 40 

percent of the total energy consumed in the United States, states also should adopt the most 

stringent building-efficiency codes available today and enforce compliance. Commenters stated

that even more opportunities are available to states that wish to maximize the benefits of energy 

efficiency. Commenters stated in its most recent scorecard of state energy-efficiency programs, 

the ACEEE details numerous policies that states could implement to achieve meaningful energy 

savings and cut pollution.

Commenters asked that EPA describe its treatment of EE options within Building Block 4 and 

state targets such as: solar thermal programs; waste heat recovery; and participation in energy 

imbalance markets like the one operated by CA ISO.

Commenters recommended that EPA indicate that it will consider, evaluate and give full weight 

to state implementation approaches that incorporate the beneficial transformation of the 

electricity infrastructure.

Commenters recommended that EPA include all available energy efficiency opportunities in its 

analysis. Commenters noted that EPA, based on its analysis, determined that energy efficiency 

can supplant 1.5 percent of retail sales. According to commenters, this level of energy efficiency 

underestimates the amount of energy efficiency that can be achieved because EPA excluded a 

number of important additional opportunities for energy efficiency such as building codes, 

transmission and distribution, voltage optimization, and combined heat and power. Commenters

believed that energy efficiency can achieve savings equal to 2 percent of retail sales per year.

By including all energy efficiency as compliance tools, commenters estimated states should 

easily be able to achieve 0.25% annual energy savings, ramping up to 2%. Commenters referred 
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to a recent analysis by ACEEE, which found that four energy policies could save over 700 

million GWh of electricity by 2030. Of these policies, commenters said building codes were 

projected to save 17% of the impacts, and CHP was projected to save 7% of the impacts.

Commenters stated that EPA should know that other opportunities exist to save energy from 

activities other than from utility programs and match the assumed pace of the implementation to 

what has been demonstrated in graphics.

Commenters urged EPA to consider that there are new technologies emerging every day in the 

marketplace that can assist with program design and carbon measurement. According to 

commenters, smart meter proliferation is providing crucial new data sources on home 

energy consumption. Commenters noted that home energy management devices from technology 

that measure plug load and energy current signature are further disaggregating that data. 

Commenters further noted that advanced thermostats and smart phone applications are providing 

crucial communications between utilities and homeowners.

Commenters stated that we are at a turning point for new home energy technology and data and 

analytics; standards, protocols and platforms are just being developed. Commenters strongly 

recommended that EPA recognize needs and revolution and ensure that their regulations do not 

close the door on new technologies and program design that encourage innovation.

Commenters stated that it would do a lot more for the poor in Georgia to weatherize houses and 

push energy efficiency than spending billions of dollars on nuclear power plants, like Georgia 

Power and other utilities are doing at the Vogtle 3 and 4 plants. Commenters referred to an 

analysis from an energy efficiency expert who looked at what you could do with that kind of 

money, such as weatherize every house in Georgia. Instead, commenters referred to a statement 

from Georgia Power that they were only going to be spending $5 million over 10 years for 

demand-side management.

Commenters urged EPA to consider energy savings achievable from building codes, combined 

heat and power, state appliance standards, etc., when setting Iowa's targets; the commenters

further urged EPA to include them in the overall energy efficiency target setting for Building 

Block 4. Commenters referred to a recent report by the American Council for an EnergyEfficient Economy (ACEEE), which stated that, if every state incorporated "four of the most 

common and effective energy efficiency policy options available to a state," including (1) 

implementing an energy efficiency savings target; (2) enacting national model building codes; 

(3) constructing combined heat and power systems; and (4) adopting efficiency standards for 

products/equipment, these end-use energy efficiency measures alone could achieve close to the 

EPA's proposed 30% carbon pollution reductions by 2030 (from 2005 levels). Commenters noted 

that ACEEE also found that these energy efficiency measures could achieve significant carbon 

reductions at no net cost to the economy. 

According to commenters, if every state adopted the four policies in their scenario, in 2030, 

carbon dioxide emissions from the power sector would be reduced by 26% relative to 2012 

emissions, and power demand would be reduced by 25% relative to 2012. Commenters also said 

the nation would avoid 600 million tons of carbon dioxide emissions, save over 925 million 

MWh of electricity, and obviate the need for 494 power plants in 2030. 
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Commenters stated that the final rule should strengthen the targets set for advanced 

energy technologies, allowing periodic review of targets to reflect technological progress and 

rewarding early use of these technologies. Commenters also asked that EPA 

specifically recognize the compliance options identified in their recent report, called "Advanced 

Energy Technologies for Greenhouse Gas Reduction." Commenters believed that EPA's Clean 

Power Plan provides a historic opportunity to modernize our electric power system for the 21st 

century. Commenters indicated this rule will drive investment in electric power system that is 

sorely in need of it. According to commenters, many of the technologies that are already 

changing the U.S. power system also help reduce carbon emissions. The recent report from 

commenters details 40 separate technologies including energy efficiency, demand response, 

natural gas electricity generation, solar, wind, hydro power, nuclear, smart grid, and energy 

storage that should be considered. Commenters applauded EPA for referencing by name many 

of these technologies in its proposal. Commenters urged EPA to further clarify the value of these 

technologies by recognizing all 40 of the options identified in their report.

Commenters noted that the proposed Clean Power Rule does not currently include savings 

potential from effective energy efficiency strategies including local building code updates, local 

appliance standards, transmission and distribution system efficiency improvements, and Energy

Service Company savings. Commenters pointed out that local adoption of model building codes 

has led to approximately 32% energy savings in residential buildings, which equates to $500 in 

annual homeowner utility cost savings. Commenters further noted that in commercial buildings, 

adoption of building codes has saved approximately 23% of energy used at an average energy 

cost savings of $0.40 per square foot.

Commenters noted that the 2012 Focus on Energy Annual Report registered 649,848 MWh of 

energy savings, which was approximately 1.0 percent of total energy sales in Wisconsin. 

According to commenters, as of 2012, Wisconsin was at 0.97 percent incremental savings as a

percentage of retail sales. Commenters noted that the proposed Clean Power Plan projects that 

beginning in 2017, Wisconsin's incremental savings percentage will need to start at 1.05 percent 

and increase every year by 0.2 percent until Wisconsin reaches 1.5 percent incremental savings, 

anticipated in 2020, which EPA proposes, and then Wisconsin will maintain that level of 

savings. Commenters said Focus on Energy could be a component of the approach. However, 

commenters indicated additional components would likely be needed to support the proposed 

aggressive expectations of EPA's proposed plan, such as credit for energy building codes and 

state appliance standards and the addition of supplementary utility-administered programs. 

Commenters further stated that an additional amount needs to be accounted for as what is 

normally factored into utility load forecasting.

Commenters recommended that EPA include a broader suite of existing energy efficiency 

policies, measures, and technologies, including building codes, state appliance efficiency 

standards, and combined heat and power. Commenters felt that this is appropriate given the 

demonstrated effectiveness of such approaches in achieving cost-effective energy reductions.

Comment 15: Include Advanced Energy Technologies
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Response 15: Comments suggested DS-EE measures in addition to ratepayer-funded energy 

efficiency programs to include in BSER. The EPA decided not to include DS-EE in BSER for 

the final rule, so comments are now outside the scope of the CPP. See sections V.A and V.B of 

the final rule preamble of the CPP for details. DS-EE remains generally available for 

compliance, including different types of EE programs, projects, and technologies. Such measures 

must meet the eligibility requirements and provisions related to demand-side EE and the 

requirements and criteria related to proper quantification and verification of MWhs from 

demand-side EE savings as described in Section VIII of the final rule preamble of the CPP.

The following are summaries of the specific public comments under this comment:

Commenters recommended EPA include advanced technologies as part of EE programs.

Commenters stated EPA should explicitly recognize more advanced energy technologies as 

compliance options and provide guidance on incorporating them into State plans. 

Commenters stated that with proper state policy, additional forms of energy efficiency can be 

accounted for and directly supported by affected states, utilities, and EGUs. Commenters

indicated States and utilities directly procure PCs (and CHP projects, see section 

3.4.5). Commenters stated an energy savings crediting system can serve as a mechanism by 

which individual EGUs or utilities indirectly support energy efficiency actions. Commenters

stated such mechanisms would be appropriate ways for states to include alternate energy 

efficiency programs, such as PCs, CHP projects, or building code policies.

While EPA has indicated that states can propose options outside of the list, commenters pointed 

out there is a great deal of uncertainty as to what options EPA might allow, and given the finite 

timeline for the development of state plans, such uncertainty is likely to limit the compliance 

options States incorporate into their plans to those listed in the rule. Commenters noted their 

recent report, Advanced Energy Technologies for Greenhouse Gas Reduction, outlined 40 

separate technologies that can provide the power sector with emission reductions while also 

providing other system and economic benefits, including many not named in the Proposed Rule, 

such as demand response and voltage-VAR optimization. Commenters asked that EPA 

explicitly recognize the technologies in this report as compliance options and provide guidance 

to states on the use of these technologies in compliance plans.

Commenters stated the history of energy efficiency deployment shows that savings potential has 

remained steady or increased over time due to the introduction of new technologies. 

Commenters cited Northwest Power and Conservation Council's 2010 regional energy plan that 

reported a 136 percent increase in energy efficiency potential relative to 2005, primarily because 

of "changing technology that has created new efficiency opportunities and reduced costs". 

Commenters cited World Resources Institute that noted, "Major household appliances -

including refrigerators, dishwashers, and clothes washers - have become 50 to 80 percent more 

energy efficient over the last two decades;" for example, new refrigerators, clothes washers, 

dishwashers, and air conditioners use 75, 70, 40, and 50 percent less energy, respectively, than 

they did in 1990. Commenters stated LED lighting has fallen in cost by approximately 75 

percent over the last several years and achieves significant energy savings even relative to 

compact fluorescent bulbs. Commenters indicated that a recent report notes that Southwestern 
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utilities have increasingly begun incentivizing customers to switch to LED bulbs in order to meet 

more stringent energy savings targets, as the cost and performance of this technology has 

improved. Commenters provided Table 7, highlighting other emerging technologies, such as 

high-efficiency HVAC units and intelligent energy monitoring instruments, that demonstrate the 

potential to maintain or increase technical and economic potential for energy efficiency over 

time.

Comment 16: Commenters recommended EPA include behavioral programs as part of EE 

approaches.

Response 16: The EPA decided not to include DS-EE in BSER for the final rule. See sections

V.A and V.B of the final rule preamble of the CPP for details. DS-EE remains generally 

available for compliance, including different types of EE programs, projects, and technologies. 

Such measures must meet the eligibility requirements and provisions related to demand-side EE 

and the requirements and criteria related to proper quantification and verification of MWhs from 

demand-side EE savings as described in Section VIII of the final rule preamble of the CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated behavioral programs provide personalized tips to change consumer behavior 

to conserve energy and participate in other energy efficiency programs. Commenters stated since 

2008, Home Energy Reports (HER) behavioral programs have been implemented by all the 

investor-owned, and multiple consumer-owned utilities in Washington. Commenters stated most 

utilities hire a contractor to administer the program, which provides customers with feedback by 

comparing a household's energy use with that of its peer neighbors. Commenters stated to 

demonstrate actual savings, the contractor measures the reduction between the participating 

customers and a control group of customers that do not receive a report. Commenters stated the 

contractor must then net out potential double-counted savings from participation in other 

efficiency programs. Commenters stated that to support the contractor's measurement and 

verification of savings, Washington also requires its investor-owned utilities to have third-party 

verification of HER savings. Commenters stated the EPA should accept programs like this that 

are supported by rigorous EM&V.

Commenters stated that behavioral efficiency alone has helped save over 5 TWh of electricity, 

avoiding the emission of roughly 39 million tons of CO2 Over the past seven years.

Commenters stated that Chicago passed an ordinance requiring energy benchmarking and 

disclosure for commercial, municipal and residential buildings over 50,000 square feet in size. 

Commenters stated the ordinance seeks to unlock energy and cost savings opportunities by 

creating the data necessary to assess and improve building energy performance. Commenters

stated although these buildings comprise under 1% of the city's building stock, they use 

approximately 20% of the energy used by buildings in the city. Commenters stated additionally, 

Chicago was the first city to make energy use information available to real estate agents through 

Multiple Listing service (MLS) listings.
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Commenters stated that behavioral-based programs that show persistent, measureable savings 

should be credited to state plans. Commenters stated that energy usage bill information 

programs in the residential sector show savings on the order of 2 percent annually and a range of 

operations-based and occupant behavior-driven savings opportunities are available in the 

commercial and industrial sectors.

Commenters stated that EPA's final rule to reduce carbon dioxide emissions under section 111(d) 

of the Clean Air Act must allow for states to include low-cost programs that lead to measurable 

and verifiable emissions reductions in their compliance plans. Commenters stated that their 

behavioral energy efficiency (BEE) programs--which are an approved efficiency resource in 31 

states and are currently reaching over 13 million homes in the United States--are an example of 

such a program. According to commenters, leading BEE programs are measured with a 

randomized control trial approach, which is the gold standard in scientific research and is the 

M&V methodology recommended by the Department of Energy's State and Local Energy 

Efficiency Action Network. Commenters recommended that EPA's final rule give states a 

reasonable level of certainty that behavioral energy efficiency programs measured with a 

randomized control trial will be approved as part of a state's compliance plan.

Commenters stated that energy consuming behavior is by its nature highly variable; behaviors 

are also subject to change as new energy consuming technologies are adopted. Commenters

stated that energy efficiency evaluation should be cognizant of this variability. While some level 

of EM&V is warranted, commenters argued that states should not be required to realize an 

unattainable level of accuracy. Commenters contended that such an approach has the potential to 

reduce total program impacts and benefits to end-use consumers.

Comment 17: ESCOs - Multiple commenters supported including energy performance 

contracting as part of EE programs.

Response 17: The EPA decided not to include DS-EE in BSER for the final rule. See sections

V.A and V.B of the final rule preamble of the CPP for details. DS-EE remains generally 

available for compliance, including different types of EE programs, projects, and technologies. 

Such measures must meet the eligibility requirements and provisions related to demand-side EE 

and the requirements and criteria related to proper quantification and verification of MWhs from 

demand-side EE savings as described in Section VIII of the final rule preamble of the CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated it is difficult to determine exactly how costs might differ between EE 

programs operated by a public utility commission and electric distribution utility, relative to EE 

delivered by private energy efficiency services companies for EGUs but noted that for the most 

part, the costs should be the same, particularly given the substantial role of EE service companies 

already play in designing and implementing energy efficiency programs. Commenters reviewed 

two ways that EGUs and the private market might face higher costs: (1) some EGUs (other than 

those that are part of vertically integrated companies) likely have fewer direct customer 

relationships than the electricity distribution utilities, which could lead to the need to do more 

market-research and advertising, and (2) EGUs are not able to recoup the costs of energy 
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efficiency programs concurrently with energy efficiency program spending, as an electric 

distribution utility (EDU) can, by collecting costs of energy efficiency programs on the utility 

bill. Commenters further noted that even assuming that EGUs and private EE service providers 

cannot achieve offsetting program efficiencies, these additional costs are reasonable and the 

commenters estimate the extra costs would increase the total cost of energy efficiency programs 

(the incremental cost of energy efficiency measures plus the costs of program administration) by 

only 12.5 percent. Commenters indicated that even if EGUs faced this additional level of cost, 

EE programs would still be a cost-effective way to achieve energy efficiency programs.

Commenters recommended savings from ESCOs that correct for any duplication with other 

programs should be included in the BSER and credited in state plans. Commenters stated EPA 

should take into account the opportunity of ESCO projects to be part of a state plan or generate 

savings credits that could be distributed to or purchased by EGUs. Commenters recommended 

EPA raise the best practices level by 0.025 percent per year to account for this opportunity. 

Commenters indicated that LBNL projects the industry will gross $10 to 15 billion in annual 

sales by 2020. Commenters noted that the ESCO industry is dominant especially in the 

municipal, university, schools, and hospitals markets, and a 2013 LBNL study estimated current 

and potential market penetration in these sectors (see Figure 7.12 in the comment letter). From a 

recent LBNL release, commenters estimated the incremental electricity savings of public sector 

ESCO projects undertaken in 2012 without utility incentives to be 1.15 TWh or around 0.027 

percent of sales. 

Commenters stated there is a significant opportunity for private sector investment in costeffective energy efficiency projects. Commenters stated that because many studies are designed 

to take into account the limitations of ratepayer-funded programs, it is unclear whether or how 

these studies take into account the potential for private actors to deliver energy savings additional 

to those that would be captured through programs administered by utilities or states. 

Commenters stated the private energy services performance contracting industry, for example, 

has been growing at a rapid pace in recent years, and achieved average annual savings of 

approximately 26-40 TWh (including both electricity and gas savings) over the period 2003 to 

2012, and it is reasonable to expect that this industry and others like it will see significant new 

growth if energy efficiency investments are incentivized through section 111(d).

Comment 18: Commenters recommended the EPA include EE programs for large energy users.

Response 18: The EPA decided not to include DS-EE in BSER for the final rule. See sections

V.A and V.B of the final rule preamble of the CPP for details. DS-EE remains generally 

available for compliance, including different types of EE programs, projects, and technologies. 

Such measures must meet the eligibility requirements and provisions related to demand-side EE 

and the requirements and criteria related to proper quantification and verification of MWhs from 

demand-side EE savings as described in Section VIII of the final rule preamble of the CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated that large energy users have voluntarily implemented EE measures as part 

DOE's Better Buildings Challenge, including 190 organizations that collectively own or operate 
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approximately 3.3 billion square feet of building space and over 600 manufacturing facilities. 

Commenters stated that achievements by large energy users corroborate the results of other 

energy efficiency potential studies, and suggest that even deeper savings can be achieved through 

well-coordinated investments in efficiency. Commenters stated since 2011, Better Buildings

Challenge partners have reduced the energy intensity of their buildings by an average of 2.5 

percent each year; more than 2,100 of the 9,000 participating facilities have improved their 

performance by 20 percent or more; and more than 4,500 have improved their performance by at 

least 10 percent. Commenters stated many participating large companies and municipal entities 

have reported reductions in building energy use as great as 40 percent through the adoption of 

leading energy efficiency technologies as well as careful energy management practices.

Comment 19: Building Codes

Response 19: The EPA decided not to include DS-EE in BSER for the final rule. See sections

V.A and V.B of the final rule preamble of the CPP for details. DS-EE remains generally 

available for compliance, including different types of EE programs, projects, and technologies. 

Such measures must meet the eligibility requirements and provisions related to demand-side EE 

and the requirements and criteria related to proper quantification and verification of MWhs from 

demand-side EE savings as described in Section VIII of the final rule preamble of the CPP. 

The following are summaries of the specific public comments under this comment:

Multiple commenters supported including building codes as EE measures. 

Multiple commenters stated adoption and enforcement of building codes would be burdensome.

Commenters stated efficiency, conservation and renewables use in residences can drastically 

reduce power use and the need for burning fossil fuels. Commenters stated over the last decade 

energy use for operation of their home has decreased fifty percent or more without significant 

lifestyle changes. Commenters stated 15 years ago our electricity use for a month as hot as the 

month we just had would have been close to 2000 kwh. Commenters stated this past month our 

electricity use was under 800 kwh. Commenters stated the changes made in their household did 

not take place overnight and they are things that have or will pay for themselves. Commenters

stated the first thing was to switch gradually to compact fluorescent bulbs. Commenters stated 

when the 15 year old heat pump died they replaced it with the most efficient unit we could obtain 

without going to a ground based system. Commenters stated systems available now are even 

more efficient. Commenters stated utilities could participate and make money by being in the 

business of encouraging installation of more efficient systems and making loans for those 

systems. Commenters stated they operate the heating and cooling system conservatively keeping 

the temperature at 78 F or higher in summer and use ceiling fans and 65 F or lower in winter and 

use an electric oil-filled space heater some in winter. Commenters stated they open and close 

blinds to keep sunlight in or out depending upon the season. Commenters stated they did a lot of 

things to seal leaks and drafts some before and some after a home energy audit. Commenters

stated that included the installation of lifetime windows when it was time to replace windows. 
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Commenters stated when it was time to replace roofing, they put an Energy Star reflective metal 

roof on the house. 

Commenters stated utility companies can do energy audits and these sorts of things and make a 

profit doing so. Commenters stated when they had done most of the EE and conservation things 

that make sense they moved on to consider clean renewable energy. Commenters stated that 

about 4 years ago they had a solar water heater installed that provides all of our hot water for all 

but about 6 weeks of the year and some of the hot water even then. Commenters stated a couple 

of years ago they had their heating and cooling system ducts checked for leaks and sealed 

reducing air loss from leaks by more than half to around eight percent or less from around 18 

percent. Commenters stated there is still more that they can do and have done. Commenters

stated last fall they put a clothesline up in the backyard after not using a clothesline for more than 

a decade, and began to use a retractable clothes line in our great room more. Commenters stated 

there are other efficiency things that they will do as appliance and equipment need to be replaced 

like the refrigerator, freezer, computers, and even the heat pump when or if it needs replacement. 

Commenters planned to reduce energy used for treatment and delivery of water by harvesting 

and using rain water. Commenters stated not only can utilities be involved in and make money 

by making loans for these efficiency and clean energy measures, these efforts create more jobs 

than power generation.

Commenters stated they would have installed PV panels to generate part or all of our electricity 

use, if our public service commission had not instituted repressive fees for connecting and selling 

excess power on the grid. Commenters stated the utilities can make money by financing and 

servicing solar PV installations and these installations will create as many or more jobs than 

burning coal.

Commenters stated the District of Columbia (District) is taking action to improve the EE of 

homes as well as commercial and public buildings. Commenters stated the DC Sustainable 

Energy Utility (DCSEU), funded by District of Columbia utility customers, provides EE and 

renewable energy incentive programs to help District residents and businesses save money and 

reduce their carbon footprint. Commenters stated last year, DCSEU provided $80 million in 

lifetime economic benefits and directly invested more than $4 million in local businesses while 

serving 45,000 District households. Commenters stated in addition, the District adopted in March 

one of the most progressive energy conservation and green construction codes in the country to 

cut energy use in new buildings by as much as 30 percent. Commenters stated EPA should 

consider this proven strategy when setting emission reduction goals and laying out compliance 

options.

Commenters believed Home Performance meets the BSER test and is a crucial part of building 

block number four in the proposed rule. Commenters stated in fact, with more than 113 million 

residences consuming 22 percent of all U.S. energy, this sector is critical for any program that 

targets emission reductions.

Commenters stated they are working on a program to improve the energy efficiency of our 

homes.
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Commenters noted that the new Carbon Emission Guidelines do not include updating building 

codes for commercial and residential buildings. Commenters strongly suggested that building 

codes be mandated, and noted that power plants may last for a few decades, but well-built 

buildings will last for a century. Commenters stated further, there are financial incentives for 

builders to ignore EE and carbon emissions. Commenters asked EPA to write regulations that 

protect users of these buildings after they have been constructed.

Commenters stated the BSER calculations in the Proposed Rule exclude the use of building 

codes to drive improved EE and noted that commercial and residential buildings were 

responsible for approximately 40 percent of all 2013 energy consumption in the United States, 

and a recent analysis showed that expanded building code policy could drive an additional 1.1 

trillion MWh of cumulative energy savings by 2030.

Commenters recommended EPA clarify that building energy codes may be included in the best 

system of emission reduction (BSER). Commenters stated buildings account for approximately 

41 percent of total primary energy consumption in the U.S., more than 70 percent of electricity 

use, and 40 percent of CO2 emissions. Commenters stated existing buildings make up the vast 

majority of the building stock, and the average age of commercial buildings is 41.7 years old, 

with many built more than 75 years ago. Commenters stated consequently, the buildings sector 

possesses many opportunities for large reductions in energy use and emissions. Commenters

stated indeed, the IPCC found that the buildings sector has the greatest potential for economical 

mitigation of GHG emissions between now and 2030. Commenters stated likewise, a 2014 

evaluation conducted by the PNNL of the U.S. DOE funded Building Energy Codes Program 

(BECP) found the cumulative GHG emissions reductions from the Programs' activities have 

been significant, totaling nearly 3.9 billion metric tons, or approximately three-fourths of all 

energy-related emissions in the U.S. in 2012. Commenters stated advances in demand-side EE 

are often driven by model building energy codes and standards, the International Energy 

Conservation Code (IECC) (residential buildings), and ANSI/ASHRAE/IES 90.1 Energy 

Standard for Buildings Except Low-Rise Residential Buildings (commercial buildings). 

Commenters stated these model building energy codes are developed by the private sector 

through open, consensus-based procedures, and then adopted and put into force by federal, state, 

and local governments. Commenters stated model codes, such as Standard 90.1, have seen 

consistent gains in EE, with significant increases over the past several years.

Commenters stated the energy-savings and emissions reductions of building energy codes 

translates into cost-savings for consumers. Commenters stated the PNNL evaluation of BECP 

found that since the Program's creation 20 years ago, "cumulative FFC [full-fuel-cycle] energy 

savings from 1992 to 2012 are estimated to be approximately 4.2 quads and cost savings to 

consumers have been more than $44 billion. These savings have resulted primarily from the 

Program's activities which upgrade the model energy codes, accelerate their adoption by states 

and localities, and improve code compliance".

Commenters stated while many gains have been realized, tremendous potential continues to exist 

for additional energy and cost-savings. Commenters stated the analysis estimates that with 

immediate code adoption and 100 percent compliance, cumulative FFC energy savings between 

2013 and 2040 is approximately 80 quads, with aggregate energy cost-savings of nearly $330 
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billion. Commenters stated unfortunately, 100 percent code compliance seldom exists, placing 

these projected savings to the nation, consumers, and businesses in jeopardy. 

Commenters stated the transition of utility EE programs from a focus on mitigating resource 

additions to a focus on reduced emissions is faced with a number of challenges. Commenters

stated these challenges are related to the long term benefits and viability of these programs to 

deliver the same results that have been associated with these programs in the past. Commenters

stated the impacts of codes and standards should be counted towards a state's EE goal. 

Commenters stated the progressive nature of codes and standards reduce the baseline for energy 

consuming end uses and thereby reduce the cost effectiveness of incrementally higher efficiency 

technologies.

Commenters stated Building Block 4 allows for reducing CO2 emissions from affected EGUs in 

the amount that results from the use of demand-side EE that reduces the amount of generation 

required. In order to properly credit and capture the full range of EE savings, commenters stated 

the Clean Power Plan must recognize not only utility-specific EE savings, but statewide 

programs that also result in reduced electricity consumption. Commenters stated the current 

iteration of EE programs in California is a combination of state efforts - primarily through the 

adoption of Title 20 Appliance Energy Efficiency Standards and Title 24 Building Energy 

Efficiency Standards (local government adopted building codes, and utility programs to 

incentivize customer investments in energy saving measures). Commenters stated California has 

adopted a zero-net energy goal for all new homes by 2020. To this end, commenters indicated 

the state adopted much more stringent building EE standards in 2013, and is scheduled to do so 

again in the 2016 and 2019 updates to the Title 24 Building Energy Efficiency Standards. 

Commenters stated California's aggressive schedule to capture energy savings through updates to 

state codes and standards - for both buildings and appliances - will necessarily result in reduced 

opportunities for energy savings from utility programs. Commenters stated as proposed, the 

Clean Power Plan would exclude state codes and standards from the calculation of annual 

incremental savings rates of at least 1.5 percent of the electricity demand that would otherwise 

have occurred. Commenters stated that excluding state codes and standards from the calculation 

of net EE savings ignores the single greatest source and opportunity to achieve energy savings, 

and disadvantages California and any other state that has demonstrated a commitment to 

increased EE savings through the development of comprehensive EE codes and standards. 

Commenters stated the Proposed Rule should be revised to allow states to account for energy 

savings derived from the adoption and enforcement of state or local building energy codes in the 

calculation of annual incremental savings.

Commenters stated some of the easiest ways states can encourage increases in EE in new 

buildings are through the adoption of policies that require new construction to hit certain EE 

goals. The three most commonly adopted policies that establish these goals are codes, standards, 

and rating systems.

• A building code is an enforceable body of rules that governs the design, 

construction, alteration, and repair of buildings by establishing minimum 

requirements to ensure the health, safety, and welfare of occupants and neighbors. 

The 2015 International Energy Conservation Code (IECC) is the latest national 

model code developed by the International Code Council CICC). 
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• A building standard defines a specific path - or a variety of alternatives- to 

achieve a desired outcome in a building. ASHRAE Standard 90.1-2013 is the 

most recent national model EE standard developed for nonresidential buildings.

• Building rating systems establish terms of measurement for the performance of 

building components to encourage levels of performance beyond the minimum 

requirements set by codes. In the past two decades, green building rating systems 

like the U.S. Green Building Council (USGBC) Leadership in Energy and 

Environmental Design (LEED) suite and the Green Building Initiative (GBD 

Green Globes program have emerged for the purpose of rating the overall 

performance of buildings with respect to energy consumption and other 

environmental considerations.

Commenters stated numerous research reports from the U.S. DOE, regional EE organizations, 

and other advocates indicate that smart building energy code policies are one of the most 

fundamental, affordable, and effective mechanisms for decreasing energy waste, increasing 

comfort, creating jobs, and reducing negative health and air quality impacts.

Commenters stated that in separate studies, DOE concluded that compliance with the 2012 IECC 

yielded substantial life-cycle energy cost savings, more than 30 percent compared to the 2006 

IECC, in both residential and commercial buildings across all building types and configurations 

in states in every climate zone. Commenters stated a 2010 Institute for Market Transformation 

CIMD report estimated that for each dollar spent to improve energy code compliance yielded 

more than six dollars in energy savings for American consumers.

Commenters stated that based on national GDP and energy consumption data, the Energy 

Efficient Code Coalition (EECC) concluded in 2014 that the traditional link between U.S. 

electricity demand and economic growth from the previous century has been broken as the nation 

has achieved improvements in EE for buildings and appliances through codes and standards. 

Commenters stated the adoption of updated energy codes and standards paired with 

implementation policies to encourage compliance yield significant energy cost savings at a 

national, state, and individual building level. Commenters stated policies that encourage 

building owners to invest in these systems are key to market uptake. Commenters stated tax 

incentives like the federal Energy Efficient Commercial Building Deduction (Internal Revenue 

Code Section 1790) help building owners finance the cost of energy efficient building systems.

Commenters stated that architect-led deep energy retrofits can help unlock the potential of the 

existing building market. Commenters stated recent market analyses have confirmed the scale 

and scope of the building EE market. Commenters stated in their March 20l2 joint report, the 

Rockefeller Foundation and Deutsche Bank Climate Change Advisors found that improving 

efficiency by 30 percent in the nation's pre-1980 building stock would result in $1 trillion dollars 

of energy savings over l0 years, requiring an upfront investment of just $279 billion dollars, a 

simple return on investment of 358 percent over a decade. Commenters stated an important 

regulatory factor that is elevating EE as a priority is the wider adoption of energy disclosure 

policies, which require building owners to publicly report their building's energy use.
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Commenters recommended the BSER should include EE that could occur due to the adoption of, 

updating, and increased compliance with building energy codes. Commenters indicated Statespecific estimates of the cost-effective savings available should be added to Building Block Four. 

Commenters recommended BB 4 be adjusted to reflect the potential carbon reductions that can 

be achieve through building energy codes.

Commenters stated there is a tremendous potential for additional CO2 reductions to be achieved 

by the implementation of national model building energy codes. Commenters cited their 

(ACEEE) recent report that found the potential for energy savings from both residential and 

commercial building codes to be dispersed across all states, with cumulative energy savings 

between the years 2016 to 2030 ranging from 953,000 MWh to 133,768,000 MWh. Commenters

noted the calculations of potential savings from building codes adoption are being modified to 

conform to the Clean Power Plan, and the updated numbers will be available in early January 

2015 and will be submitted to EPA directly in a separate filing.

Commenters cited a 2009 econometric study that examined residential energy code adoption 

across 48 states from 1970 to 2006 and found that the establishment of residential building 

energy codes alone reduced state per capita residential energy consumption by 0.3 to 5 percent in 

2006. Commenters further noted at the national level, the study found residential energy 

consumption savings of 2.09 to 4.98 percent in 2006 from the adoption of building energy codes. 

Commenters stated the study asserts that the energy savings experienced over the examined 

period may only represent a lower bound of the potential energy savings from residential codes.

Commenters cited a second econometric study published in 2011 by the Climate Policy Initiative 

that used a regression analysis to examine the residential energy consumption of states with 

building energy codes as compared to those without. Commenters indicated this study found 

residential energy codes reduced primary energy consumption in the sector by 1.3 percent and 

reduced energy-related emissions by 1.8 percent in 2008.

Commenters stated the adoption of building energy codes, as well as code-compliance 

improvement activities, have already accounted for a great deal of quantifiable energy savings 

and emission reductions across many states and jurisdictions. Commenters noted the DOE 

Building Energy Codes Program (BECP) has worked since 1992 to aid states in improving 

building EE through the adoption and implementation of building energy codes and standards. 

Commenters noted a 2013 assessment of the BECP found program activities to have contributed 

2 quads of cumulative site energy savings and resulted in 344 trillion tons of avoided CO2 

emissions over the 1992 to 2012 time period.

Commenters cited a 2009 Northwest Energy Coalition study that examined historic and future

projections of energy savings due to EE in Washington, Oregon, and California and found that 

state building energy codes accounted for an average of roughly 900 MW of energy savings in 

2006.

Commenters indicated advances in the EE achieved by new versions of both residential and 

commercial energy codes have led to significant continued reductions in the energy consumption 

of newly constructed buildings subsequent to these studies. Commenters provided Figure 1

showing the trend of residential and commercial energy code efficiency improvements. 
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Commenters noted that with each iteration of the IECC for residential buildings and the 

ASHRAE Standard 90.1 for commercial and high-rise multifamily buildings, the energy 

consumption of newly constructed buildings and those undergoing major retrofits or renovations 

further decreases, citing DOE-calculated national average source-energy-use intensity reduction 

for new commercial construction of 3.9 percent from ASHRAE 90.1-2004 to ASHRAE 90.1-

2007, 18.2 percent from ASHRAE 90.1-2007 to ASHRAE 90.1-2010, and 7.2 percent from 

ASHRAE 90.1-2010 to ASHRAE 90.1- 2013.

Commenters also cited a 2012 DOE study that found average site energy savings of 32.1 percent 

when comparing buildings that meet the 2012 IECC with buildings that meet the 2006 IECC, for 

single-family and low-rise multifamily new residential construction.

Commenters stated building energy codes are already in place and common across the majority 

of the United States, and as of September 2014, 40 states have in place mandatory statewide 

residential energy codes, 42 states have in place mandatory statewide commercial codes, 9 states 

and the District of Columbia have adopted the 2012 IECC for residential buildings, and 13 states 

and the District of Columbia already have the ASHRAE 90.1 2010 in place for commercial 

buildings. Commenters provided Figures 2 and 3 illustrating the residential and commercial 

energy code adoption status of the states through November 2014.

Commenters recommended that affordable multifamily housing energy efficiency be included in 

the potential emissions reductions used to set the targets in Block 4 and should be credited as 

state plans. Commenters indicated that that the savings potential from multifamily upgrades are 

large and can contribute significantly to overall program savings and help meet aggressive 

energy savings targets. Commenters stated that on average, multifamily housing is older than 

single-family housing and has less efficient heating, cooling, plumbing, and lighting systems, 

and therefore more room for improvement. Additionally, commenters stated a single intervention 

such as an HVAC replacement can improve efficiency in every unit in the building. 

Commenters stated that despite the potential for improvements, multifamily rental housing has 

been underserved by EE programs, despite representing about 25 percent of the housing units in 

the U.S. and 20 percent of energy consumed by all housing units. Commenters recognized that 

Affordable multifamily owners face barriers to energy efficiency, such as imperfect information 

of opportunities and available solutions; reactive rather than strategic decision making; perceived 

risk of making efficiency investments; split incentives; and constrained access to capital. 

Commenters noted that energy efficiency programs for the affordable multifamily housing sector 

tend to require more specificity and customization than programs typically offered for residential 

and commercial sectors. Commenters stated that special financing products are often needed to 

overcome the limited cash flow available in affordable housing.

Commenters concluded by giving suggestions as to how multifamily housing could become a 

part of EE programs. Commenters’ suggestions included:

• Utilities and governments fund multifamily energy efficiency programs to fill the 

capital gap.
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• Utilities improve processes and systems for utility delivery of energy usage 

information to building owners and provide incentives for continuous 

commissioning.

• Utilities and governments support a "one stop shop"--a place for building owners 

to access integrated program services.

• Governments support community development financial institutions (CDFIs) and 

other types of lenders to make loans available for energy efficiency improvements 

in multifamily affordable housing.

• State housing finance agencies require affordable housing developers to 

incorporate energy saving improvements in their housing developments as a 

condition of receiving funding.

Commenters believed that the CPP should lower barriers for building energy efficiency and 

onsite generation strategies. Commenters stated that the CPP should foster collaboration between 

building owners, tenants, and utilities on energy and GHG reduction goals. Commenters noted 

that building owners often cannot control end use efficiency of their tenants, but asked that the 

EPA use the CPP to motivate positive tenant behaviors to reduce energy use and minimize their 

buildings' carbon footprint. Commenters concluded by agreeing with commenters that EPA 

should support energy improvements in older homes, and gives some examples of how that 

could be achieved. 

Commenters stated the EPA plan should take building code and appliance standards into 

consideration. Commenters indicated States should receive credits for implementing the latest 

codes and standards, because they have resulted in significant EE and, as a result, carbon 

reduction. Commenters stated carbon savings from code-compliant residential and commercial 

construction amounted to 682,701 MWh/year or 343,000 MTY. If Texas were to adopt the 2012 

and later building energy codes, Commenters indicated the state could reduce its carbon 

emissions by an additional 400,000 MMT per year. Commenters provided a chart that shows 

CO2 generation by building sector, commercial, single-family, etc.

Commenters stated other EE options need to be relied upon to achieve incremental 

improvements going forward. Commenters stated utilities will need to mostly default to thermal 

efficiency measures, such as heating, ventilation and air conditioning (HVAC) upgrades and 

weatherization measures, which typically have a higher cost to achieve.

Commenters stated both industry and stakeholders have concluded that the adoption and 

enforcement of model building energy codes, which provide for the deployment of energy 

efficient lighting and lighting controls, are one of the most cost-effective ways to save energy. 

Commenters noted the following:

• At a cost of slightly more than 1 cent per KWh, building codes and standards 

achieve energy savings at 1/3 the cost of conventional residential EE programs 

and are roughly 1/10 the cost of retail residential electricity.
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• ACEEE concluded that if states adopted building energy codes policy achieves 

would avoid 41 GW of capacity, reduce electricity consumption by 4.2 percent 

relative to 2012, and generate a cumulative electricity savings of over 1.1 billion 

MWh in 2030. This amount is conservative, given that it represents electricity 

benefits to new buildings only. In fact building codes will create additional 

savings due to (1) reduced natural gas consumption and (2) improvements to 

existing buildings.

• A 2011 Report by the Edison Foundation concluded by 2025, significant energy 

savings could be achieved through the adoption of building codes, up to 129 

TWh, and a large majority of the savings would come from LED lighting already 

available in the marketplace.

• A recent LBNL study concluded the incremental cost of enforcing residential and 

commercial energy codes using a traditional plan review and inspection process 

ranged from $50 or less per home to nearly Dollar 200, and from less than $150 

per commercial building to over $1,000, exclusive of overhead and travel.

• A recent study by a task force of more than 30 organizations led by the Institute 

for Market Transformation (IMT) found that every $1 spent on enforcement of 

energy codes yields $6 in energy savings.

Commenters recommended EPA strengthen state emission goals by including energy savings 

that are possible through state and utility-administered codes and standards programs.

Commenters believed incorporating building energy code programs into the state emission goals 

is feasible. Commenters recommended adoption of at least the 2012 IECC or equivalent code: A 

majority of states have already adopted either the 2009 IECC (about 24 states) of the 2012 IECC 

(about 14 states) and at least five states are at various stages of adopting the recently released 

2015 IECC. Commenters believed that by 2017 most states should be able to adopt either the 

2012 or 2015 IECC.

Commenters cited a 2013 Cadmus Group report that found 17 states are already working toward 

increasing utility involvement and reliably quantifying the energy savings from building energy 

codes. Commenters stated that DOE's Building Technologies Program has awarded millions of 

dollars to states to implement training and education programs and provide technical assistance 

on building codes through state and federal partnerships. Commenters stated four states 

(Arizona, California, Massachusetts, and Rhode Island) have already made significant progress 

in implementing robust utility-run energy code programs for which utilities may take some form 

of energy savings credit, and these state efforts have established reliable mechanisms for 

ensuring compliance with building codes and for evaluating, measuring, and verifying the energy 

savings that code adoptions produce.

Commenters stated greater investment in EE in commercial buildings has huge potential to cut 

and manage demand. Commenters stated that one leading innovative approach for HVAC 

systems enables recirculation of indoor air in commercial buildings by use of low cost regenerable sorbents (largely developed by DOE), reduces the HVAC load, and results in 
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significant energy savings. Commenters stated the innovative concept has been developed and 

demonstrated to reduce the energy consumption in HVAC systems in commercial and public 

buildings by up to 50 percent at peak loads. Commenters stated air handling modules can be 

retrofitted onto virtually any building. Commenters cited 3 commercial building installations 

where 30 to 40 percent reduction in average daily cooling energy has been demonstrated, and 

noted that several other sites in the U.S. and abroad are in the works. Commenters stated the

impact of such an approach can be massive on a regional and national scale, and initial targets 

will be office buildings, large retail stores, schools and healthcare facilities. Commenters noted 

that the U.S. has approximately 40 billion sf of commercial space; each system can save 25,000 

kWh/year, and reduce CO2 generation by 17 metric tonnes/year. Commenters provided a table 

for CO2 reduction that results from the HVAC technology, including the commercial square 

footage, energy saved per year, and estimated CO2 reduction ; for example, 800,000 sf results in 

2,000,000 kWh saved, and CO2 reduction of 1.4 metric tonnes/year and 4,000,000 sf results in 

10,000,000 kWh saved with a CO2 reduction of 6.9 metric tonnes/. Commenters stated 

meaningful and substantial reductions in GHG's are possible from the adoption of such 

technologies, and there is a financial incentive and attractiveness from the viewpoint of building 

owners (energy cost savings) and utilities.

Commenters cited a new Stanford Report on EE as a key part of state clean energy programs that 

analyzes and makes specific recommendations on policies that states are using today to 

encourage EE and quotes: "Energy Efficient Building Codes. States should adopt or update 

energy efficient building codes following an independent analysis of cost-effectiveness, 

distributional impacts, and other factors. Building energy codes are a relatively straightforward 

and transparent EE strategy. Updating codes is likely to be most worthwhile in states with the 

oldest existing codes." Commenters recommended the 2012 IECC, which is a model code 

adopted by many states and municipal governments and which establishes minimum design and 

construction requirements for EE.

Commenters noted three facets of building energy codes that would bolster EPA's goals. 

Commenters indicated that States have the authority to adopt building codes, which are generally 

based on model codes developed by organizations such as International Code Council (ICC). 

Commenters stated EPA should give credit in the final Clean Power Plan where states and 

municipalities adopt the 2012 IECC or some other code of similar rigor and integrity. Because 

most states have existing building energy codes but they are frequently outdated or in need of 

improvement, commenters suggested EPA also give credit where states upgrade or improve and 

enforce code requirements to reflect the most recent model code.

Commenters stated building codes are important because modeling from various sources shows 

energy savings for residential, commercial, and industrial buildings. Commenters stated that the 

most effective and comprehensive tool for promoting energy savings is building energy codes. 

Commenters stated building codes are immediately available technology.

Commenters noted that EPA is eager to have EM&V data for such savings, and building code 

adoption can deliver that crucial data.

Commenters cited Institute for Electric Innovation ("IEI") and ACEEE studies that indicate 

electricity savings achieved from improved adoption and enforcement of building energy codes 
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is validated. Commenters stated the estimated electricity savings is significant, and the 

electricity saved under all utility-administered EE programs in 2012 was 126 TWh. [Institute for 

Electric Innovation, "Summary of Electric Utility Customer-Funded Energy Efficiency Savings, 

Expenditures, and Budgets," Issue Brief, March 2014.]

Commenters stated Pennsylvania also has a significant opportunity to improve EE through 

adoption of current building codes and improving code compliance. Commenters stated as a 

result of procedural changes to the code adoption process made in 201123, Pennsylvania has not 

adopted the 2012 International Energy Conservation Code (IECC) and is still operating under the 

2009 code. Commenters stated this results in a 15 percent improvement in building energy 

performance that is achievable but not considered in EPA's target setting. Commenters stated as 

buildings represent approximately 41 percent of statewide energy consumption this could be a

very large source of reductions. Commenters encouraged EPA and state regulators to develop 

appropriate quantification and verification protocols that will allow credit for such 

improvements.

Commenters stated building codes could erode potential DSEE. Commenters stated building 

codes also vary significantly across states and territories. Commenters stated DOE reports that: 

10 states have residential building codes equivalent to or more energy efficient than the 2012 

IECC; 28 states/territories are equivalent to or greater than the 2009 IECC; 6 states are 

equivalent to or greater than the 2006 IECC; 3 states/territories are equivalent to or greater than 

the 2003 IECC; and 9 states/territories do not maintain state-wide residential building codes. 

Commenters stated these differences affect the baselines from which utility-sponsored DSEE 

potential should be assessed. Commenters stated different baselines make comparisons of 

achievements among different states difficult. Commenters stated in addition, according to the 

American Council for an Energy-Efficient Economy ("ACEEE"), Arizona allows a portion of 

savings from new building codes to be counted towards the state's RPS. Commenters stated this 

practice further blurs ability to compare DSEE achievements across states and limits the 

application of Arizona's DSEE achievements to other states. Commenters stated additionally, as 

building codes become more stringent, the amount of DSEE gained from new customers or 

significant retrofits may be reduced.

Commenters stated it is important to note, as other EE stakeholders likely will, that the broad 

flexibility offered in the CPP proposal and supporting documents published by the EPA are 

largely focused on utility ratepayer EE programs rather than non-rate payer programs such as 

building energy codes. Commenters stated the utility ratepayer programs that focus on demand 

response strategies certainly play an enormous role in reducing emissions, however, demand 

reductions through the use of energy efficient building materials and design should receive equal 

attention.

Commenters stated EE represents the best available option to achieve significant carbon 

reductions through eliminating wasted energy in new and existing residential and commercial 

buildings. Commenters stated according to the U.S. Energy Information Administration, in 2013, 

40 percent of total U.S. energy consumption was consumed in residential and commercial 

buildings, and this statistic clearly underscores the impact the building sector can have on 

achieving the intended goals of the CPP proposal. Commenters stated by reinforcing the 
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importance of building energy codes in the CPP, the EPA has appropriately recognized a key 

opportunity for eliminating wasted energy.

Commenters stated in determining strategies to demonstrate compliance to CPP goals for target 

emission reductions, SIPs should aggressively pursue building energy code initiatives that target 

the full spectrum of buildings, including new and existing residential and commercial structures. 

Commenters stated specific energy code related areas that will have meaningful effects on CPP 

target reductions can include adoption of the most advanced energy codes published and 

increased compliance and enforcement of energy codes.

Commenters stated because buildings have a lifecycle that last many decades or more, it is 

essential to maximize energy savings through energy codes that emphasize long-lasting 

solutions, especially in the building envelope. Commenters stated energy code compliant 

envelopes for newly constructed and retrofitted existing buildings provide cost-effective, 

quantifiable, and permanent energy savings from readily available technology; for example, as 

demonstrated by "A Cost Curve for Greenhouse Gas Reduction," insulation is the most costeffective tool available; it is a measure that carries no net life cycle cost -- in effect the reductions 

come at negative cost, i.e., end-use EE enhancements both reduce utility greenhouse gas 

emissions and save money. 

Commenters stated this building block was constructed in a reasonable way, although some 

refinements and improvements could be made, such as explicitly adding efficiency opportunities 

from updated state building codes and from expanded use of combined heat and power systems 

to each state's target. Commenters stated ACEEE estimated state-specific savings available from 

these two measures in an April 2014 report.

Commenters stated insulation provides a unique and singular contribution as the most effective 

EE option for reduction of greenhouse gas emissions. Commenters stated insulation products 

save more energy than is used to manufacture them. Commenters stated in fact, insulation saves 

12 times as much energy per pound in its first year of use as the energy used to produce it, which 

means that for every Btu consumed in its production, 12 Btus are saved each year by the use of 

the insulation. Of all the EE options that EPA can and will consider, commenters stated there is 

no other like insulation. Commenters stated first, it is the simplest and the most effective way to 

save energy and reduce greenhouse gases. Commenters stated in an economy that has been 

sluggish for 8 years, that characteristic should not be dismissed. Commenters stated second, 

insulation truly saves energy. Commenters stated unlike energy efficient light bulbs and 

appliances, insulation, after its initial production, requires no energy to save energy. Commenters

stated third, insulation is immediately available for installation. It is indeed an existing 

technology ready to use. Commenters stated fourth, insulation can deliver energy savings in 

residential, commercial, and industrial buildings--even in the power plants themselves; there is a 

wide array of applications for insulation. Commenters stated fifth, insulation begins to save 

energy from the time it is installed, lasts for the life of the building, and unless damaged, requires 

no further maintenance. Commenters stated sixth, insulation saves over 600 times more energy 

each year than all the compact fluorescent light bulbs, Energy Star appliances, and Energy Star 

windows combined. Commenters stated that selecting insulation as an option brings significant 

economic benefits. Commenters stated Boston University's update of Harvard studies reconfirm 
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earlier findings that insulation saves energy, reduces pollutants, including greenhouse gas 

emissions, and improves public health.

Commenters stated insulation and insulation-related reductions are permanent. Therefore, 

Commenters requested that EPA recognize in the Final Rule that installation of insulation, 

upgrades to insulation, or improvements to insulation within the building envelope result in 

savings that are permanent and last the life of the building. Commenters stated these savings 

from insulation are unique and distinct from other EE projects which EPA limits to only a tenyear savings.

Commenters stated insulation is the ideal product to reduce energy use in buildings and the 

corresponding greenhouse gas reductions. Commenters stated according to the U.S. EIA, 

residential and commercial buildings combined accounted for 40 percent of energy consumed in 

2013. Commenters stated insulation is uniquely advantaged over other EE technologies because 

it is: a) cost effective, b) easily obtainable, c) produced domestically d) does not require any 

additional energy once installed, and e) permanent. Commenters stated according to "A Cost 

Curve for Greenhouse Gas Reduction", increasing insulation in buildings is the single most cost 

effective step that can be taken to reduce energy consumption and corresponding greenhouse gas 

emissions. Commenters stated insulation saves energy and money while simultaneously making 

homes quieter and more comfortable. Of all building insulation materials, commenters stated 

cellulose insulation is unique in that it is a readily available "off the shelf" technology that can be 

installed by either a professional contractor or homeowner, and is produced from recycled 

newspaper collected by local recycling centers, saving millions of tons of paper from ending up 

in landfills. Commenters stated further, Cellulose insulation also contains the lowest amount of 

embodied energy (the energy that goes into producing the product) of any insulation 

technology. Commenters stated for the reasons stated above, insulation and programs that 

encourage, incentivize, or mandate its usage are easy and cost effective ways to reduce our 

greenhouse gas emissions by lowering the amount of fossil fuel used at existing power plants.

Commenters stated EPA should recognize and provide an achievable pathway for these forms of 

EE: building labeling programs and policies targeting efficiency improvements in existing 

building stock. Commenters stated EE measures should be both bolder and broader, to include an 

aggressive building codes program, where insulation is a key feature. Commenters stated energy 

savings from insulation offers the best solution for reducing greenhouse gas emissions under a 

system-wide approach. Commenters stated from their perspective, EE is the most important 

element of the Proposed Rule. Commenters stated EPA Administrator Gina McCarthy agrees 

with the importance of EE, stating at the June 12, 2014 EE Forum that "energy efficiency will 

continue to play a huge role in our path to cut pollution and propel our clean energy revolution. 

. . Energy efficiency is the poster child for turning our risks into opportunities. So my answer to 

the title of the session is that energy efficiency is at a tipping point. And our proposal counts on 

it."

Commenters stated insulation offers cost-effective reductions and is immediately available to 

yield expeditious results. Commenters stated unlike other EE equipment, once installed, 

insulation requires no further energy use, is permanent, and does not need regular upkeep, so 

reductions can continue for decades, a key factor for a program intended to achieve emissions 

reductions far into the future. Commenters stated most important, insulation upgrade/incentive 
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programs provide states with maximum flexibility to meet their targets as they can be employed 

broadly across the power, housing, commercial, and industrial sectors.

Commenters stated insulation provides cost-effective reduction of energy consumption. 

Commenters stated insulation and insulation-related reductions are immediately available. 

Commenters stated the tremendous benefits from the reduction of energy demand and 

greenhouse gas emissions do not have to wait for further technological development. 

Commenters stated insulation requires no further energy use. Commenters stated insulation 

programs provide maximum flexibility to states.

Commenters stated EPA has stated publicly in the Proposed Rule that its major goal in the CAA 

Section 111(d) process is to work with states and ensure they have maximum flexibility to meet 

any targets set forth in the federal guidelines. Commenters stated given the facts above related to 

cost-effectiveness, availability, no further energy use, and permanency, insulation already 

presents a powerful tool for demand management energy reductions. Commenters stated beyond 

these factors, insulation upgrade/incentive programs can be employed broadly across all 

economic sectors that significantly contribute to a state's energy use and greenhouse gas 

emissions. Commenters stated thus, insulation programs can apply broadly across the power, 

housing, and industrial sectors. While such programs can be employed in any one sector, 

Commenters stated there is no reason they should be so limited, especially if they become a key 

part of a state's program to reduce energy demand and greenhouse gas emissions from the EGU.

Based on all these factors detailed above, commenters urged EPA to recognize the vast savings 

yet to be achieved through improvement in insulation levels. Commenters recognized that EPA 

in the Proposed Rule was fairly generic in its discussions of EE programs. However, given the 

vital role that insulation can play under CPP, commenters recommended that EPA expressly 

identify insulation as a key tool in the EE toolbox to give states maximum flexibility in adopting 

programs that incentivize, provide, or mandate improvement in the building envelope. 

Commenters stated these programs should be endowed with sufficient flexibility as to allow the 

application across power, housing, commercial, and industrial sectors.

Commenters asserted that with proper emphasis on building codes, EPA could gain significantly 

greater greenhouse gas reductions. Commenters stated the ACEEE has made a similar statement: 

"Building block [#4] was constructed in a reasonable way. Although [ACEEE] will be 

suggesting some refinements and improvements . . . With these refinements, [we estimate] that 

nationwide energy efficiency savings and emissions reduction would about double relative to 

what EPA estimates in its Clean Power Plan proposal." Commenters stated EE actions as 

envisioned by NAIMA go far beyond incentive programs where utilities give a rebate on 

insulation. Commenters stated EE measures should be both bolder and broader, to include an 

aggressive building codes program.

Commenters urged EPA to recognize the unique and singular contribution insulation brings to 

the effort to reduce greenhouse gas emissions by elevating insulation as a preferred option for 

promoting EE in the Final Rule and any guidance on EE that may be provided to states in the

future.
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Commenters stated EPA should support incentives and other measures that encourage increased 

EE through insulation. Commenters stated the building sector is a significant source of 

greenhouse gas emissions due to its use and waste of electricity. Commenters stated insulation 

can provide the most cost-effective and immediately available means to reduce this energy use. 

As demonstrated by "A Cost Curve for Greenhouse Gas Reduction," insulation is the most costeffective tool available; it is a measure that carries no net life cycle cost, in effect the reductions 

come at negative cost, i.e., end-use EE enhancements both reduce utility greenhouse gas 

emissions and save money.

Commenters recommended EPA consider different types of programs for which credit should be 

given under emission guidelines that include system-wide demand management EE programs: 

1. programs to encourage or provide improved insulation in residential, commercial, and 

industrial sectors; 

2. policies and regulatory programs to encourage, provide, or require upgrades to insulation; 

3. loan and grant programs; 

4. programs to improve EE of power plants; 

a. tax holidays on insulation products; and 

b. tax credits or deductions.

Commenters stated existing tools and data can be utilized by states to ensure such programs meet 

the EM&V requirements of the Proposed Rule and are effectively enforced. 

Commenters stated EPA should recognize and give credit to home or building labeling programs. 

Commenters stated home or building labeling is similar to a motor vehicle's mile-per-gallon 

rating, for example, the DOE's Office of Energy Efficiency and Renewable Energy (EERE) has 

developed "The Home Energy Score" to allow homeowners to compare the energy performance 

of their homes to other homes nationwide. Commenters noted that Canada also has a home 

labeling program. Commenters stated it also provides homeowners with guidance on how to 

improve their home EE.

Commenters stated EPA should acknowledge and credit EE gains through retrofits. Commenters

stated EE retrofits offer a cost-effective means to address greenhouse gas reductions and energy 

independence. Commenters stated retrofitting existing buildings provide savings of 10 percent to 

20 percent with an average payback slightly over one year. Commenters stated these projects are 

low-risk investment opportunities.

Commenters urged EPA to recognize and give credit for the significant energy savings derived 

from retrofitting buildings as an EE measure in the final CPP. Commenters stated programs 

crediting use of insulation can and should be simply designed and easily implemented. 

Commenters stated another key aspect of insulation incentive programs is that they are fairly 

simple to design and implement so that crediting energy and emission reductions resulting from 

those programs can also be readily established. Commenters stated EPA should avoid creating 
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systems that are both unnecessarily complicated and time-consuming and that might undermine 

the utility of these programs. Commenters stated rather, EPA can look to similar programs in the 

stationary source and transportation sectors as examples of straightforward credit programs that 

rely on state oversight and reporting to ensure their integrity.

In addition to federal and state programs, commenters urged EPA to recognize that utility and 

private sector programs also achieve significant energy savings and emission reductions in 

residential, commercial, and industrial buildings. Commenters stated such programs should also 

be given credit in the CPP. Commenters provided brief descriptions of some example programs 

that give incentives for insulation installation. Commenters stated EPA should allow states 

maximum flexibility in identifying guidelines and compliance demonstrations. Commenters

stated considering the significant differences among the states relative to fuel diversity and 

market differences, flexibility is imperative.

Commenters stated EE, specifically insulation, should be promoted as the first option for 

compliance. Commenters stated energy conservation should be preferred over creation of new, 

untested and uncertain renewable energy generation. Commenters stated EPA should give credit 

for adoption, enforcement, or upgrades to building energy codes. Commenters stated EPA 

specifically invited comments on the role building energy codes might play in achieving an 

increased annual incremental savings rate. Commenters stated a new Stanford Report on EE as a 

key part of state clean energy programs analyzes and makes specific recommendations on 

policies that states are using today to encourage EE. Commenters stated the Report's second of 

thirteen recommendations is for the adoption and update of EE building codes: "Energy Efficient 

Building Codes. States should adopt or update energy efficient building codes following an 

independent analysis of cost-effectiveness, distributional impacts, and other factors. Building 

energy codes are a relatively straightforward and transparent energy efficiency strategy. 

Updating codes is likely to be most worthwhile in states with the oldest existing codes."

Commenters stated they did not take a position on whether the annual incremental savings rate in 

the Proposed Rule should be increased. Commenters stated rather that their comments focus on 

the efficacy of building code adoption, upgrades, and enforcement in delivering the greenhouse 

gas reductions sought by EPA in the Proposed Rule. Commenters stated such savings can be 

significant. Commenters stated a building code is a set of rules that specify standards for 

buildings and non-building structures. Commenters stated there are many different types of 

building codes, but the ones relevant to this discussion address EE. Commenters recommended 

the 2012 IECC, which is a model code adopted by many states and municipal governments. 

Commenters stated the IECC establishes minimum design and construction requirements for EE.

Commenters stated EPA should give credit in the final CPP where states and municipalities 

adopt the 2012 IECC or some other code of similar rigor and integrity. Commenters stated most 

states have existing building energy codes, but they are frequently outdated or in need of 

improvement. Commenters stated therefore, EPA should also give credit where states upgrade or 

improve and enforce code requirements to reflect the most recent model code. Commenters

stated of course, building codes are really only effective when they are consistently and routinely 

enforced, so credits may be contingent on proof of rigorous state enforcement. Commenters

stated similar to adoption and upgrades, enforcement of the strongest building codes should be 

recognized by EPA as deserving of credit in the CPP. Commenters stated building codes are 
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important because modeling from various sources shows energy savings for residential, 

commercial, and industrial buildings. Commenters stated in fact, they are the most effective and 

comprehensive tool for promoting energy savings. In that EPA is eager to have EM&V data for 

such savings, Commenters stated building code adoption can deliver that crucial data and it is 

cost-effective and immediately available technology.

Commenters stated Chicago has launched residential and building retrofit programs that have led 

to proven energy use reduction and cost savings. Commenters stated for residential buildings, 

Chicago has facilitated partnerships between residents, non-profits, and utility-run EE upgrades, 

retrofit contractors, and equipment rebates. Commenters stated using data obtained from the 

utilities, Chicago targeted its outreach to areas of the city with relatively high-energy use and 

low-to-moderate income levels. Commenters stated over 120,000 homes have received free 

upgrades and 15,100 homes have been fully retrofitted, connecting Chicagoans to $8.5 million in 

energy bill savings due, in part, to a 15 percent reduction in energy use in retrofitted homes. 

Commenters stated Chicago has leveraged data from this program to launch an Energy Map 

project to help residents more easily understand their energy use and how it compares to other 

residents. 

Commenters stated Chicago implemented a Commercial Buildings Initiative (CBI), a voluntary 

leadership program for large buildings that commit to increase EE by 20 percent over five years. 

Commenters stated to date, 48 buildings (representing 37 million square feet of space) have 

joined the CBI including offices, hotels, multi-family residential buildings, universities, and 

cultural institutions, and to date, the CBI has connected Chicago's commercial buildings with 

$2.5 million in energy bill savings due to a 7 percent reduction in energy usage. Commenters

stated Chicago has helped CBI buildings by offering faster permit timeframes for upgrade work 

and the program was featured in a best practice report issued recently by the Natural Resources 

Defense Council. 

Commenters stated that for municipal buildings, Retrofit 1 is a self-funding program that reduces 

utility and operating costs for buildings owned by the city. Commenters stated over 60 municipal 

buildings are being retrofit, including libraries, police stations, community centers, and unique 

facilities such as City Hall and the 911 Center. Commenters stated The Chicago Infrastructure 

Trust, on behalf of the city's Department of Fleet and Facility Managements, has secured $12.8 

million in off-book, off-credit financing for the 60 buildings that are part of Retrofit 1. 

Commenters stated that upon completion, Retrofit 1 is projected to result in $1.4 million in 

energy bill savings due to an 18 percent reduction in energy use.

Commenters urged EPA to recognize that state and national Codes and Standards (C&S) are 

critical to achieving electricity savings across a state. Commenters stated that in California, C&S 

account for the majority of in-state annual energy savings. Commenters stated California's 

ongoing efforts are aimed at achieving net zero-energy at all new buildings in the timeframe of 

the proposed rule as well as targeting existing buildings. Commenters stated thus, it is essential 

that the savings attributable to C&S are equitably accounted for towards California's EE savings 

for compliance; otherwise, a 1.5 percent goal as proposed in the Best System of Emission 

Reduction would not be realistic.
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Commenters commended EPA for looking at the experience of leading states, in particular 

California, which has a long history of adopting and enforcing building energy codes that have 

led the nation, and have contributed significantly to the development of recent versions of the 

IECC, as well as to parts of the IGCC. Commenters that as EPA points out, the application and 

implementation of best practices takes time, and states like California have been engaged in 

requiring buildings to meet strict building energy codes for many years. While the discussion in 

the preamble suggests a distinction between state "energy efficiency programs" and 

implementation of building energy codes, Commenters stated it is quite clear that the reduction 

in energy use in California is to a very large extent the result of adoption and enforcement of 

building energy codes. Commenters stated they would say that a key, and very crucial element of 

the California EE program has been the advanced, and highly efficient energy codes, that have 

been consistently adopted, enforced, and upgraded on a regular basis in that state.

While some EE programs are higher profile, and attract more attention than building energy 

codes, commenters stated the fact remains that to achieve a really significant reduction in 

electricity end use, it is necessary to reduce usage across the board, in all homes, offices and 

other commercial structures. Commenters stated the huge use of energy for heating, cooling and 

lighting buildings means that reducing energy for those purposes in ALL new buildings by a 

significant percentage, such as the 30 percent reduction in average energy use estimated by DOE 

in buildings constructed to meet the 2012 IECC, over buildings built to meet the 2006 IECC, will 

result in a significant decrease in energy end-use.

Commenters stated they see several reasons to allow states to count end-use energy savings 

achieved through adoption of statewide building energy codes to be used to achieve part of the 

state plan for end-use energy reduction. Commenters stated these reasons go to the heart of the 

EPA rationale for the Clean Power Regulation, and strongly support the inclusion of building 

energy codes in state plans:

• Reductions in energy use attributed to building codes are measurable. New tools 

to accurately measure the difference between existing buildings and new 

buildings meeting current energy codes continue to be developed and 

implemented in the field.

• Reductions in energy use attributed to building energy code adoption and 

enforcement are scalable and predictable, based on known demographic and 

construction trend data.

• Reductions in energy use attributed to energy codes are permanent, and continue 

to result in lower end-use for the life of the building, often 100 years or more.

• Reductions in energy use for new buildings regulated by building codes have an 

indirect market impact on existing buildings, influencing owners of both 

residential and commercial to retrofit those building to be competitive in the 

market place in competition with newly constructed, energy-efficient buildings.

• Once adopted, and integrated into construction practices, building energy codes 

are non-reversible. They are almost never modified to result in less efficient 
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buildings. At ICC, we know of no jurisdiction that having adopted the IECC has 

later adopted a less stringent version of the code. The fact that building energy 

codes are adopted by, and supported by, policymakers of all political backgrounds 

and philosophies means they are unlikely to be subject to swings in public 

sentiment or political changes.

Finally, commenters stated, there is already a strong and sustainable infrastructure in place to 

support the adoption, implementation and enforcement of building energy codes across the 

nation in every state, and especially in areas where over 90 percent of new construction occurs. 

Commenters stated the infrastructure comprises systems for publishing and distributing the 

model IECC. Commenters stated the system provides interpretations and guidance on code 

provisions, and training and certification testing on current and each new version of the IECC. 

Commenters stated all of these are provided nationwide by ICC, and there are various training 

and guidance programs provided by other public and private sector organizations.

For all the above reasons, commenters suggested that EPA include building energy codes as an 

acceptable element of state Clean Energy plans, and specifically include the 2012 or 2105 IECC 

as an acceptable element of Building Block 4.

Commenters stated adoption of improved building codes and increased compliance with codes 

could add between an additional 0.87 to 2.5 percent per year in 2030. Commenters stated 

buildings account for 40 percent of US primary energy use, 70 percent of electricity use, and 39 

percent of carbon dioxide emissions. Commenters stated increasing EE in buildings represents a 

significant opportunity to reduce emissions from the electricity sector, and building codes have 

proven to be one of the most effective policy tools for increasing EE in new construction and 

major renovations, thereby reducing emissions and resulting in cost-effective energy savings for 

consumers. Commenters stated that utilities, program administrators, and EGUs can affect the 

energy savings achieved from buildings codes, including affecting the stringency of codes during 

code development, influencing the code adoption process, and ensuring that adopted codes are 

complied with. Commenters stated including updated code adoption and future code 

improvements by state or local governments will lead to significant additional savings and 

should also be credited in state plans.

Commenters stated the EE in affordable multi-family housing can provide significant savings 

and recommended savings from affordable multi-family housing programs should be credited in 

State plans. Commenters stated 18 percent of American households live in multi-family 

buildings and affordable multi-family sector is a critical untapped resource for achieving 

widespread energy demand reductions, emissions reductions, and improving quality of life for 

residents. Commenters cited a report that multi-family house could become 28.6 percent more 

energy efficient by 2020, saving 51,000 GW of electricity, 2,800 million therms of natural gas, 

which equates to $9.2 billion in energy costs. Commenters cited a study that estimated capital 

costs for EE opportunities in low-income residential buildings is approximately $46 billion and 

would saving $80 billion (with $16 billion of this savings for multi-family buildings). 

Commenters noted that multi-family housing is older (85 percent built before 1990) with less 

efficient heating, cooling, plumbing, and lighting systems that could save 30 to 75 percent from 

EE improvements. Commenters stated that multi-family housing makes it amenable to energy 

retrofits because it is inherently more energy efficient than single-family housing due to size per 
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unit, exterior exposure, and other structural differences. Commenters stated that 85 percent of 

multi-family households are renters with average annual income ($31,000) that is half of 

homeowners ($61,000), and renters typically pay a higher percentage of their income for energy 

(energy costs for renters rose 22.7 percent from 2001 to 2009 while rent rose 7.6 percent). 

Commenters stated efficiency gains from multifamily retrofits have the concurrent benefit of 

relieving low- and middle-income families of some of their financial strain and uncertainty. 

Commenters noted that only a fraction of the potential energy savings in the multifamily sector 

has been realized, despite the economies of scale not available in single-family homes. 

Commenters stated multi-family retrofits are easier to coordinate for multiple units that are 

contiguous, and a single intervention (for example, HVAC replacement) can improve efficiency 

in every unit in the building. Commenters indicated that EPA underestimates the potential for 

EE by assuming that states will only be able to ramp up EE programs extremely slowly. 

Commenters stated that by investing more resources into the multi-family sector, States can scale 

up EE programs much more rapidly than previously imagined.

Commenters stated newer housing stock limits efficiency. Commenters stated Nevada needs 

peaking power during the summer months, particularly in the Las Vegas metropolitan area. 

Commenters stated the Agencies contend that the capacity to add more EE is limited because 

Nevada's housing stock is relatively new and therefore already efficient. On the contrary, 

commenters stated there is enormous opportunity to improve both residential and commercial 

building stock, much of which is very inefficient and in need of retrofitting. Commenters stated 

the real problem is that current programs are too weak. In places where temperatures hit the 100s 

for weeks on end, commenters stated great improvements can be made with new HVAC systems, 

ceiling insulation, vapor barriers, cool roofs and other relatively inexpensive changes. 

Commenters stated such programs, particularly if they were more available and affordable for 

small businesses and multi-family dwellings, could make major improvements in Nevada's 

efficiency and in people's lives. Commenters stated Nevada needs to commit to such programs. 

Commenters stated the avoided cost of investing in new gas plants or renewables makes EE one 

of the most powerful tools for complying with the Clean Power Plan.

Commenters believed EE building codes should be considered as a compliance option for States. 

Commenters indicated most States have long recognized the importance of updated energy 

codes, and the tremendous economic savings for businesses and homeowners in States that have 

automatic code updates to keep pace with new technologies. Commenters stated the energy 

savings achieved by homeowners and businesses far outweigh the cost of moving to updated 

requirements, which is generally assumed by the buyer. Commenters stated the U.S. Department 

of Energy estimates that "building energy codes will produce a financial benefit to owners of 

nearly $2 billion annually by 2015, rising to over $15 billion annually by 2030." Commenters

stated these savings reduce the energy demand of public buildings, which is the largest energy 

consumption sector in the United States. Commenters stated modern homes and public buildings 

are more energy efficient than ever before largely due to the effectiveness of and consistent 

upgrades to energy codes.

Commenters stated EPA should expressly include above-code building certification and other 

third party provided efficiency projects as allowable measures for state plans, with appropriate 

conditions. Commenters stated as whole-building efficiency approaches, above-code 

certification such as LEED and EPA's own ENERGY STAR have an important role in reducing 
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the 70 percent of retail electricity that is used by buildings. Commenters stated another important 

type of third party efficiency is energy performance service contracts. Commenters stated these 

above-code certifications and performance contracts have the advantage of leveraging private 

capital investment, as well as reaching a broader spectrum of buildings. Commenters stated 

utilities in a number of states are already using LEED and ENERGY STAR as approaches to 

meet their efficiency obligations.

Commenters stated EPA appropriately proposes to allow credit for energy savings resulting from 

adoption of state and local building codes and non-preempted appliance standards. Commenters

stated the Northwest has a long history of aggressive building energy codes and appliance 

standards starting with mandates for Model Conservation Standards that are called for in the 

Northwest Power Act. Commenters stated for the last 18 years, they have worked directly with 

the four states to advance these codes and standards and to track and evaluate savings from 

improvements in these codes and standards compared to national baselines. Commenters stated 

they have worked to establish measurements of compliance in all four states to ensure that these 

advances in codes and standards actually deliver the promised savings. Commenters stated as 

these codes and standards are adopted, they are incorporated into base load forecasts for utility 

integrated resource planning across the four-state area, directly reducing the planning 

requirements for new generating sources. Commenters urged EPA to allow states to claim full 

energy savings credit for energy savings resulting from efforts to advance state-adopted codes 

and standards.

Commenters stated EPA should recognize building codes and EE retrofits as compliance options. 

Commenters stated that according to the EIA, the U.S. building sector consumes approximately 

40 percent of total U.S. energy resources and 70 percent of the electricity produced in the 

country, just for building operation. Commenters stated it does not include the energy used to 

manufacture and transport building materials or for construction work. Commenters stated the 

energy we use for lighting, heating and cooling our buildings, as well as powering residential 

appliances, commercial building equipment and a growing array of electronic devices accounts 

for nearly 40 percent of U.S. greenhouse gas emissions. Commenters stated EPA knows this and 

has developed programs and tools for building owners and developers to reduce the negative 

impact of buildings on public health and the environment. Commenters stated unfortunately, the 

energy utilities that would be regulated by the proposed Clean Power Plan are not as 

knowledgeable about the vast energy-saving potential of buildings as they could be. Reducing 

demand has not been their primary mission. Commenters believed this proposed rule is a historic 

opportunity to educate state agencies, utilities and consumers about the potential role of low/zero 

energy, high performance buildings in meeting the requirements of the proposed rule, while 

fostering local economic development and improving building comfort.

Commenters stated much of the energy consumed by buildings is wasted. Poor design and 

construction as well as deterioration over time can create gaps in the building envelope (literally, 

holes in the wall or insulation), which causes heating/cooling equipment to work overtime 

without even providing the desired level of comfort. Commenters stated older appliances also 

use too much energy. Commenters stated the good news is that the buildings industry has 

solutions. Commenters stated they just need to be deployed much more widely. Commenters

grouped these solutions into two basic categories:
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• Utility and non-utility EE improvement programs. These include:

− Industry-developed model building energy codes and federal appliance 

efficiency standards. The easiest, fastest, and least expensive strategy states 

and local jurisdictions can take to reduce building energy use is adopting and 

enforcing model building codes. Codes represent a broad industry consensus 

for a minimum level of efficiency and reference both industry and government 

efficiency standards. By adopting and enforcing building codes, states can 

ensure a competitive market for efficient buildings and products. A 

spokesman for the We Mean Business Coalition noted on the group's website, 

"We're fine with well-designed regulation, the sort of thing that the EPA is 

now proposing in the U.S. Well-designed regulation creates a level of 

certainty. You can plan against it and invest against it." EESI urges EPA to 

include building codes as a compliance option. EESI believes this will provide 

the incentive states need to adopt the most current model codes and for 

communities to enforce these codes. It is a minimal, cost-effective option that 

has the potential to achieve significant reductions in energy demand, because 

codes apply to all new construction. 

− Retrofit programs. Of course, new construction is only one or two percent of 

the entire U.S. building stock. To make a dent in carbon pollution, we must 

make existing buildings more energy efficient. States and cities have 

numerous programs underway to do this, often using tools and resources from 

EPA, DOE and national organizations with expertise in EE. Some utilities 

have programs as well, such as rebates to residential, commercial and 

industrial building owners who retrofit their properties for improved EE. In 

addition, utilities, rural electric co-ops and communities are offering 

innovative ways for consumers to pay for efficiency upgrades, such as "onbill" financing and property-assessed clean energy bonds known as PACE 

bonds. Absent regulations or other mechanisms to limit carbon emissions, 

utility efficiency programs and state policies such as Energy Efficiency 

Resource Standards (EERS) have served an important role. But more can be 

done. For instance, states and utilities could fill a gap that EESI considers a 

serious hindrance to the use of some of these private-sector programs: that of 

consumer advocate or liaison. EESI urges EPA to promote and facilitate 

greater use of existing state/utility and private-sector efficiency programs as a 

compliance option. 

• Ultra energy efficient buildings. EESI is encouraged and excited to see that 

industry professionals are gaining expertise and experience in best practices for 

achieving high quality, highly energy-efficient construction. Even more 

encouraging, the market is starting to learn about and adopt methods for ultraenergy efficient new construction and "deep-energy" retrofits of existing 

buildings. This has the potential to dramatically reduce building-energy demand 

(load) and save owners hundreds or thousands (or hundreds of thousands for large 

buildings) per year. Indeed, the building sector is a vast, mostly untapped source 

of energy savings. Investments in very energy-efficient construction and "deep 
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energy" retrofits can achieve buildings that use 50 to 90 percent less energy than 

comparable buildings. The Passivhaus building performance standard, for 

instance, is being used to design a K-12 school building in Franklin County, 

Virginia--the first public school designed to the Passivhaus standard. The school 

will eventually add solar panels and deliver more energy than it uses. A German 

standard that is being adapted to U.S. climates, Passivhaus is performance-based 

and results in an extremely airtight, super low energy structure that also provides 

high levels of comfort and indoor air quality. The builder, Adam Cohen of 

Structures Design/Build, LLC, told an interviewer that passive design is a "huge 

opportunity to improve our nation's energy efficiency. Also an opportunity for 

U.S. manufacturers to develop new products to serve the emerging Passivhaus 

market." EESI urges EPA to promote and facilitate greater use of the PassivHaus 

standard and other similar ultra-energy efficient standards.

Commenters stated EPA should take resilience into account. Commenters indicated 48 states 

and the District of Columbia were designated Presidentially-Declared Disaster Areas between 

2011 and 2013, and things will likely only get worse as extreme weather events and flooding 

become more frequent because of climate change. Commenters stated resiliency should, 

therefore, be a goal near and dear to policymakers and citizens throughout the United States. 

Commenters stated fortunately, resiliency goes hand-in-hand with reducing carbon pollution. 

Commenters stated indeed, resilient buildings are, almost by definition, more durable and longlasting than conventional buildings, which reduces the need for new construction. Commenters

stated an architect at the 2014 Passive House U.S. conference said his firm aims to "future-proof" 

structures: "Buildings should last 100 years, be low-maintenance, resilient, independent of 

energy costs, and be nice and healthy inside." Commenters stated constructing new buildings is 

very energy and material-intensive, resulting in substantial carbon emissions. Commenters stated 

by reducing the need for new construction, one reduces carbon emissions.

Commenters stated we can greatly improve the sustainability and resiliency of the built 

environment with existing technologies; a focused effort on training building professionals, 

educating consumers and ensuring that standards and policies facilitate, or at least do not hinder, 

these goals. Commenters stated there are best practices and standards for more resilient 

construction such as the Fortified Home standard (which the Department of Homeland Security 

is using for a residential pilot program). Commenters stated the U.S. Department of Housing and 

Urban Development (HUD) is also focused on resilience in a national competition for cities it 

announced recently with its partner, Rockefeller Foundation. Commenters urged EPA to include 

language in the Clean Power Plan that encourages communities to become more resilient when 

such actions help lower greenhouse gas emissions.

Commenters stated the EPA should include EE from adoption and enforcement of building codes 

and combined heat and power (CHP) as compliance options. Commenters stated building codes 

adopted between 1992 and 2012 have resulted in approximately 2 quads in cumulative total 

energy savings and are expected to save more than $40 billion over the lifetime of buildings 

constructed during this time period. Commenters stated however, only about one-quarter of 

states have adopted the most up-to-date codes for residential and commercial buildings, which 

reduce building energy use by 20 and 25 percent, respectively, compared with the 2007-09 

standards, leaving the door open for greater savings by other states.
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Commenters appreciated the EPA's invitation for comments related to enhanced building energy 

codes as a way to increase the annual incremental savings as part of the fourth building block. 

Commenters believed building energy codes are an essential tool for builders, consumers, and 

regulators to ensure their homes and buildings are comfortable, affordable, and consume an 

acceptable level of energy. Commenters believed the best building energy codes are generated 

through granting all stakeholders an opportunity to propose provisions and changes in an open, 

national or international forum, as is done through the International Code Council (ICC) code 

development process. Commenters stated the International Energy Conservation Code (IECC) is 

a prime example of stakeholders and officials working together to achieve a code that is at the 

same time achievable, reasonable, effective, and flexible enough to allow for various pathways 

towards compliance. Commenters stated these criteria also fit within the EPA's Best System of 

Emissions Reduction (BSER), which takes into account the cost of achieving reductions.

Commenters stated unlike the ICC code development process, state and local governmental 

adoption of building energy codes can be unduly influenced by special interests. Commenters

stated further, not all stakeholders may have the resources to have their voices heard at each state 

and local level. Commenters stated even the ICC code process can be vulnerable to undue 

influence from specific stakeholders. (Commenters stated in the past, certain proprietary 

interests have tried to use building codes to manipulate the market and effectively disqualify all 

insulation technologies save for one specific product. Commenters stated for example, in 2003 

the DOE proposed reforms to make it easier to comply with the IECC. Commenters stated during 

the process a particular proprietary interest proposed modifications from the floor to increase Rvalues from R-13 to R-15 in several central and southern states and from R-19 to R-21 in the 

majority of northern states. Commenters stated as a result, only a single, narrowly defined type 

of insulation product would have qualified. Commenters stated the DOE's own analysis showed 

that while this change would cost the average homeowner an additional 5600 to the cost of the 

home, the annual savings on energy costs would be a mere $15 annually. Commenters stated 

fortunately, the scheme was ultimately defeated but the precedent had been set.) Commenters

stated however, special interests acting at the state and local level have a greater chance of 

exacting undue influence than at the TCC level. Commenters stated accordingly, CTMA requests 

that the EPA not encourage states, through credits or otherwise, to adopt building energy codes 

with higher EE than in the most recent version of the IECC.

Commenters believed that building energy codes must be sensitive to cost concerns and based on 

good science. Commenters opposed the use of building energy codes to create competitive 

advantages for any proprietary interest. Setting aside the issue of building energy codes, 

Commenters strongly supported EPA granting deference to state EE programs and policies that 

allow states to credit EE policies. Commenters stated it should be noted, however, that CIMA 

would not support federal mandates for building energy codes for the reasons stated above 

supporting the ICC code adoption process.

Commenters stated that repeated studies have demonstrated that many opportunities remain for 

deploying energy efficient housing and equipment that combine environmental benefits with 

cost-savings over time offsetting or exceeding higher up-front costs. Commenters stated positive 

experience with government regulation in the transportation sector requiring an average 54.4 

miles per gallon by 2025 provides guidance on how similar action in the building sector might 

work. Commenters stated these aggressive standards for vehicle efficiency are producing 
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substantial benefits for the environment, the economy, and national security. Commenters stated 

yet, they have produced no litigation, will effectively pay for themselves in lower fuel costs, and 

allow a wide variety of options in the marketplace. Commenters stated an emphasis on efficiency 

in buildings and equipment can produce similar results under the proposed rule under discussion 

today.

Commenters stated because of appliance and lighting efficiency standards at the federal level, 

states should focus their efficiency efforts on building codes and enforcement. Commenters

stated buildings constitute an area where the states, such as Georgia, have expertise and are able 

to take into the account local climates. Commenters stated better enforcement of building codes 

will likely produce substantial benefits, although research on this issue has been sparse. 

Commenters stated utility programs in Georgia for the thermal efficiency of buildings are among 

their more effective offerings.

In addition to programmatic implementation and efficacy concerns associated with Building 

Block 4, commenters had concerns with regards to building energy code adoption, that EPA 

highlights as an option to address demand side management. Commenters stated EPA indicates 

that the calculations it uses in determining the contribution to the BSER from Building Block 4 

"represents a feasible policy scenario showing the reductions in fossil fuel fired electricity 

generation resulting from accelerated use of EE policies in all states consistent with a level of 

performance that has already been achieved or required by policies," without assuming any 

particular type of demand-side EE policy. Commenters stated however, in enumerating state 

policies which have demonstrated the potential impact of demand-side EE on reducing GHG 

emissions and in providing examples of measures states may consider including as a component 

of their state plan, EPA provides detailed description of five specific strategies including 

building energy codes. Commenters was particularly concerned with EPA's inclusion of building 

energy codes as a strategy for achieving demand-side EE under this proposal. Commenters stated 

there are some unique characteristics to the development, adoption, and implementation of 

building energy codes that go beyond the previously discussed concerns NAHB has with 

Building Block 4 and the inclusion of EE programs as federally enforceable components of a 

state plan.

Commenters stated Federal government has no authority to mandate the adoption or enforcement 

of a national building code. Commenters stated the model building energy codes development 

process is a product of the International Code Council (ICC) and the American Society of 

Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE). Commenters stated these 

private organizations develop, publish and maintain the codes (ASHRAE Standard 90.1 (for 

commercial and multi-family high-rise residential buildings) or the latest version of the 

International Energy Conservation Code (IECC) (for low-rise residential buildings)), updating 

them every three years. Commenters stated following revisions to the code, the U.S. DOE issues 

a determination as to whether such revisions included in the latest version of the code will 

improve EE in relation to the previous edition of the code. Commenters stated DOE then issues a 

final determination that each State is required to certify that they have reviewed relevant building 

code provisions and made a determination as to whether it is appropriate for such state to revise 

its code to meet or exceed the updated edition of the code. Commenters stated the ultimate 

adoption and enforcement of the code is undertaken under the authority of state and local 

governments.
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Commenters stated further, the federal government, specifically the DOE, has a very precise role 

in relation to building energy codes. Commenters stated actions taken by DOE to evaluate and 

issue determinations concerning the model building energy codes as well as other actions taken 

during the development process are done so under its authorized role as a technical advisor. 

Commenters stated the limited authority given to DOE in the realm of building codes does not 

allow for the federal government to impose, adopt or enforce a national building code. 

Commenters stated the fact that the federal government lacks such authority is a fundamental 

reason why building codes should not be an allowable component of state programs or 

incorporated by EPA as an approvable means of meeting the goals of Building Block 4.

Commenters stated that built into the guidelines provided by EPA for state plans in the rule are 

requirements that measures included by the state as a means of achieving the required emissions 

reduction be quantifiable, verifiable, non-duplicative, permanent, and enforceable with respect to 

each affected entity. Commenters stated additionally, as drafted, EPA is requiring that a state 

include as a component of the state plan any measure they are relying on to meet the state 

emissions reduction performance goals. Taken collectively, if building energy codes were 

incorporated into a state's section 111(d) plan as a means of obtaining emission reductions in the 

state, Commenters stated these codes would by definition become federally enforceable 

measures.

Commenters opposed the use of building energy codes as a measure to achieve end use EE in the 

context of this proposal to reduce CO2 emissions from the power sector. Commenters urged 

EPA to ensure that final regulations, should they be issued, treat end use EE as complementary 

programs and that building codes are not included as an approvable measure. Commenters stated 

any action by EPA to do otherwise would not only exceed federal authority, but would co-opt the 

traditional control of state and local governments in this policy area by inappropriately applying 

a policy measure that results in increased housing costs but that has a negligible impact on 

emissions reductions.

Commenters stated that adoption and enforcement of state or local building energy codes, to 

contribute additional reductions in electricity demand beyond those resulting from EE programs, 

while increasing the incremental savings rate beyond the proposed 1.5 percent, would be 

burdensome on the state and utility to enforce, track and meet such goals. Commenters pointed 

out that Tennessee is a "home rule" state and energy building codes are not enforced unless a city 

or county opts into compliance with those standards. Commenters stated that requiring the 

state(s) to perform M&V on those standards and provide compliance would burden the rate- and 

tax-payer for that state.

Commenters stated emission reductions resulting from enforcement of energy efficient building 

codes that are demonstrated with rigorous EM&V measures should be an acceptable component 

of a state compliance plan. Commenters noted that the NWPCC has been studying the impacts 

of EE policies, including utility and third party EE programs, state building energy codes, and 

federal appliance standards across their member states, Idaho, Montana, Washington, and 

Oregon, for more than three decades. Commenters stated that for the past decade, EE programs 

have accounted for more than 75 percent of the cumulative energy savings with building energy 

codes accounting for the remaining savings.
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Commenters stated building codes and appliance standards are a significant source of long-term 

energy savings, and over the last twenty years accounted for over one-third of all savings in the 

Northwest. Commenters stated codes and standards are a more efficient way of ensuring savings 

across a whole state, covering areas that may be outside the patchwork of robust utility efficiency 

programs. Commenters stated if a state can demonstrate appropriate EM&V, and enforcement of 

those standards, the savings should be included. Commenters stated as an example, in 2013 

NEEA found that Washington State building code compliance was 96 percent.

Commenters stated addressing specifically the topic of building energy codes being included as 

part of state compliance plans, NEEP acknowledges EPA's identification of the challenges of 

evaluating, measuring and verifying savings from building energy codes. But commenters also 

pointed out that significant analysis has been done on this topic in recent years, and they firmly 

believe that energy codes should and must be allowed as part of state compliance because of 

their ability to comprehensively and fairly affect energy savings in states.

Commenters asked that the EPA consider its rule establishing a system that employs something 

similar to the US Green Building Council's LEED of having prerequisites. Commenters stated 

EE is, of all of the options set forth in the rule, the easiest, most achievable, and significantly 

proven method to reduce energy, which directly correlates to carbon reduction. Commenters

shared that in their region in particular the energy consumption per capita is higher than the 

national average, per the EIA data that in their region most of the housing stock was built before 

1956. Commenters stated EE standards for homes didn't come online until the mid-70s, and, 

therefore, they see (four utility companies, through the Pennsylvania Utility Commission and the 

required work for low income usage reduction programs that utilities provide) by published data 

that is sent out by Pennsylvania State University each year, on average for electric companies, a 

14 percent reduction of electric bills in these homes and approximately a 20 percent reduction in 

gas usage, which obviously helps. Commenters stated it has a relationship indirectly to 

electricity usage. Commenters thought there could be significant reduction on grade pressure 

simply by focusing on EE.

Commenters strongly urged the EPA to adopt insulation incentives that are simple and easy to 

validate, and to quantify the energy savings and pollution reductions achieved through insulation. 

Commenters stated these incentives should apply to installation of insulation on both new and 

existing structures. Commenters stated energy savings achieved through insulation is the most 

cost effective deep reduction strategy available.

Commenters encouraged the EPA in establishing the best system of emission reduction, BSER, 

under Section 111(d) to go beyond just recognizing EE, but indeed promote end use EE 

enhancements, specifically insulation as the most important and cost effective method for states 

to achieve greenhouse gas emissions at existing power plants.

Commenters believed that a comprehensive insulation strategy could reduce energy and 

associated greenhouse gas emissions by 20 to 30 percent. Commenters stated insulation products 

save more energy than it takes to manufacture them. Commenters stated insulation that goes in a 

home, the amount of energy it took to manufacture that insulation is recovered in about 30 days 

in the home. Commenters noted on the 31st day, it's paying back the environment. Commenters 
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stated insulation saves over 600 times more energy than compact fluorescent bulbs, Energy Star 

appliances, and windows combined on an annual basis.

Commenters stated this also applies to industry. Commenters stated EE opportunities in steam 

systems, for instance, can deliver significant energy savings without incurring substantial 

implementation costs using publicly available software like the NAIMA 3E software that is 

available in a public domain on the internet. Commenters stated thickness computer programs 

can actually calculate carbon reduction as a result of applying insulation.

Commenters urged the EPA to give credit for adoption, enforcement or upgrades to building 

energy codes as well. Commenters stated studies conducted by Harvard, as well as Boston 

University which is underway to update the Harvard study, demonstrates significant energy 

savings and pollution reduction through the improvement of energy codes, and buildings account 

for approximately 40 percent of the greenhouse gas emissions in this country.

Commenters stated that improving EE performance in building is truly low-hanging fruit. 

Commenters stated it is fundamental. Commenters stated based on calculations from an 

authoritative resources, insulation currently in place in US buildings reduces the amount of 

carbon dioxide emissions by 780 million tons per year. Commenters stated that's equivalent of 

about 150 coal-fired power plants, and the electricity use of about 90 million homes a year is 

saved through insulation.

Commenters stated that Pennsylvania does not positively view saving energy. Commenters

stated in Pennsylvania, energy equals jobs. Commenters stated Pennsylvanians have good 

options to lower their carbon footprint, options that would slow climate change, create good jobs, 

and not negatively impact nearby communities. Commenters stated Pennsylvania refuses to 

consider such options. Commenters stated for example the Uniform Construction Code Review 

and Advisory Council is tasked with enforcing standards for the protection of life, health, 

property, and environment for the safety and welfare of the consumer, general public, and 

owners and occupants of buildings and structures, but has refused to update building codes since 

2009. By simply generating and consuming less energy with modern construction codes, 

commenters stated Pennsylvania could easily comply with 32 percent CO2 reduction from a 

2005 baseline. Commenters stated from 2005 to 2011, Pennsylvania reduced CO2 emissions by 

12 percent without the EPA mandate. Commenters stated a comprehensive construction code 

that lowers EPA's energy requirement would spur innovation and construction and provide good 

jobs that value energy consumers.

Commenters stated EPA should include advanced energy codes in the EE building block as an 

important way to achieve energy savings. Commenters noted that especially out in California 

under Title 24 that it's a very important part of the EE program and is mentioned frequently in 

the AD-32 Scoping Report.

Commenters noted it would be appropriate, if possible, to specifically refer to insulation as a 

method to achieve EE, especially in buildings because that's where some of the hugest 

opportunities are.
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Commenters suggested removing any ambiguity and specifically referring to insulation as a 

method to achieve EE, especially in buildings. Commenters estimated that all insulation 

currently in place in homes and building in the U.S. reduces the amount of CO2 emissions by 

780 million tons per year. Commenters stated this is the equivalent to over 150 coal fired power 

plants or the electricity used by over 90 million homes in 1 year.

Commenters stated the IECC and the ASHRAE 90.1 are updated every three years, and reviewed 

and adopted by states. Commenters stated these energy codes have an unparalleled track record 

in achieving cost effective energy savings and carbon emission reductions. Commenters stated 

therefore, while the IECC does not take a position on the regulation of carbon emissions by EPA, 

if EPA is going to implement the regulations, IECC Commenters urged EPA to specifically 

include the adoption of and compliance with energy and resource saving building codes as an 

allowable component of the state implementation plans.

Commenters stated energy codes are able to reduce energy use by buildings at a critical moment 

in their life cycle when they are being designed and built. Commenters stated most of the EE 

programs that the states have implemented through their utility programs and so forth are 

directed at retrofits of buildings, but energy codes gets at this sector of our buildings, and their 

EE at that critical moment. Commenters stated the EE of buildings, which can last from 30 or to 

50 years and beyond is set when those buildings are built.

Commenters stated in addition to the energy codes, the Codes now include the International 

Green Construction Code (IGCC), which is a model codification of green building practices that 

jurisdictions can adopt and enforce just like their more traditional building codes. Commenters

stated the IGCC can achieve even greater energy and carbon emission savings at the time of 

construction through, for example, energy and carbon targets for that particular building, siting, 

land views, on site renewables. Commenters stated building codes have a track record of more 

than two decades of effectively reducing energy use and carbon emissions.

Commenters stated currently, the IECC is used or adopted in 47 states. Commenters stated in 

2013 the Pacific Northwest National Laboratory, on behalf of your sister agency at DOE, 

assessed the energy carbon and cost savings from energy codes, retrospectively back to 1992, 

and forward through 2040. Commenters stated PNNL predicts that by 2040, energy codes can 

yield as much as 48 quads of fuel cycle energy savings and reduce carbon emissions by 3.7 

billion metric tons, and added that's a lot. Commenters stated in addition to saving energy in 

carbon emissions, the energy codes help Americans save money. Commenters stated the DOE 

estimates that homes built through the 2012 IECC here in Pennsylvania will save an average of 

$515 per year on their energy costs, $8,630 over the course of a 30 year mortgage. Commenters

stated on a national scale, DOE predicts an additional 185.7 billion dollars in energy cost savings 

through 2040. Commenters stated finally, unlike developing new programs, the states and 

jurisdictions already have the necessary legal, educational and enforcement mechanisms in place 

to regulate buildings through energy codes. Commenters stated no additional regulatory 

mechanisms are required in the vast majority of states to realize the energy savings and carbon 

reduction benefits of up to date codes.

Commenters stated that equipment code changes, at either the federal or state levels, which 

require more efficient appliances within a state, should be counted in Block 4. The commenters
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stated that building code changes, at either the federal or state levels, which require improved 

building envelopes within a state, should be counted in Block 4. 

Comment 20: Building Codes are Cost-Effective

Response 20: The EPA agrees that a wide variety of energy efficiency measures can be costeffective emissions reductions strategies which create multiple benefits, including lower electric 

bills, positive investments and job creation. Energy efficiency measures also continues to offer 

future emissions reductions opportunities. However the EPA is excluding BB4 from BSER. See 

sections V.A and V.B of the final rule preamble of the CPP for EPA’s response to this comment. 

Even though DS-EE is not used in calculating emission performance rates, the final rule gives 

states the flexibility to use DS-EE measures to achieve their emissions performance rates during 

compliance. See multiple subsections of section VIII of the final rule preamble of the CPP for 

details on the use of DS-EE for compliance and see the Demand-side Energy Efficiency TSD for 

CPP Final Rule for details on experience with and potential for savings from building codes.

The following are summaries of the specific public comments under this comment:

Commenters indicated building energy codes are a cost-effective and well-demonstrated policy 

mechanism. Commenters stated building energy codes provide cost-effective energy savings and 

emission reductions that last for decades in both the residential and commercial sectors. 

Commenters stated the added up-front investment for new construction building energy codes is 

repaid in the form of energy savings and reduced energy bills over the life cycle of a building.

Commenters cited multiple studies that have demonstrated the cost effectiveness of building 

energy codes for residential and commercial new construction. Commenters indicated that 

PNNL completed studies on 21 states and the District of Columbia and found ASHRAE standard 

90.1-2010 for commercial buildings to yield cost-effective energy savings in each state examined 

with the average simple payback for added construction costs ranging from 1.2 to 8.1 years. 

Commenters cited a set of state-specific studies completed by the DOE for single-family and 

low-rise multifamily buildings that analyzed the cost effectiveness of the 2012 IECC in 43 states 

and the District of Columbia, and these studies found cost-effective energy savings in each state 

as well, with the average simple payback period for added construction costs ranging from 2.6 to 

8.4 years.

Commenters stated building codes are cost-effective.

Commenters stated building energy codes have a long history of cost-effective energy savings. 

Commenters stated energy efficient building codes have been a successful policy tool for 

reducing energy use in new buildings and major renovations since the 1970s. Commenters stated 

building energy codes ensure that minimum levels of energy efficiency are achieved at the time 

when they are easiest and cheapest to implement: during construction. In addition to reducing 

national energy use and consequently emissions, building energy codes result in cost-effective 

energy bill savings for consumers, increased comfort in buildings, reductions in peak electricity 

load, and job creation, as energy bill savings are spent on other goods throughout the economy. 

Commenters cited a PNNL estimates for the DOE Building Energy Codes Program: (1) 
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cumulative savings from 1992 to 2012 are 4 quadrillion BTU primary energy savings, $44.6 net 

present value (NPV) energy cost savings, and 300 million metric tons carbon dioxide; and (2) 

annual Savings in 2012 are 0.5 quads of primary energy savings, $4 billion NPV energy cost 

savings, and 36 MMT CO2. Commenters cited a 2009 report that found building codes had a 

detectable effect on per capita electricity consumption, ranging from a reduction of 0.3 to 5 

percent, depending on the state, and estimated aggregate national savings of 2.09 to 4.98 percent 

for the year 2006. Commenters stated that while building codes can result in incremental 

construction costs, the energy savings from codes have been shown to be cost-effective. 

Commenters indicated the BCAP analysis found that the 2009 IECC had an average simple 

payback to the homeowner of 3.45 years; PNNL study found that ASHRAE Standard 90.1-2010 

was cost-effective compared to ASHRAE 90.1-2007 for representative building prototypes and 

climate zones; and DOE found that both the 2009 IECC and the 2012 IECC were cost-effective 

in all climate zones compared the 2006 IECC.

Commenters stated that in responding to requirements under the American Recovery and 

Reinvestment Act (ARRA) of 2009, all states have committed to adopting the IECC (and/or 

ASHRAE 90.1 Standard for Commercial buildings) and have agreed to implement a plan to 

reach 90% compliance by 2017.

Commenters stated an analysis of 45 statewide compliance evaluation studies by the Institute for 

Market Transformation (IMT) found that while data on energy code compliance is often limited, 

those studies that have been conducted indicate compliance rates well-below 100%, with many 

states between 25 and 80%, and some as low as 3%. Commenters stated the analysis indicated 

that increased compliance rates have significant returns on investment, with every $1 used to 

improve compliance yielding $6 in energy savings.

Commenters stated as indicated both by IMT's analysis and EPA's Technical Support Document 

(TSD) on State Plan Considerations, the lack of data and low compliance rates occur for a 

variety of reasons, including a lack of education, human and financial resources, and health and 

safety codes often taking precedence over energy code enforcement. Commenters stated despite 

these impediments, EPA should not exclude or discourage states from including building energy 

codes in their emissions reduction plans.

Commenters stated that demonstrated savings from improved compliance with codes should be 

included in the BSER along with savings from improved codes. Commenters stated that many 

states' energy code compliance rates are below 100 percent, leaving additional energy savings 

from current codes yet to be realized. Commenters noted States, DOE, and utilities are 

increasingly focused on improving compliance with building energy codes (historically the 

province of local governments) and on accurately measuring compliance rates. 

Commenters recommended at a minimum, savings achievable through increased compliance be 

included in the potential emissions reductions used in the BSER for Block 4 and should be 

credited in state plans. Commenters stated programs for increased compliance can be 

implemented by the state, local governments or the utilities, or a wide variety of third party 

providers or energy service companies without the involvement of government, and credits 

developed for compliance by EGUs directly.
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Commenters indicated that most states have adopted recent energy codes, while other states have 

not adopted energy codes or have energy codes that predate the 2006 IECC or ASHRAE 

90.1:2004; some states such as California and Washington develop and adopt their own codes 

rather than relying on the IECC and ASHRAE 90.1 codes; and the commenters provided maps 

showing state adoption.

