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Teleconference August 27, 2008

Midwestern Governors Association Energy & Climate Stewardship Platform Energy Efficiency Advisory Group. Teleconference August 27, 2008. Meeting Agenda. Roll Call Approval of Notes from Previous Meeting Purpose of Meeting General Quantification Approach

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Teleconference August 27, 2008

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  1. Midwestern Governors Association Energy & Climate Stewardship PlatformEnergy Efficiency Advisory Group Teleconference August 27, 2008

  2. Meeting Agenda • Roll Call • Approval of Notes from Previous Meeting • Purpose of Meeting • General Quantification Approach • Discussion of Policy Options Document • Review of changes made since Kansas City meeting • Discussion of quantification issues. • Discussion of Next Steps for EEAG Process • Finalize Options Document • Quantitative Analysis and Review • Discussion of next in-person meeting • Date/Time/Location • Focus of Meeting 2

  3. Purpose of Meeting • Check that policy options text is in near-final form (except EE-7), reviewing changes adopted in Kansas City for accuracy • Discuss approach for quantification of specific options, and solicit EEAG input on parameter/data sources • Receive an update on the White Paper on efficiency resource potential studies. 3

  4. General Quantification Approach Quantitative analysis of EE-3, -5, -6, possibly part of EE-7 Evaluate by jurisdiction, using common formats for each jurisdiction; sum totals Use best data sources readily available Common factors Discount rate, years covered, inflation rate Emission factors, fuel prices, avoided costs, T&D loss rates 4

  5. EE-1: “Establish Quantifiable Goals for Energy Efficiency” General Concepts States/provinces commitment to implement all cost-effective energy efficiency (EE) measures (with definition of “cost-effective”, including CO2 value) Investment in R&D toward future measures Counting of supply- and demand-side efficiency savings toward goals Regional coordination in addressing goals 5

  6. EE-1: “Establish Quantifiable Goals for Energy Efficiency” Revisions to option from July 23-24 EEAG meeting Clarification of 2% annual energy savings goal Region and States/Provinces will save 2%/yr by 2015 based on rolling average of prior 3-year, weather-adjusted retail sales of energy Goal to be ramped up in years prior to 2015 Future years beyond 2015 will also require 2% annual reduction, as defined above. Applies to non-transportation energy use Periodic EE potential assessments and review of goals States/Provinces measure progress toward meeting goal from all policies, may use “bottom-up” methods T&D efficiency savings can count toward meeting goals

  7. EE-1: “Establish Quantifiable Goals for Energy Efficiency” Quantification Option not to be quantified. Specifies overall goal and identifies initiatives to support overall energy savings efforts in the MGA states and provinces. Measures included in EE-1 are quantified in other EEAG options

  8. EE-2: “Undertake Assessments that Quantify the Amount of Energy Efficiency that Would Cost Less on a Unit Cost Basis than New Generation” General Concepts In the near term, produce a “White Paper” addressing EE/ conservation potential in Midwestern states Objectives: Review, summarize Midwest EE potential studies, implications for MGA goals; identify shortcomings and gaps in those studies; produce a core set of principles and methodologies for inclusion in future EE potential studies; use findings to build momentum for EE potential studies in each jurisdiction Longer-term goal of comprehensive EE/conservation potential assessments by utilities, energy offices, or other entities in each jurisdiction 8

  9. EE-2: “Undertake Assessments that Quantify the Amount of Energy Efficiency that Would Cost Less on a Unit Cost Basis than New Generation” Revisions/updates from July 23-24 EEAG meeting The White Paper has been funded and work has begun The Paper should examine studies that have examined the energy savings impact of energy education programs Question unresolved: will the white paper include a review of regulatory barriers to energy efficiency? Is there a need for a central clearinghouse to collect/analyze, distribute data related to EE potential studies? Outline for White Paper is in preparation Quantification: Option not to be quantified

  10. EE-3: “Require Retail Energy Providers to Make Energy Efficiency a Priority” General Concepts Electric, gas utility resource plans should use all achievable cost-effective energy efficiency goals, targets, and strategies before reliance on new supply Mechanisms include IRP, EE standards for utilities, cost recovery, “opt-outs” (with monitoring and verification requirements) for large-volume customers, consistent measurement across jurisdictions Challenges include implementation under different degrees of deregulation, for publicly-owned utilities, and for non-utility providers, treatment of large-volume customers 10

  11. EE-3: “Require Retail Energy Providers to Make Energy Efficiency a Priority” Revisions from July 23-24 EEAG meeting Energy providers should meet a 2%/yr energy savings goal, consistent with the goal of the MGA jurisdictions Oil and propane should be included in energy efficiency efforts and programs (do quantitative goals apply to these fuels as well?) Clarification on differing regulatory environments of IOUs and non-IOU utilities, although noting that efficiency standards should be applied equally to all types of utilities Several elements moved from EE-1 to this option

  12. EE-3: “Require Retail Energy Providers to Make Energy Efficiency a Priority” Quantification: Energy savings from programs currently underway will be counted toward goal, but quantified separately from those actions that result directly from MGA process Savings from new programs to be “ramped in” Forecasts for electricity/gas consumption by province/state are key inputs Data requirements: Effectiveness of existing programs, costs of saved energy

  13. EE-4: “Remove Financial Disincentives and Enable Investment Recovery for Energy Efficiency Program Costs” General Concepts Provide for EE program/service cost recovery; address lost revenue; provide new opportunities for utility earnings related to achieving EE goals; establish regulatory/incentive structure reflecting EE’s lower capital risks Remove disincentives to utility EE investments using tools such as rate design, decoupling of sales from revenues 13

