The Energy Efficiency Program Industry Reaching Higher

U.S. and Canadian energy efficiency budgets combined reached $4.5 billion USD in 2008—twenty-one percent more than in 2007.

Energy efficiency is maturing as an industry. With the widespread recognition by ratepayers, regulators, and elected officials that global climate change presents a real threat, and that energy efficiency presents a real solution, the focus on what energy efficiency programs can achieve has intensified. Energy efficiency budgets rose for the fourth year since CEE began collecting data for the United States in 2005 and Canada in 2007. The more highly populated states and provinces are seeing budget increases, and the number of states and provinces with programs is also growing.

With larger budgets and higher expectations comes greater responsibility. State and provincial regulations are decoupling prices, increasingly treating efficiency on an equal footing with energy supply, and trending to “all cost-effective efficiency” as a first choice for new supply. Our members are demanding more complex initiatives with longer payback periods, in order to move beyond the low-hanging fruit and reach for higher savings. The data reported here illustrate in real time the magnitude of the ratepayer-funded energy efficiency industry and help provide a sense of the direction of the energy efficiency industry as we endeavor to reach higher.

Contents, Caveats & Methodology

Data Contents and Caveats
Research Methodology
            Sample Frame
            Data Collection
            Response Rates
            Data Validation and Aggregation
Comparison with EIA Data

Data Contents and Caveats

The budgets reported here are for ratepayer-funded energy efficiency administered by both CEE member organizations and nonmember organizations across the United States and Canada. As budgets are subject to change over the course of a program year, the data reported here are a snapshot of a moving target. We have done our best to provide a reasonably comprehensive perspective, but with so many small providers and such rapid change in the efficiency industry, it was not possible to identify and collect data on all program administrators in time for this report. As a result, this report somewhat understates the actual amount budgeted for energy efficiency in the United States and Canada in 2008. Below are some other limitations to bear in mind regarding these data:

The primary purpose of these data is to illustrate in real time the magnitude of the ratepayer-funded energy efficiency industry and to provide a timely sense of industry trends. These data are meant to supplement, not replace, industry data collected by organizations such as EIA and FERC.
State energy programs, most low income weatherization programs run by state energy offices, and renewables programs are excluded. Because many low income weatherization programs are run by state or provincial agencies, the low income data understate what states and provinces budget for low income programs.
Budgets are subject to change. The program budget reported to CEE may not exactly match actual expenditures at the end of the program year.
Every efficiency program sets out to best serve its ratepayers while operating within its state regulations. As a result, it is difficult to directly compare program budgets in a meaningful way. The categories commercial and industrial, residential, load management, and low income are both common and straightforward, but not all programs use these exact categories. Items that may fall into the “other” category on the charts include administration, advertising, agriculture, education and training, codes and standards, EM&V, and so on. For cases in which portions of program budgets did not fit into any of the categories, the total for the state or province exceeds the sum of the budget categories reported.
Some program administrators do not separate program budgets by fuel type. Please see the notes for details on how these budgets have been allocated.
For purposes of this report, load management budgets are reported separately from other energy efficiency budgets, since the aim and measured outcome of such programs is the reduction of kW rather than kWh.
The savings impacts reported here are estimates for 2007. Unlike the budget data, the estimated savings impacts are for CEE members’ programs only.
For a list of sources and notes explaining any inconsistencies in the way particular states aggregate and report data, click on “Sources” on the lower left-hand corner of each screen.
This report uses the September 2, 2008 Bank of Canada exchange rate of CAD$1=USD$0.93 throughout. For ease of reading, all currency is reported here in USD unless otherwise specified.

Research Methodology

Sample Frame

Because the Energy efficiency industry is in a rapid state of change, with new plans for programs being announced frequently, it is very difficult to specify a complete sample frame of ratepayer-funded energy efficiency program administrators. We identified current and new program administrators using the CEE member list, 2006 EIA data, and information provided by the American Public Power Association, the Canadian Electrical Association, and the American Gas Association. ACEEE’s “2008 State Energy Efficiency Scorecard”¹also informed the development of the sample frame. Unfortunately, we learned of some new program administrators too late to request data for this report; we plan to request data from these administrators in 2009. Because of the vast number of small municipal and co-operative power providers, we have attempted to gather data from only the larger municipal power providers identified by APPA as having programs, and from a few large co-ops. As a result of these factors, this report somewhat understates the actual amount budgeted for energy efficiency in the United States and Canada in 2008.