Commenters provided potential electricity emissions reduction from increased compliance and 

adoption of 2012 IECC and ASHRAE 90.1:2010. Commenters provided two figures that show 

the history of improvements in ASHRAE 90.1 between 1975 and 2010 and in the IECC between 

1975 and 2012; these figures show there has been continual improvement in building energy 

codes and also recent significant improvements. Commenters stated that ASHRAE 90.1:2013 

and IECC 2015 make further improvements and this indicates a significant potential for energy 

savings. Commenters cited an IEE study that found adoption of improved building costs could 

save 123 to 129 TWh annually by 2025; PNNL found projects future savings from BECP of 40.1 

quads cumulatively, 2.2 quads annually in 2040, $185.7 billion cumulatively, $5.2 billion 

annually, 3,178 MMT CO2 cumulatively by 2040, and 185 MMT CO2 annually in 2040; and 

2014 ACEEE report found that state adoption of updated building codes could yield annual 

electricity savings of 155 TWh in 2030, equal to 4.2 percent of electricity consumption in 2012 

(assumed two rounds of code adoption: adoption of ASHRAE 90.1:2010 and 2012 IECC in 

2016, and adoption of updated ASHRAE and IECC codes in 2020, which achieve 50 percent 

savings relative to the 2004 and 2006 versions of those codes, respectively). Commenters also 

cited an IMT analysis for increased code compliance and adoption of ASHRAE 90.1:2010 and 

2012 IECC, that included a scenario for improved compliance with the state's existing code to 

100 percent, and a scenario for improving compliance to 100 percent plus adoption of 2012 

IECC and 2010 ASHRAE. Commenters noted the conservative assumptions in the analysis 

included a 50 percent baseline compliance rate, no future building code efficiency 

improvements, and only estimated savings from new construction. Commenters provided two 

figures with state by state potential savings from the two scenarios. Commenters indicated the 

nationwide annual energy savings for the scenario with improved compliance with existing 

building energy codes alone are predicted to be 19 million MWh in 2010 with cost saving over 

$1 billion; over 21 million MWh with cost savings over $2.4 billion in 2025; and 33.8 million 

MWh with cost savings over $3.9 billion. For the scenario with both improved compliance and 

with adoption of ASHRAE 90.1:2020 and 2010 IECC, commenters indicated annual energy 

savings of 26 million MWh and cost savings over $2.7 billion in 2020; 60.7 million MWh and 

costs savings over $6.6 billion in 2025; and 97.8 million MWh and cost savings over $10.8 

billion. Commenters provided two figures with state by state potential savings from the two 

scenarios.

Commenters indicated that most states have recently adopted more modern building energy 

codes with the potential to delivery billions in energy savings and accompanying emissions 

reductions. Commenters stated that ensuring builders comply with these codes offers the 

opportunity to realize these savings, and the commenters are working with the states, U.S. DOE, 

and a consortium of private sector organizations to increase compliance rates. Commenters

stated that States should receive credit for these savings and emissions reductions.
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Comment 21: Building Codes - Green Buildings

Response 21: EPA is excluding BB4 from BSER. See sections V.A and V.B of the final rule 

preamble of the CPP for EPA’s response to this comment. EPA agrees that a wide variety of 

energy efficiency measures can be cost-effective emissions reductions strategies which create 

multiple benefits, including broader environmental benefits, lower electric bills, positive 

investments and job creation. Energy efficiency measures also be cost-effectively coupled with 

measures which deliver additional environmental benefits, such as water savings, improved 

indoor air quality, and use of sustainable materials. Even though DS-EE is not used in 

calculating emission performance rates, the final rule gives states the flexibility to use DS-EE 

measures to achieve their emissions performance rates during compliance. See multiple 

subsections of section VIII of the final rule preamble of the CPP for details on the use of DS-EE 

for compliance and see the Demand-side Energy Efficiency TSD for CPP Final Rule for details

on potential of savings from building codes. Such measures must meet the eligibility 

requirements and provisions related to demand-side EE and the requirements and criteria related 

to proper quantification and verification of MWhs from demand-side EE savings as described in 

Section VIII of the final rule preamble of the CPP.

The following are summaries of the specific public comments under this comment:

Commenters recommended EPA clarify that green building codes and standards may be included 

in state emission-reduction plans. Commenters stated although a relatively new development, 

green building codes and standards are poised to be effective tools for reducing emissions.

Commenters stated model green building codes and standards, such as the International Green 

Construction Code (IgCC), ANSI/ASHRAE/USGBC/IES 189.1 Standard for the Design of 

High-Performance, Green Buildings Except Low-Rise Residential Buildings, and ICC 700 

National Green Building Standard expand upon the model building energy codes and standards 

to address a wider set of issues, including: site sustainability, water use efficiency, energy 

efficiency, indoor environmental quality, and the building's impact on the atmosphere, materials, 

and resources. Commenters stated as a result, green building codes and standards have the 

potential to not only decrease emissions through energy demand reductions, but to also protect 

and improve the environment and community surrounding green buildings.

Commenters stated green buildings are cost-effective and have been shown to have the same 

average life-cycle costs as non-green buildings, while providing greater benefits. Commenters

stated for instance, in addition to increased demand-side energy efficiency, green buildings help 

spur job creation and economic growth. Commenters stated specifically, a report by Booz Allen 

Hamilton found that green construction has generated $173 billion in GDP and supported over 

2.4 million jobs. Commenters stated the report estimates that green construction will generate an 

additional $554 billion and support over 7.9 million jobs.

Comment 22: Federal and State Appliance and Equipment Standards

Response 22: The EPA decided not to include DS-EE in BSER for the final rule. A response is 

not provided here on how different EE policies and programs relate to BSER as this comment is 
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now outside the scope of the CPP. See sections V.A and V.B of the final rule preamble of the 

CPP for details. DS-EE remains generally available for compliance, including different types of 

EE policies, programs, and projects. See multiple subsections of section VIII of the final rule

preamble of the CPP for details on the use of DS-EE for compliance and the Demand-side 

Energy Efficiency TSD for CPP Final Rule for details on savings achieved and potential savings 

from appliance and equipment standards. Such measures must also meet the eligibility 

requirements and provisions related to demand-side EE programs and projects, if applicable, and 

the requirements and criteria related to proper quantification and verification of MWhs from 

demand-side EE savings as described in Section VIII of the final rule preamble of the CPP.

The following are summaries of the specific public comments under this comment:

Commenters opposed including Federal appliance and equipment standards.

Commenters estimated that the savings from existing and pending Federal appliance and 

equipment standards average about 0.82 percent of electricity sales for each year over the 2020 

to 2030 period. Commenters stated there is some ambiguity regarding how federal appliance and 

equipment standards will be treated and how states should account for them in their compliance 

plans and made several recommendations for addressing these standards. Commenters stated that 

current federal appliance and equipment standards have already been accounted for in the EIA's 

Annual Energy Outlook Reference Case (AEO), and, therefore, recommended that states using 

AEO as a method to forecast emissions rates in their compliance plans should not be allowed to 

claim credit for federal appliance and equipment standards to avoid double counting of those 

emissions reductions. Commenters also recommended that for cases where this does not apply, 

if states seek credit for emissions reductions that occur due to the adoption, updating, and 

increased compliance with federal appliance standards, then EPA should provide guidance for 

states to take credit for carbon reductions for federal appliance and equipment standards and 

those states should work with EPA regional offices to determine an adjusted BSER and state 

goal reflecting this expanded scope of potential reductions. Alternatively, commenters stated 

EPA could set the BSER and state goals for all states to reflect the emissions reductions that will 

occur as a result of federal appliance and equipment standards that have already been finalized or 

that are pending and will take effect before 2030.

Commenters stated that an important energy efficiency issue is whether or not states that choose 

the emissions rate approach receive energy savings credits for savings resulting from federal 

appliance and equipment efficiency standards. Commenters recommended that the EPA not 

allow states to receive such credits. Commenters noted that ACEEE and the Appliance Standards 

Awareness Project estimate that the federal energy efficiency standards adopted through 2011 

saved about 278 TWh per year in 2010, 7.2% of national electricity use that year, and that the 

savings from these existing standards will increase to 682 TWh per year by 2025, 15.6% of 

projected national electricity use that year according to the EIA's most recent Annual Energy 

Outlook. Commenters also stated that standards enacted since 2011, as well as those that will be 

set in the coming years, will add to the electricity savings that will be realized in the future.

Commenters indicated that allowing states to receive credit for these savings will result in very 

large credits that would help states reach their CO2 emissions rates targets without any action on 

the part of utilities or states. If states were allowed to receive such credits, commenters said the 
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savings from federal appliance and equipment standards must be added to the Building Block 4 

energy savings assumptions and thus to the CO2 emissions rate targets. However, commenters

noted there is significant uncertainty about the level of energy savings from federal standards 

state by state; some standards yield differing amounts of unit savings in different states-for 

example, due to climatic differences. Commenters also noted that the market penetration of some 

products varies considerably across states and indicated these issues are not well studied. 

Commenters also pointed out that states have little or no experience estimating the energy 

savings occurring within their borders due to federal appliance and equipment efficiency 

standards. Rather than modifying the Building Block 4 assumptions significantly and allowing 

states to receive credits for energy savings resulting from the standards, and attempt to address 

all the uncertainties that doing this entails, commenters stated it is far simpler and more accurate 

to leave the federal standards out of the Building Block 4 assumptions (as the EPA has done in 

the proposed rules) and likewise not allow states to receive energy savings credits for energy 

savings resulting from the federal standards.

Commenters supported including State appliance and equipment standards that go beyond 

Federal standards.

Commenters recommended State appliance and efficiency standards should be credited in state 

compliance plans and noted this option will further increase the flexibility states have in reaching 

their targets. Commenters stated State appliance and efficiency standards provide substantial 

cost-effective savings, have a history of success in many states, and new state appliance and 

efficiency standards should be considered in setting the BSER. Commenters shared that States 

can choose to adopt efficiency standard for those products not yet covered under the federal 

appliance and efficiency standards, and the Appliance Standards Awareness Project (ASAP) 

reports that 16 states have adopted state standards since 2001, on products such as battery 

chargers, TVs, pool pumps, DVD players and vending machines. Commenters noted that 

California has been a leader in state standards, and just this year the California Energy 

Commission announced that it will establish new energy efficiency standards for 15 product 

categories, ranging from water faucets to the light bulbs that go into small recessed cans, and 

consumer electronics like computers, monitors, modems and Wi-Fi routers; once in full effect, 

these standards will save an estimated $2 billion in avoided annual electricity bills and avoid the 

need to build three new large power plants.

Commenters recommended that state-based appliance efficiency standards--standards that are 

not preempted by the National Appliance Energy Conservation Act (NAECA) of 1987--be 

allowed as part of state compliance plans. Since 2002, commenters have worked with states in 

the region to help them adopt 31 appliance efficiency standards for specific commercial and 

residential product categories. Commenters stated that looking forward, the appliance Standards 

Awareness Project (ASAP) projects energy savings from a package of eligible state-based 

appliance efficiency standards could save substantial; for just the state of Rhode Island, for 

example, the region's smallest state, enacting this group of new state-based appliance standards 

could result in annual CO2 savings by 2025 of some 138,000 metric tons per year; for New 

York, the region's largest state, annual CO2 savings of 2,798 metric tons per year by 2025 could 

be realized. Commenters stated that given this potential, states should be encouraged to adopt 

new appliance efficiency standards as a strategy for reducing CO2 emissions, and the EPA 

should include standards as a qualify CPP compliance strategy.
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Commenters supported including Federal appliance and equipment standards and opposed state 

standards.

Commenters noted that they and their members have a long history of working with 

policymakers and regulators in establishing mandatory national energy efficiency product 

standards that are economically justified and technically feasible. Given that the rule allows 

flexibility to states to find emission savings across all sectors, commenters have concerns that 

states could consider new energy conservation standards on products. While commenters support 

state programs to incentivize the purchase or energy efficient products, the commenters believed

mandatory energy conservation standards should remain within the province of federal 

jurisdiction to avoid a patchwork of conflicting state product requirements, since products are 

manufactured and sold on a national basis. Commenters asserted that state-by-state product 

energy conservation standards should not be eligible for compliance with the Clean Power Plan.

Commenters noted that EPA's proposed rule suggests that states might adopt efficiency 

regulations for appliances not covered by the federal programs. However, commenters indicated 

that very few states have the technical capability to do so. Commenters pointed out that the State 

of Georgia has had great difficulty creating effective efficiency incentives for replacement 

lighting and equipment under its Integrated Resource Plan, except when the goal is to switch 

customers off natural gas. Commenters noted that, even in July of 2014, the utility's web site 

urges people to switch from incandescent lighting, even though most such lights have been 

removed from the market under federal law. Commenters noted that florescent lighting continues 

to receive more attention that more advanced LEDs. According to commenters, incentives for 

appliances are generally small and based on EPA's Energy Star program, which has difficulty 

keeping current with a dynamic appliance industry. Since many states will want to base their 

appliance efficiency programs on Energy Star, commenters said it is important that EPA devote 

more resources to it more current. Commenters indicated this might involve greater resources for 

the program and more creative uses of self-certification (with appropriate penalties for 

misreporting). Commenters suggested that states looking for low-cost alternatives could support 

that federal effort with their representatives in Washington since it will make their jobs easier.

Commenters discussed the impact of new appliance and equipment standards and rebate 

programs on energy savings.

Commenters noted DOE has established many new efficiency standards in recent years that will 

continue to save energy over the 2020 to 2030 compliance period and is now working on more 

than a dozen new standards that will add substantially to the energy savings during the 

compliance period. Commenters and the Appliance Standards Awareness Project (ASAP) have 

estimated the savings achieved by both final and pending standards. Commenters provided 

tables documenting savings from finalized federal standards and many of the pending standards 

that will be achieved over the 2020 to 2030 (only the savings from equipment installed in 2015 

and later years are included, e.g., after publication of the draft EPA rule, and additional savings 

will be realized from products not included in Table A2 such as air compressors, dishwashers, 

ceiling fans, portable air conditioners, and wine chillers).

Commenters noted that utility-sponsored EE programs have traditionally relied heavily upon 

lighting programs for the vast majority of their savings (generally, compact fluorescent lamp 
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programs for residential customers and T-8 lighting retrofit programs for commercial customers). 

With adoption of new lighting standards from the Energy Independence and Security Act 

(EISA), commenters asserted that this broad, inexpensive EE resource will largely fade quickly. 

Commenters said that statements made regarding EE achieved "historically," due largely to 

lighting programs, ignore the impact of EISA lighting standards and other code changes that 

limit future EE potential. According to commenters, there is, in fact, no empirical evidence of 

any future utility-sponsored EE programs achieving levels even approaching those achieved 

through lighting programs of the past.

Commenters discussed the limited availability, cost, and declining energy savings associated 

with new, more energy-efficient appliances and equipment. Commenters noted that EPA, in its 

proposed rule, expects manufacturers to develop more energy-efficient appliances for consumers 

including refrigerators, air conditioners, heat pumps, washing machines, and clothes dryers. 

Commenters asserted that EPA's proposed guidelines do not take into account that it may take 

years for more energy-efficient equipment to come to the market and assumes consumers will 

readily purchase these types of appliances, particularly in situations where the purchase of more 

efficient appliances is occurring prior to the end of the useful life of the existing appliance. 

Commenters also pointed out that, as we have seen with new efficiency technologies that have 

entered the market, the incremental savings achieved through the technological advancement 

declines over time from earlier advancements.

Commenters remarked that the adoption of energy efficient standards for appliances and more 

stringent building codes will limit the potential savings of energy efficiency measures.

Commenters explained that this statement is true whether a program determines savings from 

replacing older, existing appliances with new ones, or calculating the incremental savings from 

purchasing a high-efficiency product, as compared to a baseline standard product that meets the 

most recent Federal efficiency standards or state/local building codes. As an example, 

commenters explained that standards for rooftop air conditioners recently proposed by DOE will 

reduce energy consumption by 30 percent. Commenters explained that this standard will 

significantly reduce baseline energy consumption, making utility-administered energy efficiency 

achievements in this segment more difficult and costly. Commenters provided several similar 

examples, including: replacing an old refrigerator with an Energy Star model, improvements in 

lighting standards that resulted from the Energy Policy Act of 1992, energy efficiency standards 

for centrifugal chillers, efficiency standards for refrigerators and freezers, standards for 

dishwashers and clothes washing machines, and more stringent commercial building codes. 

Commenters also provided a list of 18 residential electric appliance efficiency standards that 

have increased or will increase by 2016. Commenters added that customers who benefit from the 

more stringent codes and standards would be less receptive to investing in more efficient 

equipment, as this equipment would come at a premium, but provide only marginally higher 

energy efficiency savings.

Commenters noted that their cooperative has over 380,000 residential consumers and processed 

888 residential HVAC rebates in 2013 totaling over $500,000, representing a savings of over 

1,847,000 kWhs (1,847 MWhs). Despite their cooperative's efforts on this matter, commenters

stated these savings came from a participation rate of only 0.2 percent of its total number of 

residential consumers and produced energy usage reductions of only 0.02 percent. Commenters

further noted that, because many of the rebates processed came from multiple units within a 
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single home, 0.2 percent participation may even be overstated. Based on projections from their 

member systems, the commenters' cooperative is budgeting over $780,000 in 2015 for 

approximately 1,180 rebates. According to commenters, EPA's assumption that single-year 

DSEE rates in two or three states shows such programs have been "adequately demonstrated" is 

directly contradicted by this experience.

Commenters noted that their cooperative implemented a water heater demand-side program, H20 

Plus, in 2007; though not technically an energy efficiency program, this program allows them to 

remotely control usage during peak hours to minimize demand by adding load control devices to 

water heaters. Although this does not result in any overall energy reduction, commenters

indicated it allows their cooperative to prevent as much energy usage during peak times when 

energy is the most expensive to generate, and it is illustrative of the effectiveness and penetration 

of energy efficiency programs in general. Despite its implementation on approximately 13,000 

water heaters, commenters indicated this constitutes only about 3 percent of their cooperative's 

total residential consumers in the seven years of the program's existence.

Commenters noted that the growing market share of ENERGY STAR appliances limits a utility's 

ability to pursue utility energy efficiency incentives for those appliances. Commenters stated that 

demonstration of increased market share of energy efficient technologies should be counted 

towards a state's energy efficiency goal.

Commenters discussed the use of appliance rebate programs to incentivize the early replacement 

of appliances. Commenters stated that expanded appliance ER programs offer a significant

opportunity for meeting section 111(d) emission reduction goals by removing hundreds of 

thousands of comparatively inefficient refrigerators and other appliances from the grid before 

they would otherwise be taken out of service. According to commenters, progressive 

strengthening of DOE standards and EPA ENERGY STAR specifications, which the industry 

has addressed with major product improvements, has resulted in a dramatic step-by-step 

improvement in appliance energy efficiency since 1990. Commenters illustrated this 

improvement in a graph that they provided in their comments.

Summarizing the information in the graph, commenters noted that refrigerators dating from the 

1990s use twice as much energy as 2013 products, and products meeting 2014 DOE standards, 

which recently took effect, will provide even more energy savings (an estimated 25 percent) 

compared to units produced in 2013. Because refrigerators have a long useful life and retain 

value for consumers, commenters said many less efficient units remain in use that do not meet 

the latest standards and consume significantly more energy than the newest models. Commenters

also noted that less efficient units that are replaced often remain on the grid because they are kept 

as backup (or "basement") refrigerators, given away or refurbished and frequently resold through 

the secondary market.

With 147 million refrigerators expected to be on the grid in 2016, commenters asserted that 

replacing a significant number of units with the latest models and removing these old units from 

the grid will yield immediate large-scale energy savings and GHG reductions.

Commenters noted that EPA's section 111(d) proposal and support documents highlight the 

benefits of "targeted rebates for high-efficiency appliances" and underscore that "subsidies for 
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the purchase of energy-efficient appliances" can drive demand reduction by "incentivizing 

investment in cost-effective efficiency improvements . . .”

Commenters said there is strong evidence that well-publicized rebate programs are an effective 

tool for motivating consumers to replace older refrigerators that would otherwise remain on the 

grid. According to commenters, a noteworthy success at the federal level was implementation of 

the 2009 American Recovery and Reinvestment Act (ARRA), which provided $300 million for 

rebates to replace older appliances. Commenters noted that this program, which was managed by 

DOE and implemented through the states, resulted in 1.7 million rebates, 90 percent of which 

were for major appliances, including 565,000 rebates for refrigerators. Noting that DOE has 

lauded the program as a "huge success," commenters agreed. 

Commenters said there is also an extensive track record of appliance rebate programs 

implemented by utilities in response to demand reduction mandates imposed by public service 

commissions, often pursuant to state EE legislation. According to commenters, these programs, 

too, have achieved positive results in removing inefficient refrigerators from the grid and 

reducing energy consumption. However, commenters indicated that a careful review of state 

programs shows that they have not tapped the full potential of rebates to drive energy savings 

and GHG reductions through the early retirement and recycling of inefficient appliances. 

Commenters said the effectiveness of existing state programs has been limited by a number of 

factors:

• Methodologies for calculating and measuring benefits are not consistent across 

programs and jurisdictions.

• While many programs exist, there are states and regions where appliance rebates 

are unavailable. (By the commenters' count, only 50% of U.S. households have 

access to a refrigerator rebate).

• Most programs have limited consumer recognition because they are not strongly 

promoted by retailers and manufacturers, likely because of the difficulty in 

promoting these programs on a regional basis.

• Some programs impose unnecessary and burdensome EM&V requirements that 

increase administrative costs and reduce the rebate amounts paid to consumers.

Commenters stated that a coherent and coordinated framework for rebate programs at the 

national level could go far to address these limitations.

According to commenters, a more fundamental problem is the failure of virtually all existing 

programs to link purchase and disposal rebates. Commenters’ survey of state programs found 

that, with only a handful of exceptions, they are designed to remove older appliances from the 

grid or incentivize the purchase of a new product but not to do both at the same time.6 

Commenters indicated this lack of integration has reduced the benefits that existing programs are 

delivering. As an example, commenters noted that in the case of purchase-only rebates, the 

utility will lack proof that the old refrigerator has been removed from the grid and thus will be 

unable to take credit for the energy savings of taking the old refrigerator out of service. 
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Commenters said that such programs often condition availability of a rebate on purchase of an 

ENERGY STAR product, in which event the energy savings are measured as the difference in 

energy consumption between the new ENERGY STAR and new regular model--a small 

increment in actual energy use given the stringent requirements of new DOE standards.

Commenters stated that linking purchase and disposal rebates (i.e., requiring proof both that a 

new appliance has been purchased and the old unit has been removed from grid) will enable the 

utility to take credit for the greater efficiency increment between the new and old unit, 

significantly raising the energy savings and GHG reductions attributable to the rebate. By 

simplifying program administration, commenters indicated it will reduce paperwork and other 

barriers to PUC approval of rebate programs, lowering overhead and maximizing utility dollars 

that flow to consumers. Commenters estimated that this will result in a more favorable 

benefit/cost ratio, making linked rebate programs significantly more cost-effective and 

enhancing their attractiveness to states and utilities compared to other energy efficiency options.

Commenters said that a 2001 paper by the Natural Resources Defense Council supports this 

point, noting that, as federal efficiency standards become more stringent,

"it is now difficult to save significant amounts of energy by simply persuading

consumers to buy new appliances that are more efficient than the standards 

require." Instead, "taking inefficient older units out of service, recycling them in 

an environmentally sound manner, and replacing them with efficient new models . 

. . greatly increases energy savings and cost-effectiveness, while providing a wide 

range of environmental benefits." 

Commenters said this comment by NRDC was true in 2001; now having finished the next round 

of DOE energy efficiency standards, the commenters said it is even more true.

Comment 23: Commenters recommended that the EPA include EE measures for the industrial 

sector.

Response 23: The EPA decided not to include DS-EE in BSER for the final rule. A response is 

not provided here on how different EE programs relate to BSER as this comment is now outside 

the scope of the CPP. See sections V.A and V.B of the final rule preamble of the CPP for details. 

DS-EE remains generally available for compliance, including different types of EE programs and 

projects across end-use sectors, including industrial facilities. The EPA recognizes that a wide 

variety of EE programs and projects, including many in the industrial sector, have been 

achieving significant energy savings for years with additional opportunity to achieve energy 

savings in the future. Such measures must also meet the eligibility requirements and provisions 

related to demand-side EE programs and projects, if applicable, and the requirements and criteria 

related to proper quantification and verification of MWhs from demand-side EE savings as 

described in Section VIII of the final rule preamble of the CPP. The Demand-Side EE TSD 

provides further information about the potential for cost-effective savings from all sectors, 

including industrial facilities.

The following are summaries of the specific public comments under this comment:
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Commenters stated industrial energy efficiency will increase total energy efficiency delivered 

under the Clean Power Plan. Commenters stated industrial EE can be the cornerstone of an 

effective carbon mitigation strategy and is consistent with the requirements of Clean Air Act 

(CAA) section 111(d). Commenters stated savings associated with IEE can significantly reduce 

emissions of greenhouse gases and criteria pollutants, and provide states with low-cost 

compliance options that can contribute in a meaningful way to compliance with section 111(d) 

goals. Commenters stated an effective Clean Power Plan (CPP) should capture the benefits of 

cost-effective, private-sector delivered IEE. 

Commenters stated the opportunities to achieve significant EE savings are strong given the large 

energy consumption by America's industry and the estimates of potential energy efficiency gains 

in this sector. Commenters stated IEE has been achieved through ratepayer-funded EE programs 

(e.g. prescriptive Incentives or custom programs), state technical assistance programs, federal 

programs such as the Superior Energy Performance program (SEP), and individual corporate 

energy saving programs. Despite the myriad benefits of reducing energy consumption and 

energy costs, Commenters stated there are challenges to capitalizing on these opportunities, 

which energy management systems (EnMS) such as International Organization for 

Standardization (ISO) 50001 and programs such as SEP can overcome. Recognition of 

greenhouse gas (GHG) reductions associated with IEE savings in the CPP will increase the 

likelihood that states will be willing and able to utilize IEE as part of their CPP compliance.

Commenters stated by supporting the inclusion of IEE projects delivered by the private sector to 

satisfy state compliance requirements under the CPP, EPA could significantly accelerate growth 

in the demand for IEE. Commenters stated in turn, that would result in more rapid reductions of 

GHG emissions than would have otherwise occurred without inclusion of IEE in state plans. 

Commenters stated greater reliance on the GHG savings delivered through IEE would often 

delay, or entirely displace, the need for some of the most expensive 111(d) compliance actions 

by utility generators and reduce the overall costs of implementation. Commenters stated as an 

example, utilizing reductions from IEE could enable a utility to avoid expensive upgrades on a 

coal-fired power plant that is slated for closure but still meet its GHG reduction targets.

Commenters stated by taking the actions discussed in this paper, EPA would facilitate an 

increase in the adoption of both IEE measures and energy management strategies, the benefits of 

which would be realized under the CPP. Commenters stated companies having one or more 

plants that have conformed to ISO 50001 and have been certified to the U.S. DOE SEP program 

will see the benefit of expanding the program across the enterprise. Commenters stated this is 

consistent with the goal of DOE's SEP Enterprise Accelerator initiative, which seeks to increase 

the uptake of SEP at more than one facility per company. Commenters stated SEP also has a 

Utility Accelerator initiative that is designed to integrate strategic energy management through 

SEP as an effective ratepayer program oriented toward industrial customers. Commenters stated 

in addition, as increased benefits accrue to those SEP participants, competitors may seek to level 

the playing field by participating in the same programs. Commenters stated as a result, facilities 

that have not begun to utilize IEE programs or protocols will be motivated by the CPP to seek 

greater energy savings and GHG reductions.

Commenters provided input on the role of energy management systems in industrial energy 

efficiency. (The term "energy management systems" or "EnMS" in this paper refers to human, 
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programmatic, technical and administrative infrastructure and procedures that enable an 

organization to manage energy.) Commenters stated that traditionally, utility or state-based EE 

programs have generally promoted discrete EE technologies and supported the installation of 

new, more efficient equipment or processes. Commenters stated in contrast, EnMS seek to 

promote operational, organizational, and behavioral changes that result in greater efficiency 

gains on a continuing basis. Commenters stated although technology-based programs typically 

involve energy assessments to identify specific efficiency opportunities, many barriers prevent 

cost-effective measures from being implemented. Commenters stated programs implementing 

energy management systems focus on establishing the framework and internal management 

processes for managing energy use, as well as for implementing capital projects.

Commenters stated that encouraging the use of an EnMS will contribute to sustained and 

continual improvements in energy performance in the industrial sector. Commenters stated 

energy savings generated by establishing an EnMS, whether it is ISO 50001 energy management 

standard or similar energy management approaches, are increasingly recognized as an effective 

means to overcome key market barriers to IEE. Commenters stated energy management can 

most readily help overcome information barriers, which are more significant for organizations 

with little energy efficiency experience or capacity.

Commenters stated good energy management systems integrate energy efficiency into the 

management structures of organizations. Commenters stated this facilitates development of an 

organizational culture that values energy efficiency by helping an organization develop the 

policies, procedures, and tools necessary to systematically track, analyze, and improve EE. 

Commenters stated such energy management systems address senior management commitment, 

energy team selection, data collection and communication protocols, EE implementation 

practices, operational controls, and the design and procurement of renovated, modified, and new 

equipment, systems, processes and facilities. Commenters stated an EnMS approach based on 

ISO 50001 seeks to apply to energy use the same culture of continual improvement that has been 

successfully used by industrial firms to improve quality and safety practices. Commenters stated 

these systems enable companies to better manage energy use, thus creating immediate and 

lasting energy use reduction through changes in operational practices, as well creating a 

favorable environment for adoption of more capital-intensive EE measures and technologies.

Commenters believed the negative impacts of the Proposed Rule can be mitigated in part if 

appropriate steps are taken to ensure that the Proposed Rule allows energy consumers that create 

demand-side and other carbon savings to receive the full benefits of their actions. As high-energy 

users in a very competitive industry, commenters shared many of the same concerns that are 

being raised by the larger business community. However, in an effort to mitigate the rules 

impacts, commenters respectfully suggested modifications to allow large energy users with 

significant demand-side and other carbon savings efforts to mitigate some of the costs associated 

with the Proposed Rule.

Commenters stated that, due to the high energy use by industrial customers, many of the end-use 

upgrades in efficiency occur without market intervention or utility incentives.

Commenters stated that efficiency opportunities in the industrial sector will help achieve strong 

efficiency performance in states. Commenters recommended industrial energy efficiency should 
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be credited in state plans. Commenters stated the industrial sector in the United States likely has 

potential for energy efficiency in the vicinity of 15 to 20 percent of current electricity usage, 

primarily from equipment upgrades, and nearly all of this potential is cost-effective, with 

attractive payback for investments (by one estimate 4:1 return on investment). Commenters

indicated the technical potential in the industrial sector is much larger (35 to 70 percent by some 

estimates), and while some of that is not cost-effective now, it will become cost-effective over 

time, especially with a management focus on energy efficiency. Savings can be found in a wide 

range of industrial sectors.

Commenters stated that industrial EE can be realized with equipment-based improvements, 

energy management, and process and operation based initiatives. Commenters noted that 20 to 

70 percent of the energy used is associated with the industrial processes themselves. 

Commenters stated that strategic energy management enables the right decision makers to be at 

the right place at the right time, making industrial processes more efficient, improving operations 

and behaviors, and magnifying equipment-based energy efficiency improvements on a continual 

and ongoing basis. Commenters stated process- and operations-based efficiency initiatives, 

despite recent evidence that they save even more than equipment based initiatives, only 

constitute a minority in the potential studies cited above (suggesting that the actual efficiency 

potential may indeed be larger).

Commenters stated that both large and smaller companies face similar barriers to energy 

efficiency, including imperfect information about opportunities and available solutions, lack of 

well-trained and technically capable staff, reactive rather than strategic decision making, 

perceived risk of making efficiency investments, split incentives, constrained access to capital, 

and lack of corporate or executive support. Commenters stated smaller companies tend to be 

more adversely affected by these barriers than larger companies, however, the most energyefficient companies do take effective steps to overcome these barriers and capture efficiency 

potential, by establishing corporate buy-in for and visibility to energy issues, hiring energy 

managers, providing appropriate incentives including for identifying efficiency opportunities, 

tracking energy use in real-time, aligning facility equipment replacement schedules with utility 

incentives, and, in aggregate, institutionalizing principles of strategic energy management 

(sometimes known as continuous energy improvement). Commenters provided specific 

efficiency improvement examples, including installing variable frequency drives, retrocommissioning HVAC systems, improving recycling or air, and implementing waste heat 

recovery. Commenters cited multiple companies that use industrial sector EE best practices.

In the context of overcoming barriers, commenters stated that government agencies, NGOs, and 

utility-sponsored programs can provide considerable assistance in helping companies achieve 

energy savings.

Based on a recent analysis of industrial sectors across the globe, commenters stated that there 

appears to be an energy efficiency gap. Commenters cited a recent comprehensive review of the 

causes of the efficiency gap, based on a conceptualization and analysis prepared for the United 

Nations Industrial Development Organization by analysts at universities in the United Kingdom 

(hereafter UNIDO). Commenters indicated it is based on a review of over 160 studies of barriers 

to energy efficiency in industrial enterprises.
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According to commenters, it can be argued that the analysis of industrial sectors provides the 

most compelling evidence that an energy efficiency gap exists, since these are contexts in which 

the incentive to adopt economically rational technologies should be strong, if not pure, and the 

knowledge and ability to evaluate alternatives should be greater than society at large. 

Commenters also stated that, since energy is a cost of doing business, records and data should be 

superior to the residential sector, so evaluation and calculation should be better. In spite of these 

factors pointing toward economic rationality, and notwithstanding assumptions of motivation 

and capability, the commenters indicated they have found solid empirical evidence that the 

efficiency gap exists.

According to commenters, the UNIDO analysis identified a school of economic thought that can 

be closely associated with each of the categories of market barriers and imperfections. 

Commenters said the broad categories in the UNIDO analysis match up well with the 

perspectives offered by LBL and RFF with the addition of the category of externalities. 

Commenters noted that the UNIDO document offers six broad types of barriers, with two dozen 

subtypes.

Commenters noted that utility-sponsored programs for the industrial sector tend to require more 

specificity and customization based on sub-sectors as compared to programs for residential and 

commercial sectors. Commenters stated that well-designed industrial efficiency programs 

consistently contribute about one-sixth to one-third of the overall annual energy savings 

(dependent on the region's industrial base), and efficiency programs that include effective 

industrial sector offerings would constitute one of the "best practices" for demand-side energy 

efficiency.

Commenters cited multiple industrial section EE programs, including: 

1. Bonneville Power Administration (BPA), Energy Smart Industrial program offers a 

variety of options for different industry types and sizes, such as providing an energy 

expert and single point-of-contact, encouraging strategic energy management including 

funding for energy managers, training and support, and support for specific efficiency 

measures; the industrial sector contributed about 17 percent of BPA's efficiency savings 

in 2010; 

2. Efficiency Vermont handles the energy efficiency efforts of almost all of Vermont's 

utilities, including prescriptive and custom incentives, technical assistance, energy 

management training and building energy efficiency awareness; large industrial 

companies contributed about 16 percent of Efficiency Vermont's total energy savings in 

2013; 

3. The Energy Trust of Oregon (ETO) provides technical services and cash incentives to 

help industrial and agricultural businesses of all types and sizes identify and implement 

electric and natural gas energy efficiency projects and practices, including technical 

expertise, training, funding, and promoting behavioral changes and strategic energy 

management; the industrial sector contributed 27 to 35 percent of ETO's efficiency 

savings between 2010 and 2013, and the cost for industrial sector energy savings was 2.1 
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cents per kilowatt hour in 2013, cheaper than for savings from the residential and 

commercial sectors; and

4. Wisconsin Focus on Energy (WFE) consolidates all of the state's utility-related energy 

efficiency programs into a statewide program and the industrial programs offer assistance 

to all eligible customers and include prescriptive and custom incentives, feasibility 

studies, staffing grants, and (for larger customers) customized assistance for systematic 

energy management approaches; the nonresidential programs (servicing commercial, 

industrial, schools, government, and agricultural customers) contributed just over half of 

all electricity savings in 2013.

Commenters stated the opportunity to achieve industrial energy efficiency (IEE) savings is 

enormous given the large consumption of energy by America's industrial sector, roughly onethird of America's total energy consumption, and the inherent benefit to reduce costs. 

Commenters stated that IEE can be delivered through ratepayer-funded energy efficiency 

programs, custom programs, and private-sector delivered IEE projects. Commenters stated that 

despite the myriad benefits of reducing energy consumption and energy costs, there are 

challenges to capitalizing on these opportunities, which energy management systems such as the 

International Organization for Standardization's ISO 50001 Energy Management Systems 

standard and the Superior Energy Performance Program can overcome.

Commenters commended EPA for accommodating industrial efficiency in the draft Clean Power 

Plan. Commenters noted that EPA provided states a lot of flexibility to define their own carbon 

reduction pathways. Commenters were glad to see both renewable energy and 

industrial efficiency components accommodated under the draft plan.

Comment 24: Support Demand Response

Response 24: Multiple commenters requested the EPA to explicitly include demand response in 

building block 4 of BSER due to the energy savings and reliability benefits of demand response. 

The EPA decided not to include DS-EE (building block 4) in BSER for the final rule. A 

response is not provided here on how different forms of demand response relate to BSER as this 

comment is now outside the scope of the CPP. See sections V.A and V.B of the final rule 

preamble of the CPP for details. However, DS-EE does remains generally available for 

compliance, inclusive of demand response programs. All DS-EE measures must also meet the 

requirements and criteria related to proper quantification and verification of MWhs from 

demand-side EE savings as described in Section VIII of the final rule preamble of the CPP. 

The following are summaries of the specific public comments under this comment:

Some commenters supported use of demand response, while other commenters did not support 

use of demand response.

Some commenters strongly encouraged the adoption of demand response options that have the 

potential to provide least-cost, least-emission solutions to the growing challenge of providing 
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flexible generation necessary for reliability in an electric system with increasing amounts of 

variable energy renewable resources.

Commenters stated that, for the purposes of the proposed rule, energy efficiency measure should 

include cost-effective demand response programs. The commenters explained that demandresponse programs are behavioral response programs conducted in tandem with intelligent 

efficiency approaches, such as smart metering, incentive rate- making, and provision of early 

warning of high emissions, high prices, or both. According to the commenters, a recent study by 

LBNL found that these types of programs were delivering results at a very respectable and costeffective $0.025/kWh, which is at the low end for all demand-side programs and much lower 

than the cost of meeting peak demand through peaking power plants.

Commenters noted that the rule should allow the use of demand response programs as a strategy 

for meeting emission reduction targets. According to commenters, demand response programs 

such as dynamic pricing align with Building Block 4 of the rule and should be allowed as a 

means of compliance. Commenters noted that through market mechanisms that reduce electricity 

consumption and shift load away from peak demand times, demand response programs can 

reduce the need for new power plants, while eliminating carbon emissions.

According to commenters, demand response programs, which provide financial incentives for 

reducing electricity consumption during peak electric demand hours, have been shown to

increase energy efficient behavior, reduce overall household energy use, and shift load away 

from peak demand times.

According to commenters, many types of demand response programs are currently implemented 

by electric utilities. For example, commenters noted that "dynamic pricing" programs set 

customers' electricity price based on actual market prices at the time electricity is consumed. 

Commenters noted that unlike the traditional "flatrate pricing" approach, customers are informed 

of changes in the electricity prices and may choose to reduce electricity consumption at times 

when higher demand results in a higher price.

According to commenters, a 2014 study found substantial environmental benefits from Illinois' 

residential dynamic pricing programs: During summer peak load hours, participants shifted or 

reduced their peak load by 0.5 kW per participant. Commenters noted that participants reduced 

electricity use by 500 kWh per participant per year.

Commenters noted that electricity reductions were equivalent to preventing 1,006 pounds of 

Carbon equivalent greenhouse gases per participant per year.

According to commenters, successful dynamic pricing programs provide energy efficiency 

education and individualized energy use data. Commenters noted that participants in Illinois' 

dynamic pricing programs receive a customized analysis comparing their utility bills to the flat 

rate, informational workshops, program newsletters, and webinars. According to commenters, 

these tools have the potential to encourage participants to consider enrolling in other energy 

efficiency and demand response programs. For example, commenters noted that 33 percent of 

participants in one dynamic pricing program also enrolled in the air conditioning cycling demand 
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response program, as compared to just 1.8 percent of the utility's customers who were not 

participating in a demand response program.

Commenters noted that there is also tremendous potential for demand-response to address 

renewable energy's intermittency and more. While probably not quite ready for prime-time as a 

building block of its own, commenters noted that Advanced Two Way Metering (aka Advanced 

Metering Infrastructure - AMI, or Smart Meters) provides the opportunity for utilities to send 

real time pricing signals, and develop voluntary tariffs which, when sending the appropriate rate 

signal, can help couple demand with intermittent resource availability to a much greater degree 

than today. Commenters noted the potential to achieve another 10-20% reduction in emissions 

from these mechanisms by better coupling intermittent renewable resources with loads.

Commenters urged EPA to recognize demand response, and commenters noted especially when 

it is evaluating opportunities for compliance options such as energy storage. 

Commenters stated demand response can be a key facilitator of emissions reductions, for 

example, demand response can help integrate renewable energy resources and facilitate with 

load-shifting, which can increase cleaner generation. Commenters stated that in a more limited 

set of circumstances, demand response can reduce emissions through curtailment, similar to

energy efficiency activities. Commenters indicated that States should be made aware of demand 

response in which EPA discusses energy storage.

Commenters stated demand response is demonstrably "technical feasible" based on its use today; 

FERC's recent data show there were over 28,000 MW of demand response participating in 

wholesale markets that cover the majority of the country in 2012, equaling 6 percent of total 

peak demand, and it reliably delivers over 90 percent of expected capacity. Commenters stated 

demand response's role as an ancillary resource will become increasingly valuable as more 

renewable generation comes online, and demand response becomes a means of balancing 

variable supply. Commenters provided an example where an Alcoa aluminum smelter in Indiana 

consistently provides nearly 10 percent of the spinning reserves used by the Mid-Continent 

Independent System Operator (MISO). Commenters stated that while demand response has 

become a relied-upon and widely-integrated resource, its potential remains largely untapped; the 

2009 FERC National Assessment of Demand Response Potential reported that under an 

"Expanded Business as Usual" Scenario, there will be 82 GW of peak demand reduction 

potential by 2019, and under the "Achievable" Scenario, there would be 138 GW of reduction.

Commenters stated demand response reduces emissions the following ways: (1) directly through 

load reductions during peak periods (0.05 to 0.35 percent); (2) directly by providing ancillary 

services otherwise supplied by fossil-fueled generation (0.3 to 0.8 percent); and (3) indirectly, by 

facilitating increased penetration of renewable resources and the displacement of generation 

from older, inefficient sources (approximately 1 percent). Commenters stated that under 

emergency-based programs, instead of dispatching inefficiency units to balance supply with 

demand, grid operators and utilities can dispatch demand response and reduce demand by 

hundreds or thousands of MWs at a time. Commenters noted an example during a September 

2013 dispatch, where demand response reduced reliance on fossil-fueled units by nearly 6,000 

MW across PJM, which "represents over 1.1 million electricity customers reducing load as a 

wholesale market resource". Commenters also noted that when electricity demand is high, 
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transmission and distribution equipment tends to be less efficient, resulting in greater overall 

system losses. Commenters indicated that Navigant estimated that direct emissions savings from 

load curtailments during demand response dispatches range from 0.05 to 0.35 percent of overall 

emissions even after accounting for onsite backup generation. Commenters stated demand 

response can directly reduce system CO2 emissions by 0.3 to 0.8 percent from existing EGUs by 

providing "spinning reserves," i.e., when generators are generating electricity in an amount that 

is less than their full capability so they can ramp up quickly as grid operators call on them, and 

when generators are running at these lower capacity factors, they are also less efficient and have 

higher emission rates. Commenters stated demand response can serve the same function by 

quickly ramping down demand instead of ramping up generation, given that demand response is 

in many cases capable of reducing load in 30 minutes or less. Commenters indicated that 

Navigant noted that plants run less efficiently when turned down and thus emit more 

CO2. Commenters stated DR-provided ancillary services can reduce CO2 emissions due to more 

efficient dispatch of generation units. Commenters stated demand response can have a large 

indirect impact on emissions in the following ways: (1) facilitating the use of renewable 

resources to maximize their emissions impact, and (2) contributing to the retirement of older, 

inefficient generating units and replacing them with demand resources. Commenters stated that 

during periods of low electric load and high renewable output, demand response can reduce 

emissions by as much as 10 percent, noted that Navigant indicated there may be situations where 

renewables need to be curtailed such that sufficient fossil fuel generation is available to provide 

ancillary services, and in these circumstances, DR can instead provide the ancillary services, 

thereby preventing the curtailment of renewable resource. Commenters noted an example for the 

Bonneville Power Administration (BPA) that has demonstrated that fast-acting demand response 

can also offset fluctuations both up and down in wind power output, where BPA controls were 

connected to half a dozen frozen food warehouses and the chillers were able to increase 

operation when wind power suddenly increased, and the chillers could be shut off in response to 

a sudden decrease in wind generation. Commenters stated that as the penetration of renewable 

generation increases, reserve requirements will likely increase; demand response can be 

deployed far more cost-effectively than other resources to provide reserves, rendering the 

economics of renewables more attractive.

Commenters stated demand response is contributing to the retirement of older, inefficient 

generating capacity and replacing it with demand resources. Commenters stated PJM estimated 

that demand response and energy efficiency reduced capacity costs in PJM by $11.8 

billion. Commenters noted that while the retirement of older generating units in PJM can be 

attributed to a host of factors, the steep reduction in capacity market revenue is a key contributor, 

i.e., the reduced capacity market revenues make it less economic for older generating units that 

rely heavily on capacity market revenue to stay in operation. Commenters cited the Navigant 

study: DR is one of the factors that can lead to lower capacity factors for inefficient fossil fuel 

units and thus lead to their retirement. Commenters noted that PJM noted this trend in a recent 

transmission expansion plan. Commenters stated the CO2 emission reductions from one 

inefficient fossil fuel retirement can be significant, and noted that PJM calculates that the 

removal of CO2 emissions from coal units that have announced their retirement reduced overall 

emissions from units covered by the CPP by 12 percent, or from 442 million short tons to 392

million short tons, using 2012 emissions, and these emission reductions in PJM play a major role 

in helping states meet their proposed interim (2020-2029) goals under the CPP.
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Commenters stated demand response can be deployed in an extremely cost-effective manner and 

has proven to reduce overall energy prices for consumers as it reduces emissions. Commenters

referred to an analysis that found that a demand response resource could be "built" for less than 

$14,000/MW-year, a very low cost relative to other technologies. Commenters stated demand 

response also moderates capacity and energy prices for the entire grid. Commenters stated that 

instead of incurring the cost of billions of dollars for new capacity construction, demand 

response saved PJM customers $11.8 billion, and noted that during just one record-breaking 

week of electricity usage in 2006, demand response saved PJM customers $650 million in energy 

costs in exchange for only $5 million in payments. Commenters stated that if integrated into 

state compliance plans, demand response will help reduce compliance costs.

Commenters stated Building Block 4 should explicitly incorporate all proven and useful demandside emissions reduction strategies. Commenters stated demand response and load management 

are proven, low cost tools that reduce the need for dispatch of inefficient EGUs and facilitate the 

effective use of renewable generation. Commenters stated demand response and load 

management should be explicitly included in Building Block 4's definition.

Commenters stated EPA should clarify in the final rule that demand response is included in the 

building blocks for reduction of carbon emissions. Commenters stated EPA has proposed a suite 

of four strategies (the "Building Blocks") for states to use in meeting the requirements for carbon 

emissions reductions for each state set forth in EPA's Proposed Rule. In the event that EPA's 

regulation of carbon emissions from fossil-fueled EGUs proceeds, commenters fully supported 

EPA's approach of a variety of methods to reduce carbon emissions from these power plants.

Commenters stated the first three Building Blocks proposed by EPA are generation-centric 

approaches, including heat rate improvements, re-dispatch and low-carbon and no-carbon 

alternative generation. Commenters stated Building Block 4 is focused on demand-side changes 

to achieve carbon emissions reductions and is defined in the Proposed Rule as: "Reducing 

emissions from affected EGUs in the amount that results from the use of demand-side energy 

efficiency that reduces the amount of generation required."

Commenters stated in the Proposed Rule's discussion of Building Block 4 implementation, EPA 

highlights California's demand-side energy efficiency programs as a paragon for reduction of 

carbon emissions. Commenters stated that EPA points out that California's utility run demandside energy efficiency programs, which require utilities to meet electricity load through all 

available energy efficiency and demand reduction resources that are cost-effective, reliable and 

feasible, "are the bedrock upon which climate policies are built." Commenters stated in other 

words, EPA's most prominent example of demand-side energy efficiency programs includes 

demand response as part of its carbon emissions reductions strategy. Commenters stated EPA 

also mentions in its discussion of Building Block 4 implementation that Arizona utilities can 

meet the state's energy savings requirements "through a variety of means, including cost-effective 

energy efficiency programs, as well as load management and demand response programs."

Commenters stated in light of the fact that the Proposed Rule's examples of Building Block 4 

implementation include demand response, the Proposed Rule clearly could be construed to 

include demand response in Building Block 4. However, in order to eliminate any ambiguity, 

Commenters urged EPA to modify the last phrase of the Building Block 4 definition to 
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specifically include demand response, as follows: "energy efficiency, demand response and load 

management that reduce the amount of generation required."

Commenters stated demand response can/should play a strategic role in every state's carbon 

emission reduction strategy. Commenters stated demand response is a significant resource that 

has a long tradition of providing reliable load drop, thereby reducing generation from fossilfueled peaking plants. Commenters stated demand response resources have a long tradition of 

providing reliable reduction of electricity load ("peak load reduction" or "load drop") when 

needed to help maintain system reliability. Commenters stated in wholesale markets alone, there 

were over 28,000 MW of demand response in 2012. Commenters stated the practice of demand 

response has been present in the utility industry for decades. Commenters stated that 

traditionally, demand response has been viewed as simple load drop, relieving stress on the 

electricity network during potential electricity system emergencies. Commenters stated demand 

response has proven to be a reliable resource, providing service when called upon and thereby 

allowing the grid to stay in balance.

Commenters stated the alternative to maintaining system reliability in an electricity emergency 

with demand response is to rely on fossil-fueled peaking generation. Commenters stated 

increased utilization of fossil-fueled peaking generation results in additional carbon and other 

emissions. Commenters stated therefore, at its most elementary level, demand response results in 

carbon emissions reductions at times of peak electricity usage when used as an alternative to 

fossil-fueled peaking plants.

Commenters stated in recent years, as demand response technologies have improved and the 

services provided by demand response resources have expanded significantly. Commenters

stated demand response resources now provide not only load drop but also sophisticated and 

flexible ancillary services such as spinning reserve and frequency regulation. Commenters stated 

these demand response ancillary services are used to balance the electricity grid all of the time 

rather than merely during potential emergencies.

Commenters stated that when demand response provides these ancillary services, it directly and 

permanently offsets carbon emissions from fossil-fueled peaking plants; for example, if a 

demand response resource is providing spinning reserve by curtailing load within a few minutes 

when called upon, demand response is serving as a real-time service to the grid operator that can 

displace a spinning generation resource on a megawatt-to-megawatt basis. Commenters stated 

generation spinning reserves are required for system stability in all hours of the year. 

Commenters stated demand response spinning services can now be available at any time. 

Commenters stated therefore, these demand response resources reduce carbon emissions by 

reducing use of generation spinning reserves in all hours of the year and not just summer peak 

times. Commenters stated moreover, these resources have proven to be costeffective. Commenters stated that in the PJM RTO during the 9.5 percent of the hours in 2013 

when only demand response was utilized for spinning reserve the weighted average SRMCP of 

synchronized reserve was only $1.21/MW; in contrast, the weighted average cost of spinning 

reserve in PJM for all hours in 2013 was $6.98/MW.

Commenters stated as a result of the development of demand response as a more robust system 

tool, the resource has become even more reliable in providing electricity load reduction. 
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Commenters stated the more refined ancillary services of spinning reserve and frequency 

regulation are rapid response tools. Commenters stated frequency regulation is a service where 

utility system operators expect a response within seconds. Commenters stated spinning reserve is 

a service that is typically responsive within minutes. Commenters stated these parameters hold 

whether the service is provided by demand response resources or by traditional generation 

resources. Commenters stated since the required response times are so rapid, those resources 

have become more automated. Commenters stated the net result of the improved technologies is 

that demand response resources are now extremely reliable in providing electricity load 

reductions during all hours of the year.

Commenters stated demand response directly offsets a substantial amount of carbon emissions 

from fossil-fueled EGUs. Commenters stated the utilization of demand response resources to 

provide electricity market products and services in place of traditional generation provides 

benefit to society, including significant reduction in carbon emissions. For additional detail and 

analysis regarding these carbon emissions reductions to EPA, commenters commissioned the 

utility consulting firm Navigant Consulting ("Navigant") to study the carbon emissions reduction 

impacts of demand response. Commenters stated Navigant looked at the direct and indirect effect 

on carbon emissions reductions from both demand response ancillary services (i.e., spinning 

reserve and frequency regulation) and peak load reduction (i.e., simple load drop).

Commenters provided the Navigant Study, and stated most notably, the Navigant Study 

concluded the following:

"Navigant estimates that demand response could directly reduce CO2 emissions 

by more than 1 percent and that its overall role in economics of fuel mix and plan 

operations will result in CO2 emissions by a larger amount, i.e. potentially an 

additional 1 percent.... This emission reduction potential is significant when 

compared to the EPA's targets which propose to reduce CO2 emissions from 

fossil-fuel power plants by 20 percent from 2012 to levels by 2030. This analysis 

demonstrates that demand response provides valuable CO2 emissions reductions 

and thus should be a strategic part of implementation of the Clean Power Plan." 

Commenters stated the Navigant Study found that utilization of demand response to provide 

ancillary services 50 percent of the time would directly reduce carbon emissions from fossilfueled EGUs by 0.6 to 0.8 percent. Commenters stated the Navigant Study noted: "Demand 

response provided ancillary services can reduce CO2 emissions due to more efficient dispatch of 

generation units." 

Commenters stated the Navigant Study provided the following illustration of the problems 

caused by inefficient dispatch of fossil-fueled generating units that can be alleviated by demand

response: "As an illustration, if a 500 MW coal plant bids 200 MW into the reserves market then 

it takes heat rate penalty for operating at 300 MW.... The EPA demonstrated in their calculations 

for building block 1 in the Clean Power Plan that small changes in the heat rates of coal plants 

can have a significant effect on CO2 emissions.
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Commenters stated moreover, if grid operators utilize demand response rather than dispatch a 

fossil-fueled peaking plant at all, additional carbon emissions will be avoided. Commenters

stated the ancillary services of spinning reserve and frequency regulation are used in all hours of 

the year. Commenters stated significantly, spinning reserve and frequency regulation are not 

provided by zero emissions renewable generating plants because these plants are intermittent 

electricity resources by nature. Commenters stated nor are spinning reserve and frequency 

regulation typically provided by nuclear plants because these plants are usually running at full 

capacity generating electricity for sale. Commenters stated spinning reserves and frequency 

regulation are in most cases provided by marginal fossil-fueled plants running far below their full 

capability. Commenters stated when grid operators dispatch these fossil-fueled resources to 

provide ancillary services, there is an increase in carbon emissions that can be avoided if demand 

response is used instead. In addition to the substantial carbon emissions reductions from demand 

response ancillary services, Commenters stated the Navigant Study showed that peak load 

reduction (i.e., simple load drop) can directly reduce carbon emissions from fossil-fueled EGUs 

by an additional 0.05 to 0.35 percent. Commenters stated these emissions reductions occur when 

simple load drop provided by demand response reduces dependence on natural gas fueled 

combustion turbine plants that are in service to provide peaking capacity on high peak load days.

Commenters stated the Navigant Study also considered the indirect impact of demand response 

that results in reductions of carbon emissions that are not as precisely quantifiable. Commenters

stated these indirect effects include the retirement of fossil-fueled peaking plants and facilitation 

of the integration of renewable generation into the electricity grid. Commenters stated as the 

Navigant Study indicates and as we discuss further below, these two indirect effects also reduce 

a meaningful amount of carbon emissions.

Commenters stated demand response contributes to retirements of fossil-fueled EGUs and delays 

investment in new fossil-fueled peaking plants. Commenters stated demand response has a 

positive economic impact on the electricity market as a more cost-effective way to manage 

system peaks than traditional generation. Commenters stated as a result, deployment of demand 

response contributes to the retirement of uneconomic fossil-fueled peaking plants that rely on 

operating during a few annual price peaks to maintain economic viability. Commenters stated 

that generator interests have been very outspoken about the economic disruption that demand 

response has caused by forcing early retirements of power plants. Commenters cited the 

Navigant Study, these retirements can have a material impact on states in meeting their 

emissions targets:

"Demand response is one of the factors that can lead to lower coal use and thus 

lead to retirements of coal units. PJM has noted this in a recent transmission 

expansion plan. The CO2 emissions reductions from one coal plant retirement 

can be significant.... PJM calculated that the removal of CO2 emissions from 

those units that have announced their retirement reduced overall emissions from 

units covered by the Clean Power Plan by 12 percent, or from 442 million short 

tons to 392 million short tons, using 2012 emissions. These emission reductions in 

PJM play a major role in helping states meet their proposed interim (2020-2029) 

goals under the Clean Power Plan." 
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Commenters stated demand response's peak-shaving capabilities also push out in time the 

development of new fossil-fueled power plants and energy infrastructure that would otherwise be 

required to meet constantly growing system peaks. Commenters stated just as significantly, since 

additional demand response resources can be deployed with short lead times, these resources can 

reduce carbon emissions more quickly than no-carbon and low-carbon generation resources that 

have much longer lead times and often require extensive transmission build out. Commenters

stated this is particularly important given President Obama's commitment to accelerate reduction 

in carbon emissions 28 percent (from 2005 levels) by 2025 in his joint announcement with 

Chinese President Xi Jinping on November 12, 2014.

Commenters stated demand response is a tool to facilitate effective integration of substantial 

amounts of renewable generation into the grid, increasing reliability and offsetting emissions 

from fossil-fueled EGUs. Commenters stated the Navigant Study highlights the benefit of 

demand response as a tool to assist in the integration of renewable generating plants into the grid. 

Commenters stated unless demand response is used to maintain system balance to offset the 

intermittent output of wind and solar generating plants, system operators are forced to rely on 

fossil-fueled peaking plants to provide the balancing. Commenters stated if more renewable 

resources are placed on the grid, as EPA calls for in its Proposed Rule, these balancing demands 

will increase significantly. Commenters stated therefore, it is critical to utilize demand response 

resources to the maximum extent possible and avoid the increased use of fossil-fueled peaking 

plants to balance the grid.

Commenters stated emission reductions resulting from demand response measures deserve 

separate treatment and analysis because they are not a type of demand-side energy efficiency 

measure, but rather they are a separate category of measures that can shift load to a different time 

of day.

Commenters stated EPA should assure that energy efficiency includes demand reduction 

too. Commenters stated defining energy efficiency, as including both permanent lowering of 

energy demand for utility services AND including cost-effective demand response programs, is a 

method of meeting the "overarching principle" in the Task Force (The White House State, Local 

and Tribal Leaders Task Force on Climate Preparedness) report to "maximize opportunities to 

take actions that have dual benefits of increasing community resilience and reducing greenhouse 

gas emissions." Commenters stated demand-response programs are behavioral response 

programs conducted in tandem with "intelligent efficiency" approaches such as introduction of 

smart metering, incentive rate-making, and provision of early warning of high emissions, high 

prices, or both. Commenters stated an evaluation of all utility-supported demand-side programs 

released November 17, 2014 by LBNL and presented to the NARUC found that these programs 

were delivering results at a very respectable and cost-effective 2.5 cents per kilowatt-hour 

avoided, at the low end for all demand-side programs and much lower than the cost of meeting 

peak demand through peaking power plants.

Commenters stated while a main purpose of dynamic pricing is to reduce peak demand, these 

programs typically result in a reduction in total electricity consumption as well. Commenters

stated there are three reasons energy reductions can be expected from dynamic pricing. 

Commenters stated first, higher peak or critical peak prices induce load reductions during peak 

hours, some of which is shifted to other times, and some of which is not. Commenters stated 
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reducing lighting during peak periods does not lead to the use of more lighting during off-peak 

periods, for example. Commenters stated higher thermostat settings during the peak period may 

be offset in part by precooling or payback cooling (increased cooling after the end of the peak 

period), but empirical evidence indicates that peak-period reductions are typically larger than the 

increased usage outside the peak period. Commenters stated second, dynamic pricing programs 

cause participants to have a higher awareness of how they use energy, which may in turn result 

in lower consumption. Commenters stated third, these programs often increase the amount of 

usage information, or feedback, received by the customer, which can also lead to reductions in 

energy use. Commenters stated total consumption reductions from dynamic pricing programs 

have been measured from 0 percent to as high as 8.7 percent, with a typical number of perhaps 2 

percent. 

Commenters stated intelligent efficiency is a systems-based approach to efficiency. Commenters

stated enabled by information and communication technology (ICT) and user access to more 

detailed and sometimes real-time consumption information, intelligent efficiency differs from 

traditional energy efficiency in that it is adaptive, anticipatory, and networked. Commenters

stated opportunities exist along a continuum of technology and human behavior and include both 

people-centered efficiency and technology-centered efficiency (e.g. smart thermostats). 

Commenters stated the literature suggests that customers are most fully empowered to manage 

their consumption and maximize their benefits with a triad of approaches: 

1. Information to enhance understanding, 

2. Pricing options to provide financial incentives to avoid high cost peak hours, and 

3. Automation to allow "set and forget" response. Commenters stated each of these provides 

benefits individually as a program type, but can provide even more energy reductions 

when provided as a holistic menu of options.

Commenters stated the concept of people-centered efficiency is that customers reduce their 

energy consumption as a result of having better understanding of their consumption. 

Commenters stated this better understanding comes from access to more detailed information 

(e.g. hourly and daily consumption) on utility websites, or even real-time information from inhome displays connected directly to meters. Commenters stated utility websites or energy reports 

to customers can also include comparisons to similar customers and specific energy savings tips.

Commenters stated one mechanism of information-based energy savings is behavior change -

switching the lights off or adjusting thermostats. Commenters stated the second mechanism 

occurs over time, with customers using energy data to make purchases of new appliances or 

devices that are more energy efficient. Commenters stated based on dozens of pilot and largescale studies globally, utilities have found short-term consumption reductions averaging between 

5 percent and 9 percent for - customers who report viewing energy usage information. 

Commenters stated these savings have been found to persist. Commenters stated over time, more 

customers become engaged with their information, and total average savings increase.

Commenters stated regarding technology-centered intelligent efficiency, one important example 

is smart thermostats that can be remotely controlled over the Internet. Commenters stated service 
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providers monitor the operation of these systems and, through analytics algorithms, control the 

thermostats so that HVAC systems use less energy. Commenters stated in addition to such 

algorithms, smart thermostats may be controlled by occupancy sensors, operating HVAC 

systems only when homes are occupied. Commenters stated these capabilities have been shown 

in pilot programs to reduce HVAC consumption by 6.8 to 11.3 percent. Commenters stated 

residential HVAC consumption in 2009 was 47.7 percent. Commenters stated another important 

example of technology-centered intelligent efficiency is a building energy management system. 

Commenters stated research studies performed over the past decade have shown a range of 

energy savings for such systems--from none at all to annual savings of more than 30 percent. 

Commenters stated average energy savings from these systems have been estimated at between 5 

and 15 percent of overall building energy consumption. 

Commenters stated each of these, efficiency is a building energy management system. 

Commenters stated research studies performed over the past decade have shown a range of 

energy savings for such systems, from none at all to annual savings of more than 30 percent. 

Commenters stated average energy savings from these systems have been estimated at between 5 

and 15 percent of overall building energy consumption. Commenters stated given that homes and 

buildings together consume 40 percent of total U.S. energy, the reduction in consumption from 

smart thermostats and building energy management systems could yield total electricity savings 

of 2 to 4 percent.

Commenters noted other reasons that demand response and smart grid deserve consideration for 

their emissions-reducing characteristics:

1. DR will often reduce kWh consumption during the hours in which the plants with the 

greatest emissions are used to generate electricity; thus, the emissions reduction achieved 

from reducing a particular number of kWh will typically be higher for demand response 

than for the same number of kWh avoided during non-peak hours; this means that a 

higher value could be placed on kWh that are reduced during the peak period; and 

2. while the Clean Power Plan is focused on carbon emissions, and not localized impacts, 

DR and smart grid offer dynamic emissions control that can ensure that steps that are 

taken based on a goal of reducing CO2 emissions also avoid adverse local and 

community-based impacts.

Commenters stated the rule should allow the use of demand response programs as a strategy for 

meeting emission reduction targets. Commenters stated although EPA's proposal allows for the 

inclusion of EE as a compliance option, it fails to allow for the inclusion of demand response 

(DR), another end-use compliance strategy that carries great potential for CO2 reductions at 

relatively low cost. Commenters stated DR refers to end-use customers reducing or shifting their 

normal electricity consumption patterns to respond to emergency reliability concerns or price 

changes in the energy market with the goal of reducing peak demand and ensuring system 

stability. Commenters stated when the price of energy is high-evidence of high demand and/or a 

constrained electric grid, DR programs call on end-use customers to curtail or shift energy 

consumption, alleviating congestion on the grid and reducing the need to rely on costly and highpolluting peaking generation units.
194

Commenters stated because DR displaces the need to rely on high-polluting peaking generation 

units which are inefficient to run and are sometimes only used for a few hours per year to meet 

peak demand, it can deliver substantial environmental benefits. Commenters stated furthermore, 

DR has demonstrated for decades that it can effectively curb electricity consumption and carbon 

emissions with more than 28,000 MW of DR having participated in wholesale electricity markets 

in 2012 alone. Commenters stated the environmental benefits of DR are quantifiable and wellknown:

"The environmental benefits of DR Utility programs have shown that shifting load from peak 

load generating power plants to more efficient off-peak-load power plants provides such 

reductions: the California 'Shift & Save' [DR program] quantifies the reduced CO2 emissions at 

between 10 and 20 percent." 

"Energy efficiency and demand response provide substantial opportunities to displace future 

capacity additions and lower overall electricity costs. In total, this represents a 40 to 50 percent 

reduction in projected peak demand growth (depending on the carbon policy scenario)... The 

combined effects of higher gas prices, lower load growth, enhanced DR and CHP [combined 

heat and power] installations lower CO2 emissions about 4 percent by 2032 versus the Phase II 

Reference Case, or 143 million metric tons. This is the equivalent of closing one 600 MW coal 

plant for 30 years." 

Commenters stated a recent study conducted by utility consulting firm Navigant Consulting, Inc. 

examined the environmental impacts of DR in three of the country's largest regional transmission 

organizations: the PJM Interconnection ("PJM"), the Midcontinent Independent System Operator 

("MISO"), and the Electric Reliability Council of Texas ("ERCOT"). Commenters noted that 

Navigant found that using DR to displace generation from high-pollution peaking plants had 

substantial environmental benefits:

"Overall Navigant estimates that DR can directly reduce CO2 emissions by more 

than 1 percent through peak load reductions and provision of ancillary services, 

and that it can indirectly reduce CO2 emissions by more than 1 percent through 

accelerating changes in the fuel mix and increasing renewable penetration. For 

context, 1 percent of 2012 CO2 emissions from affected sources under the CPP 

[Clean Power Plan] is 19.5 million metric tons." 

Commenters stated the cost and environmental benefits of dynamic pricing have been shown in 

Illinois. Commenters stated a 2014 study found:

• During summer peak load hours, participants shifted or reduced their peak load by 

0.5 kW per participant.

• Participants reduced electricity use by 500 kWh per participant per year.

Electricity reductions were equivalent to preventing 1,006 lbs. of carbon-equivalent greenhouse 

gases per participant per year.

Commenters stated in addition to providing substantial environmental benefits to the electric 

grid, DR is extremely cost-effective. Commenters stated like EE, DR can actually save 
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customers money by reducing the amount of energy they use during the most expensive times of 

the year; for example, a recent Brattle Group report looking at the effects of DR in five MidAtlantic states found that using DR to cut peak demand by 3 percent leads to a price reduction of 

5 to 8 percent and potential savings to customers of $73 million per year in the region.

Commenters stated given the proven reliability, cost effectiveness, and environmental benefits of 

DR, EPA should include it as a compliance option in its proposal. Commenters stated a variety 

of DR programs exist throughout the country including what is known as "dynamic pricing" 

programs. Commenters stated dynamic pricing programs encourage customers to reduce their 

electricity usage during times of peak load by allowing them to pay the market rate for their 

electricity which fluctuates throughout the day according to supply and demand.

Commenters stated electric, gas and water utilities face increasing pressure to deliver more 

successful DR and EE programs to help address utility demand-side objectives. Commenters

stated for over 30 years, Honeywell's Smart Grid Solutions team has worked with more than 100 

utilities worldwide to help meet their DR and EE goals. Commenters asked that EPA, in the 

final CPP, recognize and encourage DR programs at the state level. Commenters stated DR can 

assist with emissions reduction through helping to integrate renewable energy sources of power, 

and supports load-shifting which can boost cleaner power generation. Commenters stated DR 

technologies can also reduce peak demand and can help avoid the need for investment in peaking 

capacity freeing up capital for other investments. Commenters stated these are technologies that 

are widely in use now and support the goals set forth in the proposed CPP.

Commenters noted additionally that both cooperatives and municipal utilities have been industry 

leaders in implementing demand response programs, both to further reduce electricity demand 

and to contribute to overall system reliability, cooperatives provide about 10 percent of 

electricity sales, but are responsible for almost 25 percent of peak load management capacity, 

and 21 percent of customers with demand response capabilities. Commenters stated some of this 

response has been achieved through innovative market structures that may help guide efforts 

elsewhere: in North Dakota, Minnkota Power reduced peak power demand using a power price 

"traffic light" alerting members when prices change and inviting them to reduce power usage in 

response. Commenters stated that municipalities have also had significant success simply by 

providing meaningful funding to these programs, Fort Collins Utilities, a Colorado municipal 

utility, has had huge success developing demand response services, reducing total use by 1.5 

percent at a cost of $0.02/kwh saved (making it the utility's lowest-cost electricity resource), 

simply by increasing annual demand response funding to $5 million a year.

Commenters noted that U.S. EPA acknowledges demand response, or peak shaving, within the 

proposed rule as an element of some states' energy efficiency resource standards (EERS), but 

also characterizes Building Block 4 as largely 'enduse' energy efficiency. Commenters believed 

that credit for reductions under Building Block 4 should be given for measures such as demand 

response, which reduces or shifts electricity usage during peak periods and is typically utilized 

by electric system operators in order to produce energy at a more efficient rate. Commenters

stated this not only saves consumers money, but it also results in overall reduction of CO2 

emissions. Commenters stated FERC 2009 National Assessment of Demand Response Potential 

developed four potential scenarios to reflect various levels of demand response within the nation 

over a ten year period from 2009 to 2019. Commenters stated they found that demand response 
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has the potential to reduce peak electricity demand by as much as 20 percent by 2019 if fully 

utilized under the Full Participation scenario. Commenters stated even under the Expanded 

Business-As-Usual scenario, which expands current demand response programs to all states, 

utilizes a partial deployment of advanced metering infrastructure, and ensures that a small 

percentage of ratepayers would make use of dynamic pricing, peak electricity demand is reduced 

by 9 percent over the ten year period (2009-2019). Commenters stated if demand response 

programs are largely expanded and encouraged across the country, a large amount of peak 

electricity demand could be saved, resulting in a large amount of avoided CO2 

emissions. Commenters stated U.S. EPA should encourage the use of demand response by 

incorporating it in the energy efficiency calculations of Building Block 4 since it has the 

potential to cut CO2 emissions, in addition to saving money for ratepayers.

Commenters stated EPA's Proposed Rule proposes that state implementation plans be allowed to 

include:

"a wide (or unlimited) set of energy efficiency programs and measure types in 

state plans, as long as the energy savings are adequately documented according 

to rigorous evaluation, measurement & verification (EM&V) methods and 

appropriate state regulatory oversight."

Commenters urged EPA to clarify that the same approach applies to demand response programs 

and measures in the Final Rule in this docket. Commenters stated as with energy efficiency, this 

approach will work for demand response because energy savings calculated by rigorous demand 

response EM&V methodologies subject to regulatory oversight can be used to calculate carbon 

emissions reductions.

Commenters stated tested and proven demand response EM&V protocols in use today 

adequately document energy savings, as well as peak load reduction impacts, and are subject to 

state regulatory oversight; for example, the California Public Utility Commission (CPUC) 

developed its own demand response EM&V protocols to facilitate integration of demand 

response into the California electricity system. Commenters stated CPUC requires that California 

utilities submit annual and monthly reports in compliance with the EM&V protocols which 

evaluate demand response energy savings and load reduction impacts. Commenters stated 

significantly, CPUC's EM&V protocols insure accurate measurement of energy savings from 

demand response events by addressing any issues of pre-cooling and snap back cooling as well 

as gaming of load impacts. On the other hand, commenters stated the State of Maryland has had 

success utilizing a third-party, independent evaluator model to measure and verify the energy 

impacts of demand response. Commenters stated the independent evaluator in Maryland verifies 

each utility's report on demand response energy impacts in a two-step process.

Commenters stated accurate evaluation of the energy impacts of demand response is critical to 

maintaining system reliability and grid stability. Commenters stated as a result, the FERC tasked 

the North American Energy Standards Board (NAESB) to promulgate demand response EM&V 

model standards for use in wholesale and retail electricity markets. Commenters stated in FERC 

Order 676-G, FERC required RTOs and ISOs to incorporate the NAESB developed standards 

into their demand response evaluation, measurement and verification tariffs. Commenters stated 

as a result, RTOs and ISOs have developed sophisticated demand response EM&V protocols 
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incorporating NAESB standards that are used to pay demand response providers for load 

reductions and other purposes.

Commenters stated in short, demand response has established EM&V protocols that are even 

more robust than the EM&V protocols that have been used for energy efficiency. Therefore, 

commenters urged EPA to use the approach used for energy efficiency of allowing states (and 

multi-states) to include an unlimited set of demand response measures in their implementation 

plans subject to the energy savings being documented by rigorous EM&V methods and 

appropriate state regulatory oversight.

Commenters stated EPA's proposed rule erroneously measures demand-side energy efficiency in 

the state goals as a "sale" of energy that offsets energy generated by more carbon-intensive 

resources. Commenters stated the D.C. Circuit Court of Appeals recently held that demand-side 

energy efficiency is not appropriately characterized as a sale of energy. Commenters stated in 

EPSA, the court vacated FERC Order No. 745. Commenters stated Order No. 745 established 

uniform compensation levels for suppliers of demand response resources who participate in dayahead and real-time energy markets, specifically by directing ISOs and RTOs to pay demand 

response providers the full locational marginal price that is also paid to generators that 

participate in the market. Order No. 745, at 2. Commenters stated the D.C. Circuit vacated the 

order, finding that Sections 201, 205 and 206 of the FPA do not provide the Commission with 

the authority to establish such compensation levels. EPSA at 221-223. Commenters stated the 

court rejected FERC's attempt to assert jurisdiction on the basis of its authority over wholesale 

sales of electricity under Section 201 of the FPA, finding that "[d]emand response does not 

involve a sale, and the resources 'participate' only by declining to act." EPSA at 221.

Commenters stated the "demand response" at issue in Order No. 745 and EPSA is analogous to 

the demand-side energy efficiency measures considered in the proposed rule. Commenters stated 

FERC regulations define "demand response" as a "reduction in the consumption of electric 

energy by customers from their expected consumption in response to an increase in the price of 

electric energy or to incentive payments designed to induce lower consumption of electric 

energy." 18 C.F.R. Section 35.28(b) (4). Commenters stated similarly, Building Block 4 of the 

proposed rule's BSER is "reducing emissions from affected EGUs in the amount that results from 

the use of demand-side energy efficiency that reduces the amount of generation required." 79 

Fed. Reg. at 34,877. Commenters stated the GHG Abatement Measures TSD accompanying the 

proposed rule explains that energy efficiency "refers to an extensive array of technologies, 

practices and measures that are applied throughout all sectors of the economy to reduce energy 

demand" including, in the residential sector, "more efficient products and equipment...upgrading 

of insulation...[and] customized whole home retrofits[,]" and in the industrial sector, "motor 

upgrades and maintenance programs, recovery of waste heat streams, and optimization of 

processes through modern instrumentation and controls systems." GHG Abatement Measures 

TSD at p. 5-2 and 5-3. Commenters stated the Order No. 745 demand response and the CPP's 

demand-side energy efficiency, therefore, are analogous because both concern actions taken at 

the retail level to reduce electricity consumption in response to incentives put in place to do 

so. Commenters stated most importantly, like Order No. 745's definition of demand response, 

the CPP's definition of energy efficiency clearly does not involve the sale of electric 

energy. Commenters stated like the demand response program at issue in EPSA, energy 

efficiency actually reduces the demand for electric energy through consumers' "declining to act."
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Commenters stated the Goal Computation Technical Support Document (June 2014) ("State 

Goal TSD") sets forth a methodology for calculating state goals for emissions reduction. 

Commenters stated Step 5 of the methodology considers demand-side energy efficiency to be 

avoided sales that displace generation from more carbon-intensive EGUs. See State Goal TSD at 

pp. 16-19. Commenters stated under the EPSA analysis, classification of demand-side energy 

efficiency as an avoided "sale" is erroneous; therefore, EPA must revisit this element of the 

proposed rule. Commenters stated more specifically, due to the uncertainty of demand response 

programs, particularly in those states with restructured electricity markets, EPA should not rely 

on demand response as an energy efficiency tool.

Commenters stated EPA's reliance on demand response as part of the source of BB4 reductions 

is especially untimely since the D.C. Court of Appeals has recently found that the Federal Power 

Act does not grant the FERC authorities over demand response. Commenters stated for EPA to 

establish an enforceable goal, based on the expected exercise of authority that Congress has 

reserved exclusively for states, is highly legally vulnerable.

Comment 25: Energy Storage Should be Included in EE Programs

Response 25: Multiple commenters highlighted the multiple environmental, economic, and 

reliability benefits that energy storage provides to the electricity grid. The EPA recognizes that 

energy storage has applications across the electricity grid and may be part of DS-EE programs 

and projects. However, the EPA decided not to include DS-EE in BSER for the final rule. See 

sections V.A and V.B of the final rule preamble of the CPP for details. However, DS-EE does 

remain generally available for compliance. All DS-EE measures must also meet the requirements 

and criteria related to proper quantification and verification of MWhs from demand-side EE 

savings as described in Section VIII of the final rule preamble of the CPP. Section VIII of the 

Preamble addresses the concerns the commenters raised regarding the use of energy storage in 

state plans. 

The following are summaries of the specific public comments under this comment:

Commenters recommended EPA include energy storage as part of EE programs.

Commenters stated energy storage can enhance the capacity factor and efficiency of existing 

power plants by enabling higher productivity, more efficient ramping, and even providing black 

start capability, allowing these plants to operate more efficiently and mitigating the increases in 

O&M and downtime from having to supply ancillary services. Commenters stated the PJM 

Independent Market Monitor submits that "coal units on average provided only 15.5 percent of 

regulation in 2013. This is a significant decline from the 30.1 percent of regulation provided by 

coal units in 2012." Commenters stated coal and other traditional generators simply cannot be 

used most effectively to manage variability and provide regulation services to the grid; energy 

storage is particularly adept at responding quickly and with high degree of accuracy in ways that

other generators are unable.

Commenters stated energy storage has near-instantaneous response time and is able to follow 

grid signals more accurately than traditional resources. Commenters stated the California Energy 
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Storage Alliance released a white paper, "Energy Storage - a Cheaper, Faster, & Cleaner 

Alternative to Conventional Frequency Regulation", that analyzes several case studies that 

demonstrate that even with frequency regulation services, energy storage can reduce CO2 

emissions by displacing fossil fuel plants and enhancing integration of renewable energy 

resources.

Commenters provided Figure 2 (titled: “Fast Responding Storage Reducing Ancillary Demand”) 

that illustrates how valuing speed and accuracy in the market with a fast-responding grid signal 

leads to an almost immediate reduction in regulation requirement. Commenters stated that 

traditionally this role would be filled by fossil generation with limited flexibility, systems that 

can take minutes rather than fractions of seconds to respond. Commenters stated that with energy 

storage, current power plants can run at peak efficiency, and variability between supply and 

demand can be efficiently and accurately managed.

By creating a more competitive marketplace that rewards performance, commenters stated 

commercial energy storage systems are already demonstrating cost-savings and emissions 

reductions in PJM. Commenters noted Beacon Power's Stephentown, NY project is a 20-

megawatt flywheel energy storage plant that has been providing frequency regulation services to 

Independent System Operator New England since June 2011 along with an estimated 82% 

reduction in CO2 emissions over its lifetime compared with a traditional power plant. 

Commenters stated using fast-responding energy storage to manage variations in load and 

demand across the grid in milliseconds rather than minutes makes best use of electricity from all 

types of generation, regardless of where the storage system is deployed. Commenters stated this 

allows for more efficient operation of the grid's existing coal-fired assets, and when combined 

with solutions like demand response and broader energy efficiency programs, we would expect 

compounded results.

Commenters stated energy storage allows for more efficient operation of existing plants

providing actual emissions reductions as Alevo has found in analyzing battery performance in 

conjunction with coal plants. Commenters noted that in their statement launching a 

manufacturing plant in North Carolina, Alevo states, "coal plants like to run within a narrow 

operating band. If you ramp the plant up and down to meet changes in demand, it operates less 

efficiently, costs more and emits more greenhouse gas. By using batteries to meet those 

variations in demand, a utility can keep its coal plants running only at optimal speeds and thus 

reduce costs and emissions." Commenters stated that in a presentation in May 2014 to the White 

House Office of Management and Budget, Alevo described a simulation with Western Electricity 

Coordination Council (WECC) that featured energy storage co-located with coal plants. In this 

study, coal plants with capacity factors of 70% increased to an average of 85% with the addition 

of energy storage to offset ramping, peak capacity, and reserve requirements. Commenters stated

energy storage companies like Alevo continue to develop and deploy cost-effective technologies 

that can reduce greenhouse gases from fossil fuel resources while ensuring the grid remains 

stable with increased penetration from renewables.

Commenters stated energy storage enables distributed energy resources to operate more 

effectively and efficiently, allowing for more efficient energy use and lowering the resulting net 

carbon emissions. Commenters stated distributed energy storage can support higher penetrations 

of distributed renewable generation by transforming as-available renewable resources into fully 
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dispatchable assets, maximizing their value on the grid by delivering energy when its most 

valuable to the system (e.g. during peak periods). Commenters stated this can reduce demand on 

power plants and spinning reserves, but also reduces line losses from transmission. While 

producing electricity at the point of demand is potentially the most efficient solution for the grid, 

Commenters stated energy storage can play an important role in facilitating higher penetrations 

of distributed resources. Commenters stated energy storage technologies on the demand side 

include substation and community level resources as well as behind-the-meter applications 

(thermal as well as battery storage). Commenters noted that Solar City and Solar Grid Storage 

are two companies that are making investments in and currently offering demand side energy 

storage solutions. Commenters stated a report by Rocky Mountain Institute analyzed the point at 

which solar plus storage becomes cost effective for consumers to even opt out of being 

connected to the grid altogether. Commenters stated ESA is not suggesting grid defection, but 

the report is instructional in citing the continued downward trajectory of pricing for energy 

storage demand side applications.

Commenters stated an additional value for energy storage on the demand side is its ability to 

facilitate consumer participation in demand response programs, key tools for addressing peak 

demand and reducing reliance on carbon emitting peaker plants. Commenters stated energy 

storage can serve to eliminate the opportunity cost associated with participating in demand 

response events, potentially greatly increasing consumer ability to participate in these programs.

Commenters noted further considerations of using energy storage on the demand side include: 

energy storage allows for alignment of load with optimal fleet dispatch and reduction in the need 

to build additional conventional peaking capacity; adding energy storage to distributed 

generation can mitigate the impact of high penetration of solar rooftop PV, making distributed 

generation more cost effective and reducing the costs for network upgrades; demand side energy 

storage is able to serve a similar role as supply side resources in ancillary services markets and 

demand response programs; energy storage can reduce the need for diesel generation backup 

power for grid reliability. Commenters stated most importantly, the combination of these 

characteristics should be considered when assessing the potential value of including energy 

storage in the grid.

Commenters stated EPA should explicitly state in the final rule that energy storage technologies 

can be granted credits for avoided emissions that they create. Commenters stated EPA should 

credit energy storage technologies for the emissions reductions benefits generated both directly 

by increasing the efficiency of certain coal-fired units by reducing ramping and allowing the 

units to run at their most-efficient capacities, but also indirectly through improving system 

efficiencies, such as through reducing the need for spinning reserves.

Commenters provided an article discussing energy storage. Commenters stated flexibility is also 

a crucial attribute for efficient operation of the electricity system. Commenters stated a major 

technological development that promises to expand the flexibility of the electricity system is the 

introduction of energy storage technology, including electric vehicles. Commenters urged the 

agency to consider carefully the incentives for the development of energy storage that are 

implicit in the Clean Power Plan.
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Commenters stated energy storage is expected to play a growing role in the future evolution of 

the electricity grid. Commenters stated the nation's economy requires a robust and resilient 

electricity delivery system. Commenters stated energy storage can play a significant role in 

meeting this goal by improving the operating capabilities of the grid, lowering cost, and ensuring 

reliability while deferring and reducing infrastructure investments overall. Commenters stated it 

can be instrumental for emergency preparedness by providing backup as well as grid 

stabilization services.

Commenters stated EPA's Clean Power Plan is designed to encourage a transformation of the 

electricity system to reduce greenhouse gas and other pollutant emissions. Commenters stated 

there are attributes of energy storage technology that may enable it to contribute to this 

transformation, however, energy storage also may facilitate the expanded use of incumbent 

technology, undermining the environmental goals of the Clean Power Plan. Commenters stated 

therefore, the plan should anticipate the kind of incentives provided for the development of 

storage.

Commenters stated conventionally, to meet the electricity demand, electricity suppliers would 

depend on instantaneous combustion of fossil fuels or use of other resources to create electricity 

when needed. Beyond the storage of fuels for electricity generation at various times of day, 

Commenters stated energy storage technology has traditionally been limited to the use of 

hydroelectric resources. Commenters stated increasingly, a variety of economic forces and 

concerns over the environmental impacts of fossil fuel combustion are driving a shift toward 

greater use of renewable energy sources. Commenters stated unlike fossil fuels, the temporal 

profiles of many renewable energy resources are often uncontrollable and the resources are 

available only intermittently. Commenters stated this poses a barrier to the introduction of 

renewable energy sources into the electricity system. Commenters stated energy storage offers a 

potentially potent technology to accelerate the introduction of renewable technology by enabling 

the system to respond to intermittent supply.

If associated with renewable energy technology, commenters stated the ability to store energy 

allows the electricity system to maximize the potential contribution of renewable energy output 

and synchronize the delivery of clean, emissions-free energy with the time when levels of 

electricity demand are greatest. Commenters stated storage devices are already enabling wind 

farms in Texas and solar arrays in California to capture production in excess of contemporaneous 

demand and to deliver energy services when they are most highly valued. Commenters stated 

when there is an abundance of intermittent renewable energy, the available capacity to store 

excess renewable output provides an option to overcome the grid stability issues posed by the 

intermittency of renewable generation.

Commenters stated energy storage also could be used to support expanded use of fossil energy 

resources. Commenters stated energy storage technologies can allow fossil fuel power plants to 

operate at peak efficiency. Commenters stated this could have associated environmental benefits, 

for example, if storage is used to avoid the need for conventional fossil-fired generation to 

respond to small changes and power fluctuations due to instantaneous variation in electricity 

demand or the intermittency of renewable generation.
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Commenters stated however, energy storage may allow the greater utilization of low variable 

cost, baseload fossil-fired generation, which typically is relatively high emitting generation. 

Where there is excess supply of baseload fossil generation over some hours of the year, 

commenters stated storage would enable that supply to be brought into or kept in service, and 

thereby spawn negative environmental outcomes. Commenters stated further, this could lead to a 

reduction in the average system cost, thereby enabling an expansion in the demand for energy 

services, amplifying this outcome.

In summary, commenters stated how energy storage will be used in the future will be influenced 

strongly by the requirements and implementation of the Clean Power Plan. Commenters stated in 

general, storage can enable a more efficient balance of supply and demand and smooth out the 

peaks and valleys that currently challenge grid operators. Commenters stated by regulating 

electricity generation, storage can mitigate peaks in electricity price and lower the average 

electricity price. Commenters stated it can empower a more responsive and reliable grid-power 

system. Commenters stated it can also be used to mitigate the environmental and public health 

impacts of pollutant emissions profiles. Commenters stated most importantly, energy storage, 

including the inherent storage function of electric vehicles, can greatly expand the role for 

renewable energy technology to meet the nation's electricity demands.

Commenters stated that although not a technology that reduces energy demand or carbon 

emissions on its own, energy storage technologies (e.g., batteries, thermal storage, flywheels, 

compressed air, etc.) can help optimize generation and reduce CO2 emissions by matching 

supply to demand in three primary ways, including:

• Energy storage enables electricity generated at night to be discharged during peak 

hours of the day when carbon-intensive generation is operating at a high capacity 

factor.

• Energy storage technologies facilitates the integration of high levels of renewable 

energy on the grid by smoothing out fluctuations in production due to the variable 

nature of wind and solar generation.

• Energy storage improves the heat rate of fossil fuel generating units by allowing 

them to avoid ramping up or down in response to demand, thus letting them 

operate in their optimal and least-polluting range.

Commenters stated energy storage is a set of technologies that should be implemented by states, 

in particular as they seek to install increasing amounts of renewable energy as a means of 

complying with building block three, as they seek to dispatch less carbon-intensive generation 

under building block two, and as they improve the efficiency of their existing electricity 

generating units under building block one.

Commenters commented on electricity storage with respect to pumped storage. Commenters

stated an unintended consequence of this proposed rule is penalizing using electricity storage as a 

dispatch planning and air quality mitigation strategy. Commenters stated one example of 

electricity storage is hydro-pumped storage, which is a way of storing electricity via pumping 

water up during the night while electricity demand is relatively low and letting the water run 
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down through the turbines during peak demand hours during the day. Commenters stated this 

can help reduce the need for peaking units to operate, which are usually among the dirtiest and 

least efficient units. Commenters stated it also helps reduce peak emissions from EGUs during 

the day, which can help control ambient concentrations of traditional pollutants, however, the use 

of pumped storage results in an efficiency loss since more electricity is required to pump the 

water up than is generated by letting the water run back down through the turbines. If the energy 

required to pump the water is generated with fossil fuels, commenters stated this results in more 

CO2 emissions in aggregate. Commenters stated this could discourage the use of pumped 

storage, especially since the proposed rule does not allow generation from existing pumped 

storage facilities to be used for compliance purposes under a rate-based approach (because of the 

exclusion of existing hydropower). Commenters stated the Department suggests that EPA rectify 

this issue in the final rule. Commenters stated one potential remedy is to give generation credit to 

electricity storage facilities. Commenters stated the amount of generation credit for electricity 

storage facilities (such as pumped storage facilities) would be the difference between their 

consumed generation (i.e. to pump the water) and their created generation.

Comment 26: Transmission and Distribution Efficiency

Response 26: Multiple commenters requested EPA to include electricity transmission and 

distribution improvements to BSER, in part due to the opportunity to reduce total energy use by 

managing voltage and other demand-side measures enabled by smart grid technologies. EPA 

decided not to include DS-EE (building block 4) in BSER for the final rule. A response is not 

provided here on how transmission and distribution improvements relate to BSER as this 

comment is now outside the scope of the CPP. See sections V.A and V.B of the final rule 

preamble of the CPP for details. However, DS-EE does remains generally available for 

compliance, inclusive of transmission and distribution energy efficiency measures. As is the 

case for all DS-EE, such measures must meet the requirements and criteria related to proper 

quantification and verification of MWhs from demand-side EE savings as described in Section 

VIII. of the final rule preamble of the CPP. See also the Demand-side Energy Efficiency TSD for 

CPP Final Rule for additional discussion of DS-EE opportunities to reduce energy losses across 

electricity lines. For comments related to the other building blocks and how transmission and 

distribution would affect them, refer to Section V. that discusses EPA’s final determination and 

rational of the building blocks for the Final CPP. 

The following are summaries of the specific public comments under this comment:

Commenters said that the EPA should add "expanding and upgrading high-voltage transmission 

networks" or "grid modernization" as part of the BSER or even make it a separate building 

block.

Commenters agreed with EPA statements that the U.S. electricity systems is highly 

interconnected and noted that goals of interconnectivity, flexible generation, and fungible 

electricity services would not be possible without high-voltage transmission networks. 

Commenters added that the existing high-voltage system is limited in geographic scope, 

constrained in its capacity to transfer power from one region to another, and congested at times 
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of high demand, all of which increase the cost of providing electricity services to customers, 

limit access for new zero carbon renewable generation, reduce the availability (i.e. "capacity 

factor") of existing renewable generation, and constrain the ability of grid operators to dispatch 

lower carbon generation in place of higher carbon resources. Commenters stated that a more 

robust and efficient transmission network would be more flexible, increase access and 

availability for low and zero carbon generation, and make the system more efficient as a whole 

and in separate regions and states.

Commenters noted that barriers to building new high-voltage lines for clean energy are not 

technical or economic but rather bureaucratic and that inefficient institutions and insufficient 

policies are the main obstacles standing in the way of critically important transmission 

expansions and upgrades. Commenters added that the EPA should also explore, in the revised 

rule and beyond, opportunities to engage and cooperate with other federal agencies, state 

regulators, transmission planners and stakeholders, barriers to collaborative approaches and how 

to overcome them, and the potential for improved information sharing and analytical 

coordination. Commenters said that absent changes to directly incorporate transmission planning 

and investment into state implementation plans, the proposed rule could have unintended and 

negative effects on electric reliability and on regional cooperation on transmission planning, cost 

allocation, and siting. 

Commenters said that the EPA should revise the proposed rule to explicitly add "Expanding and 

Upgrading High-Voltage Transmission Networks" as part of the BSER. At a minimum, 

commenters said, that the EPA should include them as supportive measures under Building 

Blocks 2 and 3. However, commenters said that the EPA could justify making high-voltage 

transmission measures a separate building block because doing so: 

• Validates widespread and successful state and regional use of transmission 

investments to enable increased development and use of renewable energy 

generation. 

• Highlights the enormous potential for transmission expansions and upgrades to 

reduce the cost of achieving electric sector carbon emission goals. 

• Obliges the EPA and states to cooperatively engage in and provide substantive 

input to the transmission planning process, and to incorporate relevant analytic 

findings and investment decisions directly into compliance plans. 

• Recognizes improvements to a component of the integrated electric system not 

addressed by measures under any of the other building blocks. 

If, the EPA chooses not to include transmission expansions and upgrades as part of the BSER, 

commenters believed that it would be wholly unacceptable for EPA to offer anything less than a 

detailed explanation similar to those provided under the section entitled: "Potential Emission 

Reduction Measures Not Used To Set Proposed Goals." 

Commenters also recommended that Grid Modernization be called out as a new, and separate, 

"Building Block" as an acceptable mechanism to help states and regions achieve compliance 
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with the CO2 emission reduction targets set forth in this Proposed Rulemaking. For the purposes 

of this Proposed Rule, commenters suggested that grid modernization consist of the following: 

grid efficiency, i.e., having a good power factor, saving fuel; and, "smart" load management, 

which can encompass optimizing the use of low- or zero-carbon emitting resources or, offsetting 

generation altogether, as well as levelizing loads (e.g., running appliances at times when excess 

low- or zero-emitting generation is available, thereby maximizing the use of clean energy 

resources to serve the load). Commenters said that smart load management can also "fill the 

valleys" by utilizing available power, when feasible, thereby making the entire electric system 

more efficient, recognizing that this would have to be done with nuclear or renewable energy, to 

meet the objectives of this Proposed Rule. Commenters added that demand response - i.e., 

helping to reduce peak load(s) - is a subset of "smart" (or "advanced") load management. 

Commenters also recommended that: 

• The greenhouse gas (GHG) reduction methodology outlined in the Proposed Rule 

be modified to account for grid modernization in order for this mechanism to help 

aggregate and provide credit to states in achieving compliance with the reduction 

targets established in this Proposed Rule; 

• Similarly, the Agency explicitly recognize grid modernization, as defined herein, 

in the guidance it provides to the states to use in developing their plans to reduce 

CO2 emissions from existing power plants; and, 

• Grid modernization technologies, e.g., Advanced Metering Infrastructure (AMI), 

be used to facilitate accounting, monitoring, and verification. 

Commenters emphasized that they supported each of the four building blocks included in the 

proposed rule, and that their recommendations do not interfere with a state's ability to pursue 

them:

1. heat rate improvements;

2. re-dispatch; 

3. expansion of zero and low carbon generating capacity; and 

4. increased demand side energy efficiency. To the contrary, commenters said, transmission 

expansions and upgrades directly support and are a prerequisite for, building blocks 2 and 

3, and enhance the value of measures under building blocks 1 and 4 by making their 

benefits more widely available across the system. 

Commenters specifically recommended that the EPA:

• Make expansions and improvements to the high-voltage grid an explicit element 

of the strategies states and utilities can employ in both building blocks 2 and 3 to 

meet their de-carbonization requirements, particularly in the context of regional 

integration and strategies. Without such expansions and enhancements, the 

potential for clean energy to be better integrated and made more fully available to 

the market cannot be achieved. The EPA should directly recognize those facts and 
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declare that actions to facilitate more and better transmission of clean power, 

transmission without which that power could not be accessed or used, will be 

credited under the rule. 

• Require states to work directly with utility and regional transmission planners to 

analyze the potential for transmission expansions and upgrades to reduce the costs 

of meeting carbon emissions targets, and to report the results of those analyses to 

the EPA as part of their state plans. 

• Establish clear guidelines for "the process and requirements under a state plan for 

quantifying, monitoring, and verifying the effect of" expansions and upgrades to 

high-voltage transmission networks, including "treatment of interstate effects" for 

both state and regional approaches to compliance. ACEG recognizes the 

challenge of definitively quantifying the effects in tons of CO2-equivalent 

attributable to policies that, like building out and enhancing the high-voltage grid, 

have a critical but indirect effect on those emissions. In the case of transmission, 

one can at least be certain of the volume of electricity that flows into and out of 

the grid from clean versus polluting sources, and can use contract-path analysis to 

allocate that energy to those who are bearing its costs (including its transmission 

costs) so it is probably easier to quantify and attribute emission benefits achieved 

by specific transmission infrastructure development than it is to do so with other 

indirect actions such as energy-efficiency investments. 

• Create positive incentives for states to incorporate transmission expansions and 

upgrades as part of their compliance strategies, and additional incentives for states 

to participate in regional and interregional transmission planning processes with 

binding cost allocation. ACEG does not attempt in these comments to propose a 

specific formula or procedure for awarding emission credits to transmission 

projects, but would be ready and willing to do so, working in conjunction with the 

EPA staff and other parties, should the EPA accept this recommendation. 

• Create positive incentives for states to adopt expedited procedures for siting and 

permitting transmission lines identified in approved state implementation plans. 

Commenters suggested that the EPA encompass improvements to the electrical system 

infrastructure within a fifth building block that would be a categorical option that regulators 

could implement in their states implementation plans. Commenters noted that the EPA does not 

include electricity delivery or efficiency and operational improvements to the transmission, 

distribution, and metering components of the grid among the existing building blocks. 

Commenters noted that Electric Power Research Institute (EPRI) studies have shown that 

modernizing the transmission, distribution, and metering infrastructure can reduce the total 

energy distributed by utilities an average of 3 percent without reducing end-use service quality. 

Commenters noted that these improvements lead to reduced generation requirements and 

associated carbon emissions by a proportional amount. Commenters stated that these 

improvements are cost-effective and may be economically positive. Commenters also noted that 

these improvements are closer in scope to what has historically been included within the 

regulatory definition for a system of emission reduction.
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Commenters requested EPA recognize supply side EE as a state option. Commenters supported 

the EPA's recognition that energy efficiency gains are available through the more efficient 

operation of the transmission and distribution grid and from upgrades to the electrical system and 

implementation of smart grid technologies. Commenters said smart grid technologies are being 

developed that have the ability to produce energy savings and associated emission reductions. 

Commenters said voltage optimization ("VO") software platforms, such as developed by 

Dominion Voltage, Inc. ("DVI"), a Dominion subsidiary, represent the evolving capabilities for 

grid-side efficiency that should qualify as approvable emissions reduction measures in state 

plans. Commenters stated the American National Standards Institute ("ANSI") sets the range of 

voltage levels at which electricity is to be delivered to a home or business between 114V and 

126V, with the level typically being around 120V. However, commenters said customer devices 

are generally designed to operate with 108V input voltage. Commenters said when input voltage 

is higher than needed to power customer devices the result is energy waste. Commenters stated 

that utilities have historically used conservation voltage reduction (CVR) to reduce this source of 

wasted electricity. Commenters said, however, the combination of today's smart meters and VO 

technologies can now accelerate the rate of energy savings beyond the historically rate 

accomplished by CVR. Commenters noted that grid operators can use advanced meters' 

communication capabilities to capture voltage data and communicate that information to 

automated voltage control software, which then provides the appropriate signal to the 

transformer or other voltage regulation equipment to manage the circuit-level voltage within the 

lower ANSI range of 118-114 volts, resulting in reduced energy consumption. Commenters 

requested that EPA explicitly recognize supply-side energy efficiency as an option for states to 

use when demonstrating compliance.

Commenters recommended EPA include improvements in electrical transmissions and 

distribution as part of EE programs.

