Regulatory Process to Achieve
a Goal of All Cost-Effective
Demand-Side
Demand
Side Savings
By: John Rogers
Utilit R
Utility
Regulatory
l t
M
Manager
Missouri Public Service Commission
P.O. Box 360
J ff
Jefferson
City,
Ci
MO 65102
(573) 751-7524
[email protected]
www.psc.mo.gov
November 6, 2012
1
Agenda
Missouri Energy Efficiency Investment Act
of 2009
‰ Background Information on Missouri’s
Supply-Side
Supply
Side Resources,
Resources Demand
Demand-Side
Side
Resources and Electricity Prices
‰ Missouri
Missouri’s
s Regulatory Process to Achieve a
Goal of All Cost-Effective Demand-Side
Savings
‰
2
Missouri’s Energy Efficiency
I
Investment
t
t Act
A t off 2009 (MEEIA)
Senate Bill 376 became law on August 28, 2009 as § 393.1075
3. It shall be the policy of the state to value demand-side
investments equal to traditional investments in supply and delivery
infrastructure and allow recovery of all reasonable and prudent costs
of delivering cost-effective
cost effective demand-side
demand side programs.
programs In support of this
policy, the commission shall:
(1) Provide timely cost recovery for utilities;
(2) Ensure that utility financial incentives are aligned with helping
customers use energy more efficiently and in a manner that sustains
or enhances utility customers’ incentives to use energy more
efficiently; and
(3) Provide timely earnings opportunities associated with costeffective measurable and verifiable efficiency savings.
4. The commission shall permit electric corporations to implement
commission approved demand-side
commission-approved
demand side programs proposed pursuant to
this section with a goal of achieving all cost-effective demand-side
3
savings.
Missouri Background
g
Information
‰
‰
‰
‰
‰
‰
Missouri Generation by Primary Energy Sources
(GWh);
Missouri Nameplate
p
Capacity
p
y by
y Primary
y Energy
gy
Sources (GW);
Major Drivers for Missouri Resource Planning;
Examples off Levelized Cost off Generation
Resources in Missouri;
American Council for an Energy
Energy-Efficient
Efficient
Economy (ACEEE) 2012 Energy Efficiency
Scorecard; and
Missouri and United States Average Electricity
Prices
4
Missouri Electricity Generation
by Primary Energy Sources (MWh)
5
Missouri Nameplate Capacity
by Primary Energy Sources (MW)
6
Utility Demand
Demand-Side
Side Resources
‰
Energy Efficiency (EE)
‰
Demand Response (DR)
refers to permanent
changes to electricity usage through installation of or
replacement with more efficient end-use devises or more
effective
e
ec e operation
ope a o of
o existing
e s g devices
de ces that
a reduce
educe the
e
quantity of energy needed to perform a desired function or
service. EE programs are designed to primarily reduce
energy (kWh).
refers to changes in
electric usage by end-use customers from their normal
consumption patterns in response to changes in the price of
electricity over time, or to incentive payments designed to
induce lower electricity use at times of high wholesale
market prices or when system reliability is jeopardized.
DR programs are designed to primarily reduce peak
7
demand (kW).
Major Drivers for Resource Planning
‰
‰
‰
‰
‰
‰
Uncertain load forecast – both energy
gy and
demand;
Uncertain federal environmental regulation – what
regulations,
l ti
when
h
llegislated,
i l t d what
h t costt to
t comply;
l
Uncertain natural gas prices, prices of other fuels
and market prices of energy and demand;
Uncertain costs of supply-side resources;
Uncertain costs and benefits of and response of
customers to demand-side resources; and
Uncertain future legal mandates and future
Missouri energy and environmental policy.
policy
8
Example of Levelized Cost of
Resources (Cents per kWh)
9
2012 ACEEE Energy Efficiency
Scorecard
d
10
Missouri’s 2012 Energy Efficiency
Scorecard
d
‡
Energy Efficiency Programs and
Policies
Points Max.
