Pennsylvania’s energy efficiency law moves full speed ahead

The Pennsylvania Public Utility Commission (PUC) voted 5 – 0 on Thursday, August 2 to adopt new energy savings goals for the next phase of Act 129, which will run from June 1, 2013 to May 31, 2016. The continuation of Act 129 is a huge victory for electric customers in Pennsylvania. The energy efficiency and conservation programs offered through Act 129 have saved electric customers over $278 million each year, created new jobs, reduced pollution, and enhanced energy security, all while costing less than generating, transmitting and distributing electricity.

There are several changes in store for Phase II, the first being that each utility has a unique energy savings goal. The PUC varied savings requirements based on the Statewide Evaluator’s market potential study, which looked at program potential, acquisition costs, and available funding for each utility. The resulting goals range from 1.6 percent for West Penn to 2.9 percent for PECO, with a statewide average of 2.3 percent over the three-year period.

The second change pertains to peak demand. There will be no peak demand reduction goals for Phase II while the PUC and Statewide Evaluator assess the cost effectiveness of the demand response programs occurring this summer. A tentative decision on whether to adopt peak demand goals in a future Phase III is expected in the spring of 2013.

While PennFuture believes that the Phase II savings goals could have been more aggressive, especially in light of the fact that utilities will not have to meet peak demand goals, there are several positive outcomes from the Order. The PUC will continue to require that 10 percent of a utility’s Act 129 savings come from the government, educational, and nonprofit sector and has created a 4.5 percent savings carve-out for low-income customers. In addition, the PUC is requiring that each utility offer at least one comprehensive (whole building) program for residential and small commercial customers.

The PUC also made it clear in its Order that it expects utilities that meet either Phase I or Phase II goals ahead of schedule to continue investing in energy efficiency programs so long as there is still funding available. Those utilities will be able to count any excess savings towards their goals in the next Phase. Not only will this create the possibility for achieving higher energy savings, it will allow for a seamless transition between phases to avoid having these valuable programs shut down once a utility reaches its goals.

There is much more to report on the PUC’s Final Order. Stay tuned for an upcoming E3 that will provide a full summary and analysis of this important decision.