Commenters believed there are clearly areas of energy efficiency that should and could be 

counted. Commenters stated the issue is the definitions of quantifiable, continuous and 

permanent. Commenters stated there are many areas in transmission and distribution of 

electricity that can offer carbon reductions through energy efficiency. Commenters stated here is 

a wide range of opportunities such HVDC transmission, better substations, meters and a full 

range of T&D products. Commenters encouraged EPA to consider more closely the benefits and 

efficiency that can be achieved through transmission and distribution, particularly through the 

application of the best, state-of-the-art technology.

Commenters stated the final guidelines should affirm that states can include transmission and 

distribution (T&D) efficiency improvements in compliance plans. Commenters stated that line 

losses (the loss of power during transmission) can range from nearly zero to more than eight 

percent of the electricity being transmitted as a function of line and weather conditions, and the 

current national average is that roughly six percent of power generated at central stations is lost 

during transmission to customers. Commenters stated that various technologies such as 

volt/VAR optimization, high voltage direct current (HVDC) transmission lines and high 

temperature low sag lines, can help reduce T&D losses, which CO2 emissions. Commenters

stated T&D systems are part of the interconnected power system upon which EPA relies as the 

basis for its proposed BSER. Commenters stated the final guidelines should encourage the 
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deployment of grid modernization technologies---and the emissions reductions that they can help 

achieve---by allowing their inclusion in state compliance plans.

Commenters stated savings from transmission and distribution system efficiency investments 

that reduce utility losses or reduce the energy used by appliances and devices by optimizing 

voltage can add an additional 0.2 percent per year. Commenters recommended savings from 

transmission and distribution efficiency improvements should be included in the BSER for Block 

4 and credited in state plans. Commenters indicated that 6.3 percent of electricity is used in 

T&D. Commenters cited an EPRI study that estimates the potential to reduce electricity use in 

this area is about 10 to 15 percent. Commenters noted that electricity losses in the distribution 

system can be reduced substantially through the use of efficient transformers, improved voltage 

control, phase balancing, and balancing of reactive power needs. In the transmission system, 

commenters noted opportunities include voltage overlays, voltage and line efficiency. 

Commenters stated these measures can enhance not only the efficiency, but also the flexibility 

and reliability of the electric system, facilitating integration of renewables into the system. 

Commenters stated EPA excluded Volt VAR Optimization/Conservation Voltage Reduction, a 

cost-effective option for states and utilities to save energy and reduce pollution. Commenters

stated maintaining voltage in the lower half of the 114 to 126 volt range saves energy, because 

reducing voltage reduces the energy used by customer appliances and equipment. Commenters

stated utilities often have set a strategy of "setting voltage high enough," however with recent 

advances in sensors, communication, and information processing and control techniques, utilities 

can use a process called "Volt Var Optimization," and these practices are termed "Conservation 

Voltage Reduction." Commenters stated 26 projects are funded by the Smart Grid Investment 

Grants through the ARRA implemented VVO or CVR; AEP Ohio implemented VVO on 17 

circuits and yielded a 3 percent reduction in residential customer energy use during the test 

period (measured for those customers with AMI meters); and a large pilot in the Pacific 

Northwest, the Distribution Efficiency Initiative Project, tested CVR practices, and average 

energy savings using end-of-line voltage regulation was 2 and 3 percent, voltage regulation with 

minor system improvements saved 1 to 2 percent of energy use. Commenters stated the 

Regional Technical Forum of the Northwest Power & Conservation Council is developing a 

protocol for measuring the savings from Conservation Voltage Reduction. Commenters

recommended EPA raise the best practices level of energy efficiency by 0.2 percent per year, to 

account for the savings from conservation voltage reduction and other transmission and 

distribution system investments. Commenters stated in developing EM&V Guidance, EPA's 

designated entity, should consider developing or validating a protocol for estimating savings 

from CRV and T&D system that reduce line losses.

Commenters stated EPA should encourage and credit energy efficiency in the electrical 

transmission and distribution system. Commenters stated commercially available technologies 

exist today (such as voltage control and optimization) that may provide states with cost-effective 

emissions reductions and compliance options.

While not a part of Building Block 4, commenters supported EPA's inclusion of system level 

electric distribution utility efficiency measures as a compliance option and encourage EPA to 

allow for flexibility and innovation in including these types of measures in a compliance plan. 

Commenters stated both new and existing technologies can be used by the electric distribution 

utilities to reduce system-wide energy use.
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Commenters provided volt/VAR support at the distribution level as an example technology. 

Commenters stated advancements in distribution system hardware and software is now making it 

possible for utilities to more precisely control the power quality of distribution lines, all the way 

down to individual homes and businesses. Commenters stated this allows utilities to lower 

voltage levels to customers while maintaining the reliability of the grid. Commenters stated this 

will improve system efficiency and lower customer consumption in a manner that is completely 

seamless to customers, and not dependent on the specific appliances in the home.

Commenters provided lowering line losses as an example technology. Commenters stated 

utilities can increase the capacity of their systems by increasing the voltage of existing lines 

rather than adding new lines. Commenters stated converting a 138kV line to a 230 kV line will 

lower line losses, improving the system efficiency of the system and lowering the amount of 

electricity (and fuel) needed to serve its customers. Commenters stated these are but some of the 

many new ways utilities can improve system efficiency, and EPA should ensure that its 

compliance framework allows for innovations like these to be included.

Commenters stated NEMA members are leading the way in developing and manufacturing grid 

technologies that result in emission reduction derived from energy efficiency gains in the electric 

transmission and distribution system (outside the EGU but in front of the meter). When utilities 

install these products, commenters stated EPA should recognize the emissions savings and count 

them as a means of state compliance under building block four.

Commenters stated system losses and inefficient EGU dispatch, and therefore CO2 emissions, 

can be reduced through replacement of less efficient assets with more efficient assets, as well as 

through operational practices enabled by certain technologies. Commenters stated because these 

improvements are often confined within a utility's area of operation, they are measureable and 

verifiable.

Commenters stated transformers are a widely recognizable piece of the electric system and 

nearly all electricity consumed passes through transformers on its way to the customer. 

Commenters stated transformers enable electricity to be moved efficiently over long distances

and allow electricity to be delivered at the proper voltage to the customer. Commenters stated 

while a transformer is not intended to use electricity per se, as a matter of physics no transformer 

is 100 percent efficient. Commenters stated as a result each time an electrical current is passed 

through a transformer, some electricity is lost.

Commenters stated manufacturers have invested heavily in transformer technologies that 

dramatically improve efficiency, such as NEMA Premium Efficiency-rated transformers. 

Commenters stated yet because of the ability to repair old units, many aging transformers 

continue to persist on the electric grid, despite their lower levels of efficiency compared to 

modern transformers. Commenters stated indeed, the average age of a substation transformer and 

a distribution transformer is 42 years. Commenters stated EPA should recognize and give credit 

to emissions reductions gained through utility replacement of inefficient transformers.

Commenters stated approximately 7 percent of the energy generated is lost in the transmission of 

power to the customer. Commenters stated the use of more efficient conductors and cable could 

reduce these losses, reducing the excess power generation, and subsequent emissions, required to 
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meet actual demand and improve system reliability. Commenters stated lower loss, low sag 

conductors can also improve grid reliability and capacity in a more economical and 

environmentally responsible manner. Commenters stated these conductors improve reliability as 

they maintain clearance during emergencies and periods of high power loadings thus reducing 

the chance of system failure. Commenters stated they also reduce the environmental impact of 

increasing grid capacity by allowing utilities to use existing structures thereby eliminating the 

environmental disruption caused by new line builds.

Commenters stated an Intelligent Grid uses wide area monitoring technologies and real time two 

way communications, to maximize the efficiency of the transmission and distribution grid, as 

well as the dispatch of renewable energy and a reduction of peak load through demand response. 

Commenters indicated that types of Intelligent Grid solutions include:

• Wide area monitoring systems (WAMS) that allow for optimized power flow and 

renewable energy dispatch on the grid. For example: Sensors, Weather Nodes, 

and Base Stations. These devices function as an integrated system to monitor the 

capacity of a power line. The sensors clamp directly onto the conductor and can 

be used to determine the clearance and capacity of the line. The Weather node 

collects data and atmospheric conditions surrounding the transmission line and the 

base station transmits the data to the utility. The use of this type of equipment 

allows a utility the ability to continuously monitor transmission lines thus 

allowing for more optimized integration of the most efficient and least carbon 

intensive generation sources by eliminating "apparent" capacity constraints 

resulting from the use of overly conservative static line ratings.

• Reducing peak demand through demand-response systems that remotely adjust 

power consumption thereby reducing the need for additional power generation 

capacity. Demand Response: Demand response is the process of reducing peak 

demand instead of dispatching additional EGUs in order to maintain balance 

between supply and demand on the electric grid. Demand response has 

traditionally been most effective during hot summer days when air-conditioning 

loads increase, although during the winter of 2013-2014 when the U.S. 

experienced a polar vortex, demand response was used to manage the wholesale 

price of electricity, maintain grid reliability, and keep people safe and warm while 

at the same time reducing the need to operate the least efficient, most-carbonintensive EGUs.

Commenters stated the FERC estimates that peak demand can be reduced by anywhere from 38 

to 188 gigawatts (4 to 20 percent reduction in peak demand) between 2009 and 2019. 

Commenters stated if all of the cost-effective demand response were utilized, it would eliminate 

the need for 2,000 peaking power plants. Commenters encouraged EPA to explicitly allow states 

to implement demand response programs as a means of reducing peak CO2 emissions and 

complying with building block four.

• Improving the efficiency and quality of electrical transmission through enhanced 

control of voltage and power flow. Volt/VAR Optimization (VVO): Traditional 

Volt/VAR (volt-ampere reactive) management technologies have been used by 
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the power industry for over 30 years to reduce electric line losses and increase 

grid efficiency. Today, technologies like smart meters have advanced to allow 

increasing levels of Volt/VAR Optimization (VVO), thus reducing overall 

distribution line losses by 4-6 percent through tight control of voltage and current 

fluctuations.

Commenters stated conservation voltage reduction (CVR) is a VVO technology that has 

numerous potential benefits. Commenters stated this type of VVO solution can be used to flatten 

voltage profiles and then lower overall system voltage while staying within the specified ANSI 

voltage limits. Commenters stated in short, doing this reduces overall system demand by a factor 

of 0.7 to 1.0 percent for every 1 percent reduction in voltage. Commenters stated from a 

consumer perspective, this reduces the energy they consume. Commenters stated from a utility 

perspective it reduces the amount of power they need to generate or purchase from a generator, 

reducing emissions. 

In Virginia, Dominion Power has successfully implemented VVO and CVR to deliver only the 

level of voltage needed to ensure the safe and effective operation of electricity consuming 

devices, thus reducing energy waste by 2.8 percent on average.31 These savings are easily 

quantifiable and verifiable, making VVO and CVR an ideal activity for states to include in their 

plans to help them reduce CO2 emissions under building block four.

Commenters asked that EPA describe its treatment of EE options within Building Block 4 and 

state targets such as programs like Volt Var Optimization to reduce energy on transmission and 

distribution circuits. 

Commenters stated in Building Block 4, energy efficiency is defined solely as "end-use" 

efficiency. Commenters noted this is the traditional definition of energy efficiency (i.e. modify a 

device or piece of equipment to make it more efficient), but that is not the modern, evolving 

definition of energy efficiency. Commenters stated that today, several different types of 

efficiency are being deployed in the electricity sector. Commenters stated demand response 

represents dynamic, dispatchable efficiency. Commenters stated use of new informational 

technologies and practices has created behavioral efficiency and automated intelligent efficiency. 

Commenters stated deployment of smart grid technologies and practices has created new options 

to increase the efficiency of the distribution system. 

Commenters stated the definition used in Building Block 4 may be the appropriate one for its 

purposes in goal-setting, however the adverse impact on DR and smart grid created by the 

confusion over the building blocks as menus is being compounded by the Building Block 4 

definition of energy efficiency.

Commenters stated various studies have documented the energy savings associated with demand 

response and smart grid technology. Commenters stated the savings occur in six types of 

programs, as follows: (1) Demand response: kWh savings from increased awareness of energy 

usage associated with dynamic pricing programs; (2) Demand response: kWh savings from 

demand response events and reliability programs; (3) Intelligent efficiency: kWh savings 

associated with energy consumption feedback made possible by smart meters or resulting from 

more efficient operation of HVAC systems via smart thermostats; (4) Grid efficiency: kWh 
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savings from conservation voltage control; (5) Grid efficiency: kWh savings from reduction in 

technical and non-technical line losses; (6) Grid efficiency: KWh savings from the 

modernization and more efficient operation of distribution systems.

Commenters stated Grid Efficiency, Conservation Voltage Regulation (CVR) or Voltage 

Optimization improves the efficiency of the grid by optimizing voltage on feeder lines that run 

from substations to homes and businesses. Commenters stated CVR is made possible by the 

addition of smart meters and other smart grid technology. Commenters stated in the US, 

regulations require that voltage is available to consumers at 120V +/- 5 percent, which yields a 

range of 126V to 114V. Commenters stated on any feeder line, voltage on the line gradually 

decreases as the cumulative load (number of customers) and distance on the line increases. 

Commenters stated because of this line drop, power must be transmitted at a high enough voltage 

that the last house on the end of the line gets at least 114V. Commenters stated without smart 

meters, utilities have had to use statistical models to estimate the end-of-line voltage. 

Commenters stated in order to ensure regulatory compliance, utilities have built in a small 

reserve margin, setting the substation voltage higher. Commenters stated now, by knowing actual 

voltage at the end of the line, utilities can lower the substation voltage. Commenters stated this, 

in turn, lowers consumption, because the consumption at lower voltage requires fewer kWh. 

Commenters stated numerous CVR pilots have been conducted, and a few utilities are now 

deploying CVR technology on a system-wide basis. Commenters stated based on the pilots and 

other programs, the consumption at lower voltage requires fewer kWh. 

For Grid Efficiency, reduction in losses, commenters stated that between the injection of 

electricity from large power plants and deliveries to customers, about 7 percent of electricity is 

typically lost. Commenters stated transmission losses during hot, peak periods can be much 

higher. Commenters stated most of these losses occur via transformer losses and resistance in 

lines that would not be cost effective to reduce, however, other losses can be addressed costeffectively through the application of smart grid technology. Commenters stated technical losses

that occur due to minor equipment problems, unbalanced loads across feeders, and other 

technical issues can be corrected with more detailed smart meter and network information. 

Commenters stated technical and non-technical losses can be reduced by an estimated 5-10 

percent to increase grid efficiency. Commenters stated at the higher end, this translates into total 

electricity savings of about 0.5 percent, though the opportunity may ultimately be up to 1 to 1.5 

percent.

With respect to efficiency of the distribution system, commenters stated the role of smart, 

transactive distribution grids in enabling energy efficiency in the grid itself, plus better 

integration of distributed resources such as microgrids is quickly gaining prominence and 

promises to introduce entirely new types of efficiencies into the electricity system. Commenters

stated major state regulatory efforts are underway in New York State and California to pursue 

increasing the efficiency of the distribution systems, and more information on such will be 

available over the coming year.

Commenters recommended that the EPA grant credit for improvements in transmission and 

distribution efficiency. Commenters referred to technical comments submitted by SWEEP. 

Comment 27: Water and energy efficiency programs should be included in BSER
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Response 27: Multiple commenters requesting water programs that provide energy savings 

benefits be included in BSER. The EPA is excluding BB4 from BSER. See sections V.A and 

V.B of the final rule preamble of the CPP for EPA’s response to this comment. The EPA agrees 

that a wide variety of energy efficiency measures in the water sector can be cost-effective and 

produce multiple benefits including emissions reductions, water savings, reduction in customer 

bills, positive investments and job creation. Even though DS-EE is not used in calculating 

emission performance rates, the final rule gives states the flexibility to use DS-EE measures to 

achieve their emissions performance rates during compliance. See multiple subsections of 

section VIII of the final rule preamble of the CPP for details. Such measures must meet the 

eligibility requirements and provisions related to demand-side EE and the requirements and 

criteria related to proper quantification and verification of MWhs from demand-side EE savings 

as described in Section VIII of the final rule preamble of the CPP.

The following are summaries of the specific public comments under this comment:

Commenters recommended EPA include water and energy efficiency as part of EE measures.

Commenters recommended EPA issue guidance identifying an approved protocol for how states 

may obtain credit in their 111(d) compliance plans for water efficiency programs. Commenters

stated there are many opportunities to reduce water use through water efficiency measures, 

which in turn directly reduce the electricity used to pump and treat water and wastewater. 

Commenters stated EPA should provide guidance on acceptable methods for translating water 

savings into energy savings, building on several published and forthcoming studies on this issue.

Commenters pointed out that the treatment and delivery of water and wastewater services 

requires about four percent of all U.S. energy consumption each year and that policy makers at 

all levels are examining opportunities to achieve greater efficiencies in water and energy usage. 

Commenters shared a November 2014 meeting resolution that urges EPA to provide States with 

maximum flexibility to: [i] support energy efficiency measures stemming from the water-energy 

nexus, and [ii] incorporate those efforts, and their positive impacts on the environment, into any 

compliance plan that might emerge. Commenters included the full text of the resolution as 

Appendix C of their comment letter.

Commenters stated the electric and water sectors are closely aligned - more so than most realize. 

Commenters stated as the U.S. DOE and numerous others have observed, these sectors intersect 

at critical "nexus" points, which means that, among many other things, energy efficiency efforts 

in one sector will have significant impacts in the other. Commenters stated in general, this nexus 

encompasses the interlinking aspects of these two industries, which are highly interdependent: 

energy is required to extract, pump and deliver water to consumers, while water is used 

throughout the process of energy extraction and electricity production. Commenters stated water 

companies are large energy users. Commenters stated that by one estimate, "Some 4 percent of 

the nation's electricity goes toward moving (80 percent) and treating water/wastewater." 

Commenters stated this 4 percent equals approximately $4 billion in energy costs. Commenters

indicated that as the EPA has noted, "[W]ater and wastewater utilities are typically the largest 

consumers of energy in municipalities, often accounting for 30-40 percent of total energy 

consumed." 
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Commenters stated similarly, energy companies are large consumers of water. Commenters

stated a recent report stated, "In 2005, the nation's thermoelectric power plants -which boil water 

to create steam, which in turn drives turbines to produce electricity- withdrew as much water as 

farms did, and more than four times as much as all U.S. residences." Commenters stated that in 

the proposed rule, the EPA's building blocks include increased use of natural gas as a fuel 

replacement for coal in power plants across the country. Commenters stated even this turn to 

natural gas implicates significant water use as hydraulic fracturing increases in the United States. 

Commenters stated while the hydraulic fracturing industry has been increasing its efforts to reuse 

and recycle water, EPA estimates that hydraulic fracturing's annual national "water 

requirement[s] may range from 70 to 140 billion gallons. This is equivalent to the total amount 

of water [used] each year in roughly 40 to 80 cities with a population of 50,000 or about one to 

two cities of 2.5 million people." 

Commenters stated with regard to their increasing interdependence, recent droughts in the 

Southwest and major storms in the Northeast have underscored how closely these two sectors 

work together and how much they rely on each other: droughts can create challenges for energy 

companies to keep up with demand, while blackouts can compromise the ability of water 

companies to deliver water to customers. Commenters stated in short, there are numerous underexplored opportunities for aligning the ongoing work of water companies with the EPA's goal of 

cutting carbon emissions from existing stationary sources.

Commenters stated opportunities to leverage water company efforts to cut energy use are natural 

extensions of two of the EPA's four "building blocks" that it identified as foundational to state 

efforts vis-a-vis developing mechanisms to lower carbon intensity. Commenters stated the EPA's 

third building block, and the first of relevance here, emphasizes the use of zeroemission/renewable energy sources like solar and wind. As discussed in more detail below, 

Commenters have been leaders in harnessing these sources to drive down energy use and shrink 

its carbon footprint. Commenters stated the EPA's fourth building block encourages energy 

efficiency measures.

Commenters stated with regard to energy efficiency, there are certainly many opportunities for 

leveraging progress on this front in the water sector. Commenters stated water and wastewater 

treatment plants have not historically been designed with energy efficiency in mind. Commenters

stated today, we better understand that upgrading water and wastewater infrastructure with 

innovative water and energy efficiency technologies can yield more effective management of our 

energy use and our water system outputs (making the best use of every drop of water we have),

thereby easing customer rate burdens and facilitating delivery of energy efficient, reliable, and 

safe drinking water. 

Commenters stated they are an industry leader in energy efficiency innovations, and provided the 

following examples of innovations provide significant and measurable energy efficiency 

benefits:

• NPXpress. American Water has been awarded three patents for a technology 

called NPXpress to reduce aeration energy consumption, which uses the most 

energy during wastewater treatment, by up to 50 percent and supplemental carbon 

source by 100 percent. This technology has been implemented at seven full-scale 
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wastewater treatment plants in New Jersey and New York, and is currently being 

implemented at a system in California as part of the company's overall initiative 

to achieve sustainable, energy-neutral wastewater treatment. 

• Energy Usage Index Management. American Water manages its energy program 

using the Energy Usage Index (EUI) metric derived by dividing total power usage 

in megawatt-hours (MWh) by the volume of water sold in million gallons (MG) 

during a discrete period of time. The EUI data is collected and monitored to serve 

as a barometer for the condition of the pump inventory. Specifically, as pumps 

age, they wear and become less hydraulically efficient, which translates to more 

power required to deliver the same volume of water. American Water's pumping 

inventory is comprised of about 7,500 centrifugal pumping units. Of this, it is 

estimated that about 20 percent of the largest pumps consume 80 percent of 

American Water's total power usage. Significant reductions in energy usage and 

CO2 emissions can be achieved by replacing older, inefficient pumps. For 

example, replacement of 5 large (10 and 20 MG/day) pumps and motors at a 

Pennsylvania American Water plant resulted in a quantifiable reduction of 2,200 

MWh per year of electricity demand at this single facility. 

• Smart Grid Technology. American Water is the first U.S. water utility to use the 

Smart Grid technology of ENBALA Power Networks. This innovative technology 

manages the way American Water's treatment plants and pumps use electrical 

power, allowing us to offer capacity to the electric regulation market. The 

regulated market provides short term grid balance service critical to the integrity 

of the electric grid. A successful pilot program at Pennsylvania American Water's 

Shire Oaks Pumping Station offset 2 to 3 percent of the site's total energy bill and 

has led to a larger partnership between American Water and ENBALA Power 

Networks, one that will bring ENBALA's Grid Balance technology to large 

treatment facilities throughout American Water's service territory.

Commenters stated in order to prompt change in states that have not yet sought to reduce 

emissions and to mitigate the burden that states like New York face in achieving significant 

further reductions of GHG emissions on top of already realized reductions, the federal 

government should provide funding for efficiency measures and best management practices at 

government-owned infrastructure. Commenters stated specifically, the water and wastewater 

sector represents a significant opportunity for the implementation of energy efficiency measures 

and the construction of renewable generation capacity. By EPA's own account, commenters

stated the Rule is expected to increase electric prices by 6 to 7 percent by 2020 and increase costs 

for water utilities by approximately $250 million per year. While the water and wastewater 

sector represents a significant opportunity for the implementation of energy efficiency and 

renewable energy programs that may assist states in meeting the Rule's emissions guidelines, 

commenters stated energy efficiency programs have traditionally been targeted at other sectors. 

Commenters stated therefore, there are significant reductions that remain to be captured and 

investment in efficiency measures will have high returns, as water infrastructure operates 

continuously and includes long-lived assets. Commenters stated Federal funding for municipal 

water and wastewater utilities to implement efficiency and renewable energy projects would 

achieve significant reductions. Commenters stated further, EPA should ensure that standard 
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definitions of energy efficiency and renewable energy include processes and tools specific to this 

sector, such as water loss mitigation and water demand management, and biogas generated from 

anaerobic digestion, respectively.

Commenters commended the EPA for including building block four to demand-side energy 

efficiency within the Clean Power Plan. By including demand-side energy efficiency measures, 

commenters said impacted sectors that are not directly regulated by the plan will be able to 

nevertheless offset at least some of their increased costs of increasing electricity prices to 

reducing consumption.

According to commenters, the water utility sector is estimated to use approximately one percent 

of the nation's electricity supply to provide the water services, and in some areas a larger 

percentage. By translating the projected increased costs as electricity to the water sector, 

commenters say it is likely that this rule will cost utilities approximately $250 million per year 

by 2020, which is more expensive than most drinking water regulations have been historically. If 

the sector is able to secure just one percent of the funding likely to become available for energy 

efficiency measures, commenters estimated the sector's cost is likely to be reduced by about 

$100 million per year.

Commenters strongly believes that the water utilities sector could be an important part of 

reaching the state's goals laid out within the EPA's Clean Power Plan. Commenters noted that 

there is an ever-increasing body of literature about ways to increase energy efficiency at water 

treatment plants, in drinking water distribution, and in wastewater collection and treatment.

Commenters argued that, in many ways, water utilities are a golden opportunity for energy 

efficiency programs as they are professionally staffed, continuously operated, are present in most 

communities around the country and their efficiency gains can be easily verified as needed.

Although water utilities can participate to some extent in the more common replacement of 

lighting and heating and air conditioning systems that are presently in current state plans, 

commenters believed that there are great gains to be made throughout the Water-Energy nexus 

not only covered by existing state rebate incentive programs, but to include other items such as 

more efficient pumps and motors, reducing lost water and rehabilitation and replacement of worn 

and less-efficient infrastructure with more efficient equivalents.

Therefore, commenters encouraged the EPA to include language in the final rule as well as in 

guidance and supporting materials for the states, electric utilities and the public that the water 

sector can be included as an important part of achieving energy efficiency upgrades. 

Commenters further encouraged the EPA in their discussions with and guidance to states to 

allow for custom energy efficiency improvements to be eligible for funding rebates and 

incentives as many of the solutions throughout the water sector will be custom solutions for the 

particular circumstances in that area.

Commenters stated that research under the UCS-led Energy and Water in a Warming World 

initiative (EW3) found that high use of energy efficiency and renewable energy could lead to 

deep reductions in water impacts and cited the following findings:
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"A pathway focused on renewable energy and energy efficiency, we found, could 

deeply cut both carbon emissions and water effects from the power sector. Water 

withdrawals would drop 97 percent by 2050--much more than under business as 

usual. They would also drop faster, with 2030 withdrawals only half those under 

business as usual. And water consumption would decline 85 percent by 2050. This 

pathway could also curb local increases in water temperature from a warming 

climate."

Comment 28: Innovative Program Design and Financing

Response 28: The EPA decided not to include DS-EE (building block 4) in BSER for the final 

rule. A response is not provided here on how innovative energy efficiency financing programs 

relate to BSER as this comment is now outside the scope of the CPP. See sections V.A and V.B 

of the final rule preamble of the CPP for details. However, DS-EE does remains generally 

available for compliance, inclusive of energy efficiency financing programs which facilitate or 

indirectly result in greater demand-side energy efficiency. As is the case for all DS-EE, such 

measures must meet the requirements and criteria related to proper quantification and 

verification of MWhs from demand-side EE savings as described in Section VIII of the final rule 

preamble of the CPP. 

The following are summaries of the specific public comments under this comment:

Commenters supported use of innovative EE program design and financing.

Commenters stated improvements and innovations in EE program design and implementation 

can enable customers to capture a greater share of the available EE resource base, even absent 

technological improvements or reductions in technology cost. Commenters stated for example, 

recent innovative programs such as PACE financing have enabled more customers to invest in 

EE improvements. Commenters stated PACE financing effectively allows property owners to 

borrow money from a local government to pay for renewable energy systems and/or EE 

improvements. Commenters stated the amount borrowed is typically repaid via a special 

assessment on property taxes, or another locally-collected tax or bill, such as a utility bill. 

Commenters stated only property owners within a local jurisdiction that opt in to a PACE 

program may receive financing; local PACE programs are currently operating in at least nine 

states (California, Connecticut, Florida, Maine, Michigan, Minnesota, Missouri, New York and 

Wisconsin) and the District of Columbia. 

Commenters stated on-bill financing (OBF) is another innovative program that has been offered 

by some utilities and other EE program administrators to overcome the financial barrier faced by 

customers when investing in EE improvements that have a high upfront cost. Commenters stated 

OBF allows utility customers to invest in EE improvements and repay the funds through 

additional charges on their utility bills. Commenters stated if structured properly, an OBF 

program can substantially reduce the cost of and improve access to financing. Commenters stated 

in many cases, the product can be "bill-neutral," meaning that energy savings are sufficient to 

cover the monthly payments for the financing so that the total monthly charge on utility bills is 
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less than or equal to the pre-investment amount. Commenters stated on-bill programs have been 

piloted as early as 1993 but have recently seen a surge in popularity. Commenters stated 

currently, utilities in at least 23 states have implemented or are about to implement OBF 

programs, many of which (Illinois, Hawaii, Oregon, California, Kentucky, Georgia, South 

Carolina, Michigan, and New York) have legislation in place that supports adoption. 

Commenters stated achievable potential can be increased by utilities and state agencies through 

concerted investment and improvement in program design and financing. Commenters at least 

twenty states now have utilities that offer "on-bill" loan programs that allow ratepayers to 

finance energy efficiency projects at competitive rates, and repay the cost of the loans through 

monthly energy bills. Commenters stated that since 2009, over two dozen states have authorized 

local governments to implement PACE programs to provide competitive financing for energy 

efficiency projects by allowing property owners to repay the costs of energy efficiency 

investments gradually through their property taxes. Commenters stated individual utilities are 

increasingly devising other creative customer outreach and financial incentive programs that 

enhance participation in energy efficiency initiatives and help achieve greater levels of energy 

savings. Commenters cited a recent analysis of innovative energy efficiency program designs 

that estimated that such programs could achieve total savings of almost 1,200 TWh in 2030, or 

approximately 27 percent of baseline electricity demand, which is well in excess of EPA's target.

Commenters argued that EPA must bolster its action plan with an accelerated time table and 

incentive for EE. Commenters stated that a partial alternative to the replacement of coal with 

fracked gas is to reduce the consumption of electrical energy. However, commenters said the 

national effort to improve energy efficiency has unfortunately not received the support it 

deserves. Commenters noted that a recent analysis by the American Council for an Energy 

Efficient Economy, which studied measures taken to reduce energy consumption, ranked the 

U.S. 13 out of 16 of the world's major economies, with Germany number one. Commenters

provided a link to that analysis.

Commenters understood that the EPA has developed a national action plan for energy efficiency, 

but guessed that very few people in the audience for the public hearing were aware of that plan 

and its accomplishments. Commenters stated that there is a need to significantly bolster the 

action plan that EPA has developed with an accelerated time table and incentives for energy 

efficiency in buildings, homes, manufacturing plants, etc., and cited the comments from 

commenters on the subject.

Commenters argued that the Clean Power Plan must include stronger incentives for energy 

efficiency and renewables. Commenters were concerned that the Clean Power Plan incentivizes 

conversion of coal towards natural gas and nuclear, over conversion to wind, solar and most 

importantly for the commenters' state, energy efficiency. Commenters stated that the plan 

focuses on end-of-stack emissions instead of the Best Available Technology approach, which 

would create more incentives for renewables and efficiency. As the plan stands now, 

commenters noted that it only lists energy efficiency as an "option" not a mandate. According to 

commenters, this needs to be addressed in order to promote a healthy diversification of energy 

sources that will in turn promote better reliability of energy capacity.
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Commenters noted that Kentucky is far behind many other states when it comes to diversifying 

its energy portfolio. Commenters noted that their state has no Renewable Energy Portfolio 

Standard or Energy Efficiency Resource Standards and ranks third among states in per customer 

electricity use, while having some of the lowest per-capita income rates in the nation. In other 

words, according to commenters, due to the fact that their per capita energy consumption is 

among the highest in the nation, energy efficiency is one of their best avenues for real progress 

yet they have some of the least incentives. For Kentucky to not remain at the bottom, 

commenters stated that the plan must promote strong incentives for increasing energy efficiency.

Commenters remarked that, in addition to using Federal, state, and local energy efficiency 

building codes and energy efficiency product standards, evidence indicates that the adoption of 

financial mechanisms that encourage electric utility investment in energy efficiency can facilitate 

the achievement of incremental energy efficiency. The commenters explained that such measures 

include allowance for the recovery of energy efficiency program and administrative costs, 

allowance for the recovery of lost contribution to fixed costs, and incentives for shareholders or 

ratepayers to produce the desired best practice efforts.

Comment 29: EE Programs Lead to Economic Growth and Job Creation

Response 29: EPA agrees that a wide variety of energy efficiency measures can be cost-effective 

emissions reductions strategies which create multiple benefits, including lower electric bills, 

positive investments and job creation. Energy efficiency measures also continues to offer future 

emissions reductions opportunities. However EPA is excluding BB4 from BSER. See sections

V.A and V.B of the final rule preamble of the CPP for EPA’s response to this comment. Even 

though DS-EE is not used in calculating emission performance rates, the final rule gives states 

the flexibility to use DS-EE measures to achieve their emissions performance rates during 

compliance. See multiple subsections of section VIII of the final rule preamble of the CPP for 

details. EPA’s RIA’s illustrative plan scenarios incorporate a level of DS-EE (illustrative DS-EE 

plan scenario) and, thus, reflects the economic impacts of DS-EE: lower electric bills, lowering 

demand, and creating jobs. See the RIA for the final CPP for specifics.

The following are summaries of the specific public comments under this comment:

Commenters noted the economic benefits of EE programs.

Commenters noted that energy efficiency will lead to economic growth and job creation. 

Commenters stated that the Clean Power Plan will create jobs in Pennsylvania. Commenters

have already seen the job creation impact of demand side energy efficiency. Commenters noted 

that Pennsylvania's Governor, Tom Corbett, and his energy plan released in January stated a 

booking study that reported that Pennsylvania has the fifth highest number of energy and 

resource efficiency jobs in the nation with over 42,000 employees.

Commenters noted another recent study showing that Act 129 our energy efficiency resource 

standard here in PA may have created over 10,000 jobs.
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Commenters stated that looking forward, the American Counsel for an Energy Efficient 

Economy projects that almost 8,000 new efficiency jobs could be created by 2020 and almost 

17,000 by 2030 if Pennsylvania utilizes demand side reductions to meet the Clean Power Plan.

Commenters stated that they are not aware of a comprehensive snapshot of current jobs 

associated with energy efficiency in Iowa. However, according to commenters, Iowa utilities are 

regularly saving 1% to 1.5% annually and have been achieving these savings levels for a number 

of years. Commenters noted that there is a substantial infrastructure in place to support energy 

efficiency programs, including audit and analysis firms, retail, manufacturing, architects, and 

firms that handle service and installation for HVAC and other efficiency equipment. According 

to commenters, energy efficiency programs certainly support significant direct jobs among a 

wide range of firms. Commenters noted, in addition, consumer savings from energy efficiency 

are most frequently spent in the local economy, meaning many indirect and induced jobs are 

supported by energy efficiency in Iowa.

According to commenters, several recent analyses have been conducted on the economic benefits 

of using efficiency to comply with carbon pollution standards. Commenters noted that The 

American Council for an Energy Efficient Economy found that using a set of energy efficiency 

policies to comply with carbon standards could create 5,900 net jobs in Iowa by year 2030 while 

saving electric customers money. According to commenters, The Natural Resources Defense 

Council recently found that using energy efficiency to comply with carbon standards could 

create up to 2,500 jobs in Iowa by 2020 while saving electric customers money. According to 

commenters, these studies are consistent with a 2008 Iowa Policy Project study indicating that 

high levels of energy efficiency savings (e.g., 1.5% annually) could create up to 4,473 net jobs in 

2030.

Commenters provided an analysis of incentivizing EE through carbon pollution or other policies 

provides opportunity for economic growth and job creation. Commenters provided analysis of 

the 20 percent electricity savings by year 2030, showing a gain of 800,000 jobs for the American 

economy and wage gain of $45 billion; an increase in GDP of $26 million; and reduction of 971 

million mt CO2, 700,000 tons of SO2, and 800,000 tons of NOx.

Commenters stated EE has played an enduring and critical role in our nation's economy, is a lowcost resource, reduces energy bills, reduces operations and maintenance costs at industrial plants, 

and improves the quality and speed in the production of goods and services. Commenters cited a 

McKinsey study that estimated that a holistic approach to efficiency would save $1.2 trillion, 

reduce end-use energy consumption by 9.1 quads in 2020, and reduce 1.1 Gton GHG 

annually. Commenters stated infrastructure improvements and displacement of existing capital 

stock for newer productive EE technologies, reducing the distance people and goods are 

transported could reduce total energy use by 59 percent by 2050 (compared to BAU EIA 

projection).

Commenters cited the 2009 McKinsey study that found EE measures would save family and 

businesses $680 billion over 10 years and require 600,000 to 900,000 workers to develop, 

produce, and implement efficiency improvements, administer programs, and verify results.
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Commenters stated studies suggest that energy efficiency can provide the largest single source of 

GHG emission reductions. Commenters cited a recent study by Synapse Energy Economics that 

indicated a 0.1 percent reduction in electricity use by 2050, power sector CO2 emission would 

fall 25 percent below 2010 levels; a combination of EE and renewable energy technologies could 

reduce CO2 emission to 81 percent below 2010 levels and could avoid $450 billion in health 

effects from 2010 to 2050 (based on NRC damage factors).

Commenters stated EE is cost-effective and EE benefits exceed the costs over the investment life 

of measures and improvements. Commenters cited a LBNL study that demonstrated one-third of 

electricity and NG use in buildings could be saved at total cost of 2.7 cents/kWh for electricity 

and between $2.5 and 6.9/million Btu for NG (2007 dollars) and costs savings would be 3.5

times larger than upfront investment, or benefit-cost ratio of 3.5. Commenters cited a 2006 

Amann study that non-energy benefits of EE might range from 50 to 300 percent household 

energy bill savings, allowing financial savings, energy bill relief, comfort, aesthetics, noise 

reduction, health and safety, and convenience. Commenters cited 2003 Worrell and 2005 Lung 

studies that found non-energy benefits enhance the cost-effectiveness of EE within the industrial 

sector.

Commenters stated efficiency reduces emissions and mitigates health costs.

Commenters stated efficiency stimulates economic growth by reducing the cost of energy 

services and spurring job creation. Commenters cited ACEEE analysis for two policy 

scenarios: Advanced Case (42 percent energy savings from 2050 reference case) and Phoenix 

Case (59 percent energy savings from 2050 reference case). Commenters indicated the 

Advanced Case resulted in $2.4 trillion cumulative capital investment from 2012 to 2050, $15 

trillion in energy bill savings, and a 1.3 million job gain in 2050. Commenters indicated the 

Phoenix Case resulted in $5.3 trillion cumulative capital investment over the same time period, 

$23.7 trillion in cumulative energy bill savings, and a gain of 1.9 million jobs in 

2050. Commenters provided Figure 2 showing the employment benefits from the two policies.

Commenters provided an analytical framework to evaluate the net economic and employment 

impacts of EE. Commenters indicated they used the EIA BAU scenario as the 

baseline/backdrop; evaluated an Efficiency-Led scenario based on a more production 

investments in EE technologies, systems, and infrastructure. Commenters’ assessments were

based on 

1. The standard projection for U.S. electricity consumption over the period 2012 through 

2030;

2. The key characteristics of the alternative investment scenario; and finally, 

3. A description of the DEEPER modeling system used to evaluate the efficiency scenarios 

characterized in this report.

Commenters provided background on the EIA BAU scenario. Commenters stated the foundation 

for this assessment is the Annual Energy Outlook published by the Energy Information 

Administration (2012). Commenters stated that although the forecast of energy and other market 

trends covers all uses of energy within our economy (including transportation fuels, natural gas, 
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and other resources), here we will explore possible changes in our nation's electricity use 

beginning in 2012 through the year 2030. Commenters stated this includes the growth in the 

number of households, commercial, and industrial customers over that time along with the 

anticipated growth in the demand for electricity services by those users, and it also includes both 

expected trends in electricity prices as well as a discussion of potential drivers of important shifts 

in electricity demand. Commenters stated since we are exploring the impacts on the economy, 

we will review the anticipated growth in the nation's jobs and Gross Domestic Product (GDP), 

also through the year 2030. Commenters provided a table with the assumed reference case 

projections for key metrics against which they compared the impacts of an efficiency-led 

scenario.

Commenters stated the summary in Table 1 forecasts several positive trends even under the 

reference scenario: EIA projects the economy will grow at a faster clip than either the number of 

households or their increased use of electricity consumption, as measured by EIA's assessment of 

the nation's GDP, and jobs will also increase. Commenters stated while electricity expenditures 

will grow as well, they will rise more slowly than GDP. Commenters stated EIA's forecast 

clearly anticipates that the economy will make increasingly efficient use electricity to provide the 

nation's homes and businesses with needed goods and services. Commenters stated the businessas-usual rate of efficiency improvement still requires an increase in overall electricity 

consumption since the economy is projected to grow more quickly than the rate of efficiency 

improvement. Commenters stated while pollution control technologies are likely to reduce future 

air pollution from emissions of sulfur dioxide (SO2) and nitrogen oxides (NOx), as shown in 

Table 1, carbon dioxide (CO2) emissions are likely to increase due to the increased fossil fuel 

combustion associated with the generation of electricity.

Commenters stated that fortunately, we can do much better. Commenters stated we can reduce 

overall pollution levels and, at the same time, lower the nation's total electricity bill. Commenters

stated the many studies summarized in Section II of this report indicate that a much larger set of 

energy efficiency gains beyond the business-as-usual improvements is possible. Commenters

stated this is true for the residential, the commercial, and the industrial sectors of the 

economy. Commenters stated for example, if the energy efficiency opportunities highlighted in 

the study by Laitner et al. (2012) were to be developed and implemented, the total electricity 

demand for 2030, as shown in Table 1, would decline to 3,370 billion kilowatt-hours rather than 

increase to 4,258 billion kilowatt-hours. Commenters stated what may be less obvious, however, 

is that the efficiency gains will prove to be less expensive than increasing the generation capacity 

to meet the higher electricity demands. Commenters stated some readers may be surprised to 

learn how much the economy depends every year on the flow of normal investments as they 

affect our nation's homes, schools, businesses, roads, and bridges, as well as the many electric 

power plants, transmission lines, and industrial facilities needed to maintain a functioning 

economy. Commenters stated in Table 1 it appears that we will invest about $1,875 billion in 

new buildings and infrastructure, or in routine upgrades to existing infrastructure. Commenters

stated by 2030 this will grow to an estimated $4,066 billion or about 18.7 percent of 

GDP. Commenters stated as we might imagine, and as shown in the analysis that follows, 

redirecting even one percent of the nation's annual investment to greater gains in electricity 

efficiency can provide the foundation to achieve a significant level of cost savings compared to 

the normal rate of energy efficiency improvements. Commenters stated in addition, as we shall 

also see, more productive investments will drive a small but positive gain in the nation's job 
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market and achieve a cost-effective reduction in the nation's air pollution and greenhouse gas 

emissions.

Commenters provided notes on the key attributes of the Energy Efficiency Scenario. 

Commenters stated in this assessment, they drew upon two previously referenced studies to 

define an exploratory scenario that helps evaluate energy efficiency as a pollution control 

strategy; and, more critically, to explore how energy efficiency investments might drive both 

significant cost savings and overall gains in employment. Commenters stated the first 

assessment is from Laitner et al. (2012), which explored the long-term energy efficiency 

potential for two scenarios through the year 2050. Commenters stated that report examined a 

more complete set of efficiency options, including natural gas and petroleum efficiency 

improvements as well as electricity savings from all sectors of the economy. Commenters stated 

the second is Keith et al. (2011), a report from Synapse Energy Economics that focused 

explicitly on electricity savings alone. Commenters stated both assessments found that 

productive investments in energy efficiency upgrades generated a net positive economic benefit. 

Commenters stated although both studies indicate that electricity savings of 30 to 37 percent 

from the reference case projected for 2050 are possible, the central case of this analysis is an 

assessment of the economic impacts of achieving a 20 percent efficiency gain by 2030.

Commenters provided Table 2 (Key Metrics from Year 2050 Alternative Energy Future Studies)

that highlights key metrics from both the ACEEE and Synapse scenarios, to give a sense of scale 

and cost-effectiveness of the efficiency resource more broadly. Commenters also included two 

other studies: the Energy Technology Perspectives study published by the International Energy 

Agency (IEA/ETP 2010) and Reinventing Fire released by Lovins et al. (2011).

Commenters stated there is a wide range in the assumed future GDP growth among the five 

scenarios outlined in Table 1. Commenters stated the IEA projects an economy in 2050 that is 

about 1.95 times bigger than in 2010. Commenters stated ACEEE and Synapse, generally 

following the EIA's Annual Energy Outlook, suggest economic activity that will be 2.71 to 2.79 

times larger than 2010. Commenters stated Reinventing Fire suggests a more moderate growth 

path so that economic activity is 2.58 times larger in 2050 compared to 2010. Commenters stated 

in comparing the business-as-usual energy growth in the five scenarios with their respective 

2050 efficiency gains, the evidence suggests potential 2050 savings that range between 42 and 

59 percent. Commenters stated moreover, all of the scenarios suggest a net positive savings to 

investment ratio, ranging from 2.1 to 5.2 over the period of analysis within each scenario. 

Commenters stated to test the idea of how effective efficiency might be as a pollution control 

strategy, but reflecting larger uncertainties in the out-years, we take the analysis here to only 

2030.

Commenters stated our core scenario for this exploration assumes an electricity savings that, 

beginning in 2014, slowly ratchets up to reach 20 percent by 2030. Commenters stated the 

benefit-cost ratio of this scenario (as we shall see) is over 2.0. Commenters stated as we explain 

further in the section that follows, we assume that program costs will drive investments that, in 

turn, generate a 20 percent reduction in conventional electricity generation by 2030 so that the 

electricity savings, in constant dollars, are twice as large as the combination of program costs 

and investments, also in constant dollars.
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Commenters described the Dynamic Energy Efficiency Policy Evaluation Routine (DEEPER) 

Modeling System, which is an econometric input-output analytical tool. Commenters stated 

although recently given a new name, the model's origins can be traced back to modeling 

assessments that were first completed in the early 1990s. Commenters presented Appendix B for 

historical information and other details on the DEEPER model.

Commenters stated the DEEPER model is quasi-dynamic in that the costs of energy efficiency 

improvements are based on the level of efficiency penetration over some period of time. 

Commenters stated the greater the efficiency penetration, the higher the costs, and the resulting 

payback periods begin to increase. Commenters stated moreover, the model adjusts labor impacts 

given the anticipated productivity gains within key sectors of the U.S economy. Commenters

stated as an example, if the construction and manufacturing sectors increase their output as a 

result of the alternative policy scenario, the employment benefits are likely to be affected,

depending on assumptions about the expected labor productivity gains within each of those 

sectors.

Commenters stated input-output models initially were developed to trace supply linkages in the 

economy. Commenters stated for instance, an input-output accounting framework can show how 

purchases of lighting technologies or industrial equipment benefit the lighting and other 

equipment manufacturers in a state. In addition, because the input-output model has coefficients 

linking both directly and indirectly affected industries, the model can also reveal the 

multiplicative impacts that such purchases are likely to have on other industries and businesses 

that might supply the necessary goods and services to those manufacturers.

Commenters stated the net economic gains of any new investments in energy efficiency will 

depend on the structure of the economy, and which sectors are most affected by changes in new 

spending patterns that are promoted by investments in energy productivity rather than electricity 

supply. Commenters provided Figure 3 (titled: “Labor Intensities for Key Sectors of the U.S. 

Economy”) to illustrate this point, by comparing the direct and total employment impacts that are 

supported for every one million dollars of revenue received by different sectors of the U.S. 

economy. Commenters stated these include electric utilities, manufacturing, personal and 

business services, and construction. Commenters stated for purposes of this study, a job is 

defined as sufficient economic activity to employ one person full-time for one year.

Commenters stated of immediate interest in Figure 3 is the relatively small number of direct and 

total jobs supported by energy sector spending. Commenters stated within the United States the 

electric utility industry provides, for example, only 6.7 total jobs per million dollars of revenues 

that it receives. Commenters stated this total includes jobs directly supported by the industry as 

well as those jobs linked to businesses which, in turn, provide goods and services to maintain the 

utilities' operation. Commenters stated it also includes the additional jobs supported by the 

respending of wages within the U.S. economy. Commenters stated on the other hand, one million 

dollars spent in construction supports a total of 19.3 jobs, both directly and indirectly. 

Commenters stated as it turns out, much of the job creation from energy efficiency programs is 

derived by the difference between jobs within the utility supply sectors and jobs that are 

supported by the respending of energy bill savings in other sectors of the economy.
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Commenters provided an illustration of jobs created from improvements in commercial office 

buildings. To illustrate how a simplified job impact analysis might be done, Commenters stated 

we will use the example of installing one million dollars of efficiency improvements in a large 

office building. Commenters stated office buildings (traditionally large users of energy due to 

heating and air-conditioning loads, significant use of electronic office equipment, and the large 

numbers of persons employed and served) provide substantial opportunities for energy-saving 

investments. Commenters provided a table with the results of this example.

Commenters stated the assumption used in this example is that the investment has a positive 4-

year payback. Commenters stated in other words, the assumption is that for $1 million of energy 

efficiency improvements, the upgrades might be expected to save an average of $250,000 in 

reduced electricity costs over the useful life of the technologies. Commenters stated this level of 

savings is conservatively low but consistent with the low end of ranges cited elsewhere in this 

report. Commenters stated at the same time, if we anticipate that the efficiency changes will have 

an expected life of roughly 15 years, then we can establish a 15-year period of analysis. 

Commenters stated in this illustration, we further assume that the efficiency upgrades take place 

in the first year of the analysis, while the electricity bill savings occur in years 1 through 15. 

Commenters stated moreover, we assume that only half the savings occur in the first year as it 

may take several months to actually start an average project with savings not beginning until 

halfway through the year.

Commenters stated the analysis further assumes that we are interested in the net effect of 

employment and other economic changes. Commenters stated this means we must first examine 

all changes in business or consumer expenditures, both positive and negative, that result from a 

movement toward energy efficiency. Commenters stated each change in expenditures must then 

be multiplied by the appropriate multiplier for each sector affected by the change in 

expenditures. Commenters stated the sum of these products will then yield the net result.

Commenters stated in the example, there are four separate changes in expenditures, each with 

their separate effect. Commenters stated as Figure 3 indicates above, the overall impact of the 

scenario suggests a gain of 33.7 job-years (rounded) in the 15-year period of analysis. 

Commenters stated this translates into an average gain of about 2.2 jobs each year for 15 years. 

Commenters stated in other words, the efficiency investment made in the office building is 

projected to sustain an average gain of 2.2 jobs each year over a 15-year period compared to a 

BAU scenario. Commenters stated roughly speaking, if comparable projects like this scaled to 

more like $100 million in a single year, the number of jobs gained would similarly scale upward 

(to 3,370 job-years).

Commenters reviewed the appropriate modifications in the energy efficiency 

scenarios. Commenters stated the economic assessment of the alternative energy scenarios was 

carried out in a very similar manner as the example described above. Commenters stated that is, 

the changes in energy expenditures brought about by investments in energy efficiency and 

renewable technologies were matched with their appropriate employment multipliers. 

Commenters stated there are several modifications to this technique, however.

Commenters stated first, it was assumed that only 90 percent of both the efficiency investments 

and the subsequent savings are spent within the United States. Commenters stated we based this 
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initial value on the 2010 IMPLAN dataset as it describes local purchase patterns that typically 

now occur in the United States. Commenters anticipated that this is a conservative assumption 

since most efficiency projects are likely to be (or could be) carried out entirely by contractors 

and dealers within the United States. Commenters stated by way of illustration, if the share of 

domestic spending turned out to be 100 percent, for example, the overall job gain might grow 

another five percent or more compared to our standard scenario exercise.

Commenters stated second, an adjustment in the employment impacts was made to account for 

assumed future changes in labor productivity. Commenters stated as outlined in the Bureau of 

Labor Statistics Outlook 2010-2020, productivity rates are expected to vary widely among 

sectors. Commenters stated for instance, the BLS projects an economy-wide 1.5 percent annual 

average productivity gain as the economy better integrates information technologies and other 

improvements. Commenters stated to illustrate the impact of productivity gains on future 

employment patterns, let us assume a typical labor productivity increase of 2.2 percent per year. 

Commenters stated this means, for example, that compared to 2012, we might expect that a $1 

million expenditure in the year 2030 will support only 68 percent of the number of jobs as in 

2012.

Commenters stated third, for purposes of estimating electricity bill savings, it was assumed that 

current electricity prices for the residential, commercial, and industrial sectors in the United 

States would follow the same growth rate as those published by the Energy Information 

Administration in its Annual Energy Outlook 2012.

Commenters stated fourth, it was assumed that the large-scale efficiency upgrades are financed 

by bank loans that carry an average 6 percent interest rate over a 5-year period. Commenters

stated while this does raise the cost to end-users as a result of the interest that must be paid on 

bank loans, raising or lowering the interest rates in this analysis will not appreciably affect the 

results otherwise reported. Commenters stated that to limit the scope of the analysis, no 

parameters were established to account for any changes in interest rates as less capital-intensive 

technologies (i.e., efficiency investments) are substituted for conventional supply strategies, or in 

labor participation rates, all of which might affect overall spending patterns.

Commenters stated while the higher cost premiums associated with the energy efficiency 

investments might be expected to drive up the level of borrowing (in the short term), and 

therefore interest rates, this upward pressure would be offset to some degree by the investment 

avoided in new power plant capacity, exploratory well drilling, and new pipelines. Commenters

stated similarly, while an increase in demand for labor would tend to increase the overall level of 

wages (and thus lessen economic activity), the job benefits are small compared to the current 

level of unemployment or underemployment. Commenters stated hence, the effect would be 

negligible.

Commenters stated fifth, for the buildings and industrial sectors it was assumed that a program 

and marketing expenditure would be required to promote market penetration of the efficiency 

improvements. Commenters stated based on other program reviews, this was set at 15 percent of 

the efficiency investment in the early years but declining to 5 percent of the much larger 

investments in the last year of the assessment 64.
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Commenters stated finally, it should again be noted that, by design, this analysis does not 

account for the full effects of the efficiency investments since the savings beyond 2030 are not 

incorporated into the modeling assumptions. Commenters stated nor does the analysis include 

other productivity benefits that are likely to stem from the efficiency investments. These can be 

substantial, especially in the industrial sector. Commenters stated industrial investments that 

increase energy efficiency often advance other economic goals such as improved product quality, 

lower capital and operating costs, increased employee productivity, or capturing specialized 

product markets. Commenters stated to the extent these co-benefits are realized in addition to the 

energy savings, the net economic impacts would be amplified beyond those reported here.

Commenters provided an analysis of the economic impact of a cost-effective energy efficiency 

scenario. Commenters stated the investment and savings data from the efficiency identified 

above (again reaching a 20 percent electricity savings through efficiency gains by 2020) were 

used to estimate the financial and the economy-wide impacts for the key benchmark years of 

2014, 2020, 2025, and 2030. Commenters stated each change in sector spending was evaluated 

by the Investment and Spending module within the DEEPER model for a given year, relative to 

the baseline or business-as-usual scenario. Commenters stated these were then matched to their 

appropriate sector impact coefficients.

Commenters stated these changes were further evaluated by DEEPER's macroeconomic module 

to estimate the larger overall job and wage benefits for the U.S. economy. Commenters stated 

starting with very small impacts in 2014, the end-use energy efficiency target of a 20 percent 

savings by 2030 spurs both program costs and technology investments that, in turn, begin to 

change the patterns of electricity consumption and production. Commenters stated program 

spending of $635 million in 2014 is assumed to drive an initial $4,231 million in technology 

investments in that year. Commenters stated that these investments are assumed to be financed 

over time so that the actual outlays in 2014 are only $1,004 million. Commenters stated the 

initial impacts on electricity production are relatively small, reducing electricity bills by an 

estimated $2,834 million (about 0.8 percent of the reference case electricity expenditures 

otherwise projected in that year). Commenters stated both program spending and the annualized 

efficiency payments rise to 2.3 and 39.5 billion dollars by 2030, respectively. Commenters

provided Table 4 (titled: “Key Annual Financial and Economic Impacts from the Efficiency 

Scenario”) of the impacts resulting from the analysis.

Commenters stated the net savings on electricity bills (i.e., the savings after program costs and 

the annual payments for investments have been paid) exceeds $46 billion (rounded) in 2030, 

which is about 11 percent of the nation's reference case electricity bill for that year. Commenters

stated the net residential or household savings start at only $6 in 2014, slowly increasing to $62 

in 2020, and then rise steadily to an annual $147 savings for an average household by 2030.

Commenters stated as might be expected, the program spending and changed investment patterns 

have a distinct economic impact. Commenters stated the second set of impacts in Table 4 

highlights the key employment and wage benefits for the same years. Commenters stated overall 

employment benefits begin with about 49,504 jobs in 2014, but grow steadily as both 

investments and electricity savings increase over time. By 2030, the total job gain reaches 

818,827 jobs, about 0.51 percent of the jobs otherwise available in that year. Wages associated 

with the added jobs similarly increase to just short of $45 billion by 2030. Commenters provided 
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a table with employment impact results from the analysis (see Table 5 of the comment letter, Net 

Employment Impacts (Actual Jobs)).

Commenters stated they also ran a series of sensitivity simulations to test the robustness of the 20 

percent savings target in 2030. Commenters provided a table that summarizes those findings. 

Commenters stated in effect, we compare the year 2030 savings target with the net savings (in 

millions of 2010 dollars) in that year, the average savings per household (in actual but still 

constant 2010 dollars) also in 2030, and finally, the overall job gain that might be created in that 

last year of the efficiency scenario. Commenters stated we provide a benefit-cost ratio that 

discounts the savings and the program and investment costs over the period 2014 through 2030 

using a 5 percent discount rate.

Commenters stated beginning with a 5 percent savings target, we find that the smallest effort 

shows the largest benefit-cost ratio (assuming all costs are discounted 5 percent annually). 

Commenters stated this makes sense as the least-cost resources are likely to be used up first. 

Commenters stated by themselves, however, the very cheapest efficiency resources do not 

generate sufficient savings to drive a very large gain in employment, in this case 169,112 jobs. 

Commenters stated the maximum net savings per household tops out at about 15 percent 

efficiency savings. Commenters stated that provides an average net return of $157 per 

household. Commenters stated at that level employment increases by about 563,013 jobs per 

year.

Commenters stated the maximum net energy bill savings is reached at about the 20 percent target 

with a net return of $46,185 million which helps drive the gain of 818,827 jobs as we described 

in the text surrounding Tables 4 and 5. Commenters stated the least cost-effective scenario calls 

for a 30 percent savings target; although less cost-effective, this scenario also generates the 

greatest number of total jobs because of the substantial construction activity generated in the 

later years to achieve this level of savings. Commenters provided Figure 4 (titled: “Net Job 

Impacts of Energy Efficiency Scenarios by Year 2030 Percent Savings”) with a graphic 

summary of overall job impacts by year as a function of the year 2030 savings from the reference 

case. Commenters stated beginning with the assumption that first year savings in 2014 is about 

0.75 percent of reference case sales, each of the scenarios slowly increases the gain in jobs as 

greater investments drive a greater level of savings. Commenters stated the year 2030 end-points 

are consistent with the results presented in Table 6.

Finally, commenters provided, although not part of the DEEPER modeling system, a working 

estimate of the reduction in air pollution and greenhouse gas emissions in the year 2030 for the 

20 percent savings scenario. Commenters stated this is roughly calculated as the difference in the 

year 2030 electricity generation in the BAU compared to the efficiency-led scenario multiplied 

by the 2030 (avoided) average rate of emissions (pounds per kWh) of sulfur dioxide, nitrogen 

oxides, and carbon dioxide emissions. Commenters stated the average rates of emissions in the 

2030 efficiency-led scenario are further reduced by the 20 percent savings under the assumption 

that it is the marginal generation power plants (essentially the generally dirtier units) that will be 

displaced by the alternative pattern of investments guided by carbon pollution 

standards. Commenters provided a table that summarizes the reduced impacts of air pollution 

and greenhouse gas emissions.
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Commenters stated in short, mobilizing energy efficiency as a pollution reduction mechanism 

can provide dramatic reductions in air pollution and greenhouse gas emissions. Commenters

stated achieving a 20 percent improvement in efficiency by 2030 could reduce emissions of 

sulfur dioxide and nitrogen oxides by 700,000 and 800,000 tons, respectively, and cut carbon 

pollution by 971 million metric tons, nearly a full gigaton, even as consumers and businesses 

save money and new jobs are created. Commenters stated the emission reductions described in 

Table 7 are about 57 percent of the emissions projected in the power sector for the year 2030 in 

the BAU case.

Commenters said that EE brings socio-economic and energy infrastructure benefits.

Commenters commented that implementing a broadbased set of energy efficiency measures 

would generate new jobs. Commenters cited a recent study that found that energy efficiency 

measures were both technically feasible and cost effective, would reduce utility bills in Georgia 

by $3.8 billion annually, and would create 32,000 new jobs each year by 2020. Commenters

explained that using less electricity means that consumers pay lower power bills and can spend 

more money on other things, such as cars, houses, food and education, and that the production of 

these goods and services generate many more jobs than money spent on electricity bills because 

power generation is resource- and capital- intensive, and not labor intensive.

Commenters stated that the EPA can strengthen the Clean Power Rule to ensure that the greatest 

amount of emissions reductions are delivered at their lowest cost by taking into full account the 

benefits of energy efficiency and distributed generation. Commenters added that the efforts by 

the city of Chicago to enhance neighborhoods and strengthen the economy by making energy 

efficiency improvements and distributed generation sources more accessible to its residents and 

businesses can be further encouraged and expanded under the proposed rule.

Commenters said that "efficiency is the most affordable, fastest, and cleanest path to reducing 

carbon emissions. To businesses and households, it literally pays for itself. To cities, reducing 

business and household energy costs means more money stays in the local economy."

Commenters highlighted the importance of EE. Commenters said:

"Energy efficiency touches all aspects of our economy and, in the context of any 

rule related to 111(d), can help states meet the requirements of such a proposed 

rule by recognizing the importance of states finding energy savings across all 

sectors. Admittedly, there is more than one way to assess the cost equation that 

policy makers must wrestle." "Energy-efficiency solutions can, without 

consideration of its capacity to reduce carbon emissions, yield economic benefits 

to consumers and business, and the marketplace, either alone or when combined 

with cost-justified and technically feasible energy conservation regulation, can 

reduce carbon emissions."

Commenters elaborated on how residential and commercial buildings, and the industrial and 

manufacturing sectors benefit from EE and provide statistics of current energy consumption by 

these sectors and potential emissions reductions from EE. Commenters ended by saying that:
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"the electric grid itself can be modernized to operate more efficiently." "A modern 

grid uses information and communications technologies, such as smart meters 

and high-tech sensors, to isolate problems and repair them remotely; recover 

more quickly from extreme weather outages; and maximize the efficiency, 

reliability and affordability of electricity. New grid technologies and solutions 

consume less energy and decrease the carbon-intensity of the grid through the use 

of efficient transformers, volt/VAR optimization, energy storage, microgrids, and 

combined heat and power (CHP) applications; allow energy efficient buildings 

and residences to sell power to the grid; and accommodate a growing number of 

electric vehicles, all of which contribute to lower emissions and economic 

growth." "States and tribes should adopt energy efficiency programs and 

activities that may vary substantially by state but reflect local conditions. 

Recognizing this diversity, EPA should invite multiple approaches to allowing 

energy efficiency emissions reductions to be part of compliance plans."

Commenters stated that:

"EPA should encourage states to use energy efficiency as a low-cost compliance 

option by including a deeper discussion of the possible economic benefits that 

would accrue to businesses and households. State experiences show that energy 

efficiency programs are cost-effective, win-win opportunities that can save money 

for customers and provide broader benefits including economic growth, job 

creation, and improved local air quality."

Commenters provided examples for these statements.

Commenters also said that "The Regional Greenhouse Gas Initiative (RGGI), a cap-and-trade 

program for power sector carbon dioxide emissions among 9 states in the Northeast and midAtlantic regions, which could serve as a model for compliance with EPA's new standards, has 

several years of practical experience linking emissions standards and energy efficiency." 

"Whereas energy efficiency is typically the lowest cost compliance option, this rule could 

encourage states to increase the ambition of their efficiency targets and other utility programs 

and spur some of the 26 states that do not currently have robust, binding efficiency programs to 

adopt them. Doing so can help reduce the costs of implementing the standards and produce net 

benefits for electricity customers over time, as well as inject more revenue into the economy and 

create new jobs."

Commenters said academic analysts have concluded that hundreds of thousands of jobs can be 

created by California's expanding energy efficiency programs. 

Comment 30: Funding Is Needed

Response 30: The EPA decided to not include DS-EE in BSER in the final CPP. See sections

V.A and V.B of the final rule preamble of the CPP for details. However, DS-EE remains 

generally available for compliance, as EPA recognizes that a wide variety of EE programs have 
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been achieving significant energy savings for years with additional opportunity to achieve energy 

savings in the future. DS-EE programs are being implemented widely across the sector and 

investments are increasing. See multiple subsections of section VIII of the final rule preamble of 

the CPP for details. Further, EPA recognizes that regulatory options do exist, and are generally 

available for states to consider in support of greater use of DS-EE policies and programs. See the 

Demand-side Energy Efficiency TSD for CPP Final Rule for additional discussion of energy 

efficiency funding and related state regulations.

The following are summaries of the specific public comments under this comment:

Commenters stated funding is necessary for implementation of EE programs.

Commenters recommended federal government spending to support energy efficiency programs 

used to meet Clean Power Plan goals. 

According to commenters, significant future energy efficiency measures are not likely without 

massive investment in newer housing. Commenters saw significant energy efficiency 

improvement after Hurricane Katrina, when, unfortunately, thousands of housing units were 

destroyed and replaced with newer energy-efficient houses that contained newer energy-efficient 

appliances. According to commenters, that improvement was not possible, though, without a 

massive federal assistance.

Commenters also recommended increased government funding of energy efficiency projects, 

especially those administered by public power utilities. While there is certainly room to advance 

energy efficiency as the Proposed Rule contemplates, commenters said the significant work done 

to date means far more expensive improvements lay ahead. Commenters stated that additional 

federal support of this nationwide endeavor is necessary and appropriate.

Commenters stated that their company has a strong tradition of providing energy efficiency 

programs and has been recognized for outstanding energy efficiency program delivery. 

Commenters fully supported energy efficiency as a building block to help meet Clean Power 

Plan goals. In order to meet the Clean Power Plan goals, commenters said an increase in energy 

efficiency funding available to New Hampshire's electric utilities to administer energy efficiency 

programs is needed.

Drawing on their experience implementing and observing robust energy efficiency programs in 

other New England states and around the country, commenters stated there are key structural 

components needed in the State of New Hampshire to support an effective economic model for a 

successful expansion of efficiency programs. According to commenters, these key concerns 

include:

• Program cost recovery coincident with spending, including a reconciling 

mechanism in the subsequent program year.

• Lost revenue recovery on energy efficiency driven savings.
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• Performance-based incentives that transform energy efficiency into a sustainable 

line of business for utilities.

Absent additional funding and implementation of the key structural components needed to 

support an effective economic model, commenters said the recommended Clean Power Plan 

energy efficiency goals for New Hampshire cannot be met. Commenters said that their company 

is ready to work with New Hampshire's state agencies and other energy efficiency stakeholders 

to develop a framework for meeting the Clean Power Plan goals and expanding the level of 

energy efficiency services offered to their customers.

Commenters recommended that the federal government finance and support the construction of 

energy efficient affordable housing and the implementation of efficiency measures in existing 

housing stock, award grants to environmental justice communities to construct zero to low 

emission generation capacity and install energy efficiency measures, and implement programs to 

educate communities about the availability of other funding and programs that are available to 

achieve reductions. According to commenters, the City's One City programs provide several 

initiatives that will achieve GHG reductions in New York communities, and those programs 

would be strengthened with additional federal funding and support.

Comment 31: Tribes and Territories--Support EE

Response 31: The EPA is excluding BB4 from BSER. See sections V.A and V.B of the final 

rule preamble of the CPP for the EPA’s response to this comment. Even though DS-EE is not 

used in calculating emission performance rates, the final rule gives states, tribes and territories 

the flexibility to use DS-EE to achieve their emissions performance rates during compliance. See 

multiple subsections of section VIII of the final rule preamble of the CPP for details.

The following are summaries of the specific public comments under this comment:

Commenters support the implementation of Building Block 4.

Comment 32: Tribes and Territories--Unique Circumstances

Response 32: The EPA decided not to include DS-EE in BSER for the final rule. A response is 

not provided here as this comment is now outside the scope of the CPP. See sections V.A and 

V.B of the final rule preamble of the CPP for details. DS-EE remains generally available for 

compliance, with flexibility provided for tribal governments. See multiple subsections of section 

VIII of the final rule preamble of the CPP for details. 

The following are summaries of the specific public comments under this comment:

Commenters noted that EPA did not consider the unique circumstances of the Navajo Nation. 

According to commenters, EPA's fundamental error in its application of Building Block 4 to the 

Navajo Nation was its reliance, in crafting Building Block 4, on data from energy efficiency 
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programs in states and regions of the country that have vastly different circumstances from those 

of the Navajo Nation. According to commenters, EPA proposed a program for the Navajo Nation 

based upon what it learned from examination of the state programs but noted that circumstances 

for the Navajo Nation more closely resemble the poorer nations in the world, such as Bangladesh 

or Ghana, than the Navajo Nation's neighboring states or any other state, for that matter. 

Commenters noted that a program that works well for a state may not work for the Navajo 

Nation and is unlikely to do so. In fact, according to commenters, if there is a problem with 

electricity demand on the Navajo Nation, it is that it is too low, not that electricity use is 

inefficient. 

Commenters also noted that per capita electricity consumption on the Navajo Nation is well 

below that of any of the states. According to commenters, the purpose of demand-side measures 

is to reduce electricity usage through more efficient devices (LED lights or more efficient 

appliances, for example) or through behavioral changes: however, per capita energy 

consumption on the Navajo Nation is already well below that of any of the states, even the most 

energy-efficient states such as Hawaii and California.

Supplied figures from commenters showing per capita residential and per capita total electricity 

consumption (in MWh/yr), developed from EIA Form 861 data and U.S. Census data and as 

shown, demonstrate that the Navajo Nation already uses far less energy per person than even the 

most energy efficient states.

According to commenters, it is apparent that EPA did not factor in energy usage or ability to pay 

in establishing energy efficiency goals, but it should have. Commenters stated that it is unfair 

and unjust to require a people who use so little electricity and live in extreme poverty to bear a 

burden similar to that of people who use so much more electricity and are in a much better 

position to afford increased electric rates.

Commenters noted that EPA should recognize the Navajo Nation's unique situation and should 

allow it to increase its electricity usage to be closer to that of its neighbors. According to 

commenters, EPA did not evaluate actual electricity demand trends, ability to pay, or per capita 

electricity use in developing its goals under Building Block 4. Commenters noted that this 

proposed approach is very harmful to the Navajo Nation.

At current electricity usage levels, commenters noted that the Navajo Nation economy cannot 

grow, the Navajo Nation cannot develop a modern economy and the Navajo people are confined 

to a state of extreme poverty. According to commenters, the Supplemental Proposed Rule does 

nothing to alleviate this condition, but rather exacerbates it. According to commenters, under 

EPA's proposed approach, the Navajo Nation's annual rate of electricity usage shrinks at an 

average rate of about 1.06% per year and the per-capita demand in 2019 drops to only 26% of 

that of its neighbors. Commenters noted that EPA's approach to Building Block 1 reduces the 

electricity usage of the Navajo Nation and makes it an even smaller fraction of what its 

neighbors use, guaranteeing continued poverty levels on the Navajo Nation. According to 

commenters, if the Navajo Nation were to increase its electric energy usage to a level 

comparable to where its neighbors will be in 2029 after application of Building Block 4, it would 

result in an average annual electric energy growth rate or 12.8% over the 17 years from 2012 to 

2029 to a rate of 2,144,947 MWh. Commenters stated "This is what is called the Parity 
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Glidepath." Commenters noted that such a high rate of growth is not likely to occur without 

substantial investment, but it demonstrates the disparity that exists between electricity 

availability to the Navajo Nation versus its neighbors. Commenters stated that EPA should have 

accounted for this disparity.

According to commenters, EPA's proposed application of Building Block 4 to the Navajo Nation 

will not reduce CO2 emissions and will increase the cost and decrease the availability of 

electricity on the Navajo Nation, thereby denying the Navajo Nation the possibility of 

developing a modern economy and preventing an improvement in the living standards on the 

Navajo Nation so that they are comparable to the living standards of the states. Commenters

noted that EPA should develop a goal that would allow the Navajo Nation to follow the Parity 

Glidepath and end up on a par with its neighbors.

Comment 33: Commenters said that, energy efficiency has been adequately demonstrated, costeffective, imposes minimal environmental costs, and reduces overall energy requirements. 

Response 33: The EPA agrees with commenters that energy efficiency offers a substantial and 

cost-effective strategy for reducing greenhouse gas emissions from the power sector. The EPA 

has determined not to include demand-side energy efficiency (building block four) in the BSER 

of this final rule and therefore we do not need to address further comments supporting the 

removal or changes in the level of DS-EE in BSER. This determination is discussed in sections

V.A and V.B of the final rule preamble of the CPP. Even though demand-side energy efficiency 

is not being included in the BSER in this final rule and, thus, not included in the determination of 

emission performance rates, the final rule provides states the flexibility to use demand-side 

energy efficiency measures in their state plans for compliance to meet the emission guidelines set 

forth in the final CPP, provided they meet the applicable requirements established in section VIII 

of the preamble for the CPP. The EPA recognizes that one of the major approaches available for 

achieving CO2 emission reductions from the electric power sector is demand-side energy 

efficiency. The EPA continues to believe that significant emission reductions can be achieved by 

the use of such measures cost effectively and that such measures are likely to represent an 

important component of state plans. Accordingly, the EPA is including a level of DS-EE as a 

component of our illustrative plan scenarios that are the basis for the analysis discussed in the 

RIA that supports the final CPP and in the Demand-side Energy Efficiency TSD for CPP Final 

Rule.

The following are summaries of the specific public comments under this comment:

Commenters said that the energy efficient lighting programs offer the least expensive compliance 

option to increase energy efficiency. Commenters gave four examples of utility funded programs 

that are as follows:

1. Commenters said electric utility customer-funded EE programs represent 89% of all 

state-level EE programs resulting in $14 billion dollars in savings by 2015.

2. Commenters said Edison Foundation funded an EE program that saved 126TWh of 

electricity in 2012.
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3. Commenters said ACEEE estimates that the energy savings due to a 111(d) performance 

standard could save consumers Dollar 143 billion and reduce CO2 emissions by a total of 

4.9 billion metric tons if states only utilized utility EE programs.

4. Commenters said recent analysis by Lawrence Berkeley National Laboratory (LBNL) 

concluded that utility customer-funded EE programs delivered energy savings at a cost of 

roughly 2 cents / kWh over the lifetime of the investment. The same analysis concluded 

that lighting EE measures delivered energy savings at half the cost of all EE measures at 

1 cent / kWh.

Comment 34: Observing need for shareholder/utility incentives for EE in vertically integrated 

states.

Response 34: The EPA has not included demand-side EE (building block four) in the BSER of this 

final rule. However, the Demand-side Energy Efficiency TSD for CPP Final Rule discusses utility 

regulatory models for supporting utility EE investments including shareholder incentive 

mechanisms and other strategies for leveling the impact on utilities and their shareholders 

relative to non-EE capital investments. The EPA recognizes the ongoing progress made by states 

across the country in adopting regulatory models that support utility EE investment and believes 

that effective state models exist and have demonstrated their effectiveness in practice as 

discussed in the TSD. Adoption of these models will better support the use of DS-EE in state 

strategies in response to the final rule.

The following are summaries of the specific public comments under this comment:

Commenters stated that in the Southeast, where most southeastern utilities remain vertically 

integrated, incentive mechanisms will likely be needed to eliminate return-on-investment gaps 

with energy efficiency as compared to other capital investments.

3.4.2 State goal setting

This section discusses the annual incremental savings target rate as it applies to demand-side EE

programs.

Commenters have raised a number of issues related in this subsection which are organized by 

comments below. Responses are provided for these topics. 

• Support State Goal of 1.5%/1.0%

− Adequately demonstrated and supported

− It could be more stringent
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• Oppose 1.5%/1.0% state goals

− It has not be adequately demonstrated; it is not sustainable over time; there are 

errors in the EPA’s analysis; and the EPA didn’t consider unique factors

• Ramp rates are too aggressive or not aggressive enough

• EPA should change specific elements of the EE BSER calculations 

− The EPA should use BAU sales projection to determine achievable EE 

− Useful life and expiring savings can be longer than 10 years. 

− Targets should be modified to include electric vehicle effect on load growth

− The EPA should use adjusted gross savings for target setting.

• State specific comments

− The 1.5% goals are too stringent for my state because of various reasons

• Tribes BB4 goal setting shouldn’t be applied in the same manner

Comment 1: Support State Goal of 1.5 Percent

Response 1: One of the major approaches available for achieving CO2 emission reductions from 

the utility power sector is demand-side energy efficiency. The EPA continues to believe that 

significant emission reductions can be achieved through use of such measures at reasonable costs 

and that demand-side energy efficiency will represent an important component of state plans. 

The EPA has not included demand-side EE (building block four) in the BSER of this final rule.

However, the EPA is excluding DS-EE from BSER. See sections V.A and V.B of the final rule 

preamble of the CPP for the EPA’s response to this comment. DS-EE remains generally 

available for compliance. Demand-side EE that are tied to a state plan and achieve quantified and 

verified MWh savings may be used to achieve the emission guidelines specified in the CPP Final 

rule, provided they meet the eligibility requirements for resources described in Section VIII. of 

the final rule preamble of the CPP. Even though Demand Side EE is not in the final rule under 

BSER, the EPA is using a DS-EE target level of 1.0% for the illustrative demand-side energy 

efficiency plan scenario. See the Demand-side Energy Efficiency TSD for CPP Final Rule for 

support and details.

The following are summaries of the specific public comments under this comment:

Commenters supported the 1.5 percent incremental annual energy savings proposed by EPA.

Commenters supported the determination that a 1.5 percent incremental annual energy savings 

rate is feasible, cost-effective, and adequately demonstrated. Commenters confirmed EPA's 
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determination that an annual energy savings rate of 1.5 percent per year in utility-based energy 

efficiency programs for BSER is achievable, reasonable, and sustainable. Commenters cited an 

ACEEE report that indicates six states have achieved this savings rate in 2013 through utility and 

non-utility energy efficiency programs, and another five that have achieved greater than 1 

percent savings. Commenters stated that two states, Massachusetts and Rhode Island, exceeded 2

percent savings in 2013, while Vermont has achieved savings greater than 1.5 percent for the 

past 7 years. Given these historical reductions, commenters stated the target set by EPA is 

conservative, it would be inappropriate/unjustified for EPA to use the alternative proposed level 

of 1 percent annual incremental energy savings, and EPA itself notes that 1.5 percent is 

conservative because it does not include EE measure from many existing policies.

Commenters stated the annual incremental electricity savings rate to meet the 2030 EE building 

block target is already being achieved by states. Commenters stated the annual incremental 

savings target rate of 1.5 percent is a reasonable estimate of the savings that can be achieved at 

reasonable costs by states and within a reasonable timeframe. Commenters stated that as noted in 

the proposed rule, "twelve leading states have either achieved, or have established requirements 

that will lead them to achieve, annual incremental savings rates of at least 1.5 percent of the 

electricity demand that would otherwise have occurred".

Commenters supported EPA's conclusion, on the basis of recent potential studies as well as the 

experience of states that have succeeded in developing energy efficiency programs, that all states 

can eventually achieve annual incremental energy savings of at least 1.5 percent of retail sales 

each year. Commenters stated this assessment is amply supported by individual energy 

efficiency potential studies that have been performed around the country, as well as by broader 

national and regional studies. Commenters stated EPA's assessment is conservative because it is 

based largely on efficiency opportunities that have historically been captured through ratepayerfunded energy efficiency programs. Importantly, commenters stated these are programs where 

the cost effectiveness of energy efficiency investments are typically evaluated in the absence of 

carbon dioxide emissions standards for the power sector, and factoring in those avoided 

compliance costs will inherently increase the amount of cost effective energy efficiency 

investments. Commenters stated EPA's analysis does not fully account for many existing energy 

efficiency technologies and practices - such as whole-building retrofits, commercial building 

commissioning, upgrades to transmission and distribution infrastructure, voltage/VAR 

optimization, and combined heat and power, that are typically not included in achievable 

potential studies but are nonetheless available to states and utilities, and added that nor does 

EPA's analysis fully reflect the many emerging energy efficiency technologies that will increase 

future technical and economic potential for energy savings. Commenters noted EPA's 

assessment does not capture the many innovative mechanisms now being developed by states, 

utilities, and the private sector to streamline the financing and delivery of cost-effective energy 

efficiency solutions, all of which will have the effect of increasing achievable potential. In light 

of these considerations, commenters stated EPA's 1.5 percent target likely understates the actual 

magnitude of savings that states can and will achieve as they implement state plans.

Commenters stated EPA's assessment of energy efficiency potential is conservative and readily 

achievable. Commenters stated EPA's proposed annual energy savings target of 1.5 percent of 

retail sales is readily achievable and, indeed, likely underestimates the full potential for costeffective energy savings. Commenters stated that as EPA notes in the TSD accompanying the 
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proposed rule, the 1.5 percent target is consistent with average achievable energy savings in 

twelve recently-conducted potential studies from around the country, and with an ACEEE 

analysis from April 2014. In addition, commenters stated three states were already achieving 

this level of energy savings as of 2012, and an additional nine states will be required to achieve 

this level by 2020 under existing energy efficiency policies. Commenters stated these 

considerations all indicate that the 1.5 percent target is adequately demonstrated.

Commenters indicated States have made these [EE] investments because these programs are 

good for consumers, even absent limits on carbon pollution. Commenters stated that according 

to analysis by the World Resources Institute, these programs "regularly save customers over $2 

for every $1 invested, and in some cases up to $5." Commenters stated that according to ACEEE, 

ramping up every start target to 1.5 percent would increase GDP by over $17 billion by 2030 

while creating over 600,000 new jobs. 

Commenters cited white paper prepared by the Analysis Group (submitted separately to this 

docket) that focuses specifically on the 1.5 percent target, evaluating both EPA's meta-analysis 

and a recent comprehensive study by ACEEE (2014), as well as other literature. Commenters

stated the Analysis Group's review confirms that the studies considered by EPA and ACEEE are 

thorough, geographically diverse, and represent sound methodologies for evaluating energy 

efficiency potential. Commenters stated the Analysis Group review finds that energy efficiency 

potential studies have found economic and achievable energy savings potential well in excess of 

1.5 percent per year in all major regions of the country, and over varying forecast periods 

ranging up to 20 years. Commenters stated the Analysis Group report also includes a critical 

evaluation of the EPRI (2009) analysis reported in the TSD, which found significantly lower 

energy savings potential than other studies reported in the literature; the Analysis Group notes 

that, among other flaws, the EPRI analysis excluded savings from a wide range of efficiency 

measures and did not take into account the potential to reduce energy consumption through 

accelerated replacement of equipment.

Commenters stated, as the Analysis Group report also explains, the methodology used by EPA 

(and other similar analyses) to quantify achievable potential is likely to lead to a conservative 

result that understates the full scale of energy savings that can be achieved by states and utilities. 

Commenters stated this is because "achievable" potential is typically defined to represent only a 

fraction of cost-effective energy efficiency potential, and is often intentionally restricted to 

reflect current energy efficiency program budgets and limitations. Commenters stated that as the 

National Academy of Sciences described it in a 2010 review of potential studies, "The risk of 

overestimating efficiency potential is minimal, owing to the methodologies that are used in the 

studies, the studies openly and intentionally make assumptions that lead to "conservatively" low 

estimates of the efficiency resource." Commenters stated these are considerations that are not 

binding in the context of an emission reduction program such as the Clean Power Plan.

Commenters stated that in addition to the Analysis Group white paper, many of the regional and 

national studies cited above in the context of EPA's 1.5 percent target also lend support to EPA's 

assumptions regarding ramp-up rates and sustained savings. Commenters stated these regional 

and national studies report aggregate reductions in demand in future years, which can be 

compared to EPA's projected demand savings in 2020 and 2030. Commenters stated EPA's 

projected energy savings, in turn, are based on both the 1.5 percent savings target and the ramp-
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up rate. Commenters stated the fact that the demand reductions in these regional and national 

studies either meet or significantly exceed EPA's projections therefore indicates that the 

combination of savings target and ramp-up rate is reasonable and achievable.

Commenters stated there are two other aspects of EPA's goal-setting approach that lead to an 

overall conservative assessment of potential energy savings, and that further indicate EPA's 

proposed energy savings levels in Building Block 4 are readily achievable. First, commenters

stated EPA assumes that each year's energy efficiency investments have a limited measure 

lifetime of 20 years, and that the energy savings resulting from any given measure decline at a 

rate of 5 percent per year starting the year after the measure is installed. Commenters stated this 

means that cumulative savings in the year 2030 reflect only 50 percent of the first-year energy 

savings achieved by energy efficiency measures installed in the year 2020, and just 35 percent of 

the first-year energy savings from measures installed in 2017. Commenters stated this is a highly 

conservative assumption, given data from LBNL indicating that minimum lifetimes for energy 

efficiency measures are at least 5 years. Commenters stated that moreover, the practical effect of 

this assumption is to reduce the cumulative savings that are used to calculate each state's 

goal. Commenters stated EPA's TSD, for example, shows that for South Carolina the "expiring" 

savings reduced the state's cumulative savings by approximately 5 percent in 2025. Second, 

Commenters stated EPA applies the 1.5 percent goal in a way that results in annual average 

reductions of slightly less than 1.5 percent. Commenters stated as noted above and in the TSD, 

the 1.5 percent goal was drawn from analyses of annual average energy efficiency savings, 

defined as cumulative savings divided by the total time period over which those savings can be 

achieved, however, when calculating state goals, EPA does not determine annual savings by 

applying the 1.5 percent goal to a fixed baseline, as the potential studies do; rather, EPA applies 

the 1.5 percent goal to the prior year's sales in each year (after the state has ramped up to that 

level). Commenters stated as a result, EPA's target-setting approach results in annual average 

savings that are slightly less than 1.5 percent over the 13-year period in the proposed emission 

guidelines. Commenters provided a table that illustrated this effect (see Table 6 of the comment 

letter), which shows the cumulative savings that would result from a 1.5 percent per year energy 

savings in a state with business as usual (BAU) demand growth of 0.8 percent. Commenters

stated as the table shows, the 1.5 percent target results in annual average savings of 

approximately 1.37 percent by 2013. Commenters stated this only underscores that EPA's goal is 

readily achievable and well within the range of savings reported in energy efficiency potential 

studies.

Commenters believed that it would be helpful for regulators, policy makers and the 

general public to understand the amount of energy wasted in the US and the size of the potential 

EE resource, and the amount of CO2 emissions reductions resulting from the elimination of this 

waste. Commenters provided two examples of rough benchmarking of the size of the energy

efficiency potential: 1) converting EPA Energy Star's estimate of energy lost via transmission 

into potential CO2 emissions reductions and calculating the potential percentage of the national 

CO2 reduction goal available from eliminating end-use waste is one example of the potential 

savings that can be mined from the national building stock; and 2) converting the estimated 

improvement in energy efficiency over the past four decades (70%), a figure often cited by oil 

companies in advertising, into CO2 emissions reductions. Commenters suggested that EPA begin 

the discussion of energy efficiency by estimating the potential size of the energy efficiency 

resource and providing an estimate of the amount of the target CO2 emissions reductions that 
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could be met with energy efficiency. Commenters believed that this information would reveal 

that the EPA's target for EE in perspective is easily attainable.

Commenters stated that a 1.5 percent per year annual incremental energy savings is readily 

achievable, as six states have already achieved or exceeded this level of savings (Arizona, 

Hawaii, Massachusetts, Michigan, Rhode Island, and Vermont) and additional states are onrecord as planning to ramp-up to this level of savings, including Maine, Maryland, Minnesota, 

New York, and Washington. Commenters stated that these levels of annual savings are also 

supported by several "bottom up" studies of energy efficiency potential that go beyond today's 

standard energy efficiency programs and also include new efficiency measures and program 

approaches.

Commenters stated that EPA's proposed 1.5% level for energy efficiency can be achieved 

especially in states that have not yet undertaken meaningful energy efficiency programs. 

Commenters stated that their own experience demonstrates that there are significant benefits in 

addition to GHG emission reductions that can be achieved with energy efficiency programs and 

that energy efficiency programs can be deployed at a level consistent with EPA's assumed levels 

for the fourth building block. Commenters encouraged EPA to ensure that the regulations 

stimulate the implementation of similar programs in states that have not yet tapped this important 

resource, as well as support the more mature programs in their region.

Commenters urged EPA to include at least a 1.5% savings target in the final rule, with a 10-year 

compliance period and higher performance standards. Commenters noted that they have 

worked with many individual program administrators that achieve savings at incremental rates 

far greater than the statewide levels noted in the TSD (GHG Abatement Measures TSD, p. 5-17) 

and therefore enthusiastically supported the notion that a 1.5% target would drive broad-based 

efficiency investment among a much larger set of electricity distribution companies. 

Commenters noted that attaining these standards will require massive market transformation: 

redirection of public and private funds, new policies, new industries and companies, innovation, 

and behavior changes. Commenters stated that many states have just begun to tap their costeffective energy efficiency and thus a longer time horizon and higher targets creates a "virtuous 

cycle" of investment and innovation.

Commenters believed that achieving annual EE savings of 1.5% of total retail sales is possible. 

Commenters acknowledged that this is an aggressive goal, but believed that if utilities are 

provided with the proper incentives to invest in EE, along with supportive state policies and 

regulatory structures, it can be achieved on a consistent, reliable basis. Commenters suggested 

potential examples such as obtaining a rate of return of EE investments or obtaining an incentive 

payment or return on equity ("ROE") adder for performance.

Commenters stated that the targets proposed by EPA are not as conservative as those for 

renewables in the sense that they are characteristic of the best performing states in the country 

and are not depressed by no action states; however, the targets in Building Block 4 fail to 

account for demonstrated, robust efficiency options such as building codes and combined heat 

and power (CHP) technology, so in this regard the target for energy efficiency also substantially 

understates achievable potential. Commenters noted that the inclusion of these options would 

push achievable efficiency impacts well above the 1.5 percent level of the Proposed Rule. 
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Commenters noted that reducing the savings level would needlessly weaken the Clean Power 

Plan since EPA already underestimated energy efficiency potential. Therefore, commenters

believed that the target set under Building Block 4 should not be reduced below 1.5% annual 

growth in energy efficiency.

Commenters urged EPA to consider the possibility it has underestimated the potential for 

efficiency technologies and overestimated costs by favoring its own "conservative" calculations 

over those of the 2014 study by the American Council on an Energy Efficient Economy and by 

not assuming the continuation of federal efforts to update efficiency requirements in its baseline. 

Commenters stated that because EPA underestimates the potential for energy efficiency, it is 

important that it not abandon its 1.5% annual goal for improvement.

Commenters stated that EPA should not exceed the annual energy efficiency savings rate of 

1.5% of retail sales and the incremental improvement in annual energy efficiency savings of 

0.2% per year because these goals are already very aggressive for rural states like Montana and 

will be a significant challenge for such states to achieve. Commenters noted specifically that 

achieving a savings rate of 1.5% will be a significant challenge for Montana because of its high 

rural population and the abundance of electricity cooperatives and private electricity suppliers instate that do not currently have significant energy efficiency programs.

Commenters validated that the 1.5 percent per year savings rate for electric utility programs 

because, based on their industry experience, they saw this rate of energy conservation as 

reasonable and sustainable.

Commenters stated that EPA's targets are attainable and are supported by data from other 

industry analysis like ACEEE. 

Commenters stated that EPA's assessment of EE potential is reasonable, but conservative, and 

they find that EPA's conclusion likely significantly understates the potential for EE savings in 

states over the compliance period. 

Commenters discussed the NERC's critique of EPA's assessment of energy efficiency 

improvements.

Commenters stated that the NERC critiques EPA's assessment of the potential for energy 

efficiency improvements, particularly casting doubt on the potential for industrial and 

commercial customers to realize future efficiency gains, and on the long-term sustainability of 

efficiency improvements. Commenters stated that the premise for NERC's contention that 

industrial and commercial customers will not be able to achieve the same level of cheap savings 

as residential customers is that companies, and particular industrial users, already "are designed 

to use as little energy as possible in order to maximize profits of daily operations and may have 

already invested in energy efficiency programs, leaving minimal and costly opportunities 

remaining for incremental improvement." Commenters stated that there is an apparent logic to 

this assertion, because they expect companies to maximize their own self-interest, but it has been 

proven wrong many times. Commenters noted that new technologies and changing cost 

parameters mean that new energy efficiency opportunities arise continually for commercial and 

industrial sectors. Similarly, Commenters noted that innovative financing structures are emerging 
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to improve payback and internal rates of return. Commenters stated that many states have run 

industrial and commercial energy efficiency programs for years that continue to produce 

significant cost effective savings. Finally, commenters noted that the attractiveness of an 

investment in energy efficiency by commercial and industrial facility owners will increase if 

these entities stand to gain revenue under the CPP for energy efficiency credits that can be sold 

to owners of power plants for compliance. 

Commenters stated that the NERC's argument is based on a misunderstanding of the difference 

between industrial firm economics and utility system economics. Commenters stated that for a 

variety of reasons, including split incentives, and financial limitations, commercial and industrial 

customers will typically pursue only energy efficiency investments with a short, typically less 

than two-year, payback period. In contrast, commenters noted that a utility seeking to procure the 

lowest-cost resource over the next decade will find it advantageous to incentivize measures with 

longer payback periods that otherwise would not be implemented. Commenters noted that what 

is a cost-effective measure from an individual consumer's perspective does not correspond 

perfectly to what is cost-effective from a system-wide perspective -- thus there are untapped 

energy efficiency opportunities in the industrial and commercial sector. 

Commenters stated that the high potential for efficiency gains in industrial and commercial users 

was confirmed recently in a study analyzing a wide range of programs, in 31 states, from 2009 to 

2011. Commenters stated that the study found that commercial and industrial participants in 

efficiency programs achieved efficiency improvements at a levelized cost of about $21 per 

megawatt hour, only $3 more than that achieved in residential programs. Commenters stated that 

commercial and industrial users also achieved significantly more efficiency gains overall than 

residential users did from their programs: commercial programs spent $3.2 billion, more than 

double the $1.5 billion spent on residential programs, to achieve double the lifetime gross 

efficiency savings. 

Commenters stated that NERC also claims that the world of efficiency gains is so finite that 1.5 

percent gains in demand-side management cannot be sustained annually until 2030. First, the 

commenters noted that few states -- aside from those that already have ambitious energy 

efficiency targets -- will be expected to sustain 1.5 percent annual savings over the full interim 

period. On average, the commenters noted that states are not expected to attain the 1.5 percent 

annual savings rate until 2025. Second, commenters stated that high levels of savings have been 

sustained around the country. Commenters stated that EPA notes the long-record of high savings 

in the Pacific Northwest, and California's history of efficiency improvements alone belies 

NERC's claim. Until about 1975, commenters noted that California's per-person megawatt-hour 

use tracked national usage almost exactly. Since the 1970's, commenters noted that California's 

energy use per person has virtually flat-lined, at least partially because California in 1977 took 

the lead in improving building and appliance efficiency to improve the productivity of its 

electricity usage. Commenters stated that in spite of this leadership, and the significant efficiency 

gains it has already achieved, California continues to invest significantly in energy efficiency, 

and has projected up to 50 percent additional energy savings for existing homes and commercial 

structures by 2030. Finally, states are not required to sustain this level of savings for any 

particular period of time, or to achieve it at all; NERC's argument mistakes EPA's target setting 

with compliance requirements.
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Commenters continued, stating that after reviewing historical data on state efficiency programs 

and analyzing the requirements of state energy efficiency policies, EPA identified twelve leading 

states that have achieved, or put in place requirements that will achieve, annual incremental 

savings rates of at least 1.5 percent of the electricity demand (retail sales) that would otherwise 

have occurred, that is, avoided energy use, or reduced demand attributable to energy efficiency. 

(Id. at 34,872) Commenters stated, based on that analysis of efficiency potential, EPA set as its 

target a 1.5 percent incremental savings rate per year that can be achieved by all states, at a 

reasonable cost, over an adequate period of time. (Id.) Commenters said EPA then set specific 

rates for each state. Commenters stated that states currently achieving a 1.5 percent annual 

energy savings rate are assigned that rate in 2017, and all future years; states not yet achieving 

that rate are assigned their 2012 annual incremental rate, and that rate is increased by 0.2 

percentage points per year until it reaches 1.5 percent, where it remains. (Karen L. Palmer, 

Resources for the Future, Energy Efficiency in 111(d): Understanding Building Block 4 (June 

16, 2014), available at http://common-resources.org/2014/energy-efficiency-in-111dunderstanding-building-block-4) 

Commenters stated, in the Northwest, the Northwest Planning and Conservation Council gives 

the states of Idaho, Montana, Oregon, and Washington guidance on implementing energy 

efficiency measures and the Bonneville Power Administration provides funds to consumerowned utilities to implement energy efficiency measures. Commenters continued, stating that in 

the Northeast, the market-based Regional Greenhouse Gas Initiative (RGGI) has driven 

increased investment in energy efficiency; because the RGGI states invest a portion of their 

RGGI auction proceeds in end use energy efficiency, demand for fossil fuel-fired power further 

decreases - a powerful co-benefit that also reduces CO2 emissions. Commenters stated energy 

efficiency programs funded through reinvestment of the $700 million generated by RGGI 

auctions through 2012 is projected to offset the need for approximately 8.5 million MWh of 

electricity generation, thereby avoiding the release of approximately 8 million short tons of CO2 

into the atmosphere. (RGGI, Regional Investment of RGGI CO2 Allowance Proceeds, 2012, at 

3-4 (Feb. 2014), available at http://rggi.org/docs/Documents/2012-Investment-Report.pdf) 

Commenters stated that EPA's estimate of efficiency potential is not based on, and did not take 

into account, additional energy savings that will be achieved by private businesses delivering 

energy efficiency services, building codes, or combined heat and power. (See Comments of 

Advanced Energy Economy on Proposed Rule, at 43-44 (Nov. 5, 2014) (Accounting for the 

contributions of the well-established [performance-based contract] market by incorporating 

[performance-based contracts] as viable tools for state emission reduction under the Clean Power 

Plan would result in an additional cumulative savings of 104 to 190 million MWh by 2030.), 

available at http://info.aee.net/hs-fs/hub/211732/file-2034410148-pdf/EPA/Testimony/AEEClean-Power-Plan-Comments-Nov-2014.pdf) Commenters stated, for that reason, the target 

energy efficiency savings rate is conservative. As well, commenters stated that EPA's target 

assumes that there will be no improvement by those states that currently are not achieving the 1.5 

percent savings rate during the period between 2012 and 2017, which also demonstrates that 

EPA's estimate is conservative. (Id. at 44-45) Commenters said, because the 1.5 percent target is, 

based on states' experience, achievable and adequately demonstrated, they do not support EPA's 

alternatively proposed 1 percent annual incremental rate. 

Commenters stated "that if EPA raised its projections for BBs 3 and 4, Arkansas would achieve a 

higher carbon emissions reduction level and create unprecedented economic development and 
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job growth in the state's advanced energy industry." Commenters furthermore stated that they 

thought the key energy technologies in Arkansas would be "cost-effective investments in 

renewable energy (up to 15% or more of energy generated); EE with annual savings of 1.5% or 

more; and full deployment of Combined Heat and Power (CHP)."

Comment 2: Oppose 1.5 Percent – value not demonstrated and does not fit criteria of BSER

Response 2: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule and therefore we do not need to address the 

commenters’ concerns as they are now out of scope. This determination is discussed in sections

V.A and V.B of the final rule preamble of the CPP. Although the EPA has determined to not 

include demand side-energy efficiency in the BSER in this final rule we are using 1.0% as a 

target level for incremental savings as a % of electricity demand in our illustrative EE

scenario. See the RIA Chapter 3 and the Demand-side Energy Efficiency TSD for CPP Final 

Rule for details on the illustrative demand-side energy efficiency plan scenario. 

The following are summaries of the specific public comments under this comment:

Commenters did not support the 1.5 percent annual incremental savings goal because they 

believed that the proposed goal had not been adequately demonstrated and therefore does not 

represent BSER for this building block.

Commenters did not fully support either option 1 or 2 to its fullest, however, if one option is 

required, the commenters proposed the use of option 2. Commenters saw the 1 percent 

performance level with a 0.15 percent ramp-up rate in option 2 as a more reasonable approach 

than the 1.5 percent performance level with a 0.2 percent ramp-up rate in option 1. Commenters

noted that the option 2 performance level is more justifiable and still aggressive in nature. Under 

option 1, all states theoretically achieve the 1.5 percent incremental savings level by 2025, 

whereas all states reach the 1.0 percent level by 2024. This shows that option 1, while more 

reasonable in its approach, is still aggressive. Commenters stated the stringency of the reduction 

goals generally necessitates the use of all building blocks, thus any claimed flexibility is 

illusory. Commenters stated EPA should re-analyze its methods and assumptions used to 

calculate the potential for energy efficiency in each state and take a less aggressive approach. 

Commenters stated EPA proposes that states can achieve emissions reductions by reducing 

electric consumption. Commenters stated the cleanest energy is certainly the energy you never 

need to produce. Commenters have established that the EPA baseline for energy efficiency 

potential is quite shaky. Commenters also noted that EPA has not appropriately considered costs 

and that its estimated gains of 1.5 percent each year seem excessively ambitious in the context of 

other analysis. Commenters stated that in comments to EPA, both NERC and EPRI note that 

their own estimates of demand side energy efficiency fall far short of EPA's levels. Commenters

stated that EPRI further notes that ambitious energy efficiency targets will require programs that 

overcome substantial financial, market, communications, and perceptual obstacles to the 

adoption of economic efficiency improvements.
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Commenters stated that EPA does not display substantial evidence that its projection in the state 

goal calculations is "reasonably reliable," "reasonably efficient" or will "produce the 

performance necessary to achieve the goal." Commenters noted that EPA used only one data 

source, EIA Form 861, in making its claim that states will be able to achieve an annual 

incremental savings rate of at least 1.5% of electricity demand. Commenters also noted that EPA 

does not future as state programs move beyond the "low-hanging fruit" and increasingly focus on 

achieving deeper and broader energy savings.