Max Points
2.5
20
Transportation
0
8
Building Energy Code
2
7
Combined Heat and Power
1
8
State Government
Go e
e t Initiatives
t at es
3
7
Appliance Efficiency Standards
0
3
85
8.5
50
Total
11
States with Highest and Lowest
Scores on ACEEE 2012 Scorecard
d
12
Missouri and USA Average
Electricity
l
i i Prices
i
(Cents/kWh)
(
/k h)
13
Regulatory Process To Achieve All
Cost-Effective
ff
i
Demand-Side
d id Savings
i
‰
‰
‰
‰
‰
‰
‰
MEEIA Legislation
Commission’s MEEIA Rules
Commission’s Electric Utility
y Resource Planning
g
Rules (Chapter 22)
Policy Objectives of Chapter 22
Missouri’s
’ Renewable
bl Energy Standard
d d
Overview of Chapter 22 and MEEIA Activities –
the regulatory process to achieve all cost
costeffective demand-side savings
Demand-Side Programs and Demand-Side
Programs Investment Mechanism
14
Summary of MEEIA
State Energy Policy
‰
‰
‰
‰
‰
‰
‰
‰
‰
‰
‰
Value demand-side and supply-side resources on equal
basis
Programs’ cost recovery
Ensure
su e utility
u
y financial
a c a incentives
ce
es are
a e aligned
a g ed with helping
ep g
customers save energy
Provide for timely earnings opportunities
Goal of achieving all cost
cost-effective
effective demand
demand-side
side savings
Programs must be cost effective
Large customers – who qualify – may opt-out
E l ti
Evaluation,
measurementt and
d verification
ifi ti
off energy and
d
demand savings
Annual reports to Commission
Separate line item on customers’ bills for MEEIA charges
State tax credits, incentives and disclosures
15
Commission’s
Commission
s MEEIA Rules
‰
4 CSR 240-3.163 Demand-Side Programs
Investment Mechanisms Filing and Submission
R
Requirements
i
t
‰
4 CSR 240-3.164 Demand-Side Programs
Filing and Submission Requirements
‰
4 CSR 240-20.093 Demand-Side Programs
Investment Mechanisms
‰
4 CSR 240-20.094 Demand-Side Programs
16
Commission’s Chapter
p
22 Rules
‰
‰
‰
‰
‰
‰
‰
4
4
4
4
4
4
4
CSR
CSR
CSR
CSR
CSR
CSR
CSR
Analysis
‰
240-22.010
240-22.020
240-22.030
240-22.040
240-22.045
240-22.050
240-22.060
Policy
y Objectives
j
Definitions
Load Analysis and Load Forecasting
Supply-Side Resource Analysis
Transmission and Distribution Analysis
Demand-Side Resource Analysis
Integrated Resource Plan and Risk
4 CSR 240-22.070 Resource Acquisition Strategy
Selection
‰
4 CSR 240-22.080
240 22 080 Filing Schedule, Filing Requirements,
and Stakeholder Process
17
Chapter 22 Policy Objectives
(2) Th
The ffundamental
d
t l objective
bj ti
off the
th resource planning
l
i
process at electric utilities shall be to provide the public with
energy services that are safe, reliable, and efficient, at just
and reasonable rates,
rates in compliance with all legal mandates
mandates,
and in a manner that serves the public interest and is
consistent with state energy and environmental policies. …
(A) Consider and analyze demand-side
demand side resources,
resources renewable
energy, and supply-side resources on an equivalent basis,
subject to compliance with all legal mandates that may affect
the selection of utility electric energy resources in the
resource planning process;
(B) Use minimization of the present worth of long-run utility
costs as the primary selection criterion in choosing the
preferred resource plan,
18
Missouri’s Renewable Energy
Standard
d d – A Legall Mandate
d
On November 4, 2008 voters in Missouri enacted Proposition C (§ 393.1020), a
mandatory renewable energy standard (electricity production from solar thermal,
photovoltaics, methane from landfills, wind, biomass, hydroelectric, and fuel
cells using renewable fuels). Minimum annual electricity sales from renewable
electricity
l i i sources:
„
„
„
„
2% from 2011 to 2013 (0.04% solar)
5% from 2014 to 2017 (0.1% solar)
10% from 2018 to 2020 (0.2% solar)
15% for 2021 and thereafter (0.3% solar)
Additional key provisions:
„
„
Tradable renewable energy credits (RECs)
Cost cap of 1% of retail rates
Commission’s rules effective on September 30, 2010
„
„
4 CSR 240-3.156
4 CSR 240-20.100
19
Regulatory Process to Achieve All
Cost Effective Demand-Side
Cost-Effective
Demand Side Savings
2009
DSM Potential Study
2010
2011
2012
2013
Jan
2014
2015
2016
Aug
Chapter 22 Triennial
Compliance Filing
Feb
MEEIA Rules Effective
May
Revised Chapter 22
Rules Effective
Jun
Chapter 22 Special
Contemporary Issues
Oct
Oct
Chapter 22 Annual
Update Filings
Apr
Oct
SCI
Oct
Oct
Apr
Chapter 22 Triennial
Compliance Filing
Apr
Oct
Apr
?