State energy programs, most low income weatherization programs run by state energy offices, and renewables programs were excluded from the sample frame. Because many low income weatherization programs are run by state or provincial agencies, the low income data understate what states and provinces budget for low income programs.

Data Collection

We requested data from organizations by email and/or telephone. In the case of CEE members, we contacted each individual program administrator for data. In some cases, the CEE member was an agency that oversees the administration of programs by utilities in a particular state or province, and so supplied aggregated data from all programs being run in the jurisdiction. In other cases, the CEE member operated programs across multiple states, and so provided data that cut across states. In the case of most non-members, CEE obtained budget data directly from the program administrator. However, in some cases a CEE member was in a position to provide information for programs in several states in which there were no CEE members, or a non-member was able to aggregate data from non-member program administrators across the state. As a result, the number of respondents listed in the table below understates the number of organizations represented in the data.

Data were collected in Summer 2008. Changes made to state budgets after this period are not reflected in the budgets data. Savings impacts from organizations that became CEE members in the latter half of 2008 are not reflected in the member savings data.

Response Rates

The response rate varied by type of respondent and whether or not they were included in the initial data request, which was send in May and June to all program administrators identified by June 2008. As the table below shows, the response rate among CEE members was very high, at 95 percent. For the 6 members that did not supply 2008 data, CEE used their 2007 budget data in the 2008 tables. (Only one member could not supply either 2008 or 2007 data.) The response rate among non-members identified through June 2008 was 74 percent. For the 10 non-members in this category that did not provide 2008 data, CEE used their 2007 budget data in the 2008 tables. Response rates were lower for non-member program administrators who were identified after June 2008. Reasons for the lower response rates among these two groups include having only company name and no individual energy efficiency contact for many of these organization; having less time to follow up on the request; and the later data request coinciding with the timing of some rate cases. Of the municipal power providers identified after June 2008 as having efficiency programs, we expect these to represent only a small fraction of municipal efficiency budgets, since most larger municipal power providers have routinely been included this data collection effort for some years. The non-member electric utilities identified after June 2008 came from a comparison of EIA’s 2006 data against CEE’s 2007 report. In 2006, the grand total of electric efficiency expenditures of this group was $90 million, including load management and indirect DSM costs.² This represents three percent of the 2008 electric budget total for the U.S. In 2009, CEE will be focusing on improving the response rate among this group.

Program Administrators

Data Validation and Aggregation

CEE worked with the staff of each reporting organization to ensure that the data supplied were categorized in ways consistent with other organizations reporting. Impacts data in particular are calculated many different ways; CEE identified and followed up with members on impacts data that were out of the expected range to ensure that data definitions were being interpreted the same way by each organization and that the impacts were reported consistently across all organizations.

Relationship of CEE data to EIA Data

CEE is often asked how these data differ from the data collected annually by EIA. CEE’s data collection request is modeled on the U.S. Energy Information Administration's (EIA) form EIA-861, but most similarities end there.

Scope and Purpose

CEE reports budget data for the current program year. These data are meant to illustrate in real time the magnitude of the ratepayer-funded energy efficiency industry and to provide a timely sense of industry trends. They are not meant to provide a retrospective look at efficiency program expenditures.
CEE attempts to obtain current year budget data for all the larger efficiency program administrators that it is able to identify in time for each year’s report. This includes non-utility program administrators who are not required to report to EIA. CEE reports estimates of prior year impacts from its members’ programs only; many of these members are non-utility program administrators who are not required to report to EIA. In addition, CEE reports data for Canada as well as the U.S.

Fuels

CEE reports data for both electric and gas programs.

State data

CEE reports budget data at the state or provincial level.

1 Eldridge, M., Neubauer, M., York, D., Vaidyanathan, S., Chittum, A., and S. Nadel. 2008. “The 2008 State Energy Efficiency Scorecard.” American Council for an Energy-Efficiency Economy Report No. E086. Washington, D.C.: ACEEE.

2 Energy Information Administration. 2008. Form EIA-861 Final Data File for 2006. Retrieved October 30, 2008 from http://www.eia.doe.gov/cneaf/electricity/page/eia861.html.