Commenters recommended EPA revise its analysis of estimated savings from electric efficiency 

activities to more realistic estimates. Commenters stated EPA's assumptions on the projected EE 

savings and growth rates used in calculating the interim and final state goals go well beyond 

current experience with EE programs and the best practices of leading states. Commenters

referred to comments by NERC, that notes "EPA appears to overestimate most states' energy 

efficiency savings potential, resulting in setting performance targets too high for individual 

states." (Initial Reliability Review at 14) Commenters stated for the majority of states, achieving 

such dramatic increases in EE savings rates will require correspondingly dramatic increases in 

utility EE program budgets and customer expenditures, which EPA does not address. 

Commenters stated EPA fails to address the existence of a range of constraints that will make 

attaining the state goals both more difficult and more expensive than EPA presumes. 

Commenters stated, at minimum, EPA should address state-specific concerns about the proposed 

emission rate goals before finalizing these EE goals. Commenters suggested EPA should work 

with the states to set achievable state goals that reflect in-state conditions.

Commenters stated any across-the-board energy efficiency savings goal would be arbitrary and 

capricious. Commenters stated per Section 111(d)'s command that standards of performance for 

existing sources be set by the State, the individual States should determine what goals from 

energy efficiency savings, if any, can be realistically achieved and maintained given the unique 

circumstances of the State and its utilities. Commenters stated EPA should eliminate the 

Building Block 4 goal. Commenters stated it was arbitrary and capricious for EPA to assume that 

all 48 covered States can achieve the annual savings target for energy efficiency of 1.5 percent of 

kWh sales. Commenters stated each State needs to have an energy efficiency potential study 

completed for its geographic territory in order for the EPA's approach to be realistic and credible. 

Commenters stated the cost of achieving EPA's EE goals will place a significant economic 

burden on cooperative consumers. Commenters stated the EE program in these [rural] areas will 

likely result in limited EE benefits towards meeting the state goals.

Commenters stated that small businesses or even larger ones that face tough economic conditions 

such as the 2008 recession will focus all resources on keeping the business profitable and are 

unlikely to invest in a program viewed as adding to their short-term cost. Commenters stated 

businesses and States tend to put EE programs on hold during tough economic times. 

Commenters stated when businesses are downsizing their work force and reducing shifts, it is 

much harder to justify expensive investments that do not pay off for many years. 

Commenters stated that for States, tax revenue from business and residences are down, which 

reduces the State's opportunity to provide tax incentives or grants and rebates that might make

EE programs more attractive. Commenters stated all of these factors have been in play in recent 

years due to a slow and uneven recovery from the 2008 recession; so the energy efficiency gains 

EPA has noted during this period are likely driven more by reduced demand from idled factories, 
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scaled back construction, and reduced customer spending rather than widespread adoption of 

energy efficiency programs.

Commenters provided background on the Demand Side Management (DSM) working group that 

was established and facilitated by the Georgia Public Service Commission (Commission); the 

DSM working group consists of diverse stakeholders that provide meaningful input and expertise 

in the development of Georgia Power's DSM programs, meets quarterly for the two year period 

before the IRP is filed by the utility, and comprises a robust methodology for determining 

effective EE and DSM programs for Georgia.

Commenters stated that a 2012 Technical, Economic, and Achievable Potential (TEAPot) Study 

was conducted by Georgia Power through coordination with the Commission and other 

stakeholders, and an updated TEAPot will be filed with the Commission early in 2015. 

Commenters stated the TEAPot identified all economically viable energy efficiency measures for 

Georgia Power customers and provided a basis for the design and planning for the EE and DSM 

programs in the 2013 IRP. Commenters stated that the proposed rule bases EE/DSM reductions 

on studies reporting the "Achievable" potential for various states, however this is a fundamental 

misuse of this data and leads to more stringent reduction targets. Commenters stated that 

achievable potential assumes that all programs that pass the Technical and Economic tests are 

able to be initiated and that 100 percent expected customer participation in the programs will be 

realized, however no program can reach, or could be expected to reach, this goal. Commenters

stated the methodology for setting a realistic target for Georgia needs to be revised by the EPA in 

the final rule.

Commenters stated that during the 2013 IRP, Georgia Power committed to spending nearly $500 

million on DSM/EE programs over the next 10 years. Commenters stated these programs are 

projected to save 3,596,976 MWh during the period of 2014-2023. Commenters stated the

programs achieved energy savings of 0.4 percent in 2013, 0.27 percent in 2012, and 0.15 percent 

in 2011, as a percentage of gross retail energy sales for the state of Georgia. Commenters stated 

the proposed rule calls for an energy savings increase of 0.2 percent each year starting in 2018 

and then tops out at 1.5 percent per year by the mid-2020s on total energy for the state. 

Commenters stated any assumption that these programs could be increased to achieve net energy 

reductions equal to 9.8 percent of the overall electricity demand in a 15 year timeframe is not 

feasible and is cost prohibitive. Commenters stated that to date, there is currently not a state 

managed program that has been able to achieve the proposed level of sustained demand 

reduction. Commenters stated this goal is well outside of a reasonable expectation for expansion 

of Georgia Power's EE programs over the next several years. Commenters stated the final rule 

must be modified to reflect a realistic and feasible target for Georgia that is a compliance option 

and not a mandated level of energy efficiency.

Commenters stated the success of utility-sponsored energy efficiency programs rely on 

customers to choose to participate and not a mandate by this rulemaking process. Commenters

stated that while studies may show that there is potential for further adoption of certain measures, 

the success of all programs is dependent on consumers to adopt new technologies and to 

participate in the utility sponsored programs. Commenters stated using the best case scenario of 

states located on the west coast or in the northeast is not a relevant model for what can be done in 

Georgia. Commenters stated that demographic and ideological differences between states will 
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cause significant variation in the adoption of measures and success of programs across the 

country, even if those programs are identical and well managed. Commenters stated that to better 

model the possible reductions for Georgia, the basis for rulemaking should be limited to what 

other southern states have been able to achieve in order to determine what is truly feasible. 

Commenters stated that the Georgia Power TEAPot helps determine the energy savings that are 

feasible specific to Georgia Power's territory and the cost-effectiveness of achieving certain 

levels of energy savings. Commenters stated the EPA's goal of net annual incremental energy 

savings of 1.5 percent per year is not feasible and cost effective based on Georgia Power's 2012 

TEAPot Study and lies outside the bounds of "Achievability" identified in the studies the EPA 

uses to set the benchmark goals.

Commenters stated that they would accept EPA's 0.97 percent growth rate as being within a 

reasonable range. Commenters stated it is important to note that, as shown on Wyoming's album 

on EIA's Flickr page, in 2013 Mining had nearly a 35 percent share of the Wyoming economy, 

nearly fourteen times higher than the nation as a whole, and higher than any other state. 

Commenters stated given this sector leverage, the actions that EPA intends to affect the coal and 

power sectors of Wyoming's economy will affect the state as a whole. Commenters stated 

without the exclusions, the 0.97 percent is excessive.

Commenters stated Wyoming's ability to achieve energy efficiency goals is affected by the heavy 

weighting of industrial use in its electricity consumption. Commenters stated 2012 industrial 

sales in Wyoming were 58.98 percent of statewide total sales, a substantially heavier proportion 

than the next closest western states, Idaho (40.38 percent) and Nevada (39.04 percent). 

Commenters stated the general rule in the west, readily apparent from the EIA data for 2012, is 

that energy savings do not keep pace with industrial sales (the commenters duly noted 2012 

exceptions in Idaho and Oregon). Commenters stated the PacifiCorp data for Wyoming follows 

the general rule, with industrial efficiency effects being about 0.1 percent of sales, while 

residential efficiency is about 0.7 percent and commercial efficiency is about 0.5 percent; the 

commenters provided a table (see page 24 of the comment letter) that presents PacifiCorp 2012 

sales (MWh) and 2012 EE Savings (MWh) for Residential, Commercial, and 

Industrial. Commenters stated Cheyenne Light Fuel & Power did not report any 2012 efficiency 

savings associated with its industrial class to EIA, although its commercial program was 

available to industrial customers.

Commenters stated predominance of the industrial sector makes a difference. Commenters stated 

as the EIA observed in its March 4, 2013 issue of Today in Energy, the national industrial 

sector's demand for electricity is relatively flat compared to the other two sectors; the 

commenters provided diagrams of retail sales for 2009 to 2012 for residential, commercial, and 

industrial retail sales. Commenters stated rate cases have shown that the same is essentially true 

in Wyoming on a daily and weekly basis. Commenters stated the EIA sketched the practical 

context: 

"Serving an industrial customer tends to cost less on a dollars-per-megawatt hour 

because there is less hourly and seasonal variation in demand. Industrial 

facilities often run 24 hours a day to avoid ramp-up times or to meet 

manufacturing requirements. Also, industrial customer can take advantage of 

interruptible service contracts, in which the customer agrees to reduce its 
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electricity use when the utility asks, in exchange for a lower rate. At such time, the 

industrial facility can switch to onsite backup generation or shut down 

temporarily."

Commenters indicated that stated another way, the industrial sector makes more efficient use of 

the electrical system from the outset. Commenters stated the potential for efficiency gains is 

greatest for the residential class, and least for the industrial class. Commenters stated the rough 

orders of the differences of potential are shown in the diagram above.

Commenters stated industrial sales affect energy efficiency programs in several ways. 

Commenters stated first, the nationally familiar programs for residential and commercial sectors 

have much less overall impact in Wyoming. Commenters stated if Arizona's outstanding 

program rates of success were achieved, but with the weight of Wyoming's sectors, Arizona's 

high overall first year savings performance would drop from 1.61 percent of sales to 0.76 percent 

of sales; the commenters provided a table with that presents energy efficiency data for AZ and 

adjusts/weights it to Wyoming's sector percentages.

Commenters stated second, the relatively constant demands on the system reduce the economic 

consequences of daily fluctuations in electricity demand, and in doing so, reduce the attraction of 

many common demand side management measures. Commenters stated time of use pricing, for 

example, has never found favor in Wyoming, because peak demands are already modulated into 

insignificance by industrial loads. Commenters stated the system efficiencies also keep prices to 

all consumers somewhat lower, dampening the economic appeal of energy efficiency programs.

Commenters stated third, industrial energy efficiency opportunities tend to be dominated by the 

character of the industry, and its capital cycles. Commenters stated a significant percent of 

PacifiCorp's overall Wyoming load is fewer than three dozen large industrial customers. 

Commenters stated about 85 percent of PacifiCorp's industrial usage is related to mining and 

mineral extraction. Commenters stated when commodity prices are up, these customers are 

normally preoccupied with producing as much as possible; when prices are down, the same 

customers are focused on cost cutting, and capital budgets are constrained. Commenters stated 

opportunities to influence decision makers may take years to develop.

Commenters stated further, PacifiCorp has concluded, based on a study prepared to support its 

upcoming Integrated Resource Plan revision, that 75 percent of the Wyoming industrial energy 

efficiency opportunity through 2034 is tied to process loads, and hence to motors, compressors, 

pumping, and the like. Commenters stated this type of equipment often has a long life and 

represents expensive investment with little analogue to a residential context. Commenters stated 

industrial customers tend to be receptive to addressing energy efficiency possibilities when the 

motor fails, but otherwise tend to avoid disturbing ongoing operations to install new capital 

equipment.

Commenters stated as a corollary to the capital cycle and efficiency opportunities, first year 

industrial energy efficiency savings tend to be lumpy, up one year and down the 

next. Commenters stated this is true of industrial opportunities in other states as well (a 

California example appears below). Commenters stated EPA's decision to rely on one base year, 

supplemented mainly by assumptions, masks significant year-on-year variations in data, and 
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particularly industrial data. Commenters stated it is not clear that this lumpiness can be 

smoothed out by something as simple as a three year average, given the lengthy lives of heavy 

capital equipment.

Commenters stated fourth, industrial customers present a service risk. Commenters stated if 

electricity prices are driven too far, too fast, industrial customers are capable of self-generation, 

and leaving the company's customer base. Commenters stated this gives added poignance to the 

PRECorp problem described above. Commenters stated efficiency programs that do not 

demonstrably add value may drive industrial customers off the grid.

Commenters stated aside from its industrial base, Wyoming is also affected by an urban/rural 

divide. Commenters stated this is illustrated by PacifiCorp's experience and reflected in EIA 

data. Commenters stated PacifiCorp prepares and files Form 861 data for its service territories in 

six states: Wyoming, Idaho, Utah, Oregon, Washington, and California (in Oregon, PacifiCorp 

data is consolidated with the filing of the Oregon Energy Trust and hence not shown). 

Commenters stated it offers essentially the same energy efficiency programs in all six states, but 

its service territories in every state but Utah tend to be rural with dispersed populations. 

Commenters provided a table of the data readily available from EIA, which shows PacifiCorp 

Residential, Commercial, and Industrial sales and energy efficiency data for WY, ID, CA, WA,

and UT. Commenters stated looking at the residential performance in the five service territories, 

the best performance is in Utah, the most densely populated service territory. Commenters stated 

performance in the sparsely populated service territories in Wyoming, Idaho, and California is 

less than half of Utah. Wyoming outperforms California in the residential context. Commenters

stated it is important to remember that overall state performance is not necessarily indicative for 

a rural territory. Commenters stated further, rural territories may have more in common with one 

another than with their respective states.

Commenters noted they viewed Washington as being similar to its other rural territories. 

Commenters stated in 2012, 13,610 MWh of the company's reported residential efficiency was 

related to market transformation savings reported by a regional non-profit organization in which 

PacifiCorp participated. Commenters stated market transformation typically involves market 

intervention, typically upstream and ahead of utility programs, working with product 

manufacturers and retailers to build and stock higher efficiency products than would otherwise 

be available over a similar timeline. Commenters stated this includes intervention in the supply 

chain of big box stores like Costco, as distinct from programs which typically involve offerings 

directly to ratepayers. Commenters stated PacifiCorp only applies for ratepayer support when 

there is a reasonable relationship between the supply chain intervention and its service territory. 

Commenters stated this does not include Wyoming. Commenters stated in PacifiCorp's 

Wyoming territory, there is neither a Costco nor a Lowe's. Commenters stated PacifiCorp's trade 

allies for its appliance program include only two Home Depots, five K-marts, two electric supply 

stores, five Sears stores, a Sutherlands, seven Walmarts, and a Sam's Club, for a service territory 

occupying more than a third of the state. Commenters stated if one eliminates the market 

transformation activity, Washington's program performance falls to the low end of residential 

performance in the five service territories.

Commenters stated much the same pattern applies to commercial performance, with Utah again 

being well in the lead with 1.11 percent, and this time, California the laggard with 0.41 percent. 
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Commenters stated in the industrial class, California is the 2012 leader with a 1.92 percent 

performance, although with sales that are a small fraction of either Wyoming or Utah. 

Commenters stated in the Form 861 filed by PacifiCorp for 2013, California's savings drop to 

786 MWh from 2314 MWh the preceding year, and its overall performance percentage dropped 

to 0.56 percent from 0.74 percent.

Commenters stated there is not time during the comment period to prepare a formal study of why 

rural service territories underperform, but part of the answer is density. Commenters stated 

Wyoming has only six people per square mile, fewer than any state but Alaska. Commenters

stated as noted above, this affects markets and opportunities available to the consumer. 

Commenters stated it also affects all aspects of program design, administrative expense, and 

customer service. Commenters stated for example, the refrigerator retirement programs of 

PacifiCorp and Cheyenne Light Fuel & Power relied on the same out of state contractor with out 

of state personnel, and often required wait times of several weeks before an appliance was 

removed, a deferral not popular with customers. Commenters stated the contractor now has one 

location in the state.

Commenters stated programs have been imported into Wyoming without sufficient thought 

about how likely they are to succeed. Commenters stated when Cheyenne Light Fuel & Power 

first proposed an efficiency program, its consultant relied on a portfolio of measures that had 

been successful with sister companies in other states. Commenters stated the consultant's budget 

included 100 high efficiency electric water heaters. Commenters stated skeptical because hot 

water was commonly heated with natural gas supplied by the same utility, the Commission 

authorized a budget that included 50 units, and after a year, only one customer had taken 

advantage of the offering, which was then eliminated because the volume was too low to support 

administrative expense. 

Commenters stated the reason for failure may be obscure. Commenters stated in February 2013, 

PacifiCorp attempted to augment distribution of CFLs by mailing 28,000 coupons to customers 

in ten cities in Wyoming, redeemable at Walmarts in three cities. Commenters stated only 193 

coupons were redeemed, a response rate of 0.69 percent. Commenters stated the program was 

cancelled.

Commenters stated air conditioning is another source of insight for residential consumption. 

Commenters stated while there is not granular federal data on the penetration of central air 

conditioning in Wyoming, periodic PacifiCorp surveys of appliance saturation provide 

suggestive data that reflects on residential consumption in PacifiCorp's service 

territories. Commenters provided a table that shows CAC saturates for WY, ID, CA, WA, and 

UT where PacifiCorp operates. Commenters generally observed that the addition of air 

conditioning increases residential consumption by forty percent (2014 Rocky Mountain Power 

General Rate Case, Volume 3, p. 642, lines 6-13).

Commenters stated with EIA data available for 2010 to 2013, they can summarize the 

performance in PacifiCorp's five service territories with percentages of annual incremental 

savings, broken out by class. Commenters provided a table with incremental savings data for 

Residential, Commercial, and Industrial in WY, ID, CA, WA, and UT from 2010 to 2013. 

Commenters stated based on Wyoming's experience, we assume that all of these jurisdictions 
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have provided PacifiCorp with all the resources the company requested to conduct its programs. 

Commenters stated there is nothing in the documented experience of the rural service territories 

to suggest that EPA's steady annual increase of 0.2 percent a year is feasible or reasonable. 

Commenters stated to the contrary, actual experience suggests that increases will be much less 

dramatic, and difficult to sustain. Commenters stated there is also nothing in this data to support 

a final rate of 1.5 percent, or to support EPA's view that a rate of 1.5 percent first year savings 

can be sustained. Commenters stated the 1.5 percent becomes even more problematic when 

considered in light of EPA's intended results for Wyoming's economic base. Commenters stated 

it is also speculative in view of the fact that the majority of expected savings will be in lighting 

(see discussion elsewhere), and the rate lighting savings will be declining. Commenters stated 

the change from historical incandescent lighting technology to more efficient incandescent lights 

and to CFL has already been largely accomplished now that federal standards have been 

implemented. Commenters stated the savings resulting from a transition to LED bulbs from CFL 

bulbs are far less dramatic. Commenters understood that part of EPA's intention is to challenge 

states to higher levels of performance, but it is one thing to present a challenge, and another thing 

entirely to set a standard which no one can reasonably expect to be accomplished. An annual 

increment of 0.1 percent and a final rate of 0.75 percent would be a challenge. Commenters

stated an annual increment of 0.2 percent with a final rate of 1.5 percent is a non-starter.

Commenters stated EPA notes that the national average energy savings rate in 2012 was 0.58 

percent and the median was 0.48 percent. Commenters stated that, consistent with the CAA's 

requirement that BSER be "adequately demonstrated" and that the resulting standards be 

"achievable," the use of the mean or median savings rate would be a better measure of what the 

states actually achieved in 2012. Commenters stated that States that do not have robust energy 

efficiency portfolios or energy efficiency resource standards overseen by public utility 

commissions are at a disadvantage as EPA assumes they can bring their programs up to the "best 

practice" scenario level. Commenters stated EPA should consider in setting goals the retail rate 

of electricity in those 12 states compared to other states across the nation. Commenters stated 

this comparison between the 12 leading states and the rest of the nation along with demand side 

energy efficiency impacts is a crucial comparison since the price of energy is a significant factor 

in the calculation of EE potential. Commenters stated that just as generating plants serve large 

areas across state boundaries, energy efficiency potential studies used by EPA could cross state 

boundaries and would add additional burden where goals are overestimated. Commenters stated 

there are no state potential studies to derive actual or estimated potential savings.

Commenters stated that they have estimates of realistically achievable potential for customer EE 

projects that are much lower than EPA's estimates, which they feel are unrealistic. Commenters

noted that customer adoption of EE measures is beyond the control of states and utilities and 

recommends that each state have authority over assumptions since each state has methods to 

determine cost-effectiveness of EE, as well as reduction verification methods.

Commenters stated that EPA's arbitrary standard ignores the economic potential for energy 

efficiency, which varies with local and regional demographics. Commenters noted that the 

Northeast states have a very different electric consumption footprint than Southern states, relying 

much more on natural gas to fuel more energy intensive applications such as space and water 

heating unit. Commenters noted that this logic suggests that the Northeast has a greater EE 

potential than the South, but EPA's proposal does not recognize this difference. Commenters
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stated that any standards based on EE opportunities in a state should be based on reasonable 

review of state-specific factors that affect potential for reducing electrical demand including 

population, building stock, cost impacts, and customer behavior trends.

Commenters stated that EPA's assumptions go well beyond current experience with EE programs 

and best practices of leading states, Commenters stated that achieving such dramatic increases in 

EE savings rates will require correspondingly dramatic increases in utility EE program budgets 

and customer expenditures, which EPA does not address. Commenters also noted that EPA did 

not take into account how its assumption that all states can achieve a 1.5 percent annual 

incremental savings rate would impact load forecasting for states. Commenters noted that not 

only do electricity demand forecasts directly influence the required level of generation from 

existing and affected generating units under the proposed guidelines, they also affect the required 

amount of new construction of generating units that are needed to meet expected electricity 

demand and provide reliable power. NERC Initial Reliability Review at 16. Commenters stated 

that EPA should, at a minimum, address state-specific concerns about the proposed emission rate 

goals before finalizing these EE goals.

Commenters noted that EPA's on analysis shows that annual incremental savings as a percentage 

of sales varies tremendously by state. Commenters stated that the key inquiry it not whether 

some states already have achieved the target savings rate, but whether this achievement can be 

replicated by other states and over what timeframe. Commenters stated that a single 

year's snapshot data does not allow EPA enough information to answer this question. 

Commenters also stated that it is not clear that the achievements of three states with respect to 

annual incremental savings rate are indicative of what is sustainable for these states or feasible 

for the rest of the states. Commenters noted that to be consistent with the CAA's requirements 

that BSER be "adequately demonstrated" and that the resulting standard would be "achievable", 

the use of the median savings rate would be a better measure of what the states actually achieved 

in 2012. Commenters stated that EEI analysis shows that the median savings rate in 2012 was 

0.48 percent but EPA notes that the national average was 0.58 percent.

Commenters noted that Minnesota was one of the 12 states cited by EPA as having successfully 

implemented a 1.5% annual conservation goal. Commenters stated that when establishing the 

1.5% annual goal, Minnesota policy makers assumed that by treating all utilities the same --

every electric utility was given the same conservation goal -- they were treating every utility 

fairly. Commenters stated that unfortunately, the 1.5% annual conservation has proved to be 

significantly more difficult and costly for electric cooperative members because of the significant 

variations in demographics, load growth, and usage patterns among utilities. Commenters stated 

that as a result, electric cooperatives in Minnesota face a significant higher cost to achieve the 

1.5% goal, costs that are paid for by electric co-op members and the average cooperative cost per 

kWh saved through adoption of cooperative conservation programs is more than double the cost 

to other utilities in the State. Commenters stated that electric cooperatives in Minnesota also 

spent 6.95% of their gross operating revenue to achieve the reductions, which is, again, almost 

twice the cost of other utilities. Commenters found that success in meeting the conservation goal 

is dependent on significant financial investments by end users, something a utility can't control. 

Commenters stated that the Minnesota experience demonstrates clearly that conservation 

investments at large industrial and commercial users provides significantly more bang for the 

buck when it comes to energy savings.
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Commenters noted that EPA's benchmark represents a significant increase above the current 

energy efficiency achievements of 0.4% to 0.5% annually verified by the commenters. 

Commenters stated that their experience with over 10 years of aggressive EE program 

implementation suggests that EPA's assumptions regarding EE programs are unrealistic. 

Commenters stated that EPA must examine the "best practices" employed in successful energy 

efficiency programs to determine an achievable metric for energy efficiency-related emission 

reductions. Commenters noted that it is not clear whether the 1.5% energy efficiency goal 

represents only savings attributable to utility efficiency programs, or whether it also includes 

savings due to increasing efficiency codes and standards that are driven by federal, state, and 

local regulations (e.g., the 2007 Energy Independence and Security Act's phase out of generalduty, standard incandescent bulbs). Commenters stated that such regulation-driven efficiency can 

be highly effective in saving energy, but is typically excluded from energy savings attributable to 

utility efficiency programs. Commenters noted that it will be important for electric utilities to 

understand how much of the 1.5% energy savings will come from regulation-driven efficiency, 

who will be responsible for ensuring it is achieved, and how it affects the energy savings the 

utilities will be responsible for achieving.

Commenters stated that EPA's analysis was not robust enough to assume that all states can 

achieve and sustain the proposed amount of energy savings over ten years. Commenters stated 

that EE programs historically have been financed by utilities and EPA must recognize 

that expansion and consumer use of these programs depends on state laws and regulations that 

allocate resources and approve of demand-side programs.

Commenters noted that no member of the LPPC (Large Public Power Council) has been able to 

achieve a 1.5% annual savings rate over a ten-year period. Commenters noted that the LPPC's 

comments on this rulemaking state that based on the experience of LPPC members with more 

than ten years of implementing aggressive energy efficiency programs, EPA's assumptions on 

energy efficiency have not been adequately demonstrated.

Commenters stated that EPA's goal may not be achievable because many states do not have 

enabling legislation in place requiring energy efficiency goals and without the necessary 

legislation to implement such goals, it is unreasonable to assume that this goal will be met. 

Commenters also noted that some states have already undertaken significant actions to reduce 

electricity consumption through state-specific energy efficiency programs and in those states, it 

will be difficult to achieve further increases, making it unfair to impose the same standard on all 

states. Commenters added that if the EE reduction goals are not achievable, it will require that 

additional carbon reductions are realized from the other building blocks contained in the CPP 

proposed rule.

Commenters believed that EPA's proposed rate of annual incremental reduction is totally 

unrealistic. Commenters noted that the high cost of energy and intense price competition in the 

global marketplace compel companies in Virginia, as elsewhere, to maximize the ratio of 

production to energy consumption. Commenters noted that over the past years, Virginia 

companies have continuously improved their energy efficiency and reduced their electricity 

demand and that they have already applied "best practices" to reduce their energy consumption. 

Commenters concluded that there are no additional cost-effective ways to achieve a 1.5 percent 

reduction in electricity consumption every year from now until 2030.
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Commenters noted that in California in particular, utilities are already implementing the most 

cost-effective EE measures possible given our climate and economic constraints, commenters

noted that despite taking aggressive action, the state's 2012 incremental level of EE deployment 

was only 1.24%, while the state's cumulative savings level was 13.67%. Commenters stated that 

California's cumulative EE saving rate is second in the nation, while California's 2012 level of 

incremental EE deployment is fourth in the nation, slightly behind Arizona and two significantly 

less populous New England states. Commenters stated that this level of incremental EE 

improvement reflects the fact that municipalities and other utilities in California are already 

harvesting most of the "lowest hanging fruit," as well as a number of less costeffective opportunities to save electricity. Commenters concluded that higher levels of savings 

thus are not achievable in light of the costs and technological barriers of increasing EE beyond 

California's already-ambitious level of EE savings.

Commenters stated that EPA's projections regarding achievability of cost-effective EE targets are 

not consistent with Idaho's experience and projections. Commenters noted that Idaho's 

historically achieved cost-effective EE reductions have been significantly less than 1.5% on an 

average annual basis. Commenters also noted that EPA failed to include state-specific studies, 

such as Idaho Power's most recent EE Potential study, which projected an annual average of 

0.6% achievable EE potential over a 20-year study period, in the EPA's "Summary of Recent 

(2010-2014) Electric Energy Efficiency Potential Studies." Commenters acknowledged that EPA 

cited information published by the Northwest Power Conservation Council (NPCC), of which 

Idaho is a member, but noted that NPCC's analyses are limited to a regional overview and do not 

address the ability of specific states to increase future cost-effective EE savings. Commenters

disagreed with EPA's use of historical reductions to predict future success and noted that the 

NPCC reports historic utility EE savings in the Northwest ranging from 0.65% (2005) of sales to 

1.38% (2011), but decreasing to 1.22% in 2012 with a U.S. average of 0.58%. Commenters

stated that EPA's unrealistic load growth assumptions will exacerbate future compliance 

problems, as EPA inappropriately assumes that demand reductions from cost-effective EE 

measures will more than offset future load growth. Commenters noted that Idaho's largest utility, 

Idaho Power, prepared projections through its 2013 integrated resource planning ("IRP") process 

that anticipate load growth in excess of 1% per year, even after accounting for the projected 

effects of existing EE programs.

Commenters noted that based on their personal experience, achieving a 1.5% annual incremental 

savings rate is not realistic for their Colorado, South Dakota, and Wyoming service territories. 

Commenters stated that their customers would have to achieve a staggering 22,256,969 kWh in 

savings annually for the next 15 years in South Dakota and offer programs aimed at achieving 

additional energy savings of 5.982,492 kWh in Colorado to achieve EPA's goal. Commenters

noted that based on the historical cost-per-kWh-saved the commenters' Colorado savings figure 

would amount to an estimated additional $1.3 million in annual expenditures devoted to EE 

programs in the state. Commenters stated that achieving EPA's goal would require the 

commenters' Wyoming territory would cost approximately $3.5 million annually, which would 

result in increasing the approximate annual cost per customer for EE/DSM programs from $8.00 

to $40.00.

Commenters noted their support of EE measures in state compliance programs for the Proposed 

Rule and stated that their members have very successful EE programs; however, none of their 
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members have ever been able to achieve a 1.5% annual savings rate over a ten-year period. 

Commenters disagreed with EPA's assumption that this level of EE has been adequately 

demonstrated. Commenters noted that while several states may currently achieve an annual 

savings rate of 1.5%, no state has maintained annual energy efficiency savings rates at or near 

that level for a ten-year period, as EPA assumes in establishing state emission rate targets. As an 

example, commenters noted that one of their members spent in excess of 2.5% of retail revenue 

from electricity sales on efficiency projects for the past several years, and has been able to verify 

efficiency savings of about 0.5% annually.

Commenters stated that by relying on actions at the retail level, over which the commenters have

no control, to inform a standard that is intended to reflect emission reductions available at the 

generation level, EPA relies on assumed efficiency that commenters cannot reasonably achieve 

and with which it cannot reasonably comply. Commenters noted that they and their members 

have invested more than $22 million in demand-side energy efficiency programs between 2010 

and 2012, or between $6.5 million and $9 million annually and more recently in 2014 invested 

$6.9 million in energy efficiency measures and saved a total of 81,868,000 kWh. Commenters

stated that the savings from these measures, however, do not approach the 1.5% savings that 

EPA assumes to be achievable in any one year, much less compounded year-over-year.

Commenters stated that based on prior studies and experience, the proposed savings due to 

energy efficiency are unrealistic and unattainable. Commenters noted that since the Iowa State 

Legislature passed SF 2386, municipal utilities came together to conduct a study to determine 

potential energy efficiency gains in our Iowa communities. Commenters noted that study and the 

annual results of the Iowa municipal utilities' energy efficiency programs have since been 

reported annually to the Iowa Utility Board. Commenters stated that they already touched many 

of their customers with their existing energy efficiency programs.

Commenters noted that Iowa has required its utilities to implement EE programs since 1990 

(Iowa Code 476.6(14) and (16)), and the state has already achieved significant savings from EE 

programs. Commenters stated that in recent years, Iowa utilities have achieved results close to 

one percent incremental savings, for both electric energy and natural gas; however, there are 

significant differences among various types and sizes of Iowa utilities in terms of energy 

efficiency results. Commenters stated that for both investor-owned and consumer-owned 

utilities, much higher levels of savings implied by the EPA's Building Block 4 calculation may 

imply much higher utility and participant costs. Commenters also worried that EPA's EE 

methodology may create problems due to inadequate consideration of the interaction of state and 

utility energy efficiency measures with non-utility efficiency standards. 

Commenters stated that there is no national-level precedent for EPA's highly aggressive 

assumptions as to the amount of electricity that can be saved year-over-year based on energy 

efficiency measures. Commenters stated that the fact that three states have achieved a 1.5% 

annual savings goal and nine other states have targeted this level falls short of evidence 

"adequately demonstrating" the ability of all states to meet EPA's proposed target.

Commenters believed that the Proposed Regulation selectively considers the policies of some 

States over those of Virginia and other States. Commenters noted that Virginia has an energy 

efficiency goal, rather than a requirement, is disregarded and, in effect, "vetoed" by the different 
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policies of other States -- States with demographics, climates, load and generation profiles 

different from those of Virginia. Commenters stated that this approach to setting Virginia's 

carbon emission rate is arbitrary and capricious and does not establish what is achievable, much 

less what has been adequately demonstrated, in Virginia.

Commenters noted that North Carolina electric utilities have actively developed EE programs 

under the incentives provided in REPS but despite this flexibility, the past six years of historical 

EE implementation shows that a 1.5% annual incremental rate and a 10.3% annual cumulative 

rate by 2030 are unrealistic for North Carolina. Commenters noted that the most recent 

Integrated Resource Plans filed by North Carolina utilities indicate EE savings in 2030 of 0.9%, 

4.3% and 6.5% for Dominion North Carolina Power, Duke Energy Progress, and Duke Energy 

Carolinas, respectively.

Commenters noted that the national EE rate is only 0.58% and that EPA failed to provide 

adequate support that a 1.5% incremental savings goal would be attainable by all states. 

Commenters stated that EPA did not discuss how states with admittedly more 

limited opportunities - as well as different energy use and other relevant characteristics -

will maintain incremental gains at the same pace as leading states. Commenters believed that 

any standards based on EE opportunities for states should be based on a reasonable review of the 

state specific factors that affect the potential for reducing electrical demand, including but not 

limited to population, building stock, cost impacts and customer behavior trends.

Commenters stated that a review of the most recent IRPs and potential studies indicates the 

EPA's assumption that a 1.5 percent annual incremental savings rate is aggressive unless 

Missouri IOUs can meet the maximum achievable potential (MAP) analysis. Commenters noted 

that maximum achievable potential, by definition, is the hypothetical upper limit of achievable 

potential; while MEEIA is measured relative to realistic achievable potential which establishes a 

realistic target for demand-side savings that a utility can expect to achieve.

Commenters stated that the actual experience of North Carolina IOUs since Senate Bill 3 was 

enacted and the IOUs developed EE programs shows incremental EE savings rates for the IOUs 

lower than the 1.5% goal in the Proposed Rule. Commenters stated that it would be reasonable to 

expect an increase in the incremental rate if North Carolina utility policy and ratemaking had not 

already encouraged EE programs, but that is not the case. Commenters concluded that it is 

unrealistic to expect the IOUs to achieve a significantly higher savings rate than they have 

achieved with financial incentives in the recent past.

Commenters noted that they have a long history of administering demand-side 

management programs through their member-owner distribution cooperatives effectively 

harvesting the available fruit of energy efficiency options. Commenters stated that their longterm, multi-pronged approach to influencing their load curve through end-use member initiatives 

is inclusive of EE and load management programs. Commenters noted that that have achieved 

near cost-effective saturation of their EE programs, and therefore the compliance obligations 

under Building Block 4 are overly optimistic and do not provide adequate flexibility for a utility 

to modify its load curve to reduce emissions of CO2.
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Commenters noted that they engaged in concerted efforts at conservation, both for their member 

utilities and for their members' customers, since 2008 and their experience has consistently 

demonstrated actual efficiency gains that average 0.7% per year.

Commenters noted that while several states may currently achieve an annual savings rate of 1.5 

percent, no state has maintained annual energy efficiency savings rates at or near that level for a 

ten year period, as EPA assumes in establishing a state's emission rate target. Commenters stated 

that EPA provides no evidence that states can do so and therefore EPA's assumptions on energy 

efficiency have not been adequately demonstrated.

Commenters stated that EPA selected the most optimistic values rather than an average of the 

different analysis that would give appropriate effect to the credibility of all of the analysis. 

Commenters stated that as U.S. EPA correctly noted, EE/DSM has been evolving; past 

experience may not prove to be an accurate predictor of future results and therefore, achieving a 

1.5% annual increase in EE/DSM is suspect.

Commenters noted that Florida achieved incremental energy efficiency savings of 0.27% of total 

retail sales, and per EPA's compliance model, in 2020, Florida's annual incremental energy 

efficiency savings would have to reach 0.85% of total retail sales---a 300% increase. 

Commenters also noted that the EPA model would further require this annual incremental 

savings level increase to 1.5% of retail sales year over year through 2030 which is 

unprecedented. 

Commenters stated that EPA lacks support for its conclusion that Pennsylvania and other states 

can achieve and maintain incremental energy efficiency savings of 1.5 percent per year. 

Commenters noted that cumulative EE savings contemplated by EPA represents 22 percent of 

total emission reductions required under Pennsylvania's proposed emission target.

Commenters believed that EPA should reevaluate its energy efficiency expectations to make sure 

its assumptions are achievable for all states based on state-specific circumstances.

Commenters stated that EPA should not be using yet-to-be-determined achievable requirements 

that have not been adequately demonstrated to establish state goals, as the 2020 targets set by 11 

states that EPA relies on have not been demonstrated.

Commenters stated that in their experience, the reductions proposed by EPA are not being 

achieved with any consistency now, and are unlikely to be achieved in the future.

Commenters stated that EPA's assumptions simply do not relate to the current and future 

projected economic growth in North Dakota and must not be furthered.

Commenters noted that EPA's goal would be a totally unrealistic and unattainable goal for their 

region, as they would have to reduce their demand and energy requirements by 20 to 25 percent 

by 2030 which would increase electric energy costs and shift those costs between customers.

Commenters stated that EPA's 1.5 percent annual incremental savings rate is greater than 

industry's assessment of energy efficiency program potential.
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Commenters stated that it is not clear that states will be able to achieve a 1.5 percent annual 

incremental savings rate without constraining, or even stalling, economic growth.

Commenters stated that this goal does not have any benefits while EE programs come at a cost to 

the entire rate base, not just to residential consumers. Commenters stated that EE is unclear and 

almost unenforceable with EPA's lack of clarity.

Commenters stated that EPA's proposal is based upon a complex web of assumptions -- many of 

them implausible --about future energy demand, dramatic shifts in generation sources, the 

addition of more intermittent sources for generation and reductions in energy use in 48 states. 

Commenters stated that each of these assumptions, what EPA ironically calls "building blocks", 

rests upon a weak foundation. Commenters stated that EPA's assumption of 1.5 percent growth 

in energy efficiency year-over-year lacks any credible basis. To reach that goal, commenters

noted that demand-side energy efficiency would have to improve 250 percent nationally over a 

10-year period. Commenters stated that such an assumption means that energy efficiency gains 

outpace electricity demand growth resulting in declining retail electricity sales. In short, 

commenters stated that EPA assumes negative electricity demand growth that is inconsistent 

with the U.S. Energy Information Administration forecast as well as other respected demand 

forecasts. Commenters stated that over time, potential energy savings decline significantly absent 

some major technological breakthrough. Commenters stated that EPA does not identify any 

breakthrough that would sustain an annual 1.5 percent growth in efficiency and if such 

breakthroughs are not on the present horizon, they will not be available during the 10-year period 

for achieving the targets in the proposal. Commenters stated that the gap between the agency's 

efficiency wish and technological reality has significant implications for the cost of the rule. 

Commenters stated that since most of the lowest cost efficiency measures are already being 

deployed, the next increment will be more expensive especially in states with the lowest retail 

power prices. 

Commenters stated that Building Block 4 is undemonstrated and arbitrary. Commenters stated 

that according to EPA, energy consumption reductions achieved over some period of time in 

three States and projected to be achieved in nine more qualify those jurisdictions as leading 

States and their legislative programs as best practices. Commenters stated that for building block 

4 these best practices must be expected by EPA to be adopted by the remaining States because, 

despite claims of flexibility, the results of applying building block 4 was baked into the cake of 

hard state "goals." Commenters stated that the associated projections by EPA are completely 

undemonstrated. Commenters stated that consistent year-over-year reductions over long periods 

have never been achieved. Commenters stated that these projected decreases are arbitrary and 

capricious as well because they are contrary to all major official and unofficial projections of 

population growth and economic increase. Commenters stated that there are also arbitrary, 

discriminatory penalties falling on States that purchase power out of state. Commenters stated 

that this is because the grid is not structured on a state-by-state basis, targets simply calculated 

by State cannot escape being arbitrary. 

Commenters recommended that EPA fix technical deficiencies inside CPP modeling, and re-run 

building block assumptions and goals, incorporating the effects of one block's goals and 

assumptions on another. Commenters stated that EPA should fix the errors in the assumption 

used for energy efficiency programs results that form the foundation of building block 4 goals. 
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Commenters stated that there is no demonstrated, credible evidence to support the proposed 

rule's assumptions of 1.5 percent annual EE reductions can be sustained ad-infinitum equally 

among each state.

Commenters stated that in fashioning Building Block 4, EPA evaluated energy efficiency studies 

and energy efficiency programs adopted by States to determine the potential for energy 

efficiency programs to reduce energy demand and, thereby, reduce the need to operate fossil 

fuel-fired EGUs. Commenters stated that based on these sources, EPA projected that States could 

achieve an incremental energy efficiency savings of 1.5% of retail sales, with a yearly rate of 

improvement of 0.2% until a State reached the 1.5% target.

Commenters stated that EPA's analysis falls short in numerous respects. Commenters stated that 

first, the Clean Air Act requires that each standard of performance must be "adequately 

demonstrated" for each type of source to which it applies and also must be cost-effective. CAA 

section 111(a) (2). Commenters stated that an emission control technology is "adequately 

demonstrated" under Section 111 when it "has been shown to be reasonably reliable, reasonably 

efficient, and [it] can be expected to serve the interests of pollution control without becoming 

exorbitantly costly in an economic or environmental way." Essex Chem. Corp. v. Ruckelshaus, 

486 F.2d 427, 433 (D.C. Cir. 1973). Commenters stated that under Section 111, EPA may "look 

toward what may fairly be projected for the regulated future, rather than the state of the art at 

present," but these projections are necessarily constrained by the effective date by which the 

performance standards go into effect. Portland Cement Ass'n v. Ruckelshaus, 486 F.2d 375, 391-

392 (D.C. Cir. 1973). Commenters stated that standards of performance may not be based on 

emission control technologies that are "purely theoretical or experimental," Essex Chem., 486 

F.2d at 434, nor "based on a 'crystal ball' inquiry." Portland Cement Ass'n, 486 F.2d at 391; see 

Costle, 657 F.2d at 362 (emission limit could not be achievable based on test data from "nonlime/limestone processes" because they "are not widely available"). Commenters stated that even 

if EPA had such authority to regulate sources "outside the fence line" as it proposes to do in 

Block 4, the agency has not specifically demonstrated for each category of source "outside the 

fenceline" that the proposed requirements for customers of utilities are both available and 

adequately demonstrated. Commenters stated that finally, the proposed rule also does not allow 

the States to consider the costs of certain emission control technologies may be unreasonable due 

to the source's limited remaining useful life, as required by Section 111(d)(3).

Commenters stated that in addition, EPA has failed to account in its determination of BSER for 

Block 4 that there are fundamental differences in state's resources, the fact that many states 

already have required efficiency improvements in their state regulations, the cost of energy 

efficiency measures, Clean Air Act prohibitions on efficiency changes that would result in 

"significant increases" in regulated air pollutants under the CAA's New Source Review Program, 

and the fact that the gains from most energy efficiency measures are "elastic" in the sense that 

the performance of most energy efficiency equipment - light bulbs, coils on refrigeration units, 

etc., - wane as the equipment ages. Commenters stated that even more fundamentally, EPA fails 

to explain how economic growth in the in the United States quickly will eclipse efficiency 

improvements and swallowed by international increases in CO2 emissions from industrial 

revolutions in other countries. Commenters stated that the fact that the emission reduction 

achieved at a great cost may be overtaken by events suggests that if the agency is "going long" 

on a regulatory interpretation, some of these costs should be explored as well. 
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Comment 3: Oppose 1.5 Percent – value has not been shown to be sustainable

Response 3: The commenters expressed concern that the 1.5% target EPA set is unsustainable. 

A few commenters provided analysis showing that this level could be maintained over time. 

The EPA has determined not to include demand-side energy efficiency (building block four) in 

the BSER of this final rule and therefore we do not need to address the commenters’ concerns as 

they are now out of scope. This determination is discussed in sections V.A and V.B of the final 

rule preamble of the CPP. Although the EPA has determined to not include demand side-energy 

efficiency in the BSER in this final rule we are using 1.0% in our illustrative EE scenario. See 

the RIA Chapter 3 and the Demand-side Energy Efficiency TSD for CPP Final Rule for details 

on the illustrative demand-side energy efficiency plan scenario. The EPA believes that 1.0% is a 

reasonable and sustainable level of savings.

The following are summaries of the specific public comments under this comment:

Commenters did not support the 1.5 percent annual incremental savings goal because the value 

proposed by EPA has not been proven sustainable.

Commenters noted several factors that lead them to question whether a level of 1.5 percent 

incremental energy efficiency can be achieved as quickly as EPA assumes. Commenters stated 

the levels of energy efficiency in the proposed rulemaking represent a realization of best-in-class 

performance as achieved or mandated by a select few states. While commenters agreed that 

efficiency improvements in end-use devices and advances in controls technology can make the 

realization of electricity savings equivalent to 1.5 percent of retail sales technically possible, 

economic, market, and perceptual barriers can inhibit or curb customer adoption. Commenters

stated these barriers can be overcome with federal, state, and local energy efficiency building 

codes and energy efficiency product standards. Commenters’ energy efficiency potential study 

indicated it will be necessary to use these methods to achieve the levels EPA assumes as energy 

efficiency programs alone will not reach these levels, however, these methods can take longer to 

implement and produce results less than utility best-in-class programs. Commenters stated there 

is a "learning curve" associated with effective implementation of energy efficiency programs; 

states with more experience implementing energy efficiency programs are likely to have a higher 

proficiency at launching new energy efficiency programs, whereas, states with less experience 

may require more time bring their programs to market. Commenters stated that while a small 

number of states are achieving electricity savings at level commensurate with the 1.5 percent 

incremental annual target, maintaining that level over decades has not been proven.

Commenters were concerned about the assumption made in setting the carbon emissions goal 

that Arizona (and other states) can sustain a level of savings from EE at 1.5 percent of sales for 

the next 13 years (2017 to 2030) and believed that the rate of savings will decline over that 

period of time due to the limit on the market potential for savings. Commenters noted that this 

position is also supported by the analysis conducted by Pace Global, which identified that the 1.5 

percent energy efficiency standard has only been demonstrated in top tier states for a single year. 

Commenters also noted that EPA's data does not strongly support that a 1.5 percent energy 

efficiency standard can be achieved year over year for multiple years, and Pace Global 
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recommends that for the purposes of goal setting, EPA should use the 0.6 percent per year 

standard identified in the EPRI study. Commenters agreed with Pace Global's recommendation 

but stated that if EPA opted not to lower the goal, EPA should at least use a scaled rate rate 

between 0.6 percent and 1.5 percent per year during the 2017 to 2030 time frame based on the 

length of time that each state has been engaged in EE programs. Commenters stated that the 

length of time that EE programs have been implemented affects states' ability to achieve EE 

improvements as they approach the end of the initial compliance term and into the future. 

Commenters noted that proactive utilities will find it more difficult and more expensive to 

maintain the same level of incremental EE savings that they have already achieved compared to 

a utility that has not yet achieved that same level of savings.

Commenters noted that EPA's assumption that a 1.5 percent annual incremental EE savings can 

be maintained through 2030 and beyond produces a produces very large savings goals by the end 

of the interim compliance period with cumulative 2030 savings rates range from nearly 10 

percent to almost 13 percent. Commenters stated that because the savings rates are first-year 

rates, states must continually deploy new EE programs or attract additional customer 

participation in existing programs in order to achieve the incremental savings rate throughout the 

interim compliance period and the cumulative rate in 2030 and beyond. Commenters noted that 

states must also replace expiring EE measures, as they are assumed to produce reductions only 

for 10 years and that the result is that states, utilities and customers are not required simply to 

"maintain" a certain EE savings rate, but must continually make additional, expansive 

investments just to keep up. Commenters cited an analysis by the Lawrence Berkley National 

Laboratory (LBNL) that concluded that savings rates of 1.5 or 2 percent of retail sales go "well 

beyond current experience and practice in most leading states." Accordingly, "[t]he challenge for 

program administrators will be to design and implement programs that can achieve both deeper 

savings, on average, at customer facilities and have a broader reach in terms of market 

penetration over a sustained period of time." LBNL goes on to note that "service providers will 

have to achieve savings levels of 25-40 percent of existing usage at customer facilities compared 

to current practice in utility customer-funded programs, which is typically in the 5-20 percent 

range. Commenters noted that this means that the sustained achievement of greater levels of 

savings would require increasing EE program performance by a factor of two to five times; an 

unprecedented requirement which EPA cannot prove is either possible or probable.

Commenters noted that EPA assumes that, once a state achieves 1.5 percent annual incremental 

EE savings, savings are "maintained at that level through 2029 and stated that because the 

savings rates are first-year rates, states must continually deploy new EE programs or attract 

additional customer participation in existing programs in order to achieve the incremental 

savings rate throughout the interim compliance period and the cumulative rate in 2030 and 

beyond. Commenters noted that EPA's focus on incremental EE savings rates does not address 

concerns about the achievability of the cumulative goals through 2030 and beyond. Commenters

stated that while these savings are meaningful and important, a "side effect" of increasing 

minimum codes and standards, which set the minimum efficiency levels for newly constructed 

buildings and a large range of residential, commercial and industrial energy consuming 

appliances, is that this significantly decreases the energy savings opportunities that would be 

available to EE program administrators, while driving up the costs to acquire additional energy 

savings above the new minimum efficiency levels.
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Commenters worked with EPRI to evaluate the energy efficiency potential throughout their 

members' service territories. Commenters noted that in their most recent evaluation in November 

of 2011, they discovered that due to the rural, residential nature of the commenters' membership,

the lower density of end-use members, and the lower percentages of commercial and industrial 

members within the commenters' members' service territories, the total energy efficiency 

potential identified through this evaluation falls far short of the total energy efficiency that is 

called for within the Proposed Rule. Commenters noted that the total achievable energy 

efficiency potential identified within the commenter's service territory was equivalent to 

approximately 8.3 percent of the calculated baseline residential and small commercial forecast 

for 2030. Commenters noted that when assuming that the state goal for Minnesota is allocated to 

utilities on an equal percentage basis, the commenter's member cooperatives would need to 

increase total residential energy savings by more than 59 percent and total savings from the 

commercial and industrial end-use members by more than 27 percent. Commenters concluded 

that this analysis shows that there is tremendous uncertainty surrounding the ongoing 

achievement of these levels of energy efficiency achievements.

Commenters stated that their experience is that although significant energy savings can be 

achieved through a myriad of EE measures, a 1.5 percent annual savings rate is likely not 

achievable at reasonable costs over an extended period of time (from 2017 to 2029). 

Commenters noted that they have spent in excess of 1.5 percent of retail revenue from electricity 

sales on efficiency projects for the past several years, and have been able to verify efficiency 

savings of about 0.5 percent annually. Commenters noted that while several states may currently 

achieve an annual savings rate of 1.5 percent, no state has maintained annual energy efficiency 

savings rates at or near that level for a ten year period, as EPA assumes in establishing a state's 

emission rate target. Thus, commenters stated that it is unknown whether a continuous high level 

of savings is achievable given the costs and technological barriers of increased EE beyond 

California's ambitious level of EE savings.

Commenters did not believe that establishing a 1.5% is acceptable when little analysis was done 

much beyond the 2020 period. Commenters conducted an independent study, which EPA 

referenced in its GHG Abatement Measures TSD, Table 1- "Summary of Recent (20110-2014) 

Electric Energy Efficiency Potential Studies", and noted that their study showed a one-third 

reduction in cost effective achievable energy efficiency potential from the years 2013 through 

2020, indicating that large potential may not be sustainable over time. Commenters stated that 

EE potential is a delicate balance of technological development, increasing energy codes and 

standards, and customer preferences; based on the commenters' experience, they believed that 

these three variables are unlikely to move in a predictable and favorable fashion over such an 

extended time period.

Commenters noted that several factors influence the difference between an EE market 

assessment study potential and the actual EE savings achieved by a program, such as the 

economy. Commenters noted that EE programs are voluntary and ask customers to install 

equipment that is more efficient than the code requires. Commenters stated that typically, this 

more efficient equipment is more costly than the equipment required to precisely meet the 

minimum energy code. Commenters stated that it is difficult to ask customers to do more, 

especially in times of economic downturn, even if the customer can save money over time and 

pay for the added cost with energy savings over time. Commenters stated that it is not realistic to 
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assume a consistent annual EE savings goal over the next 16 years and not recognize the cyclic 

nature of these EE programs and the economy.

Commenters noted that EPA has assumed that a savings rate of 1.5% can be sustained 

indefinitely, year after year, but states that have achieved savings rates of 1.5% in recent years 

have done so through programs dominated by lighting retrofits. Commenters noted that this 

will continue until the market for electric-saving lighting is saturated, which is expected to 

happen within the next 10 years then this occurs, EE savings will become much more expensive 

and the level of savings available will also be much less.

Commenters questioned whether the EPA's assumption of the incremental savings rate of 1.5 

percent per year is sustainable on an ongoing basis as shown in the recently published study, 

"US. Energy Efficiency Potential Through 2035" by EPRI. Commenters stated the study 

indicates an achievable range of annual incremental electricity savings from EE measures to be 

in the range of 0.5 to 0.7 percent, less than half of EPA's estimated savings. Commenters stated 

that Pennsylvania's Act 129 required a Phase II incremental reduction of 0.72 percent, and early 

indications from PA PUC's investigation into a Phase III scenario suggests a 0.75 percent annual 

incremental reduction which is in line with the EPRI study.

Commenters stated that they have serious concerns about the sustainability of 1.5% savings year 

after year after year as most of the low-hanging conservation fruit has been picked in Minnesota. 

Commenters stated that Minnesota electric cooperatives who have done conservation potential 

studies within their service territories have a growing concern over the dwindling potential for 

savings due to increases in lighting, motor and appliance efficiency over the past two decades. 

Commenters noted that big box retailers and cable and telecommunications firms are making 

inroads into home control and conservation, reducing the opportunities for utilities to count 

savings, particularly in the residential setting.

Commenters noted that only three of the twelve states EPA relies on have reported EE savings of 

1.5%, and there is no evidence that these states can maintain that level of EE savings. 

Commenters noted that while nine of the twelve states have legislatively established 1.5% EE 

goals, the mere establishment of a goal does not mean it can or will be achieved. Commenters

pointed to Indiana, who recently modified its EE targets and goals for electricity suppliers due to 

cost considerations. 

Commenters stated that EPA's assumption of a 1.5 percent growth in energy efficiency, year 

over year, lacks any credible basis because over time potential energy savings decline 

significantly absent some major technological breakthrough. Commenters noted that EPA does 

not identify any breakthrough that would sustain an annual 1.5 percent growth in efficiency, and 

if such breakthroughs are not on the present horizon they will not be available during the 10 year 

period for achieving the proposed emission targets.

Commenters stated EPA does not take into consideration the challenges in achieving and 

sustaining the proposed EE savings rate over time. Commenters stated that EPA assumption that 

a state maintains a 1.5 percent annual incremental EE savings rate produces very large savings 

goals by the end of the interim compliance period. Commenters stated because the savings rates 

are first-year rates, states must continually deploy new EE programs or attract additional 
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customer participation in existing programs in order to achieve the incremental savings rate 

throughout the interim compliance period and the cumulative rate in 2030 and beyond. 

Commenters indicated States must also replace expiring EE measures, as they are assumed to 

produce reductions only for 10 years. Commenters stated the result is that states, utilities and 

customers are not required simply to "maintain" a certain EE savings rate, but must continually 

make additional, expansive investments just to keep up. Commenters stated that the magnitude 

of this challenge should not be underestimated. Commenters cited a LBNL report that stated 

savings rates of 1.5 or 2 percent of retail sales go "well beyond current experience and practice 

in most leading states." (See LBNL Study at 28.) Commenters stated accordingly, "the challenge 

for program administrators will be to design and implement programs that can achieve both 

deeper savings, on average, at customer facilities and have a broader reach in terms of market 

penetration over a sustained period of time." Id. Commenters stated that LBNL went on to note 

that "service providers will have to achieve savings levels of 25 to 40 percent of existing usage at 

customer facilities compared to current practice in utility customer-funded programs, which is 

typically in the 5-20 percent range." Id. Commenters stated this means that the sustained 

achievement of greater levels of savings would require increasing EE program performance by a 

factor of two to five times. This is unprecedented. EPA cannot point to any data showing that 

this is possible or even probable. Commenters stated EPA's focus on incremental EE savings 

rates does not address concerns about the achievability of the cumulative goals through 2030 and 

beyond. Commenters stated that EPA notes that California and Minnesota achieved cumulative 

savings rates in excess of 13 percent, respectively, in 2012. (See Abatement Measures TSD at 

Table 5-4.) Commenters stated that achieving this level of cumulative savings in one year is, 

however, no indication that this level can be achieved indefinitely. In fact, commenters stated it 

may become more difficult for these states to maintain such savings rates going forward. 

Commenters stated EPA has not proffered any evidence to support its belief that individual states 

have the EE potential to support and maintain high levels of cumulative EE savings. 

Commenters further stated that EPA has not considered the "combined effect of economic 

torpor, moderate gas prices, and tightening energy codes and minimum standards." (LBNL Study 

at 30.) Commenters stated according to LBNL, these will "pose challenges for continued growth 

in electric efficiency programs." Id.

Commenters stated EPA has not demonstrated that the projected EE savings rate is achievable by 

all states. Commenters stated EPA concedes that the 1.5 percent annual incremental EE savings 

rate has not been achieved and sustained nationwide previously. See Abatement Measures TSD 

at 5-37. When examined in closer detail, commenters stated none of EPA's assertions provide 

adequate support that all states can achieve and maintain annual incremental EE savings rates of 

1.5 percent; in fact, in 2012, the average incremental EE savings as a percentage of U.S. 

electricity consumption was only about 0.6 percent. Commenters further stated that as EPA's 

own analysis shows, annual incremental savings as a percentage of sales varies tremendously by 

state. See Abatement Measure TSD at 5-17.

Commenters noted that experience shows that this level of savings can be achieved for many 

years in a row, noting that Vermont first achieved 1.5 percent per year savings in 2007 and has 

sustained at least this level of savings since then. Commenters noted the state recently reviewed 

efficiency opportunities still available, and based on this, Efficiency Vermont (the program 

operator) and the Vermont Public Service Board recently decided to establish savings goals for 

2015 to 2018 averaging over 2 percent per year (Scott Johnstone, executive director, Vermont 
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Energy Investment Corporation, pers. comm., September 23, 2014). Commenters stated that both 

Massachusetts and Rhode Island recently decided to increase their savings targets above 2 

percent per year, even though they have been aggressively implementing energy efficiency 

programs since the late 1980s.

Commenters stated many new efficiency program approaches are emerging that will allow this 

level of savings to be sustained. For example, ACEEE's 2013 report Frontiers of Energy 

Efficiency: Next Generation Programs Reach for High Energy Savings examined 20 different 

program areas that collectively could reduce 2030 electricity use by about 27 percent relative to 

EIA's Annual Energy Outlook forecast.

Commenters noted the savings targets are typically limited to ratepayer-funded, utility energy 

efficiency programs, however these programs represent only a subset of the cost-effective, 

adequately demonstrated, technologically feasible end-use energy efficiency that can be used to 

reduce CO2 emissions from the power sector. Commenters indicated there are potential savings 

from the adoption of building energy codes and CHP, and the savings from these types of 

policies are different from and largely additional to the savings that utility energy efficiency 

programs have achieved. Commenters noted that utility support for increased compliance with 

building codes is a new and emerging practice and does not result in any significant overlap in 

our calculations of potential savings from building energy codes and utility programs. 

Commenters stated these emerging energy savings opportunities mean that the 1.5 percent per 

year savings level is actually a conservative estimate of what states have demonstrated can be 

achieved.

Commenters stated most importantly, Analysis Group's review of these factors [analysis of EE 

potential studies and state and utility EE programs] demonstrates that leading states-including 

states that have implemented EE for over a decade-continue to be able to achieve high levels of 

annual energy efficiency savings as programs grow.

Commenters assessed the reasonableness of EPA's sustained savings level assumption by 

evaluating the actual historical experience of states and program administrators in capturing 

savings from energy efficiency, and found that numerous examples exist of states and utilities

that achieved relatively high levels (1.0 percent of retail sales or greater) of energy efficiency 

savings over time. Commenters provided a figure showing the annual energy efficiency savings 

expressed as a percentage of retail sales from 2006 to 2013 (see Figure 11 of the comment 

letter). Commenters stated this is significant because it indicates the ability of utility-driven 

efficiency programs to react quickly to changes in policy by aggressive ramping and sustained 

savings levels, analogous to the potential impact on EE providers that may flow from expanded 

opportunities associated with Clean Power Plan compliance activities. Commenters provided a 

number of illustrative examples of states that have achieved relatively high levels (1.0 percent of 

retail sales or greater) of energy efficiency savings, and sustained these levels over time.

Commenters stated that while it cannot be assumed that continued savings are inexhaustible, it is 

clear that achieving savings at the rate assumed by EPA can be sustained for many years. 

Commenters stated this suggests, in part, that as technological innovation advances and the cost 

of new technologies falls, more cost-effective energy efficiency potential becomes available and 

in some sense continuously building the resource of EE potential.
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Commenters noted that EPA asserts that states can sustain a level of 1.5 percent of incremental 

EE achievements indefinitely. Commenters stated that EPA offers no justification for this 

assertion, and in fact there is no evidence of any program sustaining this level of EE achievement 

over the length of time covered by the proposed rule.

Commenters stated EPA further assumes the EE programs, once implemented to a level of 1.5 

percent annual savings, can be sustained at that level. Commenters stated that EPA 

acknowledges that this level of savings has been achieved by only a few States, and no State has 

demonstrated that these rates can be sustained over several years.

Commenters found that the experience of leading states and utilities, coupled with the vast 

additional potential for energy savings not included in EPA's 1.5 percent target, provides ample 

support for EPA's expectation that a savings rate of up to 1.5 percent can be sustained through 

2030.

Commenters stated that in addition to supporting EPA's conclusions regarding feasible rates for 

increasing energy efficiency savings, the Analysis Group also documents the ability of states and 

utilities to sustain high savings levels over time. Commenters noted the existence of massive 

technical and economic potential for energy savings, including savings from measures and 

programs that are not explicitly included in EPA's analysis, strongly suggests that states will be 

able to achieve high levels of energy savings over an extended period of time. Commenters

stated the Analysis Group also provides many examples of leading states and utilities that have 

demonstrated this ability in recent years; for example, the Analysis Group notes that San Diego 

Gas & Electric, one of California's "big three" large investor-owned utilities, has reported energy 

savings well in excess of 1.5 percent of sales every year since 2007, and in 2009 alone, SDG&E 

reported energy savings of over 2.5 percent of sales; the state of Massachusetts achieved energy 

savings exceeding 1.5 percent of sales in each year from 2011 to 2013, with savings exceeding 2 

percent of sales in both 2012 and 2013; and Vermont has exceeded the 1.5 percent target every 

year from 2007 to 2012, with energy savings in three of those years at or exceeding 2 percent of 

sales. Commenters stated these and other examples in the Analysis Group report demonstrate 

that high savings rates can not only be reached at the rate that EPA projects in building block 4, 

but can also be met over extended periods.

Commenters asked a series of questions regarding BB4, including: Are EE programs, and their 

associated electrical generation savings rates, expected to be maintained after the final goal year 

of 2029? Similarly, why does EPA expect the top performing states to maintain 1.5 percent 

annual EE savings for more than 10 years (GHG Abatement TSD states "For states currently at 

or above the best practices level of performance, this effects an ability to sustain the target level 

for thirteen years")? To what extent has the Agency considered literature that suggests that the 

pace of incremental EE savings slows over time and the largest gains come earliest?

Commenters noted that while other major power market forecasters' electricity sales 

compounded annual growth rates (CAGR5) for the period between 2020 and 2030 are strictly 

positive (AEO 2013: 0.7 percent, EPRI: (achievable potential) 0.4 percent, NERC average of 

assessment studies: 1.5 percent), the EPA assumes a CAGR of -0.2 percent for the same time 

period. Commenters noted that between 2020 and 2030, the EPA assumes incremental year-over 

year reductions from energy efficiency to be almost 41 TWh nationally on average, outpacing 
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year-over-year national electricity sales growth of 31.6 TWh, on average. Commenters stated 

that this result is based on EPA's assumption of states being able to sustain an annual incremental 

growth rate of 1.5 percent once achieved. Commenters did not believe that this sustainability is 

support by any peer-reviewed of technical studies of EE potential.

Commenters worked with EPRI to evaluate the EE potential throughout their members' service 

territories and noted that their most recent evaluation in November of 2011 found that total EE 

potential falls far short of what is called for within the Proposed Rule and is not likely to be 

achievable in the long term because of the rural, residential nature of the commenters' 

membership, as well as the low density of end-use members and the lower percentages of 

commercial and industrial members within the commenters' service territories.

Commenters believed that EPA's assumption of a sustainable 1.5% annual load reduction goal 

from utility energy efficiency programs through 2030 is extraordinarily aggressive, and based on 

the analysis above, likely unattainable. Commenters noted that their technical potential for 

energy efficiency through 2030 averages to be 1.95% per year; however, "technical potential" is 

an academic construct with unfounded assumptions that lacks real world applicability and 

verification. Commenters noted that "economic potential" is another construct wherein only the 

cost effective technology included in technical potential is quantified. Commenters estimated 

customer participation in its EE programs through regularly scheduled surveys and found that the 

realistic achievable potential for energy efficiency programs is 0.37%.

Commenters noted that they participated in a bottom-up, statewide evaluation of available cost 

effective (Total Resource Cost test - TRC) energy efficiency for the Florida Public Service 

Commission's goal setting proceedings under the Florida Energy Efficiency and Conservation 

Act this year which found that, for the commenters, there is insufficient energy efficiency 

potential to meet the 1.5% target as the highest level indicated was no more than one percent per 

year. Commenters stated that the ability to achieve and sustain indicated levels of EE are beyond 

their control.

Commenters noted that the U.S. electricity demand grew over the last decade at an average 

annual rate of 0.7%, according to the Energy Information Administration (EIA). Commenters

stated that while this energy agency sees a slight increase in the near future to 0.9% a year tied to 

a projected overall U.S. economic growth at around 2.4%, these decade long trends are well 

below the past energy demand which typically exceeded the annual rate of economic growth. 

Commenters stated that a combination of energy efficiency measures, declining costs of 

renewable energy rooftop solar photovoltaic (PV), and steady technology innovation with energy 

storage systems and distributed energy (DE) management systems through microgrids, could 

mean traditional base-load electricity generation will likely see steady declines in future years.

Commenters stated that the proposal recognizes that levels of EE performance have not always 

been sustained, and that a 1.5 percent annual increase and the projected cumulative EE savings 

rate are larger than the average savings that most states have achieved. Commenters asked what 

basis does EPA cite to use the experience of a subset of states to determine a national annual 

incremental savings rate for all EE programs in all states? 
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Commenters discussed how EPA's reliance on demand reductions to reduce emissions is flawed 

and illegal.

Commenters stated that the EPA assumes that Georgia, like all states, can achieve and maintain a 

1.5 percent annual reduction in electricity demand through 2030, representing a nearly 10% 

reduction in electricity demand in Georgia. Commenters stated that not only is this assumption 

beyond EPA's authority, it is also based on flawed assumptions about energy efficiency, 

particularly within the industrial sector.

Commenters stated that for example, EPA relies on data derived from the recent recession and 

subsequent slow economic recovery period. Commenters stated that EPA needs to analyze its 

energy efficiency assumptions during more robust economic periods in order to demonstrate the 

reasonableness of its assumptions.

Commenters stated that in addition, EPA's analysis does not account for energy efficiency 

improvements made to date. Commenters noted that over the last several years, business and 

industry in Georgia have already taken the initiative to invest in and implement cost-effective 

energy efficiency measures. Thus, commenters stated that much of the low-hanging fruit has 

already been captured. Commenters stated that additional measures will be much more costly 

and difficult to achieve and sustain.

Commenters stated that for example, energy efficiency improvements that have been achieved 

have occurred in part due to the introduction of LED or other high-efficiency lighting options, 

which represent the cheapest and most universal efficiency improvements currently available. 

Commenters stated that as those lighting efficiency improvements saturate the market, which can 

be expected in the next few years, states and electricity customers, will be forced to move 

towards more aggressive, and less cost-effective, means of encouraging further efficiency 

improvements.

Commenters stated that the EPA has not included anything in its analysis to account for 

increased costs associated with sustained efficiency improvements at the level it has proposed. 

Commenters stated that EPA's rule will effectively penalize business and industry in Georgia for 

early investments and put them at a competitive disadvantage. At a minimum, the commenters

stated that EPA must account for these additional costs in determining whether a 1.5 percent 

annual reduction is cost-effective as required under section 111(d).

Comment 4: Oppose 1.5 Percent – studies used by the EPA to form goal do not support 

goal/issues with studies used

Response 4: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule and therefore we do not need to address the 

commenters’ concerns as they are now out of scope. This determination is discussed in sections

V.A and V.B of the final rule preamble of the CPP. Although the EPA has determined to not 

include demand side-energy efficiency in the BSER in this final rule we are using 1.0% in our 

illustrative EE scenario. See the RIA Chapter 3 and the Demand-side Energy Efficiency TSD for 

CPP Final Rule for details on the illustrative demand-side energy efficiency plan scenario. The 
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TSD has updated information on evaluations of achievable EE potential. This information 

demonstrates that the illustrative DS-EE plan scenario is fully supported by analysis from across 

the U.S. and is at the lower end of the range of results for such studies.

The following are summaries of the specific public comments under this comment:

Commenters believed that upon further examination of the studies referenced by EPA, none 

support the assertion that all states can achieve and maintain annual incremental savings of 1.5 

percent. The commenters asserted that EPA has overstated achievable EE potential in Building 

Block 3 as a result of misinterpretation or incorrect reliance on certain studies.

Commenters noted that EPA relied on 12 state studies to set its expanded annual program target 

savings improvement rate at 1.5 percent per year and out of the 12 studies, 11 contain multiple 

scenarios with different sets of assumptions to demonstrate wide ranges of what is achievable 

under alternative financial, technological, and behavioral environments. However, commenters

noted that there is no documentation on how each study's respective average annual 

improvement rate was calculated. Commenters stated that considering that EPA used these 

studies as the foundation for its 1.5 percent annual improvement rate, the commenters have a 

serious concern with whether or not 1.5 percent is an appropriate estimation for an achievable 

and sustainable annual improvement rate over a 13-year period.

Commenters noted that the incremental EE savings as a percentage of U.S. retail sales was 0.58 

percent in 2012. Commenters stated that achieving this aggressive level of EE savings will be 

challenging because utilities cannot guarantee EE savings, as it takes customer participation, and 

in many cases some level of financial investment from customers. Commenters concluded that 

EE savings are not as predictable as other resources and noted that they are subject to after-thefact evaluation, measurement and verification, which makes the ultimate savings levels difficult 

to estimate.

Commenters noted that EPA concedes that the 1.5 percent annual incremental EE savings rate

has not been achieved and sustained nationwide previously; however, the Agency asserts that a 

review of reported 2012 incremental EE savings data, the expected performance of a limited 

number of existing state EE programs in 2020, and a review of a select number of EE potential 

studies show that this level of savings is achievable by all states. Commenters stated that when 

examined in closer detail, none of these provide adequate support for EPA's assertions that all 

states can achieve and maintain annual incremental EE savings rates of 1.5 percent when in fact 

the average incremental EE savings as a percentage of U.S. electricity consumption was about 

0.6 percent in 2012.

Commenters stated that EPA has incorrectly concluded that the studies it references support a 1.5 

percent year-on-year increase in EE. Commenters noted that EPA ignored the fact that these 

studies have different base years, some of which are in the past. Commenters stated that the 

selection of base year is an important consideration because many subsequent actions to improve 

the efficiency across sectors have already been taken; therefore the EE growth that would be 

projected by the studies with earlier base years overestimate the total potential for EE growth. 

Commenters also noted that EPA did not adjust for the time period that the studies cover, which 

will alter how returns on EE programs are evaluated.
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Commenters stated that the ten DSM potential studies cited by EPA as the basis for calculating 

an average annual sustainable load reduction target of 1.5% through 2030 are aggressive since 

they are based on highly uncertain results of maximum achievable potential studies from an 

extremely small sample of 10 DSM potential studies, six of which do not attempt to estimate 

energy efficiency potential beyond 2020, which understates the detrimental effects of new 

appliance efficiency standards and building codes on IOU energy efficiency program potential.

Commenters did not support the 1.5 annual incremental savings goal because they believed that 

the studies used by EPA to set the goal did not conclusively support EPA's proposed value, and 

without credible proof of potential, EPA's target is arbitrary and capricious.

Commenters found that only a single source---the American Council for an Energy Efficient 

Economy ("ACEEE") top-down, policy-based study---produced an estimate as high as EPA's

proposed 1.5 percent goal. Commenters noted that the next highest estimate, from the Electric 

Power Research Institute's ("EPRI") bottom-up engineering-based study, is between 0.5 to 0.7 

percent per year. Commenters noted that only three states have ever achieved a 1.5% goal in a 

single year and stated doubts about whether states could realistically achieve 1.5% improvements 

in EE.

Commenters stated that targets should be based on demonstrated best performance instead of a 

policy goal and suggested that the MACT concept could be used for EE potential. Commenters

suggested that EPA take the top 12% of actual savings performance to represent "best in fleet" or 

"best performance'.

Commenters noted that EPRI's "U.S. Energy Efficiency Potential Through 2035" study indicated 

that an achievable range of EE potential from programs was equivalent to an annual incremental 

electricity savings of 0.5 to 0.7 percent of retail sales through 2035 and that the economic 

potential of energy efficiency, characterized by 100 percent adoption of all cost-effective energy 

efficiency measures as customers phase them in over time, was equivalent to only 0.9 percent of 

annual retail sales through 2035. Commenters also noted that EPRI has stated that EPA's 1.5 

percent annual incremental savings is greater than their assessment of EE program potential.

Commenters recommended that EPA use the 0.6 percent value in its building block formula, 

instead of a policy-based approach.

Commenters also noted that EPA ignores the fact that utility-sponsored EE programs have 

traditionally relied heavily upon lighting programs for the vast majority of their savings 

(generally, compact fluorescent lamp programs for residential customers and T-8 lighting retrofit 

programs for commercial customers). Commenters noted that with the adoption of new lighting 

standards from the Energy Independence and Security Act (EISA), the availability of this 

inexpensive EE resource will quickly diminish.

Commenters also stated that of the 3 national studies EPA references, only one study predicted 

1.5 percent incremental savings level, the Agency's use of top-down, policy-based studies to

support analysis in the TSD has a serious technical flaw, and EPA should consider using a 

combination of studies, with a focus on bottom-up analysis to make this determination since topdown analysis can fail to realistically validate the model. Commenters stated that the EPRI 
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analysis shown in EPA's TSD projects 0.6 percent high maximum achievable potential per year 

(see Table 15 of TSD, Summary of National EE Potential Studies), the average and median 

incremental savings in 2012 is 0.55 percent and 0.48 percent, respectively (see Table 16 of 

EPA's TSD, Analysis of Baseline (2012) Energy Efficiency Data from EIA 861 -Survey 

Results), and a more reasonable performance level to use would be the third quartile at 093 

percent as a bar for states in the lower quartiles to aim for. Commenters stated it is irrational to 

require all states to achieve a 1.5 percent level of savings, which has not been attained by even 

the leading states in the area of energy efficiency (states in the third quartile).

Commenters disagreed with EPA's usage of EIA Form 861 data in order to determine that a 1.5 

annual incremental savings goal is achievable. Commenters were concerned with the consistency 

and quality issues with this data resulting from self-reported sourcing and differing 

methodologies in estimating these data. Commenters stated that EPA does not fundamentally 

address this issue and while EPA did use state-specific data from Form 861 for establishing 

starting points for EE levels, it applies "national" estimates of EE potential to this data and 

applied an EE growth rate historically only experienced in other best-practice states---both 

metrics which have some fundamental flaws based on the variability of state-specific factors, 

such as relative industrial, commercial, and residential consumption; lighting standards; other EE 

options; and customer economic challenges.

Commenters noted that according to the TSD, only 11 states currently have policies to achieve 

incremental savings of 1.5% by 2020, and even as to these 11 states, the TSD includes no inquiry 

into whether these policy goals can be and actually will be achieved. Commenters noted that 

though the TSD cites a number of studies (including its own meta-analysis) ostensibly indicative 

of growth in energy savings potential, the referenced studies reach widely diverging conclusions. 

Commenters also stated that flaws in Building Block 4 are made worse by the agency's 

misinterpretation of other studies it purports to rely upon. For example, commenters noted that 

EPA cites one Pennsylvania-specific study as supporting energy efficiency savings of 17.3% 

over a six-year period, when in fact such savings would be accrued over 10 years. Commenters

also noted that the 17.3% energy efficiency savings estimate also reflected the unrealistic 

assumption that utilities would pay for the entire incremental cost of needed technology--an 

assumption directly counter to EPA's own assumption that half of all costs would be paid by 

efficiency program participants. Commenters noted that EPA's analysis does not: (1) account for 

year-to-year variability in incremental energy efficiency savings potential; (2) provide any 

evidence supporting the continued application of single-year "best practices" for a decade or 

more; and (3) account for substantial variation in state-to-state retail rates and corresponding 

differences in energy efficiency incentives.

Commenters further stated EPA's analysis of the 48 States that submitted their 2012 data via 

Form 861 to the EIA shows that only three States (Arizona, Maine and Vermont) have actually 

achieved an incremental savings of 1.5 percent or greater, while 45 other reporting States 

(including nine States EPA deemed to be top performers) have much lower savings ranging from 

0.00 percent to 1.24 percent. Commenters stated EPA also acknowledges that the EIA datagathering process has gone through several significant iterations and that only in 2011 did the 

reporting through Form 861 provide a more comprehensive and consistent assessment of what 

EE activities are taking place in States. Commenters stated this suggests that EPA's approach to 

determining a nationwide goal for achieving EE savings was, at best, supported by data from 
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2011 and 2012 and that much of the data from previous years were inconclusive, or not readily 

comparable.

Commenters noted that EPA relies on an Arizona 2010 study to conclude that a 2.2% per year 

reduction is reasonable; however this study is based on gross savings and relies on assumptions 

that all codes and standards are applied and complied with. Commenters added that EPA 

recognized that the definition and data categories may not be consistently applied across utility, 

state, and data year. Commenters felt that for these reasons, EPA should not include values for 

demand-side energy efficiency measures into state emission rate goal computations.

Commenters also noted that EPA failed to ensure that the projected efficiency improvements are 

not already incorporated in EIA's aggressive "Reference Case" projections of electricity 

demand.

Commenters also noted that EIA implicitly incorporates EE into their baseline electricity demand 

forecasts and that EIA's consideration of EE can be evidenced through their measurement of 

energy intensity, typically measured in consumption per dollar of GDP. Commenters noted that 

EIA has attributed about one quarter of the overall improvement in energy intensity to these 

programs. Commenters stated that many of the gains achievable by improving lighting efficiency 

have already been used, and some states have even eliminated their EE programs because the 

targets set by the state were unachievable.

Commenters stated the metrics adopted by EPA in setting this standard differ substantially from 

the engineering-based analyses that have historically been conducted on the topic. Commenters 

referenced the study conducted by Lawrence Berkeley National Laboratory which reported 

potential estimates for EE savings from 0.5 percent (low case) to 1.1 percent (high case) and 

noted that several other individual studies and meta-analyses of EE potential, conducted mostly 

by EE advocacy organizations or consultants to EPA, as well as EPA's own analysis are nearly 

all "top-down, policy-based approach" studies.

Commenters conducted and/or referenced third party studies which looked further into EPA's

analysis and concluded that EPA's 1.5 percent annual incremental savings rate is overstated 

when considering actual EE growth and current EE program requirements.

Commenters noted that NERC evaluated EPA's analysis that served as the basis for the EE goals 

and concluded that the EE goals are higher than states can actually achieve. Commenters noted 

that NERC found that EPA applied the same EE potential for all electric sectors and did not 

account for implicit forms of EE measures from energy load grown projections on which EPA 

relied when formulating the EE goals. Commenters stated that the 1.5 percent annual EE growth

rate is wholly unsupported by the analysis conducted by NERC and EPRI. Commenters believed 

that the EE goals expressed as a percentage reduction in energy delivered are inflated relative to 

national averages because of the reliance of their owner-members on electric heat, as there are no 

reasonable fuel switching opportunities in much of the commenters' service area, and meaningful 

reductions in space and water heat system efficiency require very expensive appliance 

replacements in addition to home sealing and insulation.
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Commenters noted that GDS evaluated EPA's EE proposal and found that EPA relied on 

incorrect data when calculating the potential increase in EE and observed that when the data 

errors are corrected, the 1.5 percent average kWh savings decreases substantially. Commenters

noted that of the twelve states EPA evaluated for EE growth, GDS found that the potential EE 

for many of the states was well below 1.5 percent and only three of the fifty states saved more 

than 1.5 percent of annual kWh sales in 2012. Commenters noted that the varying levels of EE 

programs in place at present can create disparity between leading and lagging states, and 

suggested that a study of each state's EE potential should be undertaken to ensure realistic goals 

are established.

Commenters believed that EPA's basis for achieving large reductions through EE is not wellsupported as EPA assumes over 450 TWh in cumulative savings from EE programs nationally---

almost twice the estimated savings found in an Institute for Energy Innovation white paper. 

Commenters stated that the level of EE measures EPA included in Kentucky's goal calculation is 

set at an amount that greatly overstates the potential achievable results. Commenters cited a 

report by the Cadmus Group, Inc. ("Cadmus") which assessed EE potential for electricity in the 

residential and commercial sectors for commenters and found a range of 941 GWh to 1,478 

GWh of achievable electricity savings, representing 3.9% to 6.1% of forecasted retail sales in 

2033.

Commenters stated that the Clean Power Plan creates a fundamental change in the portion of 

economic EE that is "achievable" by making EE a means of achieving compliance with federal 

carbon pollution standards. Commenters stated several national and regional studies have found 

technical, economic, and achievable efficiency potential that significantly exceeds EPA's target, 

and these corroborating studies provide further confirmation that EPA's target is eminently 

reasonable and, in fact, conservative. Commenters cited a February 2014 LBNL study that 

estimated aggressive deployment of cost-effective EE measures could reduce annual energy 

demand in Western Interconnection by 18 percent for 2021 and by 22 percent for 2032, above 

and beyond savings from programs already in place; these estimates greatly exceed EPA's 

proposed targets, which imply a 3 percent decrease in overall electricity demand in 2020 and a 

11 percent decrease in electricity demand by 2030. Commenters cited a January 2013 ORNL 

study that found a limited suite of 12 selected policies that incentivize or require greater 

efficiency in residential, commercial or industrial buildings would reduce total electricity use in 

the Eastern Connection by 7 percent 2020 and 10.2 percent in 2032; these are double the level of 

demand savings implied by EPA's target for 2020 and is comparable to EPA's target for 

2030. Commenters cited a 2012 Southwest EE Project (SWEEP) that included review of best 

practice EE programs and estimated the saving for 6 Southwestern states to be 20 percent of 

retail sales by 2020, reducing electricity demand to 18 percent below reference case; this analysis 

is based on savings and participation rates achieved by actual EE programs implemented across 

the country and is an achievable assessment. Commenters cited an exhaustive 2009 McKinsey 

analysis for deploying already-available technologies in buildings and industrial processes found 

a 23 percent reduction in total end-use energy consumption by 2020, relying on measures that 

pay for themselves over time; the result exceed the energy savings expected by EPA for 

2030. Commenters cited a 2020 NAS report that reviewed EE studies in residential and 

commercial buildings and found 25 to 30 percent energy saving for the building sector could be 

achieved between 2030 and 2035 at a cost of 2.7 cents/kWh saved and industrial electricity 
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demand could be cost-effectively reduced by 2020; these estimates exceed the energy savings 

EPA's target implies for 2030.

Commenters stated that when comparing EPA's EPA analysis with the commenters' current 

program requirements, the following inconsistencies are revealed: EPA's incremental percentage 

of 1.5% is essentially double what is required to meet the Act 129 Phase II requirements that are 

to be met in 2016. Commenters noted that early indications of a PAPUC investigation into a 

Phase III scenario suggests a 0.75% annual incremental reduction which is just slightly above the 

realized EDC average of 0.72% required in Phase II. Commenters further noted that staff 

adjusted this incremental reduction value taking into account the different baseline years (2012 

for EPA and 2009/2010 for Act 129) and the result is an annual adjusted incremental reduction 

value of 0.74% through 2030. Commenters noted specifically that, for Phase II of Act 129, West 

Penn has a target of 1.6% reduction by the end of the three years, whereas PECO has a 2.9% 

reduction requirement.

Commenters stated that the studies on which EPA relies to set the contribution of EE programs 

to state CO2 emissions rate targets do not support EPA's conclusion. Commenters noted that 

EPA merely averages results from twelve studies to conclude that 1.5 percent year-on-year 

growth in EE is achievable, resulting in demand reductions of around 10 percent in every state. 

Commenters believed this approach was arbitrary and unreasonable because the studies contain 

multiple scenarios and EPA does not attempt to rectify the different scenarios in each study, but 

merely averages across all the scenarios without consideration of the assumptions therein. In so 

doing, Commenters stated that EPA fails to adjust for impacts to the potential EE growth rate 

under different assumptions.

Commenters studied the highest potential of cost-effective energy savings achievable in the four 

states it serves and observed consistent results in several of the studies undertaken in the last ten 

years. Commenters stated that these studies found that about 0.7 % savings is the maximum of 

cost-effective energy savings achievable, although this value is specifically tailored to the 

commenter.

Commenters noted that much of the data and methods used by the EPA in EPA's GHG 

Abatement TSD were derived from studies by EE advocacy organizations employing a "topdown, policy-based approach" and therefore, it is possible that some of the information on which 

the EPA relied to develop its EE targets was based on best-case scenarios rather than average 

results in the field.

Commenters noted that much of the data and methods used by EPA in this TSD were developed 

by EE advocacy organizations and the metrics adopted by EPA largely incorporate these 

findings, and differ substantially from the engineering-based analyses that have been conducted 

on the topic.

Commenters noted that other mechanisms complementary to energy efficiency programs, 

including federal, state, and local energy efficiency building codes and energy efficiency product 

standards, would be needed to attain the target levels. The commenters also noted that these 

mechanisms could take longer to implement than EE programs and have the potential to become 

more costly. (Commenters provided details on their Energy Efficiency Potential model.) 
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Commenters stated that while efficiency improvements in end-use devices and advances in 

controls technology can lead to energy savings; economic, market, and perceptual barriers can 

inhibit or curb customer adoption. Commenters stated the assumptions used to determine the 

economic viability of the proposed levels of energy efficiency should be reviewed to ensure that 

adverse economic impacts are avoided.

Commenters stated that EPA's assumptions are too aggressive and the proposal should be 

withdrawn. 

Commenters stated that EPA's proposed "building blocks" contain unrealistic assumptions on the 

potential for large-scale renewable energy and energy efficiency development within the short 

timetable of the EPA rule, and untenable projections of the potential for power plant efficiency 

improvements.

Commenters stated that EPA's assumption on heat rate, natural gas, renewables, nuclear, energy 

efficiency are all too aggressive. Commenters stated for example that the Georgia Public Service 

Commission has worked for years to develop and implement energy-efficient programs that 

make sense for their customers. Yet, commenters noted that EPA assumes Georgia can increase 

cumulative energy-efficient measures to 14 times the 2012 levels, with minimal cost. 

Commenters stated that their research tells just the opposite. Commenters stated that the energy 

efficiency levels proposed in the guidelines could cost their customers $4 to $5 billion in higher 

rates, costs that are not factored into this rule. Farther, commenters stated that the cost only 

covers the impact to their customers, which are roughly half the electricity users in the state. 

Commenters stated that EPA projects that in 2030, electricity usage will be 10 percent below the 

business-as-usual case. Commenters stated that according to EPA, electric consumption in 2030 

will be little more it is today and will actually decline between 2020 and 2030. Commenters

stated that according to the U.S. Census, population is expected to rise to 358,471,000 people by 

2030, an increase of 37,108,000 from the projected 2015 level of 321,363,000, or an average of 

more than 2 million people per year. Commenters stated that although economic growth has been 

slow-paced, presumably at some point in the next 15 years, it will pick up to more normal rates 

of growth. Commenters stated that EPA's proposal thus assumes that the country's population 

and economy can grow without electricity growth. Commenters noted that there is no precedent 

to back up this extraordinarily aggressive assumption. Commenters stated that NERC disbelieves 

it. Commenters noted that NERC examined various load growth projections and energy 

efficiency program data that it collects for its annual grid reliability assessments. Commenters

noted that this data shows far lower efficiency gains than EPA projects. Commenters noted that 

as NERC concluded, "the CPP assumes energy efficiency gains outpace electricity demand 

growth through the compliance period. However, commenters stated that this assumption does 

not reasonably reflect energy efficiency achievability and is a departure from normalized 

forecasts."

Commenters stated that in contrast to EPA's projection that, under building block 4, electricity 

usage in 2030 would be little higher than electricity usage today and would decline between 

2020 and 2030, even the states that EPA says have achieved the level of demand-side savings 

that EPA projects have not been able to prevent electricity consumption from growing over time 

nor do they project zero or negative load growth in the future. Commenters stated that with the 
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exception of recessions, California's electricity consumption has always grown and it is projected 

to continue growing in the future. Commenters noted that similarly, ISO New England's most 

recent forecast projected that the region's overall electricity demand would grow at a rate of 1.1% 

annually over the next decade.

Commenters stated that there is no national-level precedent for EPA's highly aggressive 

assumptions as to the amount of electricity that can be saved year-over-year based on energy 

efficiency measures. Commenters noted that EPA reports that states have implemented energy 

efficiency programs for decades, that all states fund energy efficiency in some measure, and that 

state funding for energy efficiency has rapidly increased. Commenters stated that yet EPA is 

forced to concede that, for its primary option, only three states have actually achieved, for some 

period, the level of savings that EPA projects for all states. Commenters stated that only another 

nine states have even targeted (but not achieved) that level. Commenters stated that this falls far 

short of evidence "adequately demonstrating" the ability of all states to meet EPA's target.

Commenters stated that Pace reviewed the technical merits behind EPA's proposed 1.5% annual 

EE improvement assumption. Commenters stated that the basis appears to be a study from the 

American Council for an Energy Efficient Economy (ACEE), an advocacy group. Commenters

stated that other studies in the electric industry, such as one by the Electric Power Research 

Institute (EPRI) have found lower figures, with a high of 0.6%. Pace Study, section 3.1, at 17. 

Commenters agreed that a 0.6% figure is more reasonable for year-over-year projections over a 

decade.

Commenters stated that the EPA selected a 1.5% annual reduction based on a review of the top 

tier states' efficiency performance in the 2012 baseline year, noting that three states actually 

achieved this level in one year and that nine other states had mandates to achieve this level for at 

least one year by 2020. Commenters stated that achieving a 1.5% efficiency improvement has 

been demonstrated in top tier states in a single year. However, commenters stated that the EPA's 

assumption in building block 4 is that this high level is achieved by all states for the years 2017 

to 2029. Commenters noted that in the EPA's Clean Power Plan technical support document on 

GHG Abatement Measures, only one source, the American Council for an Energy Efficient 

Economy (ACEEE), reported efficiency potential of 1.5% per year. Commenters stated that the 

next highest efficiency potential was reported from the Electric Power Research Institute (EPRI), 

a non-partial source, in a 2014 study to be 0.6%, representing the high end of achievable 

efficiency penetration levels. Thus, commenters stated that even the EPA's scientific support is 

not fairly supporting the fact that 1.5% efficiency penetration in all states is feasible, much less 

the achievement of this level consistently for more than a decade.

Commenters stated that EPRI, which has researched potential power sector energy efficiency in 

great depth, warns that EPA has far overstated the amount realistically achievable. Commenters

stated that the NERC report sets forth a complete critique of EPA's building block four 

assumptions, showing that EPA misread the studies it relied on and far overstated the potential 

for energy efficiency. Commenters noted that as NERC stated, EPA's conclusion that states can 

make and sustain the energy efficiency measures EPA relies on "is not supported by any peer 

reviewed or technical studies of energy efficiency potential." Commenters noted that as NERC 

concluded, "By overestimating efficiency savings resulting in declining electricity retail sales, 

the results of the EPA's entire Regulatory Impact Assessment are concerning from a reliability 
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perspective and have implications to electric transmission and generation infrastructure. 

Underlying electricity demand forecasts directly influence the required level of generation -- and 

hence, CO2 emissions -- from existing and affected generating units under the CPP. They also 

affect the required new construction of generating units that are needed to meet expected 

electricity demand, which is projected to increase during the next 10 years."

Commenters stated that EPA identified Arizona as one of the top performers in the country and 

utilized Arizona's performance over the last few years to outline the "Best Practices Scenario" for 

establishing targets for other states. Commenters stated that as a result of Arizona's strong 

performance in the past, its annual incremental energy savings assumption was set at the highest 

level, 1.50% of retail sales. Commenters stated that this annual savings assumption is expected to 

be achieved in years 2017 through 2030 in the EPA goal setting calculation.

Commenters stated that EPRI likewise has similar concerns, as noted in their comments on the 

Proposed Rule.

"The level of energy efficiency performance in this proposed rulemaking -- 1.5% 

annual incremental electricity savings as a percentage of retail sales-- is greater 

than EPRI's assessment of energy efficiency program potential. EPRI research 

indicates that achieving this level of energy efficiency will require[d] the addition 

of measures beyond energy efficiency programs and will occur over a longer 

period and at a higher cost than suggested in the proposed rule and 

accompanying RIA. While efficiency improvements in end-use devices and 

advances in controls technology can lead to energy savings; economic, market, 

and perceptual barriers can inhibit or curb customer adoption."

Commenters stated that based on research conducted by EPRI, which was published in their 

"U.S. Energy Efficiency Potential Through 2035" study and discussed in their comments on the 

Proposed Rule, the level of achievable incremental savings values is much lower than the 1.50% 

value proposed by EPA. Commenters stated that specifically, EPRI's study "indicates an 

achievable range of energy efficiency potential from programs equivalent to an annual 

incremental electricity savings of 0.5% to 0.7% of retail sales through 2035." Commenters

recommended that EPA take this research under advisement when establishing energy efficiency 

savings values for use in the goal setting calculations.

Commenters agreed with EPA that demand-side energy efficiency opportunities offer potential 

economic benefits to consumers through reduced electricity bills, as well as environmental 

benefits due to reduced carbon emissions but has concerns regarding EPA's analysis, which 

applies assumptions that State could achieve incremental energy efficiency savings of 1.5% of 

retails sales (with a yearly rate of improvement of 0.2% until a State reach the 1.5% target) 

uniformly across all the States. Commenters were concerned with EPA's reliance on data derived 

from the recent recession and slow economic recovery period that followed, explaining that 

while the energy efficiency gains observed during this period are promising, those periods do not 

reflect representative economic conditions. Commenters believed the periods used are not 

representative of higher demand scenarios associated with periods of more rapid economic 

growth. Commenters stated to demonstrate the reasonableness of EPA's assumptions for energy 

efficiency, EPA must expand its analysis and provide assurance that the incremental savings 
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target can be achieved under a more robust set of economic conditions. Commenters added 

that EPA did not attempt to account for the extent to which States have already adopted energy 

efficiency programs, explaining that a State that has a mature and established program cannot be 

expected to achieve the same levels of demand reduction as a State that has only just begun its 

program and is able to target the most easily implemented, lowest-cost reduction programs.

Comment 5: Oppose 1.5 Percent – issues with the EPA’s analysis of states to form annual 

incremental savings goal

Response 5: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule and therefore we do not need to address the 

commenters’ concerns as they are now out of scope. This determination is discussed in sections

V.A and V.B of the final rule preamble of the CPP. Although the EPA has determined to not 

include demand side-energy efficiency in the BSER in this final rule we are using 1.0% in our 

illustrative EE scenario. See the RIA Chapter 3 and the Demand-side Energy Efficiency TSD for 

CPP Final Rule for details on the illustrative demand-side energy efficiency plan scenario. 

The following are summaries of the specific public comments under this comment:

Commenters did not support the 1.5 percent annual incremental savings goal, as they had issues 

with EPA's analysis of high-performing states to form the goal.

Commenters stated that basing state performance targets on potential future performance is very 

problematic and that a more accurate projection of future energy savings could be made by 

considering states' past performance.

Commenters noted that, according to EPA, nine states are anticipated to achieve incremental EE 

savings rates of 1.5 by 2020 by virtue of existing state policies, and EPA notes that 12 states 

have achieved or will have achieved the target savings rate by 2020. Commenters stated that at 

this time, these nine states have not achieved the target rate, and, in fact, the 2012 reported 

savings rates for all except three states were below 1.0 percent. Commenters noted that one of 

the states EPA expects to achieve 1.5 percent incremental EE savings by 2020 is Indiana, which 

repealed its energy efficiency standards in March 2014. 

Commenters also noted Florida, while not projected to reach a 1.5 savings rate by 2020, was one 

of the top three states in terms of EE spending in 2012. Commenters stated Florida's Public 

Service Commission (PSC) currently is reviewing the state's energy efficiency goals; as part of 

this proceeding, the four main investor-owned utilities have asked the PSC to consider scaling 

back the current EE program goals because the EE gains made in recent years make further 

efficiency improvements harder and more costly to achieve. Commenters stated the utilities 

argue that slow economic growth, lower electricity consumption and the relatively low cost of 

natural gas-based power mean that the goals of Florida's EE program are being met through 

industry trends.

Commenters stated EPA's meta-analysis of achievable potential EE studies does not support the 

target EE savings. Commenters stated EPA's meta-analysis provides interesting information 
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about the amount of EE potential that might exist, but does not speak to the levels that have been 

adequately demonstrated to be achievable. Commenters stated that a better, more reliable metric 

of what can be achieved is what states have done to date. Commenters stated such an analysis 

would focus on the existence of supportive regulatory policies and the sufficiency of expected 

budgets for utility managed, customer-funded EE programs. Commenters stated NERC echoed 

these concerns regarding EPA's analysis, pointing out that EPA applied one national energy 

efficiency growth factor to all state situations without considering program performance or cost. 

Commenters cited NERC as stating 

"the discrepancies are subsequently compounded by extrapolating these annual 

energy efficiency performance targets as incremental improvements that can be 

sustained through 2030, beyond the 12 studies evaluated. Out of 12 studies, 11 

contain multiple scenarios with different sets of assumptions to demonstrate wide 

ranges of what is achievable under alternative financial, technological, and 

behavioral environments. There is no documentation on how each study's 

respective average annual improvement rate was calculated, which was used as 

the foundation to calculate the incremental performance improvement target of 

1.5 percent per year." (Initial Reliability Review at 14.) 

Commenters stated that NERC concluded that, "this sustainability is not 

supported by any peer-reviewed or technical studies of energy efficiency 

potential."

Commenters stated that EPA's use of a set of top 12 states in terms of EE performance as 

measured by incremental savings as a percentage of retail sales, based on 2012 reported data, 

was not enough to prove that a 1.5 percent value is adequately demonstrated because it is not 

appropriate to base the feasibility of a goal by a minority of states.

Commenters believed that the three states EPA indicates have already achieved the highest level 

of performance, more than 1.5 percent annual incremental savings, are incomparable to others as 

a whole. Commenters also believed that EPA ignored that two states they cited (Indiana and 

Ohio) have recently taken legislative action to reconsider the degree of achievability of their 

long-term targeted EE requirements in part because of their concerns of the potential rate impact 

that these programs will have on retail customers.

Commenters noted that of the twelve states cited by EPA as "leading states", the 2014 ACEEE 

Scorecard showed eight of those states had reported 2013 incremental annual savings of less than 

1.5%, with five of those showing incremental savings of less than 1.0%. Commenters stated that 

the historical experience of other states that have had incentivized EE programs in place for 

several years suggests the EE savings rates in the Proposed Rule are unrealistic.

Commenters stated EPA relies almost exclusively on three states, Arizona, Maine, and Vermont, 

to demonstrate the achievability of 1.5 percent annual incremental DSEE savings. Commenters

stated EPA, however, displaces two important factors: (1) the demonstration of sustaining 1.5 

percent and (2) the achievements of other states. Commenters stated first, Arizona and Maine 

have only demonstrated annual incremental savings of 1.5 percent for one year (2012) thus 

negating EPA's reliance on these two states as adequately demonstrating the sustainability of 1.5 
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percent annually. Commenters stated second, between 2006 and 2012, the 50 states plus the 

District of Columbia had 357 opportunities to achieve EPA's DSEE target. Commenters stated 

during this time period, EPA's target was met by states on only 10 occasions (i.e., less than four 

percent of the total opportunities). Commenters stated only two states besides Arizona, Maine, 

and Vermont achieved 1.5 percent annual incremental savings: California in 2010 and Hawaii in 

2008. Commenters stated California and Hawaii did not maintain these levels of savings. 

Commenters stated in fact, Hawaii went from achieving 1.97 percent annual incremental savings 

in 2008 to 0.04 percent in 2012. Commenters stated EPA must recognize that its savings target 

has not been adequately sustained to justify its inclusion as BSER.