MEEIA Filing
Jan
MEEIA Order
Dec
Aug
"Bridge"
Programs
Initial DSM Programs
DSM Programs
2009
2010
Mar
2011
2012
Cycle 1 MEEIA Programs
2013
2014
Cycle 2
2015
2016
20
Examples of Cycle 1 Residential
Programs
Program
Description
Lighting
Incentives paid to retail partners to discount the price on high
efficiency lighting products
Energy Efficiency
Products
High efficiency water heaters, window air conditioners and
smart strips will be promoted through rebates and incentives
Heating Ventilation
and Air Conditioning
Diagnostics/tune-up, retrofit, and replacement
upgrades for air conditioners, heat pumps and cooling
systems
Refrigerator
R
f i
t
Recycling
IIncentives
ti
paid
id to
t remove inefficient
i ffi i t refrigerator
f i
t or
freezer, pick up and recycling and disposal of old units
Home Energy
Performance
Energy assessment, direct install measures and cost
effective follow up
p measures
ENERGY STAR New
Homes
Targets builders and energy raters with incentives for
construction of ENERGY STAR homes
Low-Income
Delivers energy savings to low income qualifying
customers through
h
h direct
di
iinstall
ll measures and
d
appliances
21
Examples of Cycle 1 Business
Programs
Program
Description
Standard
Incentive
Incentives to purchase energy efficient measures
with predetermined savings values and fixed
incentive levels
Custom Incentive
Energy efficiency measures which are not
standard. Projects are sometimes complex and
unique, requiring separate incentive applications
and
d calculations
l l i
off estimated
i
d energy savings
i
RetroCommissioning
Program has a special focus on complex control
systems and provides options and incentives to
improve operations and maintenance practices
New Construction
Provides incentive to overcome cost barriers to
incorporate energy
g efficient building
g design
g and
construction
22
Examples of Program Costs ($000)
and Energy Savings (MWh)
23
Example of Demand-Side
P
Programs
Investment
I
t
t Mechanism
M h i
‰
‰
‰
To provide timely cost recovery --contemporaneous recovery of all direct
programs’ costs
To ensure that utility financial incentives are
aligned with helping customers use energy
more efficiently --- contemporaneous recovery
off 90% fixed
f d operating costs with
h true-up to
100% in next rate case
To provide timely earnings opportunities
associated with cost-effective measurable and
verifiable efficiency savings --- future
pe fo mance incentive
performance
incenti e a
award
a d based on afterafte
the-fact verified energy savings
24
Links for Data
http://www.eia.gov/electricity/data/state/
‡ http://aceee.org/
http://aceee org/
‡ http://www.epa.gov/cleanenergy/energyprograms/suca/resources html
programs/suca/resources.html
‡ http://psc.mo.gov/
‡
25
Any Questions?
John Rogers
Utility
y Regulatory
g
y Manager
g
Missouri Public Service Commission
P.O. Box 360
Jefferson City, MO 65102
(573) 751-7524
[email protected]
www.psc.mo.gov
26