Commenters noted that states within the 11-state "best practice" group varied in the application 

of their efficiency requirements as some states applied their regulations only to investor owned 

utilities, whereas others included municipal utilities, and/or cooperative utilities. Commenters

stated that those states with limited applicability will not achieve their regulatory goals on a full 

state-wide basis, but EPA treated these states as evidence of the general practicality of its 1.5 

percent/year efficiency improvement rate. Commenters also noted that EPA's overarching logic 

used to develop end-use efficiency and renewable energy targets is flawed and inconsistent. 

Commenters noted that end-use efficiency goals are based on the 11 most aggressive state targets 

in the U.S. while renewable energy generation targets are based on average RE generation targets 

by region. Additionally, Commenters noted that EPA stated that the state RPS targets "reflect 

expert assessments of RE technical and economic potential that can be cost-effectively 

developed for that state's electricity consumers," and then overrode a state's assessment if it was 

less or more than a regional average. Commenters stated that there is no reason to believe that 

state agencies able to render "expert assessments" for RE are somehow unable to make such 

judgments regarding Energy Efficiency Resource Standards (EERS), yet EPA only recognized 

the expertise of states that had adopted at least a 1.5 percent/year efficiency improvement 

requirement.

Commenters stated that EPA's presumed fairness of applying goals deemed reasonable by 11 

states to the 39 states which have not adopted such goals lacks support, particularly given the 

fundamental differences in energy generation, energy use, and electricity demand growth by 

state. Commenters also noted that even states within the "best practices" group have programs to 

exclude major sources of electricity, such as municipal power entities, electric cooperatives, or 

investor owned utilities serving a relatively small number of customers; hence, the targets of the 

state efficiency programs EPA relied on will not achieve the reduction in total electricity 

consumption in the state which is embodied in EPA's rule.

Commenters stated the 12 states selected do not appropriately represent the nation's landscape 

nor do they represent the various energy efficiency capabilities across each state. Commenters

stated among three states listed as having already met the 1.5 percent goal, many Arizona 

utilities, including cooperatives, have not met their standard since 2010.Commenters stated that 

nine utilities in Arizona are required to file Energy Efficiency Implementation Plans (EEIP) with 

the Arizona Corporation Commission (ACC) because they have annual revenues in excess of $5 

million. Commenters stated all nine of these utilities have requested waivers from the ACC 

because they could not achieve the required energy efficiency targets based on the rule's costeffectiveness requirements, and the types of programs permitted. Commenters stated these 

waivers allow the entities permission to not attain the standard targets or otherwise deviate from 
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the requirements as written. Commenters stated of those nine, five utilities are distribution 

cooperatives and the remaining four are municipalities or investor-owned utilities. Commenters

stated every utility required to file an Energy Efficiency Implementation Plan with the ACC has 

at one point requested and been granted waivers to deviate from the parameters of the energy 

efficiency rule due to their inability to reach the targets as originally designed. Commenters

stated that by choosing Arizona as an example, the EPA presented a state that could not make 

their energy efficiency mandates work universally throughout the state; even recognizing from 

the onset that electric cooperatives have special challenges by setting their mandate 25 percent 

lower than other utility groups.

Commenters stated the EPA claims they have chosen a conservative 1.5 percent requirement for 

each state, however only 11 states nationwide have previously adopted this same target as part of 

their state mandate. Commenters stated in making this claim, the EPA ignored the disparate 

impact a uniform energy efficiency requirement has across the nation, and ignored the various 

demographics that are not conducive to this overly ambitious standard. Commenters stated the 12 

states represented do not appropriately represent the nation's landscape nor do they represent the 

various cost-effective energy efficiency capabilities across each state.

Commenters stated Arizona is one of the three states the EPA cites as achieving a 1.5 percent of 

savings in 2012 due to Energy Efficiency Resource Standards (EERS), but even in the creation 

of the state EERS, the Arizona Corporation Commission (ACC) accounted for the dissimilar 

nature of investor-owned utilities and distribution cooperative utilities. Commenters stated this is 

shown in the discounted standard allowed for distribution cooperative utilities written into the 

EERS. Commenters stated for every cumulative percentage of savings that investor-owned 

utilities must achieve, distribution cooperatives are only required to achieve 75 percent of that 

level. Commenters stated despite this discount, many Arizona utilities, both investor-owned and 

distribution cooperative utilities, have not met their standard since 2010, and a number of 

Arizona entities are granted waivers from the Arizona Corporation Commission which allows the 

entity permission to not attain the standard targets. Commenters stated the waiver process is also 

written into EERS language, further emphasizing that from the outset, the ACC understood that 

the original standards were potentially set higher than entities could attain, so a waiver process 

was necessary. Commenters stated this mirrors what is occurring with several other electric 

utilities and distribution cooperatives in other states who have not been able to meet or exceed 

their required energy efficiency goals either. Commenters stated even though the EPA cites 

Arizona as achieving the stated 1.5 percent mandate in 2012, a closer look at the individual 

utilities' savings over several years in response to the EERS program shows that a 1.5 percent 

mandate is unreasonable and unsustainable, particularly for distribution cooperatives.

Commenters stated given the EPA's basis for determining the 1.5 percent goal, it is clear that the 

EPA has ignored several cases across the country where annual energy efficiency savings are 

declining and are unsustainable. Commenters stated this can be seen in the actual kWh savings 

data as filed in Maine, Vermont, and Washington among others. Commenters stated these case 

studies are further detailed in the Appendix 1 Statewide Energy Efficiency Programs. 

Commenters provided a case study describes the outcome of the Energy Efficiency Resource 

Standards as established in Arizona and how the utilities and the Commission Staff have 

responded to the standards, now several years past their implementation. Commenters provided 
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several case studies for other states as well (including Arizona, Vermont, Maine, Hawaii, Iowa, 

Maryland, Michigan, Minnesota, Washington, and Wisconsin). Commenters also provided a 

table entitled "Table 1. EPA's Best Practices References as Basis for Energy Efficiency Goals" 

that highlights the States that represent the 12 states that the EPA considers "on track" to meet 

the 1.5 percent incremental energy efficiency goal by 2020. 

Commenters stated that it is not appropriate for the EPA to use the experience of 3 out of 50 

states to determine a one-size-fits-all nationwide annual incremental savings rate for all EE 

programs in all states and that the sustainability of past achievements is not guaranteed going 

forward, particularly over a long time horizon through 2030.

Commenters believed that EPA should not have relied solely on historic EE savings to set EE 

savings targets for the future, as they felt that historic EE savings are not a good indicator of 

potential EE savings because the EE measures available change over time. Commenters noted 

differences in generation mix and ownership as well as the electricity regulatory structure may 

make it more difficult for some states to implement EE programs than others; for example, the 

Northeast Power Coordinating Council ("NPCC"), a regional group EPA cited for its historical 

EE savings, cautioned against using its history of EE savings to set state EE targets, because EE 

opportunities are not equally accessible in all the Northwest states that are part of the regional 

group, thus, while the Northwest as a region may meet combined state EE goals, particular states 

within the Northwest may not meet their individual goals. Commenters stated that depending on 

the type of EE measures that a state has employed in the past, a state may have less EE potential 

in the future. Commenters provided Idaho as an example, where Idaho achieved a significant 

amount of energy savings from lighting in the residential and commercial sectors in the past; 

while Idaho Power's analyses indicate that it can maintain cost-effective EE savings from 

lighting over the performance period, the potential to expand lighting programs is very low 

during the performance period. Commenters noted that Idaho Power is limited in alternative EE 

measures because Idaho employs a cost-effectiveness test for EE measures, thus, despite greater 

annual energy savings rate in the past, Idaho Power projects an annual energy savings rate of 0.6 

percent throughout the performance period. Id. at 49. Commenters further indicated that a state 

may change the way that EE programs are deployed, shifting from a utility-led EE programs to a 

state-led EE programs, for example (See Dan York et al., Frontiers of Energy Efficiency: Next 

Generation Programs Reach for High Energy Savings (ACEEE 2013)). 

Commenters stated EPA's use of 2012 snapshot data ignores key contextual information about 

what is required in order for states to achieve an incremental annual savings rate of 1.5 

percent. Commenters indicated that while it is true that these states reported this level of 

savings, this 2012 snapshot data does not provide any historic context. In particular, commenters 

noted it does not address how long it took these states to achieve these rates or whether the state 

regulatory environment supports EE. Commenters stated this information would provide 

important context about whether the achievements of these states actually could be replicated by 

other states. Commenters stated the key inquiry, therefore, is not whether some states have 

achieved the target savings rate, but whether this achievement can be replicated by other states 

and over what timeframe, and a single year's snapshot data does not allow EPA to answer this 

question. 
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Commenters stated EE savings are dependent on EE budgets approved by state 

regulators. Commenters stated EE savings and budgets are highly dependent on whether a 

particular state's regulatory framework supports utility investment in EE programs. See IEE 

Regulatory Frameworks. Commenters noted that some states like Maine and Vermont have had 

aggressive EE programs in place for more than two decades but this is not the case for other 

states. Commenters also noted it is important to note that the three states with the largest EE 

expenditures in 2012 had not yet reached the target 1.5 percent incremental savings level by 

2012: California spent $1.3 billion in 2012 and only achieved incremental savings of 1.24 

percent; New York spent $600 million and only achieved incremental savings of 0.93 percent; 

and Florida spent $370 million and only achieved incremental savings of 0.27 percent, despite 

aggressively pursuing EE and DR programs for decades. Accordingly, commenters stated EPA 

cannot rely on three states' reported EE savings rates in one year as adequate support for the 

achievability of a 1.5 percent annual incremental savings rate for all states. Commenters noted

that EPA asserts, but provides no evidence, that achievement of a 1.5 savings rate in one year 

demonstrates that a state can sustain this target level of savings for 13-17 years.

If anything, commenters stated 2012 reported data shows that the demonstrated annual 

incremental EE savings rate is closer to 0.5 percent. Commenters stated consistent with the 

CAA's requirement that BSER be "adequately demonstrated" and that the resulting standards be 

"achievable," the use of the median savings rate would be a better measure of what the states 

actually achieved in 2012. Commenters pointed out that an EEI analysis shows that the median 

savings rate in 2012 was 0.48 percent; EPA notes the national average was 0.58 percent; and 

recent LBNL report found the national average was 0.49 percent in 2010 (see LBNL Study, 

supra, n.102). See Abatement Measures TSD at 5-17. Commenters indicated that because the 

2012 data are skewed, a median is a better measure of central tendency than a mean, with 14 

states reporting incremental savings rates of between 0.5 and 0.99 percent and 25 states reporting 

rates of less than 0.5 percent. See id. at Table 5-8. Commenters further stated that regardless of 

whether the mean or median is used, both figures are considerably less than EPA's proposed 1.5 

percent annual incremental savings rate, and thus, the 2012 reported savings rates do not support 

EPA's assertion that all states can achieve 1.5 percent annual incremental savings. Commenters

stated if the reported data demonstrate anything meaningful about the feasibility of different 

levels, it would be that the median savings rate achieved in 2012 is a better measure of an 

achievable annual incremental savings rate.

Commenters noted that to reach EPA's goal, demand-side energy efficiency would have to 

improve 250 percent nationally over a 10-year period---such an assumption means that energy 

efficiency gains outpace electricity demand growth resulting in declining retail electricity sales. 

Commenters stated that this assumption of negative electricity demand growth is inconsistent 

with the U.S. Energy Information Administration forecast as well as other respected demand 

forecast. Commenters stated that over time, potential energy savings decline significantly absent 

some major technological breakthrough, but EPA does not identify any breakthrough that would 

sustain an annual 1.5 percent growth in efficiency and if such breakthroughs are not on the 

present horizon, they will not be available during the 10-year period for achieving the targets in 

the proposal.

Commenters noted that EPA purported to use a seven step process to derive its estimates of 

achievable results using demand-side management energy efficiency (DSM energy efficiency); 
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however, the EPA provided very little evidence regarding its process. Commenters stated that the 

three states EPA noted had achieved a 1.5% rate self-reported this data which they felt was not 

particularly believable. Commenters noted that even having set the EE goal, EPA acknowledges 

that this level of performance has not been sustained nationwide previously and that the annual 

percentage increases, as well as the cumulative energy efficiency savings, are well above the 

average savings that most states have achieved to-date. Commenters stated that EE savings rarely 

result in the savings expected and should not be included as a building block.

Commenters noted that EPA relies on data derived from the recent recession and the slow 

economic recovery that followed. Commenters stated that EPA needs to provide analysis of their 

energy efficiency assumptions during more robust economic periods in order to demonstrate the 

reasonableness of its assumptions.

Commenters noted that state targets under building block 4 are not differentiated based on the 

potential for associated carbon reduction, as states with some of the highest building block 4 

requirements have some of the lowest historic CO2 emissions rates and some high emitting 

states, including Wyoming and West Virginia, have some of the lowest efficiency potentials. 

Commenters stated that the latter observation is not surprising as high emissions rates tend to be 

correlated with low electricity prices and thus weak economic incentives to encourage energy 

savings through investments in efficiency, setting aside environmental arguments for such 

investments. Commenters stated that there is a small negative correlation between efficiency 

potential and average CO2 emissions rates in 2012 across all 50 states and noted that this lack of 

correlation raises the question of whether a more targeted approach would improve both the

effectiveness and cost-effectiveness of this building block.

Commenters noted that their annual MWh savings have not been included with the statewide 

MWh savings that USEPA has counted as it formulated the regulation and anticipated the 

potential CO2 savings due to electric efficiency programs going forward, therefore, USEPA has 

over-estimated the amount of savings that remains to be captured. Commenters noted, in their 

case, that there are 30,763 MWh of savings that USEPA might incorrectly assume is yet to be 

garnered, when, in fact, those MWh are already being saved.

Commenters noted that EPA's analysis does not appear to consider state or locality's future 

growth when assuming a reduction percentage for demand side management by 2030.

Commenters stated that the energy efficiency targets are based on flawed assumptions and are 

overly aggressive as a result, particularly as they impact the rural consumers served by 

cooperatives who traditionally cannot achieve the energy efficiency potential seen in other 

sectors of the economy. Commenters noted that their engineers found major flaws with the 

analysis developed by EPA, including incorrect data extracted from some of the 12 potential 

studies examined. Commenters noted that on top of the flaws gleaned from information provided 

by EPA, there are several trends that have emerged over the past few years (lower electric and 

natural gas avoided costs, higher baselines for energy conservation measures, limited utility load 

growth and the subsequent impact on utility revenues, and competing options for utility 

investments from limited funds) and are expected to last over the next 5-10 years, that also do 

not align with the goal of achieving 1.5% incremental annual savings from energy efficiency.
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Commenters stated that EPA's target of 1.5% net year-over-year savings is unrealistic for 

Indiana. 

Furthermore, commenters stated that currently no study exists to support the 1.5 percent net 

savings goal between years 2020-2030. Commenters stated that the EPA does not confirm or 

support whether EE is cost-effective at this savings level. Commenters stated that Federal 

building codes and standards will diminish the 1.5 percent net savings opportunity over the 

years, resulting in making achievement of goals even more challenging if not impossible.

Commenters added that, similarly, it precludes the state from determining what could be 

achieved and setting those requirements. Commenters concluded that, in order to meet the goal 

of 1.5 percent annual savings, states may well feel pressured to require all utilities to achieve the 

same level, even when in reality they cannot.

Furthermore, commenters stated that currently no study exists to support the 1.5 percent net 

savings goal between years 2020-2030. Commenters stated that the EPA does not confirm or 

support whether EE is cost-effective at this savings level. Commenters stated that Federal 

building codes and standards will diminish the 1.5 percent net savings opportunity over the 

years, resulting in making achievement of goals even more challenging if not impossible.

Comment 6: Oppose 1.5 Percent – EPA did not consider important factors in its analysis.

Response 6: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule and therefore we do not need to address the 

commenters’ concerns as they are now out of scope. This determination is discussed in sections

V.A and V.B of the final rule preamble of the CPP. Although the EPA has determined to not 

include demand side-energy efficiency in the BSER in this final rule we are using 1.0% in our 

illustrative EE scenario. See the RIA Chapter 3 and the Demand-side Energy Efficiency TSD for 

CPP Final Rule for details on the illustrative demand-side energy efficiency plan scenario

The following are summaries of the specific public comments under this comment:

Commenters did not support the 1.5 percent annual incremental savings goal because they 

believed that EPA did not consider important factors in its analysis to determine an appropriate 

value.

Commenters stated EPA's proposed nationwide 1.5 percent energy savings goal is unrealistic in 

many States, because it fails to account accurately for extreme variations in demographics, 

regulatory environments, load growth, and usage patterns among States and utilities. 

Commenters stated that in fact, EPA has ignored several examples across the country where 

annual energy efficiency savings are declining, and this unrealistically inflates the Proposed 

Rule's state-level CO2 emissions targets and increases the burden on the other three CO2-

reducing building blocks. Commenters stated that actual kWh from Maine, Vermont, and 

Washington, among others, shows that EPA's across-the-board 1.5 percent savings goal is 

unrealistic. Commenters stated these States set out aggressive energy efficiency savings goals 
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and yet in each case they have not been able to achieve them, and the reasons for the shortfall 

typically include challenges in fully funding the programs and in building broad and rapid 

adoption of the program by residential, commercial and industrial consumers. Commenters

stated that while they have made some progress, ramping up the programs and sustaining 

funding for them has been a significant challenge.

Commenters stated not all States can cost-effectively achieve and sustain the 1.5 percent annual 

energy efficiency goals. Commenters stated its association conducted an analysis that further 

demonstrates that EPA's nationwide 1.5 percent annual EE savings goal cannot be achieved and 

sustained at the state level or by many individual utilities. Commenters noted the study shows 

that EPA's own data is inconsistent with its assumption that all States can achieve, and then 

maintain, a 1.5 percent annual EE savings goal. Commenters stated EPA's assumed savings goal 

is flawed because it is based on insufficient data that draws comparisons among a limited 

number of States that are not representative of the savings that are actually achievable across the 

Nation. Commenters stated that at the individual utility level, particularly from the cooperative 

perspective, the commenters' analysis demonstrates why many cooperatives cannot technically or 

cost-effectively achieve EPA's 1.5 percent annual savings goal.

Commenters asked how EPA and States will account for situations where consumers do not 

adopt EE. Commenters stated that even with incentives, the cost to consumers can be quite high, 

and in many cases the consumer will simply not choose to take action. Commenters stated that 

historically, EE programs have largely been voluntary and incentive-laden efforts, and 

particularly for residential EE programs, success of the program is based upon the consumer 

being willing to participate. Commenters stated this often means the consumer has to make what 

are often substantial up-front investments in a product in the short-term, with the hope that over 

the long-term they will receive a greater savings; for example, a consumer would purchase a 

$1200 energy efficient refrigerator with an expectation that it will save them more energy over 

time compared to continuing use of their existing refrigerator, or the purchase of a less 

expensive, less energy efficient unit. Commenters stated that in this example, even if the State 

were to provide a rebate or tax incentive, the out-of-pocket expense may well exceed the 

potential savings. Commenters stated this choice can be much more difficult, if not impossible, 

for those with limited means. Commenters stated yet EPA's approach assumes that for EE 

programs, "if States build it," they will have a steadily increasing customer base that will adopt 

it. Commenters stated based upon the EIA data of EE savings, it appears that in many States that 

simply is not the case.

Commenters provided a list of considerations that EPA should adopt when determining if the 

1.5% savings goal is realistic, including: (1) As more and more customers participate in EE 

programs, it becomes more challenging, both in terms of simply finding new participants as well 

as incurring significantly increased costs to market programs, to achieve savings; (2) As building 

codes and mechanical standards continue to advance and become more stringent, energy savings 

from EE programs are more difficult to achieve; and (3) Existing state laws and regulatory rules 

(Colorado) likely need to be reviewed and revamped to enable utilities a better opportunity to 

offer programs that are deemed to be cost effective, while at present other states (South Dakota 

and Wyoming) lack specific EE mandates and rules. Commenters also stated that the cost 

impacts do not factor in additional resources required for the informing and reaching customers 

in order to drive the participation needed to achieve energy savings.
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Commenters stated EPA has not addressed the considerable uncertainty about whether states can 

actually achieve the EE rates predicted by EPA, and whether EE will result in reduction of CO2 

emissions from fossil generation. Commenters stated EPA also lacks reliable projections of EE 

potential for each state, and a nationwide EE target applied to each state fails to account for statespecific constraints on EE potential.

Commenters stated there are market considerations that can inhibit or curb the realization of 

energy efficiency measures, even when they are economically beneficial to consumers. For 

example, commenters pointed out that dislocations in customer awareness of energy efficiency 

measures or the market availability of energy efficiency measures can hamper adoption. 

Commenters stated that while such market considerations can be, and have been, overcome with 

federal, state, and local energy efficiency building codes and energy efficiency product 

standards, these methods will increase the customer's cost of energy efficiency implementation. 

Commenters stated this is because the consumer cost of energy efficiency measures implemented 

through codes and standards is not offset by energy efficiency program incentives. Commenters

stated this introduces another risk of decreased or slower adoption rates than EPA's assumptions.

Commenters noted that while efficiency improvements in end-use devices and advances in 

controls technology can lead to energy savings; economic, market, and perceptual barriers can 

inhibit or curb customer adoption. Commenters stated that the assumptions used to determine the 

economic viability of the proposed levels of energy efficiency should be reviewed to ensure that 

adverse economic impacts are avoided. Commenters urged EPA to consider both the spatial 

effects of regional variation in the electric power generation mix, and temporal effects of 

changes in electric system load shapes resulting from changes in energy efficiency, and their 

associated impacts on marginal CO2 emissions.

Commenters stated additionally, the EPA failed to properly address the different regional 

demographics that disproportionally favor greater energy efficiency potential in the 12 states that 

does not exist in other states. Commenters indicated States with the highest energy efficiency 

savings also have some of the highest electric retail rates in the country. Commenters stated 

electric consumers in states with high electric retail rates are more willing to implement and 

participate in energy efficiency programs because every kilowatt hour they save carries a higher 

monetary savings value, thus reducing their individual payback period for that investment 

compared to states with lower electric retail rates.

Commenters stated that EPA needs to factor differences in climate and appliance saturations in 

setting guidelines and that ignoring these differences could inadvertently penalize the industrial 

sector of the U.S. economy, a sector extremely important to the national economy as it continues 

to struggle to regain its footing since the Great Recession.

Commenters stated that EPA failed to address the different potential EE adoption available to 

different classes of electricity consumers as this potential can vary widely across different 

customer sectors, and it is unreasonable to assume that an individual state's sectoral composition 

has no bearing on its ability to achieve and sustain 1.5 percent annual increases in incremental 

EE. Commenters noted that many of the studies cited by EPA break down the potential for 

increases in EE by residential, industrial and commercial sectors and in doing so, those studies 

recognize the different potential for improving efficiency that exists in the different sectors.
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Commenters used the same 2012 EIA data that EPA used in the Proposed Rule and found that of 

the 2012-delivered MWh in the United States, 36% was consumed by commercial customers, 

37% by residential customers, and 27% by industrial customers but noted that the observed 

effects of annual energy efficiency did not accrue in the same proportions---42.5% of 

incremental MWh reductions were realized by commercial customers, 39.4% by residential 

customers, and 18.1% by industrial customers. Commenters stated that this indicates that the mix 

of customer classes within a state will have a significant impact on the availability of costeffective energy efficiency savings---a fact that should not be surprising because competition 

provides industrial customers a strong incentive to improve efficiencies of processes and lower 

electricity consumption.

Commenters stated that in general, the residential sector has the highest potential for improving 

efficiency, while industrial and commercial consumers have lower potential to improve. 

Commenters noted that potential can even vary greatly among residential consumers and pointed 

out that industrial and commercial sectors already have a profit motive for improving efficiency 

and have therefore already adopted many energy efficiency measures; therefore, the states in 

which industrial or commercial electricity consumers make up a large portion of electricity 

consumption will have limited EE improvements available.

Commenters stated that the EE assumption also does not account for the fact that states such as 

New Mexico have a low level of electric energy use per customer compared to many other states, 

and the cost to achieve the same savings rate is much higher. Commenters noted that many 

homes in New Mexico do not have refrigerated air or any air conditioning and thus it is not costeffective to add insulation or replace windows to save air-conditioning energy because the 

cooling requirement is much lower than other states. Commenters also noted that New Mexico 

has a significant rural population and that 19.5% of New Mexicans live below the poverty rate 

and simply do not have the means to upgrade their homes. Commenters stated that low income 

programs often provide free services but they are very expensive and hard to design as costeffective programs.

Commenters stated that EPA should allow states to demonstrate that the composition of their 

customers varies and the ability to attain the target incremental EE savings rate will be unique to 

each state. Commenters noted that their service territory is predominately rural and, based upon 

their experiences, rural customer EE participation rates are typically lower.

Commenters noted that the coal-heavy states tend to have a much larger percentage of their sales 

to industrial customers, and the more populous states have a larger percentage of their sales to 

the commercial sector.

Commenters noted that EPA provides options for introducing and increasing residential EE, 

including financial incentives (rebates and loans) and technical services (audits and retrofits) as 

well as educational campaigns, yet the Clean Power Plan does not consider whether all residents 

can afford to invest in new EE appliances.

Commenters stated that the state data that EPA relies upon for its 1.0% and 1.5% annual 

efficiency targets may not be appropriate for all states, such as those experiencing high rates of 

population and economic growth.
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Commenters stated that because of the many serious flaws, Commenters urged EPA to withdraw 

the proposal. Commenters stated that EPA bases its proposal on flawed information and 

assumptions for its four building blocks that are the basis for each state's target.

Comment 7: Oppose 1.5 Percent – errors in the EPA’s calculations to reach the proposed goal

Response 7: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule and therefore we do not need to address the 

commenters’ concerns as they are now out of scope. This determination is discussed in sections

V.A and V.B of the final rule preamble of the CPP. Although the EPA has determined to not 

include demand side-energy efficiency in the BSER in this final rule we are using 1.0% in our 

illustrative EE scenario. See the RIA Chapter 3 and the Demand-side Energy Efficiency TSD for 

CPP Final Rule for details on the illustrative demand-side energy efficiency plan scenario, 

including the basis for and full detail of the calculations of the scenario

The following are summaries of the specific public comments under this comment:

Commenters did not support the 1.5 percent annual incremental savings goal because they 

believed that EPA's calculations to reach this value contain various errors.

Commenters noted that EPA made an error when referencing Pennsylvania's annual incremental 

achievement rate from the Pennsylvania 2012 Potential Study. Commenters noted that 

in referencing the Pennsylvania 2012 Potential Study, the GHG TSD27 references a value of 

2.9% as annual incremental achievement which is incorrect. Commenters noted that Table 1-3 

and 1-4 from this Study show program potential of cumulative values for the periods of 2013 -

2016 and 2013-2018 of 2.3% and 3.7%, respectively. Commenters also noted that the study 

assumes an 85% participation rate, is based on gross, not net, savings, and assumes yet-to-be 

discovered future energy efficiency technologies---none of which are borne out in practice.

Commenters believed that EPA misinterpreted DSM studies when EPA erred in transposing 

DSM Potential study results for some of the potential studies. Commenters noted, for example, 

that EPA shows Pennsylvania as having the largest average annual potential of 2.9%. 

Commenters stated that EPA made a transposition error as the 10-year potential on an average 

annual basis is 17.3%/10 = 1.7% and there is no average annual potential of 2.9% in the 

Pennsylvania study cited by the EPA. Commenters stated that if 1.7% was substituted for the 

2.9% used by the EPA to calculate an achievable sustainable annual load reduction target of 

1.5%, the average would decrease to 1.3%. Commenters also noted that six of the ten potential 

studies cited by EPA to arrive at the average annual load reduction of 1.5% are based on studies 

that are ongoing, which overstates potential by not capturing the full impact of the most 

significant federal and states appliance efficiency standards and building codes -- most especially 

residential lighting.

Commenters stated that on an incremental basis, this would be approximately 0.75% per year 

(before considering effects of degradation) which is significantly lower than EPA's assumption 

of 2.9%/year. Commenters noted that the Pennsylvania value was the highest in the range of 
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potential studies quoted (see GHG TSD, at Appendix 5-1) used to support EPA's assumed 1.5% 

incremental EE savings. 

Commenters noted that the EnerNoc 2012 EE Market Assessment study compared its results to 

studies from two other states referenced in Appendix 5-1 of EPA's GHG Abatement Measure 

TSD: Delaware and Pennsylvania. Commenters noted that EPA declares that Delaware and 

Pennsylvania have reported N/A and 2.9% as achievable average annual projected potential as 

percentage of baseline sales; however, Chapter 11 "Comparison to recent Regional Potential 

Studies" of the NJ EE Market Potential Study asserts 0.7% and 0.8% for Delaware and 

Pennsylvania, respectively. 

Commenters compared the estimated EE/DSM available as included in the Integrated Resource 

Plans ("IRP") for each of their utility companies with EPA's estimated potential outcomes by 

state. Commenters stated that when one considers the internal estimates prepared for inclusion in 

the IRP cases, it is clear that EPA's estimates for EE/DSM are overly optimistic, which 

especially apparent for the Arkansas and Texas utility companies, which have the most 

experience with the EE/DSM efforts. Commenters noted that EPA estimates exceed the 

reference cases included in the IRPs, except for Mississippi. Commenters noted that for other 

states, EPA's estimates exceed the IRP high case while others are higher than the reference case, 

but lower than the expected high cases. 

Commenters stated that the proposal's Technical Support Document on GHG Abatement 

Measures acknowledges that only three states in 2012 achieved incremental energy savings of 

1.5% or greater: Arizona, Maine, and Vermont but of those states, only Vermont is among the 

leaders in cumulative energy savings as a percentage of load; Arizona and Maine are both 

roughly average.

Commenters stated EPA's state goal calculations are riddled with technical data errors. 

Commenters stated for example, EPA's data includes inaccurate unit ratings, units that do not 

meet applicability criteria, and units that are retired. 

Commenters stated that GDS Associates identified at least 19 areas in which EPA's calculations 

for EE savings for each state are inaccurate and as a result of these mistakes, EPA's projected 

energy savings is too high. Commenters stated that when data errors are corrected, the EE 

savings goal of 1.5 percent kWh on average decreases substantially. Commenters noted that of 

the twelve states EPA evaluated for EE growth, GDS found the potential EE for many of the 

states was well below 1.5 percent as GDS calculated that only three of the fifty states saved more 

than 1.5 percent of annual kWh sales in 2012. 

Commenters stated that it performed a detailed review of the EIA Form 861 data and energy 

efficiency potential studies that EPA assessed to develop the target 1.5 percent annual savings 

goal. Commenters also indicated it evaluated each "energy efficiency potential" study relied 

upon by EPA's meta-analysis and compared the detailed information in those studies to the Table 

on pages 5-65 and 5-66 of EPA's Technical Support Document. Commenters identified several 

major flaws with the analysis developed by EPA including:
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- In the potential study meta-analysis, EPA used incorrect data extracted from some of the 12 

potential studies examined. For example, for the Commonwealth of Pennsylvania, EPA has used 

a cumulative annual savings figure of 2.9 percent that covered a three-year future period as a 

one-year kWh savings figure. This is an obvious error that Commenters have confirmed with the 

author (GDS Associates) of the 2012 Pennsylvania energy efficiency potential study. When this 

and other data errors are corrected, the 1.5 percent average kWh savings calculated by EPA 

decreases by at least 20 percent. 

• EPA incorrectly calculated the achievable potential savings percentage for the 

2010 Salt River Project potential study in Arizona. Arizona is one of the States 

EPA touts as achieving the 1.5 percent annual energy efficiency goal. For the Salt 

River Project potential, however, the average incremental annual percentage 

savings was shown as 1.4 percent per year, not 2.2 percent. 

• The achievable energy efficiency savings potential for 6 of the 12 States 

examined in the EPA meta-analysis is much less than 1.5 percent per year. 

Commenters believed it made no sense to assume that all 12 States included in the 

EPA Technical Support Document can achieve 1.5 percent energy efficiency 

savings annually when many of the studies reviewed by EPA found that the 

potential in those States individually, and on average, is far less than 1.5 percent.

• When the meta analyses examined by EPA are corrected for data errs and to 

remove studies from Canada, the average incremental EE potential savings drops 

to 1.2% per year from the 1.5% estimated by EPA. At a minimum, EPA should 

correct the data errors and remove the Canadian utilities from the meta-analysis 

data.

Commenters reviewed the electricity savings and retail kWh sales data from the 2012 EIA Form 

861 and recalculated the 2012 Incremental and Cumulative Savings for each State. Commenters 

found mistakes for 19 areas of EPA's Table 5-4 on pages 5-17 through 5-19 (17 States and the 

Continental US Total and US Total). In all of the 19 areas where NRECA identified these errors, 

the EPA results were higher than the actual values, resulting in an EPA average 2012 

Incremental Savings of 0.58 percent versus Commenters corrected calculation of 0.51 percent 

(i.e., EPA's results were 14 percent too high). Commenters stated EPA also assumed a 0.2 

percent per year "conservative" improvement in annual Incremental Savings for each State. 

Commenters stated this EPA assumption means each State would need to increase the actual 

average U.S. Incremental Annual Savings percentage by approximately 40 percent (0.2/0.51) 

each year from 2012 into the future. 

Significantly, commenters stated, EPA failed to take into account state-to-state differences in the 

legislative, regulatory, economic, demographic, and geographic and climate characteristics. 

Commenters stated there are also state laws in effect that place a cap on the amount that can be 

spent on energy efficiency programs. Moreover in some instances, commenters said, state energy 

efficiency programs have simply run out of money such as the Maine program. Commenters 

stated when evaluating data from both leading and lagging state energy efficiency programs, it is 

not clear that all States can achieve savings of 1.5 percent a year with energy efficiency 

programs, because of key differences among States. 
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Commenters stated that Sreedharan (2013) and Eldridge (2008) do not justify the 1.5 percent 

annual energy efficiency goals, as EPA contends they do. Commenters added ten of the fifteen 

Eldridge studies and 7 of the 10 studies in the Sreedharan analysis did not achieve the 1.5 percent 

goal. 

Commenters stated the three States that have achieved the 1.5 percent annual savings have had 

their EE programs for over 20 years, yet EPA's proposal would require all covered States to 

achieve similar or greater savings by 2025, just over 10 years away. Commenters stated that 

based upon EPA's own data, achieving the 1.5 percent annual savings is well beyond what has 

actually been accomplished in practice. 

Commenters argued that EPA used data from EIA Form 861 filings to determine each state's 

starting point in 2012, which only reflect energy efficiency savings from utility-driven programs. 

However, commenters stated, many of the states that EPA used to establish the level of 

performance include measures implemented by non-utility entities programs, the implementation 

of which are beyond the control of utilities. Commenters also argued that there is insufficient 

time for the development of state plans for states that do not have sufficient existing renewable 

or energy efficiency programs already underway. Commenters stated experience indicates that 

programs requiring state legislative approval typically need more time than allotted under the 

proposed schedule.

Commenters stated that a cost-effective EE not included in base case. Commenters stated that 

regardless of the ultimate disposition of EPA's proposed rule, some states already have plans to 

continue existing utility-administered programs. Commenters stated that EPA's analysis is 

flawed in that it doesn't recognize the future impacts of these existing EE programs, or future 

impacts of new (incremental) EE programs, both of which will occur regardless of the 

implementation of the rule. Commenters stated that this has the effect of attributing all future EE 

achievements solely to this proposal, even though they would occur regardless of its 

implementation. Therefore, Commenters noted that much of the benefit ascribed to the CPP's 

implementation is overstated, relative to business-as-usual.

Comment 8: Oppose State Goal of 1.0 Percent.

Response 8: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule and this determination is discussed in sections V.A and 

V.B of the final rule preamble of the CPP. Although the EPA has determined to not include 

demand side-energy efficiency in the BSER in this final rule we are using 1.0% in our illustrative 

EE scenario. See the RIA Chapter 3 and the Demand-side Energy Efficiency TSD for CPP Final 

Rule for details on the illustrative demand-side energy efficiency plan scenario.

The following are summaries of the specific public comments under this comment:

Commenters believed that reducing the annual incremental savings goal to 1.0% is too 

conservative and should be rejected by EPA.
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Commenters stated EE building block approach taken to set the 2030 goals should not be 

changed under an alternate approach [i.e., the 1 percent goal], as [the 1.5 percent goal] captures 

attainable energy saving goals informed by a broad range of state successes across the country. 

Commenters did not support a reduction to 1.0 percent for annual incremental electricity savings. 

Commenters stated that the 2025 alternate set of state-specific goals for the EE building block is 

a low bar, and its carbon pollution reduction potential does not reflect what is already achievable. 

Commenters stated EPA recognizes that the alternate set of goals "may underestimate the extent 

to which the key elements of the four building blocks... can be achieved rapidly while preserving 

reliability and remaining reasonable in cost". Commenters believed that if the alternate approach 

is to be an option, widespread past state successes with EE demonstrate that it is reasonable to 

expect states can achieve annual incremental electricity savings of 1.5 percent by 2025.

Commenters stated that the 1 percent level is far below the cost-effective EE potential and is 

excessively conservative as demonstrated by the number of states already achieving higher levels 

of performance and the number of states with plans to exceed that level of performance by 2020. 

Commenters noted that a meta-analysis of 45 studies of efficiency published in August 2014 

(after publication of the proposed rule) found that "average annual maximum achievable savings 

range from 0.3 percent to 2.9 percent with a median of 1.3 percent." Commenters noted that this 

study also found that assessments of potential savings did not vary by geography. Commenters

urged EPA to keep in mind that estimates of achievable EE are heavily dependent on energy 

prices and the utility's avoided costs.

Commenters stated that the suggested alternative of 1 percent savings per year, with a ramp up 

rate of 0.15 percent per year is far too conservative and should be rejected by EPA, particularly 

given the example of leading states that are already achieving high levels of energy savings.

Commenters stated that the EPA has also invited comment on a less stringent alternative of 1.0% 

savings per year with a ramp rate of 0.15% per year (p. 34873; p. 34898). Commenters stated 

that these values are much too conservative and do not reflect what well performing utilities and 

states are already achieving with respect to utility energy efficiency programs let alone what all 

utilities and states are capable of achieving. Commenters stated that the EPA should adopt 

energy savings values in Building Block 4 that are higher, not lower, than those contained in the 

Proposed Rules.

Comment 9: Support State Goal of 1.0 Percent.

Response 9: The EPA recognizes that one of the major approaches available for achieving CO2 

emission reductions from the electric power sector is demand-side energy efficiency. The EPA 

continues to believe that significant emission reductions can be achieved by the use of such 

measures cost effectively and that such measures are likely to represent an important component 

of state plans.

The EPA has determined not to include demand-side energy efficiency (building block four) in 

the BSER of this final rule and this determination is discussed in sections V.A and V.B of the 

final rule preamble of the CPP. Although the EPA has determined to not include demand sideenergy efficiency in the BSER in this final rule we are using 1.0% in our illustrative EE
294

scenario. See the RIA Chapter 3 and the Demand-side Energy Efficiency TSD for CPP Final 

Rule for details on the illustrative demand-side energy efficiency plan scenario. 

The following are summaries of the specific public comments under this comment:

Commenters supported EPA's alternate annual incremental savings goal of 1.0 percent instead 

of the proposed value of 1.5 percent if energy efficiency remains a Building Block in the 

Proposed Rule.

Commenters stated the proposed EE savings are based on complex assumptions of existing states 

programs and extrapolations of those technical potentials, and do not fully account for issues 

such as state legislative support actions and EE budget setting with public service commissions.

Commenters described the growth of Michigan's current energy optimization program and stated 

that this strong EE program is a perfect example of why EPA must make allowances for early 

acting states to benefit for their progressive view on EE savings, as Michigan had already 

achieved 3 years of EE savings prior to EPA's 2012 baseline. Commenters stated that the 

necessary expenditures for states like Michigan to achieve steeper requirements will escalate 

more quickly since the easiest, most cost-effective EE savings have already been achieved. 

Commenters therefore requested EPA set a standard no greater than 1 percent per year.

Commenters believed that an annual growth rate of 1.5 percent is too aggressive, relies on 

flawed data, and may not be sustainable. Commenters noted that energy efficiency, as a 

component of a best system of emission reduction, is complex and will require careful evaluation 

by states in implementing energy efficiency programs into their compliance plan as well as in 

assessing whether or not to enter into multistate compliance plans. Commenters noted that their 

analysis shows that increasing annual energy efficiency savings to 1.5 percent of total sales will 

not be cost effective as it would increase program spend to 5 percent of revenue by 2029 which 

is unsustainable, and also raises concerns about the availability of achievable savings potential 

during the compliance period. Commenters recommended an annual energy efficiency growth 

rate of no more than 1 percent for states goals based on these issues.

Commenters stated that even with their 20+ years of experience implementing energy efficiency 

programs, they are not projected to achieve a 1.5 percent incremental savings rate over the 

current plan period. Commenters noted that they seek to effectuate significant energy efficiency 

savings; however, they must demonstrate that energy efficiency program elements meet a costbenefit test in order to receive regulatory approval for that program element in each of their three 

jurisdictions. Commenters noted that if an energy efficiency measure does not provide more 

benefits to customers than it costs, state regulators will not approve it for inclusion in the 

company's energy efficiency plans. Commenters suggested that EPA require a 1 percent per year 

maximum energy savings to account for the technical and economic challenges associated with 

implementing energy efficiency savings.

Commenters noted that several important factors limit the EE potential in some state's municipal 

utilities. Commenters stated that municipal electric utilities may serve small rural communities 

with little or no growth which typically have a limited industrial and commercial base. 

Commenters noted that new construction and commercial/industrial EE programs are typically 
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some of the most cost-effective EE programs a utility can offer, but municipal utilities that do 

not have significant new construction or commercial/industrial customers will have their EE 

programs limited largely to existing residential customers. Commenters also noted that the ever 

increasing stringency of building EE codes and Federal efficiency standards for appliances and 

equipment may limit energy savings as utility EE programs typically can only count energy 

savings above and beyond those achieved through energy codes and appliance standards. 

Commenters supported the 1% performance level in response to these limiting factors, but still 

had concerns about the cost that will be incurred to try to meet the 1% level.

Commenters stated that EPA's proposed method of determining BSER from energy efficiency 

does not match their current practices or their understanding of the leading policies that have 

been adequately demonstrated to acquire the most significant savings over time. Commenters

referenced information from the American Council for an Energy Efficient Economy (ACEEE) 

to show that Oregon is a leader in energy efficiency programs and significantly outpaces the rest 

of the nation and other leading states in per-customer energy savings. Commenters went on to 

list Oregon's EE accomplishments and stated that rather than recognizing these 

accomplishments, EPA's proposed approach of using energy efficiency to set state goals serves 

to penalize Oregon for the high level of demand-side savings already achieved. Commenters

noted that Oregon has a very stringent final goal, and with the energy efficiency efforts already 

achieved in the state, Oregon would have to spend a large amount of money in order to meet 

EPA's goal. Commenters stated that by adopting the proposal's energy efficiency 1.0% Option, 

the final rule would more closely resemble the amount of energy savings available from 

customer energy efficiency programs that are cost-effective with existing technology.

Comment 10: Support State Goal Beyond 1.5 Percent

Response 10: The EPA recognizes that one of the major approaches available for achieving CO2 

emission reductions from the electric power sector is demand-side energy efficiency. The EPA 

continues to believe that significant emission reductions can be achieved by affected EGUs by 

the use of such measures cost effectively and that such measures are likely to represent an 

important component of state plans.

The EPA has determined not to include demand-side energy efficiency (building block four) in 

the BSER of this final rule and this determination is discussed in sections V.A and V.B of the 

final rule preamble of the CPP. Although the EPA has determined to not include demand sideenergy efficiency in the BSER in this final rule we are using 1.0% in our illustrative EE

scenario. See the RIA Chapter 3 and the Demand-side Energy Efficiency TSD for CPP Final 

Rule for details on the illustrative demand-side energy efficiency plan scenario. 

Even though demand-side energy efficiency is not being included in the BSER in this final rule 

and, thus, not included in the determination of emission performance rates, the final rule 

provides states the flexibility to use demand-side energy efficiency measures in their state plans 

for compliance to meet the emission guidelines set forth in the final CPP, provided they meet the 

applicable requirements established in section VIII. of the preamble for the CPP.

The following are summaries of the specific public comments under this comment:
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Commenters supported state energy efficiency goals beyond 1.5 percent.

Commenters recommended BSER should include energy efficiency savings from utility 

programs of 1.5 percent per year or greater by 2030. Commenters believed the 1.5 percent is a 

reasonable target, but state utility efficiency programs can achieve much more. Commenters

noted that their ACEEE 2014 State Energy Efficiency Scorecard finds that six states achieved or 

exceeded this level of savings in 2013 (Arizona, Hawaii, Massachusetts, Michigan, Rhode 

Island, and Vermont). Commenters noted that several additional states are between 1 percent and 

1.5 percent savings per year. Commenters provided Table 1 that lists the states with annual 

utility energy efficiency savings greater than 1 percent. Commenters stated that more states are 

on record as planning to ramp up to this level of savings, including Maine, Maryland, Minnesota, 

and Colorado, with several more states approaching 1.5 percent per year (Table 2). Commenters

provided a table that shows the annual utility energy efficiency savings targets by state. 

Commenters stated EPA should ensure that energy efficiency potential assumptions reflect 

Alabama's true potential. Commenters stated resource planning in Alabama is a notoriously 

opaque process; any assessments of energy efficiency potential by or on behalf of Alabama's 

regulated utility, Alabama Power, are not available. Commenters stated nevertheless, earlier this 

year, the ACEEE determined that Georgia could reduce electricity consumption by 22 percent 

below 2012 levels by 2030 by implementing four common efficiency practices , 

including: implementing an annual energy efficiency savings target of 1.5 percent; enacting 

national model building codes; constructing combined heat and power systems; and adopting 

efficiency standards for products and equipment - and these practices are well within Alabama's 

power to implement.

Commenters stated moreover, recent savings and new targets in other states demonstrate the 

increasing achievability of energy efficiency. Commenters stated 11 states achieved energy 

savings of over 1 percent of retail sales in 2012. Commenters stated national investments in 

utility energy efficiency programs have grown at a rapid pace, increasing from $1.6 billion in 

2006 to $5.9 billion in 2011, and are projected to continue to increase to between $8.1 billion and 

$12.2 billion over the next decade, with the most significant increases occurring in regions with 

lower levels of historical program spending. Commenters stated given these trends, and the 

comparatively low levels of energy efficiency currently being realized in Alabama, the potential 

to quickly ramp up energy savings across the state is enormous. Commenters stated accordingly, 

EPA should revise its assumptions upward to reflect Alabama's substantial potential for progress 

at efficiency.

Commenters stated that EPA was conservative in calculating targets for energy efficiency under 

Building Block 4 due to the omission of any forms of energy efficiency beyond state and utility 

efficiency programs. Commenters stood by the assertion that states can achieve much higher 

levels of emission reductions through energy efficiency than anticipated by EPA's BSER 

methodology.

Commenters recommended EPA strengthen the targets for end-use energy efficiency to reflect 

the full extent of achievable efficiency as demonstrated in the market. While commenters

confirmed 1.5 percent is achievable, the calculations underestimate what is achievable because it 

does not include end-use energy savings from major market sectors and strategies that utilities 
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have typically left to others, including ESCO efficiency improvements, CHP, and building 

codes. Commenters stated that ESCO efficiency improvements take place outside of traditional 

utility programs and the market was $4.8 billion in 2012 (compared to utility efficiency budgets 

of $5.7 million). Commenters stated CHP could drive 565 million MWh of energy savings by 

2030. 

Commenters stated EPA's proposed CPP determined that energy efficiency could supplant 1.5 

percent of retail sales per year (79 FR 34849). Commenters stated this figure underestimates the 

reductions achievable using energy efficiency. Commenters stated EPA's 1.5 percent numbers 

fails to account for important opportunities for energy savings that many states are already using 

or could be using, including: building codes, transmission and distribution efficiency savings, 

voltage optimization, and combined heat and power. Commenters stated EPA should revise its 

reduction estimates for building block 4 to include these additional available energy efficiency 

opportunities. Using an approach that properly considers the full range of energy savings, NWF 

believes that energy efficiency can achieve savings equal to 2 percent of retails sales per 

year. Commenters stated EPA also assumes an unnecessarily slow adoption rate for these energy 

efficiency programs. Commenters stated energy efficiency programs can be implemented much 

more rapidly than EPA assumes, as demonstrated by the faster expansion of efficiency programs 

achieved in several states. EPA should use a faster ramp up rate, allowing for greater overall 

emission reductions from energy efficiency. 

Commenters stated in its current form, EPA's proposed regulation would vastly alter this 

dynamic [i.e., the constrained pace of EE investment] by opening the door to states, new and 

existing market entities, owners of affected units, and utilities all investing in energy efficiency 

to profit from the use of EE as a compliance mechanism. Commenters stated EPA's proposed 

regulations would thus dramatically alter the delivery mechanisms, pace, magnitude, and market 

size of energy efficiency investments across the country over the next decade, compared to ratedriven or customer-funded utility programs. Commenters stated EPA's meta-analysis is 

consistent with other meta-analyses that have been conducted on energy efficiency 

potential. Commenters stated that their independent review of the studies reveals that they are 

thorough, geographically diverse, and representative of other studies conducted in the last five 

years. Commenters stated an examination of the methodologies of the studies reveals that the 

common bottom-up assessment, described above, is the dominant methodology.

Commenters stated the "economic" EE potential (well in excess of EPA's 1.5 percent finding) 

available for compliance activities generates savings in excess of costs even absent CPP 

compliance benefits. Commenters stated EPA's conclusions regarding a sustainable annual 

savings of 1.5 percent are reasonable and, if anything, conservative in light of the findings of the 

underlying EE potential studies reviewed both by EPA and ACEEE. Commenters stated despite 

these low reported numbers, EPRI states that the "reduction in growth and the creation of 

minimum efficiency standards that have the effect of reducing efficiency potential this report 

suggests that there continues to be an ample supply of cost effective energy efficiency for 

utilities to tap into." Commenters stated EPRI reports 473 TWh of economic potential in 2009 

compared to McKinsey's 1,080 TWh of NPV-positive potential for 2009. Commenters noted 

they found evidence that there is ample opportunity for states to include CO2 reductions through 

the expansion and enforcement of these types of policies [strengthened building codes and 
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appliance standards] in their State Plans, indicating that there are multiple energy efficiency 

strategies that could be adopted by states in complying with the Clean Power Plan.

Commenters cited IEE savings estimates and noted that the IEE's results find that significant 

electric savings from codes and standards are possible: in 2025, savings from improved codes 

and standards range from 351 TWh under the moderate scenario to 556 TWh under the 

aggressive scenario, which is equivalent to 8.6 percent and 13.6 percent of the baseline electric 

forecast (included in the 2011 EIA AEO), respectively. Commenters provided a table of the 

data. Commenters stated that the EPA estimates that compliance with the Clean Power Plan will 

result in cumulative demand-side energy savings that lead to an 8 percent reduction in total 

generation relative to the base case in 2025, and an 11 percent reduction in 2030; therefore all of 

the demand-side energy savings needed for compliance could potentially come from aggressive 

improvements in building codes and equipment and appliance standards alone. Commenters

stated the results of this literature review are illustrative in nature but provide a clear take-away 

message: strengthened building codes and appliance standards have and could provide ample 

energy efficiency savings and corresponding reductions in carbon emissions.

Commenters stated, in short, by selecting a highly-conservative approach to develop an estimate 

of what the potential contribution of EE is to CO2 emission reductions within each state through 

2030, EPA is in effect ignoring potentially significant components of state EE potential. 

Commenters stated in their view, failing to incorporate the evolution of EE technologies, 

particularly in an environment that could include innovative market-driven investment in EE for 

CPP compliance, represents a downward bias in existing EE potential estimates, and suggests 

that the results of shorter-term studies are better indicators of energy efficiency potential in the 

current context. Based on their analysis, commenters concluded that EPA's estimate of annual 

average EE potential does not consider the impact of expanded market reach that would flow 

from the eligibility of EE for Clean Power Plan compliance, understates the impact of building 

codes and appliance standards, and focuses solely on conservative measures of EE potential.

Commenters stated that by including explicit opportunities to harness EE, EPA has opened the 

door to states developing compliance approaches that include investment in EE programs and 

measures, by states, compliance entities, or others (e.g., through revenues created from the sale 

of allowances in cap-based approaches or other compliance mechanisms). Commenters stated 

this introduces the possibility of an expanded set of EE investments, to supplement traditional 

utility programs, and an expanded set of EE investors and providers that are motivated to invest 

in EE, rather than deterred-as have utilities in the past-by an underlying profit disincentive. 

Commenters stated further, the geographic scope of EE investment will likely expand, creating 

new business opportunities, since it will no longer be limited to utility-administered EE programs 

in states that find it in their economic, energy and/or environmental policy interests to require 

such investment.

Commenters noted that States' prior experience with EE program ramping/savings levels varies 

substantially across states, and over time within states. Commenters recanted experiences from 

various states (Iowa, Massachusetts, New York, North Carolina, Oregon, Rhode Island, 

California, and Vermont) which they believe provides ample support for EPA to increase its 

target under Building Block 4. Commenters noted that state EE has been largely the result of 

utility-driven investments constrained by legislation and regulation limiting EE practices to those 
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deemed appropriate from a state regulatory perspective. Commenters stated a handful of states 

have, at times, allowed for relatively aggressive levels of investment in EE by utilities, where 

investments are found to be cost-effective relative to alternative investments. Commenters stated 

but investment in EE in states has rarely-if ever-approached a rate of growth or sustained levels 

that would be justified solely based on cost effectiveness, or actual technical or economic 

potential. Commenters stated the pace and level of historical EE investments, and the 

performance of utility EE programs, have also sometimes faced the headwind of fundamental 

disincentives at utilities for investment in programs that reduce revenues and profits (incentives, 

lost-base revenue adjustments and decoupling rate designs partially-but not fully-address these 

disincentives). Commenters stated thus, while EPA set state emissions rate using an adequately 

demonstrated BSER, the pace and level of past EE investments must be viewed as a poor 

indicator of the potential pace and level of state EE investment within states.

Commenters stated consequently, past experience with administration of energy efficiency 

programs as required (and limited) by states must be viewed as an imperfect and extremely 

conservative indicator of the potential investment in EE going forward. Commenters stated while 

there certainly have been leading states pursuing substantial investments in EE, in most states the 

rate, policy and financial disincentives have all served to constrain the pace, level, and 

effectiveness of EE investment. Commenters stated in its current form, EPA's proposed 

regulation could alter this dynamic by opening the door to states, new and existing market 

entities, owners of affected units, and utilities all investing in energy efficiency to take advantage 

of the use of EE as a compliance mechanism. Commenters stated EPA's proposed regulations 

could thus dramatically alter the delivery mechanisms, pace, magnitude, and market size of 

energy efficiency investments across the country through the compliance period, compared to 

current customer-funded utility programs.

In short, commenters expected that the possibility of complying with the Clean Power Plan's 

requirements in whole or in part through EE installations will unshackle EE investment from 

constrained state regulatory policy, and open up EE activity to new players, new programs, an 

expanding market for EE services, and new revenues. Commenters stated in their view this is a 

fundamental consideration in judging the value of historical data, and must be kept in mind when 

judging the reasonableness of EPA's key assumptions surrounding states' ability to scale and 

sustain energy efficiency programs.

Commenters stated the results of a regression analysis using these data (from a study presented at 

the 2012 ACEEE's Summer Study on Energy Efficiency in Buildings) indicated that the cost per 

kWh-year of energy avoided (expressed in $2011) falls as savings increase, until approximately 

2.5 percent of annual energy savings are achieved, as shown in a figure provided by the 

commenters. Notably, commenters added, the Clean Power Plan's fourth building block assumes 

that states could scale their energy efficiency programs until they achieve and maintain annual 

energy savings of 1.5 percent of retail sales-only sixty percent of the level of annual energy 

savings at which the study suggests an inflection in the cost of maintaining annual savings 

levels.

Commenters stated that in setting state goals, EPA can better reflect the large efficiency 

opportunity and multiple options for states and EGUs to save energy by changing the best 

practices level of savings to 2 percent per year. Commenters recommended EPA's assumption of 
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a 1.5 percent reduction in retail sales per year from energy efficiency for BSER is achievable, but 

low. Commenters stated EPA should adopt at least a 2 percent reduction in retail sales per year 

as BSER for Block 4 energy efficiency. Commenters stated EPA's conservative approach to the 

assumptions for Block 4 led to an underestimation of the potential for compliance using energy 

efficiency, and an overestimation of the costs of efficiency deployment. Commenters stated 

EPA concluded that states could ramp up their savings at a rate of 0.2 percent per year, and by 

2030, could sustain annual average savings of 1.5 percent of the state's retail electricity sales. 

Commenters stated EPA relies on experience with energy efficiency programs in several key 

states in order to determine the potential impact of energy efficiency as a compliance mechanism 

and identify the energy efficiency component of BSER. Commenters stated EPA acknowledges 

that its assumptions are very conservative.

Commenters stated the evidence shows that EPA's assumptions understate the potential amount 

of energy efficiency that can be achieved in all states. Commenters believed that more than 1.5 

percent annual savings can be achieved for every state, and that energy efficiency programs can 

expand faster, and at a lower cost than EPA assumed in setting the targets in the proposal. 

Commenters stated in fact, many are already doing so, or planning to do so. Commenters cited 

evidence to support their recommendations for strengthening Block 4, and thus the proposed 

standard. Commenters stated that like EPA, their recommendations also represent an 

underestimate, since they also rely on examples of what is possible in a world without the Clean 

Power Plan, which will itself open up new energy efficiency opportunities. Commenters have

updated the assumptions EPA used to calculate their proposed savings level to reflect today's 

technologies and performance for utility and state energy efficiency programs, and evaluated the 

potential savings from other proven energy efficiency measures in the BSER not included in 

EPA's 1.5 percent savings estimate; EPA limited its analysis only to programs that "are realized 

exclusively through the adoption and implementation of energy efficiency programs." 

Commenters believed that a minimum level of 2 percent annual reduction in retail sales is 

achievable; there is no justification for the EPA to use the alternatively proposed 1 percent 

annual reduction in total retail sales. 

Commenters stated energy efficiency programs alone already reach 1.5 percent of sales, and 

leading program administrators save best practices amounts of energy efficiency year after year. 

Commenters stated a savings level of 1.5 percent total reduction in retail sales per year is 

achievable. Commenters stated in fact, 15 states have already achieved it, or have standards to 

achieve that level or above (Arizona, California, Colorado, Hawaii, Illinois, Iowa, Maine, 

Massachusetts, Michigan, Minnesota, New York, Ohio, Rhode Island, Vermont, and 

Washington). Commenters stated Vermont and Massachusetts, and National Grid in Rhode 

Island have all delivered above two percent. Commenters stated in all, 28 states now have a 

standard for either a specific energy efficiency resource standard or a requirement to pursue all 

cost-effective energy efficiency. 

Commenters stated that EPA's approach understates the extent to which utilities around the 

country are implementing best practice-level energy efficiency programs.

Commenters stated they used the same EIA Form 861 data as EPA, but used the utility as the 

unit of analysis instead of the state, comparing retail sales (bundled and delivery) and 

incremental energy savings (Total Energy Efficiency Incremental Effects (MWh)), for years 
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2012, 2011, and 2010, as detailed in Table 7.2 (titled: “2010-2012 Energy Savings for Leading 

Investor-Owned Utilities”) provided by commenters. Commenters identified eight investorowned utilities that saved more than 1.5 percent of electricity sales in 2012, and a further 27 

investor-owned utilities that saved between 1 percent and 1.5 percent that year. Commenters 

stated they also examined performance in 2011 for these utilities, and found that average 

performance among this group of top performers was higher in 2012 than 2011: average savings 

were 1.34 percent in 2012 and 1.14 percent in 2011. This shows that utilities ramped up 

programs in 2011. Commenters stated they also identified 12 publicly-owned utilities that saved 

more than 1.5 percent of electricity sales in 2012, and a further 17 publicly-owned utilities that 

saved between 1 and 1.5 percent of sales. Commenters stated the large differences between 

these leading utilities, in climate, utility size, urban/rural mix, show that states and program 

administrators around the country can run energy efficiency programs at best practice levels. 

Commenters stated the track record of these utilities, saving best practice-amounts of energy year 

after year, helps show that energy efficiency at EPA's best practice-level is adequately 

demonstrated.

Commenters stated energy efficiency is a sustainable resource that we will be able to rely on for 

the duration of this initial standard and beyond. Commenters stated no one knows the upper limit 

of what we can achieve with energy efficiency because design biases found in most existing 

studies make even their sizable projections low. Commenters stated but we do know that we 

have not come close to capturing the immense capacity for cost-saving efficiency since potential 

studies keep showing that cost-effective investments and even longstanding efforts are not seeing 

diminishing returns in investments. Commenters stated a recent ACEEE study found that 

estimates of energy efficiency savings potential had not changed noticeably over the past decade 

or more, despite having harvested all the savings from previous programs, and despite a major 

recession, a drop in natural gas prices, and the impacts of codes and standards. Commenters 

stated this observation shows that states and utilities are still finding a substantial amount of 

energy efficiency savings potential after more than ten years of aggressive pursuit. 

Commenters stated an assessment by the Analysis Group (AG) found that states could achieve 

and sustain levels of energy savings (and associated emission reductions) for many years above 

1.5 percent of state retail electric sales from energy efficiency. Commenters stated the 

assessment also found that the "successful demonstration of states' ability to meet aggressive 

ramp rate and/or sustained savings levels holds true across a wide cross-section of states and 

delivery mechanisms, representing different electric industry structures; different electricity 

costs; different parts of the country with different climates and electricity needs; different mixes 

of residential, commercial, and industrial customers; and vastly different modes of 

implementation (e.g., by utilities, compacts/associations, state agencies, and third-party 

contractors)". Commenters stated AG also found that, for at least several years, leading states, 

including those that have implemented energy efficiency programs for over a decade, continue to 

achieve high levels of annual energy efficiency savings as programs grow. 

Commenters stated energy efficiency is a renewable resource. Commenters stated as companies 

innovate and produce more advanced products, they will develop new cost-effective applications 

to improve energy use. Commenters stated the Northwest Power and Conservation Council (a 

regional organization that develops and maintains a regional power plan that aggressively targets 

energy efficiency) estimated an available cost-effective energy efficiency potential in their Sixth 
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Power Plan (2010) at more than double the already aggressive levels in the Fifth Power Plan, in 

large part due to technological innovation that resulted in creating new efficiency opportunities 

and reduced costs.

Commenters stated EPA has set state targets in part based on achievable savings from state 

utility efficiency programs, of 1.5 percent. Commenters stated this was based on the efficiency 

performance of 12 leading states that have either achieved or plan to achieve such efficiency 

levels. Commenters stated in their assessment, and as described below, the efficiency potential 

from the industrial sector and recent demonstrated savings strongly support this level of energy 

reduction from efficiency and provides additional evidence for at least 2 percent. 

Commenters stated first, assessing actions by industrial companies directly, a number of wellestablished and prominent companies have been able to achieve energy savings greater than 2 

percent per year over a sustained period of time. Commenters stated companies such as 3M, 

BPM Inc., General Motors, HanesBrands, PepsiCo, Raytheon, Saint Gobain, and Toyota have 

achieved average savings greater than 2 percent per year over a period of five years or more, 

with some companies achieving rates greater than 3 percent per year. Commenters stated several 

other examples of efficiency successes in industrial companies exist, which amply demonstrate 

that industrial sector companies have the ability to do their part to sustain or even exceed annual 

energy efficiency savings of 1.5 percent. 

Commenters stated second, the value of utility-sponsored efficiency programs for the industrial 

sector may be reviewed. In this regard, studying the Midwest can be instructive given the 

prevalence of manufacturing and, as a consequence, large industrial sector efficiency 

Potential. Commenters stated in 2012, among the Midwest states, Iowa, Michigan, Minnesota 

and Wisconsin, achieved efficiency savings of between 1 and 1.5 percent. Commenters stated 

from our analysis, these states have reasonably well-structured utility-sponsored programs for the 

industrial sector; these programs result in measurable and verifiable savings that likely play a 

strong role in helping the states achieve their noteworthy annual savings. Commenters stated 

these programs, especially with continued refinements and increased participation from 

industrial companies, should help these states meet and exceed the 1.5 percent and 2.0 percent 

efficiency guideposts that inform the states' emissions targets.

Commenters stated other Midwest states such as Illinois, Indiana, Kansas, Missouri, and Ohio 

achieved efficiency savings of less than 1 percent in 2012. From commenters’ analysis, while 

Illinois has reasonably strong programs comparable to those discussed above, the other four 

states have either no industrial programs (Indiana, Kansas), or have industrial programs with the 

option for companies to opt-out with little oversight (Missouri, Ohio). (Commenters stated it is a 

possibility that higher participation and removal of "opt-out" provisions will allow greater 

efficiency savings from the industrial sector and in the states overall.) Commenters stated as 

such, the industrial program offerings can be strengthened considerably in order to increase 

participation from industrial companies and achieve meaningful and verifiable sectoral savings, 

which should help these states meet and exceed the 1.5 percent and 2.0 percent efficiency 

guidepost that informs the states' emissions targets.

Commenters stated broadening the lens beyond the Midwest, it can be noted that Oregon and 

Vermont have achieved remarkable industrial sector energy savings. Commenters stated the 
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Energy Trust of Oregon has realized energy savings in the industrial sector of approximately 1.8 

percent of current industrial energy usage; efficiency performance of the industrial sector is 

outperforming other sector. Commenters stated in Vermont, energy efficiency performance in 

the industrial sector was greater than 2.2 percent on average in 2013, outperforming the 1.8 

percent savings for all customer classes. Commenters stated utility-sponsored industrial sector 

programs in these states (as described earlier) are widely regarded as among the best in the 

country. Commenters stated furthermore, demonstrated international experience from the 

Netherlands has achieved 30 percent savings over a 15-year period, more than 2 percent per 

year.

Commenters stated from a national perspective, EIA Form 861 data suggests that nearly half of 

all energy efficiency (or load management) programs are devoid of industrial sector contribution, 

and, as discussed in the context of the Midwest states, driving participation where programs are 

available is yet another matter. Commenters stated while better data and focused analyses are 

needed as verification, in reviewing these state utility-sponsored programs, there appears to exist 

at least a loose correlation between states that have strong overall efficiency performance and 

ones that have strong industrial sector efficiency programs.

Commenters stated accordingly, efficiency savings in the industrial sector may either be 

occurring outside of utility-sponsored programs, or if included as part of utility programs, are 

likely underrepresented currently vis-a-vis efficiency from other sectors. Commenters stated in 

either case, as significant savings are possible from the industrial sector, going forward, it should 

be able to play a strong role in improving states' efficiency performance.

Commenters stated that State energy efficiency programs and dedicated investments provide 

some of the most cost-effective opportunities to reduce carbon pollution, reduce electricity costs 

to rate-payers, increase local economic activity, and create jobs. Commenters stated that at least 

25 states have energy efficiency resource standards or dedicated funding for energy efficiency 

established in law. Commenters stated that independent analysis has shown that, when applied 

across the country, such energy efficiency programs can achieve incremental annual electricity 

savings in the range of 0.5 to 1 percent annually.

Commenters indicated that experience in some of our states demonstrates that even greater 

annual savings are achievable; Vermont recorded annual savings of 1.8 percent last year through 

its Efficiency Vermont program and ISO New England forecasts that New England states' 

combined programs will effectively flatten projected demand growth through 

2022. Commenters stated these reductions in electricity use translate into very significant 

reductions in carbon pollution; for example, Massachusetts projects that its investment in energy 

efficiency from 2005 through 2015 will reduce Massachusetts' electricity demand by 17.1 

percent, resulting in a total annual reduction of 3 million tons of CO2 in 2015. Commenters

stated that in reducing electricity use, these programs also reduce rate-payer costs; for example, 

Vermont will see lifetime benefits of $136.1 million after spending $57.1 million on energy 

efficiency through its Efficiency Vermont program, Colorado Xcel Energy anticipates $227 

million in net lifetime economic benefits for its customers as a result of its 2010 demand-side 

management programs, and California's energy efficiency standards have saved consumers over 

$74 billion on their electric bills over their decades of operation.
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Commenters stated in addition to saving rate-payers on electricity costs, demand-side efficiency 

programs also represent investment in the local economy and the creation of jobs, by creating 

positions for those who perform energy efficiency audits or install energy efficiency controls in 

commercial buildings. Commenters stated investments in energy efficiency by states 

participating in RGGI were a large driver for the finding that the RGGI program overall created 

16,000 jobs as a result of the first three years of its operation. Commenters stated these 

tremendous cost savings to rate-payers and economic benefits help make energy efficiency 

programs among the most cost-effective measures for reducing carbon pollution.

Commenters stated that nationally, the CPP is expected to deliver carbon emissions reductions of 

30 percent from 2005 levels by 2030. Commenters stated reductions of greater than 30 percent 

have already been achieved by Massachusetts and other states, and faster reductions will be 

necessary for the nation to be on a path for meeting the goal of reducing emissions by 80 percent 

by 2050. As EPA considers comments and revises the rule, commenters suggested that the 

agency finalize steeper reductions that will more effectively drive the deployment of clean 

energy technologies and innovation. Commenters stated that such increased aggregate emission 

reductions could for example be achieved by adjusting the expected contribution of renewable 

energy sources, to better reflect existing states' renewable energy targets and potentials, as well 

as actual observed renewable energy growth rates as reported by the Energy Information 

Agency. Commenters stated EPA should increase the degree to which the CPP holds states 

responsible for realizing the full potential of efficiency. Commenters stated a simple way to do 

this would be to increase the amount of anticipated annual EE savings used to set state goals 

from 1.5 percent to 2.0 percent, in line with Massachusetts' recent experience.

Commenters noted that despite the benefits of EE and the necessity of implementing it at 

maximum achievable levels and as quickly as possible, EPA compares its "best practices level of 

performance" EE target rate to studies assessing EE "achievable potential," a level much below 

EE's "technical potential." Commenters noted that instead of considering what is possible, EPA 

based its "best practices" target rate exclusively on EE implementation programs that already 

exist in many states. Commenters stated that this decision immediately and categorically 

excludes a host of other EE measures, such as building energy codes, appliance standards, 

improvements in transmission and distribution, and building energy benchmarking requirements, 

which may not be included in existing state programs. Commenters also noted that EPA 

constrained its analysis further by refusing to assume that states will continue their existing EE 

programs on a business as usual level, and instead assumes that states will cease all EE efforts on 

the current end dates of their existing EE programs. Commenters noted that EPA also decreased 

the target by setting 2017 as the first compliance year instead of the 2012 baseline and by 

underestimating the EE "measure life". Commenters stated that all of these factors systematically 

understate the adequately demonstrated energy savings level EE measures can and will achieve, 

and overstates their costs. Commenters stated that together with the deficiencies in EPA's 

analysis of RE measures, these defects seriously and arbitrarily constrict the effectiveness of the 

Proposed Rule. Commenters urged EPA to revise both the RE and EE targets sharply upwards.

Commenters urged EPA to keep in mind that the current utility revenue structure in most states 

provides a significant disincentive to implementing strong energy efficiency programs. 

Commenters stated that the primary way that a load-serving utility can elevate profits is to 

increase electricity sales above forecasts made during the utility's last rate case; thus, the utility 
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has a deeply ingrained motivation not to reduce electricity sales, which is commonly referred to 

as the "throughput incentive." Commenters noted that although some states have instituted 

decoupling to some extent---a policy that breaks the link between electricity sales and utility 

revenue recovery---for the majority of utilities in the country, it is counter to the utility's business 

logic to implement energy efficiency programs. Commenters stated that the picture of EE 

program achievement in recent years reflects this significant barrier and should be viewed as a 

conservative estimate of what is achievable with a proper incentive structure for utilities. 

Commenters noted that EE achievement has also been hampered by the lack of long-term 

political support in many states as some states either implement short-term targets that inhibit 

optimization of long-term plans or place caps on the amount that a utility may spend on utility 

programs. Commenters believed that the 1.5 percent best practice level of performance is 

sustainable and some states have found that annual efficiency targets as high as 2.5 percent 

remained feasible over the next ten-year period.

Commenters stated that EPA underestimated the potential for energy efficiency carbon savings 

and that many states have shown they can far exceed the 10.7% cumulative savings by 2030. 

Commenters noted that the American Council for an Energy-Efficient Economy (ACEEE) 

demonstrated a combination of four end-use energy efficiency strategies that states could adopt 

to achieve much greater savings--25% energy savings below 2012 levels. Commenters noted that 

several states and utilities are already achieving savings of 2% or greater and several states have 

an annual energy savings goal between 1.5% and 2%. Commenters stated that increasing the 

energy savings goal used to calculate a state's target to match ACEEE's expectation of 18.8% 

utility program energy savings would achieve greater savings than EPA's model. Commenters

stated that while 40 states have adopted some version of model building code, most states are 

several years behind and could create substantial energy savings by adopting revised building 

codes. Commenters also stated that states could develop policies under the Clean Power Plan to 

increase CHP generation to 13% of generation which would build on the President's E.O. calling 

for increased deployment of CHP. Commenters also highlighted the benefits of appliance energy 

efficiency standards which includes savings businesses and consumers money.

Commenters believed that recent experience at the state level demonstrates that the ramp-up 

period can be shortened and the ultimate efficiency targets can be increased. Commenters noted 

that 24 states have implemented electric efficiency savings targets, and most have proven costeffective. Commenters stated that the portfolios of the programs states use to meet their targets 

regularly save customers over $2 for every $1 invested, and in some cases up to $5. Commenters

stated that the majority of these 24 states currently aim to save over 1 percent of annual 

electricity sales once programs are fully ramped-up, and several states have pushed further with a 

few already requiring savings in excess of 2 percent of annual sales. Commenters also noted that 

12 states have already achieved, or plan to achieve, at least the 1.5 percent annual savings goal 

that EPA assumed all states would achieve by 2030. Commenters also stated that the 

proliferation of state efficiency policies has contributed to a doubling in electric efficiency 

budgets over the past six years---a trend that is expected to continue, although it is not universal.

Commenters stated that states should do more than the EPA model suggests, and should pursue a 

more aggressive path toward a clean energy economy. Commenters noted that more than half of 

U.S. states have already adopted some form of renewable electricity generation requirements--

requirements that states' utilities generate a certain percentage of their electricity from renewable 
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sources by a specific date. Commenters believed that states should review their targets and 

commit to generating more electricity from zero-carbon sources, such as wind and solar power 

and that states that have not committed to increasing renewable electricity generation should 

enact a standard with an ambitious target. Commenters noted that Massachusetts, Rhode Island, 

and Vermont have established EERS requirements of almost 2.5% annually--well above the 

standard EPA recommends. Commenters urged all states to enact the strongest possible EERS in 

their state in order to set clear energy savings targets.

Commenters stated that EPA's target is at the low end of the achievable potential as 

demonstrated by studies that show continuing opportunities for energy efficiency even after two 

decades of implementation across several states. Commenters noted that the agency's analysis 

does not consider the enormous potential for efficiency improvements through building codes, 

energy service companies, voltage optimization, combined heat and power, and a host of other 

energy efficiency measures. Commenters also noted that EPA's analysis uses energy efficiency 

program costs that are well above program costs observed in practice-including under the 

assessments cited by EPA. Commenters urged EPA to use more realistic program cost numbers 

and data on the true scale of demand-side energy efficiency potential in its analysis of the 

potential for carbon reductions.

Commenters recommended that EPA more realistically examine the true reductions that can be 

achieved through more robust EE goals in light of the NRDC's "Updated Costs and 

Performance" analysis by ICF International to run the Integrated Planning Model (IPM) with 

updated data that in some cases dramatically alters the data inputs and resulting conclusions of 

EPA - which also uses the IPM. Commenters stated that this analysis, with updated data not 

reflected in this draft rule, indicates that far greater emissions reductions are possible than 

envisioned in this draft rule.

Commenters urged EPA to consider the full potential of energy efficient buildings in its 

calculations, to encourage states to identify and assess the potential energy savings from building 

retrofits and new construction (particularly from ultra energy-efficient design), and to recognize 

building efficiency as a compliance strategy in the CPP as they believe that more energy savings 

can be delivered more cost effectively than the proposed rule estimates.

Commenters believed that energy efficiency should be the centerpiece of the Clean Power Plan 

but stated that the agency's analysis overstates the cost of efficiency and understates its potential 

to reduce emissions. Commenters therefore stated that the agency's efficiency targets are far too 

low as they fail to capture significant carbon reductions and cost savings for consumers.

Commenters stated that EPA's rule may underestimate what South Carolina could achieve 

because end-use energy savings are not calculated - only utility based Energy Efficiency 

programs. Commenters urged EPA to consider strengthening the targets for End-Use Energy 

Efficiency to reflect the full of extent of achievable efficiency.

Commenters specifically supported an annual incremental energy efficiency goal of 2.0%.

Commenters noted that according to the Southwest Energy Efficiency Program (SWEEP), the 

2% alternative is reasonable given the current state of energy efficiency efforts in the Southwest, 
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especially when non-utility policies and programs are included. Commenters noted that both 

building energy codes and public sector energy efficiency initiatives involving performance 

contracting through energy service companies (ESCOs) can provide significant energy savings 

above and beyond what is realized through utility programs. Commenters believed that shifting 

to counting energy savings based on gross savings will simplify EM&V requirements and help 

justify moving up to the 2% per year savings target.

Commenters believed that increasing the annual incremental savings rate to 2.0 percent and the 

pace of improvement to 0.25 percent per year is unnecessary if all states are required to 

implement a minimum target level of EE measures by 2030 and that any additional EE savings 

that a state wants to take credit for can be based on technical and economic factors affecting that 

state.

Commenters believed that all states should be pushed to achieve at least 2% annual energy 

savings. Commenters noted that a 2% target is contained in the Clean Energy Opportunity Act, a 

bill that has been considered, but not yet adopted, by the Kentucky legislature in recent years. 

Commenters stated that they have plenty of evidence that utilities in their state can but will not 

deploy energy efficiency programs at that scale unless or until they are required to do so. 

Commenters noted that Kentuckians, especially lower income residents and people in fixed 

incomes, need the EPA to set and keep the bat high for emissions reductions achieved through 

energy efficiency.

Commenters noted that the Pacific Northwest has seen an annual increase of much greater than 

1.5 percent in the early stages of deployment of energy efficiency measures and that there are 

many states now at the point the Pacific Northwest states were 10 years ago. Commenters stated 

that the 1.5 percent level is appropriate only for a fully mature program when there have not been 

any significant technological improvements in the past several years. Commenters stated that a 

higher level, say 2% in the long-term, is also appropriate if EPA includes in-direct energy 

efficiency measures such as building codes, state appliance standards beyond the federal 

standards, etc.

Commenters stated that NBI's programs and projects have demonstrated over the past 15 years 

that energy efficiency is the least expensive energy source available to electric utilities. 

Commenters stated that EPA should also consider recent research done by the Union of 

Concerned Scientists and the Natural Resources Defense Council on available cost-effective 

efficiency for Clean Power Plan, and the NW Power Planning Council's Sixth and Seventh 

Power Plans because both of these important research efforts confirm that additional costeffective energy efficiency in the 2030 timeframe is available on which to base annual savings, 

and NBI's programmatic efforts are consistent with these conclusions.

Commenters noted that the Institute for Electric Innovation (IEI) estimates that codes and 

standards programs together have the potential to save between 420 TWh and 769 TWh of 

electricity in 2035, representing 9.5% to 17.3% savings relative to the Annual Energy Outlook 

baseline. Commenters also noted that under the more aggressive IEI scenario, these programs 

would complete flatten electricity consumption growth between 2010 and 2035. Commenters

believe this information supports increasing the annual incremental savings rate to 2.0% and the 
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pace of improvement to 0.25% to reflect the future adoption and enforcement of state building 

energy codes and state appliance standards.

Commenters stated that EPA should increase the rate to 2.0%, as well as incorporate CHP, 

equipment standards, and building codes. Commenters noted than a 2014 analysis by the 

American Council for an Energy Efficient Economy found that combining these four efficiency 

measures-utility programs, CHP, building codes, and equipment standards-at a 1.5 percent rate of 

annual improvement would reduce emissions by 26 percent from 2012 levels by 2030 through 

energy efficiency alone. Commenters stated that ACEEE explained that that its analysis is 

conservative in several ways: its CHP analysis omits some policies that could lead to greater 

reductions; its analysis of equipment standards includes only five products; and it analysis of 

building codes includes only new buildings, not existing buildings, and does not calculate 

savings from reduced natural gas consumption. Commenters therefore stated that savings higher 

than 1.5% can be achieved cost-effectively.

Commenters noted that in its calculation of 1.5% annual savings from energy efficiency, EPA 

did not account for other demand side energy efficiency programs such as building codes, 

appliance standards, energy retrofit ordinances, voltage optimization, transmission and 

distribution efficiency improvements, etc. Commenters therefore supported increasing the metric 

to 2% savings per year from both utility and other energy efficiency programs, given the vast 

energy efficiency potential across different states in the country. Commenters noted that studies 

by the Lawrence Berkeley National Lab have shown that efficiency programs have had 

$0.021/kWh levelized cost of saved energy at the national level, in 2012 which means that these 

energy efficiency programs can provide electricity savings similar to traditional utility energy 

efficiency programs, and should be allowed to be included as part of state Plans as long as 

Evaluation, Measurement and Verification (EM&V) requirements and other rules established by 

the EPA are followed.

Commenters stated that allowing energy efficiency to be applied only to offset in-state 

generation has the effect of reducing the effectiveness of the energy efficiency building block. 

Commenters also stated that if EPA were to increase the percentage of energy efficiency states 

can apply to their targets from 1.5 percent of retail sales/load to a greater percentage, states and 

regions such as the Northwest that have adopted aggressive DSM programs could be allowed to 

capture the savings from such things as building codes, voltage regulation, market transformation 

(such as accomplished by the multi-state Northwest Energy Efficiency Alliance) and energy 

efficiency appliance standards. Commenters stated the proposed 1.5 percent threshold should be 

increased to at least 2 percent and that EPA should consider a more rapid ramp rate of new 

energy efficiency than currently reflected in the rule, which would remove some disincentives 

for states to implement efficiency measures and to realize emission reductions as quickly as 

possible.

Commenters stated that several states have now demonstrated that it is possible to achieve 2% 

per year energy efficiency for extended periods through cost-effective utility programs. 

Commenters also noted that energy efficiency potential studies in many other states, including 

the 2013 Michigan study sponsored by the Michigan Public Service Commission have shown 

that 2% per year energy efficiency is achievable using only measures that pay for themselves in 

reduced electricity bills.
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Commenters recommended that EPA strengthen Building Block 4 by adopting a ramp-up rate of 

0.25 percent and a final incremental annual energy efficiency rate of 2.0 percent of electricity 

sales.

Commenters believed a more reasonable goal is 2.0 percent annual savings with a ramp up rate 

of 0.25 - 0.35 percent. Commenters noted that if EPA included other opportunities to save energy 

from additional programs and activities, such as transmission and distribution system efficiency 

improvements, state building energy and appliance standards, and savings delivered by energy 

service companies (ESCO) that do not get funding from utility and state programs, we believe 

that a 2.0 percent goal would be easily achievable in most states.

Commenters stated that any concerns about proper accounting for the avoided emissions or 

emissions reductions associated with including the full range of existing end-use EE in Building 

Block 4 can be addressed through strong evaluation, measurement, and verification and EE 

crediting requirements in state plans. Commenters additionally noted that EPA's economic 

evaluation of EE does not fully account for new and developing technologies such as smart 

thermostats, or the fact that existing technologies will become cheaper as they are more widely 

deployed. Commenters stated that instead of using cost estimates, which EPA acknowledges are 

57% to 66% higher than actual surveyed EE costs in 2014, 79 Fed. Reg. 34874, EPA should 

assume that the cost of EE deployment will continue to decline as technologies advance, such 

that much greater levels of deployment are cost-effective. Commenters concluded that EPA 

should adopt the more stringent method for calculating state EE targets that is set forth in the 

proposed rule.

Commenters stated that a 2 percent target can be achieved with strong monitoring and 

verification guidelines and direction from EPA to spur new technologies as well as more 

permanent projects such as combined heat and power systems.

Commenters noted that utility energy programs have been demonstrated to deliver over 2 percent 

in annual energy savings and that other opportunities for energy efficiency, including 

transmission and distribution system efficiency, should also be included.

Commenters detailed Wisconsin's EE potential and stated that this this potential and other 

existing state practices, the 1.5% annual incremental savings goal is conservative. Commenters

endorsed a 2% annual incremental savings goal, and urged EPA to adopt this higher goal.

Commenters stated that in establishing CO2 emissions rate targets state by state, the EPA has 

assumed that all electric utilities can ramp to 1.5% electricity savings per year from utility 

efficiency programs only, based on net savings (i.e., savings net of free ridership but including 

spillover effects). Commenters stated that savings start in 2017 at the level of savings that was 

achieved by electric utilities in each state in 2012 and savings increase from this starting point by 

0.2% per year until reaching 1.5% per year. Commenters stated that these are the key 

assumptions that determine the Building Block 4 values for each state that in turn influence the 

overall emissions rate targets for each state. 

Commenters stated that these are very conservative assumptions for a number of reasons and 

should be revised upwards by the EPA. Commenters stated that first, numerous utilities and 
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states are already surpassing the target of 1.5% savings per year from their energy efficiency 

programs. Commenters noted that in 2013, utilities or third party administrators of ratepayer 

funded efficiency programs in six states (Arizona, Hawaii, Massachusetts, Michigan, Rhode 

Island and Vermont) met or surpassed the metric of 1.5% savings from electric utility ratepayer 

funded programs alone. Commenters stated that utilities in the top performing states, 

Massachusetts and Rhode Island, achieved more than 2% savings per year. In addition, 

commenters stated that utilities in California have exceeded 1.5% savings per year in the past, 

and achieved 1.25% savings statewide in 2013 according to the American Council for an 

Energy-Efficient Economy (ACEEE). 

Commenters stated that secondly, the key Building Block 4 assumption of ramping up to 1.5% 

savings per year is overly conservative because this assumption is based on savings from utility 

programs (or utility ratepayer funded programs administered by third parties) only, even though 

the EPA is proposing that states can receive energy efficiency credits from both utility and nonutility programs. Commenters stated that the EPA requested comments on the alternative of 

ramping up to 2% savings per year from a combination of utility and non-utility EE policies (p. 

34875) along with a higher ramp rate. Commenters supported this alternative, or possibly 

moving up to 2.2% savings per year, for the reasons explained below.

Commenters stated that non-utility policies and programs such as building codes, state tax credits 

and other financial incentives, state financing programs, state appliance efficiency standards, 

energy efficiency programs targeted to the public sector, and policies or programs to support 

adoption of Combined Heat and Power (CHP) systems offer significant incremental savings 

potential, in addition to the savings from utility programs.

Commenters stated that they believe it is legal and appropriate to include non-utility policies and 

programs in both the Building Block 4 calculus and in the implementation phase because EPA 

has correctly defined the scope of the Rule to include actions that influence both electricity 

supply and electricity demand. Commenters stated that these non-utility policies and programs 

influence electricity demand in a manner similar to utility policies and programs - through 

education, financial incentives, regulations, etc. In many cases, commenters noted that there is 

collaboration between utilities and state or local governments in the adoption and 

implementation of energy efficiency policies and programs. For example, commenters noted that 

many utilities provide training to support building code implementation and in some cases also 

support the adoption of state-of-the-art building energy codes. Also, commenters noted that 

many utilities provide rebates for projects implemented to help achieve public sector energy 

savings goals established at the state or local level. Commenters stated that there is considerable 

interaction and overlap between utility and non-utility energy efficiency policies and programs -

these are only a few examples.

Commenters stated that increasing the adoption of efficiency measures in the public sector 

through setting energy savings goals, financing programs, use of performance contracting, and 

other mechanisms can provide additional energy savings including savings in public buildings, in 

street lighting and in water and wastewater treatment. Commenters stated that researchers from 

Lawrence Berkeley National Laboratory (LBNL) estimate that public sector efficiency projects 

implemented by energy service companies (ESCOs) during 2003-2012 yielded savings of about 

15 TWh per year in 2012, adjusting to exclude projects that utilized incentives from utility 
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energy efficiency programs. Commenters stated that this is equivalent to about 0.4% of national 

electricity consumption. According to LBNL, commenters noted that the annual incremental 

savings from public sector efficiency projects implemented by ESCOs without utilizing utility 

incentives during 2010-12 was about 1.0 TWh per year, which is equivalent to about 0.025% of 

national electricity use. However, commenters noted that this is a very conservative estimate of 

public sector energy efficiency potential because it does not include projects implemented 

directly by state or local governments without use of an ESCO or the performance contracting 

approach.

Commenters stated that in summary, the combination of building codes, state appliance 

efficiency standards, public sector efficiency programs and CHP support programs could yield 

total electricity savings of 0.5% per year or greater, in addition to savings from utility efficiency 

programs. Commenters stated that other types of non-utility policies and programs, such as home 

or commercial building retrofit ordinances, state financing programs (including PACE 

financing), and state financial incentive programs (including state tax credits) could provide even 

greater savings.

Commenters stated that for the nation as a whole, electricity savings achieved by ratepayerfunded programs increased from 18.4 million MWh per year in 2010 to 24.4 million MWh per 

year in 2013, a 33% increase in three years. Furthermore, commenters stated that studies indicate 

that electric utility energy efficiency programs are still growing at this time and will continue to 

grow in the near future. Commenters stated that growth in savings is occurring in both leading 

states such as Arizona, Massachusetts and Rhode Island and in previously lagging states such as 

Colorado, Michigan and Illinois. Furthermore, commenters noted that a recent ACEEE study 

found that estimates of energy efficiency savings potential had not changed noticeably over the 

past decade and that states and utilities are still finding a substantial amount of energy efficiency 

savings potential after more than ten years of aggressive energy efficiency efforts.

Commenters stated that researchers from LBNL have projected that electric utility energy 

efficiency program spending nationwide will increase from $3.9 billion in 2010 to $6.5 billion in 

2015 and then to $7.4 billion by 2020 (medium case scenario). Commenters stated that increased 

funding will result in increased energy savings, including in the period 2012-2017. LBNL 

projects that electricity savings nationwide will increase from 18.4 million MWh per year from 

programs implemented in 2010 to 26.6 million MWh per year in 2015 and 28.6 million MWh per 

year in 2020 in a medium case scenario.18 By 2017, commenters noted that many more utilities 

and states will be saving 1.5% or more per year given the growth in funding as well as energy 

savings goals or targets that call for this level of energy savings or greater. Given these trends 

and projections, commenters recommended that the EPA modify the starting point for energy 

savings in 2017 in Building Block 4. Rather than assuming no growth in savings between 2012 

and 2017 as was done in the Proposed Rule, commenters recommended that the EPA assume 7% 

annual growth in savings during 2012-2017, for each state. Commenters stated that this is 

slightly less than the annual average growth in savings that LBNL is projecting will occur 

nationwide during 2010-2015, which is 7.6% per year. For example, commenters noted that if a 

state was achieving 0.5% annual savings from electric utility programs in 2012, they 

recommended that EPA assume it will achieve 0.7% annual savings from electric utility 

programs in 2017. In addition, commenters recommended that EPA use 2013 actual data rather 

than 2012 data in deriving the starting point in 2017 for each state, given that 2013 data will be 
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available - in other words, start with 2013 actual savings data and then escalate savings by 7% 

per year for the four years (2013-17).

Commenters stated that in addition to the other sources of energy efficiency savings that the EPA 

could consider in its Building Block 4 assumptions, it could also revisit its assumption that 

programs ramp-up slowly and the energy savings achieved through utility programs will decline 

far more quickly than the actual experience from these programs demonstrates. 

Commenters stated that in the final rule, EPA could capture more cost-effective savings potential 

from energy efficiency by adjusting its Block 4 assumptions to: 

1. Include savings from non-utility and non-state run energy efficiency programs; 

2. Lower the assumed cost of energy efficiency measures; 

3. Increase the ramp-up rate assumed for measures; and 

4. Increase the average measure life assumed for measures. 

Commenters stated that one defect in this draft rule allows states to bypass renewables in energy 

conservation. Commenters stated that reduction targets are woefully inefficient and should be 

increased because, among other reasons, the targets are too lenient. Commenters noted that state 

targets add up to a national goal that will not avert the worst impacts of climate change.

Commenters discussed how EPA should account for decreasing market potential for DemandSide Energy Efficiency activities over time.

Commenters stated that while they recognize the value of Demand-Side Management (DSM) as 

an important and cost-effective component of the BSER, commenters expressed concern about 

the assumption that the proposed DSM levels of 1.5% of retail sales per year can be consistently 

achieved for over a decade. Commenters stated that this is particularly true, if acceptable 

measure types are limited to traditional utility incentive programs. Commenters noted that a 

recent survey of LPPC members found that for the 2012 year, few of our peer public-sector 

utilities met or exceeded the 1.5%/year savings target. Commenters stated that the programs and 

market conditions that allowed exceptional public power programs to meet this goal in select 

markets may not be possible to replicate in all US markets, or to replicate consistently for many 

successive years. Commenters stated that as minimum efficiency baseline regulations improve 

and markets reach saturation for efficient products, utilities have fewer opportunities to 

implement DSM. Commenters stated that as noted in the EPA's technical supporting 

documentation for this rule, "Limited empirical data suggests the reasonableness of this 

approach; however, comprehensive data, across all regions and states, does not exist because 

these levels of performance have not been achieved and sustained nationwide previously."[GHG 

Abatement Measures TSD]

Commenters asked if there were ways by which the proposed rule could stimulate or encourage 

new technologies, such as requiring solid state lighting, by weighting the new technologies more 

to justify a higher target for states (e.g., 2 percent).
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Commenters remarked that EPA's target rate is achievable, and even conservative, explaining 

that Massachusetts' energy efficiency programs, for example, reduced retail sales of electricity 

in the Commonwealth by 2 percent in 2012 (Mass. Dept. of Envtl. Prot., Commonwealth of 

Massachusetts Global Warming Solutions Act 5-Year Progress Report, at 32 (Nov. 21, 2013), 

available at http://www.mass.gov/eea/docs/eea/gwsa/ma-gwsa-5yr-progress-report-1-6-14.pdf); 

that number is expected to reach 2.6 percent in 2015, (Mass. Dept. of Pub. Util., Electric ThreeYear Energy Efficiency Plans, D.P.U. 12-100 through D.P.U. 12-111, at 17 (2013), available at 

http://www.mass.gov/eea/docs/dpu/electric/2013-2015-3-yr-plan-order.pdf) resulting in a 

cumulative annual CO2 emission reduction of three million metric tons in 2015 from electric 

energy efficiency programs implemented from 2005 through 2015. (Mass. Dept. of Envtl. Prot., 

supra note 94, at 3) Commenters noted that Massachusetts' electric efficiency programs, along 

with those in other New England states, have been so successful that the Independent System 

Operator-New England (ISO-NE) (New England's Regional Transmission Organization) has 

begun to take the programs into account for purposes of its long term load forecasting. 

Commenters said, for the period 2014 through 2023, ISO-NE is projecting that, with state energy 

efficiency investments fully included, load growth will remain flat at about 130,000 GWh. (ISONE, 2014 Regional System Plan, at 47 (Nov. 6, 2014), available at http://www.isone.com/system-planning/system-plans-studies/rsp) By contrast, commenters remarked, without 

including state energy efficiency programs in the projection, load growth is forecasted to 

increase to over 151,000 GWh by 2023. (Id. at 38)

Comment 11: Oppose State Goal Beyond 1.5 Percent

Response 11: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule and this determination is discussed in sections V.A and 

V.B of the final rule preamble of the CPP. Although the EPA has determined to not include 

demand side-energy efficiency in the BSER in this final rule we are using 1.0% in our illustrative 

EE scenario. See the RIA Chapter 3 and the Demand-side Energy Efficiency TSD for CPP Final 

Rule for details on the illustrative demand-side energy efficiency plan scenario

The following are summaries of the specific public comments under this comment:

Commenters opposed the approach to establish an even higher EE goal of a 2.0 percent annual 

energy efficiency savings and a 0.25 percent growth rate to achieve that goal.

Commenters reiterated that most States are nowhere near achieving a 1.5 percent goal, and the 

compliance deadline EPA establishes to meet that goal is less than half the time it took the three 

leading States to achieve that level of annual savings. Commenters noted that only one of those 

States has achieved over 2 percent.

Commenters stated that no fewer than eight states in the Northeast region of the U.S. in 2013 

achieved greater than 1 percent in electricity savings as a percentage of state retail electric sales 

as a result of their energy efficiency programs. Commenters stated the leading states of 

Massachusetts, Rhode Island and Vermont (ranked number 1, 3 and 3, respectively, in the most 

recent ACEEE State Energy Efficiency Scorecard) are approaching or have exceeded 2 percent 

savings levels. Commenters stated other states around the country have also exceeded 1.5 
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percent in annual electricity savings. Commenters stated in addition, several states in the 

Northeast, as illustrated in the table below, have set energy efficiency savings goals of at least 

1.5 percent of electric sales per year. Commenters stated thus, in establishing its emissions 

reductions targets for each state, EPA may have, in fact, underestimated the savings from electric 

utilities that it has assumed, that assumption being that all states can "ramp up" to 1.5 percent 

electricity savings per year. Commenters stated as this assumption drives the emissions rate 

targets for each state, NEEP would urge the EPA to revise this savings estimate 

upward. Commenters provided a table of the NEEP member states and their energy efficiency 

standards. Commenters stated in its proposal for setting emissions targets for individual states, 

EPA has assumed that electric utilities can ramp to 1.5 percent electricity net savings per year 

from energy efficiency programs delivered by utilities or other designated program 

administrators (hereafter referred to as "utility programs.") Commenters stated those assumptions 

are based upon savings starting in 2017 at the level of savings that was achieved by utility 

programs in each state in 2012, with those savings assumed to increase at a rate of 0.2 percent 

per year until reaching the target of 1.5 percent per year. Commenters stated these savings 

assumptions hence inform the emissions savings targets established for each state.

Commenters stated based upon our experiences in the Northeast, NEEP would suggest that these 

are very conservative assumptions and should be revised upward. As noted above, many of our 

state efficiency programs in the region are already at or surpassing 1.5 percent savings per year. 

Similarly impressive savings have been achieved in other states around the country, including 

California, Michigan, Hawaii, Oregon, Washington and Arizona.

Commenters stated the ramp-up target of 1.5 percent savings per year is also based upon utility 

programs alone, without accounting for additional savings to be realized through complementary 

programs and policies, including building energy codes and state-based appliance efficiency 

standards. Commenters stated as EPA has asked specifically for comment on an alternative 

ramp-up target of 2 percent savings per year from a combination of utility and non-utility 

programs, NEEP would strongly support such an alternative, and might even suggest that, based 

on our experiences in the region, an even higher ramp-up target be considered.

Commenters also stated that increasing the annual incremental savings rate to 2.0 percent and the 

pace of improvement to 0.25 percent per year is not feasible. Commenters noted that the cost of 

energy efficiency measures would increase so significantly due to the accelerated depletion of 

low cost measures, that it is unlikely that most states would be able to scale their programs up to 

cost effectively achieve a 2.0 percent per year savings levels on an ongoing basis. Commenters

noted that in fact, Vermont is the only state that has achieved a 2.0 percent per year savings. 

Commenters stated that however, looking at Vermont's achievements in 2011, 74.7 percent of 

the impacts came from lighting. Commenters noted that repeating this performance is unlikely 

in Vermont, much less all other states. Therefore, commenters stated that EPA should not 

increase the incremental savings target to 2.0 percent and the pace of improvement to 0.25 

percent.

Comment 12: Cost escalation rate.
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Response 12: Commenters noted that EPA’s cost escalation for demand Side EE under BSER 

should change. The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule. This determination is discussed in sections V.A and 

V.B of the final rule preamble of the CPP. Although the EPA has determined to not include 

demand side-energy efficiency in the BSER in this final rule we are using 1.0% in our illustrative 

EE scenario. See the RIA Chapter 3 and the Demand-side Energy Efficiency TSD for CPP Final 

Rule for details on the illustrative demand-side energy efficiency plan scenario. The EPA has 

modified the approach for applying cost factors as savings levels increase. The basis for and 

details of the change are addressed in the TSD.

The following are summaries of the specific public comments under this comment:

Commenters noted that EPA applied a 0% escalation rate when first-year savings as a percentage 

of sales are less than 0.5%, a 20% escalation rate when first-year savings are between 0.5% and 

1.0%, and a 40% escalation rate when savings are greater than 1.0%. Commenters also noted that 

EPA mentioned two studies it considered in establishing the cost escalation methodology: an 

LBNL analysis that suggested decreasing costs at savings levels up to 0.5%, leavings costs 

constant for savings between 0.5% and 1.5%, and increasing costs at savings levels above 1.5%; 

and a 2014 ACEEE report, which EPA notes "provides weak statistical support for a cost 

increase of 20% when going from 0.5% to 1.0% savings rate and an additional cost increase of 

20% when going from 1.0% to 1.5% savings rate." 

Commenters stated, however, that other studies, such as a study by Green Energy Economics 

Group presented at the 2012 ACEEE Summer Study on Energy Efficiency in Buildings, suggest 

much less cost escalation than that which was adopted by EPA. Commenters stated that this 

study indicated that program costs do not increase---and in fact decrease on a per unit savings 

basis---until savings reach 2.5% per year. Commenters also cited two studies by Synapse Energy 

Economics: one which concluded that their analysis of actual program CSE found that program 

CSE seems to decrease as programs scale and impact grows, and one which concluded that the 

cost of saved energy could decrease if the utilities were to increase their program scale further, 

perhaps up to the level of annual savings equal to 2% or 3% of annual sales. Accordingly, 

Commenters recommended that for years with EE savings forecast below 2.5% of annual sales, 

costs be held constant in real terms, but for years with EE above that level, an escalation rate 

should be adopted.

Comment 13: Establishing a specified level of energy efficiency poses problems.

Response 13: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule and therefore we do not need to address this comment. 

This determination is discussed in sections V.A and V.B of the final rule preamble of the CPP. 

Although the EPA has determined to not include demand side-energy efficiency in the BSER in 

this final rule we are using 1.0% in our illustrative demand-side energy efficiency plan 

scenario. See the RIA Chapter 3 and the Demand-side Energy Efficiency TSD for CPP Final 

Rule for details on the illustrative EE scenario. 
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Even though demand-side energy efficiency is not being included in the BSER in this final rule 

and, thus, not included in the determination of emission performance rates, the final rule 

provides states the flexibility to use demand-side energy efficiency measures in their state plans 

for compliance to meet the emission guidelines set forth in the final CPP, provided they meet the 

applicable requirements established in section VIII. of the preamble for the CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated that EPA should not mandate a level of energy efficiency under the Proposed 

Rule.

Commenters stated they were particularly concerned about the way that EPA modeled energy 

efficiency in IPM. Commenters stated according to the Regulatory Impact Assessment, "the fixed 

total electricity demand in IPM was adjusted exogenously to reflect the estimated future-year 

energy savings." Commenters stated this means that EPA assumed the significant levels of 

energy efficiency it identified were always the least cost compliance approach. Commenters

stated this is an inappropriate assumption given the uncertainty associated with what may or may 

not qualify as energy efficiency and the absence of the availability of such measures within each 

state. Commenters believed this is particularly important for states to consider when establishing 

compliance plans and, at a minimum, we believe that if energy efficiency is included in a 

compliance plan the level of energy efficiency should not be mandated. Commenters stated this 

avoids the potential of making rule compliance, and ultimately customer electricity, more 

expensive.

Commenters noted that EPA's analysis is based on estimates and that there is no uniform way of 

estimating energy savings. Commenters stated that a standardized, national protocol for 

assessing energy efficiency programs must be put in place before EPA can rely on reported 

reductions from energy efficiency measures in setting state emission rate goals. Commenters

stated that due to the difficulties associated with quantifying EM&V, EPA should not rely on 

energy efficiency measures to calculate state goals at this time.

Comment 14: Goal setting should not be a compliance obligation.

Response 14: The EPA agrees that setting the BSER is not an obligation for state plans. It is 

important to note that the EPA has determined not to include demand-side energy efficiency 

(building block four) in the BSER of this final rule and this determination is discussed in sections

V.A and V.B of the final rule preamble of the CPP. Although the EPA has determined to not 

include demand side-energy efficiency in the BSER in this final rule we are using 1.0% in our 

illustrative demand-side energy efficiency plan scenario. See the RIA Chapter 3 and the 

Demand-side Energy Efficiency TSD for CPP Final Rule for details on the illustrative demandside energy efficiency plan scenario. 

Even though demand-side energy efficiency is not being included in the BSER in this final rule 

and, thus, not included in the determination of emission performance rates, the final rule 

provides states the flexibility to use demand-side energy efficiency measures in their state plans 
317

for compliance to meet the emission guidelines set forth in the final CPP, provided they meet the 

applicable requirements established in section VIII. of the preamble for the CPP.

The following are summaries of the specific public comments under this comment:

Commenters asked EPA to ensure that goal setting does not become a compliance obligation, but 

rather enables entities to have flexibility to choose between renewable energy and energy 

efficiency to achieve compliance.

Commenters stated that in fact, because of the displacing effects of renewables and energy 

efficiency on fossil units, exact reliance on the four building blocks as used by EPA in the target 

setting would result in over-compliance -- i.e., Virginia would achieve a target rate lower than its 

2030 goal. Commenters stated that this is an important reason to view application of the building 

blocks for target-setting as distinct from their use for compliance. Commenters stated that it also 

shows that Virginia's route to compliance is less burdensome than a narrow focus on the targetsetting would indicate. Commenters stated that Virginia's pursuit of measures under building 

blocks 3 and 4 will result in substantial carbon reductions, especially if those measures are 

allowed to displace fossil generation on a pro-rata basis.

Comment 15: Rural co-ops should be treated differently.

Response 15: The commenters asked the EPA to take the unique situations of different states 

and utility types into consideration when using EE in BSER. The EPA has determined not to

include demand-side energy efficiency (building block four) in the BSER of this final rule and 

therefore we do not need to address this comment. This determination is discussed in sections

V.A and V.B of the final rule preamble of the CPP. Although the EPA has determined to not 

include demand side-energy efficiency in the BSER in this final rule we are using 1.0% in 

illustrative demand-side energy efficiency plan scenario. See the RIA Chapter 3 and the 

Demand-side Energy Efficiency TSD for CPP Final Rule for details on the illustrative demandside energy efficiency plan scenario. 

Even though demand-side energy efficiency is not being included in the BSER in this final rule 

and, thus, not included in the determination of emission performance rates, the final rule 

provides states the flexibility to use demand-side energy efficiency measures in their state plans 

for compliance to meet the emission guidelines set forth in the final CPP, provided they meet the 

applicable requirements established in section VIII.K of the preamble for the CPP.

The following are summaries of the specific public comments under this comment:

Commenters believed that EPA overestimated the amount of EE that can be achieved on a statewide level, once EE mandates move beyond programs currently targeted at dense urban areas. 

Commenters stated that their experience with utilities working in rural Arizona shows that EE is 

difficult and expensive to obtain. Commenters noted that issues involved with obtaining EE 

include: (1) utility difficulty in certifying or approving contractors for approved EE services or 

appliance installation; (2) customer difficulty in finding an approved contractor due to travel 

distances; (3) verification difficulty due to travel distance and expense in returning appliances or 
318

sending out verification personnel; (4) lower uptake due to poorer customer base diminishes the 

ability to handle the higher first costs, travel expenses, and similar issues; and (5) lower 

commercial and industrial customer base, with corresponding smaller opportunities for EE at any 

location, making much greater penetration required to achieve equivalent levels of EE compared 

to urban areas. Commenters stated that these issues are in addition to other inherent challenges of 

rural electric cooperative or rural distribution company operation, such as higher transmission 

loss, fewer customers per line-mile, and higher cost per customer for distribution equipment. 

Commenters concluded that these challenges demand that rural cooperatives be treated

differently in terms of what can reasonably be achieved in their service territories.

Commenters recommended that EPA account for the unique circumstances of electric generation 

and transmission cooperatives, including the very high percentage of sparsely populated 

residential and farm consumers and the few commercial and industrial consumers served by 

electric cooperatives. Commenters noted that Building Block 4 can be especially complicated for 

cooperatives since they sell their power to member cooperatives, which are completely separate 

entities, who then sell to their members (the actual consumers). Commenters noted, therefore, 

that cooperatives do not always interact directly with customers in the same way other utilities 

do. Commenters noted that there are also logistical challenges electric cooperatives face, such as 

having a large body of residential customers and few commercial/industrial customers who are 

prime candidates for making strides in EE. Commenters stated than an IOU could make 

significant gains in energy efficiency working with a handful of warehouses and factories, but 

that commenters and their cooperatives would have to work with hundreds of home owners, 

farmers and small business owners in their sparsely populated service territory to achieve the 

same results.

Commenters discussed how residential members are disadvantaged by EPA's Energy Efficiency 

Assumptions. 

Commenters stated that the proposal does not address the well-established fact that EE measures 

undertaken in the residential sector are considerably less effective on a dollar-per-KWhreduction basis than those undertaken in the industrial and commercial sectors. Commenters

stated that instead, EPA erroneously applies one EE potential across the residential, commercial 

and industrial sectors. Commenters noted that applying a uniform EE potential percentage across 

all three sectors creates perverse incentives for industrial utility consumers to reduce their energy 

load proportional to residential customers, but by a much greater magnitude per capita. 

Commenters stated that Building Block 4 thus imposes greater burdens on rural electric 

cooperatives, which have a disproportionately residential customer base, compared to municipal 

and investor-owned utilities. Commenters stated that the proposed EE targets will result in 

member T&D cooperatives incurring additional cost per rural electric cooperative 

member/ratepayer.

Commenters stated that Generation & Transmissions (G&T) serve the poorest, most rural areas 

of the country. Commenters noted that compared to the rest of the country, rural areas have a 

higher proportion of detached single unit homes, manufactured homes and mobile homes, all of 

which are energy-inefficient. Commenters noted that these challenges to successful EE programs 

are further exacerbated by the large size of G&T service territories. Commenters stated that 
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many G&Ts serve one member per mile of transmission line or less making EE projects even 

more challenging, as well as reducing any EE gains by the line losses. Commenters stated that 

many homes served by co-operatives are under-served because the customers that live in these 

houses cannot afford to comfortably heat and cool their homes. Commenters noted that often EE 

programs reduce the cost of electrical service and allow these families to increase usage to 

comfortable levels because of the savings. Commenters stated that PowerSouth regularly surveys 

its members and recent results show that 76% of members surveyed supported wind energy and 

80% supported solar power. Commenters noted however, that the results also show that 87% of 

surveyed members would not be willing to pay more for renewable energy. Commenters stated 

that although they support the concept, those served by commenters are not willing to pay for RE 

in their electricity bills. 

Comment 16: Banking mechanism needed.

Response 16: In the final CPP, there is a banking mechanism available for compliance with state 

plans. The EPA recognizes that banking reduces the cost of attaining the requirements of the 

regulation. The EPA has determined that the same rationale and outcomes apply under a CO2 

emission rate approach, in that allowing banking will reduce compliance costs. 

Banking also provides long-term economic signals to affected emission sources and other market 

participants where actions taken today will have economic value in helping meet tighter emission 

constraints in the future, provided those emission sources expect that the banked ERCs or 

emission allowances may be used for compliance in the future.

In Sections VIII.J and K. of the Preamble in the Final CPP, the EPA discusses the availability to 

use banking mechanism for eligible measures. For details, see these sections in the final CPP 

rule. 

The following are summaries of the specific public comments under this comment:

Commenters urged EPA to understand the multiple ways to evaluate cost-effectiveness of energy 

efficiency investments as not all tests are created equal, and not all are appropriate for measuring 

the full costs and benefits to society. Commenters believed that states will find it easier to 

achieve higher savings targets if EPA includes all energy efficiency programs, not just those 

overseen by Public Utility Commissions (PUCs). Commenters noted that municipal utilities, 

such as the LADWP, have proven that they can administer highly cost-effective programs 

without PUC oversight. Commenters believed it to be critical that EPA devise a banking 

mechanism to reward actions taken before 2020. Commenters noted that allowing banking will 

reduce the incentive to back off on programs and lose momentum for the sake of "saving" 

savings opportunities for when they are allowed to count.

Commenters referenced the North Carolina RETS system, and how, under the state's Renewable 

Portfolio Standards, the state could bank EE savings over 0.75% to use to meet targets in later 

years, when it would be more difficult. Commenters would like the Clean Power Plan to include 
320

a similar system, where EE savings over a certain percentage of total electricity production 

would be eligible to be banked and used to meet goals in later years.

Comment 17: Commenters noted issues for EERS policies.

Response 17: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule and therefore we do not need to address this comment. 

This determination is discussed in sections V.A and V.B of the final rule preamble of the CPP. 

Demand Side Energy Efficiency is still generally available for inclusion in state plans. See 

section VIII. of the preamble of the final CPP rule for eligibility requirements for EE in state 

plans. While EERS were one basis for using 1.0% as the target rate for the illustrative DS-EE 

plan scenario used in the RIA, a comprehensive inventory of EE potential studies, and analysis 

of their results, confirms the feasibility and reasonableness of the levels of savings included in 

the illustrative plan scenarios. See the TSD for background, supporting information, and 

analysis. 

The following are summaries of the specific public comments under this comment:

Commenters noted that the vast majority of EERS policies in the country do not project or 

require energy savings 15 years in the future; rather, EERS policies tend to be short-lived and 

then re-upped. Commenters noted that in states without EERS, savings projections are estimated 

for five-years in the future as it is harder to forecast beyond that time. For example, commenters

projected the amount of electricity their programs could be expected to save between 2015 and 

2019 given current funding, known technologies, and projected energy costs. Commenters stated 

that the result of this initial calculation was five-year savings of 1,909,680 MWh. Commenters

stated that these are ambitious figures but these initial estimates assumed essentially no new 

energy-efficient technologies. Commenters noted that, unlike those faced with achieving energy 

savings to reliably serve load, the proposal assumes levels of savings based on technology that 

does not yet exist or that is not yet cost-effective.

Comment 18: Allow States to Establish the Limit/Programs

Response 18: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule and this determination is discussed in sections V.A and 

V.B of the final rule preamble of the CPP. Although the EPA has determined to not include 

demand side-energy efficiency in the BSER in this final rule we are using 1.0% in our illustrative 

demand-side energy efficiency plan scenario. See the RIA Chapter 3 and the Demand-side 

Energy Efficiency TSD for CPP Final Rule for details on the illustrative demand-side energy 

efficiency plan scenario. 

Even though demand-side energy efficiency is not being included in the BSER in this final rule 

and, thus, not included in the determination of emission performance rates, the final rule 

provides states the flexibility to use demand-side energy efficiency measures in their state plans 
321

for compliance to meet the emission guidelines set forth in the final CPP, provided they meet the 

applicable requirements established in section VIII of the preamble for the CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated that EPA should allow states the flexibility to develop their own demand-side 

energy efficiency target and specific protocols for EM&V of EE since States have the best 

understanding of EE already developed in the state and what will work for consumers and 

generators within the state.

Commenters stated that energy efficiency targets and goals have also been used by state utility 

regulators and state energy resource planning agencies as a means to delay the need for 

additional capital intensive base-load generating resources, and to manage peak loads. 

Commenters noted States should be given the option to take credit for these efforts if they prove 

to be cost-effective, and as new technologies develop, however EPA is not an energy planning 

expert or rate regulator, and these measures can only be developed consistent with the reserved 

power of the states for retail energy rate regulation. Commenters stated there is no single "best 

practice" that can be established for all states. Commenters stated each state should be allowed to 

incorporate its energy planning strategy into a plan under section 111(d) to the extent it 

determines is appropriate.

Commenters felt that it is inappropriate for DSM programs to be included in federal 

environmental regulations. Commenters noted that DSM programs in South Carolina are already 

regulated by the Public Service Commission (PSC) of South Carolina to ensure the public 

received cost-effective and reliable utility services. Commenters stated that predicting customer 

behavior is never an exact science and the success of Energy Efficiency programs are based 

largely on the behavior of the energy consumer. Commenters stated that changes in the economy 

will often decide if a consumer will spend the money to participate in energy efficiency 

programs and therefore basing a regulated state goal for CO2 emissions on unpredictable 

outcomes is not only a reach on EPA's part, but also creates a compliance metric that is difficult 

to measure and is outside of the control of the regulated electric industry. Commenters suggested 

that EPA remove these programs from the Clean Power Plan's state goal calculations and leave it 

up to states to determine appropriate credit towards compliance.

Commenters urged EPA to eliminate the 1.5 percent and 1.0 percent targets and instead allow 

each state, with input from impacted utilities, to develop its own demand-side energy efficiency 

target based on state-specific Market Potential Studies. Commenters noted that Market Potential 

Studies analyze applicable market conditions within a jurisdiction to develop economically and 

technologically feasible goals and are an industry accepted practice for determining achievable 

savings from the adoption of energy efficiency programs.

Commenters stated that EPA's goals are based upon flawed assumptions about Indiana's electric 

consumption and costs to achieve the targeted efficiency savings. Commenters urged EPA to 

provide Indiana, and other states, the flexibility to set state-specific energy efficiency targets 

based upon the state's appraisal of the potential for realizable and cost-effective energy savings.
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Commenters stated States need to establish EE programs and goals based upon more reasonable 

assumptions that are, in turn, based on actual state-specific data, and EPA needs to adjust the 

individual state baseline goals accordingly. Commenters stated in its review of existing EE 

programs, it comes as no surprise that the programs are varied and that many States set their 

standards based upon a range of factors that include: economics (including funding for rebates 

and subsidies), reducing peak demand vs. overall energy demand, and residential vs. industrial or 

commercial customer bases. Commenters stated that significantly, all state programs focus on 

situations where the EE benefits can exceed cost. Commenters stated that for these reasons, the 

States and not the EPA should determine whether and, if so, how to implement EE programs and 

to set goals based upon their unique circumstances. Commenters stated EPA does not allow a 

State to conduct the unit-specific analysis expressly contemplated by the statute and instead 

arbitrarily assumes all regulated sources can achieve the limits, or that some sources will have to 

exceed targets to offset lesser reductions from other sources.

Commenters stated that under Section 111(d), EPA's role is to establish individuals; it is up to 

each State to establish the standards of performance for and to apply those standards 

to each existing source within its borders. Commenters stated EPA cannot displace the States' 

authority to develop their own standards of performance, and therefore it should be the States 

and not the EPA making the decisions on whether or how they choose to implement an EE 

program. Commenters stated the States will base such determinations on actual state-specific 

data rather than EPA's arbitrary speculative assumptions about their abilities to make consumers 

use less electricity.

Commenters stated not all individual utilities can achieve and sustain a 1.5 percent annual 

energy efficiency goal. Commenters commissioned an analysis to determine the ability of 

individual utilities to meet EPA's 1.5 percent annual energy efficiency savings goal. 

Commenters stated that study concluded that many individual utilities will be unable to achieve 

the EPA's proposed 1.5 percent goal. Commenters stated while EPA recognized the differences 

in energy generation between States in its detailed development of targets for CO2 emissions, 

EPA's uniform energy efficiency target inexplicably fails to account for the broad differences 

that likewise exist from State to State in the consumption of energy. Commenters stated these 

differences, not just among States, but also among utilities within the same State, play a key role 

in determining the appropriate level of cost-effective, achievable, and sustainable energy 

efficiency. Commenters stated for example, Arizona is one of the three States that EPA cites as 

achieving a 1.5 percent of savings in 2012 due to Energy Efficiency Resource Standards, yet in 

the creation of the state EERS, the Arizona Corporation Commission (ACC) accounted for the 

dissimilar nature of investor-owned utilities and distribution cooperative utilities. 

Commenters stated this is shown in the discounted standard allowed for distribution cooperative 

utilities written into the State's EERS. Commenters stated that despite the flexibility provided, 

many Arizona utilities, both investor-owned and distribution cooperative utilities, have not met 

their standard since 2010, and a number of Arizona entities have been granted waivers from the 

ACC which allow the entity to not attain the standard targets.

Commenters stated the waiver process is also written into the Arizona EERS language, further 

emphasizing that from the outset the ACC understood that the original standards were potentially 

set higher than entities could attain, necessitating a waiver process. Commenters stated this 

mirrors what is occurring with several other electric utilities and distribution cooperatives in 
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other States that also have not been able to meet or exceed their required energy efficiency goals. 

Commenters stated that even though EPA cites Arizona as achieving the intended 1.5 percent 

mandate in 2012, a closer look at the individual utilities' savings over several years in response to 

the state EERS program shows that a 1.5 percent mandate is unreasonable and unsustainable, 

particularly for distribution cooperatives. Commenters stated in the two examples from 

distribution cooperatives cited by Enervision, one would only be able to meet 34 percent of its 

cumulative goal and the other would only achieve 11 percent of their goal.

Commenters noted that South Dakota currently has a voluntary law regarding EE objectives with 

no penalties or sanctions for providers that fail to meet the objective and that the law does not 

specify the amount of conserved energy required to meet the objective. Commenters stated that 

in order for South Dakota to meet EPA's feasible policy scenario, new legislation would be 

required that establishes a target energy efficiency savings standard of 1.5 percent of retail 

electric sales and that further allows for enforceability of the standard. Commenters stated that 

enacting such legislation in the state would be highly contentious, with little guarantee of any 

legislation being passed by state government and therefore, EPA cannot reasonably assume that 

South Dakota has the ability to meet EPA's scenario. Commenters asserted that even if the 

assumption is made that South Dakota can enact a law that sets an enforceable energy efficiency 

standard at 1.5 percent of retail electricity sales, there is no guarantee that utilities will be able to 

meet such a standard. Commenters noted that each state has unique energy demand 

characteristics (population, population density, types of industry) and recommended that EPA 

establish EE targets for each state based on the economically feasible potential for energy 

efficiency savings specific to each state and that those determined economically feasible target 

levels be used in the state's emissions rate goal calculation.

Commenters suggested the imposition of a state created glide path to the 2030 goals established 

by EPA because only the states can determine how to manage and deploy electricity production 

that maximizes the states assets and resources, while minimizing economic impact on consumers 

and industry. Commenters noted that states can determine the right approach rather than the 

EPA's front loaded demand that will cause potential economic distortion and potentially 

significant impact on reliability and resilience.

Commenters stated that EPA's approach includes serious errors in methodology, including 

failure to ensure that differences in state conventions for accounting cost and performance of 

end-use efficiency measures do not undermine the identification of states with "best practices" 

regarding end-use efficiency. Commenters believed that EPA erred when basing CO2 reductions 

from end-use efficiency on the most aggressive state programs, rather than recognizing the 

expertise of state regulatory agencies to determine the most appropriate role of end-use 

efficiency for conditions in that state.

Commenters noted that utilities have no control over the actual amount of savings achieved, 

regardless of the incentive---only customers do. Commenters also noted that despite the 

implementation of energy efficiency, demand may still grow and outstrip energy efficiency (EE) 

due to the introduction of new electric-fueled technology, population growth, economic 

development, or for countless other reasons. Commenters noted that states have a detailed 

understanding of what EE has been achieved in the state already, and they are in the best position 
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to know what will work for the utilities and consumers in their own state, including the pace at 

which EE ramps up and whether that is even possible, let alone economical.

Commenters noted that assumptions must be made to estimate the cost and the potential savings 

of alternate strategies for compliance, and it is crucial that much assumptions are reasonable and 

realistic. Commenters noted that in their experience, utility DSM programs require careful 

analysis of the remaining cost effective and achievable conservation potential in current and 

future customer electric usage, considering the results of past implementation of DSM both by 

consumers and by utility programs; average results of the best states are simply not translatable 

into potential results for any state or utility service territory. Commenters recommended that the 

final rule explicitly require state-specific and utility-specific calculation of cost-effective and 

achievable DSM savings to reflect realistic potential DSM savings.

Commenters noted that states are in the best position to assess a utility's potential for incremental 

new energy efficiency programs. Commenters also noted that EPA failed to recognize that states 

with long running EE programs may have achieved near cost-effective saturation of such 

programs. Commenters stated that mandating incremental new EE programs in such cases cannot 

be achieved at EPA's proposed costs, and therefore EPA should allow a state to determine what 

level of EE is appropriate for its goal calculation based on its historic EE efforts and the 

remainder of available EE programs that could be implemented in the state.

Commenters stated that EE measures should not be mandated by EPA (explicitly or implicitly) to 

inclusion in state 111(d) plans.

Commenters asked EPA to allow each state to assign its emission reduction value equal to the 

emissions rate of the power pools' marginal resources.

Comment 19: Realistic Achievable Potential (RAP) instead of Maximum Achievable Potential 

(MAP)

Response 19: The commenters asked EPA to use the Realistic Achievable Potential instead of 

Maximum Achievable Potential. The EPA has determined not to include demand-side energy 

efficiency (building block four) in the BSER of this final rule and therefore does not need to 

address this comment. This determination is discussed in sections V.A and V.B of the final rule 

preamble of the CPP. Although the EPA has determined to not include demand side-energy 

efficiency in the BSER in this final rule we are using 1.0% in our illustrative demand-side energy 

efficiency plan scenario. See the RIA Chapter 3 and the Demand-side Energy Efficiency TSD 

for CPP Final Rule for details on the illustrative demand-side energy efficiency plan scenario. 

The EPA conducted a survey of recent (2009-2024) EE potential studies and found that the 

illustrative DS-EE plan scenario is fully consistent with the results, using a scenario where the 

average annual savings are below the range of results from the survey and, this, a reasonable and 

feasible scenario for the illustrative plan scenario analysis.

The following are summaries of the specific public comments under this comment:
325

Commenters stated that EPA should consider the realistic achievable potential (RAP) instead of 

the maximum achievable potential (MAP) when determining the BSER for the EE building 

block in order to realistically answer questions about future EE savings. Commenters noted that 

EPA sets a sustainable target of 1.5 percent annual load reduction of sales as the long-term EE 

load reduction target, based on the MAP estimates of potential, using a few (ten) studies from 

various states. Commenters stated, however, that what the EPA labels as "achievable" potential 

is actually MAP rather than RAP. Commenters noted that MAP, by definition in each DSM 

Potential study used by the EPA, is defined as the hypothetical upper limit of achievable 

potential. Commenters concluded that the DSM Potential studies cited by the EPA as the basis 

for calculating an average sustainable load reduction target of 1.5 percent through 2030 should 

be considered aggressive since they are based on highly uncertain results of MAP studies from a 

small number of DSM Potential studies.

Comment 20: EPA cannot determine “best practices”.

Response 20: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule and this determination is discussed in sections V.A and 

V.B of the final rule preamble of the CPP. Although the EPA has determined to not include 

demand side-energy efficiency in the BSER in this final rule we are using 1.0% in our illustrative 

demand-side energy efficiency plan scenario. See the RIA Chapter 3 and the Demand-side 

Energy Efficiency TSD for CPP Final Rule for details on the illustrative demand-side energy 

efficiency plan scenario. This illustrative plan scenario reflects a reasonable and feasibly level of 

DS-EE, supported by the information and analysis provided in the TSD.

The following are summaries of the specific public comments under this comment:

Commenters noted that EPA presumes to dictate "best practices" to states for energy 

conservation programs but, as with renewable energy, EPA neither has the expertise nor the 

authority to dictate to states what "best practices" are for adopting programs that conserve 

energy. Commenters additionally noted that EPA cannot meet the statutory standard of showing 

that its energy efficiency projections have been "adequately demonstrated" as EPA's proposal 

assumes that the country's population and economy can grow without electricity growth in 

stating that electricity usage will be 10% below BAU in 2030.

Commenters stated that EPA's proposed methodology overstates the potential for cost-effective 

energy efficiency nation-wide and overstates the potential statewide by using a one-size-fits-all 

approach.

Commenters stated that Building Block 4 is based on inappropriate method of determining 

technical potentials. Commenters stated that chapter 5 of the EPA's GHG Abatement Measures 

TSD provides information regarding the EPA's determination of appropriate levels of demandside EE as a component abatement measure within its BSER. Commenters noted that section 5.3 

details the EPA's development of annual EE goals. Commenters stated that the EPA first 

determined what it refers to as a "best practices" scenario for each state, which was used to 

estimate the potential for states to implement policies that increase investment in what the EPA 
326

believes are cost-effective demand-side energy efficiency technologies and practices. 

Commenters stated that the EPA created this scenario using a level of EE performance 

demonstrated or required by policies in leading states, while considering each state's existing 

level of EE performance and allowing "appropriate time" for states to increase from current EE 

levels of performance to the identified best practices level.

Commenters stated that the EPA determined that all states should be able to reach an annual 

incremental EE of 1.5 percent of annual retail sales. Furthermore, EPA has determined a best 

practices rate of improvement of 0.2 percent of annual retail sales starting in 2017. Commenters

stated that since within EPA's data Louisiana had no reported savings from EE in 2012, the 

EPA's proposed methodology would require Louisiana to continually increase incremental 

annual EE saving from 2017 through 2025, and furthermore continue this level of annual savings 

through 2030.

Commenters expressed concern that EPA's proposed methodology may be inappropriate for 

individual states, including Louisiana. Commenters stated that EPA's proposed methodology by 

definition applies a national goal for EE potential to all states, regardless of "on-the-ground" 

realities. Commenters noted that within Louisiana, the Entergy Companies (Entergy Louisiana 

and Entergy Gulf States) serve approximately 63 percent of all Louisiana retail electric 

customers, and is by far the largest electric utility in the State. Commenters noted that Entergy 

included in its 2012 IRP a Demand-Side Management ("DSM") potential study for its Louisiana 

operating companies. Commenters noted that his study, conducted by ICF International for 

Entergy, evaluated EE potential for years 2013 through 2028 across three scenarios: Low, 

Reference, and High.

Commenters stated that Entergy's DSM potential study shows that while EPA's near-term EE 

savings targets are arguably conservative, the EPA's proposed methodology overstates the 

ultimate potential for EE savings within Louisiana in all but the most optimistic scenarios. 

Commenters stated that only under the study's high scenario did Entergy's 2012 study find EE 

potential sufficient to meet EPA's proposed EE goal for Louisiana. Commenters stated that 

Entergy recently released a new long-term DSM potential study supporting its current IRP 

analysis. Commenters stated that this study's findings are lower than Entergy's earlier study, now 

finding that Entergy only has the technical potential to achieve 6.1 percent cumulative energy 

savings under the reference scenario compared to estimated sales by 2034. Commenters stated 

that even under the high scenario, it finds the utility only has the technical potential to achieve 

9.6 percent cumulative energy savings by 2034, just slightly greater than EPA's proposed target 

for 2030.

Commenters stated that Louisiana major electric and natural gas utilities are in the early stages of 

implementing EE programs pursuant to the LPSC EE rules finalized August 21, 2013. 

Commenters noted that this situation explains the finding of cumulative EE savings greater than 

EPA's near-term cumulative EE savings targets. Commenters noted however, it is clear that 

Entergy's DSM potential study examining only EE potential in Louisiana does not support the 

EPA's proposal of a 1.5 percent annual savings target relative to annual retail sales as an 

appropriate target for EE in Louisiana.
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Commenters stated that EPA fails to recognize that prior technical potentials arose in high-cost 

energy environment. Commenters stated that in addition to the EPA's omission of accounting for 

the cost-effectiveness of EE, and the inherent differing economics seen throughout the country, 

EPA also fails to recognize structural changes occurring in energy markets in the past few years. 

Commenters noted that in most states, natural gas-fueled power plants operate as the "marginal" 

unit in most hours throughout the year (i.e. natural gas fueled power plants are the most 

expensive per kWh unit typically dispatched to serve customers). Therefore, commenters stated 

that the costs to operate these natural gas fueled-plants typically set the overall wholesale 

electricity rate before transmission and local distribution costs to end consumers. Commenters

stated that it follows that this operating cost would follow natural gas prices, as has been noted

by many market analysts. 

Commenters noted that from 1990 through the late 2000's, domestic production of natural gas 

was essentially flat, remaining under 20 Tcf per year. However, commenters noted that the 

emergence of shale gas extracted through hydraulic fracturing significantly increased domestic 

production, more than displacing declining production in traditional onshore and offshore 

production. In 2014, commenters stated that natural gas from shale deposits is estimated to 

account for nearly 40 percent of all natural gas produced. By 2030, commenters stated that the 

production of natural gas from shale deposits is estimated to increase to account for over 49 

percent of all domestic production. Likewise, commenters stated that the total production of 

natural gas is expected to increase by nearly 42 percent. Commenters noted whereas historically 

the natural gas market represented a market that was supply constrained, forecasts now show 

production to keep pace with all projected growth in consumption. 

Commenters noted that from 1997 through 2000, wholesale natural gas prices averaged just 

$2.79 per Mcf, and were relatively stable, as shown by a relatively low standard deviation. 

Commenters noted that this changed dramatically in late-2000 through 2008, when natural gas 

prices increased sharply, averaging $6.24 per Mcf through the period. Commenters stated that 

wholesale natural gas prices were also much more volatile than seen previously, with a standard 

deviation of $2.39. Commenters noted that with the emergence of large-scale hydraulic fracking 

in 2009, wholesale natural gas prices have dropped just as dynamically, averaging $3.86 per 

Mcf. Commenters noted that likewise, volatility in natural gas markets has also fallen, being 

even more stable than prices were in the late 1990s. 

Commenters stated that in its 2009 AEO the EIA projected that wholesale natural gas prices 

would increase from then current levels in real terms to a high of $9.91 per MMBtu by 2030. 

Commenters stated that with the significant change in natural gas markets, the EIA has revised 

these estimates in subsequent AEO publications. Commenters stated that in the 2013 AEO, the 

EIA projected that wholesale natural gas prices would only reach $5.29 per MMBtu in real terms 

by 2030, a nearly 47 percent reduction from 2009 estimates. 

Commenters stated that the adoption of energy efficiency resource standards ("EERS") by 

various states mirrors this changing outlook on the future prices of energy. Commenters noted 

that of the 26 states that have adopted EERS, only 3 states (Arkansas, Oregon, and Wisconsin) 

have adopted such measures since 2010. Commenters noted that 15 states adopted EERS in the 

years 2007 through 2009, when projections of future natural gas prices were at their highest. 
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Since 2011, commenters noted that not a single state has adopted an energy efficiency resource 

standard. 

Commenters expressed concern with the EPA's proposed methodology of relying on "best 

practices" in general, as laid out previously. However, commenters also expressed concern with 

the EPA's reliance on requirements of individual states' EERS to inform what a national "best 

practice" amount of incremental savings through EE would be. Commenters stated that the 

majority of these EERS were passed during a period when the consensus view was rapidly 

raising natural gas and electricity costs. Commenters stated that since the cost-effectiveness of a 

proposed energy efficiency program is estimated over the useful life of the program, this 

pessimistic outlook resulted in higher benefits for proposed energy efficiency investments than 

would have been estimated if natural gas prices were assumed to be stable, as it is now viewed. 

Commenters stated that by its very nature, the EPA's proposed methodology overstates the 

potential for cost-effective energy efficiency nation-wide and then it overstates the potential 

statewide by using a one-size-fits-all approach. 

Commenters stated that EPA's methodology to establish BSER for EE is flawed and 

demonstrates that the proposed 1.5 percent level is not adequately demonstrated. Commenters

noted that according to EPA, the best practices scenario is informed by "a level of performance 

that has already been demonstrated or required by policies of many leading states." Commenters

stated that this level of demonstrated or required performance is based on a single year of EE 

data (2012), which provides an incredibly narrow view of EE performance across all states. 

Commenters stated that without understanding each state's regulatory circumstances and EE 

program characteristics and particular considerations (e.g., implementation date, lifespan, 

budget, growth, penetration potential, etc.), it is unreasonable to presume that all states are 

capable of achieving a 1.5 percent level of performance based on a single year snapshot. 

Commenters stated that moreover, this level of performance has only been achieved by three 

states (Arizona, Maine, and Vermont in 2012), and is expected to be achieved by nine additional 

states by 2020 (Colorado, Illinois, Indiana, Massachusetts, Minnesota, New York, Ohio, Rhode 

Island, and Washington). Commenters stated that in reality, the 1.5 percent level of performance 

has only been adequately demonstrated in 3 of 50 states, therefore it is not appropriate to extend 

this level across all states in setting BSER. Commenters believed that EE as a "technology" or 

"strategy" is so unique to the particular circumstances of each state and the operating utilities 

within the state that this building block presents the benefit of finalizing BSER as a presumptive 

number that can then be further evaluated by states during the state planning process. 

Commenters noted that states, particularly Tennessee, need the time to work collaboratively with 

utilities, PUCs, EE utilities, and/or other EE programs to study EE potential, taking into 

consideration historic and current circumstances. Commenters noted that states will then be in a 

better position to provide EPA with an annual incremental savings rate that is representative of 

its own potential market grow in developing BSER (i.e., the same annual incremental savings 

rate that could be applied presumptively across all states), commenters recommended that EPA 

employ a national average of energy savings rates achieved over the past three to five years 

rather than utilizing performance reflective of achievement by a few states. Commenters noted 

that states must then still be given the opportunity to demonstrate, in state plans, what is 

achievable within the state; therefore, the national number, as applied to state goals, should still 

be presumptive, not mandatory.th and contextual factors. 
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Commenters stated that they are not in a position to specifically comment upon the technical 

feasibility and reasonableness of with regard to utility EE potential in Tennessee as these 

programs are not currently managed nor have the oversight of a state entity that lends itself to 

understanding potential contribution and growth of energy efficiency to Tennessee's electricity 

demands. Commenters noted that TVA is better-suited to comment upon utility energy efficiency 

program potential. Commenters stated that TVA has indicated that cost assumptions associated 

with EPA's best practices scenario do not reflect the utility's operations and "could prove 

burdensome on the rate payers in the Valley and make TVA programs cost .prohibitive."

Commenters stated that current TVA energy efficiency programs must pass Total Resource Cost 

and Utility Cost Tests to ensure that rates remain as low as feasible. Commenters stated that 

EPA's assumptions in the proposed guidelines are based on program cost to utilities as well as 

additional participant costs to the end-user.

Commenters noted that all EE programs are not created equal. Commenters stated the rate 

payer funding programs are usually required to pass a cost effectiveness test, and these tests are 

often implemented in ways that are biased against deeper energy efficiency investments because 

they don't account for all the costs, and frequently ignore many benefits. 

Commenters stated that EPA fails to examine cost-effectiveness. 

Commenters stated that the EPA created its "best practice" scenario by examining the level of 

EE performance demonstrated or required by policies in leading states. Commenters stated that 

EPA's proposed methodology by definition applies a national goal for EE potential to all states, 

and nowhere in its analysis did the EPA examine or recognize important differences between 

individual states. Commenters stated that this leads to many mitigating factors omitted from the 

EPA's analysis the LPSC believes needs to be considered. Commenters stated that the first 

among these is the large variance in electric rates themselves throughout the country. 

Commenters stated that even ignoring Alaska and Hawaii, which due to geographic remoteness 

see higher electricity prices than the contiguous US, electric rates vary considerably throughout 

the country. Commenters noted that the most expensive state, Connecticut, reported electric 

prices in August 2014 equal to 19.67 cents per kWh, while the least expenses state, Washington, 

had electric prices less than half this amount at only 8.93 cents per kWh. Commenters stated that 

this regional variation is due to many factors, but regional resource availability accounts for a 

significant portion. Commenters noted for instance, electric prices in the Pacific Northwest have 

historically been less than the rest of the country due to the abundance of local hydropower. 

Commenters noted that likewise, New England has historically seen higher electric prices due to 

the need to import fuel stocks a significant distance. Commenters stated that Louisiana is located 

within a prolific natural gas producing region, and thus has the third lowest residential electric 

rates in the country, behind only Washington and West Virginia.

Commenters stated that rarely, if ever, has EE been viewed as a goal in-and-of-itself, but as a 

means to meet multiple policy objectives, such as reducing the escalation of energy prices 

through reduction of consumption or demand. Commenters noted that the consideration of the 

cost-effectiveness of potential EE programs has always been central to examination of the 

appropriate level of EE investment. Commenters noted that the EPA's GHG Abatement 

Measures TSD restates this role of EE, and further acknowledges that "most states evaluate their 
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EE policy options through the application of cost tests, weighing the projected benefits with the 

costs of energy efficiency technologies and practices." Commenters stated that EPA's decision of 

a national "best practices" standard however does not recognize the cost-effectiveness of 

potential levels of EE investments. Commenters stated that it is cost-effective to have higher

levels of EE investment in states with high energy costs due to the benefits of displacing these 

costs. Commenters stated that however, these levels of EE investment may not be appropriate in 

low energy costs states, such as Louisiana, since the benefits of avoiding energy costs are much 

lower.

Commenters stated that the EPA's discussion of states which have either achieved or have 

policies requiring EPA's chosen "best practices" levels of percent incremental annual savings

demonstrate the relationship between EE and high retail electric prices. Commenters stated that 

of the twelve states that have either achieved or are required to achieve an incremental savings 

through EE of 1.5 percent per year, eight states are among the top 20 states in terms of residential 

retail electric prices. Commenters noted that likewise, of the 20 states that have either achieved 

or are required to achieve an incremental savings through EE of 1.0 percent per year, six (CT, 

NY, RI, CA, VT, MA) comprise the 6 states in the continental U.S. with the most expensive 

residential retail electric rates. Commenters stated that fourteen of these states are among the top 

20 states in terms of residential retail electric prices.

Comment 21: The EPA’s goals conflict with state agency determination of expert assessment.

Response 21: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule and this determination is discussed in sections V.A and 

V.B of the final rule preamble of the CPP. Although the EPA has determined to not include 

demand side-energy efficiency in the BSER in this final rule we are using 1.0% in our illustrative 

demand-side energy efficiency plan scenario. See the RIA Chapter 3 and the Demand-side 

Energy Efficiency TSD for CPP Final Rule for details on the illustrative demand-side energy 

efficiency plan scenario. This illustrative plan scenario reflects a reasonable and feasible level of 

DS-EE, supported by the information and analysis provided in the TSD.

Even though demand-side energy efficiency is not being included in the BSER in this final rule 

and, thus, not included in the determination of emission performance rates, the final rule 

provides states the flexibility to use demand-side energy efficiency measures in their state plans 

for compliance to meet the emission guidelines set forth in the final CPP, provided they meet the 

applicable requirements established in section VIII of the preamble for the CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated that EPA offers no justification for forcing one state to use the "expert 

assessment of RE, or EE, technical and economic potential" developed and applied in another 

state. Commenters stated that is EPA believes that state energy regulators are competent and 

that their energy planning decisions are reasonable, then EPA should apply the reasoning of a 

state's energy regulators in that state. Commenters suggested that for states that have 

determined that no EERS is appropriate "for that state's electricity consumers," EPA should 

assume no increase in end-use efficiency for that state in the context of Building Block 4. 
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Commenters stated that EPA's "best practices" approach for identifying Building Block 4 

contributions to a state goal is in direct conflict with the Agency's determination that a state 

energy agency determination reflects an expert assessment of conditions specific to that state.

Comment 22: Ramp Up of 0.20 Percent is unreasonable.

Response 22: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule and therefore we do not need to address this comment. 

This determination is discussed in sections V.A and V.B of the final rule preamble of the CPP. 

Although the EPA has determined to not include demand side-energy efficiency in the BSER in 

this final rule we are using 1.0% in our illustrative demand-side energy efficiency plan 

scenario. See the RIA Chapter 3 and the Demand-side Energy Efficiency TSD for CPP Final 

Rule for details on the illustrative demand-side energy efficiency plan scenario. This illustrative 

plan scenario reflects a reasonable and feasibly level of DS-EE, supported by the information 

and analysis provide in the TSD. In the plan scenario, the EPA uses a ramp up of 0.20% per year, 

however, has lowered the target savings level to 1.0%. The TSD provides support for these 

levels. This illustrative plan scenario reflects a reasonable and feasibly level of DS-EE, 

supported by the information and analysis provide in the TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated that the proposed ramp rate of 0.20 percent per year is unreasonable.

Commenters also opposed EPA's assumption that the level of incremental savings is sustained 

through 2030. This assumption does not recognize that the pace of incremental energy efficiency 

savings slows over time and that the largest gains are made early in the life of most energy 

efficiency programs. The studies and information EPA used to justify the assumed levels of 

performance generally occurred during the recent economic recession and slow economic 

recovery. Commenters opposed EPA's assumption that the levels of performance would be 

sustained during period of more robust economic growth.

Commenters stated that EPA proposes a "ramp-up" rate 0.2 percent per year until each state 

achieves the 1.5 percent incremental savings rate target and that once achieved, states are 

expected to maintain the target rate. Commenters stated that this results in each state having a 

different cumulative energy efficiency savings percentage by 2030. In addition, commenters

stated that the ramp-up rate of 0.2 percent per year is applied to all states, except those that have 

already met the 1.5 percent target, regardless of the 2017 starting point for each state. 

Commenters stated that Maine, Arizona and Vermont are already starting at the target, but most 

states in the country are starting at an annual incremental savings rate less than 1 percent and 

over half are starting at an incremental savings rate less than 0.5 percent. Commenters noted that 

these states have clearly implemented fewer energy efficiency measures than "best in practice" 

states but the prolonged ramp up period allows them to reach this target slowly resulting in a 

lower cumulative savings percentage over the duration of the rule. Commenters suggested that 

EPA consider increasing the ramp-up rate for those states that still have much progress to make 

in order to meet the 1.5 percent annual incremental savings target (or the target that EPA 
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ultimately chooses) and this could make the cumulative percent savings more equitable among 

states.

Commenters said that the 0.2% "pace of improvement" is not reasonable.

Commenters stated that the EPA's estimated 0.2 percent pace of improvement is not reasonable 

for two reasons. Commenters explained that first, the EPA based this pace of improvement on a 

set of states that are not representative of the country as a whole because the subject states have 

had aggressive energy efficiency programs with supportive legislative and regulatory 

environments in place for at least 20 years. Commenters added that secondly, the Agency's pace 

of improvement analysis is based on a period when relatively large and inexpensive lighting 

measures accounted for much of the savings. Commenters stated that, however, the Energy 

Independence and Security Act standard will limit future efficiency gains in the lighting sector. 

Commenters added that, as the EPA had noted, the pace of incremental energy efficiency savings 

will decrease over time, and consequently, the EPA's analysis overestimates the pace of 

improvement.

Commenters stated the second reason EPA's goal is overstated is that EPA's 0.2 percent escalator 

for first year incremental savings is unreasonable, as is the ultimate annual target of 1.5 percent. 

Commenters stated EPA should consider the experience of Wyoming's largest utility, PacifiCorp, 

which has had an energy efficiency program in Wyoming for four full years. Commenters stated 

PacifiCorp's EE program offerings are virtually identical to those in five other PacifiCorp states. 

Commenters provided a table (see page 24 of the comment letter) expressing the growth of the 

Wyoming energy efficiency program (final numbers for efficiency were taken from annual 

reports to Wyoming Public Service Commission and vary slightly from Form 861) as a function 

of total PacifiCorp intrastate sales; the table presents PacifiCorp efficiency effects (MWh), the 

company's gross intrastate sales (MWh), and Efficiency as percent of total sales for 2010 to 2013 

showing a range of 0.14 to 0.29 percent. Commenters stated that after a successful program 

inception, PacifiCorp has been unable to manage anything approaching incremental growth of 

0.2 percent. Its best year for growth was 0.1 percent, but only after declining 0.09 percent from 

the previous year. Its next best increase was 0.05 percent. Commenters stated in each of these 

years, the Wyoming Public Service Commission approved all of the proposed program 

expenditures PacifiCorp sought.

Commenters noted that South Carolina is an industry-heavy state with 36.2% of delivered MWh 

to industrial consumers in 2012--31% more than the national average--while residential 

customers used 36.5% of delivered MWh--5% more than the national average--and commercial 

customers consumed only 27.3%--28% less than the national average. Commenters stated that 

these differences between the customer base of South Carolina's utilities and those of utilities 

elsewhere in the country are highly relevant to the question of whether EPA's annual target is 

achievable in South Carolina. Commenters recommended that EPA adjust the assumed EE 

reductions that comprise building block four downwards to a level of no more than 0.1% per 

year for South Carolina to reflect a more realistic estimate of annual energy savings available in 

the state through end-use EE measures.

Commenters stated that ramp rates associated with energy efficiency load reductions simply do 

not support EPA's assumed 1.5% goal. Commenters cited a study titled "MISSOURI'S ENERGY 
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EFFICIENCY POTENTIAL: OPPORTUNITIES FOR ECONOMIC GROWTH AND ENERGY 

SUSTAINABILITY" conducted by the American Council for an Energy-Efficient Economy 

("ACEE") which projected the following ramp rates in terms of annual energy efficiency load 

reduction potential: 0.3% in 2012, 0.5% in 2013, 0.7% in 2014 and 2015, and 1% in 2016.

Commenters does not support an increase in either the annual incremental savings rate or the 

pace of improvement per year for states. Commenters questioned the cost-effectiveness of these 

increases and mentioned that they currently do not have the regulatory authority to require any 

type of EE program, and that the timing of this rule makes it impossible to get such authority in 

place by the proposed date of plan submittal.

Commenters stated that EPA should maintain the 0.20 percent ramp-up rate as proposed.

Commenters stated the concept of lower-hanging fruit recognizes that certain energy efficiency 

measures can be undertaken quickly, cost effectively, and as part of a wider range of reduction 

strategies. Commenters stated this is supported by energy efficiency supply curves, such as the 

McKinsey Curve, which depict a number of efficiency measures by category and sector 

according to the average cost of the efficiency measure and the value of direct energy savings 

that the measure is expected to provide over its lifetime. Commenters indicated States just 

starting to implement energy efficiency measures likely have a wide variety of inexpensive 

strategies to choose from, while states that are already undertaking aggressive efforts to achieve 

their economic energy efficiency potential may be targeting measures further up the supply 

curve, which requires a greater investment of resources and effort. Commenters stated the 

endeavors of states already exceeding the national average for incremental or cumulative savings 

(calculated as a percentage of 2012 retail sales) should be recognized by maintaining the 0.20 

percent ramp-up rate as proposed by the EPA.

Commenters stated that EPA's rule should require utilities to ramp up efficiency programs aimed 

at helping customers save money by saving energy.

Commenters supported a faster ramp-up to the efficiency standard. Commenters supported a 

faster ramp-up for some states.

Commenters stated that for reasons of equitable burden sharing among states for goal setting and 

expedited emissions performance, EPA should accelerate the rate at which states ramp up to EE 

goals of 1.5 percent. Commenters’ experience has shown that EE programs can be developed 

and intensified relatively quickly. Commenters stated the rate of increase in energy savings in 

Minnesota's electric power system went from 0.8 percent to a required 1.5 percent between 2007 

and 2010. Commenters stated EPA should consider similar ramp-up rates for states that have yet 

to achieve a level of 1.5 percent energy savings.

Commenters assessed the reasonableness of EPA's ramp rate assumption by evaluating the actual 

historical experience of states and program administrators in capturing savings from energy 

efficiency, and found that numerous examples exist of states and utilities that achieved energy 

efficiency ramp rates at or above 0.2 percent annually, and in a number of instances at levels that 

greatly exceeded 0.2 percent. Commenters provided a figure detailing the achievements of these 

states. Commenters noted that often ramp rates of this magnitude have followed changes in state 
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level policies requiring or otherwise increasing annual spending on energy efficiency programs. 

Commenters stated that these same types of policy commitments and corresponding changes in 

energy efficiency spending by states may result from compliance with the Clean Power Plan, and 

therefore we could see ramp rates that exceed 0.2 percent annually in many more than 12 

states. Commenters detailed the success of several states (Arizona, Illinois, Michigan, and Ohio) 

with ramping rates meeting or exceeding EPA's proposed 0.2 percent.

Commenters believed that the way the proposed rule calculates the energy efficiency budgets for 

states fails to take advantage of the much "low hanging fruit" efficiency gains in states that have 

invested little, if any, in efficiency programs and that EPA should be using an accelerated rampup of efficiency achievement for those states.

Commenters stated that EPA should use a faster ramp up rate, allowing for greater overall 

emission reductions from energy efficiency. Commenters believed that EPA underestimates the 

potential for energy efficiency by assuming that states will only be able to ramp up energy 

efficiency programs extremely slowly even though new EE programs can be implemented more 

quickly than EPA assumes, as demonstrated by faster expansion of efficiency programs achieved 

in many states.

Commenters recommended that EPA increase the annual ramp-up rate for energy efficiency 

standards to 0.25 percent per year, as the 0.20 percent per year growth rate is too conservative.

Commenters stated that in setting state goals, EPA should recognize that states can and have 

ramped up to best practice levels of energy efficiency much faster than provided by EPA's ramp 

rate. Commenters recommended EPA's assumption of a 0.2 percent ramp rate for BSER is 

achievable, but low. Commenters stated EPA should adopt at least a 0.25 percent ramp rate in its 

BSER for Block 4 energy efficiency. Commenters stated EPA concluded that states could ramp 

up their energy efficiency programs at a rate of 0.2 percent per year, but also requested comment 

on whether it should adopt a 0.25 percent growth rate. Commenters stated when looking at actual 

program performance, EPA itself found an average rate of improvement of the annual savings 

rate of 0.3 percent for states at the moderately performing level (0.8 to 1.5 percent annual 

savings levels), and 0.38 percent at the high performing level (>1.5 percent annual savings 

levels). Additional evidence exists to support the feasibility of at least a 0.25 percent annual 

growth rate.

Commenters stated the assessment by AG found that states could achieve rates of growth in 

energy efficiency savings in excess of 0.2 percent per year and that many states and/or individual 

utilities have already demonstrated this ability, including a number of states that achieved double 

and triple that rate. Commenters stated in fact, they found that at least 12 states have achieved 

ramp rates of their energy efficiency programs at or in excess of 0.2 percent since 2006, and that 

most of these states achieved these ramp rates consistently over multiple years; commenters

provided a figure (see Figure 7.1, State Energy Efficiency Ramp-up Rates) that shows ramp up 

rates for 12 States for 2006 to 2013. Commenters stated that many more states and utilities 

achieved ramp rates at or above 0.2 percent than are included in the figure; for example, at least 

the following states have achieved a ramp rate at, or above, 0.2 percent in at least one year 

between 2006 and 2012: Arizona, California, Connecticut, District of Columbia, Hawaii, Idaho, 

Illinois, Indiana, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, 
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Montana, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, North 

Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, Utah, Vermont, and Wisconsin. 

Commenters stated these states represent a wide cross-section of geographies, customer bases, 

electricity pricing contexts, and public policies.

Commenters noted that Several states and utilities have ramped up very quickly, going from zero 

or near-zero to as much as one percent total annual load reduction in just three to four years in 

response to changes in policy. Commenters stated this indicates that rapid and major expansion 

of energy efficiency programs does not require a long lead time. Commenters stated an Edison 

Foundation Institute for Electric Innovation report found five states (Indiana, South Dakota, 

Tennessee, Virginia, and West Virginia) more than doubled their electric efficiency expenditures 

in 2012 relative to 2011, and in 2011, three states (Indiana, Ohio, and Pennsylvania) had doubled 

their spending relative to 2010 levels.

Commenters stated AG found that higher ramp rates have often followed changes in state level 

policies that support, encourage, or require savings from energy efficiency programs, similar to 

what is expected under the Clean Power Plan. Commenters stated a cross-section of four state 

examples illustrates what is feasible with policy encouragement. Commenters provided the 

following examples for Arizona, Illinois, Michigan, and North Carolina.

Commenters stated that EPA's assessment of the historic energy savings of 73 separate efficiency 

programs found average annual first-year energy savings of 0.3 to 0.38 percent, well above the 

0.2 percent that was assumed in EPA's calculations (GHG Abatement Measures TSD, 5-

70). Commenters noted that several states have EERS in place that require increases in 

incremental energy savings greater than 0.2 percent annually and cited several states (Rhode 

Island's EERS requires utilities to increase energy savings by 0.4 percent between 2012 and 2013 

and by 0.4 percent from 2013 to 2014; Massachusetts EERS requires utilities to increase energy 

savings by 0.6 percent from 2010 to 2011 and by 0.4 percent from 2011 to 2012; Arizona EERS 

requires increases in energy savings of 0.25 percent each year from 2011 to 2014; and 

Michigan's EERS requires increases in energy savings of 0.23 percent annually from 2009 to 

2012) (ACEEE 2014). Commenters pointed out that a number of states have recently achieved 

incremental increases in annual energy savings at or above 0.25 percent. Commenters provided 

tables that show the increase in incremental energy savings 2011-2012 and 2012-2013 (see 

Tables 3 and 4 in their comment letter); these tables illustrate that across multiple regions, energy 

mixes, and levels of experience with energy efficiency, states can achieve incremental annual 

increases in energy savings above 0.25 percent.

Commenters noted EPA does not require all states to reach 1.5 percent annual incremental 

savings starting in the first compliance year, 2020, but instead has specified a 0.2 percent rate of 

annual growth for each state's energy efficiency program is feasible. Commenters cited a 

ACEEE report that demonstrates a 0.25 percent per year energy efficiency growth rate could 

reduce nationwide emissions by 25 percent by 2030 with a net positive economic 

impact. Commenters stated top-performing states such as Massachusetts and Rhode Island have 

achieved consistent growth in energy efficiency savings, with average annual increases of 0.30 

and 0.25 percent, respectively, over the period 2009-2013. 
336

Commenters noted that their experience in working with utilities in over 15 states shows that 

when a jurisdiction, or a utility, chooses to move forward with increased energy efficiency 

efforts, they are quite able to do that at a steady pace. Commenters therefore recommended that 

EPA assume a quicker ramp-up of energy efficiency programs to at least 0.25% annually.

Commenters supported an increased ramp-up rate for energy efficiency of up to 0.38 percent per 

year.

Commenters stated that one mechanism to maximize the potential emission reductions 

contemplated by Building Block Four would be to assign an increased ramp-up rate to those 

states which by year-end 2012 had not met or exceeded either the average U.S. total incremental 

savings as a percentage of retail sales (2012) or the average U.S. total cumulative savings as a 

percentage of retail sales (2012). Commenters stated the goal computation for these states 

should reflect a targeted 0.38 percent rate of improvement of incremental annual savings per 

year, as opposed to the 0.20 percent per year ramp-up schedule. Commenters stated this 

heightened ramp-up rate of 0.38 percent per year is: supported by data and analysis included in 

the EPA's technical support documents; is consistent with the demonstrated concept that "lowerhanging fruit" is ripe for the picking; and is supported by Vermont's experience implementing 

energy efficiency programs.

Commenters stated that EPA could maximize the potential emission reductions contemplated by 

Building Block by assigning an increased ramp-up rate to those states which by year-end 2012 

had not met or exceeded either the average U.S. total incremental savings as a percentage of 

retail sales (2012) or the average U.S. total cumulative savings as a percentage of retail sales 

(2012). Specifically, commenters stated that the goal computation for these states should reflect a 

targeted 0.38 percent rate of improvement of incremental annual savings per year, as opposed to 

the 0.20 percent per year ramp-up schedule identified by the EPA in the current proposed goal 

computation. Commenters believed that this heightened ramp-up rate of 0.38 percent per year is 

supported by data and analysis included in the EPA's technical support documents, and is 

consistent with the demonstrated concept that "lower-hanging fruit" is ripe for the 

picking. Commenters also noted that certain EE measures can be undertaken quickly, costeffectively, and as part of a wide range of reduction strategies which is supported by EE supply 

curves, such as the McKinsey Curve which depicts a number of efficiency measures by category 

and sector according to the average cost of the efficiency measure and the value of direct energy 

savings that the measure is expected to provide over its lifetime. Commenters noted that 

states that are just starting to implement energy efficiency measures likely have a wide variety of 

inexpensive strategies to choose from, while states that are already undertaking aggressive 

efforts to achieve their economic energy efficiency potential may be targeting measures further 

up the supply curve, which requires a greater investment of resources and effort. Commenters 

recommended that EPA recognize these circumstances affecting these states already exceeding 

the national average by maintaining the 0.20 percent ramp up rate.

Commenters urged EPA to improve its ramp rate assumptions by increasing the state ramp up 

rate to 0.38% per year, the "high group" identified in EPA's technical analysis on existing state 

practices.
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Commenters believed that EPA should increase its ramp-up rate to between 0.30 and 0.5 percent 

per year.

Commenters supported EPA's analysis for the pace and timing of energy efficiency 

savings. Commenters stated that based on current energy efficiency targets adopted by states 

around the country, and historical rates of increase in energy efficiency savings, EPA concludes 

that each state can reasonably increase its energy efficiency savings by 0.2 percent of retail sales 

per year. Commenters stated this projected "ramp-up" rate is conservative based on the actual 

experiences of states and utilities. Commenters stated that EPA's projected rate has been met or 

exceeded in numerous instances over the last seven years. Commenters cited a white paper 

prepared by the Analysis Group (submitted separately to this docket) that examines ramp-up 

rates achieved by utilities in various states, and Commenters concluded that EPA should increase 

the ramp rate to no less than 0.3 percent, and consider increasing it to 0.5 percent per year or 

more. Commenters found that the experience of leading states and utilities, coupled with the vast 

additional potential for energy savings not included in EPA's 1.5 percent target, provides ample 

support for EPA's expectation that a savings rate of up to 1.5 percent can be sustained through 

2030. Commenters stated EPA's assumed costs for energy efficiency measures greatly exceed 

the most recent assessments in the literature, and recommended that EPA adopt lower and more 

realistic cost estimates that better reflect the opportunities for cost-effective pollution reductions 

available under the proposed Clean Power Plan.

Commenters stated EPA's projected rate of increase in energy savings is conservative and should 

be increased. Commenters stated EPA's projection that states can increase energy savings at a 

rate of 0.2 percent of retail sales per year is conservative according to recent experiences at the 

state level, as Analysis Group concludes in AG Ramp Rate Analysis. According to work by the 

Analysis Group, commenters stated, it is very common for states to achieve a ramp rate in excess 

of 0.3 percent per year, and most of those states were able to sustain this high rate of savings 

growth over multiple years, however, the Analysis Group also documents many cases where 

states recorded an annual rate of energy savings growth from 0.5 percent to 0.9 percent at various 

times from 2006-2013, including California, Massachusetts, Ohio, Oregon, Rhode Island, and 

Vermont. In addition, commenters noted that EPA's own analysis of past rates of energy savings 

shows that states achieving moderate levels of savings recorded an average rate of improvement 

of incremental annual savings of 0.30 percent per year, and that the high performers achieved an 

increase in incremental annual savings of 0.38 percent per year. Because the actual performance 

of programs so regularly exceeds the ramp rates from EERS targets, commenters stated EPA 

should use historical data when determining what energy efficiency ramp rate constitutes the best 

system of emissions reductions. Based on these analyses, commenters recommended that EPA 

increase the ramp rate to no less than 0.3 percent, and consider increasing it to 0.5 percent per 

year or more.

Commenters stated that the "pace of improvement" rate of 0.2 percent of savings per year may 

not be appropriate and there are many factors to consider at the state level. Commenters urged 

EPA to defer to the states to determine what is a feasible energy efficiency target and reasonable 

pace of improvement to that target.

Commenters stated that EPA should assume quicker ramp-up periods and greater sustained 

annual savings for energy efficiency, which is more accurate and realistic. Commenters stated 
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that in its proposal, EPA assumes states will expand energy efficiency programming by an 

annual rate of 0.2% and will reach a level of 1.5% annual savings from energy efficiency by 

2025. Commenters recommended EPA increase this ramp-up period to 0.25-0.3% per year and 

increase expected annual savings to 2%. 

Commenters stated that to calculate each state's emission target, EPA assumes that all states will 

ramp up their energy efficiency programs - which typically fall into a state's Energy Efficiency 

Resource Standard ("EERS," also known as an Energy Efficiency Portfolio Standard or "EEPS") 

- to 1.5% annual savings, excluding savings from building energy codes or other policies for 

which measurement and verification protocols are less consistently applied. Commenters stated 

that EERSs set a proportion of electricity that utilities are required to save over time by 

implementing energy efficiency initiatives. Commenters stated that EPA assumes this ramp-up 

occurs over a period of years, starting in 2017, at a rate of 0.2% each year, with all states 

reaching 1.5% annual savings by 2025.

Commenters stated that EPA's assumed ramp-up rate underestimates the ability of states to 

expand energy efficiency. Commenters noted that this is especially true given that states with 

underdeveloped EE programs can more easily take advantage of low-cost, "low hanging fruit" 

efficiency retrofits and installation opportunities that may be less readily available in states with 

longstanding programs. Commenters stated that many state programs have demonstrated the 

ability to ramp up more quickly than EPA has estimated. For example, commenters stated that 

Arizona ramped up from near 0% in 2006 to 1.75% in 2012 - a rate of 0.26% per year. 

Commenters stated that this mirrors the experience in Illinois where the state's EERS ramped up 

from near 0% in 2007 to 1.8% in 2014 - a rate of 0.25% per year. Given these realities, 

commenters stated that EPA should assume a ramp-up rate of 0.25% to 0.30%, representative of 

current practice in states.

Commenters stated that similarly, EPA's assumption of 1.5% annual savings by 2025 from state 

energy efficiency initiatives does not recognize the fact that many states are already currently 

exceeding this target, and many more are on pace to meet or exceed it by 2020. As such, 

commenters stated that EPA should increase its assumed savings from EE to more accurately and 

realistically reflect achievable savings. Commenters recommended a target of 2%, which many 

of the most progressive states are already achieving as noted in the table above.

Commenters also stated that the EIA data supports an energy efficiency ramp up level of 0.3 

percent instead of the proposed 0.2 percent.

Comment 23: Alternative needed if not able to meet standard.

Response 23: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule and therefore we do not need to address this comment. 

This determination is discussed in sections V.A and V.B of the final rule preamble of the CPP. 

Although the EPA has determined to not include demand side-energy efficiency in the BSER in 

this final rule we are using 1.0% in our illustrative demand-side energy efficiency plan 
339

scenario. See the RIA Chapter 3 and the Demand-side Energy Efficiency TSD for CPP Final 

Rule for details on the illustrative demand-side energy efficiency plan scenario. 

The following are summaries of the specific public comments under this comment:

Commenters stated that in the event that a state does not meet its goal due to the difference 

between projected and actualized savings from an EE measure, where the cause of the difference 

is not a result of an error on the states' part, EPA should have an alternative means of 

compliance. Commenters noted there is a precedent for such a fee mitigation instrument 

(introduced during the reauthorization of the Clean Air Act in 1990 and was described in 

President Bill Clinton's July 1997 memorandum to EPA when it revised the NAAQS for ozone 

and particulate matter). Commenters indicated this fee payment has a cap placed on it and 

should not be used for other state purposes, such as increasing general revenue.

Commenters stated that if full achievement of any of the assumed building block reductions 

proves to be impractical for a state, the state must find a way of compensating, presumably by 

pushing other building block approaches beyond the levels deemed reasonable by EPA. 

Commenters believed this issue to be particularly relevant for end-use efficiency measures in 

BB4, because of: 

1. the variability and uncertainty in how this efficiency is being measured by states, and 

uncertainty in how EPA will measure these generation reductions for compliance with the 

ESPS, and 

2. the state-by-state variability in electricity consumption by sector, in the age of existing 

equipment that would be replaced to improve efficiency, and in electricity demand 

growth. Commenters stated that EPA should provide the basis for its conclusion that the 

prescribed state goals are technically and economically reasonable, and do not create 

additional electricity grid reliability risks, given the state-based uncertainties cited above.

Comment 24: Starting place for annual savings target.

Response 24: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule and therefore we do not need to address this comment. 

This determination is discussed in sections V.A and V.B of the final rule preamble of the CPP. 

Although the EPA has determined to not include demand side-energy efficiency in the BSER in 

this final rule we are using 1.0% in our illustrative demand-side energy efficiency plan 

scenario. See the RIA Chapter 3 and the Demand-side Energy Efficiency TSD for CPP Final 

Rule for details on the illustrative demand-side energy efficiency plan scenario. The EPA has 

updated to 2013 EIA-861 data as the basis for the start year savings levels, consistent with 

commenter suggestion.

The following are summaries of the specific public comments under this comment:

Commenters suggested EPA should use the most recent data--2013 rather than 2012--regarding 

state savings rates.
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Commenters recommended EPA should use 2013 energy savings as the starting place in 

determining state ramp-ups to the 1.5 percent annual savings target. Commenters stated EPA 

should use the most recent data available as the place to begin ramping up energy efficiency 

savings. Commenters stated many states increased savings in 2013 relative to 2012, and 

therefore the 2013 savings are a more appropriate base for ramping up savings to 1.5 percent per 

year.

Comment 25: Disagree with capping state performance.

Response 25: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule and therefore we do not need to address this comment. 

This determination is discussed in sections V.A and V.B of the final rule preamble of the CPP. 

Although the EPA has determined to not include demand side-energy efficiency in the BSER in 

this final rule we are using 1.0% in our illustrative demand-side energy efficiency plan 

scenario. See the RIA Chapter 3 and the Demand-side Energy Efficiency TSD for CPP Final 

Rule for details on the illustrative demand-side energy efficiency plan scenario. This illustrative

plan scenario reflects a reasonable and feasibly level of DS-EE, supported by the information 

and analysis provide in the TSD.

Even though demand-side energy efficiency is not being included in the BSER in this final rule 

and, thus, not included in the determination of emission performance rates, the final rule 

provides states the flexibility to use demand-side energy efficiency measures in their state plans 

for compliance to meet the emission guidelines set forth in the final CPP, provided they meet the 

applicable requirements established in section VIII. of the preamble for the CPP.

The following are summaries of the specific public comments under this comment:

Commenters believed that it is unlawful for EPA to cap a state's performance at 1.5 percent if 

existing state law requires a higher target. Commenters noted that several states (Arizona, 

Colorado, Illinois, Maine, Massachusetts, and Rhode Island) are on track to exceed a 1.5 percent 

savings goal before 2030. Commenters stated that just as it was contrary to the CAA for EPA to 

set state renewable energy targets below their established RPS targets, EPA cannot set state EE 

targets below established standards. Commenters added that when EPA sets the 2017 start level 

of performance for each state, those levels cannot be below the mandates already established in 

that state.

Comment 26: Business as Usual (BAU) Sales.

Response 26: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule and therefore we do not need to address this comment. 

This determination is discussed in sections V.A and V.B of the final rule preamble of the CPP. 

Although the EPA has determined to not include demand side-energy efficiency in the BSER in 

this final rule we are using 1.0% in our illustrative demand-side energy efficiency plan 

scenario. See the RIA Chapter 3 and the Demand-side Energy Efficiency TSD for CPP Final 
341

Rule for details on the illustrative demand-side energy efficiency plan scenario. This illustrative 

plan scenario reflects a reasonable and feasibly level of DS-EE, supported by the information 

and analysis provide in the TSD. The EPA has used a reasonable approach for estimating BAU 

sales, building off of EIA data and the recent AEO. The approach is addressed and supported in 

the TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated EPA should account for cumulative energy savings as a percentage of BAU 

sales.

Commenters stated the rule should use estimates of BAU sales to determine the achievable 

number of MWh of energy savings under Block 4. Commenters stated this will more accurately 

capture the number of MWh of energy savings that would be expected from a 1.5 percent annual 

incremental savings rate from 2020-2030. Commenters stated the incorporation of BAU energy 

sales projections into the calculation of the appropriate cumulative savings rate but not in the 

ultimate determination of energy savings in each compliance year is inconsistent, and final rule 

should calculate the expected quantity of MWh of energy savings for each state that results from 

1.5 percent annual incremental savings using a projection of BAU retail sales. 

Commenters stated that the assumed base year is of critical importance when comparing multiple 

studies -- achievable potential for energy efficiency. Commenters noted that when drawing 

comparisons between percentages, the baseline level of electricity demand must be the same; 

otherwise, the total amount of energy avoided due to energy efficiency measures would be 

different. Commenters stated that under the CPP, all energy efficiency savings are applied to 

Business As Usual (BAU) sales forecasts generated from EIA-861 data. Commenters stated that 

base years used in the 12 studies range from as early as 2007 to as recently as 2013 and are not 

consistent throughout the sample. Commenters stated that comparing achievable energy 

efficiency potential percentages is therefore difficult, since BAU electricity demand levels are 

inconsistent between the studies.

Comment 27: Useful life, use more common evaluation of measure lives.

Response 27: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule and therefore we do not need to address this comment. 

This determination is discussed in sections V.A and V.B of the final rule preamble of the CPP. 

Although the EPA has determined to not include demand side-energy efficiency in the BSER in 

this final rule we are using 1.0% in our illustrative demand-side energy efficiency plan 

scenario. See the RIA Chapter 3 and the Demand-side Energy Efficiency TSD for CPP Final 

Rule for details on how the EPA addresses measure lives for this illustrative demand-side energy 

efficiency plan scenario. The EPA has updated the approach to accounting for useful lives of 

DS-EE. The revised approach is addressed in the TSD and is based on recent analysis by LBNL 

using a uniquely comprehensive dataset of EE program results, including information on 

measure lives, where available.

The following are summaries of the specific public comments under this comment:
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Commenters critiqued EPA's evaluation of useful life and expiring savings of energy efficiency 

measures.

Commenters stated that EPA should recognize that some energy efficiency enhancements can 

last longer than 10 years as passive improvements for building envelopes in homes and buildings 

certainly can last for the life of the building.

Commenters believed that an analysis of the life of the measures offered through utility scale EE 

programs would be an appropriate requirement for state plans to show that performance will be 

maintained after 2030.

Commenters supported EPA's evaluation of expiring savings in the model. Commenters stated 

EPA's proposed approach to expiring savings is reasonable and appropriately reflects a wide 

range of products in this analysis. Commenters supported the assumption of a linear decline of 

expiring savings over 20 years since it provides a steady regression instead of producing spikes 

and downturns in savings values for certain years.

Commenters disagreed with EPA's evaluation of expiring savings and measured life.

Commenters noted that EPA is correct in stating that the distribution results in total energy 

savings over 20 years equivalent to the more common approach of assuming all measures have a 

set life (in this case 10 years). Commenters stated that the LBNL study that EPA cites 

establishes the interquartile range of lives for different types of programs (from 5 to 25 years), 

however the Proposed Rule provides no justification for the use of a uniform distribution of 

measure lives. Commenters stated that the uniform distribution effectively assumes that 

measures are as likely to last 1 year as they are to last 10 years or 20 years, and this is not 

consistent with the data presented in the LBNL study that EPA itself cites. Commenters provided 

Figure 1 (Distribution of Measures Lives in The Program Administrator Cost of Saved Energy 

for Utility Customer-Funded Energy Efficiency Programs) that presents the distribution of 

energy efficiency measure lives as catalogued in the LBNL study cited by EPA and the 

distribution is clearly not uniform.

Commenters pointed out that measures are significantly more likely to last between 10 and 15 

years than to last between 0 and 5 years. By assuming a uniform distribution, commenters stated 

the rule overestimates the amount of energy savings that expire in early years and therefore 

underestimates the amount of achievable savings over the Interim compliance period. 

Commenters stated the Rule should utilize the distribution of measure lives included in the 

LBNL study rather than the inaccurate assumption that measure lives are uniformly 

distributed. Commenters stated EPA should make it explicitly clear that the measure life figure 

used to calculate state targets is not an indication of what will be approved as part of state 

compliance plans; the final rule should clarify that EPA expects to see state plans that 

incorporate programs with a range of measure lives, and that any measure life that is determined 

with appropriate EM&V or M&V methodologies is acceptable.

Commenters stated the second reason EPA's goal is overstated is that EPA's assumption of the 

life of a portfolio measure at 19 years is too high. Commenters stated 19 years over-inflates the 

cumulative results. Commenters stated EPA's calculations for Block 4 use nineteen years as the 
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portfolio measure life (e.g., Data File: GHG Abatement - Scenario 1 (XLS), Reference Table, 

Measure Decay Schedule). Commenters stated the rationale for this number is to assume that a 

portfolio of measures with an average life of ten years will be evenly distributed with measures 

ranging from one year to twice the average life, or twenty years (TSD, p. 5-36). Commenters

stated residential and commercial measures with greatest longevity are associated with structural 

elements of buildings, but the opportunities for energy efficiency improvements to structural 

elements are much reduced where electricity is not the dominant source of energy for space 

heating and cooling, and water heating.

Commenters stated as reported to and by the EIA, in 2009, 41.5 percent of national residential 

energy consumption was for space heating; 6.2 percent was for air conditioning; 17.7 percent 

was for water heating; and 34.6 percent was for appliances, electronics, and lighting. 

Commenters stated in other words, about two thirds of United States energy usage goes to 

heating and cooling of air or water. Commenters stated census data shows that state patterns of 

heating and cooling differ dramatically. Commenters stated the Selected Housing Characteristics, 

2008-2012 American Community Survey 5-Year Estimates provide state by state data on the 

heating of houses. Commenters provided a list showing electricity and its principal heating 

alternatives, for the states EPA has identified as achieving levels of incremental annual savings 

of 1 percent or more (GHG Abatement Measures TSD, p. 5-33), and commenters added 

Wyoming to the list for comparison.

Commenters indicated EPA states that cumulative EE savings take into account the lifetime of 

EE measures, but EPA improperly estimated the lifetime of EE measures based on the national 

average lifetime of EE measures across all sectors. In doing so, commenters stated EPA failed to 

account that some states invested in EE earlier than others and therefore their existing EE 

measures have a shorter lifetime. Commenters indicated that states have not invested in EE 

measures in all sectors equally.

Commenters stated obviously, if a house is heated by something other than electricity, there are 

fewer opportunities to implement efficiency programs with long-lived structural elements. 

Commenters stated in Wyoming, where 71.5 percent of homes are heated with utility gas or 

propane, programs addressed to structural elements are mainly bailiwick of local gas distribution 

companies, including the gas distribution side of companies providing both electric and gas 

service. Commenters stated the use of gas and propane for space heating tends to carry over to 

water heating as well. Commenters stated while the energy for water heating may be different in 

the New England states which rely heavily on fuel oil for space heating, the list shows that a 

clear majority of states predominantly heat with something other than electricity.

Commenters stated since so much Wyoming heating is done with gas and cooling is often not 

done at all, one would expect that appliances, electronics, and lighting would dominate 

residential portfolios of efficiency measures. Commenters stated by using 19 years, EPA has 

assumed a value that cannot be proven, and calculated a target that cannot be met. Commenters

stated if EPA is going to assume a value, 10 years for all measures would be more appropriate.

Commenters stated the average measure life is longer and savings do not stop at the end of 

measure life. Commenters recommended EPA should at a minimum increase the average 

measure life to 12 years, and should consider reducing or eliminating the decline in savings 
344

expected due to the incorrect assumption that savings "disappear" after a measure's useful 

life. Commenters stated the lifetime of energy efficiency measures is discussed in detail in the 

GHG TSD. Commenters stated EPA assumes an average life of 10 years, and that savings from 

a measure end at the completion of its "useful life." Commenters stated there are two problems 

with these assumptions. Commenters stated first, in most cases usage does not jump back up at 

the end of a measure's useful life. Commenters stated most often, the measure is replaced with 

one that is equivalent or more efficient than the previous measure due to market transformation, 

state or federal standards, or technology innovation. Commenters stated heating and cooling 

systems installed today will be replaced with higher SEER/EER/HSPF ones in 20 years. 

Commenters stated refrigerators will be replaced in 15 years with more efficient ones. 

Commenters stated insulation will stay in attics and walls. Commenters stated as a result, the 

sharp decline in savings shown in the GHG TSD is inaccurate and states will in most cases 

benefit from steady savings at the end of a measure's "useful life." Commenters stated EPA 

should consider reducing or eliminating the decline in savings expected due to this effect. 

Commenters stated however, if the EPA chooses to take a conservative position and declines to 

acknowledge this effect, we offer our second point to adjust the average measure life. 

Commenters stated second, EPA uses an average measure life of 10 years. Commenters stated 

the recently-released data from Lawrence Berkeley National Lab (LBNL) which is the most 

complete dataset available and includes programs from at least four states in each U.S. region, 

should instead be used. Commenters stated these data report an average savings-weighted 

measure life of 12.5 years, and we recommend that the EPA use at least an average measure life 

of 12 years to set the BSER.

Commenters stated EPA's use of "expired savings", as outlined in the GHG Abatement Measures 

Technical Support Document, is an unorthodox and unjustified attempt to apply a one-size-fits 

all methodology that fails to recognize the very substantial variation in the duration of EE 

savings from particular measures (EE measure "life").

Commenters disagreed with EPA's assumptions regarding efficiency measure lifetimes and 

recommended that EPA recognize that many energy efficiency measures such as ENERGY 

STAR lighting measures are designed to last a minimum number of hours and while some 

products may fail early, the vast majority do not (i.e., there is a relatively narrow band of 

lifetimes around an average lifetime value, with a few outliers). Commenters noted that although 

EPA's proposed measure life of 10 years incorporated residential efficiency programs from 

2009-2012 developed from data used by ACEEE which relied heavily on compacted fluorescent 

lamps (CFLs-- a measure with a relatively short life;) EE programs are shifting away from CFLs 

to LED lamps which can have a lifetime up to 20 years in residential applications.

Commenters recommended that EPA use average lifetime values for different types of measures 

and programs in its Building Block 4 calculations, with savings remaining constant over the 

average lifetime rather than steadily declining from year one so that, for instance, all efficiency 

measures installed in year x providing y MWh of savings per year with a 12 year average 

lifetime would continue to provide that same level of savings for 12 years and then drop to zero 

savings. Commenters believed this approach is more straightforward and consistent with how 

utilities and states typically treat measure lifetime and persistence of energy savings when 

considering savings from programs implemented and measures installed over a multi-year 

period, compared to the approach used by the EPA in the Proposed Rules. Commenters
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suggested that EPA use a 12 year average lifetime in its Building Block 4 assumptions. 

Commenters noted that a recent study of total cost of saved energy from more than 100 program 

administrators in 34 states conducted by the LBNL found an average lifetime of 12.6 years. 

Commenters recommended that EPA use lifetime measure values with savings remaining 

constant over the average lifetime, rather than steadily declining from year one and that EPA 

should accept state use of this same methodology in their implementation place, or defer to 

states' adopted statewide technical reference manuals or deemed savings databases. Commenters

stated that EPA should also recognize that many states already have, or are seeking to 

develop, statewide TRMs or deemed savings databases that are acceptable to energy 

efficiency policymakers, utilities, and stakeholders in a particular state and reflective of 

individual state conditions (climate, for example). Commenters noted that an analysis of 

the Michigan Efficiency Measures Database shows that 330 of the 482 commercial measures 

included in the MEMD have a lifetime of more than ten years, which commenters stated also 

shows that an average lifetime of 10 years is too conservative. Commenters also stated that while 

EPA should allow states to use the assumptions in these statewide, state-adopted TRMs, it should 

recognize that TRMs vary from state to state and assumptions made in the TRMs will need to be 

evaluated for acceptance into a state's implementation plan.

Commenters urged EPA to develop and incorporate the use of life-time energy saving measures 

into the final guidelines for those states that develop TRMs through a similar process of 

validation as the Illinois TRM which was developed through a stakeholder process that 

encompassed consumer advocates, environmental organizations, state agencies, and utilities and 

ensured the validity of savings.

Commenters noted that there is currently no end-of-measure life used in calculating energy 

savings toward the Arizona standard and believed it is appropriate to allow savings to persist, 

as the likelihood of an efficiency measure reverting back to the pre-efficiency condition at the 

end of its life is extremely small. Commenters noted, for example, if an incandescent light fixture 

is replaced with a compact florescent light (CFL), another CFL is likely to be installed at the end 

of that CFLs useful life---that, or another, more efficient light (such as an LED). Commenters

believed that if EPA's "measure life" approach carries forward to the final plan, it would further 

reduce the credit available for such EE measures.

Commenters stated that EPA's choice of measure lifetime is too generic and is not appropriate. 

Commenters believed that EPA's approach should defer to states to determine what is 

appropriate and that the Evaluation Working Group for Focus on Energy should provide further 

analysis and comment on this issue to the EPA.

Commenters stated that EPA's assumptions on energy-efficiency measure lifetime need further 

refinement. Commenters noted that for example, EPA has made the assumption in the Technical 

Support Document: GHG Abatement Measures when determining Building Block 4 goals, that 

energy savings from energy efficiency measures start to decline immediately after installing and 

continue to decline until reaching the end of their useful life. Commenters disagreed with this 

assumption. Commenters stated that many energy-efficiency measures, such as lighting, provide 

stable energy savings over their lifetime and many measures are replaced by equal or higher 

efficiency measures when needed or after "burn out."
346

Commenters stated that limiting a measure's lifetime to only ten years, as proposed in the CPP, 

will result in undercounting actual MWh saved by many measures. Commenters noted that LED 

light bulbs will last 20 years or longer and the MWh saved in years 20 is the same as year 1. 

Commenters noted that EPA states that savings decline over years; thus the need to not count 

savings past year 10. Commenters noted that is true for some measures (e.g., air sealing doors), 

but saving from many measures do not decline over time and last longer than 10 years (e.g., 

LEDs). 

Commenters stated that measure life is another important assumption regarding the sustainability 

of achievable savings. Commenters noted that it is uncertain whether the level of annual energy 

efficiency savings could be sustained after the expiration of the program, as the most costeffective and impactful measures would have been utilized already, leaving only increasingly 

expensive incremental energy efficiency measures. Commenters stated that the cited studies vary 

significantly in length: from as few as four years, to as many as 21 years. Commenters stated that 

the CPP assumes that dividing cumulative potential by the study length provides an adequate 

estimation for an average annual achievable potential that is sustainable over a much longer (13-

year) period (2017-2030). Commenters stated that however, there is a discrepancy in the 

longitudinal application of cross-sectional studies.

Commenters stated that the CPP assumes an average life of 10 years for energy efficiency 

measures. Commenters stated that this average does not fully capture the unique distribution of 

the length of measures when analyzing regionally available energy efficiency measures. 

Commenters stated that the key assumptions when determining energy efficiency potential are 

"breadth of sectors and end uses considered, study period, discount rate, pattern of technology 

penetration, whether economically justified early replacement of technologies is allowed for, 

whether continued improvement in efficiency technology is provided for," [GHG Abatement 

Measures (EPA June 2014) (EPA-HQ-OAR-2013-0602) pg. 5-22.] yet the EPA applies a broad 

average rather than determining individual measure life curves. Commenters noted that most of 

the source studies perform bottom-up approaches and evaluate thousands of permutations of 

measures, building types, climate zones, market penetration factors, and measure lives to 

determine which energy efficiency technologies to include and exclude. Commenters stated that 

by approximating thousands of measure lives using one average, the CPP does not capture 

measure life disparities and possibly underestimates the amount of energy efficiency savings that 

expire throughout the compliance period.

Commenters stated that the proposed 10-year average lifetime for efficiency measures is 

appropriate. Commenters stated that the proposed rule assumes an average electricity efficiency 

measure lifetime across all sectors of 10 years. Commenters stated that this is a reasonable level 

and supported it.

Comment 28: Load growth and demand growth concerns.

Response 28: Commenters stated that they did not believe that the EPA's assumption that EE 

will grow faster than energy demand is likely to be true. The EPA has determined not to include

demand-side energy efficiency (building block four) in the BSER of this final rule and therefore 

we do not need to address this comment. This determination is discussed in sections V.A and 
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V.B of the final rule preamble of the CPP. Although the EPA has determined to not include 

demand side-energy efficiency in the BSER in this final rule we are using 1.0% in our illustrative 

demand-side energy efficiency plan scenario. See the RIA Chapter 3 and the Demand-side 

Energy Efficiency TSD for CPP Final Rule for details on how the EPA addresses measure lives 

for this illustrative demand-side energy efficiency plan scenario. This illustrative plan scenario 

reflects a reasonable and feasibly level of DS-EE, supported by the information and analysis 

provide in the TSD. The EPA believes the reductions in load growth reflected in the plan 

scenario are reasonable and feasible response to the CPP requirements and potential response of 

states to incorporate DS-EE into their strategies.

The following are summaries of the specific public comments under this comment:

Commenters held issue with EPA's assumptions and analysis regarding load growth under 

Building Block 4.

Commenters did not agree with EPA's assumption that energy efficiency gains would outpace 

electricity demand growth through the compliance period, as this assumption has the potential to 

create complexities with compliance. Commenters indicated that the implications of this 

assumption are complex and noted that if the EPA-assumed energy efficiency growth rates

cannot be attained, additional carbon reduction measures would be required, primarily through 

reduced fossil-fired generation.

Commenters stated if states are unable to achieve the EPA target savings, additional CO2 

reduction measures beyond BSER measures would be needed to meet the proposed rate limits -

primarily through further reductions in existing generation or expansion of natural gas and 

VERs. Commenters stated the energy efficiency assumptions underpin the CPP proposal and 

present the following reliability issues: EPA appears to overestimate the amount of energy 

efficiency expected to reduce electricity demand over the compliance time frame and the results 

of overestimation have implications to electric transmission and generation infrastructure needs; 

substantial increases in energy efficiency programs exceed recent trends and projections, as 

several sources (e.g., NERC, EIA, EPRI, and various utilities) have published reports, analysis, 

and forecasts for energy efficiency that do not align with the CPP's assumed declining demand 

trend; the CPP assumption appears to underestimate costs and may underestimate the capital 

investments that would be required by utilities to sustain energy efficiency performance through 

2030; the offsetting requirements in more coal retirements, along with expansions in natural gas 

and VERs, in a constrained time period could potentially result in reliability or ERS constraints.

Commenters believed that the percentage EPA used to calculate load growth is within reason; 

however, assuming that EE will grow faster than electricity demand beyond 2017 has very 

complex implications. Commenters noted that if this EE growth cannot be sustained, more 

carbon reduction measures would be required under the Proposed Carbon Rule. Considering that 

Arizona is already required to discontinue coal generation under the Proposed Carbon Rule, 

commenters noted that Arizona would be required to shut down existing NGCC to meet the 

carbon goal; however, due to the discrepancy between load growth and EE savings, Arizona 

would be shutting down old NGCC plants to meet carbon goals while building new NGCC to 

meet demand. Commenters also noted that if Arizona could not identify the discrepancy between 
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load growth and EE growth at an early enough stage, grid reliability or CO2 emission goals 

could be compromised.

Commenters did not believe that EPA's assumption that EE will grow faster than energy demand 

is likely to be true, given reports that question the Clean Power Plan's energy efficiency 

assumptions. Commenters noted that as a result, other building blocks will have to be used to 

compensate for load growth.

Commenters stated that EPA included predictive load growth analysis in building block 4, but 

failed to properly account for the potential variation in population and load growth that may 

occur within a state, city or locality. Commenters stated EPA does not address the situation that 

may befall states in the case when a significant shift occurs unexpectedly. Commenters noted 

that severe influxes in population can greatly differ from local, state, and regional perspectives, 

and spikes or downturns in population will impact the ability to meet the standards due to 

omission of appropriate growth analysis in the calculations. Commenters noted that an aggregate 

regional growth rate does not accurately depict the probable and improbable fluctuations that 

may occur on a more granular level, such as the county or state level. Commenters stated EPA 

should be aware that load forecasting is limited in its capability to accurately predict future 

consumption patterns and often requires adjustments to account for unexpected changes. 

Commenters recommended the final rule should include a mechanism to allow states that 

undergo severe shifts in population or load growth affecting their ability to reach their goals to 

modify such goals. Where a significant population or load shift does affect a state in achieving 

its target, commenters stated EPA should allow an alternative form of compliance, and 

commenters suggested a compliance method in the form of a fee reflecting the cost of energy 

efficiency measures available in that individual state.

Commenters stated the Agency's assumption of an annual 1.5 percent EE savings rate does not 

take into account how such an assumption would impact load forecasting. Commenters stated 

that as the NERC report notes, not only do electricity demand forecasts directly influence the 

required level of generation from existing and affected generating units under the proposed 

guidelines, they also affect the required amount of new construction of generating units that is 

needed to meet expected electricity demand and provide reliable power. (Initial Reliability 

Review at 16.) Commenters stated EPA has not accounted for these effects in its BSER 

calculations.

Commenters stated that there is nothing in the Clean Power Plan that acknowledges the reality of 

load growth in the residential, commercial or industrial sector in general, or in specific regions of 

the country. Commenters stated that without accounting for load growth, the Clean Power Plan 

reveals a fundamental limitation of its structure, yet again revealing a substantial disconnect with 

the reality of the United States economy and the operation and function of the electric industry.

Commenters observed only minor differences in ultimate reductions between low, moderate, and 

high demand growth levels between a final rule without Building Block 4 and a final rule with 

that Building Block and also strict M&V measures. Commenters believed that EPA could use its 

full fleshed-out projection to account for energy efficiency in other parts of the rulemaking 

package.
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Commenters stated that the EPA used the EIA's AEO 2013 baseline forecast to estimate its BAU 

electricity sales forecast. Commenters stated that growth rates calculated by the National Energy 

Modeling System (NEMS) region were applied to state-level 2012 retail sales from the EIA-861 

survey to arrive at an annual BAU sales forecast. Commenters stated that these growth figures 

include the net effect of implicit forms of energy efficiency, as that information is not explicitly 

presented in AEO 2013 reference case. Commenters stated that because the EIA does not 

explicitly model energy efficiency as a forecast line item, the retail sales growth is skewed for 

the purposes of calculating the energy efficiency Building Block.

Commenters stated that the EIA presents some metrics to gauge energy efficiency in the AEO 

2013 model results. Commenters stated that energy intensity, defined as energy use per dollar of 

GDP, represents the aggregate effects of energy consumption trends and a rising national output. 

Commenters noted that electricity energy intensity, in particular, has been on a steady decline in 

both consumption per dollar of GDP and consumption per capita. Commenters noted that this is 

due in large part to energy efficiency, but its contribution is difficult to isolate. Commenters

stated that the EIA's AEO 2013 energy load growth projections include implicit forms of energy 

efficiency measures, and the proposed CPP does not appear to account for these savings. 

Commenters stated that this effectively double counts the savings of some energy efficiency 

measures and results in state-specific energy efficiency targets that are too high to be considered 

reasonably achievable.

Commenters stated that with potentially overstated expectations for energy efficiency savings, 

the EPA's demand forecast results in a decline in electricity use between 2020 and 2030. 

Commenters stated that while other major power market forecasters electricity sales 

compounded annual growth rates (CAGRs) for the period between 2020 and 2030 are strictly 

positive (AEO 2013: 0.7 percent, EPRI: (achievable potential) 0.4 percent, NERC average of 

assessment studies: 1.5 percent), the EPA assumes a CAGR of -0.2 percent for the same time 

period. Commenters stated that between 2020 and 2030, the EPA assumes incremental yearover-year reductions from energy efficiency to be almost 41 TWh nationally on average, 

outpacing year-over-year national electricity sales growth of 31.6 TWh, on average. Commenters

stated that the main reason for this result is the EPA's assumption of states being able to sustain 

an annual incremental growth rate in energy efficiency savings of 1.5 percent once achieved. 

Commenters noted that as mentioned above, this sustainability is not supported by any peerreviewed or technical studies of energy efficiency potential.

Commenters stated that the EPA projection for energy efficiency growth at a 1.5 percent annual 

increase is substantially greater compared to what NERC examined in its current and prior longterm reliability assessments (LTRAs). NERC collects energy efficiency program data that is 

embedded in the load forecast for each LTRA assessment area. Commenters stated that projected 

annual energy efficiency growth as a portion of Total Internal Demand since 2011 has ranged 

from only 0.12 to 0.15 percent.

Commenters stated that a key component of the EPA's CPP is a projected decrease in electricity 

generation from the EIA business as usual (BAU) scenario. Commenters stated that EPA predicts 

an 11% generation reduction from BAU in 2030 resulting from successes in energy efficiency 

and conservation. Commenters stated that according to the EIA, net generation in the electric 

power sector has shown an increasing trend since 1949. Commenters stated that in recent years 
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overall electricity generation has decreased, but this can primarily be attributed to negative 

economic factors, rather than improvements in energy efficiency or conservation. Commenters

stated that despite historical evidence that electricity generation generally increases over a 

decade, the EPA projects a 1.2% decrease from 2020 to 2030. Commenters stated that this 

sharply contrasts with the 7.8% increase in generation projected by the EIA over this time 

period. Commenters stated that while the CPP should have a positive impact on energy 

efficiency and conservation, an 11% reduction in electricity demand would be a capacious feat, 

particularly in light of the energy efficiency statement.

Commenters addressed technical comments that raise questions about the data and methodology 

used by EPA in arriving at the emissions reduction requirements. Commenters stated that 

electricity demand growth will vary by region of the country. Commenters stated that for 

example, EIA's AEO-2013 projects that electricity demand in 2030, compared to 2012, will 

increase by 35 percent in the Southeastern Electric Reliability Council region (GA, AL, and parts 

of MS and FL), increase by 29 percent in the Western Electricity Coordinating Council -

California region (CA), decrease by 18 percent in the Midwest Reliability Council region (most 

of WI), and decrease by 10 percent in the Northeast Power Coordinating Council - Long Island 

region (Long Island, NY). Commenters stated that end-use efficiency and renewable energy 

generation expansion is much easier to implement in a growth environment, but EPA made no 

adjustment for the impacts of varying state electricity demand growth rates when EPA set statespecific end-use efficiency and renewable energy generation targets.

Commenters stated that EPA's 1.5% incremental energy efficiency savings requirement for 

Pennsylvania improperly double-counts efficiency savings. 

Commenters stated that EPA's projected emission reductions under Building Block 4 reflect 

significant double-counting of future savings from existing EE programs already accounted for 

under EPA's base load forecasts, derived from EIA's Annual Energy Outlook ("AEO") 2013 

reference case. Commenters stated that this double-counting has significant implications for 

Pennsylvania's ability to achieve EPA's proposed 1,052 lbs. CO2/MWh emission target. 

Commenters stated that this target contemplates cumulative energy efficiency savings of 11.69% 

in 2029, including savings generated both from new and already established programs. However, 

commenters stated that the AEO base case already assumed 136 terawatt hours (TWh) of energy 

savings in 2035, representing approximately 3% of projected baseline sales. Thus, commenters

noted that the 11.69% savings projected under Building Block 4 overstates Pennsylvania's 

savings potential by at least 3%, purely on the basis of this double-counting error. Commenters

stated that this, in turn, means that at least some portion of the emission reductions assumed to be 

achievable through energy efficiency measures would actually have to be achieved through other 

more costly means not reflected in EPA's modeling. Commenters noted that the burdens and 

costs of these additional emission reductions would ultimately have to be borne by plants like 

Homer City that would be required to curtail power generation to an extent far beyond EPA's 

projections. 

Commenters stated that customers subject to section 111 of the CAA should be excluded. 

Commenters stated that certain industrial customers are also in industrial categories that are 

themselves subject to standards of performance under section 111 of the CAA, including steel, 

glass, paper, and chemical manufacturing, refineries, and other industries. For such customers, 
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commenters stated that requiring efficiency improvements under an electric utility standard is not 

justified, when additional requirements may be imposed as part of a future section 111 standard 

for their source category. Commenters noted that to the extent that any portion of the state goals 

is based on customer end use efficiency measures, the degree of manufacturing and industrial 

load that forms a part of the customer base must be considered, and appropriate adjustments 

made to exclude all or at least the portion of such load that is subject to a separate section 111 

standard.

Comment 29: Electric technologies contribute to load growth.

Response 29: Commenters’ asked the EPA to factor in vehicle electrification in their load 

growth projections. The EPA has determined not to include demand-side energy efficiency 

(building block four) in the BSER of this final rule and therefore we do not need to address this 

comment. This determination is discussed in sections V.A and V.B of the final rule preamble of 

the CPP. Although the EPA has determined to not include demand side-energy efficiency in the 

BSER in this final rule we are using 1.0% in our illustrative demand-side energy efficiency plan 

scenario. See the RIA Chapter 3 and the Demand-side Energy Efficiency TSD for CPP Final 

Rule for details. This illustrative plan scenario reflects a reasonable and feasibly level of DS-EE, 

supported by the information and analysis provide in the TSD.

The following are summaries of the specific public comments under this comment:

Commenters urged EPA to modify its targets to take other electronic technologies into account 

that may also contribute to load growth, such as electric vehicles.

Commenters stated EPA should modify state targets to reflect the fact that beneficial 

electrification will almost certainly decrease economy wide CO2 emissions while increasing 

CO2 emissions, though not in a one to one fashion, from the power sector. Commenters stated 

the rule does not account for the potential for additional load increases as a result of increasingly 

prevalent environmentally-friendly electric technologies. Commenters cited a 2009 EPRI 

PRISM analysis that forecasted use of electric technologies in industrial and commercial 

applications, reduction of 6.5 percent CO2 emissions, and replacement of 4.5 percent of direct 

fossil fuel use by 2030; this study also predicted reduction of 9.3 percent CO2 emissions by 

2030. Commenters cited a 2007 EPRI PRISM analysis that predicted plug-in hybrid electric 

vehicles will account for 10 percent of new vehicles by 2017 and increase by 2 percent every 

year. (Commenters stated the increase in electric vehicles will almost necessarily increase CO2 

from the power sector, which is at odds with the Clean Power Plan, but that increase will be 

projected to be offset by the overall CO2 reduction economy-wide.) By failing to credit states to 

support electric vehicles in the market, commenters stated EPA is discouraging the production 

and implementation of electric technologies that could play a significant role in EPA's 

overarching goal of CO2 reduction.

Commenters stated that if overall CO2 emissions are taken into account, and not just emissions 

at EGUs, electric vehicle use may represent a notable and overlooked exception to this statement. 

Commenters noted that according to EPA's website, electric vehicle use increases demand for 
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electricity while reducing aggregate CO2 emissions. Commenters were concerned that EPA may 

be penalizing Indiana's efforts to increase the state's use of electric vehicles, which has 

immediate implications for the state as Indianapolis has put multiple programs in place to 

incentivize the installation of electric vehicle charging stations. Commenters stated that EPA 

should avoid penalizing these investments, which are certainly in line with the Agency's goal of 

curtailing greenhouse gas emissions. Commenters stated that it would be ironic if EPA asserted 

the authority to regulate energy use "beyond the fence-line" in the name of reducing emissions 

only to disregard the proposed rule's impact on emissions everywhere except at the EGU.

Commenters urged EPA to consider the potential electric load growth that may result from 

increased utilization of electric vehicles. Commenters noted that given that increased EV 

utilization will reduce GHG emissions overall, commenters would urge the EPA to work with 

states to evaluate how to encourage this reductions through section 111(d) compliance plans. 

Commenters also recommended that EPA consider a mechanism for periodic review and "reset" 

of the program to adjust for unanticipated events, such as increased electric load growth.

Commenters noted that the expanded use of electric vehicles would lead to an increase in 

demand for electricity generation and that if this is not anticipated in the conversion to a massbased standard, such a standard could introduce an unanticipated cost on electric vehicles due to 

the increased cost of environmental compliance that comes with increased electricity demand. 

Commenters stated that in the near term, when electric vehicle technology and the infrastructure 

that will be necessary to support its widespread adoption are still in development, the constraint 

on emissions in the electricity sector could pose a cost disadvantage that might hobble the 

emerging industry. Commenters also noted that under either a rate-based or a mass-based 

system, due to the sector-based nature of the Clean Power Plan, the emissions reductions that 

might be achieved in the transportation sector would not be accounted for as an advantage of 

electric vehicle use.

Commenters stated that EPA neglected to consider the pressure that will be brought to bear on 

the electric generation industry by the increase in availability and use of electric vehicles. 

Commenters stated that these vehicles have the potential to dramatically reduce GHG production 

from the transportation sector, but the power to move the vehicles has to come from somewhere. 

Similarly, Commenters noted that a shift in home heating energy sources away from 

traditional oil- and gas-fired central heating systems to geothermal heat pumps that use 

electricity to operate condensers will result in a net decrease in fossil fuel consumption with 

an associated increase in electricity consumption. Commenters stated that if a state or region 

chooses to comply using the mass-based option, and significant increases in demand occur from 

the influx of electric vehicles and/or heat pumps, that state should be able to credit the CO2 

emissions avoided in the transportation and residential heating sectors against the additional CO2 

emissions due to generation of the electric power needed for the vehicles and heat pumps. 

Commenters believed that without such a mechanism to account for these avoided emissions, the 

Proposed Rule may actually inhibit emission reductions in certain circumstances.

Commenters stated that the increased use of electricity in other sectors (e.g., electric vehicles, 

port and off-road vehicle electrification) can produce many benefits, including reduced CO2 

emissions from those sectors and at the same time, these activities increase the demand for 

electricity (and in turn, can increase CO2 emissions from regulated sources). Commenters
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believed, given that EPA acknowledges the importance of the role of electric vehicles in 

reducing emissions from the transportation sector in the future, the effects need to be considered 

in the Proposed Rule.

Commenters noted that the electrification of the transportation sector could possibly be limited 

by suppressing growth in power as a result of the Proposed Rule. Commenters believed a multisector approach for climate control regulations would solve this issue.

Comment 30: Emission reduction calculation is flawed.

Response 30: The EPA disagrees with the commenters’ remarks that energy efficiency doesn’t 

reduce emissions from EGUs. Lowering energy demand on the grid avoids the need to generate 

electricity and therefore reduces the emissions that would have been produced by the operation 

of the avoided generator. The EPA has determined not to include demand-side energy efficiency 

(building block four) in the BSER of this final rule and therefore we do not need to address this 

comment. This determination is discussed in sections V.A and V.B of the final rule preamble of 

the CPP. 

The following are summaries of the specific public comments under this comment:

Commenters stated EPA's method of equating end-use energy efficiency directly to greenhouse 

gas emission reductions is flawed. Commenters stated that in its analysis, EPA consistently 

makes general assumptions that end-use reduction of kilowatt-hour energy consumption leads 

directly to specific levels of greenhouse emissions reductions in the power sector. 

Commenters stated the reality is that electrical end-use efficiency does not necessarily lead to 

emissions reductions, and certainly does not lead to the emission reductions assumed by EPA in 

its analysis. Commenters stated the problems of equating end-use electrical energy efficiency to 

an emission reduction are evidenced by the open questions that even the EPA poses about how to 

rectify fundamental disconnects in the relationship, such as: what if the efficiency is gained in a 

home or business that received electricity generated from a nuclear power plant, or wind, 

hydroelectric or solar power; and what if the gains from efficiency improvements of a home or 

business (defined as more output per unit input) are used to increase output (heating or cooling 

for comfort) instead of to reduce input (electricity use). Commenters stated that surely in neither 

case would greenhouse gas emissions be reduced even though consumption is reduced in the first 

case and efficiency is improved in the second. Commenters stated an analysis with 

such fundamental open questions as these is not complete, thus basing state emission goals on 

the analysis is arbitrary and capricious.

Comment 31: Use of “adjusted gross savings”.

Response 31: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule and therefore we do not need to address this comment. 

This determination is discussed in sections V.A and V.B of the final rule preamble of the CPP. 

Although the EPA has determined to not include demand side-energy efficiency in the BSER in 
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this final rule we are using 1.0% in our illustrative demand-side energy efficiency plan 

scenario. See RIA Chapter 3 and the Demand-side Energy Efficiency TSD for CPP Final Rule

for details. See the preamble sections for discussion of requirements of and accounting for 

inclusion of DS-EE in state strategies.

The following are summaries of the specific public comments under this comment:

Commenters recommended that EPA direct states to report "savings beyond BAU", sometimes 

referred to as "adjusted gross savings" or "net savings lite". Commenters stated that savings 

beyond BAU should include adjustments from impact evaluations such as verification of 

installations, adjusting for measure persistence and actual savings achieved per a billing analysis, 

and corrections to account for data quality control. 

Comment 32: Suggested policies to enable procurement of EE in states

Response 32: The EPA agrees with the commenters’ assessment that many states have adopted 

energy efficiency programs over time and there is an increase in program adoption for the last 30 

years. However, since the EPA has determined not to include demand-side energy efficiency 

(building block four) in the BSER of this final rule and therefore we do not need to address this 

comment. This determination is discussed in sections V.A and V.B of the final rule preamble of 

the CPP. The Demand-Side EE TSD discusses the history of EE efforts in the U.S., increasing 

program and policy adoption and associated savings, and the substantial remaining cost-effective 

potential across the U.S.

The following are summaries of the specific public comments under this comment:

Commenters stated that the expansion of energy efficiency spending in recent years can be 

largely attributed to new and strengthened state policies that target the procurement of energy 

efficiency. Commenters noted that these policies do not need to be mutually exclusive and can 

take on many forms including:

1. Policies that provide a funding source for energy efficiency programs:

(i) Program funding for energy efficiency programs embedded in utility bills paid by 

customers and often referred to as system benefit charges ("SBCs"). SBCs exist in 14 

states and were typically established more than a decade ago as part of larger electric 

industry restructuring processes.

2. Policies that require the consideration and assessment of meeting customers' needs through a 

broad range of resource options, including meeting demand for electricity through energy 

efficiency resources:

(ii) Integrated resource planning requirements exist in 34 states (primarily in the West 

and Southeast) and in areas served by the Tennessee Valley Authority, whereby 

utilities are required to plan for the long-term needs of their customers by considering 
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and assessing a broad range of resource options, including meeting demand for 

electricity through energy efficiency resources.

(iii) Utilities in 28 states are required to regularly submit a demand-side management or 

multi-year energy efficiency plan to their state regulator, proposing a specific 

portfolio of programs that meet cost-effectiveness guidelines and other policy 

objectives, typically on a one- to three-year cycle.

3. Policies that mandate the capture of energy efficiency savings:

(i) "Loading order" policies, requiring utilities to procure all cost-effective conservation 

and energy efficiency resources --- either as a stand-alone requirement on 

distribution-only utilities, or on vertically-integrated companies before adding new 

generation resources. Currently, six states --- California, Connecticut, Massachusetts, 

Rhode Island, Vermont, and Washington --- have these types of policies in place.7

(ii) Energy Efficiency Resource Standards ("EERS"), that is, policies adopted as a matter 

of policy, legislation or regulation that establish specific, long-term targets for energy 

savings to be met through customer energy efficiency programs offered by utilities or 

independent program administrators, are currently in place in 24 states.

4. Ratemaking mechanisms and policies that overcome disincentives faced by utilities to pursue 

energy efficiency:

i. Policies that guarantee recovery of the costs of efficiency program expenditures and/or 

recovery of lost base-revenues in order to that neutralize a utility's disincentive to invest 

in energy efficiency.

(b) Revenue decoupling, that is, a rate adjustment mechanism that a "decouples" (a) the utility's 

ability to recover the allowed revenues from (b) the actual volume of unit sales that occurs over 

time via a true-up mechanism has become increasingly popular in recent years, with 16 states 

having electric decoupling programs in place, and 3 more with programs pending as of August 

2013. (See Figure 2 below). (c) Performance incentives are financial incentives that reward 

utilities (and in some cases, non-utility program administrators) for reaching or exceeding 

specified program goals.

Commenters noted that currently, 30 states have a performance incentive in place or pending for 

electric utilities.

Comment 33: State specific EE concerns.

Response 33: Commenters’ provided details about how to make changes to their state specific 

Demand side Energy Efficiency calculations for BSER. The EPA has determined not to include 

demand-side energy efficiency (building block four) in the BSER of this final rule and therefore

we do not need to address these comments. This determination is discussed in sections V.A and 

V.B of the final rule preamble of the CPP. 
356

Commenters urged the EPA to confine its BSER determination to actions that involve what they 

characterized as more “traditional” generation. While some stakeholders recognized demand-side 

EE as being an integral part of the electricity system, with many of the characteristics of more 

traditional generating resources, other stakeholders did not. Though demand-side EE shares 

many of the most salient characteristics of what some regard as more traditional generation, and 

is treated as functionally interchangeable with other forms of generation for planning and 

operational purposes, the broad range of comments on this topic illustrates how much the role of 

demand-side resources is changing and how the opportunities for generating companies to use 

demand-side resources varies more than the other building blocks. For example, a broad range of 

types of generation owners including vertically integrated utilities, municipalities, cooperatives 

and independent power producers own or contract for renewable energy, but only a handful of 

independent power producers are currently providing demand-side resources like demand-side 

EE. In view of this, since the BSER must serve as the foundation of the emission guidelines, the 

EPA has not included demand-side EE as part of the final BSER determination. Thus, neither the 

final guidelines’ BSER determination nor the emission performance rates for the two 

subcategories of affected EGUs take into account demand-side EE.

The EPA has determined not to include demand-side energy efficiency (building block four) in

the BSER of this final rule and therefore we do not need to address these comments. Although 

the EPA has determined to not include demand side-energy efficiency in the BSER in this final 

rule we are using 1.0% in our illustrative demand-side energy efficiency plan scenario. See the 

RIA Chapter 3 and the Demand-side Energy Efficiency TSD for CPP Final Rule for details on 

how the EPA addresses measure lives for this illustrative demand-side energy efficiency plan 

scenario. This illustrative plan scenario reflects a reasonable and feasibly level of DS-EE, 

supported by the information and analysis provide in the TSD.

The following are summaries of the specific public comments under this comment:

Commenters believed that EPA's assumptions regarding Arkansas energy-efficiency potential are 

quite modest, compared to Arkansas's current portfolios and the experience of other states. 

Commenters felt that this was in part due to apparent under-reporting of EE achievements in 

Entergy's report to EIA.

Commenters noted that the Arkansas PSC does not currently mandate or review EE programs by 

coops and while the Arkansas Electric Cooperative Corporation (AECC) asserted that they and 

their member-owners have a rich history of demand-side and EE programs and services, 

AECC's list of its efforts is limited to distributing information and some audit programs (none of 

which are listed on its web site), which produce little or no savings without incentive, direct 

installation, and facilitation of retrofits. Commenters stated that only one coop reports energyefficiency savings to the EIA and that the coops can and should adopt the modern programs that 

the investor-owned utilities have been ramping up over the last few years.

Commenters also noted that the AECC failed to understand that EE savings increase the 

denominator in the rate-based compliance formula and incorrectly asserted that "EE benefits 

prior to 2020 will not count toward meeting the Clean Power Plan goals". Commenters noted 

that EPA did not intend that its energy-efficiency scenario be interpreted as a maximum potential 

for energy-efficiency savings.
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Commenters provided a table that showed the annual and cumulative savings for the EPA 

assumptions, the current Arkansas targets with slow expansion to 1.5% annually, and the current 

Arkansas targets with more aggressive portfolio expansion to 2.15% annually. Commenters

noted that in modeling the cumulative savings, they adopted EPA's assumption that savings from 

each year's installations decay linearly over 20 years. Commenters stated that even excluding (1) 

any energy-efficiency efforts by municipal utilities and (2) all coop savings through 2014, these 

cases result in cumulative savings about four times EPA's assumptions by 2020. Commenters

noted that in 2020, the increased efficiency above EPA's assumptions would be equivalent to 

about 40-50 lb/MWh, or about 7% of EPA's target for Arkansas's reduction in emission from 

2012 to 2020.

Commenters stated that similar to its failure to develop its in-state solar potential, Alabama has 

yet to make progress toward realizing significant energy savings through cost-effective energy 

efficiency and that Alabama's lack of progress in this area is unfortunate because there is no 

question that energy efficiency is the lowest cost option for reducing carbon emissions. 

Commenters felt that the Clean Power Plan provides Alabama the necessary impetus to begin 

realizing significant energy savings as Alabama has nowhere to go but up. Commenters noted 

that Alabama spent just $10.8 million on efficiency programs (0.14 percent of statewide utility 

revenues) in 2014 and only achieved 56,045 MWh (0.06 percent of retail sales) of net 

incremental savings in 2012. Commenters stated that these paltry savings earned Alabama the 

poor rank of 39th on the 2014 State Energy Efficiency Scorecard published by the American 

Council for an Energy-Efficient Economy (ACEEE).

Commenters also noted that Alabama Power is not even keeping pace with its sister utilities, let 

alone with leading utilities nationwide. Commenters noted that Georgia Power's eight certified 

programs are targeted to achieve 0.4 percent reductions in annual retail sales, more than 6 times 

Alabama's 2012 electric program savings and that Gulf Power Company's performance is even 

higher: in 2013, it achieved annual savings equal to 0.9 percent of retail sales.

Commenters believed that Mississippi's experiences could be instructive for Alabama. 

Commenters noted that Mississippi was ranked dead last (51st) in ACEEE's State Efficiency 

Scorecard and now it is considered a "state to watch." Commenters asserted that the state began 

its upward trajectory with the Mississippi PSC's establishment, in 2010, of a new docket for the 

purpose of investigating the development and implementation of energy efficiency programs and 

standards. Commenters noted that the PSC's order requiring utilities to file new efficiency 

programs within 6 months of July 2013 aimed to encourage the early implementation of EE 

programs and provide experience on which Mississippi's utilities and regulators can build 

comprehensive portfolios of long-term efficiency programs.

Commenters concluded that Alabama already has the mechanisms in place for utility energy 

efficiency programs. Commenters stated that Alabama Power can recover lost revenues by 

projecting losses and adjusting rates annually through a rate mechanism known as Rate RSE, 

which includes a cap on rate increases and automatic rate reductions when profits or expenses 

exceed authorized ranges. Commenters recommended that EPA modify its assumptions for 

Alabama in order to maximize the role the energy efficiency plays in the state's target-setting.
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Commenters noted that EPA has assumed that Arizona's EE Standards encompass the entire state 

when in reality there are a number of electric service entities throughout Arizona that do not fall 

under the commenters' purview and are not required to adhere to the EE rules. Commenters

stated that of the fifteen electric utilities regulated by the commenters, only nine are required to 

participate in the EE Standard; out of the nine electric companies required to participate in the 

EE Standard, only one is currently meeting the energy efficiency trajectory incorporated in the 

rule.

Commenters stated that Arizona has one of the most aggressive energy efficiency standards in 

the county, requiring regulated utilities to increase the savings achieved through approved energy 

efficiency programs until the cumulative reduction reaches 22 percent by 2020. Commenters

noted that EPA recognizes Arizona as one of the states that achieved the "best practices level of 

performance" in energy efficiency, but due to the method by which EE is incorporated into the 

state goal calculation, TEP and UNSE will not realize any benefit from that early action. 

Commenters noted that TEP, in complying with the Arizona standard, anticipates achieving its 

highest incremental energy savings well before 2020, as the most cost effective programs are 

implemented first. Commenters anticipated that incremental annual energy savings will begin to 

diminish in 2020, the final year covered by Arizona's standard. Commenters stated that it is 

unlikely, after having already achieved significant savings under Arizona's standard, that 

commenters would be able to continue achieving savings at such a high incremental rate.

Commenters also believed that is it important for EPA to understand the specific legal construct 

of the Arizona standard as well as the procedures for how efficiency programs are conceived, 

approved, and implemented. Commenters explained the process which a utility would need to go 

through in order to adopt an EE program in Arizona which involves researching programs, 

developing a list of possible programs, and submitting to the ACC for approval. Commenters

noted that if the list of programs ultimately approved by the ACC, and therefore, implemented by 

the utilities is less than would be required to meet the overall reduction goal, the utilities would 

need to ask for a waiver from the standard to still be in compliance.

Commenters stated that EPA has made some unrealistic assumptions about Energy Efficiency 

(EE) for Arizona. Commenters asserted that even with EE, load growth would be higher than 

EPA assumptions since Arizona's "population has been forecasted to increase 38% to 45% 

between 2012 and 2030." Commenters quoted the Brattle White Paper and raised 3 main 

concerns: that EE measures are "hard coded" in the IPM Model; EPA is double counting the 

effects of the EE measures since there are already EE assumptions in the baseline load forecast; 

and EPA should not assume that EE measures will be fully used during peak demand times. 

Commenters also stated that EPRI and NERC have concerns about EPA's use of EE in the 

Reliability and Cost Modeling Analysis and that NERC says EPA is overestimating the amount 

of EE and that NERC is concerned about the reliability of the RIA. Commenters further stated 

that if Arizona did not meet the assumed EE targets, Arizona would be constrained by its CO2

goals with regard to building resources to supply the power needed. 

Commenters stated that "Arizona's strong EE programs were projected to reduce demand by as 

much as the EPA assumes Building Block 4 will in 2020. EPA assumes that from 2020 to 2030 

Arizona can continue high levels of annual reductions of 1.5% after its 2012 to 2020 program 

has harvested much of the low cost energy efficiency by its EERS program. If 1.5% each year 
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from 2020 to 2030 were achievable, which is unlikely as explained further below, its cost would 

in all likelihood be well above what EPA assumes in its analysis." Commenters cited an April 

2014 EPRI study which estimates that states can eventually reach incremental annual energy 

savings in the range of 0.2% and 0.6% instead of EPA's estimate of 1.5%. Commenters

suggested that EPA's 1.5% growth rate for Arizona is not reasonable. Commenters pointed out 

that EPA used California as an example but that is not reasonable because the analysis is based 

on one year (2012) not multiple years of EE savings and California has more incentive for EE 

projects due to high retail electricity rates. Commenters stated that EPA does not differentiate EE

costs by state. Commenters also said that EPA's EE target overstates the achievable because 

aggressive states have already done the cost-effective 'low hanging fruit' EE projects. 

Commenters said there are reliability and financial risks from overestimating the EE potential in 

Arizona. Commenters talked about a Fossil Leverage Factor developed by EPRI which they used 

to estimate that if Arizona does not meet its Building Block 4 EE savings target for 2020, then 

27,000 GWh of combined cycle generation would have to be replaced.

Commenters stated support for the inclusion of energy efficiency as a Building Block, but noted 

that EPA's current proposal fails to reflect Georgia's full energy efficiency potential; relies on 

unreasonable cost assumptions; fails to account correctly for the emissions reduction benefits 

that cost-effective efficiency measures provide; and inappropriately discounts credit for 

Georgia's efficiency measures based on its current status as a net importer of electricity. 

Commenters stated that there is no doubt that Georgia has yet to realize its potential for 

significant energy savings through cost-effective energy efficiency, as Georgia ranks near the 

bottom of states in achieving electricity savings. Commenters stated that according to the 2014 

State Energy Scorecard developed by the American Council for an Energy-Efficient Economy 

(ACEEE), Georgia's current position is 35th, a drop of two positions from its 2013 ranking. 

Commenters noted that Georgia's sole regulated utility, Georgia Power, is already achieving 

higher levels of energy savings than EPA assumes, and it can achieve greater savings faster than 

EPA projects. Commenters noted that based on programs approved in 2013, Georgia Power will 

by 2017 achieve incremental savings of 0.4 percent and cumulative savings of 1.6 percent. 

Commenters believed that if EPA were to correct its assumptions and include Georgia Power's 

actual projected savings in 2017, Georgia's starting point would be higher, meaning it could 

achieve the target rate of 1.5 percent annual savings earlier than EPA assumes.

Commenters also noted that EPA's projections for Georgia are exceeded by independent 

assessments of Georgia's energy efficiency potential, including by Georgia Power itself. 

Commenters cited several studies which supported setting a higher goal for Georgia: a 2005 state 

agency assessment of Georgia's energy efficiency potential found that by 2010 the state could 

achieve annual savings levels ranging from 2.3 to 8.7 percent, a 2007 assessment prepared for 

Georgia Power reached similar conclusions, finding potential reductions by 2010 ranging from 

1.7 percent to 6.2 percent, a 2012 assessment from Georgia Power which shows hypothetical 

achievable energy savings ranging from about 6 percent to 15 percent of forecasted 2023 energy 

sales depending on the level of incentives paid to customers, and ACEEE's determination 

that Georgia could reduce electricity consumption by 24 percent below 2012 levels by 2030 by 

implementing four common efficiency practices (implementing an annual energy efficiency 

savings target of 1.5 percent, enacting national model building codes, constructing combined 

heat and power systems, and adopting efficiency standards for products and equipment). 
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Commenters stated that EPA should take recent national trends into account which 

show showing that Georgia and other states can ramp up to significant savings sooner than EPA 

projects. Commenters concluded that given these trends, and the comparatively low levels of 

energy efficiency currently being realized in Georgia, the potential to quickly ramp up energy 

savings across the state is enormous.

Commenters stated that building block number four establishes a goal for demand-side energy 

efficiency programs with a cumulative target for Kansas of 9%. Commenters said the Kansas 

legislature passed House Bill 2482 in the 2014 session, and that the new law provides utilities the 

opportunity for cost recovery for demand side management programs. Commenters said it 

establishes a voluntary program that is in the initial stages of implementation. Commenters said 

it has no compliance provisions that could be adapted into a state 111(d) plan. Commenters said 

that transitioning from a voluntary program in its developmental stages to a regulatory program 

with hard targets to meet the interim goals contained in the proposal would be a great challenge.

Commenters stated that there is no requirement in Louisiana for municipal utilities to offer 

energy efficiency programs. Commenters stated that while they support home energy audits and 

energy efficiency education, they do not yet have sufficient data available to comment 

specifically regarding energy efficiency potential within their service territory. Commenters

endorsed comments of others who have stated that the goals presented are overly aggressive and 

very likely to result in significantly higher costs for the commenters' customers.

Commenters stated that the current electric rate structure in Michigan is skewed to provide 

industrial customers favorable electric rates compared to residential customers and that their 

analysis indicates that to achieve potential energy efficiency savings for the industrial sector 

(where the most potential for savings exists) would disproportionately raise industrial electric 

rates and could impact the competitiveness of manufacturers in Michigan. Commenters noted 

that key stakeholders responsible for shaping Michigan's future energy policy recommend that 1 

percent is the appropriate energy savings target for Michigan.

Commenters stated that Michigan could achieve the reductions in Building Block 4 if: 1) the 

savings from all measures installed from 2012 to 2014, or (even better) from 2005 to 2014, are 

counted during the 2020 through 2029 compliance period; 2) the utility spending cap in the state 

statute is raised above two percent to allow funding for the capture of energy savings from costeffective EE improvements that have higher upfront costs and/or longer payback periods. 

Commenters noted that legislation may be necessary to increase the amount of EE undertaken by 

utilities, which could be a lengthy process. 

Commenters stated that Minnesota has undertaken early action measures for customer energy 

efficiency deployment that already delivered significant conservation and process efficiency 

improvement gains for Minnesota electricity consumers. Commenters noted that Minnesota 

Power's analysis of energy efficiency and conservation improvement measures through 2005, as 

reported to the EIA 1605(b) voluntary reporting of greenhouse gas emissions program, show 

cumulative efficiency improvements of over seven percent relative to MP's annual electricity 

customer demand. Commenters were concerned that under the Clean Power Plan, EPA 

effectively nulls out the benefits from Minnesota Power's conservation and energy efficiency 

actions through 2012. Commenters also stated that Minnesota utilities are now challenged by 
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needing to sustain energy efficiency gains by implementing new measures from a depleting list 

of candidate projects so that expiring earlier measures can be replaced. Commenters urged EPA 

to acknowledge Minnesota's early action in the conservation and energy efficiency improvement 

areas by designating Minnesota's ongoing program as sufficient for satisfying EPA's proposed 

CPP requirements.

Commenters stated that even though EPA uses Minnesota as an example of the appropriateness 

of 1.5% as the savings goal, it ignores important exceptions in the Minnesota standard and the 

fact that Minnesota has not actually achieved that savings goal. Commenters noted that in 

2007, the state of Minnesota adopted an energy efficiency goal of 1.5% savings per year and the 

state statute, Minn. Stat. 216B.241, provides that each municipal power agency, cooperative or 

utility is to plan and implement programs aimed at meeting at least 1.5% savings per year. 

Commenters noted that although certain provisions the Next Generation Energy Act which 

enacted the 1.5% annual conservation improvement program savings standard have been 

invalidated as unconstitutional, the provisions relating to this energy efficiency standard were not 

at issue in that litigation. 

Commenters noted that Missouri's EERS is voluntary, although the law creates a goal for 

investor-owned utilities to capture "all cost-effective energy efficiency savings." Commenters

stated that this law is called the Missouri Energy Efficiency Investment Act (MEEIA), and its 

primary purpose is to encourage investor-owned utilities to invest in energy efficiency by 

allowing the Public Service Commission (PSC) to approve rates that compensate the utility for 

their investments in efficiency in a way that results in profits which are equal to or greater than 

the profits they would have received had they invested in new supply-side power generation 

instead of efficiency. Commenters stated the rule resulting from MEEIA sets out clear stair-step 

targets for investor-owned utilities, providing multi-million dollar incentives if these targets 

come within 30% of being achieved during any given year.

Commenters noted that Missouri has struggled to achieve maximum success in energy efficiency 

because although the MEEIA statute sets forth achievable savings targets and extremely 

generous cost-recovery mechanisms, the law lacks a clear mandate requiring utilities to achieve 

all cost-effective energy efficiency. Commenters stated that utilities have great leverage in 

negotiations before the Public Service Commission (PSC) regarding approval of their efficiency 

portfolios, as they can call upon the ultimate threat of ceasing efficiency programs entirely. 

Commenters asserted that the MEEIA statute's savings targets are easily-achievable in the 

timeframe provided; utilities simply need the extra incentive or motivation to make the 

investments and EPA can provide this extra pressure by treating MEEIA savings targets as 

achievable and non-negotiable when setting its BSER for Building Block 4.

Commenters believed that EPA overstates the potential for energy efficiency in Missouri. 

Commenters provided a table representing the annual EE load reductions in MEEIA Cycle 1 

DSM programs covering the 3 year implementation period (2013-2015). Commenters noted that 

the average annual percentage load reduction to be achieved is 0.7%, less than half of EPA's 

1.5% assumed sustained value.
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Commenters noted that Montana is far from being a leader among other states in terms of 

investment in energy efficiency as, according to the 2013 scorecard from the American Council 

for an Energy Efficiency Economy (ACEEE), Montana ranks 31st in energy efficiency spending, 

programs and policies. Commenters also noted that in the last three ACEEE scorecards, Montana 

has lost ground on energy efficiency. Commenters stated that since 2012, Montana has dropped 

from 25th to 31st among states for energy efficiency investments. Commenters stated that this 

should not be rewarded by providing Montana with a weak target and instead EPA should base 

its rule on Montana's energy efficiency potential, not its failure to adopt adequate policies.

Commenters stated that Montana's limited investments in energy efficiency mean there is plenty 

of cost effective energy efficiency available and achievable and noted that most of the state's 

energy efficiency gains have been achieved through limited utility programs.

Commenters noted that NWE expects to save 6 average megawatts of energy each year for the 

next 10 years through energy efficiency, however, the Northwest Power Planning and 

Conservation Council's utility energy efficiency estimator predicts that NWE could do much 

better and achieve about 10 average megawatts per year.

Commenters stated that Montana could reduce its electricity consumption by at least 23% by 

adopting common sense policies to expand energy efficiency programs and measures and that 

EPA should establish a state target that will encourage the state to achieve its energy efficiency 

potential and decrease the cost of the rule while saving Montana consumers money.

Commenters noted that the state of Nebraska currently employs a number of demand-side energy 

efficiency measures, including residential building weatherization, efficiency improvements for 

agricultural systems and equipment, and building energy codes; however, Nebraska does not yet 

have a qualifying evaluation, measurement, and verification program for demand-side energy 

efficiency measures, a necessary component for receiving credit under the proposed Clean Power 

Plan. Commenters stated that implementing an evaluation, measurement, and verification 

program will require consultation, consideration, and collaboration with the Nebraska State 

Legislature, Executive Branch, various state agencies, utility governing boards, city councils, 

village boards, and other entities which will take considerable time and likely require legislative 

and policy action at several levels in order to meet EPA's requirements. Commenters stated that 

the longer it takes to implement, the less flexibility the state will have to determine whether 

demand-side energy efficiency measures are effective and meeting the intended objectives.

Commenters stated that EPA's proposed rate is virtually impossible for Nebraska, which does not 

have a mandatory EE program. Commenters noted that the proposed 0.2% yearly interim 

increase is higher than the commenters' actual 0.13% yearly EE reduction by 50% in the first 

year, by triple in the second year, quadruple in the third year (and so on). Commenters stated that 

even if the 1.5% annual increase could be attained, there is no evidence that a 1.5% level could 

be sustained over many years, let alone that EE reductions would increase to 10.4% (an 80-fold 

increase above the commenters' actual EE reductions) by 2029, as proposed.

Commenters stated that Nevada's PUC is initiating a docket on decoupling electric utilities and, 

if approved (as expected), decoupling will increase the utility's need for more robust energy 

efficiency programs. Commenters also noted that legislation for an Energy Efficiency Resource 
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Standard (EERS) is also planned for the 2015 session; therefore there is vast potential for energy 

efficiency improvements in Nevada. Commenters also noted that the Southwest Energy 

Efficiency Project published a study two years ago on the potential for energy efficiency 

improvements in Nevada which showed that implementing best practices in energy efficiency 

could cut electricity use by 22% (and peak use by 21%) by 2020. 

Commenters stated that EPA's ramp rate embedded in the design of this Building Block does not 

acknowledge the maturity of New York's well-established energy efficiency programs. 

Commenters estimated that New York has invested over $4.5 billion in energy efficiency 

investments since 1999 with an achieved cumulative annual energy savings of 9,272,000 MWh. 

Commenters stated that experience in New York has shown that efficiency gains begin to slow 

once this level of investment has been achieved and EPA should allow New York a ramp rate to 

2030 that reflects its already mature efficiency program.

Commenters noted that this Building Block assumes New York would reduce demand by 11.8%, 

or 18,105,870 MWh to receive credit for 16,847,624 MWh, in 2029 and thereafter through 

cumulative energy efficiency measures and while New York is presently increasing energy 

efficiency by about 1,200,000 MWh/year (assuming a ten year average), commenters does not 

believe that this level of improvement can be sustained through 2029, and attempting to do so 

would be prohibitively expensive. Commenters noted that New York reportedly expected to 

spend just $145 per MWh-saved through 2015, but in 2011 utility budgets were increased to an 

average $351 per MWh for the last four years of the program. Commenters stated that EPA's 

assumption that New York can continue to spend this much money on energy efficiency and 

reach Building Block's 4 efficiency target by 2029 should be revised.

Commenters urged EPA to acknowledge New York energy efficiency gains by revising the ramp 

rate required for further investment to 0.5% and crediting each MWh of energy efficiency 

towards meeting New York's goal regardless of its ratio of generation to sales.

Commenters noted that critics often claim that energy efficiency is hard to achieve in states like 

North Carolina with relatively low electricity rates; however, commenters stated that this claim is 

belied by the fact that several states with leading energy efficiency programs have electricity 

rates comparable to, or even lower than, rates in North Carolina. Commenters also noted that 

collectively, EPA's energy efficiency assumptions for North Carolina resulted in cumulative 

savings of 12,169,442 MWh of avoided generation in 2030 even when considering that, as a net 

electricity importing state, North Carolina would only receive credit for 86% of its energy 

efficiency investments. Commenters stated that this is especially important because the principal 

arguments in favor of employing higher levels of efficiency center around the benefits of 

avoiding supply-side generation.

Commenters stated that North Carolina is already on track to meet or beat the modest level of 

energy efficiency that EPA assumed in the CPP. Commenters explained that a portion of the 

utilities' REPS obligation may be met with EE: up to 3.125% of retail sales can come from EE 

through 2020, and up to 5% can come from EE in 2021 and after. Commenters noted that this is 

an annual percentage, not a cumulative percentage, and because EE/DSM resources are the 

lowest cost energy resources, North Carolina's electric suppliers are expected to maximize their 

use of these resources for REPS compliance.
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Commenters also noted that North Carolina's major electric utilities have already made a serious 

commitment to aggressive energy efficiency goals. Commenters detailed how, with the merger 

of Duke Energy and Progress Energy, DEC and DEP agreed to adopt an annual energy efficiency 

savings performance target of 1% of the prior year's retail electricity sales beginning in 2015 and 

a cumulative target of 7% of retail electricity sales over 2014-2018. Commenters stated that DEC 

and DEP modeled a level of EE based on these goals and found that their "high EE" scenarios, 

utilities would achieve a total load reduction of 11% and 9.1%, respectively, over the 2009-2029 

period. 

Commenters concluded that efficiency savings achieved in leading states demonstrates the 

increasing achievability of energy efficiency and given recent trends in EE and the 

comparatively low levels of EE currently being realized in North Carolina, the potential to ramp 

up energy savings across the State is enormous, and North Carolina's utilities can and should 

achieve much higher levels of energy savings going forward.

Commenters stated that their experience designing and implementing demand response and 

energy efficiency programs for over 30 years led them to conclude that EPA's target of 9.97% for 

Oklahoma is not reasonably attainable. Commenters noted that they offer several programs their 

customers can opt into, including programs related to home energy efficiency, weatherization, 

and commercial lighting. Commenters stated that all of this effort has allowed commenters to 

project an increase in system-wide energy and demand reductions of up to 548 MW and 1,130 

GWh over the next ten years. Commenters stated that if these projections are accurate, 

the proposed Building Block 4 goal of displacing 9.97 percent of sales by EE and DR in 

Oklahoma by 2030 is not reasonably attainable, as the commenters' projected reductions amount 

to only 3.5 percent of the commenters' sales projected for 2024. Commenters added that their 

experience has taught them that the tolerance of customers to EE programs can be low, as these 

programs do not always provide immediate benefits and are often declined in period of economic 

downturn. Commenters were unsure how EPA's mandate will change consumer behavior to 

support its goal.

Commenters highlighted multiple successes with energy efficiency programs and policies within 

the state of South Carolina which lead to significant savings. Commenters stated that, despite 

recent progress, the fact remains that savings in the state are well below what has been achieved 

elsewhere in the nation as annual gains in other states are more than double to four times as great 

as South Carolina IOUs, and up to ten times greater than the savings achieved by South 

Carolina's state-run utility, Santee Cooper, whose 2012 EE impacts were less than 0.20% of 2011 

sales. Commenters believed that achieving more EE is not only possible, but that EPA 

should recognize that ramping up South Carolina's energy efficiency performance up to 

nationally competitive levels could save customers billions of dollars compared to resource plans 

heavily weighted towards the supply side. Commenters noted that the results of Duke Energy's 

modeling of Base Efficiency and High Efficiency resource portfolios, indicate that a doubling of 

savings to more than 1 % of retail sales in the High Efficiency case is expected to save customers 

at least $4.7 billion on an NPV basis. Commenters stated that existing initiatives and efficiency 

stakeholders in the state put South Carolina in a strong position to continue to ramp up energy 

savings and place efficiency as a keystone of South Carolina's compliance plan.
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Commenters noted that an estimated 36 percent of all South Carolina's retail sales are to 

industrial consumers and stated that it is not reasonable to assume that the large increases in 

energy efficiency are available to this customer class. Commenters stated that achieving a 10 

percent increase in energy efficiency savings in South Carolina is not a feasible goal.

Commenters stated that under EPA's assumptions, Tennessee is expected to achieve annual 

incremental savings of 1.5 percent by 2023, and cumulative savings of 10.79 percent by 2030. 

Commenters noted however that EPA assumed that states that are net importers of electricity will 

receive credit for only a portion of their energy efficiency investments. Commenters stated that 

as a net electricity importing state, Tennessee receives credit for 72 percent (its share of in-state 

generation) of its energy efficiency investments. Therefore, commenters stated that EPA reduced 

the level of avoided generation to reflect this assumption, resulting in a decrease from 5,980,298 

MWh to 4,305,814 MWh. Commenters stated that modifications to this assumption should be 

made so that importing states receive full credit for the efficiency programs that they implement. 

Commenters stated that this is especially important because the principal arguments in favor of 

employing higher levels of efficiency center around the benefits of avoiding supply-side 

generation. Commenters stated that applying the energy efficiency savings levels that Tennessee 

has already received through 2012 results in an emissions rate decrease from 1,271 lbs/MWh to 

1,262 lbs/MWh, a reduction of 9 lbs/MWh.

Commenters stated that EPA's assumptions that Tennessee will reach 1.5 percent annual 

incremental savings by 2023 through a 0.2 percent annual ramp rate are modest in comparison to 

actual policies that are in effect in the state. Commenters noted that the state legislature called on 

the TVA in 2007 to pursue energy efficient means of producing power. Commenters also noted 

that TVA began to expand its commitment to EE in 2010 when its Board of Directors adopted its 

"Vision 2020" to "become a leading provider of low-cost, cleaner energy by 2020," and set three 

specific goals for fulfilling that vision: 1) lead the nation in improved air quality, 2) lead the 

nation in increased nuclear production, and 3) lead the Southeast in increased energy efficiency. 

Commenters detailed TVA's 2011 IRP which the Board of Directors accepted and allowed to be 

used as a guide in energy resource planning and selection, expanding the contribution of EE and 

demand-side management by 3,600 to 5,100 MW by 2020---over ten times the level that EPA 

assumed in its application of Building Block 4 in Tennessee.

Commenters also noted that in 2011, the Chairman of the Senate Committee on Environment and 

Public Works requested that GAO examine TVA's plans, efforts, and financial condition to meet 

demand and operational goals. Commenters stated that GAO issued a report in late 2011, 

""Tennessee Valley Authority: Full Consideration of Energy Efficiency and Better Capital 

Expenditures Planning Are Needed" which showed that, with respect to energy efficiency, 

"TVA's planning process may be ignoring opportunities to pursue a more cost-effective path that 

could make greater use of energy efficiency. . . . By not fully exploring and identifying energy 

efficiency resources in its 2010 Integrated Resource Planning process], TVA cannot be certain 

that its plans to meet future demand, largely by building new generating capacity, are the most 

cost effective." Commenters noted that GAO recommended that TVA use information from its 

then pending EE potential study which revealed that TVA's achievable high potential in 2020 

would result in over 15,000 GWh of savings, or 9.8 percent savings over baseline to ensure that 

TVA's future resource planning process reflects the most cost-effective mix of resources. 

Commenters stated that this analysis included updated projections reflecting a lower cost of 
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natural gas and as a result decreased this projection to just over 13,000 GWh of savings, or 8.6 

percent savings over baseline; however, EPA's energy efficiency assumptions under the proposal 

would result in only 2,294 GWh of savings through 2020, significantly lower than both the 2011 

and 2012 efficiency potential study results.

Commenters also stated that other independent analysis reveals that Tennessee could achieve 

significantly higher cumulative energy savings than included in EPA's analysis, such as the 

ACEEE report that determine that Tennessee could reduce electricity consumption by 26 percent 

below 2012 levels by 2030 by implementing four common efficiency practices. Commenters

noted that recent trends and new targets in other states demonstrate the increasing achievability 

of energy efficiency, as eleven states achieved energy savings of over 1 percent of retail sales in 

2012. Commenters felt that given these trends, and the comparatively low levels of energy 

efficiency currently being realized in Tennessee, the potential to ramp up energy savings across 

the State is enormous and TVA can and should achieve much higher levels of energy savings 

going forward.

Commenters urged EPA to formulate the final rule to push TVA into a maximum reduction in 

coal and encourage a roll back of reliance on nuclear generated energy which commenters

believe can be done by maximizing EE and RE. Commenters noted that Tennessee's per capita 

electricity consumption is higher than the national average, and twice that of California, and that 

the state government has few and ineffective policies to encourage EE and RE.

Commenters stated that Virginia's goals under the Clean Power Plan are modest in comparison to 

actual policies that are in effect in the state. Commenters noted that Virginia adopted a modest 

voluntary goal of reducing electric energy consumption by 10 percent of 2006 sales by 2022--a 

reduction of 11,836 GWh. Commenters stated that The State Corporation Commission 

conducted an evidentiary hearing where it determined that the 10 percent goal is realistic and 

achievable, and Dominion has called this goal "realistically accomplishable" and "...can be 

achieved even using a relatively conservative test for cost-effectiveness." Yet, commenters noted 

that EPA's energy efficiency assumptions for Virginia would reach just 3,395 GWh of energy 

savings in 2022, less than one third of the modest 10 percent goal which indicates that EPA's 

target of 9% for Virginia is under-representative of Virginia's true EE potential.

Commenters also noted that the level of DSM that Dominion and Appalachian Power projected 

in their respective Integrated Resource Plans filed with the State Corporation Commission in 

2013 would produce higher levels of cumulative savings through 2022 than were included in 

EPA's assumptions.

Commenters added that independent analysis also reveals that Virginia could achieve 

significantly higher cumulative energy savings than included in EPA's analysis. Commenters

cited a report by the American Council for an Energy Efficient Economy (ACEEE) which 

determined that Virginia could reduce electricity consumption by 23 percent below 2012 levels 

by 2030 by implementing four common efficiency practices (implementing an annual energy 

efficiency savings target of 1.5 percent, enacting national model building codes, constructing 

combined heat and power systems, and adopting efficiency standards for products and 

equipment).
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Commenters stated that their preliminary assessment of incremental energy efficiency programs 

in West Virginia suggests very little potential for energy savings in the residential and 

commercial sectors and that industrial users already are pursuing EE programs aggressively to 

reduce costs and increase profitability. Commenters noted that EE programs that attracted a 

theoretical 100% participation rate by residential and commercial users, and achieved a 20% 

overall reduction of West Virginia's kWh energy use by 2030, would contribute only about 5% 

toward the state's 20% overall reduction target. Commenters asserted that more realistic 

assumptions about participation rates (e.g., 50%) and overall kWh demand reduction (e.g., 10%) 

would suggest that energy efficiency might contribute only about 1% to West Virginia's 20% 

target.

Commenters noted that EPA reports in Table 5-3 that Wisconsin's Energy Efficiency Resource 

Standard (EERS) was adopted in 2011 when in fact the Focus on Energy program was 

established in 1999 by Wisconsin Act 9 and began operating in July 2001 making Wisconsin's 

EERS one of the longest-running in the nation. Commenters urged EPA to correct this error in 

any future publications on this issue.

Commenters noted the final proposed component requires Wyoming to increase its utilization of 

demand-side energy efficiency, but Wyoming's industrial sector consumes nearly 60% of 

intrastate electricity which results in relatively flat demand throughout the day. Commenters

stated that there is little incentive for Wyoming residents or businesses to install energy 

efficiency technologies because savings are modest; therefore the proposed standard cannot be 

reasonably achieved in Wyoming.

Commenters believed that EPA's proposed level of EE underestimates the amount of energy 

efficiency that can be achieved in Texas because the EPA excluded a number of important 

additional opportunities for energy efficiency such as demand response, industrial energy 

efficiency, transmission and distribution, voltage optimization, and combined heat and power.

Commenters noted that Texas law requires that all transmission and distribution service 

providers ("TDSPs") meet energy efficiency goals and that the law recently required that TDSP 

EE activities eliminate 30 percent of annual peak demand growth and is transitioning to require a 

0.4 percent reduction in total peak demand. Commenters stated that the TDSPs offer incentive 

programs to meet these goal and while it is difficult to precisely estimate the incremental energy 

savings from each EE program, the programs are estimated to have grown by between 400 GWh 

and 700 GWh per year since the law was established, representing nearly 5,000 GWh of total 

energy savings (relative to a current statewide base of around 300,000 GWh of total sales). 

Commenters also noted that studies on EE potential in Texas suggested, however, that the state's 

caps on efficiency spending are a significant limiting factor, precluding additional cost-effective 

energy efficiency. Commenters stated that there are numerous achievable and cost-effective - yet 

untapped - energy efficiency opportunities in Texas that could easily achieve greater efficiency 

savings. Commenters provided an example of Austin Energy's experiences and success with 

implementing EE programs. 

Commenters noted that industrial customers are able to opt out completely from Texas' current 

programs, creating a significant limitation on EE gains in the state. Commenters stated that the 
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PUC has further limited the pool of participants by taking a very expansive definition of 

industrial customer, allowing commercial customers that are associated with an industrial 

production site to opt out of the program. Accordingly, commenters believed that Texas has a 

greater potential for EE savings than the state's modest existing savings would suggest.

Commenters stated that generators within the ERCOT market are incentivized to operate as 

efficiently as possible because generators compete against each other to be "dispatched" to 

generate electricity. Commenters noted that, wherever possible, they and other market 

participants look for and adopt efficiency measures to reduce the amount of fuel used to generate 

electricity. Commenters stated that electric generating units in Texas have already made CO2 

reductions from operational efficiencies where it is practicable and economically justified.

Commenters believed that EPA underestimated Iowa's potential for cost-effective, energy 

efficiency savings under Building Block 4 and encouraged EPA to strengthen the state's energy 

efficiency target under Building Block 4, and maximize Iowa's potential to reduce carbon 

emissions.

Commenters noted that while Iowa is not among the states currently achieving a 1.5% savings on 

a statewide basis, Iowa's second-largest utility, Interstate Power & Light/Alliant Energy, has 

achieved a 1.4% savings level in 2012 and a 1.5% savings level in 2013 and may achieve 1.5% 

again in 2014. Commenters also noted that in Assessment of Energy and Capacity Savings 

Potential in Iowa, Cadmus Group found that Iowa has the technical potential between 2013 and 

2023 to save 8,446 GWh, of which 6,872 GWh is cost-effective or economic potential. 

Commenters stated that the technical potential would save 24% of base sales cumulatively, and 

the economic potential would save 19% of base sales cumulatively, translating to technical 

potential savings of over 2% annually and economic potential savings just under 2% annually. 

Commenters noted that the study (like EPA's analysis) did not include important sources of EE 

savings such as building codes, use of combined heat and power, etc. Commenters stated that 

the significant amount of savings that these efficiency measures would provide, if included in the 

proposed rule, demonstrates that additional, cost effective energy efficiency measures exist that 

would allow Iowa to meet a more aggressive energy efficiency target than the currently proposed 

1.5% annual savings by 2020. Commenters encouraged EPA to strengthen Iowa's annual 

incremental savings rate to 2% and the pace of improvement to 0.25%.

Commenters strongly believed that Missouri can exceed its 21% reduction target by the 2030 

deadline. They cited two Missouri programs, the Missouri Renewable Energy Standard and the 

Missouri Energy Efficiency Investment Act as examples of Missouri's commitment to 

Renewable Energy and Energy Efficiency. 

Comment 34: BB4/EE goals too high.

Response 34: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule and therefore we do not need to address this comment. 

This determination is discussed in sections V.A and V.B of the final rule preamble of the CPP. 

Although the EPA has determined to not include demand side-energy efficiency in the BSER in 
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this final rule we are using 1.0% in our illustrative demand-side energy efficiency plan 

scenario. See the RIA Chapter 3 and the Demand-side Energy Efficiency TSD for CPP Final 

Rule for details on how the EPA addresses measure lives for this illustrative demand-side energy 

efficiency plan scenario. This illustrative plan scenario reflects a reasonable and feasibly level of 

DS-EE, supported by the information and analysis provide in the TSD.

See Section VIII. of the preamble for details on how EE will be included in state plans. 

The following are summaries of the specific public comments under this comment:

Commenters stated that EPA's application of Building Block 4 to the Navajo Nation should be 

changed and that the demand-side energy efficiency goal of 9.15% is too high. Commenters

noted that in its analysis, EPA assumed that, absent Building Block 4, Navajo Nation electricity 

demand would grow at a 1.3% annual rate, consistent with the expected growth of its regional 

neighbors. Commenters stated, however, that Navajo Nation electricity demand has been 

decreasing, at an average rate of 0.5% per year, due to the dire economic situation on the Navajo 

Nation. Commenters supposed that demand-side reductions required by EPA's Supplemental 

Proposed Rule would actually decrease availability of electricity to the Navajo people. 

Commenters also noted that the two power systems on the Navajo Nation, NGS and FCPP, are 

used off of the reservation to serve the people of Arizona and for the CAP and that the power 

actually used by the Navajo Nation is primarily provided by NTUA and the majority of that 

electricity is hydro-electric power. Commenters concluded that reductions in demand required of 

the Navajo Nation therefore would not impact the CO2 emissions from the two coal-fired power 

plants and that the application of Building Block 4 to the Navajo Nation will not result in CO2 

emission reductions.

Comment 35: Apply BB4 in tribes/territories in the same manner as states

Response 35: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule and therefore we do not need to address this comment. 

This determination is discussed in sections V.A and V.B of the final rule preamble of the CPP. 

Although the EPA has determined to not include demand side-energy efficiency in the BSER in 

this final rule we are using 1.0% in our illustrative demand-side energy efficiency plan 

scenario. See the RIA Chapter 3 and the Demand-side Energy Efficiency TSD for CPP Final 

Rule for details on how the EPA addresses measure lives for this illustrative demand-side energy 

efficiency plan scenario. This illustrative plan scenario reflects a reasonable and feasibly level of 

DS-EE, supported by the information and analysis provide in the TSD.

The following are summaries of the specific public comments under this comment:

Commenters agreed that EPA's goal of a 1.5 percent annual incremental increase in demand-side 

energy efficiency each year of the compliance period is a feasible and effective approach to EE. 

Commenters stated that because electricity consumption on tribal lands is generally very low, 

Block 4 will require only small emission reductions at the affected EGUs. Commenters noted 

that, under their formulation, the states in which the electricity that is consumed will have to 

include the electricity exported from Indian lands in their EE targets and as those neighboring 
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states reduce their demand for electricity through EE measures in their CPP implementation 

plans, this will almost certainly reduce emissions from Four Corners and Navajo Generating 

Station, and help achieve the goals for the units on Indian Lands.

Commenters stated that EPA should apply building block four to power plants in Indian Country 

and U.S. Territories in the same manner as it does with power plants in states. Commenters noted 

that the evidence demonstrated in their December 1st comments assert that annual energy 

efficiency savings of up to two percent can be achieved, and that this can be achieved at a rate of 

0.25 percent per year.

Comment 36: Commenters offered a number of questions and comments related to the data and 

methodology used by EPA in arriving at the emission reduction requirements implied by 

Building Block 4.

Response 36: The EPA provides details responsive to the commenters’ technical questions in the 

technical support document. For the EPA’s response to this comment, see the Demand-side 

Energy Efficiency TSD for CPP Final Rule. The TSD provides the basis for the illustrative DSEE plan scenario used as a basis for inclusion of EE in the plan scenarios represented in the RIA. 

This illustrative plan scenario reflects a reasonable and feasibly level of DS-EE, supported by the 

information and analysis provide in the TSD.

The following are summaries of the specific public comments under this comment:

Commenters asked the following questions:

1. What is the technical basis is for assuming that all states can replicate the incremental 

annual savings achieved by Arizona, Maine, and Vermont?

2. What is the technical basis for assuming that states can sustainably achieve incremental 

annual savings of 1.5% every year until 2030? 

3. What studies did the EPA rely on to make this determination? What level of peer-review 

did they undergo?

4. Why did the EPA's analysis not factor in the finite nature of EE opportunities?

5. What is the upper limit for EE? What does the performance/cost curve look like?

Commenters asked the following questions:

1. What performance assumptions were used by the programs in the 11 states cited by EPA 

as having a 1.5 percent/year efficiency improvement requirement, and are these methods 

consistent with the method EPA will require for compliance purposes regarding the 

ESPS?
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2. What compliance method will EPA prescribe or permit regarding the ESPS? How will 

this balance the desire to use existing state methodologies against the need for national 

uniformity, particularly if interstate trading is involved?

Comment 37: There are sufficient cost-effective opportunities to save energy to support EPA's 

best practices level of performance (1.5 % savings per/year) and EPA's alternative 2% savings 

per/year level. 

Response 37: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule and therefore we do not need to address further 

comments supporting the removal or changes in the level of DS-EE in BSER. This determination 

is discussed in sections V.A and V.B of the final rule preamble of the CPP. Even though 

demand-side energy efficiency is not being included in the BSER in this final rule and, thus, not 

included in the determination of emission performance rates, the final rule provides states the 

flexibility to use demand-side energy efficiency measures in their state plans for compliance to 

meet the emission guidelines set forth in the final CPP, provided they meet the applicable 

requirements established in section VIII of the preamble for the CPP. The EPA recognizes that 

one of the major approaches available for achieving CO2 emission reductions from the electric 

power sector is demand-side energy efficiency. The EPA continues to believe that significant 

emission reductions can be achieved by affected EGUs by the use of such measures cost 

effectively and that such measures are likely to represent an important component of state plans. 

Accordingly, the EPA is including a level of DS-EE as a component of our illustrative plan 

scenarios that are the basis for the analysis discussed in Chapter 3 of the RIA that supports the 

final CPP. The basis for and analysis of the illustrative DS-EE plan scenario is provided in the 

DS-EE TSD. This illustrative plan scenario reflects a reasonable and feasibly level of DS-EE, 

supported by the information and analysis provide in the TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated, in describing the opportunity for energy efficiency to reduce greenhouse gas 

emissions from power plants, EPA examines recent assessments of energy efficiency potential. 

Commenters said, energy efficiency potential studies are, as EPA states, a common tool used by 

policymakers, utilities, and stakeholders to inform both energy savings goals and energy 

efficiency program development. Commenters said, most potential studies evaluate technical, 

economic, and "achievable potential," but there remains significant variation in the analytic 

methods and assumptions used to estimate energy efficiency potential.

Commenters stated, one of the chief sources of variation is the analysis of achievable potential. 

Commenters said, as stated in a recent report:

"Although the achievable framework is useful from a practical standpoint, too 

often projections of achievable savings are seen as precise forecasts or even upper 

limits on what level of demand reduction can be attained through energy 

efficiency initiatives. Labeling a projection as "achievable" to distinguish it from 

more theoretical technical and economic projections may sometimes have the 
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unintended consequence of making anything above the forecast seem 

"unachievable."

Commenters stated, some have attempted to directly measure achievable potential. Commenters 

said, the Hood River Conservation Project study, conducted in the early 1980s, found a 91% 

response rate for home energy assessments (out of roughly 3,500 eligible participants) and an 

85% participation rate for the subsequent implementation of conservation measures, when 

measures were free to participants. Commenters said, the Northwest Power Conservation 

Council uses this 85% participation rate in part to determine what fraction of measures that pass 

its cost-benefit test (economic potential) is achievable, along with commercial availability of 

products and limits on the annual ramp rate of measures. 

Commenters stated, EPA's use of potential studies is well-justified, but the economic and 

achievable potential reported in past studies likely understates the amount of energy efficiency 

that can be implemented as part of the Clean Power Plan. Commenters said, among other factors, 

the Clean Power Plan will alter the economics of energy efficiency because under the Plan, 

energy efficiency will be used as a means of compliance with standards of performance for 

power plants.

Commenters stated, to further refine EPA's meta-analysis of recent energy efficiency potential 

studies, they added some three new recent potential studies (from New York, Ohio, and the 

Pacific Northwest ), and substituted one to better reflect "maximum achievable potential" 

(California), recalculating average annual projected potential as a percentage of baseline sales 

was shown in Table 7.1 (titled: “NRDC Summary of Recent (2010-2014) Electric Energy 

Efficiency Potential Studies”), the average annual achievable potential as a percentage of 

baseline sales remains the same with these additions and changes: 1.5% average annual 

economic potential remains at 2.4%. 

Commenters stated, even these averages are likely conservative assessments of potential, 

because potential studies usually constrain the list of potential measures to only those already 

incorporated into programs, reduce the potential applicability of measures based on arbitrary 

realization factors, fail to consider systems integration or integrated design, assume static 

technological progress, and ignore the value of non-energy benefits.

Commenters stated, energy efficiency potential studies generally only examine the potential 

impact of utility energy efficiency programs, which leaves out several energy efficiency 

opportunities. Commenters said, these opportunities, which would add to achievable potential if 

included, include:

• Transmission and distribution system investments that reduce utility losses or 

reduce the energy used by appliances and devices by optimizing voltage.

• Performance contracting or ESCO projects.

• Efficient combined heat and power systems.
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• State appliance and device efficiency standards, additive to the extent they allow a 

higher share of the market (potentially approximately 100%) to shift to the 

efficient option.

• State building codes, additive to the extent they allow a higher share of the new 

construction or retrofits (potentially 100%) to meet minimum levels of efficiency.

• Increasing compliance with building codes, additive because potential studies 

assume that energy efficiency programs use the existing building code as the 

baseline from which savings are measured. Increasing the extent to which 

buildings meet this code increases savings.

• State and local efforts, including financing or building benchmarking.

3.4.3 Impacts assessment

This section discusses the impacts assessment as it applies to demand-side EE the following is a 

summary of comments under this section:

The EPA needs to be more transparent in their cost estimates, rationale and methodology for:

− LCSE, whether and how they used load shapes, escalation factors, 

• The EPA underestimated costs (e.g., LCSE) and over stated potential (BB 4 is too 

stringent)

− We should be accounting for; recovery of lost revenue, rate payer increases, 

costs of transmission upgrades (See NERA Economic Consulting Study)

− Off-bill (aka, participant) costs should be separate, not combined with 

program costs

− The lifetime of EE is overestimated

− The RIA costs use annualized costs instead of first year costs.

• The EPA overestimated costs by 50%-60% because: 

− We didn’t factor integrative design principles, other approved EE filings show 

costs are lower than EPA’s.

• Coops, Muni’s and low income communities cannot afford to invest in EE at the 

BSER rate.

− The EPA didn’t account for the budgets that would need to be approved
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Commenters have raised a number of issues related in this subsection which are organized by 

comments below. Responses are provided for these topics. 

Comment 1: Need for clarification of cost effectiveness modeling data and assumptions

Response 1: For the EPA’s response to this comment, see the Demand-side Energy Efficiency 

TSD for CPP Final Rule and the RIA, Chapter 3, supporting the final CPP. The topics raised by 

these commenters are addressed in those supporting materials including step-by-step description 

of the estimation of DS-EE costs, the integration of DS-EE savings into the power sector

modeling, the conservativeness of DS-EE savings level and costs as represented by the 

illustrative demand-side energy efficiency plan scenario, the start date for DS-EE efforts, the 

assumed load shape of DS-EE savings, the cost escalation approach, and the estimation of 

participant costs. The EPA agrees with the commenters that the DS-EE driven energy savings 

lead to emission reductions at affected sources; for the RIA, such impacts are captured through 

power sector modeling as discussed in Chapter 3. This illustrative plan scenario reflects a 

reasonable and feasible level of DS-EE, supported by the information and analysis provide in the 

TSD.

The following are summaries of the specific public comments under this comment:

Commenters highlighted the need for clarification of the cost effectiveness modeling data and 

assumptions, including the LCSE calculations, cost benefit methodology, and the end use load 

shapes.

Commenters commented about the lack of clarity in the EPA's cost analysis. Commenters stated 

that the EPA's cost analysis for end-use efficiency measures is not transparent and that major 

uncertainties remain about how the metrics of cost and benefit are accounted for, given that each 

state conducts such analyses differently. Commenters added that costs and benefits for the same 

measure can differ by state, due to factors, such as local climate and energy use by sector. 

Commenters gave the example of increased building insulation, which would have different 

costs and impacts when installed in North Dakota vs. California. Commenters remarked that the 

EPA's cost analysis is not transparent because it provides little information on the composition, 

elements, or methods of determining the LCSE. Commenters requested that the Agency explain 

how energy efficiency costs were incorporated into their IPM modeling for the proposal, what 

costs associated with energy efficiency were used in their IPM modeling, how such energy 

efficiency costs were determined including the method used, the rationale for the method used, 

pertinent assumptions used (e.g., availability of energy efficiency is equal everywhere), why the 

costs used are believed to representative of energy efficiency costs across the nation, and how 

different modeling inputs on energy efficiency costs affect (or is expected to affect) modeling 

results. Commenters also asked that the EPA explain if the expected lifetime of each energy 

efficiency measure has to be accounted for, or if some default program lifetime was assigned to 

all energy efficiency programs. Commenters commented that the estimated cost impacts to 

electricity consumers associated with energy efficiency enhancements should be more clearly 

presented and explained in the preamble of the proposed rule as well as the RIA. Commenters

explained that, while the information is available in the RIA and in the GHG Abatements 
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Measures Technical Support Document, the EPA does not make the tremendous cost impact to 

consumers readily available to the general public, the people most impacted by this cost burden.

Commenters stated that the methodology used to evaluate the cost and benefits associated with 

energy efficiency are unrealistic. Specifically, commenters remarked that, if the projected levels 

of energy efficiency are deemed to be exogenously economic, they should also be included in the 

base case projection of electric demand, as these activities would occur even in the absence of 

the proposed rulemaking, and thus, should already be factored into the electric load forecast. 

However, according to commenters, the EPA has not explained why neither the EPA nor the EIA 

have included these types of projections within the reference load forecast or what the EPA 

models as the base case.

Commenters raised questions about several assumptions used in the EPA's IPM model. 

Specifically, commenters asked the following: Why did the EPA assume in Building Block 4 

that states begin implementing energy efficiency measures in 2017, when the compliance period 

does not begin until 2020 and many states may not have submitted plans by 2017; what was the 

technical basis for imposing Building Block 4 into the model exogenously; why did the EPA not 

model Building Block 4 as a variable compliance method that states could implement more or 

less depending on cost; how can the EPA be sure the IPM results accurately reflect the technical 

and economic feasibility when it simply assumes that Building Block 4 is fully implemented; and 

how can reliability be realistically assessed absent Building Block 4 modeling that realistically 

examines whether other measures may be more cost-effective or otherwise chosen by states.

Commenters stated that it is difficult to evaluate the EPA's estimates for LCSE for participants 

because the Agency did not specify the composition and relative contributions of end-use 

measures towards the overall energy savings target. Commenters explained that each end-use has 

a unique load shape, and specific technologies within an end-use category may have distinct load 

shapes. Commenters added that load shapes can have a significant bearing on the costs of energy 

efficiency. Commenters remarked that, for instance, energy savings distributed over nighttime 

hours, such as from residential lighting technologies, may not be as cost effective as energy 

savings distributed primarily over summer on-peak hours, such as from energy-efficient air 

conditioning. Commenters concluded that, therefore, the LCSE is difficult to estimate without 

some assumptions of the underlying load shapes of energy savings.

Commenters agreed that in evaluating the costs of demand-side EE, EPA says to have included a 

cost escalation factor to account for the pace at which states can feasibly improve their levels of 

performance over time. However, commenters asked EPA to explain what escalation factor was 

used and the assumptions underlying this factor. Commenters added that the assumptions EPA 

uses are not reasonably supported by the data cited.

Commenters asked for clarification on the data and assumption used for the proposal. 

Commenters said that "pricing and cost assumptions used in developing BB4 are not 

transparent. The low cost assumed for end-use efficiency dictates the overall cost of the 

regulations, since almost all of the emission reduction (compared to base case) is the result of 

replacing coal-fired generation with end-use efficiency (RIA, p. 3-27). How are consumer costs 

(e.g., the additional cost of the more efficient measure) factored into overall costs? Are 

appliances (heat pumps, refrigerators) assumed to be replaced at end of useful life or earlier? In 
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the case of more efficient appliances, such as refrigerators, how is replacement verified in order 

to ensure that the older appliance does not continue operation? Did the 11 states used by EPA to 

establish the 1.5 percent benchmark use the same assumptions that EPA used in developing 

BB4?"

Commenters discussed the assumptions/basis for converting energy efficiency savings to CO2 

emissions reductions.

Commenters stated that EPA contends that there is a link between electrical energy efficiency 

and reductions in CO2 emissions. Commenters noted that the EPA's GHG Abatement document 

refers to projected average 2020 Emissions Intensity across the U.S. Power Systems of 1,127 

lbs/MWh saved. Commenters noted that EPA describes this calculation as an average of the 

emissions reduced using IPM and from its base case. 

Commenters stated that EPRI research supports the assertion that the implementation of energy 

efficiency produced measurable, verifiable, and permanent emission reductions. Commenters

stated that EPRI has developed an emissions calculator based on its environmental analyses 

using the US Regional Economy, Greenhouse Gas, and Energy Model (US-REGEN). As part of 

this analysis, EPRI estimates marginal emissions impacts of changes in load as a function of the 

characteristic load shapes of individual end-use measures. Commenters stated that EPRI and 

EPA models recognize that CO2 emission impacts depend upon the spatial and temporal effects 

of changes in the load. Commenters agreed that using a model that captures the timing of energy 

efficiency implementation in relation to the generation dispatch stack allows for an energy 

efficiency portfolio to be optimized for CO2 reduction. 

Commenters stated that EPRI research supports the link between energy efficiency and CO2 

intensity reduction and finds that EPA's approach for determining CO2 intensity reductions of 

current energy efficiency measures is reasonable. However, commenters noted that EPA's 

approach and method may not be appropriate for long term forecasting; it does not account for 

evolution of the generation fleet over time. Commenters noted that as the mix of generation in a 

given region changes, so does the average and marginal intensity of CO2 emissions, which will 

in-turn impact the emissions reduction impact of specific types of energy efficiency 

interventions. 

Commenters agreed with EPA that the link between energy efficiency and CO2 intensity 

reduction is present. Commenters stated however, in quantifying the link between energy savings 

and CO2 reductions, EPA would benefit from a modeling approach that considers the economic 

optimization of future generation fleet resources over time, as EPRI does. In addition, 

commenters urged EPA to consider both the spatial effects of regional variation in the electric 

power generation mix, and temporal effects of changes in electric system load shapes resulting 

from changes in energy efficiency, and their associated impacts on marginal CO2 emissions.

Comment 2: Need for guidance on EE programs to be considered and cost effectiveness 

methodologies and tests to evaluate those programs and determine compliance
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Response 2: In the final CPP, the EPA is not requiring the use or submittal of cost-effectiveness 

evaluations for DS-EE measures included in state plans. The final rule provides the flexibility to 

use DS-EE measures in their state plans to meet the emission guidelines set forth in the final 

CPP, provided they meet the applicable requirements established in the State Plans section of the 

preamble, section VIII, for the CPP.

The following are summaries of the specific public comments under this comment:

Commenters pointed out the need for guidance on EE programs to be considered, and costeffectiveness methodologies and tests to evaluate those programs and to determine compliance. 

The comments included recommending the use of RVF, TRC, and UCT tests and financial 

modeling.

Commenters recommended that the EPA use the Resource Value Framework (RVF) for states 

that wish to test the 111(d) compliance programs for cost effectiveness in order to encourage 

deeper energy savings opportunities. Commenters explained that RVF is a powerful tool used by 

public utility commissions to ensure that their cost-effectiveness tests are balanced and 

transparent and account for public policy goals.

Commenters stated that EPA should adopt new strategies for determining the cost-effectiveness 

of energy efficiency and carbon reductions and develop a new standard practice manual. 

Commenters stated that current cost effectiveness tests, designed for power plants, often 

inaccurately penalize energy efficiency in homes, where consumers are spending their own 

money on a range of measures that primarily affect comfort, health and medical issues, or 

replace broken equipment, creating a range of non-energy benefits that explain why customers 

are satisfied with projects that fail cost effectiveness tests which do not consider non-energy 

benefits. Commenters stated that these tests are designed to determine the cost-benefit of energy 

generation, not pollution reduction.

Commenters stated that the majority of ratepayer funded programs are usually required to pass a 

cost-effectiveness test (as noted in the draft regulation). Commenters noted that these tests are 

based on five tests originally developed in the 1970s California Standards Practice Manual 

(SPM) (for a determination if new generation assets are cost effective and in the public interest). 

Commenters stated that despite updates, these tests are often implemented in ways that are 

biased against energy efficiency investments because they account for all the costs, but 

frequently ignore the many benefits of the improvements, including reduced energy use, reduced 

need for new generation, and pollution reduction.

Commenters stated that a new screening effort called the Resource Value Framework (RVF) 

developed by the Home Performance Coalition and numerous partners, including Efficiency First 

through the National Efficiency Screening Project (NESP) provides a powerful tool for public 

utility commissions to ensure that their cost effectiveness tests are balanced, transparent, and 

account for public policy goals. Commenters stated that specifically, in "The Resource Value 

Framework: Reforming Energy Efficiency Cost-Effectiveness Screening" the NESP advocates 

that in designing an energy efficiency screening test, each state should adhere to a guiding set of 

principles that have direct implications for the success of states using energy efficiency in their 
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plans for 111(d) compliance, as these tests will help states to develop programs with the most 

cost-effective energy efficiency and best carbon reductions. Commenters stated that to best 

utilize the RVF as a compliance tool, states need a SPM that incorporates 111(d) policy and 

carbon reductions in its implementation. Commenters stated that the current SPMs across the 

country do not currently incorporate the RVF or the public policy elements that the RVF 

includes, thus this new policy tool needs to be developed. 

Commenters encouraged EPA to recommend the use of the RVF to states that wish to test their 

111(d) compliance programs for cost-effectiveness in order to encourage deeper energy savings 

opportunities and carbon reductions, particularly in the residential sector. Furthermore, 

commenters recommended that EPA support the development of a Standard Practice Manual that 

provides direct guidance to the states on using the RVF to enhance their testing procedures and 

ensure they are getting the most carbon and energy savings out of their energy efficiency 

programs.

Commenters suggested that any energy efficiency program in a utility portfolio be evaluated 

using the Total Resource Cost (TRC) and Utility Cost Test (UCT) s to keep rates as low as 

possible. Commenters noted that his organization (TVA) uses these two tests to judge the merits 

of energy efficiency programs, with the criterion that the score from each test must be 1.0 or 

higher to ensure any program is cost effective for the utility and its rate payers.

Commenters recommended that energy utilities consider financial modeling related to the costs 

associated with current energy efficiency program planning and the cost increases that will result 

to achieve the additional savings of 1.5 percent energy targets from 2019 to 2030. Commenters

explained that such financial modeling will enable evaluation of budget increases and thus, the 

costs to customers associated with increasing energy efficiency targets to the required 1.5 

percent.

Commenters stated that electric cooperatives use three methodologies for evaluating the cost 

effectiveness of energy efficiency programs: total resource cost (TRC), rate impact measure 

(RIM), and participant cost test (PCT). Commenters explained that each method measures the 

cost effectiveness from a different perspective, giving the cooperatives a broad view of each 

energy efficiency program and portfolio. Commenters described each of the methodologies and 

pointed out that RIM is the method most often used by cooperatives because cooperatives are 

particularly mindful of any activity that will negatively impact the rates its members pay. 

Although not requested explicitly, it is assumed that commenters would like the Agency to 

consider using the RIM to determine the cost effectiveness of the proposed rule.

Commenters noted that, like other states, Nevada has limited resources and must select programs 

that provide the most benefits for its retail customers, and uncertainty over the types of programs 

that can contribute toward energy efficiency may result in lost opportunities or delays in 

programs that provide significant cost savings to customers, as well as reduce energy 

consumption and emissions. Commenters concluded by requesting clarity from the EPA 

regarding what types of programs are acceptable under the energy efficiency Building Block.

Commenters said that despite more recent updates to cost effectiveness tests they are often 

implemented in ways that are biased against deeper energy efficiency investments because they 
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do not account for all the costs, and frequently ignore many benefits. "A new screen effort 

developed by the Home Performance Coalition and numerous partners, called the Resource 

Valued Framework provides a powerful tool for public utility commissions to ensure that their 

cost effectiveness tests are balanced, transparent, and account for public policy goals." 

Commenters urged EPA to recommend the use of the RVF in states that wish to test their 

111D compliance programs for cost effectiveness in order to encourage deeper energy 

savings opportunities." Commenters went further to say that "home performance programs have 

many different designs as noted in the proposed rule. From deemed savings to model savings to 

measured savings, there are best practices that we urge EPA to include in its guidance to 

states developing their implementation plans." 

Commenters stated that conservation efforts must be assessed in terms of their relative cost and 

the rate impact on other utility customers. Commenters explained that the implementation of 

non-cost-effective utility energy efficiency measures will result in increased cross-subsidization 

of utility DSM participants by non-participants, and that the increased cross-subsidization is both 

unnecessary and undesirable.

Commenters commented that the use of an assumed level of incentives (i.e., 20 percent of 

estimated first participant costs) could produce distributional or subsidization effects between 

participants and non-participants if the impacts are not limited by the avoided cost savings. 

Commenters explained that this is a consequence of the use of the Standard Practice Economic 

Tests for energy efficiency. Commenters stated that the total resource cost (TRC) test, used by 

the EPA and standard in the industry, is not affected by incentive levels, which are a transfer 

payment between constituent groups. Commenters cautioned that, if the use of the TRC in 

choosing and designing energy efficiency measures is not tempered with examination of 

appropriate incentive levels through the use of ratepayer impact measures or participant cost 

tests, then uneconomic cross-subsidies may result, depending upon the load shape of the energy 

efficiency implemented.

Comment 3: Criticism of EPA's cost effectiveness modeling (e.g., costs are underestimated), not 

necessarily offering alternatives for data or methodologies

Response 3: Several commenters recommend that building block four should not be included in 

the BSER or that the levels that were included in the proposal were not justified or appropriate. 

In addition, commenters recommend changes in the estimates of DS-EE costs associated with the 

building block four savings levels which also served as the basis for the illustrative demand-side 

EE scenario included in the RIA supporting the proposed CPP. The EPA has determined not to 

include demand-side energy efficiency (building block four) in the BSER of this final rule and 

therefore we do not need to address further comments supporting the removal of DS-EE from 

BSER. This determination is discussed in sections V.A and V.B of the final rule preamble of the 

CPP. Even though demand-side energy efficiency is not being included in the BSER in this final 

rule and, thus, not included in the determination of emission performance rates, the final rule 

provides states the flexibility to use demand-side energy efficiency measures in their state plans 

for compliance to meet the emission guidelines set forth in the final CPP, provided they meet the 

applicable requirements established in section VIII (State Plans) of the preamble for the CPP. 
380

Accordingly, the EPA is including a level of DS-EE as a component of our illustrative plan 

scenarios that are the basis for the analysis discussed in Chapter 3 of the RIA that supports the 

final CPP. EPA is reducing the level of DS-EE in the illustrative demand-side energy efficiency 

plan scenario from the level represented in the proposed CPP, from 1.5% annual incremental 

savings down to 1.0% annual incremental savings. The EPA disagrees with commenters that 

recommend increasing the DS-EE costs presented in the CPP proposal. Based upon more up-todate and extensive data the EPA is slightly modifying our approach to DS-EE costs from that

used for the proposed CPP. The support for the DS-EE costs supporting the final CPP is 

provided in the Demand-side Energy Efficiency TSD for CPP Final Rule and is the basis for DSEE costs represented in the RIA for the final CPP. This illustrative plan scenario reflects a 

reasonable and feasibly level of DS-EE, supported by the information and analysis provide in the 

TSD.

The following are summaries of the specific public comments under this comment:

Commenters criticized EPA's cost-effectiveness modeling (e.g., costs are underestimated), not 

necessarily offering alternatives for data or methodologies. Commenters questioned the 

assumption that electricity consumption will continue to grow, said that EPA double-counted 

reductions in generation, that the LCSE calculations did not consider all cost elements of EE, 

that costs did not account for historical EE expenditures, that cost were assumed fixed. They also 

said that EPA did not model EE as a resource in competition with other options, did not consider 

incentives, and criticized assumptions such as that expanded EE will result in savings to 

participants. 

Commenters remarked that the conclusion by the EPA that the energy efficiency measures will 

be cost effective is belied by the fact that the IPM model projects that electricity consumption 

will continue to grow, even with the rule in place. Commenters added that if the energy 

efficiency measures truly were cost-effective, it would not be necessary to "hard wire" them into 

the Agency's projections.

Commenters remarked that the cost analysis for the proposed rule fails to appreciate the 

magnitude of uncertainty underlying the scale of costs in implementing Building Block 4. 

Commenters explained that prior studies relied upon by the EPA did not consider the 

unprecedented growth in energy efficiency programs and savings, as anticipated under the 

proposed rule, and thus, the costs of energy efficiency determined for Building Block 4 are likely 

to substantially understate the actual costs that would be incurred.

Commenters stated that the EPA's analysis of end-use efficiency failed to properly account for 

the upfront consumer costs of energy efficiency upgrades, and thus, results in a flawed analysis 

for target setting.

Commenters remarked that economists have pointed out that the costs of energy efficiency 

programs often end up being higher than reported. Commenters explained that, in addition to 

direct program costs like subsidies, these programs impose substantial indirect costs, including 

design, advertising, and administration, and these indirect costs tend to be ignored or understated 

in energy-efficiency evaluations, causing the overall cost effectiveness of these programs to be 

overstated.
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Commenters commented that the Agency's cost analysis did not account for all cost elements 

associated with the implementation of energy efficiency measures. Commenters stated that, 

specifically, the analysis did not include recovery of lost-revenues: that portion of rates 

associated with fixed costs that are not avoided when energy use is reduced through energy 

efficiency programs. Commenters added that the EPA did not account for the costs of 

administrator incentives in the LCSE analysis, and because of these oversights, the resulting cost 

of compliance with the proposed rule could be significantly different than what the EPA 

proposed.

Commenters commented that the EPA's analysis of Building Block 4 energy efficiency 

reductions double-counts energy efficiency savings already accounted for in the base case, 

effectively resulting in a much more stringent standard. Commenters added that the proposed 

rule goes well beyond current Pennsylvania law and what the Agency's data support. 

Commenters noted that relative to the base case, the EPA predicts that increasing levels of 

energy efficiency in Pennsylvania could reduce generation by approximately 12 percent, and 

such reductions are not supported by the state's historical energy efficiency performance or by 

other data on energy efficiency potential. Commenters explained that the shortfall between the 

EPA's energy efficiency targets and what Pennsylvania can actually achieve must necessarily be 

made up through further reductions from coal-fired plants and puts even more pressure on states 

with significant coal-fired assets, like Pennsylvania, to either close down such facilities or make 

their continued operation uneconomical.

Commenters remarked that the proposed rule is too dismissive of the significant increase over 

historical energy efficiency expenditures mandated under Building Block 4. Commenters noted 

that the EPA's own data show that energy efficiency expenditures can be expected to climb from 

historical levels between $1.8 and 5.9 billion dollars up to $21.8 billion dollars in 2030.

Commenters stated that the energy efficiency cost estimates applied by the EPA are not 

conservative, as claimed, but rather significantly underestimate the costs of incremental energy 

efficiency. Commenters cited a study performed by NERA Economic Consulting that concluded 

that the best assessment of actual historical energy efficiency costs supported values roughly 60 

percent above those assumed by the EPA. Commenters explained that this suggests that the 

energy efficiency volumes assumed by the EPA to be economically achievable are significantly 

overstated, and, if not modified appropriately, it will mean that the compliance burden of 

meeting the currently proposed emissions rate goals will be shifted even more toward renewable 

generation, and that the cost of compliance will be significantly greater than the EPA has 

estimated.

Commenters stated that, although the EPA has taken a conservative approach by applying 

program costs at the higher end of the range of reasonable values, the assumption that the ratio of 

participant costs to program costs will remain fixed at historical levels may understate participant 

costs, and therefore understate LCSE, and overstate energy efficiency potential.

Commenters commented that, in the EPA's analysis with the IPM, energy efficiency is not

adequately modeled as a resource in competition with other mitigation options. Commenters

stated that, as a result, the estimated costs associated with energy efficiency measures could be 

underestimated.
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Commenters stated that the assumption by the EPA that expanded energy efficiency will result in 

savings to participants is not valid. Commenters explained that, even if the EPA's assumptions 

regarding savings to the electric power generation sector from reduced generation are accurate, 

these cost savings do not automatically translate to savings to the electricity consumers.

Commenters remarked that, although the EPA's estimates for LCSE, which range from $0.85 to 

$0.95/kWh, are lower than LCSE estimates determined by ACEEE, the ACEEE estimates do not 

include the costs for incentives. Commenters also stated that the LCSE estimates are so tightly 

bound by the assumptions that any error or changes in the future may produce much higher costs 

and much less available efficiency. Commenters stated that, that, in turn, could mean that 

achieving a level of 1.5 percent incremental energy efficiency will cost more than the EPA has 

assumed.

Commenters commented that stable or declining demand for electricity does not necessarily 

translate into a proportionately reduced need for energy delivery infrastructure, as assumed by 

the EPA in its analysis. Commenters stated that experience has proven this to be an indefensible 

assumption, and that investment in transmission has, in fact, begun to recover in the recent 

recessionary period, notwithstanding anemic demand for electric power. Commenters further 

explained that transmission systems are actually in the process of being replaced and upgraded 

with new technologies because newly competitive power markets require more reliable transfer 

capacity, situational awareness, and higher quality power (i.e., fewer interruptions). Commenters

added that the significant increase in location-constrained renewable energy resources that the 

EPA itself aims to promote frequently has no physical or economic access to markets; as a result, 

transmission systems will continue to be upgraded and expanded.

Commenters explained that the goal of demand side management is to encourage the consumer 

to use less energy during peak hours, or to move the time of energy use to off-peak times such as 

nighttime and weekends, but that peak demand management does not necessarily decrease total 

energy consumption. Commenters added that, even if demand side management programs are 

extremely successful, the load will still grow, albeit at a slower rate, due to expanding population 

and GDP, and that the EPA should not rely on this overly broad assumption to avoid considering 

transmission costs in the BSER.

Commenters stated the proposed increases in energy efficiency will result significantly increase 

costs to ratepayers. Commenters commented that the four building blocks of the proposed rule 

are all based on overly aggressive assumptions. Commenters explained that, even if the state of 

Georgia could increase demand-side energy efficiency to 10 percent by 2030, it would create 

hardships on the state's ratepayers. Commenters noted that a 2012 study evaluated similar 

aggressive targets, and concluded that such a program would cost $4 to 5 billion, based on 

achieving levels of demand-side energy efficiency that have never been demonstrated on a 

sustained basis. Commenters stated that the EPA did not address the dramatic increases in utility 

energy efficiency program budgets and customer expenditures that achieving the proposed 

aggressive increases in energy efficiency savings rates will require. Commenters explained that, 

under the proposed 1.5 percent annual incremental savings rate, states, utilities and customers 

must continually make additional, expansive investments just to keep up, and energy efficiency 

savings will not be achieved unless current state- and administrator-run energy efficiency 

programs are both continued and expanded. Commenters noted that, as a practical matter, annual 
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incremental state energy efficiency savings rates cannot be increased without supportive 

regulatory frameworks and the energy efficiency program budgets they create, and that the EPA 

should work with the states to set achievable goals that reflect actual in-state conditions.

Commenters said that "it is impossible to determine the costs imposed by building block 4, given 

EPA's thin analysis of efficiency investments in the baseline. EPA should appreciate that a clear 

cost accounting is extremely necessary for this goal in particular. Efficiency investments are 

widely regarded as least-cost emissions reduction achievements, but any failure to realize end 

use efficiency will force a state to compensate with other building blocks that require an 

expensive and time consuming planning, permitting, financing, and construction process."

Commenters said that "EPA's cost analysis for end-use efficiency measures are not transparent. 

Major uncertainties rest with how the metrics of cost and benefit are accounted, recognizing that 

each state conducts such analyses differently. Moreover, cost and benefits for the same measure 

can differ by state, due to factors such as local climate, and energy use by sector. For example, 

increased building insulation will have a different cost and impact when installed in North 

Dakota than in California."

Commenters said that "while flexibility is provided by EPA to pick and choose between building 

blocks, the EE building block is the fundamental basis of EPA's claim about reducing customer 

bills 8% in 2030 as part of the CPP. If realistic measures and targets are used rather than EPA's 

flawed analysis, EPA's claim of lower bills falls apart."

Commenters noted that "lowering the demand for electricity will reduce utilization of EGUs, it is 

not logical to assume that this measure will result in a proportional decrease in CO2 emissions. 

Some of the electricity that would have otherwise been generated would certainly have been 

produced by "zero-emitting" EGUs (e.g., nuclear) or via the combustion of "carbon neutral" 

fuels (e.g., biomass)." Commenters concluded by saying that "this means that the "real world" 

impacts of building block 4 are overstated by an amount roughly proportional to a state's 

nuclear and RE generation."

Commenters said that "EPA numbers likely understate the costs and overstate the achievability 

of the energy efficiency gains that are possible in Texas. Further, the nature of utility energy 

efficiency programs is that the benefits are limited to a subset of consumers who actually qualify 

and participate in the programs, but the costs are socialized across all consumers, even those 

who cannot participate."

Commenters said that "additionally, EPA has significantly underestimated the costs associated 

with implementing energy efficiency measures in rural areas, like Montana-Dakota's service 

areas." Commenters present estimates of costs and cites the studies that developed them.

Commenters states that "for Building Block #4, demand-side energy efficiency programs, our 

goal for demand reduction was set to obtain our proportionate share of the goal for Georgia. 

Although netting a reduction in energy usage, the program costs were found to be great enough 

that rates would increase by $465 million to $1.4 billion, over the study period."

Commenters said that "the calculation of avoided energy costs for energy efficiency measures is 

unclear and appears to be over-valued." "Most DSM measures do not contribute to capacity and 
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should not be credited with capacity savings, so the above cost data should be considered 

extremely conservative.)"

Commenters said that "EPA's proposal of a 10 percent reduction due to EE in Florida is 

unreasonable both in terms of proposed cost and achievability based on Florida's actual historic 

data. Setting an arbitrary goal without considering the technical potential or the costeffectiveness of the programs to achieve the goal is contrary to Florida Statutes. Since EE can 

only be incentivized by utilities (not implemented by them) and the results EPA proposes are 

unlikely to occur, utilities effectively only have 3 building blocks to work with."

Commenters said that "WREA encourages energy efficiency by our members. Most cooperatives 

have aggressive EE programs targeted specifically for the demographics of each cooperative. As 

a small very rural Cooperative WREA cannot have the same benefit as other Cooperatives. 

WREA believes EPA has overstated the value of EE in the Plan. Many of the low cost EE 

measures have been adopted in Colorado. Therefore, there is a diminishing return on investment 

for expanded measures."

Commenters stated that their direct experience with EE investments does not support the EPA's 

assumptions of the cost of implementing Building Block 4 nor does it suggest that the levels of 

reductions assigned to the state are achievable. Commenters stated that EE investment returns 

experienced do not result in the kind of reductions that EPA projects. Commenters stated that 

while EE is a significant and valuable investment and can be cost effective it is not without 

problems. Commenters stated that EE incentive programs, such as rebate programs, generally 

fail to reach the most at risk populations impacted by rising electric costs. Commenters stated 

that this failure only compounds the economic disparity that results from policies that raise 

electric rates. Commenters stated that their experience in offsetting this problem has 

demonstrated that the cost to address the disparity is very high - far higher than EPA's 

anticipated Building Block 4 projections.

Commenters said that the EE targets will likely increase cost for rate-payers.

Commenters described how "North Carolina utilities are allowed to increase rates in order to 

offset the costs to implement EE programs required under our REPS rule. Large consumers of 

electricity were allowed to opt out of the EE rebate program because of the possibility of a rate 

increase. All major electricity consumers in North Carolina opted out because of the uncertainty 

of rate increases." Therefore, commenters recommend that any cost study related to EE 

measures should include an analysis of rate hikes for residential and commercial customers. In 

addition, any measures adopted by states to encourage voluntary participation of 

commercial/industrial customers in EE programs should address uncertainty in rates.

Commenters said that "Even though customers use less electricity, which may mean that less fuel 

is used to produce power, the utility's infrastructure must remain intact. As the quantity of 

electricity sold diminishes or stays flat due to energy efficiency, the cost of the infrastructure 

needed to generate and deliver that energy rises with maintenance, improvements, labor costs 

and inflation." "The only way to support this diminishing rate of return on the infrastructure 

investment is to increase electricity rates." Because of the confined footprint of typical municipal 

utilities, aggressive energy efficiency programs can completely offset any growth in demand. As 
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new transmission, distribution and generating resources replace existing resources, rates 

increase significantly." 

Commenters said that "the Proposed Regulation's claim that overall customer bills will go down 

is contrary to experience implementing energy efficiency programs in Virginia. In fact, this claim 

could only be accurate if the costs of reducing CO2 emissions through energy efficiency 

programs are less than the variable operating costs (primarily dispatch costs) that would be 

avoided by the compliance action since compliance requires the displacement of existing 

generation." "The costs of energy efficiency programs of any appreciable scale are likely to 

exceed avoided variable operating costs. However, under the unlikely scenario that variable 

operating costs do exceed energy efficiency costs, there are two possible outcomes: 1) aggregate 

bills are lower and the resource provider receives reduced compensation, or 2) rates are 

adjusted and aggregate bills are increased. If aggregate bills are reduced without a 

corresponding price adjustment, the net cost of compliance is simply borne by the energy 

efficiency resource provider, it is not avoided. When prices are adjusted, aggregate bills are 

increased and net compliance costs are borne by consumers. In either of these two events, the 

cost of compliance is real, it is simply borne by different people and businesses."

Commenters listed their efforts to achieve higher energy efficiency for themselves and their 

consumers. Commenters then stated that by attacking the least cost options in advance of EPA's 

proposed Rule, they appear to have disadvantaged their community under the Rule relative to the 

state not only in securing credit for their past actions but also in removing the lowest costeffective options to meet EPA's expectations moving forward, as their lowest cost programs have 

already been utilized by eligible customers. Commenters read and understood EPA's assertion 

that its model is a national model and that EPA does not expect each utility to meet the scenario 

utilized for setting the goals but would caution EPA that when a utility or state cannot meet one 

or more expected BB rates, increased compliance in other areas becomes a mandate. Based 

on commenters’ analysis, neither they nor their state will be able to meet BB 1 reductions or BB 

2 reductions requiring a significant overweight in BB 3 and 4. Yet, commenters’ efforts to reach 

those in the greatest need of EE improvements also impair future capabilities. Commenters stated 

many of these projects involve capital expenditures that reap important rewards at the location 

but are not economic. Because capital to invest in EE projects is not inexhaustible, these 

expenditures, while an important component of the commenter's community obligation, saps 

from their ability to make the more efficient expenditures that EPA envisions.

In addition, commenters stated that they are a very small vertically integrated utility, having a 

very efficient transmission system to serve its load. Commenters stated to have a compact, multi 

path or looped transmission system that makes their system extremely efficient. Commenters

repeated that they built a reliable, efficient transmission system that their customers paid for well 

in advance of this proposed rule. The neighboring investor owned utilities are now trying to 

upgrade their transmission system and recovers costs from the markets which the 

commenters' customers must cost share, but commenters received no compensation from outside 

for their existing meshed transmission system. Commenters were gravely concerned that the 

Rule will drive additional, costly transmission projects that have high ROI for transmission 

providers within the markets, driving up costs for their consumers, with very little to no actual 

benefit. Commenters stated that as a small municipal utility principally serving their community, 

the transmission lines are very short distances, such that increasing efficiencies, even just another 
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0.09%, would be relatively impossible for commenters to achieve. The U.S. EPA's expected 

efficiency increase in transmission did not consider a small municipal utility with a small and 

networked transmission system in establishing the efficiency goal.

Comment 4: Criticism of EPA's cost effectiveness modeling (e.g., costs are underestimated), 

offering alternatives for data or methodologies

Response 4: Commenters recommend changes in the estimates of DS-EE costs associated with 

the building block four savings levels which also served as the basis for the illustrative EE 

scenario included in the RIA supporting the proposed CPP. The EPA has determined not to 

include demand-side energy efficiency (building block four) in the BSER of this final rule. This 

determination is discussed in sections V.A and V.B of the final rule preamble of the CPP. Even 

though demand-side energy efficiency is not being included in the BSER in this final rule and, 

thus, not included in the determination of emission performance rates, the final rule provides 

states the flexibility to use demand-side energy efficiency measures in their state plans for 

compliance to meet the emission guidelines set forth in the final CPP, provided they meet the 

applicable requirements established in section VIII of the preamble for the CPP. Accordingly, 

the EPA is including a level of DS-EE as a component of our illustrative plan scenario that is the 

basis for the analysis discussed in Chapter 3 of the RIA that supports the final CPP. The EPA is 

reducing the level of DS-EE in the illustrative demand-side energy efficiency plan scenario 

relative to the level represented in the proposed CPP, from 1.5% annual incremental savings 

down to 1.0% annual incremental savings. The EPA disagrees with commenters that recommend 

increasing the DS-EE costs presented in the CPP proposal for reasons including: the use of 

annualized rather than first-year costs to estimate incremental cost impacts of the CPP, 

assumptions of DS-EE embedded in the reference case scenario, the treatment of DS-EE costs as 

a component of changes in electricity rates, approach to treatment of DS-EE measure lives, 

declining availability of DS-EE opportunities over time, the representation of EM&V costs, 

changes in levels of program costs relative to participant costs as savings levels increase, and the 

impact of reduced recovery of fixed costs under the CPP illustrative demand-side energy 

efficiency plan scenario. The EPA’s response to these comments is provided throughout the 

Greenhouse Gas Abatement Measures TSD – Demand-Side EE – which supports the final CPP. 

Based on more up-to-date and extensive data addressing first-year costs of saved energy, DS-EE 

measure lives, and cost factors, the EPA is revising our approach to DS-EE cost estimation for 

the final CPP. The revised approach is fully presented in the Demand-side Energy Efficiency 

TSD for CPP Final Rule. This illustrative plan scenario reflects a reasonable and feasibly level of 

DS-EE, supported by the information and analysis provide in the TSD.

Absolute levels of DS-EE costs represented in the illustrative demand-side energy efficiency 

plan scenario supporting the final CPP impact analysis are reduced due to the reduced level of 

incremental savings that each state is assumed to reach as compared to the proposed CPP.

The following are summaries of the specific public comments under this comment:

Commenters criticized EPA's cost-effectiveness modeling (e.g., costs are underestimated), 

offering alternatives for data or methodologies. For example, pointing out that RIA 

underestimates EE costs by reporting annualized costs instead of first-year costs, that off-bill 
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costs needed to be included, that the inclusion of EE only in the policy cases artificially skews 

program costs, and that the life for the EE measures was overestimated.

Commenters commented that the EPA's cost analysis is flawed because it reports only 

annualized costs between 2017 and 2030. As a result, the analysis excludes costs that are 

deferred to years beyond this timeframe. Commenters pointed out that these deferred costs 

amount to almost $200 billion. In addition, the EPA did not account for costs after 2030, which 

is a major oversight. Commenters stated that the Agency must reevaluate its cost-benefit analysis 

by considering the annual cost of energy efficiency measures through the year 2050.

Commenters commented that the costs of the proposed rule are greatly underestimated because 

the EPA based its RIA on annualized costs instead of first-year costs. Commenters stated that by 

misstating the timing of energy efficiency, the Agency's analysis resulted in a substantial 

understatement of annual compliance costs in 2020, 2025, and 2030. Commenters explained that 

using annualized costs instead of the annual first-year costs has the impact of pushing energy 

efficiency costs out into the future and makes the compliance costs for 2020, 2025, and 2030 that 

the EPA presents in the RIA appear lower than they actually would be. Commenters commented 

that the total compliance costs using annual first-year energy efficiency costs for 2020, 2025, and 

2030, calculated entirely using the EPA's model inputs and outputs, would be $28 billion, $20 

billion, and $10 billion, respectively, all of which are significantly higher than the compliance 

costs reported in the RIA. Commenters explained that, for the purposes of calculating retail 

electricity rates, the EPA used first-year energy efficiency costs, which was inconsistent with the 

Agency's use of annualized energy efficiency costs when presenting total compliance costs. 

Commenters added that this does not make sense because energy efficiency costs are incurred 

and paid for immediately; the spending is not spread out over time, nor is the recovery of the 

costs spread out. Commenters concluded that it is more appropriate to measure energy efficiency

costs using annual first-year costs. Commenters stated that energy efficiency programs are 

typically funded on the basis of O&M expenditures for utility program costs and out-of-pocket 

expense for participant costs. Commenters explained that, as energy efficiency utility program 

costs are typically expensed, a first-year cost is the appropriate measure to evaluate the true cost, 

as this is the cost that directly impacts customer rates. Commenters added that, participant costs 

are typically not financed, but rather represent a one-time out-of-pocket expenditure, and even 

for programs that are financed, the term is likely to be significantly less than the 20-year lifetime 

assumed by the EPA. Commenters stated that, by relying on annualized energy efficiency costs, 

the cost of the CPP is dramatically understated in the early portions of the program, by more than 

$20 billion in 2020 and almost $15 billion in 2025. Commenters explained that the use of 

annualized energy efficiency costs results in enormous discounting of total energy efficiency 

costs given an assumed 20-year energy efficiency measure life. Commenters remarked that 

proper actuarial treatment would result in significantly higher present value costs as first-year 

costs would be discounted less to the present year. Commenters concluded that, although the 

EPA has characterized utility program costs on a first-year cost basis, the Agency needs to 

evaluate total program costs on a first-year basis also to properly assess the costs and benefits of 

the proposed rule.

Commenters stated that the cost analysis for the proposed rule failed to account for the 

significant off-bill energy efficiency investments required by member-consumers. Commenters

explained that the EPA assumed that utility demand-side energy efficiency programs account for 
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one-half of the costs to achieve its proposed energy efficiency targets, and the remaining onehalf of costs are incurred directly from consumers through off-bill program participation costs. 

Commenters added that these direct participation costs climb to more than $120 annually per 

cooperative member by 2028 and total more than $1,300 per cooperative member over the 2017 

to 2030 period and represents a hidden cost of $28 billion.

Commenters stated that the proposed rule does not require states to target any specific level of 

energy efficiency, nor is it within the EPA's authority to require a set level of efficiency. 

Commenters added, that the inclusion of energy efficiency measures in the policy cases 

artificially skews the costs of the program downward by assuming less generation is needed to 

meet electric demand and that avoided costs are greater than energy efficiency program costs. 

Commenters remarked that, as the EPA has reached a conclusion that the proposed levels of 

energy efficiency are economic under prevailing market conditions, energy efficiency measures 

must be included in both the base case and policy cases to ensure a proper, fair, and transparent 

assessment of costs that are directly attributable to this proposal.

Commenters commented that the EPA should have, but failed to, acknowledge the tremendous 

costs associated with future energy efficiency programs in its discussion of the projected 

electricity bill impacts. Commenters suggested that the $21.8 billion in first-year costs to 

electricity consumers should be presented in the context of the electricity price and monthly bill 

impacts to electricity consumers, rather than combining with projected operating costs for 

electricity utilities, as the EPA has done for its net benefits claims. Commenters remarked that 

the EPA's cost analysis is flawed because it does not account for the future impacts of existing 

energy efficiency programs being implemented by several states, or the impacts of new energy 

efficiency programs, which will be implemented regardless of the proposed rule's 

implementation. As a result, the EPA's base case electricity costs are overstated, and the 

incremental costs of the CPP are substantially understated. Commenters cited a report by NERA 

(NERA Economic Consulting, Potential Energy Impacts of the EPA Proposed Clean Power Plan, 

(2014), Appendix C.) that supports this argument.

Commenters remarked that the EPA has underestimated the LCSE. Commenters based his 

conclusion on an analysis by Allcott & Greenstone (Allcott, Hunt and Michael Greenstone. 2012. 

"Is There an Energy Efficiency Gap?" Journal of Economic Perspectives, 26(1): 3-28.2012) that 

recommended a levelized utility cost of end-use energy efficiency of $0.053/kWh. Based on the 

same assumption used by the EPA, that utility and participant costs would be equal, commenters

estimated a total levelized cost of $0.106/kWh, which is significantly higher than the EPA's 

estimate of $0.0651/kWh.

Commenters commented that, although the EPA assumed a 20-year life for efficiency 

improvements, a review of several studies of energy efficiency effectiveness points to a much 

shorter life for many efficiency improvements, especially those involving lighting or HVAC. 

Commenters explained that the shorter measure life and the need for higher spending by electric 

cooperatives to promote adoption by residential and low-income consumers appear likely to 

drive up LCSE significantly.
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Commenters commented that, regarding energy efficiency measure lifetime, the EPA should 

revise its methodology to assume a slower decline in savings over time and by adding a degree 

of persistence of savings after a measure "burn out."

Commenters stated that EPA fails to consider rate impacts and lost utility base revenues. 

Commenters noted that pages 5-27 through 5-29 of the EPA's GHG Abatement Measures TSD 

discuss comparative cost statistics of EE resources to alternative electricity resource options 

utilizing a levelized cost of energy ("LCOE") or levelized cost of saved energy ("LCSE") in the 

case of EE. Within this analysis, commenters stated that the EPA finds that a review of studies 

examining only utility costs find an average LCSE in the range of 1 to 6 cents per kWh. 

Commenters noted that the EPA further references a recent review conducted by the American 

Council for an Energy Efficient Economy ("ACEEE") which examined studies across 20 states 

performed between 2009 and 2012 which found the LCSE for electric energy efficiency 

programs in the range of 1.3 to 5.6 cents per kWh, with a mean value of 2.8 cents per kWh. 

However, commenters stated that examining cost-effectiveness of EE resources by only 

examining utility costs is fundamentally flawed. 

Commenters stated that unlike traditional supply resources, use of demand-side resources affects 

a utility's financial position by reducing the utility's earnings through a reduction in sales. 

Commenters stated that a non-trivial portion of a typical electric utility's costs arise from fixed 

costs not directly related to the production of electricity, but to the generation, transmission, and 

distribution infrastructure required to efficiently produce and transport electricity to end-use 

customers. Commenters stated that these fixed costs therefore will not be reduced by increased 

efficiency of end-use customers, and will still have to be recovered through other means without 

negatively affecting a utility's financials. Commenters stated that this is sometimes referred to as 

the lost contributions to fixed costs, lost revenue recovery or lost margin recovery, and has been 

discussed exhaustively in technical literature, including within an EPA-affiliated November 2007 

white paper where it was noted that "few energy efficiency policy issues have generated as much 

debate as the issue of the impact of energy efficiency programs on utility margins."

Commenters expressed concern that the EPA is not valuing EE resources and their potential on a 

correct comparable basis to traditional resources. Commenters stated that recovery of utility lost 

margins resulting from EE require rate increases in the form of either (1) subsequent base rate 

cases, (2) lost revenue adjustment mechanisms ("LRAMs"), or (3) decoupling mechanisms. 

Commenters stated that rate increases to customers are costs directly related to investment in EE 

and should be included when comparing resource potentials of EE to supply side alternatives. 

Commenters stated that other issues include the efficiency of demand-side resources from free 

ridership and endogeneity issues. As noted by the EPA in its GHG Abatement Measures TSD, 

commenters noted that empirical analyses including these factors "present a wider range of 

estimates of cost of saved energy." Commenters stated that one study referenced in the GHG 

Abatement Measures TSD estimated the average utility cost of saved energy in the range of 5.1 

to 14.6 cents per kWh. Commenters noted that Louisiana had the third lowest residential electric 

rates in the country in August 2014 at 9.77 cent per kWh. Commenters stated that it is doubtful 
390

that extensive EE investments with an average utility cost of saved energy of 14.6 cents per kWh 

would be cost-effective in low energy cost states such as Louisiana.

Commenters stated that technical analysis fails to examine total rate and ratepayer impacts 

adequately. Commenters expressed concern that the EPA's analysis assesses EE potential on an 

inherently incorrect basis. For best practices, commenters stated that the EPA determined that all 

states should be able to reach an annual incremental savings through EE equal to 1.5 percent of 

annual retail sales. Commenters stated that the finding of an EE potential goal based on annual 

incremental savings assumes that savings through EE exists no matter how saturated the market 

may become. Commenters stated that the EPA incorrectly forces states to view EE as the 

proverbial "gift that keeps on giving," rather than a demand-side resource comparable to 

traditional supply resources. Commenters stated that such a goal in terms of renewable energy 

would require states to increase each year their renewable energy generation, rather than achieve 

a particular amount of renewable generation capacity or energy, regardless of the need for such 

generation. Commenters suggested a more appropriate and theoretically sound goal would be 

based on cumulative energy savings.

Commenters noted that like the RE component, the cost to ratepayers is not simply the cost of 

EE programs, but also the lost revenues incurred. Commenters stated that assuming a mid-range 

cost estimate of $106/MWh, EE program expenditures would total $538.9 million. Commenters

stated that this, in addition to $122.3 million of lost revenues to utilities, results in a total 

Building Block 4 cost of $661.2 million.

Commenters stated that the estimates of price increases are conservative and do not even include 

the customer portion of energy efficiency costs of $2.2 billion per year by 2024 that EPA would 

mandate, nor the cost of additional transmission lines and ancillary services that would be 

needed to carry and support the large amount of new gas and renewable generation EPA would 

mandate (which could add up to $2 billion of costs per year). Commenters stated that if 

socialized across the entire market, these other system costs could effectively add more than 1 

cent per kilowatt-hour price increase to the estimates above.

Commenters stated that while flexibility is provided by the EPA to pick and choose between 

building blocks the EE building block appears fundamental to reinforcing the EPA's claim about 

reducing the customers' power bill by 2030 as part of the CPP. Commenters noted that if a state 

decides to veer off course from the EPA's feasible amount of EE, this claim falls apart. 

Commenters stated that measurement and verification of EE programs is crucial to understanding 

the potential costs of Building Block #4. Commenters noted that large scale measurement and 

verification programs can add overhead to an EE program and can be duplicative if each party is 

implementing the same measure and independently running evaluation, measurement and 

verification programs. 

Commenters stated that while EE can contribute to and be a significant part of CPP compliance, 

neither commenters nor other utilities can force EE upon its customers. Commenters stated that 

regardless of how much time, effort and money are committed to EE, there is no way to know 

how effective it will be. Commenters stated that even in current EE programs it is difficult to 

measure energy savings and it is impossible to enforce energy savings targets from EE programs. 
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Commenters noted that for G&Ts it is even more difficult because the EE goals are implemented 

by owner-member cooperatives that own and operate the distribution system, not the G&Ts. 

Commenters stated that these costs that their Owner-Members will absorb are extraordinary and 

must be considered by EPA when setting 111(d) guidelines. Commenters stated that failure to do 

so is arbitrary and violates CAA 111 which requires consideration of economic costs.

Commenters stated that the industry has tried to achieve significant consumer efficiencies for 

more than 40 years with marginal success. Commenters stated that to include significant impacts 

raises the question of who is responsible for short falls should targets in plans not be achievedperhaps a direct result of consumer behavior. Commenters noted that EPA points to the reduced 

electric demand in recent years but our analysis points to the non-recovery from the 2008 

recession as more of a factor than efficiency. Commenters stated that efficiency gains are more 

likely to be in the range of 0.5-1% per annum on average as opposed to EPA's aggressive 1.5% 

Even EPA own data would point to the lower figures.

Commenters stated that EPA also seems to accept that these savings will come at nominal cost. 

Commenters noted that statement will not be true for the consumer, the power companies, or the 

states. Commenters stated that all efficiency requires investment by one or more of these entitiesbe it CFD light bulbs, meters or programs. Commenters noted that states will have to implement 

substantial and costly Energy Efficiency Measurement and Verification programs which may 

entail acts of their legislature.

In addition, commenters requests that EPA estimate the costs associated with meeting the 

specified EM-V requirements for both EE and RE and include them in the BSER cost benefit 

analysis."

Commenters stated that four major factors will contribute to higher costs in that future time 

period than have been observed in the last two decades: 

1. increasing saturation levels from programs in place for multiple decades, 

2. increasing federal and state standards and local building codes which will effectively 

make each marginal kWh savings more and more costly to achieve;

3. diminishing opportunities for marginal kWh savings from new technologies and

4. increasing costs associated with new technologies. Commenters stated that these factors 

should be taken into consideration when forecasting costs, particularly, so far out into the 

future. 

Commenters stated that to further illustrate this point, the references given in the GHG TSD 

point to additional growing "greenfield" states that have started programs. Commenters stated 

that these lower costs represent low hanging fruit that will be harvested during the first 

implementation cycle and are not representative of savings beyond 2020. Commenters noted that 

for example, after 2020, the baseline for most general service lamps is effectively the CFL. 

Commenters stated that LEDs will never realize the savings as CFLs did in the residential sector 

because EISA has effectively saturated lighting end uses with CFLs and because of the code 
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change in 2020. Commenters stated that the incremental savings of LEDs compared to CFLs is a 

fraction of that for CFLs compared to incandescent lighting and at a significantly higher cost per 

kilowatt hour of savings. Commenters noted that while the EPA has included cost escalators of 

20% to 40%, cost escalators alone do not explicitly account for each of these four factors.

Commenters stated that the EPA's analysis also makes assumptions for participant incremental 

measure costs to arrive at total costs of energy efficiency programs. As stated in the GHG TSD:

"...while program costs are relatively known and consistently reported by the 

program administrator, participant costs require significant effort to estimate, 

and are less consistently estimated and reported. The ratio between program and 

participant costs will vary significantly from one program to the next within a 

utility's portfolio."

Commenters stated that there are correlations between participant cost versus program cost and 

overall levelized cost, and it is not apparent that these are accounted for by the EPA. 

Commenters noted for example, that a program with high costs will have a lower ratio of 

participant costs to programs costs, and conversely a program with low costs will have a higher 

ratio. Commenters stated that these factors introduce variation from state-to-state and to assume 

a 1:1 ratio for all states could cause significant over or under forecasts. Commenters stated that 

the in EPA's calculation of the contribution of demand side energy efficiency, the degradation 

assumption used in developing targets is based on 20 years, while measure life is based on 10 

years which overstates the potential (see 5-36 GHG TSD). Commenters stated that contrary to 

EPA claims, this is not conservative (see GHG TSD 5-38) and results in higher values achievable 

than would be calculated if 10 year degradation was assumed in lieu of 20 years. Commenters

suggested that the final rule's BSER should be recalculated using 10-year degradation 

assumptions.

Commenters said that "U.S. EPA's energy efficiency cost estimates of $0.09/KWh 

are much lower than Indiana's derived cost estimates. An independent study done 

by National Economic Research Associates (NERA) suggests that, based on a 

review of historical energy efficiency costs, a national levelized cost of 

$0.10/KWh is a more accurate assumption. Indiana's costs are even higher. Based 

on the Indiana utilities' 2015 DSM/EE plans, the costs to utilities range from 

$0.11 to $0.16/KWh. However, the Indiana Office of Utility Consumer Counselor 

(OUCC) points out that costs to ratepayers are even higher, as Indiana's 

inclusion of lost margins and shareholder incentives more than doubled Indiana's 

DSM/EE costs to an average of $0.32/KWh. If these compliance costs are taken 

into account into 111(d), this could have an impact on the BSER analysis for this 

building block, as well as make this option less affordable for states to implement 

and, in turn, for consumers, who would bear the brunt of such an increase 

through an increase in utility rates. Indiana recommends that U.S. EPA consider 

all available costing information in order to provide stakeholders with more 

reliable cost estimates."
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Comment 5: Criticism of EPA's cost effectiveness modeling- it overestimates costs and does not 

consider all the benefits of EE

Response 5: Commenters recommend decreasing DS-EE costs, improving the representation of 

benefits of DS-EE, and increasing the levels of DS-EE represented in building block four. The 

EPA has determined not to include demand-side energy efficiency (building block four) in the 

BSER of this final rule and therefore we do not need to address further comments supporting 

changes in the level of DS-EE from BSER. This determination is discussed in sections V.A and 

V.B of the final rule preamble of the CPP. Even though demand-side energy efficiency is not 

being included in the BSER in this final rule and, thus, not included in the determination of 

emission performance rates, the final rule provides states the flexibility to use demand-side 

energy efficiency measures in their state plans for compliance to meet the emission guidelines set 

forth in the final CPP, provided they meet the applicable requirements established in section VIII 

of the preamble for the CPP. Accordingly, the EPA is including a level of DS-EE as a 

component of our illustrative plan scenarios that are the basis for the analysis discussed in 

Chapter 3 of the RIA that supports the final CPP. The EPA is reducing the level of DS-EE in the 

illustrative demand-side energy efficiency plan scenario from the level represented in the 

proposed CPP, from 1.5% annual incremental savings down to 1.0% annual incremental savings. 

The EPA continues to recognize that a wide variety of demand-side energy efficiency measures 

can be cost-effective strategies for reducing CO2 from affected EGUs. These measures are in 

widespread use across the country and can create multiple benefits beyond greenhouse gas 

mitigation including lower electric bills, positive investments and job creation, and reduction of 

other air pollutants from power plants. The EPA also finds that a wide variety of demand-side 

energy efficiency measures have been achieving significant energy savings for years with 

additional opportunity to achieve energy savings in the future and to do so cost effectively. The 

EPA is modifying our approach to estimating DS-EE costs based upon more up-to-date and 

extensive data. The support for the DS-EE costs represented in the final CPP is provided in the 

Demand-side Energy Efficiency TSD for CPP Final Rule and is the basis for DS-EE costs 

represented in the RIA for the final CPP. This illustrative plan scenario reflects a reasonable and 

feasibly level of DS-EE, supported by the information and analysis provide in the TSD. The EPA 

believes that the most significant benefits from DS-EE are captured by the impact analysis 

represented in the Demand-side Energy Efficiency TSD for CPP Final Rule and the RIA 

(Chapter 3). Specifically, through the decreased electricity demand level represented in the CPP 

scenario in IPM, the power system cost impacts that are accounted for include: reductions in fuel 

supply costs, reductions in other variable costs of generation (variable O&M, etc.), avoided new 

generation, and wholesale price impacts.

The following are summaries of the specific public comments under this comment:

Commenters criticized EPA's cost effectiveness modeling- it overestimates costs and does not 

consider all the benefits of EE. For example, commenters said that the assumptions were overly 

conservative, that EPA did not account for integrative design, that the program acquisition costs 

were overstated, and that the states have EE potential above the 1.5% goal.
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Commenters said that "because EPA used unreasonably high and out of date cost assumptions 

for renewable energy and energy efficiency, EPA overstates the costs of compliance and 

underestimates the potential to make these reductions. Commenters stated a study by the Natural 

Resources Defense Council found that simply by updating the cost and performance parameters 

for renewable generation and energy efficiency to be consistent with today's technologies, 

compliance could be achieved at net savings of $1.8 billion in 2020 and $6.6 billion in 2030. 

Commenters stated the same study did IPM modeling of a similar but more ambitious set of 

intensity-based targets and found that the benefits in saved lives, reduced illness, and climate 

change avoided would be $28 to $63 billion, far exceeding the estimated costs. Commenters

then concluded that by 2025, EPA should review and strengthen state reduction and renewable 

energy targets to ensure that the rule is updated with the latest cost-effective opportunities for 

cutting CO2 emissions.

Commenters remarked that the assumptions used by the EPA for energy efficiency in Building 

Block 4 are overly conservative. Commenters explained that his organization has been a deep 

practitioner of energy efficiency for decades, working mainly with the private sector with 

buildings (which use three-fourths of U.S. electricity), industry (one-fourth), transportation, and 

the electricity industry itself. Commenters stated that the assumptions about the high cost, slow 

adoption, and limited life of efficiency measures are systematically far worse than what has been 

documented by LBNL, NAS, and ACEEE, and seem to be based on worst-case data throughout.

Commenters stated that the EPA's analysis did not account for integrative design in energy 

efficiency measures. Commenters referenced several studies that estimated levelized costs as 

being less than what the Agency had assumed in its analysis. Commenters explained that the 

estimated costs in some of those studies were conservative because they did not account for 

integrative design, which optimizes a building or factory as a whole system rather than its 

components in isolation. Commenters noted that integrative design can often make very large 

energy savings cost less than small ones, turning the normally assumed diminishing returns into 

expanding returns. Commenters described examples of how integrative design was applied to 

specific buildings and the industrial sector, and, based on a 20-year average measure life and a 3 

percent social discount rate, resulted in a mean technical cost of $6/MWh for roughly quadrupled 

electric end-use efficiency by 2050. Commenters added that the far smaller quantities of 

electrical savings reflected in current efficiency programs would naturally be expected to cost 

less than this average and suggested that the overwhelming majority of utility efficiency 

programs are sub-optimally designed and do yet not harness integrative design. Commenters

stated that these results reinforce the great conservatism in the EPA's assumptions about energy 

efficiency resources, and that this conservatism will become more so because energy efficiency 

resources keep getting bigger and cheaper. Commenters concluded that, in addition to the 

emissions reductions estimates for Building Block 4, the EPA should assume much greater 

emissions reductions for Building Block 3 because, since 2011, renewables have substantially 

outpaced the targets in both cost and deployment rate.

Commenters stated that the EPA overestimated costs of energy efficiency programs. Four of 

commenters stated that the estimated costs of $0.85 to 0.95/kWh are overstated and not 

consistent with state experience and the most recent data. Commenters explained that the Agency 

based its costs on a 2009 study by ACEEE, but ACEEE updated and expanded the report in 

2014. The revised report indicates that program acquisition costs average $0.23/kWh, which is 
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less than the average cost of $0.275/kWh that the Agency used in its analysis. Commenters also 

cited the costs reported in the more recent ACEEE study. Commenters stated that, in practice, 

energy efficiency costs are one-third to one-fourth of the cost that the EPA assumed. 

Commenters added that cost assumptions that reflect the true cost of energy efficiency programs 

are vital if states are to realize the full benefits of these resources, and, as a result, the EPA's cost 

assumptions should include the more realistic assessments that are being seen in the marketplace. 

Commenters commented that the analysis by the EPA overestimated the cost of improving 

energy efficiency by using cost assumptions more than 60 percent above the costs observed in 

practice, including costs observed in the assessments cited by the EPA. Commenters suggested 

that the EPA use program cost numbers that more properly reflect reality in determining the 

potential for carbon reductions through energy efficiency. Commenters stated that the Agency's 

estimates are very conservative, particularly since energy efficiency is well recognized as a costeffective (and in most cases the least-cost) method to reduce greenhouse gases. Commenters

added that, in analyzing the benefits of energy efficiency as a compliance mechanism, a study by 

ICF estimated an incremental value of additional energy efficiency of $0.012/kWh in 2030. 

Commenters pointed out that these trends and estimates do not support the EPA's high cost 

estimates of energy efficiency during the proposed compliance period. Commenters referenced a 

recent draft study by LBNL that reported program administrator costs average $0.023/kWh 

saved. Commenters added that costs to both the utility and the end users totaled $0.044/kWh 

saved, based on 2009 to 2013 data for programs run by 50 administrators in 19 states from that 

include every U.S. region. Commenters recommended that the EPA use the results of this study 

in its analysis for the final rule. Commenters stated that the Agency's estimated costs are much 

too high, are not consistent with the Northeast and Mid-Atlantic states in their approved energy 

efficiency program filings, and could have a chilling effect on the inclusion of energy efficiency 

in compliance strategies. Commenters recommended that the EPA assume a LCSE in the range 

of $0.50 to $0.55/kWh for future ratepayer-funded energy efficiency programs. Commenters 

remarked that cost assumptions that reflect the true cost of energy efficiency programs are vital if 

states are to realize the full benefits of these resources, and therefore, the EPA's cost assumptions 

should include the more realistic assessments that are now being seen in the marketplace. 

Commenters stated that a more realistic assessment of these costs, based on the long track record 

of energy efficiency programs that have been deployed over the last few decades, would 

significantly lower the overall compliance costs anticipated for the Clean Power Plan, and 

perhaps alter the overall balance of carbon pollution reduction measures that the EPA would 

consider cost-effective in its BSER analysis. Commenters noted that the LBNL study found that, 

on a savings-weighted basis, the average levelized program administrator cost of saved energy 

across the programs sampled was just $0.021/kWh. Commenters explained that, assuming 

comparable participant costs, the total levelized cost would be $0.042/kWh, which is less than 

half of the Agency's estimated cost for 2020 ($0.085/kWh). Commenters added that, even taking 

into account the EPA's assumption that the costs of energy efficiency will escalate by 40 percent 

for states that exceed a savings rate of 1 percent per year, levelized cost based on the LBNL data 

would still be much lower than the EPA's estimate. Commenters recommended that recommend 

that the EPA adopt lower and more realistic cost estimates that better reflect the opportunities for 

cost-effective pollution reductions available under the proposed CPP.

Commenters noted that the EPA projected that achievement of the target incremental savings 

rate will result in first-year energy efficiency costs in 2025 of $21.8 billion. Commenters

explained that LBNL has projected customer-funded budgets for 2025, even under their high 
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projection case, are expected to be only $12.2 billion. Commenters added that LBNL's medium 

case budget projections forecast budgets are $8.1 billion in 2025, indicating a shortfall of $13.7 

billion when compared to the EPA's projected costs.

Commenters stated that all regions of the country have economic and achievable EE potential in 

excess of the EPA's 1.5 percent assumption. Commenters based this statement on an analysis by 

The Analysis Group (The Economic Potential of Energy Efficiency, A Resource Potentially 

Unlocked by the Clean Power Plan) that concluded that there is no geographic trend in 

achievable energy efficiency potential, with some regions hitting this value multiple times and 

across multiple study time periods. Commenters added that the average annual savings potential 

reported represents an annual level of efficiency savings that can be sustained at least over the 

time period studied.

Commenters stated that the proposed energy efficiency target of 1.5 percent should be increased. 

Commenters remarked that a focus on energy efficiency and conservation should be the priority 

of any plan to reduce the impacts of climate change and that the U.S. should maintain a balanced 

approach to energy development that includes land protection and pristine and natural places that 

are set aside for public use. Commenters explained that the EPA should, thus, encourage a faster 

rate of energy efficiency and renewable energy expansion within states, and review the 

assumptions about the compliance cost of energy efficiency in the context of both rate-based and 

mass-based options. Commenters noted that energy efficiency investments have been proven to 

be highly effective and must be a core component in the transition to a clean energy economy. 

Commenters said that "the Proposal ignores nearly half of the established energy efficiency 

market and its potential for reducing emissions. The methodology for calculating EE should be 

improved to include these options. A further limitation is that the Proposal assumes that states' 

EE achievement rates in 2017 will be the same as in 2012, another assumption that limits the EE 

potential presented in this building block."

Commenters said that "the EPA's current Block 4 assumptions underestimate states' energy 

efficiency savings potential and overestimate of the costs of deploying efficiency as a compliance 

option. Evidence from many state and local programs show that states can do more to increase 

their energy efficiency at a lower cost than EPA's assumptions suggest." Commenters provided

some data point on levelized cost from the ACEEE and LBLN studies.

Commenters said that "In Block 4, EPA correctly recognizes that energy efficiency is the most 

cost effective method to reduce emissions, but it also undervalues the role that energy efficiency 

could play - underestimating how much, and how quickly states can affordably deploy by 

overestimating costs and ignoring additional sources of efficiency beyond voluntary utility run 

programs."

Commenters said "EPA's cost-estimate for energy efficiency is unrealistically high and should be 

lowered. EPA estimates that energy efficiency will cost, on average, 4.5 cents/kWh (excluding 

participant costs). However, a thorough review of recent state experiences indicates a much 

lower cost. CUB recommends EPA lower its assumed cost to approximately 3.4 cents/kWh or 

below (excluding participant costs)." Commenters argued that this lower value will reflect true 

cost and accurately incentivize state compliance.
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Commenters concluded that "EPA should also strengthen Building Block 4 by updating EPA's 

underlying cost data and cites the values proposed by ACEEE."EPA should update cost data to 

reflect current assumptions of energy efficiency costs, thus maximizing the Iowa's carbon 

reductions."

Commenters said "the cost per MWh of saved energy of $85/MWh to $90/MWh ($2011) over the 

compliance period is very conservative, particularly since energy efficiency is well recognized as 

a cost-effective (and in most cases the least-cost) method to reduce greenhouse gases. In stark 

contrast to EPA's likely overestimated costs, the American Council for an Energy Efficient 

Economy ("ACEEE") found that the cost of saved energy for programs in Texas averaged $.026 

per kWh in 2009-12 - more than 66% less than EPA's estimate.54 In light of the cost trends 

observed by ACEEE - estimates EPA relies on elsewhere in the rule - EPA's estimates are almost 

certainly too high." "The EPA compounded this error by failing to account for avoided 

generation costs associated with energy efficiency." Commenters provided a table titled 2030 

Texas Electric Sector Costs and Benefits of Compliance (millions 2011$) to support the 

argument.

Commenters urged "the EPA to explain why its estimates of the costs of energy efficiency (EE) 

are much higher than the estimates of other respected national sources, because the 

discrepancies between the estimates undermines the credibility of EE as a building lock in state 

CPP compliance plans."

Commenters said that "they updated these assumptions and reevaluated the Clean Power Plan's 

proposed state targets. Our analysis found that the agency overstates the costs of compliance, 

the amount the power sector would pay to implement the Clean Power Plan as proposed, by $10 

billion in 2020, this correction turns compliance costs into savings." Commenters further said 

that "by overstating the costs, the EPA missed an opportunity to make even deeper carbon 

reductions while keeping costs reasonable."

Commenters also said that the "Updated Cost and Performance" runs demonstrate that EPA can 

strengthen state targets to achieve deeper emissions reductions at reasonable cost, and NRDC 

analyzed potential strengthening of state targets based primarily on the ideas put forth in EPA's 

October 28, 2014 Notice of Data Availability (NODA)." Commenters described some of the 

analyses developed and the available documentation, which include: proposal improvement 

recommendations, the analysis of a case in which only Pennsylvania and New Mexico adopt rate 

targets as a way to provide additional information on the potential for environmental leakage 

between states, and sensitivity analyses on the compliance with targets.

Commenters further said that "simply by making the cost and performance parameters for 

renewable generation and energy efficiency consistent with today's data, NRDC has found that 

compliance with EPA's proposed targets could be achieved at a savings of $1.8 billion (Option 1 

State) to $4.3 billion (Option 1 Regional) by 2020. For 2030, the savings are even larger: $6.4 

billion (Option 1 State) or $9.4 billion (Option 1 Regional). There is a $10 billion difference in 

2020 and a $17 billion difference in 2030 between model runs using EPA's assumptions and the 

Updated Costs and Performance assumptions. These substantial savings indicate that the 
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standards could be strengthened and achieve significantly greater carbon reductions at a 

reasonable cost."

Commenters said that "in addition to underestimating the full potential of efficiency, the EPA 

dramatically overstates the costs of utility energy efficiency programs, the only end-user 

efficiency measures it considers. The agency estimates that the levelized cost to program 

administrators and participants will be 8.5 cents per kWh saved in 2020 and 9.0 cents in 2030. 

The best analyses suggest much lower numbers." Commenters cited and described some of those 

analysis including ACEEE's. 

Commenters presented recommendations for improvement of the proposed rule that included 

"correcting the economic analysis to use recent actual costs of energy efficiency programs plus 

moderate escalation rates. The current EPA economic analysis is overly conservative as it 

applies multiple escalation rates, resulting in average costs more than double those reflected 

today (recent actual costs having averaged 2.8 cents per kWh savings as documented in a March 

2014 ACEEE report."

Commenters noted that "SACE's review of recent cost literature and review of cost recovery 

filings in state regulatory proceeding indicates that the cost assumptions the EPA used for 

energy efficiency compliance appear to be very conservative, and subsequently, quite high. 

SACE has three specific recommendations for EPA regarding its CSE calculations: (1) update 

its cost estimates based on the 2014 ACEEE report, resulting in a 2017 first year net cost of 

$230 per MWh and a 2017 levelized cost of 2.8 cents per kWh; (2) eliminate cost escalation for 

years when incremental energy savings are less than 2.5%; and (3) utilize the 11-year measure 

life in the 2014 ACEEE report." Commenters cited and described the sources of the proposed 

data including the ACEEE study and data from Southeastern utilities in Georgia, Tennessee and 

North Carolina.

Commenters said that "in practice, energy efficiency costs are one-third to one-fourth of the cost 

that EPA assumed. For example, the Lawrence Berkeley National Laboratory found that the 

average levelized cost of energy saved from efficiency programs is 2.1 cents/kWh at a 6 percent 

discount rate. ACEEE also performed a study of the cost of efficiency programs and found that, 

on average, the levelized cost is roughly 2.8 cents/kWh under a 5 percent discount rate and 2.5 

cents/kWh under a 3 percent discount rate." "Cost assumptions that reflect the true cost of 

energy efficiency programs are vital if states are to realize the full benefits of these resources. As 

a result, EPA's cost assumptions should include the more realistic assessments that are being 

seen in the marketplace."

Commenters said that "EPA greatly overestimated the cost of energy efficiency in its Clean 

Power Plan analysis. When EPA's inflated cost assumptions are corrected, the cost of 

compliance is far lower than EPA anticipates, resulting in greater net benefits to ratepayers. We 

encourage EPA to update its energy efficiency costs to reflect the real-world, lower cost of 

energy efficiency." "The more realistic cost estimate presented in these comments is based on an 

in-progress literature review of recent cost of saved energy ("COSE") estimates, standardized to 

use the same basic assumptions of discount rate, measure life time, and dollar year. Across 10 

studies, program administrators, COSE values range from 2.5 to 5.6 cents per kWh of lifetime 

savings, with a median value of 3.1 cents per kWh and an average value of 3.3 cents per kWh."
399

Commenters stated that "while it is not an input to the derivation of Building Block 4 energy 

efficiency values, the EPA has made assumptions about the average cost of electricity savings as 

part of its analysis of the cost for complying with the proposed CO2 emissions reduction goals. 

In particular, the EPA has assumed a levelized cost of saved energy of $85-90 per MWh of 

savings in the 2020-2030 time period. We contend that this cost range is much too high and 

inconsistent with experience regarding the cost of saved energy from utility energy efficiency 

programs." "Numerous studies show that achieving high levels of energy savings in the future 

will continue to be very cost effective, providing large net economic benefits for customers and 

businesses." Commenters cited and described those studies and ends by saying that based on 

these trends and studies, we recommend that the EPA assume total levelized costs on the order of 

$50-55 per MWh saved (based on gross savings) for future utility energy efficiency programs. 

But in conducting cost-benefit analysis for energy efficiency policies and programs, it is critical 

to recognize that energy efficiency programs and measures provide substantial non-energy 

benefits as well as direct energy system benefits of avoided fuel purchases and avoided capital 

investment in energy supply. "

Commenters said that "if electricity consumers were to deploy a combination of EE and RE 

technologies that either save or generate energy during the peak time of day, the overall effect 

will be to improve system load factor producing downward pressure on electric rates." 

"Therefore, instead of the old paradigm where a utility demonstrates a need for new capacity in 

order to meet system peak, and does so with the costs rate-based to all rate payers, I advocate 

for the utility to be rewarded by investing in technology on the demand-side of the meter that 

increases system load factor. Utilities, should recover all costs associated with demand-side 

spending with a sufficient additional Return on Equity (ROE) for improving the system load 

factor."

Commenters said that the EPA assumes cost and performance estimates for energy efficiency 

measures and programs that do not reflect the latest data, resulting in unduly high cost 

assessments. Those estimates cover areas such as first-year program costs, product lifetimes, 

program costs over time, and levelized cost of saved energy (LCSE)." Commenters proceeded by 

providing specific recommendations for each of them.

Commenters said that costs do not rise with increased EE and even when low hanging fruit 

measurements have been already implemented.

Commenters stated that they have found no evidence of a strong correlation between program 

acquisition costs or LCSE and the level of energy savings. Commenters explained that his 

organization's research indicates that LCSE never exceeds $0.06/kWh, even when savings 

exceed 2 percent of retail electricity sales. Commenters cited data from a report by Molina 

(Molina, M. 2014. The Best Value for America's Energy Dollar: A National Review of the Costs 

of Utility Energy Efficiency Programs. Washington, DC: American Council for an EnergyEfficient Economy.) to support this conclusion. Commenters noted that a study of LCSE from 

2005 to 2012 shows average utility costs were relatively flat during that period; as programs 

achieved deeper energy savings, utility costs were stable and remained within the range of $0.02 

to $0.03/kWh. Commenters added that, while some lower cost efficiency measures, such as 

CFLs, will likely play a much smaller role in achieving energy savings going forward, new 

technologies that are already viable such as LED lighting, smart thermostats, advance controls 
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technology, heat pump clothes dryers, and others will increase savings potential at low cost. 

According to commenters, based on the EPA's assumptions for participant costs, total program 

costs would average $0.05 to $0.06/kWh. Commenters added that, therefore, it is inappropriate 

for the Agency to conclude that costs would increase 120 to 140 percent over time. Commenters

stated that states in the Northeast, where energy efficiency programs are only among the most 

mature in the country, have ever-increasing savings goals being set and realized. Commenters

stated that thus, it has not been the case in the Northeast that once easier to achieve measures, 

such as residential lighting installations, are broadly deployed that program costs will 

significantly increase.

Commenters commented that the evidence simply does not support the EPA's assumption that 

states will experience increasing costs at energy savings levels below 1.5 percent per year. 

Commenters cited a study by The Analysis Group that found that the first-year cost of saved 

energy declines as a state increases its savings level to 2.5 percent, and there were diminishing 

returns only after savings levels reached 2.5 percent. Commenters referenced another study by 

Synapse Energy Economics that also found that the unit cost of saved energy for a cross-section 

of high-performing utilities declined with increasing levels of savings, even at savings levels of 2 

percent of annual sales. Commenters stated that the study concluded that the results likely 

reflected economies of scale and learning effects, and stated that, while there exists a possibility 

that unit costs might begin to increase at much higher levels of energy efficiency program 

savings, the evidence suggests that current program savings levels have not yet approached any 

such point. Commenters urged the EPA to revise its cost assumptions for energy efficiency to 

better reflect the results of the LBNL analysis and other credible studies that found little to no 

relationship between total energy savings and costs at levels of 1.5 percent per year or less. 

Commenters added that more realistic cost projections for energy efficiency would significantly 

reduce the overall anticipated cost of the Clean Power Plan, and indicate that increased levels of 

pollution reduction are cost-effective to achieve.

Commenters said that "one of the strongest findings of the empirical literature is to support the 

theoretical expectation that technological innovation will drive down the cost of improving 

energy efficiency and reducing greenhouse gas emissions. A comprehensive review of 

Technology Learning in the Energy Sector found that energy efficiency technologies are 

particularly sensitive to learning effects and policy. "Commenters also said that "experience 

curves, sometimes referred to as "learning curves," are a useful analytical construct for 

understanding the magnitude of these improvements. Analysts have long observed that products 

show a consistent pattern of cost reduction with increases in cumulative production volume."

Commenters highlighted that "ACEEE's latest review actually compares CSE values to relative 

electricity savings thresholds (i.e. savings as a percentage of applicable retail electricity sales), 

finding only a weak correlation between the two values, which "casts doubt on the hypothesis 

that programs with higher electricity savings levels are associated with higher CSE values." 

Some experts actually suggest that the increasing penetration of information technology may 

result in energy efficiency resources becoming progressively cheaper."

Commenters stated moreover, energy efficiency measures have already been implemented in 

various states more quickly and at lower cost than EPA has assumed they can be. Energy 

efficiency measures therefore have not only already been "adequately demonstrated" within the 
401

meaning of the Clean Air Act, but have in fact been demonstrated to be more effective and less 

costly than EPA has assumed. Commenters urged EPA to use the most realistic cost estimates 

and the most current data in issuing its final rule. 

Commenters stated the cost of EE is under half the cost of building coal power plants. 

Commenters stated a recent report presented to the NARUC by LBNL determined the average 

total cost of saved energy is only 4.4 cents per kilowatt hour vs U.S. EIA's estimate for the cost 

of conventional coal for utilities, 9.5 cents per kilowatt hour, more than double the total cost of 

saved energy. Commenters stated this means that EE and other smart uses of energy that can be 

controlled from the demand side can replace dirty coal at a fraction of the cost of building coal 

plants to generate electricity (and without polluting our air or exacerbating climate disruption).

Comment 6: CPP targets are difficult to achieve, cannot be maintained in the long term, and/or 

are difficult to verify and enforce.

Response 6: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule and therefore we do not need to address further 

comments supporting the removal or changes in the level of DS-EE in BSER. This determination 

is discussed in sections V.A and V.B of the final rule preamble of the CPP. Even though 

demand-side energy efficiency is not being included in the BSER in this final rule and, thus, not 

included in the determination of emission performance rates, the final rule provides states the 

flexibility to use demand-side energy efficiency measures in their state plans for compliance to 

meet the emission guidelines set forth in the final CPP, provided they meet the applicable 

requirements established in section VIII of the preamble for the CPP. The EPA recognizes that 

one of the major approaches available for achieving CO2 emission reductions from the electric 

power sector is demand-side energy efficiency. The EPA continues to believe that significant 

emission reductions can be achieved by affected EGUs by the use of such measures cost 

effectively and that such measures are likely to represent an important component of state plans. 

Accordingly, the EPA is including a level of DS-EE as a component of our illustrative plan 

scenarios that are the basis for the analysis discussed in Chapter 3 of the RIA that supports the 

final CPP. The EPA is reducing the level of DS-EE in the illustrative demand-side energy 

efficiency plan scenario from the level represented in the proposed CPP, from 1.5% annual 

incremental savings down to 1.0% annual incremental savings. For support for the representation 

of DS-EE in the illustrative EE plan scenario, see the Demand-side Energy Efficiency TSD for 

CPP Final Rule. This illustrative plan scenario reflects a reasonable and feasibly level of DS-EE, 

supported by the information and analysis provide in the TSD.

The following are summaries of the specific public comments under this comment:

Commenters said that CPP targets are difficult to achieve, cannot be maintained in the long term, 

and/or are difficult to verify and enforce. 

Commenters questioned the validity of the Agency's assumption that that annual energy 

efficiency savings can be maintained at a level of 1.5 percent. Commenters commented that the 

Agency acknowledged that this level of savings has been achieved by only a few states, and no 

state has demonstrated that these rates can be sustained over several years. Commenters added 
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that the Arizona Corporation Commission recently proposed to scale back their energy efficiency 

program because the costs were exceeding the benefits to consumers, noting that most of the 

most of the energy efficient upgrades were adopted in the early years of the program. 

Commenters remarked that, in the state of Washington, certain utilities were allowed to set their 

own energy efficiency goal. 

Commenters explained that two cooperatives subject to the program were able to achieve their 

target savings, but for both cooperatives, the percentage of actual energy efficiency savings 

decreased year-on-year. Commenters added that it is typical for most utilities to meet their goals 

in the early years, when there are low-hanging fruit options, but, in each subsequent year, as 

these low-cost options are exhausted, it becomes more expensive to implement additional 

programs and more difficult to find customers willing to participate to a greater extent and at a 

greater up-front cost. Commenters explained that, to achieve 1.5 percent annual savings with a 

50 percent incentive level, the state of Georgia would need a 9.83 percent net cumulative 

reduction in electricity demand by 2030. Commenters stated that the latest Georgia Power 

technical potential study filed with the Georgia PSC in 2012, indicated that the cumulative 

theoretically achievable DSEE potential after 12 years (2012 to 2023) at a 50 percent incentive 

level was about 9 percent on a gross basis of retail sales. Commenters explained that, on a net 

basis, this equates to about 6 percent, which is well short of the EPA's proposed net target. 

Commenters added that the EPA portrays the cost of achieving similar levels for the entire state 

of Georgia as approximately equivalent to the results of a technical potential study for one utility 

in the state. Commenters stated that proposed guideline assumption of 1.5 percent annual 

increase in incremental savings is ambitious, and that there are uncertainties that suggest the 

proposed annual increases in incremental energy efficiency savings are not achievable as 

proposed. Commenters gave lighting as an example, where the baseline for energy savings will 

change since CFLs and LEDs will be replacing CFLs, not the less-efficient incandescent bulbs, 

and therefore, the program will not likely be able to provide the same level of savings as it has in 

the past.

Commenters stated that the savings estimated by the Agency are unachievable and provided an 

example of high efficiency heat pump replacement to illustrate his point. Commenters explained 

that savings are the product of participation rate and percent savings, and that, if an energy 

efficiency measure consisted of replacing heat pumps with new models that are 30 percent more 

efficient, the overall reduction in household consumption would be 10 percent. Commenters

stated that, to achieve a saving of 1.5 percent, the utility would need an annual participation rate 

of 15 percent (0.1 x 0.15 = 0.015). Commenters added that, if heat pumps are replaced at the end 

of an average 15-year lifetime, only 6.7 percent of the customer base would be in the market for 

an upgrade in any given year (1/15 = 0.067 = 6.7%). Commenters stated that the efficiency gains 

(percent savings) for many energy efficiency measures are even smaller than for heat pumps, 

and, due to the high costs, participation rates for some measures may be even lower the 6.7 

percent rate used in this example.

Commenters stated that the proposed annual 1.5 percent reduction in capacity demand, 

culminating in a 10 percent reduction for the state of Florida, is reasonable. Commenters first 

requested that the EPA clarify whether the 10 percent applies to avoided capacity or the 

percentage of annual sales. Commenters then stated that Florida's historical demand-side energy 

management (DSM) data supports the commenters' conclusion. Commenters explained that the 
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Florida Energy Efficiency and Conservation Act (FEECA) declares the use of DSM programs to 

be critical and directs the Florida Public Service Commission to adopt goals and approve plans to 

implement DSM programs in Florida. Commenters stated that, since 1981, Florida consumers 

have paid more than $5.7 billion for DSM programs. Commenters explained that Florida Statutes 

require that conservation goals be established at least every 5 years after a careful analysis of 

technical potential, cost-effectiveness, and other factors. Commenters explained that, in the 

benchmark year of 2012, DSM programs achieved a reduction of 259.7 MW (0.45 percent of 

total capacity) at a cost of $388 million, or $1.49 million per MW of capacity need avoided by 

DSM. Commenters pointed out that the proposed rule's use of 10 percent DSM avoided capacity, 

which equals 5,745 MW for the 2012 benchmark year, will cost an estimated $8.6 billion each 

year and therefore is unreasonable both in terms of proposed cost and achievability based on 

Florida's actual historical data. Commenters added that setting an arbitrary goal without 

considering the technical potential or the cost-effectiveness of the programs to achieve the goal is 

contrary to Florida Statutes.

Commenters said that "the gap between the agency's efficiency wish and technological reality 

has significant implications for the cost of the rule. Since most of the lowest cost efficiency 

measures are already being deployed, the next increment will be more expensive especially in 

states with the lowest retail power prices.

Commenters described why the CPP's goals are unattainable based on increasing levelized cost 

for energy efficiency and provides a list of case studies showing the increases in LCEE. The list 

included locations in Indiana, Ohio, Florida, Kentucky, and Oregon.

Commenters stated that "the proposed rule anticipates that Utilities would provide incentives to 

customers to purchase more efficient appliances, furnaces and air conditioners. However, The 

Utility has no authority to make customers invest in these or other energy improvements. To 

expect that load can be reduced by 1.5% per year through this process is not realistic."

Commenters said that "In addition, rebound effects of EE measures should be considered, 

particularly in conjunction with a mass based BSER scenario. More efficient use of energy 

results in (as stated in GHG TSD at 5-29) "[a]n improvement in energy efficiency would 

effectively reduce the cost of a service or production input, potentially boosting its demand or 

production output thus increasing energy use." This creates additional growth in demand and 

energy. Although good for the economy, this additional demand and energy usage makes a state 

goal more difficult to achieve."

Commenters argued that EE cannot be an enforceable compliance measure. Regardless of how 

much time, effort and money are committed to EE, there is no way to know how effective it will 

be." commenters concluded that the Proposed CPP includes unachievable EE goals which will 

undermine Hoosier Energy's ability to provide reliable electricity."

Commenters said that "IOUs have actively developed EE programs under the incentives 

provided in North Carolina, and yet their history indicates that the EPA goals of a 1.5% annual 

incremental rate and a 10.3% annual cumulative rate by 2029 far exceed the past achievements 

of EE savings."
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Commenters said that "while energy efficiency certainly has virtue as a goal, increasing savings 

in Montana will be difficult to achieve without significant cooperation from utilities and their 

regulatory authorities. The Montana PSC would need to dramatically increase the USB 

surcharge or rely on utilities to voluntarily increase contributions to make energy efficiency a 

significant component of the state's plan for meeting its Clean Power Rule emissions target." 

"Ultimately ratepayers or taxpayers will pay to drive the sort of efficiency gains envisioned in 

the proposed rule. EPA has overlooked these costs in producing an unrealistic estimate of 

overall costs of the proposed rule. There is simply too much uncertainty about whether states can 

actually achieve significant increases in energy efficiency and whether such increases would be 

cost-effective."

Comment 7: Aggressive EE implementation schedule could be cost prohibitive.

Response 7: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule. This determination is discussed in sections V.A and 

V.B of the final rule preamble of the CPP. Even though demand-side energy efficiency is not 

being included in the BSER in this final rule and, thus, not included in the determination of 

emission performance rates, the final rule provides states the flexibility to use demand-side 

energy efficiency measures in their state plans for compliance to meet the emission guidelines set 

forth in the final CPP, provided they meet the applicable requirements established in section VIII 

of the preamble for the CPP. Accordingly, the EPA is including a level of DS-EE as a 

component of our illustrative plan scenarios that are the basis for the analysis discussed in 

Chapter 3 of the RIA that supports the final CPP. The EPA is reducing the level of DS-EE in the 

illustrative demand-side energy efficiency plan scenario from the level represented in the 

proposed CPP, from 1.5% annual incremental savings down to 1.0% annual incremental savings. 

In addition, the EPA is changing the start year for the DS-EE savings and cost estimates from 

2017 (proposed CPP) to 2020 in the final CPP. The support for the DS-EE savings levels and 

costs supporting the final CPP is provided in the Demand-side Energy Efficiency TSD for CPP 

Final Rule and is the basis for DS-EE savings and costs represented in the RIA for the final CPP.

This illustrative plan scenario reflects a reasonable and feasibly level of DS-EE, supported by the 

information and analysis provide in the TSD. The EPA believes the implementation schedule for 

DS-EE represented in the final rule is supported by extensive industry experience as detailed in 

the TSD and is reasonable.

The following are summaries of the specific public comments under this comment:

Commenters in this summary pointed out that aggressive EE implementation schedule could be 

cost prohibitive.

Commenters stated that the Agency's aggressive schedule for implementing energy efficiency 

measures could be cost-prohibitive. Commenters explained that the EPA's estimates of the costs 

for implementation of the proposed energy efficiency requirements show a substantial level of 

investments that would result in significant rate impacts on customers. Commenters added that 

simply inviting comments does not provide an adequate basis for reasonably estimating costs.
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Comment 8: EE has a diminishing rate of return

Response 8: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule. This determination is discussed in sections V.A and 

V.B of the final rule preamble of the CPP. Even though demand-side energy efficiency is not 

being included in the BSER in this final rule and, thus, not included in the determination of 

emission performance rates, the final rule provides states the flexibility to use demand-side 

energy efficiency measures in their state plans for compliance to meet the emission guidelines set 

forth in the final CPP, provided they meet the applicable requirements established in section VIII 

of the preamble for the CPP. Accordingly, the EPA is including a level of DS-EE as a 

component of our illustrative EE scenario that is the basis for the analysis discussed in Chapter 3 

of the RIA that supports the final CPP. The EPA is reducing the level of DS-EE in the illustrative 

EE scenario relative to the level represented in the proposed CPP, from 1.5% annual incremental 

savings down to 1.0% annual incremental savings. In addition, the EPA is changing the start year 

for the DS-EE savings and cost estimates from 2017 (proposed CPP) to 2020 in the final CPP. 

The support for the DS-EE savings levels and costs supporting the final CPP is provided in the 

Demand-side Energy Efficiency TSD for CPP Final Rule and is the basis for DS-EE savings and 

costs represented in the RIA for the final CPP. The EPA finds that the sustained achievement of 

these revised levels of savings is achievable and a reasonable basis for the illustrative EE plan 

scenario. This illustrative plan scenario reflects a reasonable and feasibly level of DS-EE, 

supported by the information and analysis provide in the TSD.

The following are summaries of the specific public comments under this comment:

Commenters said that EE has a diminishing rate of return. 

Commenters stated that, in order to meet the energy efficiency standard of 1.5 percent savings 

per year, the costs of reducing energy consumption would be significantly greater than what the 

EPA has modeled. Commenters explained that, in terms of energy efficiency measure 

implementation, most utilities that have already "picked the lowest hanging fruit." Commenters

added that appliance efficiency standards and building codes have been improving energy 

efficiency for decades. Commenters explained that, in many cases, further increasing 

expenditures on efficiency improvements on existing commercial, industrial, and residential 

structures could lead to a decreasing return on investment. Commenters listed several codes and 

standards that have significantly reduced energy consumption over the past few decades and 

stated that, eventually, appliances and other energy efficiency measures incorporated in codes 

will reach a maximum efficiency level due to constraints on the technology and other factors. 

Commenters concluded that the net effect is that there will be a diminishing return on investment 

for energy efficiency measures, and the 1.5 percent annual savings assumed for the proposed rule 

will not be achievable.

Commenters stated that the cost of expanding energy efficiency programs in states with existing 

energy efficiency programs will be greater than the historic average program costs because states 

and utilities have already taken advantage of the most cost-effective energy efficiency options. 

Commenters explained that at least 27 states use a cost effectiveness test in deciding whether to 

implement an energy efficiency measure, and some potential energy efficiency programs may 
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not be implemented because they do not pass state cost effectiveness tests. Commenters added 

that, outside the Midwest and South, most states have established energy efficiency programs, 

and thus, have less cost-effective energy efficiency measures available to them. Commenters

stated that, as a result, these states will have higher marginal costs in meeting their higher 

electricity savings targets, if the states can meet the targets at all. Commenters commented that 

utilities that have had energy efficiency programs ongoing for years, or even decades, would 

experience increased costs for incremental energy efficiency savings because energy efficiency 

is prevalent in those states, and the potential for additional savings through energy efficiency is 

reduced. Commenters expressed reservations regarding the EPA's estimate that a 0.5 percent 

increase in energy efficiency will only require a 20 percent increase in energy efficiency 

spending. Commenters cited two studies that supported this conclusion.

Commenters stated that the analysis of cost impacts for the proposed rule arbitrarily relies on a 

single estimate of national average energy efficiency program costs, despite the fact that baseline 

energy efficiency levels vary widely from state to state. Commenters explained that the 

calculation of costs in this way has the effect of understating the significant costs of incremental 

energy efficiency savings, particularly in those states, like Pennsylvania, that have already made 

substantial investments in energy efficiency. Commenters explained that additional energy 

efficiency savings beyond those already achieved will typically be costlier and harder to come by 

in states that have already made substantial energy efficiency investments and that have already 

implemented less-costly energy efficiency measures. Commenters commented that, by not 

considering these higher costs, the emissions reductions have not been adequately demonstrated 

to be cost effective.

Commenters cited Missouri DSM potential studies to support the argument that "program costs 

as incremental energy savings shrink." Therefore, "the incremental cost of going from realistic 

to maximum achievable ("RAP" and "MAP") energy efficiency potential." Commenters provided

a figure to illustrate this point.

Commenters said that "as an established EE program develops, most of the no cost or low cost 

(low hanging fruit) is exhausted. The remaining EE savings, therefore, becomes more costly to 

acquire. These programs require more complex administration to address various levels of 

incentives, financing and tiered rebates. This increases the EE program administration costs and 

greatly increases the dollars spent relative to the energy saved." "Accordingly, the EPA proposal 

needs to recognize the difference between relatively new state EE programs and very mature EE 

programs and, likewise, allow states like New Jersey to demonstrate and include their baseline 

savings from past years as part of the goal. It is simply not equitable to view a new state EE 

program the same as a state like New Jersey that has been advancing EE saving for over 30 

years without an EPA mandate."

Commenters stated that "the pool of achievable, cost effective DSM is finite (reference the 84.3 

MW of DSM identified in the 2009 Plan, for example). As customers implement EE measures due 

to our programs, the pool of remaining opportunities for efficiency improvements shrinks, 

making it increasingly difficult to continue to achieve constant year-over-year savings goals of 6 

MW."
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Commenters went further to say that "because of the lack of additional cost-effective programs, 

NorthWestern has not forecast increasing its annual DSM savings goal. In fact, because of the 

issues just discussed, we are concerned that achieving 6 MW per year of cost-effective DSM 

savings into the future is unlikely. In any event, we expect the recent trend of decreasing 

program savings to continue, at least in the near term, absent stabilized or increased avoided 

costs and/or the appearance of a new cost-effective energy efficiency technology or 

technologies." "In the broader context for the state of Montana, NorthWestern has no way of 

projecting the energy savings potential or pace of savings for large electric customers who are 

deemed "Choice customers". Additionally, NorthWestern has no way of projecting the energy 

savings of the other regulated utilities or the rural electric co-ops that serve large portions of the 

state. These two points are added because much of the remaining energy efficiency potential in 

Montana is beyond NorthWestern Energy's scope or control."

Commenters said that "most of the investments undertaken by our community far exceed EPA's 

expectations of EE's cost per avoided ton of CO2. Second, EE investments made in advance of 

the CPP are only counted for ten years while we conclude that some of these investments (like 

insulation), last far longer." Commenters provided examples and concluded by saying that 

"early investments in EE tend to start with the highest return, meaning that early actors are left 

with lower return investments."

Commenters said that "states with ambitious existing energy efficiency programs tend to have a 

larger obligation than states where energy efficiency policies are less advanced. How these 

differences will impact cost-effectiveness at the national level is an open question. One might 

expect there to be more low-cost opportunities for saving energy in the inexperienced states 

where energy-using equipment and buildings are presumably less efficient than in the more 

experienced states. But it could also be the case that more experience with running energy 

efficiency programs results in learning by doing - and greater future energy savings at a lower 

cost. Or both factors could be at play simultaneously with the ultimate answer depending on the 

balance between the two."

Commenters stated that the EPA target of 1.5 percent net savings by 2020 is very aggressive and 

potentially very costly to customers. Commenters stated that as the 'low hanging fruit' savings 

have already been captured, it will be more difficult to capture the same level of savings in a cost 

effective manner. As such, commenters stated that achieving 1.5 percent net savings by 2022 is 

very aggressive and is concerned with the burden of cost placed onto customers if this level of 

EE is required.

Comment 9: Need to consider state specific EE potential, electricity supply and demand and 

regulatory environment.

Response 9: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule and therefore we do not need to address further 

comments supporting the removal or levels of DS-EE from BSER. This determination is 

discussed in sections V.A and V.B of the final rule preamble of the CPP. Even though demandside energy efficiency is not being included in the BSER in this final rule and, thus, not included 
408

in the determination of emission performance rates, the final rule provides states the flexibility to 

use demand-side energy efficiency measures in their state plans for compliance to meet the 

emission guidelines set forth in the final CPP, provided they meet the applicable requirements 

established in section VIII of the preamble for the CPP. Accordingly, the EPA is including a 

level of DS-EE as a component of our illustrative EE plan scenario that is the basis for the 

analysis discussed in Chapter 3 of the RIA that supports the final CPP. The EPA is reducing the 

level of DS-EE in the illustrative EE scenario relative to the level represented in the proposed 

CPP, from 1.5% annual incremental savings down to 1.0% annual incremental savings. The EPA 

finds that these levels are achievable and a reasonable basis for the illustrative EE plan scenario 

in all states even considering the unique characteristics that affect achievable EE potential in 

each state. This is addressed in the Demand-side Energy Efficiency TSD for CPP Final Rule and 

is the basis for DS-EE illustrative plan scenario represented in the RIA for the final CPP. This 

illustrative plan scenario reflects a reasonable and feasible level of DS-EE, supported by the 

information and analysis provide in the TSD.

The following are summaries of the specific public comments under this comment:

Commenters pointed out a need to consider state specific EE potential, electricity supply and 

demand and regulatory environment.

Commenters stated that South Carolina's actual energy efficiency potential is greater than the 

savings scenario used in Building Block 4. Commenters explained that South Carolina's average 

household electricity consumption is among the highest in the country, due in part to inefficient 

housing stock, and, as a result, the state's commercial and industrial energy users collectively 

represent vast potential for gains in energy efficiency. Commenters noted that such gains would 

not only reduce demand for electricity and result in lower emissions from fossil-based generating 

units, but would also mean bill savings for citizens and businesses, and would stimulate 

economic growth via the efficiency segment of the housing and commercial building sectors in 

South Carolina. Commenters also explained that, based on the assumptions used by the Agency 

to estimate energy efficiency savings, the efficiency potential for South Carolina equates to 

10,205 GWh of cumulative energy savings by 2030. Commenters explained that, in fact, South 

Carolina's energy efficiency resource is far larger. Commenters stated that, in a 2009 analysis of 

energy efficiency potential in South Carolina prepared by ACEEE, the medium and high cases 

would produce twice the energy that the EPA has assumed to be available for Building Block 4 

for South Carolina. Commenters concluded by stating that the EPA should recognize the 

enormous potential for efficiency gains in South Carolina to satisfy a significantly greater 

portion of the state's emissions reductions requirements than is indicated by the Building Block 4 

savings figures used within the target-setting.

Commenters said that "the presumed fairness of applying goals deemed reasonable by 11 states 

to the 39 states which have not adopted such goals lacks support, particularly given the 

fundamental differences in energy generation, energy use, and electricity demand growth by 

state."

Commenters further said that "given the difference in geography, temperature extremes, 

population demographics and the types of economic activity (manufacturing, farming, 

commercial, tourism, etc.) that are present in individual states across the continental U.S., it 
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seems unlikely that end-use efficiency savings could be ramped up aggressively and then 

maintained at the 1.5 percent annual rate of improvement by all states."

Commenters invited EPA to consider Louisiana's report on EE potential titled "Louisiana's 2030 

Energy Efficiency Roadmap; Saving Energy, Lowering Bills, and Creating Jobs", which 

commenters present as attachment.

Commenters argued that "EPA's assumptions about demand side reductions do not account for 

the unique competitive market and regulatory structure in Texas." 

Commenters said that "state targets under building block #4 are not differentiated based on the 

potential for associated carbon reductions. Indeed, states with some of the highest building block 

#4 requirements, including Maine, California, and Connecticut, have some of the lowest historic 

CO2 emissions rates. In contrast, some high emitting states, including Wyoming and West 

Virginia, have some of the lowest efficiency potentials. (This latter observation is not surprising 

as high emissions rates tend to be correlated with low electricity prices and thus weak economic 

incentives to encourage energy savings through investments in efficiency, setting aside 

environmental arguments for such investments). Across the 50 states there is a small negative 

correlation between efficiency potential and average CO2 emissions rates in 2012. This lack of 

correlation raises the question of whether a more targeted approach would improve both the 

effectiveness and cost-effectiveness of this building block."

Comment 10: Costs and impacts for low income areas, rural areas and cooperatives

Response 10: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule and therefore we do not need to address further 

comments supporting the removal or levels of DS-EE from BSER. This determination is 

discussed in sections V.A and V.B of the final rule preamble of the CPP. Even though demandside energy efficiency is not being included in the BSER in this final rule and, thus, not included 

in the determination of emission performance rates, the final rule provides states the flexibility to 

use demand-side energy efficiency measures in their state plans for compliance to meet the 

emission guidelines set forth in the final CPP, provided they meet the applicable requirements 

established in section VIII of the preamble for the CPP. Accordingly, the EPA is including a 

level of DS-EE as a component of our illustrative EE plan scenario that is the basis for the 

analysis discussed in Chapter 3 of the RIA that supports the final CPP. The EPA is reducing the 

level of DS-EE in the illustrative EE plan scenario relative to the level represented in the 

proposed CPP, from 1.5% annual incremental savings down to 1.0% annual incremental savings. 

In addition, the first year of DS-EE savings for the illustrative scenario has been moved back 

from 2017 (proposed CPP) to 2020 in the final rule. The EPA finds that these levels are 

achievable and a reasonable basis for the illustrative EE plan scenario in all states and has 

estimated the associated costs. Based upon more up-to-date and extensive data the EPA is 

modifying our approach to estimating DS-EE costs. The support for the DS-EE levels supporting 

the final CPP is provided in the Demand-side Energy Efficiency TSD for CPP Final Rule and is 

the basis for DS-EE costs represented in the RIA for the final CPP. This illustrative plan scenario 

reflects a reasonable and feasibly level of DS-EE, supported by the information and analysis 

provide in the TSD. The data and analysis supporting DS-EE savings and associated costs is 
410

representative of all states and regions and, thus, includes significant levels of DS-EE delivered 

to low income communities as well as rural areas and those served by cooperatively-owned 

utilities. Further, because certain communities, including low-income communities, are 

disproportionately affected by climate change related impacts, the EPA is seeking to ensure that 

states are actively engaging with communities and is, therefore, requiring states to provide, in 

their initial plan submittal, a summary of how they have been engaging with community 

stakeholders and how they intend to meaningfully engage with community stakeholders during 

the additional time (if an extension is granted) for development of the final plan. For the final 

plan submittal, states must have meaningful engagement with all members of the public, 

including affected communities, during the final plan development process, pursuant to the 

public participation requirements of the implementing regulations. See section VIII of final rule 

preamble for further discussion on these requirements.

The following are summaries of the specific public comments under this comment:

Commenters talked about the costs and impacts for low income areas, rural areas and 

cooperatives.

Commenters remarked that a report by LBNL cited extensively by the EPA highlights energy 

efficiency program constraints faced by program administrators serving a large share of 

residential and/or low-income consumers. Commenters explained that, while the report does 

show a low weighted average administrator LCSE, it also shows median costs for residential 

programs more than twice the weighted average, and both average and median administrator 

costs for low-income programs double to triple those of other types. Commenters added that both 

residential and low-income programs show a very wide interquartile range, meaning that there is 

great cost variability across these programs. Commenters stated that this suggests that most 

cooperatives will likely face administrative costs higher than the average used by the Agency, 

which is based more on densely populated urban areas. Commenters remarked that, in the case of 

low-income consumers, even higher administrative costs will result, given the need to directly 

subsidize their limited ability to afford the upfront costs necessary for energy efficiency 

improvements.

Commenters commented that the Agency's LCSE is based on discount rates that are not 

appropriate for cooperatives. Commenters explained that, unlike large businesses, the average 

homeowner is less inclined or able to make the kind of cost minimizing decisions that many 

economic models are based upon. Commenters explained that even when consumers have the 

necessary information, these investments are often not attractive if the payback period exceeds 

how long a person intends to stay in a home, or when weighed against other types of investment. 

Commenters stated that, while the 3 percent and 7 percent rates used by the EPA are commonly 

used market discount rates that might reasonably be applied to electric cooperative 

administrative costs, there appears to be much higher private discount rates among residential 

consumers, and especially among low-income households, that could conservatively range 

between 15 percent and 25 percent. Commenters added that, assuming a 7 percent discount rate 

for the cooperative, this would give a blended discount rate for the administrator and the 

consumer of 11 to 16 percent.
411

Commenters remarked that energy efficiency programs typically are designed to split the costs 

evenly between program administrators and consumers. Commenters stated that, because 

distribution cooperatives are not-for-profit businesses owned by the consumers they serve, the 

distinction between what costs are borne by the cooperatives and by their member-consumers is 

blurred. Commenters added that, ultimately, any energy efficiency program costs are borne by 

consumer-owners through higher electric bills. Commenters explained that the unique business 

model of electric cooperatives is well suited to pursue cost-effective energy efficiency programs, 

but the Agency's arbitrary targets offer no evidence that the additional costs will ultimately save 

cooperative consumers money. Commenters concluded that this is a significant cost for 

consumers, on top of other increased costs they will bear in the monthly electric bills driven by 

the proposed rulemaking.

Commenters commented that it is more difficult for rural electric cooperatives to bear the costs 

of the proposed rule. Commenters stated that rural cooperatives are typically small, averaging 

fewer than 48 employees, and they serve vast rural territories that average 7 meters per mile. 

Commenters explained that the low density of these areas often means a lack of energy 

efficiency vendors and service providers, who tend to focus on more lucrative markets in more 

densely-populated areas. Commenters added that over 62 percent of cooperative customers are 

residential, and cooperatives serve 93 percent of the nation's persistent poverty counties, as well 

as other high-poverty areas. Commenters commented that, as a result, electric cooperatives face 

significant challenges in implementing energy efficiency programs that are likely to raise their 

costs significantly compared to other utility program administrators. Commenters added that, due 

to their small size, rural cooperatives often have too few consumers to recover the costs of 

implementing energy efficiency programs without burdening members. Commenters stated that 

energy efficiency measures undertaken in the residential sector are considerably less effective on 

a dollar-per-kWh-reduction basis than those undertaken in the industrial and commercial sectors. 

Commenters noted that the proposed rule would apply the same energy efficiency potential 

across the residential, commercial, and industrial sectors, even though industrial processes are 

already designed to maximize efficiency in order to maximize profits. Commenters stated that 

Building Block 4 thus imposes greater burdens on rural electric cooperatives, which have 

disproportionately residential customer bases, than are imposed on municipal and investorowned utilities, and the proposed energy efficiency targets would result in cooperatives incurring 

additional cost per member/ratepayer. Commenters further explained that rural cooperatives 

serve the poorest, most rural areas of the country where household electricity consumption tends 

to be higher due to the prevalence of houses that are larger and more exposed to the elements 

than urban housing and a disproportionate share of energy-inefficient, manufactured housing. 

Commenters added that the challenges to successful energy efficiency programs are further 

exacerbated by the large size of rural cooperative service territories.

Commenters stated that, because of the higher private discount rates associated with rural 

residential consumers, electric cooperatives would have to spend far more on education, 

promotion, and incentives to even attempt to achieve the 1.5 percent annual savings goal.

Commenters commented that consumers living in economically disadvantaged areas cannot 

afford energy efficiency upgrades. Commenters explained that some of the counties in the 

commenters’ service area have average household incomes that are less than half the national 

average. Commenters explained that, in areas where incomes are low and unemployment levels 
412

are high, consumers must postpone making improvements that are not cost-justified in the shortterm, even if there would be a long-term economic benefit. Commenters explained that energy 

efficiency improvements are expensive and often require significant capital investment, and that 

customers usually avoid such large expenditures until a precipitating event occurs, such as failure 

of their HVAC system. Commenters added that, with current economic conditions, this is 

extremely challenging, particularly in the state of Florida due to significant portions of Florida 

being economically disadvantaged. Commenters stated that, in the long-term continued 

challenges are expected in motivating customers to pay premiums for energy efficiency 

improvements.

Commenters remarked that it is more difficult for cooperatives to achieve the goal of 1.5 percent 

annual energy efficiency savings because electricity costs are much higher when compared to 

IOUs and municipal utilities. To illustrate their point, commenters said that, in the state of 

Minnesota, the average cost per kWh saved for cooperatives is more than double the cost to other 

utilities in the State. Commenters added that the cooperatives also spent 6.95 percent of their 

gross operating revenue to achieve the reductions, which is almost twice the cost for other 

utilities.

Commenters talked about impacts on rural populations. "Hoosier Energy is significantly 

disadvantaged by Building Block 4 of the proposed CPP. The proposed CPP anticipates a 

significant increase in EE that will translate into a reduced demand for electricity. However, the 

proposed CPP does not consider the real life situation of many members of the rural electric 

cooperatives and does not consider the impact Building Block 4 will likely have on reliability."

Commenters said that "while EE is a significant and valuable investment and can be cost 

effective, it is not without problems. EE incentive programs, such as rebate programs, generally 

fail to reach the most at risk populations impacted by rising electric costs. This failure only 

compounds the economic disparity that results from policies that raise electric rates. CWLP's 

experience in offsetting this problem has demonstrated that the cost to address the disparity is 

very high, far higher than EPA's anticipated BB4 projections."

Commenters stated that "as a relatively small, nonprofit energy cooperative, PowerSouth cannot 

justify expensive measures forced on its consumers that provide minimal benefit."

Commenters said that "based on CPP comments filed through November 28, 2014 by the 

American Public Power Association (APPA) and National Rural Electric Cooperative 

Association (NRECA), it is not clear whether municipal utilities and rural cooperatives are fully 

considering the benefit or potential for energy efficiency in the CPP. In the Southeast, municipal 

and cooperative utilities are achieving savings higher, or comparable to savings reported by 

investor-owned utilities in nearby territories." "As discussed in our joint EM&V comments with 

several organizations including ACEEE, NEEP, and NRDC, states with limited EE program and 

evaluation experience should be allowed to use deemed savings values borrowed from other 

states or regions to quantify savings for measures/programs installed during 2016-2019." One 

area in which many municipal and cooperative utilities hold an advantage in achieving energy 

savings is the availability of public funding for financing energy efficiency. In particular, the 

United States Department of Agriculture's grant and loan programs through the Rural Utility 

Service offer low-cost opportunities for energy efficiency funding. Among these grant and loan 
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programs are the Energy Efficiency and Conservation Loan Program (EECLP), the Rural 

Economic Development Loan and Grant Program, and the Rural Energy Savings Program. 

Commenters continued by saying that "another advantage municipals and cooperatives hold is 

not having a fiduciary obligation to shareholders to grow profits. However, as noted in a 2014 

ACEEE report, management compensation is often based on financial performance, and in some 

cases, "public utilities that are part of municipal and other government agencies are in fact profit 

centers whose surplus of revenues over expenses keeps taxes and other public exactions lower 

than they would be otherwise." While the nonprofit status of public power entities generally 

means that financial incentives for energy efficiency implementation are not needed, municipal 

and cooperatives still must ensure that service costs are being recovered through rates. In most 

cases, fixed costs are recovered in part through variable charges on customers' bills, so a 

reduction in sales can potentially result in unrecovered costs. This issue, often referred to as "lost 

revenues," is a common concern among management of municipal and cooperative utilities 

considering energy efficiency initiatives. There are several methods to mitigate the impact of lost 

sales revenue on the recovery of fixed costs, including rate adjustments that reflect the increase 

of fixed costs across fewer kilowatt-hours being sold (and purchased if it is a distribution only 

utility)."

Commenters said that "demand-side measures will increase electricity rates, reducing access to 

affordable electricity on the Navajo Nation." "The American Council for an Energy Efficient 

Economy (ACEEE) scores electric efficiency programs based upon the percent of electricity 

revenues dedicated to electric efficiency program budgets. The higher the percentage of total 

electricity revenues dedicated to energy efficiency (EE) programs, the higher the score on the 

ACEE scale. These scores show that the programs result in increased electric rates." "Although 

there are a number of factors that determine the electric rate in a particular state, there is a 

general trend toward increasing residential electric rates with higher AEEE scores." "Increasing 

electric rates for the Navajo Nation by such amount will only reduce access to affordable 

electricity, which, in an area where energy use and income are already so low, seems unjust."

Commenters urges USEPA to consider the effects of this proposal on those who contribute a 

much higher portion of their household income to have the basic necessities at home."

According to commenters small towns will have difficulty meeting EE targets.

Commenters expressed concern that the retail electric customers in the commenters' town would 

have difficulty meeting new energy efficiency requirements that accelerate in stringency year by 

year.

Comment 11: Implementation budget implications of EE goals

Response 11: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule and therefore we do not need to address further 

comments supporting the removal or change in savings level of DS-EE from BSER. This 

determination is discussed in sections V.A and V.B of the final rule preamble of the CPP. Even 
414

though demand-side energy efficiency is not being included in the BSER in this final rule and, 

thus, not included in the determination of emission performance rates, the final rule provides 

states the flexibility to use demand-side energy efficiency measures in their state plans for 

compliance to meet the emission guidelines set forth in the final CPP, provided they meet the 

applicable requirements established in section VIII of the preamble for the CPP. Accordingly, 

the EPA is including a level of DS-EE as a component of our illustrative EE plan scenario that is 

the basis for the analysis discussed in Chapter 3 of the RIA that supports the final CPP. EPA is 

reducing the level of DS-EE in the illustrative plan scenario relative to the level represented in 

the proposed CPP, from 1.5% annual incremental savings down to 1.0% annual incremental 

savings. In addition, the EPA has moved the first year of DS-EE savings for the illustrative EE

plan scenario from 2017 (proposed CPP) to 2020 in the final CPP analysis. Based on more up-todate and extensive data the EPA is modifying our approach to estimating DS-EE costs. The 

support for the DS-EE costs supporting the final CPP is provided in the Demand-side Energy 

Efficiency TSD for CPP Final Rule and is the basis for DS-EE costs represented in the RIA for 

the final CPP. These changes lead to reductions in the levels of DS-EE costs represented in the 

illustrative plan scenario. The EPA finds these to be reasonable levels and address this in the 

associated supporting materials referenced. The TSD analyzes the level and growth of EE 

program budgets under the EE plan scenario and compares the rate of growth with recent historic 

growth rates. The EPA finds that the EE budget growth rates represented in plan scenario are 

much lower than historic growth rates and, therefore, believes they are reasonable for the 

illustrative EE plan scenario.

The following are summaries of the specific public comments under this comment:

Commenters talked about the implementation budget implications of EE goals.

Commenters stated that the EPA did not adequately explain how energy efficiency program costs 

would be funded or why it is reasonable to expect that future budgets and spending will be 

sufficient to achieve the proposed 1.5 percent annual incremental savings rate. Commenters 

stated that the EPA arbitrarily assumed that the necessary resources will be available, but that the 

EPA cannot ignore these costs or assume that the necessary budgets will materialize (on the 

utility side or the customer side) to support the proposed savings rate because program budgets 

directly affect electricity rates for end-use customers and depend on regulatory approval. 

Commenters also commented that the EPA has not considered the interplay of state policies 

addressing cost concerns and a state's ability to increase its energy efficiency savings rate.

Commenters commented that, based on a study by LBNL, energy efficiency budgets could 

exceed $12.2 billion by 2025. Commenters explained that this budget estimate is derived from 

the study's "high" scenario and assumes that no new major policy developments (such as a 

national carbon policy) take place, and that, if such new policy changes occur, customer-funded 

energy efficiency program spending and savings that exceed the values in the high case budget 

estimates. Commenters concluded that the EPA's Clean Power Plan represents the type of 

national carbon policy that could have an amplifying impact on national EE spending.

Commenters stated that "for the majority of states, achieving such dramatic increases in EE 

savings rates will require correspondingly dramatic increases in utility EE program budgets and 

customer expenditures, which EPA does not address". "Based on the current regulatory 
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requirements, this cost is passed on to customers." "As a practical matter, annual incremental 

state EE savings rates cannot be increased without supportive regulatory frameworks and the 

EE program budgets they create." Commenters presented some estimates for The Texas Joint 

Utilities in support of the argument.

Commenters said that "the EPA are problematic because they are based on very limited data, 

have uncertain funding and may require legislative action. State funding for energy efficiency 

programs is variable and uncertain. With the exception of the weatherization program (which 

receives a portion of program funds from federal sources), all of the efficiency programs noted

above run on state general funds as part of capital appropriations. There is not a secure or 

consistent source of funds for these programs and appropriations have been highly variable year 

to year. Decreasing oil production and thus revenue to the state has created an uncertain fiscal 

situation. Future state funding for efficiency programs is not certain as revenues continue to 

decline." 

Comment 12: EE could affect system reliability and line losses and compromise emission 

reduction goals.

Response 12: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule and therefore we do not need to address further 

comments supporting the removal or change in savings level of DS-EE from BSER. This 

determination is discussed in sections V.A and V.B of the final rule preamble of the CPP. Even 

though demand-side energy efficiency is not being included in the BSER in this final rule and, 

thus, not included in the determination of emission performance rates, the final rule provides 

states the flexibility to use demand-side energy efficiency measures in their state plans for 

compliance to meet the emission guidelines set forth in the final CPP, provided they meet the 

applicable requirements established in section VIII of the preamble for the CPP. The EPA 

continues to recognize that a wide variety of demand-side energy efficiency measures can be 

cost-effective strategies for reducing CO2 from affected EGUs. These measures are in 

widespread use across the country and can create multiple benefits beyond greenhouse gas 

mitigation including lower electric bills, positive investments and job creation, and reduction of 

other air pollutants from power plants. The EPA recognizes that a wide variety of demand-side 

energy efficiency measures have been achieving significant energy savings for years with 

additional opportunity to achieve energy savings in the future and to do so cost effectively. 

Accordingly, the EPA is including a level of DS-EE as a component of our illustrative EE plan 

scenario that is the basis for the analysis discussed in Chapter 3 of the RIA that supports the final 

CPP. The EPA is reducing the level of DS-EE in the illustrative EE plan scenario relative to the 

level represented in the proposed CPP, from 1.5% annual incremental savings down to 1.0% 

annual incremental savings. In addition, the EPA has moved the first year of DS-EE savings for 

the illustrative plan scenario from 2017 (proposed CPP) to 2020 in the final CPP analysis. Based 

on more up-to-date and extensive data the EPA is modifying our approach to estimating DS-EE 

costs. The support for the DS-EE costs supporting the final CPP is provided in the Demand-side 

Energy Efficiency TSD for CPP Final Rule and is the basis for DS-EE costs represented in the 

RIA for the final CPP. These changes lead to reductions in the levels of DS-EE and associated 

costs represented in the illustrative EE plan scenario. The EPA finds these to be reasonable levels 
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and address this in the associated supporting materials referenced. The EPA disagrees that states 

and utilities will be unable to employ DS-EE for compliance without adversely affecting system 

reliability. The EPA believes that DS-EE can be planned for, included in state plans or as a 

complimentary strategy, and savings levels realized, and that DS-EE can therefore provide a 

significant benefit to system reliability.

The following are summaries of the specific public comments under this comment:

Commenters said that EE could affect system reliability and line losses and compromise 

emission reduction goals.

Commenters stated that implementing additional energy efficiency may result in system 

reliability concerns for Florida Power and Light (FPL). Commenters explained that FPL utilizes 

three reliability criteria: a 20 percent minimum total reserve margin; a maximum 0.1 day/year 

loss-of-load-probability; and a 10 percent minimum generation-only reserve margin (GRM). 

Commenters stated that implementing additional energy efficiency could result in FPL not 

meeting its GRM reliability criterion, thus making FPL's utility system less reliable for its 

customers. Commenters noted that there are instances in which there simply is no adequate or 

comparable replacement for power than an actual, physical generating unit to meet the constant 

and instantaneous demands of customers for reliable power. Commenters added that the electric 

system is the platform for virtually every aspect of our lifestyle and our economy and cannot be 

compromised.

Commenters said that "If the projected energy efficiency growth cannot be attained, more carbon 

reduction measures would be required, primarily from reduced coal generation in most states. 

More low-emitting or new NGCC/CT generating capacity (not regulated under the CPP) would 

need to be built. Construction of new replacement capacity, as well as related infrastructure, 

would take time to plan, permit, finance, and build. If these needs are not identified at an early 

enough stage, either grid reliability or state CO2 emission goals could be compromised."

Commenters said that "CWLP's transmission personnel find it implausible that line losses can be 

reduced by 0.09%. If anything, because the CPP is likely to drive so many retirements of existing 

coal plants for which the existing transmission grid was designed as to increase line loss." 

Commenters further suggested that "reduced demand cannot replace the fossil-fuel generation 

that will retire due to this rule."

Commenters stated that in its Regulatory Impact Assessment, the EPA assumes that energy 

efficiency will grow faster than electricity demand, with total electricity demand shrinking 

beyond 2020. Commenters stated that the implications of this assumption are complex. 

Commenters said that if such energy efficiency growth cannot be attained, more carbon 

reduction measures would be required, primarily from reduced coal generation in most states. 

Commenters noted that more low-emitting or new NGCC/CT generating capacity (not regulated 

under the CPP) would need to be built. Commenters stated that the construction of new 

replacement capacity, as well as related infrastructure, would take time to plan, permit, finance, 

and build. Commenters stated that if these needs are not identified at an early enough stage, 

either grid reliability or state CO2 emission goals could be compromised. 
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Commenters stated that by overestimating efficiency savings resulting in declining electricity 

retail sales, the results of the EPA's entire Regulatory Impact Assessment are concerning from a 

reliability perspective and have implications to electric transmission and generation 

infrastructure. Commenters noted that underlying electricity demand forecasts directly influence 

the required level of generation and hence, CO2 emissions from existing and affected generating 

units under the CPP. Commenters stated that they also affect the required new construction of 

generating units that are needed to meet expected electricity demand, which is projected to 

increase during the next 10 years. 

Commenters stated that neither they nor the EPA have the authority to require consumers to limit 

their electricity consumption short of rationing electricity or causing blackouts/brownouts. 

Therefore, they felt that it is contrary to law to hold individual source operators to a standard that 

requires consumer action for compliance.

Comment 13: Impacts to the construction industry and housing availability

Response 13: The EPA does not agree that compliance with the final rule will adversely impact 

housing affordability or economic development. The EPA’s economic analysis indicates 

significant reductions in average electric bills as well as significant growth in DS-EE-related jobs 

under the illustrative plan scenarios. See the RIA for the EPA’s impacts analysis of the final CPP

and the DS-EE TSD for details on the DS-EE plan scenario reflected in the RIA’s illustrative 

plan scenarios

The following are summaries of the specific public comments under this comment:

Commenters in this summary talked about impacts to the construction industry and housing 

availability.

Commenters said, "Residential construction is one of the most heavily regulated industries in 

America. The time and costs of compliance not only impact a business' ability to thrive and 

grow, they can also negatively affect housing affordability and stifle economic development."

Comment 14: Other rule benefits to be considered (e.g., indirect, non-energy benefits)

Response 14: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule and therefore we do not need to address further 

comments supporting changes in the level of DS-EE from BSER. This determination is discussed 

in sections V.A and V.B of the final rule preamble of the CPP. Even though demand-side energy 

efficiency is not being included in the BSER in this final rule and, thus, not included in the 

determination of emission performance rates, the final rule provides states the flexibility to use 

demand-side energy efficiency measures in their state plans for compliance to meet the emission 

guidelines set forth in the final CPP, provided they meet the applicable requirements established 

in section VIII of the preamble for the CPP. Accordingly, the EPA is including a level of DS-EE 

as a component of our illustrative plan scenarios that are the basis for the analysis discussed in 
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Chapter 3 of the RIA that supports the final CPP. The EPA is reducing the level of DS-EE in the 

illustrative plan scenario from the level represented in the proposed CPP, from 1.5% annual 

incremental savings down to 1.0% annual incremental savings. The EPA continues to recognize 

that a wide variety of demand-side energy efficiency measures can be cost-effective strategies 

for reducing CO2 from affected EGUs. These measures are in widespread use across the country 

and can create multiple benefits beyond greenhouse gas mitigation including lower electric bills, 

positive investments and job creation, and reduction of other air pollutants from power plants. 

The EPA also finds that a wide variety of demand-side energy efficiency measures have been 

achieving significant energy savings for years with additional opportunity to achieve energy 

savings in the future and to do so cost effectively. The EPA believes that significant benefits 

from DS-EE are captured by the impact analysis represented in the Demand-side Energy 

Efficiency TSD for CPP Final Rule and the RIA (Chapter 3). Specifically, through the decreased 

electricity demand level represented in the CPP scenario in IPM, the power system cost impacts 

that are accounted for include: reductions in fuel supply costs, reductions in other variable costs 

of generation (variable O&M, etc.), avoided new generation, and wholesale price impacts. The 

EPA recognizes that some of the non-energy benefits identified by the commenters are not 

quantitatively accounted for in the RIA and, therefore, the benefits of the final CPP as presented

in the RIA may be understated.

The following are summaries of the specific public comments under this comment:

Commenters described other rule benefits to be considered (e.g., indirect, non-energy benefits).

Commenters commented on the need to account for non-energy benefits in the Agency's 

analysis. Commenters noted that non-energy benefits range from reduced maintenance costs and 

lower waste of both water and chemicals, to increased product yield and greater product quality. 

Commenters explained that these benefits are sufficiently large that they can diminish the 

payback period of the energy efficiency measures and can mitigate the health and environmental 

effects associated with the extraction, processing, and transportation of fossil fuels. Commenters

added that energy efficiency resources are therefore, not only among the least-cost options for 

reducing CO2 emissions, they impose no independent non-air environmental impacts and 

actually reduce those impacts from other sources. Commenters stated that a proceeding to 

examine non-energy benefits was underway at the Massachusetts Department of Public Utilities 

(DPU) and could likely prove illustrative in understanding the range of non-energy benefits 

related to environmental compliance. Commenters stated that his organization has also gathered 

an inventory of state benefit-cost screening issues and practices, and made similar 

recommendations for how states can further recognize the expanded range of benefits from 

energy efficiency programs, including higher productivity, increased occupant comfort and 

reduce water consumption. Commenters added that similar analysis has been conducted by the 

National Efficiency Screening Project and should also be considered.

3.4.4 Analysis considerations

This section discusses the analytical concerns regarding demand-side EE programs including 

annual targets, need to consider updated data, net or gross output, and the rebound effect.
419

Commenters have raised a number of issues related in this subsection which are organized by 

comments below. Responses are provided for these topics. 

Comment 1: Multiple commenters: Net and Gross Output

Response 1: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule and therefore we do not need to address this comment. 

This determination is discussed in sections V.A and V.B of the final rule preamble of the CPP. 

Although the EPA has determined to not include demand side-energy efficiency in the BSER in 

this final rule we are using 1.0% in our illustrative demand-side energy efficiency plan 

scenario. See the RIA Chapter 3 and the Demand-side Energy Efficiency TSD for CPP Final 

Rule for details on the savings calculations used for the illustrative demand-side energy 

efficiency plan scenario. The DS-EE plan scenario is implemented using net savings impacts. 

Accounting for DS-EE in state plans is addressed in section VIII of the preamble. All DemandSide EE measures used to adjust the CO2 rate must be measured in gross unless gross savings is 

unavailable. In those cases net savings can be used. 

The following are summaries of the specific public comments under this comment:

Commenters discussed the advantages and disadvantages of using net or gross output.

Commenters stated that the EPA should allow the use of gross energy savings to measure and 

document energy efficiency program achievements. 

Commenters stated that a common area of misunderstanding among states, utilities, 

environmental advocates, etc., is whether or not savings targets specified in Building Block 4 are 

net or gross. Commenters stated that net savings targets are commonly used by public utility 

commissions to determine lost revenue adjustments for utilities operating DSM programs. 

Commenters stated that in order to determine the actual net to gross ratio, extensive EM&V, 

including surveys, must be performed to adjust for issues like spill over, free ridership, etc. 

However, commenters stated that the ultimate goal of the CPP is to reduce carbon emissions 

from the electric power sector nationwide. Therefore, commenters stated that using net targets is 

an added and unnecessary burden on states. Commenters stated that gross savings is simpler to 

calculate and is a more appropriate methodology for both setting state goals and determining 

credit towards the realization of those goals. Commenters requested that EPA allow for gross 

savings to be utilized instead of net for quantifying the carbon reduction benefit of EE programs.

Commenters stated that EPA should quantify "evaluated savings" and adjust EE targets if 

necessary. Commenters stated that while EPA's proposal uses the term "net savings," there is no 

common definition of "net" used across the United States. 

Commenters stated that the CPP's EE targets for Ohio do not use a gross savings reporting 

mechanism. 

Commenters stated that EPA should use gross, not net energy savings. Commenters reported that 

gross energy savings to the state PUCs, which provides an approximation of the level of savings 
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achieved, based on energy simulations, bill analysis, and in some cases, in situ metering studies. 

Commenters stated that EPA's Building Block 4, however, is based on net savings. Commenters

stated that under EPA's proposal, if a customer would have installed an energy efficiency 

measure anyway (also known as free-ridership), it would not count towards compliance because 

the DSEE requirements are based on "net" rather than "gross" savings. Commenters stated that if 

included in final guidelines, DSEE targets should be based on gross, not net, achievable savings. 

Commenters stated that basing the proposed rule on net savings makes it even more stringent 

than it already appears, because utilities will need to achieve even greater gross savings to arrive 

at the assumed net savings.

Commenters noted that in the proposal, EPA states that it calculated state energy efficiency goals 

based on net savings. Commenters noted as EPA states:

"This incremental savings rate and all others discussed in this subsection 

represent net, rather than gross, energy savings. Gross savings are the changes in 

energy use (MWh) that result directly from actions taken by program participants, 

regardless of why they participated in the program. Net savings refer to the 

changes in energy use that are directly attributable to a particular energy 

factors."

Commenters stated that EPA did not specifically seek comment on this issue, and the 

Conservation Groups do not disagree with EPA's use of net savings for purposes of targetsetting. Commenters stated that compliance, however, is another issue. Commenters noted that in 

its State Considerations Technical Support Document, EPA states that a consideration for energy 

efficiency programs in state compliance plans "is whether reporting of energy savings should be 

specified on either gross or net basis, or both, to promote consistency in measuring the impact of 

energy efficiency measures across state plans."

Additionally, commenters recommended providing energy savings credits, as well as developing 

the Building Block 4 assumptions, based on gross energy savings rather than net energy savings. 

Commenters stated that this is justified on a number of counts including the fact that all energy 

savings generate CO2 emissions reductions. Commenters stated that using gross savings rather 

than net savings will simplify savings analysis for both utility and non-utility programs, and 

remove the possibility of states or utilities claiming dubious "spillover effects". Commenters

stated that the difference between net and gross savings for electric utility efficiency programs as 

a whole is typically about 10-15%, so 1.5% net savings is equivalent to 1.65-1.7% gross savings. 

Commenters stated that the combination of shifting to gross savings and accounting for savings 

potential from non-utility programs justifies moving to 2.2% savings per year as the key 

Building Block 4 assumption (this reflects an additional 0.5% per year for non-utility programs 

and 0.2% per year for moving from net to gross savings).

Commenters asked if EPA can provide additional information regarding the treatment of EE in 

the proposal with respect to the distinction between net and gross savings? Commenters stated 

that it appears that net savings was used for the proposal but gross savings (after adjustment for 

EM&V as appropriate) may be a better capture the full benefit of EE programs.
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Commenters stated that they consider the EPA's proposed EE savings scenario generally 

reasonable, if the savings from EE programs are calculated on a gross basis and the baseline is 

properly defined and equitably applied across the utility sector. 

Commenters recommended that EPA base its savings estimates on either gross savings or 

adjusted gross savings, as opposed to net savings.

Commenters believed that EE savings estimates should be based on "adjusted gross savings" 

rather than net or gross savings. Commenters stated that adjusted gross savings measures EE 

savings beyond "business as usual" and is updated to include the most recent impact evaluations. 

Commenters clarified that adjusted gross savings are EE savings resulting from actions taken by 

participants in an EE program, but not adjusted for spillover and free ridership effects and that 

adjustments are made for data errors, installation and persistence rates, and hours of use. 

Commenters added that care should be taken in the use of adjusted gross savings that no double 

counting of EE savings across a state's different types of program activities takes place.

Commenters stated that EPA should ensure that the EE measurement basis used in the target 

setting process matches the basis used for compliance and that there is no double counting of EE 

savings within a state's building block across different EE program activities or between states.

Commenters disagreed with EPA's use of net savings for purpose of target-setting. Commenters

noted the net savings establish whether a utility expenditure caused a consumer to adopt an 

energy efficiency technology or measure and as such, they are a useful metric for determining 

whether a utility should receive a performance incentive or lost revenue adjustment for its 

program. However, commenters noted that this is a separate issue from whether a utility program 

has the effect of reducing carbon emissions for a state carbon reduction goal. Commenters noted 

from that standpoint, any measure that actually reduces emissions by reducing the need for 

generation should count for compliance, regardless of whether the measure was installed by a 

free rider, or resulted from spillover or other factors. Accordingly, Commenters believed 

that gross savings are the appropriate metric for compliance purposes, and EPA should so clarify 

in the final rule.

Comment 2: Multiple commenters: Rebound Effect

Response 2: Commenters have asked the EPA to consider the rebound effect in the energy 

efficiency analysis for building block four. The EPA has determined not to include demand-side 

energy efficiency (building block four) in the BSER of this final rule. This determination is 

discussed in section V.A and V.B of the final rule preamble of the CPP. Even though demandside energy efficiency is not being included in the BSER in this final rule and, thus, not included 

in the determination of emission performance rates, the final rule provides states the flexibility to 

use demand-side energy efficiency measures in their state plans for compliance to meet the 

emission guidelines set forth in the final CPP, provided they meet the applicable requirements 

established in section VIII. of the preamble for the CPP. Accordingly, the EPA is including a 

level of DS-EE as a component of our illustrative plan scenario that is the basis for the analysis 

discussed in Chapter 3 of the RIA that supports the final CPP. The EPA is reducing the level of 

DS-EE in the illustrative demand-side energy efficiency plan scenario from the level represented 
422

in the proposed CPP, from 1.5% annual incremental savings down to 1.0% annual incremental 

savings. The EPA disagrees with commenters that there is enough conclusive evidence at this 

time to include the rebound effect in our illustrative demand side energy efficiency plan scenario. 

the Demand-side Energy Efficiency TSD for CPP Final Rule for details including a discussion of 

the rebound effect and related economic literature.

The following are summaries of the specific public comments under this comment:

Commenters discussed the issue of the rebound effect.

Commenters stated that its demand-side energy efficiency programs result in both direct and 

indirect "rebound" effects.

Commenters stated that there are behavioral obstacles to expanding EE programs. Commenters

stated that EE programs that reduce electricity rates can create a perverse incentive to consume 

more electricity, thereby offsetting the potential electricity savings. Commenters stated that for 

example, 10 to 40 percent of efficiency improvements in water heaters is negated by increased 

water heater usage. Thus, commenters stated that 20 to 60 percent of electricity savings from the 

EE program may be offset by the "rebound effect" of increased electricity consumption.

Commenters stated that EE programs that reduce electricity rates can create a perverse incentive 

to consume more electricity, thereby offsetting the potential electricity savings. Commenters

noted for example, 10 to 40 percent of efficiency improvements in water heaters is negated by 

increased water heater usage. Thus, commenters stated that 20 to 60 percent of electricity savings 

from the EE program may be offset by the "rebound effect" of increased electricity consumption. 

Comment 3: Basis for value.

Response 3: The EPA has determined not to include demand-side energy efficiency (building 

block four) in the BSER of this final rule. This determination is discussed in sections V.A and 

V.B of the final rule preamble of the CPP. Accordingly, the EPA is including a level of DS-EE 

as a component of our illustrative plan scenario that is the basis for the analysis discussed in 

Chapter 3 of the RIA that supports the final CPP. EPA is reducing the level of DS-EE in the 

illustrative demand-side energy efficiency plan scenario from the level represented in the 

proposed CPP, from 1.5% annual incremental savings down to 1.0% annual incremental savings. 

For details on how values were determined and the various steps, see the Demand-side Energy 

Efficiency TSD for CPP Final Rule. This illustrative plan scenario reflects a reasonable and 

feasibly level of DS-EE, supported by the information and analysis provide in the TSD.

The following are summaries of the specific public comments under this comment:

Commenters stated that the "2012 Total MWh" of 6,898,283 megawatt-hours (MWh) used in 

Step 5 does not match the statewide generation data reported in the EIA 923 forms nor the value 

reported in Table 4-1 of the Greenhouse Gas Abatement Measures Technical Support Document. 

Commenters stated that the value provided in those two documents is 6,946,419 MWh. 
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Commenters stated that EPA should provide the basis for the 6,898,283 MWh value or use the 

6,946,419 MWh value from the EIA 923 form. 

Commenters stated that supporting data could not be found to allow for replication of the EPA 

calculations used to determine the Alaska demand side energy efficiency assumptions for 2020 

through 2029. Commenters stated that this supporting data should be clearly identified in the 

record so that the public has the opportunity to verify the EPA assumptions. 

3.4.5 CHP/cogeneration

This section discusses the analytical concerns regarding demand-side EE programs as they relate 

to CHP/cogeneration. Commenters asked for EPA to consider CHP as a part of the best system 

of emission reductions (BSER). 

Commenters have raised a number of issues related in this subsection which are organized by 

comments below. Responses are provided for these topics.

Comment 1: CHP should be considered EE measure.

Response 1: One of the major approaches available for achieving CO2 emission reductions from 

the utility power sector is demand-side energy efficiency, including CHP. The EPA continues to 

believe that significant emission reductions can be achieved by the source category through use 

of such measures at reasonable costs and that demand-side energy efficiency and CHP will 

represent an important component of state plans. However, the EPA is excluding DS-EE from 

BSER. See sections V.A and V.B of the final rule preamble of the CPP for the EPA’s response 

to this comment. DS-EE and CHP remains generally available for compliance. Demand-side EE 

and CHP that are tied to a state plan and achieve quantified and verified MWh savings may be 

used to achieve the emission guidelines specified in the CPP Final rule, provided they meet the 

eligibility requirements for resources described in Section VIII of the final preamble of the final 

CPP.

The following are summaries of the specific public comments under this comment:

Commenters commented that CHP should be considered as an energy efficiency measure in the 

BSER. Commenters stated that installation of new industrial CHP systems will reduce the 

utilization of existing fossil fuel fired generation, and therefore, will reduce emissions from 

affected EGUs. Commenters added that the EPA should clearly signal states that such new CHP 

can be considered an end-use energy efficiency measure. Commenters stated that the BSER 

should include energy efficiency that could be gained from constructing CHP and state-specific 

estimates of the cost-effective savings available should be added to Building Block 4. 

Commenters cited a recent report by ACEEE that found that 68 million MWh of energy could be 

saved in 2030 by installing CHP. Commenters noted these savings represent approximately 18 

GW of avoided capacity and could cut carbon dioxide emissions and offset the need for about 36 

power plants. Commenters noted that the EPA has already recognized the value of CHP as a 
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proven cost-effective technology to reduce GHG emissions by incorporating CHP in its BACT 

guidance and its 111(b) rule and by issuing awards to various CHP ENERGY STAR projects in 

recognition of their emissions reductions. Commenters stated that, because CHP is currently 

incorporated, in whole or in part, into the energy efficiency program savings goals in most states 

in the Northeast, commenters recommended that CHP be allowed as an eligible compliance 

method as proposed by the EPA, provided such credit reflects incremental CHP activity beyond 

that otherwise included in the baseline of policies and programs assumed as "in place" prior to 

2017. Commenters stated that his organization recommends that CHP be included as a viable 

option to reduce CO2 emissions, and state credit should include energy savings from CHP 

projects. Commenters added that an analysis of CHP by investor-owned utilities supports 

inclusion of CHP systems and provided the example of a study by Kansas City Power and Light 

that identified 60 candidate customers for CHP, including customers in the chemicals, food, 

healthcare, and industrial sectors. 

Commenters stated that ASAP has estimated the energy savings potential state-by-state in 2025 

and 2035 assuming that state standards on ten products are adopted in 2017. Commenters stated 

that expanding the adoption of CHP systems through state incentive programs or other types of 

policies to stimulate greater CHP adoption is another opportunity for additional energy savings at 

the state level. Commenters stated that based on an analysis by ACEEE, they estimated that it 

would be feasible to expand CHP capacity by 1,500 MW per year nationwide during 2020-2030. 

Furthermore, Commenters stated that doing so would provide net electricity savings of around 

0.15% per year for the nation as a whole. Commenters stated that this is a reasonable if not 

conservative assumption about incremental CHP potential.

Commenters stated that the EPA should justify the exclusion of any effective and commercially 

viable technology, such as CHP, from consideration as a qualifying energy efficiency resource.

Comment 2: EPA should consider regulating CO2 emissions from CHP.

Response 2: Commenters have asked the EPA to regulate non-covered CHP sources. The EPA 

has determined that CHP sources that do not fall under the regulated source category under 111d 

will not be regulated under Section 111d of the CAA. States have flexibilities and those 

flexibilities, related to CHP are discussed in section VIII of the final preamble of the final rule. 

The following are summaries of the specific public comments under this comment:

Commenters commented that, while not currently regulated, the EPA may consider regulating 

CO2 emissions from non-covered CHP sources because, in most cases, a facility installing CHP 

may increase onsite emissions while displacing a greater amount of emissions from the electric 

system. Commenters explained that the onsite increase could trigger additional or more-stringent 

regulation through other current or future rulemakings, and that this uncertainty could be a 

significant deterrent to facility owners considering new CHP. Commenters added that, if a 

facility anticipates future regulation, it may perceive a disincentive to participate in a Clean 

Power Plan emissions-reduction program in the near term, leaving readily deployable emissions 

reductions on the table. To address this issue, Commenters proposed that the EPA should allow a 
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non-covered CHP system to voluntarily place itself under current power plant regulation, either 

under section 111(b) (for new sources) or 111(d) (for existing sources). Commenters noted that, 

by placing the CHP system under regulation, direct emissions from the CHP system should be 

excluded from site emissions that may in the future be regulated by the Agency.

Comment 3: CHP in EE Portfolio Measures.

Response 3: The final rule provides states the flexibility to use demand-side energy efficiency 

measures and CHP in their state plans for compliance to meet the emission guidelines set forth in 

the final CPP, provided they meet the applicable requirements established in section VIII of the 

preamble for the CPP. The EPA recognizes that one of the major approaches available for 

achieving CO2 emission reductions from the electric power sector is demand-side energy 

efficiency and CHP. The EPA continues to believe that significant emission reductions can be 

achieved by affected EGUs by the use of such measures cost effectively and that such measures 

are likely to represent an important component of state plans.

The following are summaries of the specific public comments under this comment:

Commenters stated that over 20 states have energy efficiency resource standards (EERS) that 

require utilities to save a certain amount of energy every year. Most of these plans focus on "End 

Use" efficiency measures, but do not track end-use requirements and instead track electricity or 

natural gas consumption. Seven states include other types of efficiency in their EERS, including 

some forms of CHP (specifically bottoming cycle or waste heat to power). Commenters

concluded by saying the CHP can be encouraged as a component of a State Clean Power Plan 

because of these current examples of implementation.

3.4.6 Other

This section discusses additional concerns regarding demand-side EE programs that do not fit 

into the other subsections of this section 3.4, including prioritizing GHG reduction efforts, 

banking system and use of natural gas in EE programs.

Commenters have raised a number of issues related in this subsection which are organized by 

comments below. Responses are provided for these topics.

Comment 1: Account for natural gas savings in EE programs.

Response 1: Commenters asked the EPA to extend regulation to natural gas combustion as an 

energy efficiency measure. The final rule is only regulating affected EGUs subject to 111d. 

Please see section VIII of the preamble that describes the eligible EE measures that can be used 

for compliance and non-eligible measures. 
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The following are summaries of the specific public comments under this comment:

Commenters urged the EPA to consider allowing states to account for natural gas savings in 

energy efficiency programs. They requested that EPA recognize the unintended consequences 

that could be associated with fuel-switching, and the carbon that would not be captured and 

measured, as well as the inefficiencies in delivery of energy-efficiency services that may come 

by excluding efficiency gains from gas and other heating fuels under the rules. 

Commenters stated that maximizing direct use of natural gas closest to the point of consumer 

application may be the single most effective way to help EPA meet its stated goals of cutting 

wasted energy, improving efficiency, and reducing pollution. 

Commenters stated that EPA should consider allowing states to account for natural gas, oil, and 

propane savings in energy efficiency programs. 

Commenters urged the EPA to recognize the unintended consequences that could be associated 

with fuel switching and carbon that would not be captured and measured as well as the 

inefficiencies in delivery of energy efficiency services that may come by excluding efficiency 

gains from gas and other non-electric heating fuels under the rule. Commenters recognized that 

the language of section 111(d) has been interpreted to prohibit utilizing measures that do not 

have a direct impact on emissions from covered generating units, not allowing these "offsets" 

would provide an additional incentive for buildings to move from electric heat to natural gas 

heat. Commenters requested that EPA provide guidance to states that include residential energy 

savings programs in their implementation plans to encourage best-practices for reducing 

unaccounted-for carbon emissions that come from switching to natural gas, or other fuels, from 

electric energy. 

Commenters stated that natural gas water heaters are much more efficient than electric resistance 

heaters, they give a figure of 80% vs. 30% between the two, however there is no citation. 

Commenters urged the inclusion of fuel substitution at the end use to displace electric energy, 

especially in space and water heating. 

Comment 2: Grid reliability if EE goals not met

Response 2: The final rule provides states the flexibility to use demand-side energy efficiency 

measures and CHP in their state plans for compliance to meet the emission guidelines set forth in 

the final CPP, provided they meet the applicable requirements established in section VIII, 

including section VIII.K.1.a, and section V.A.6.b.(1) of the preamble for the CPP. The EPA 

recognizes that one of the major approaches available for achieving CO2 emission reductions 

from the electric power sector is demand-side energy efficiency and CHP. The EPA continues to 

believe that significant emission reductions can be achieved by affected EGUs by the use of such 

measures cost effectively and that such measures are likely to represent an important component 

of state plans. The final rule also has provisions that will maintain reliability in the system, such 

as reliability safety valve provisions and requiring states to demonstrate that they considered 
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reliability issues in developing state plans such as through consultation with the Regional 

Transmission Organization, Independent System Operator or other planning authorities.

The following are summaries of the specific public comments under this comment:

Commenters worried that if the EE goals proposed in building block 4 are not met, then 

reliability to the grid will be put into jeopardy. This is because additional carbon reduction 

measures would be required, likely in the form of reduced coal generation. Commenters stated 

that curtailing the use of coal-fired units without supplementing the power grid with additional 

generation introduces the likelihood of a gap between meeting the CPP's CO2 goals and having 

sufficient energy available to meet member needs.

Comment 6: Commenters expressed concern that Building Block #4 could be implemented de 

facto by setting annual mass-based CO2 emission limits for EGUs. Commenters asked, "What 

happens when the owner/operator of an EGU subject to an annual CO2 mass emission limit 

realizes that the EGU is about to exceed that limit? Faced with the option of continuing to 

provide electricity to its customers or exceeding its permitted limit, would the EGU 

owner/operator be forced to curtail or cease providing electricity to one or more of its customers 

in order to avoid a knowing violation of the Clean Air Act?" Commenters believed it is 

inappropriate for a federal agency to willingly place an obligation on any business that forces 

them to choose which requirement to violate. 

Response 6: For the reasons explained in section V of the preamble the Agency is not including 

BB4 in the BSER. EPA has provided states with significant flexibility in designing their 

programs to ensure that sources will be able to comply with the state plan while ensuring 

reliability concerns are addressed.