  14. EE-4: “Remove Financial Disincentives and Enable Investment Recovery for Energy Efficiency Program Costs Revisions from July 23-24 EEAG meeting Goals clarified to say that states should consider and implement standards to remove disincentives to energy efficiency and that the MGA should develop a set of guiding principles for rate design Develop a menu of options for providing utilities with incentives based on experience in other states Quantification Option not to be quantified. Option supports and enables utility energy efficiency programs carried out under EE-3, but will not be separately analyzed

  15. EE-5: “Strengthen Building Codes, Appliance Standards and Requisite Training, Quality Assurance and Enforcement” General Concepts Strengthening of Building Energy Codes and Code Adoption—improve building energy efficiency by 30% relative to 2006 IECC standards, most recent ASHRAE Commercial Codes, and update regularly Provide Training related to Building Energy Code Implementation Appliance/Equipment Efficiency Improvement Certification programs for energy-efficient appliances, equipment, buildings Upgrading Existing Buildings, and “Beyond Code” Construction, including incentives, upgrades at sale 15

  16. EE-5: “Strengthen Building Codes, Appliance Standards and Requisite Training, Quality Assurance and Enforcement” Revisions from July 23-24 EEAG meeting Recommendation: all jurisdictions should adopt a jurisdiction-wide building energy code Increased emphasis on enforcement and training for building codes Consider codes that set energy standards for rental housing Develop means of assuring compliance with codes Questions unresolved: Need to address code inspector training, timing of code implementation Question unresolved: Need to flesh out or discuss Energy Efficiency Partnership (p. 25)

  17. EE-5: “Strengthen Building Codes, Appliance Standards and Requisite Training, Quality Assurance and Enforcement” Quantification Use data from BCAP to assist in quantification of building codes improvement Will need to interpret current status of codes in each jurisdiction Use data from Appliance Standards Awareness Project to assist in quantification of appliance standards. Key Data: Home sales, commercial floor area, and growth in both; improvement due to code changes

  18. EE-6: Have the Public Sector Lead by Example General Concepts Applies to government-owned and non-government buildings with >20% of construction costs funded with government money Make new buildings/major retrofits meet stringent energy, water performance standards (recommissioning goal, regular certification) Set energy, water efficiency procurement guidelines based on performance standards for equipment purchases Fund and demonstrate existing and new technology – pilot and education EE for new/existing low-income housing, with specific energy use goals, funding to support EE measures. Encourage energy conservation via education/outreach 18

  19. EE-6: Have the Public Sector Lead by Example Revisions from July 23-24 EEAG meeting Substantial reorganization of section Question unresolved: Should the section set a hard target for a reduction in energy consumption in gov’t. buildings? Question unresolved: Should gov’t. buildings exceed current codes by a specified percent? Should there be a date certain for benchmarking of gov’t. buildings? Flesh out section on Related Policies/Programs with regard to MN program.

  20. EE-6: Have the Public Sector Lead by Example Quantification Estimates of energy savings relative to what would have happened in absence of EE-6 Existing buildings upgrades, “beyond (new) code” for new buildings Savings from purchase of Energy Star devices Data/Parameter needs Estimates of new, existing public housing units, public building space, fraction participating per year Average energy savings in participating buildings Average savings from purchase of Energy Star devices

  21. EE-7: “Accelerate Adoption of Energy Efficiency Technologies and Best Practices by Commercial, Residential, and Industrial Customers” General Concepts Expand network of organizations providing energy efficiency outreach/consumer awareness beyond utilities Provide public benefit funds directly to manufactures and service providers in addition to utilities Create/reinforce education programs at K-12 levels on energy efficiency, climate change mitigation relationship Provide information to building professionals on building EE opportunities (best practices brochure/website), regulatory/financing incentives for adopting energy-efficient building practices (TIF link) Provide information to building occupants (including commercial) to help assess energy costs of a building 21

  22. EE-7: “Accelerate Adoption of Energy Efficiency Technologies and Best Practices by Commercial, Residential, and Industrial Customers” Revisions during/since July 23-24 EEAG meeting Substantial reorganization of elements, including moving elements from other options Addition of industrial customers to coverage A conference call was held on August 21 among a sub-group to focus on this option. A second meeting of this group will take place on August 28 to flesh out financing elements in this option.

  23. EE-7: “Accelerate Adoption of Energy Efficiency Technologies and Best Practices by Commercial, Residential, and Industrial Customers” Quantification Most elements support other options, and therefore would not be quantified, but This may change with further definition of Policy Option Possible quantification of “market transformation” element based on experience in other regions

  24. EEAG Next Steps and Timeline Incorporate comments from this teleconference into draft text, circulate to EEAG Continue work on EE-7 Financing/incentives element Begin work on analysis of “quantifiable” policy options, with data and other input from EEAG members Could include EEAG review of partial draft analyses via e-mail Goal of complete text of recommendations to MGA, draft analysis before September 29-30 EEAG meeting 24

  25. Next EEAG Meeting In-person meeting, September 29-30, Purdue University, Indianapolis Campus Time to be confirmed, but likely 11 AM or noon to 6 PM on 29th, 8 AM to 2 PM on 30th Finalize text of Options Document to the extent possible Review/discuss quantification inputs, structure, and results Discussion of System Dynamics Modeling Effort Decide on next steps for EEAG (preparation of Final Report to MGA?) 25

  26. Energy Efficiency Advisory Group Facilitation Team • Lola Schoenrich • lschoenrich@gpisd.net • Jennifer Johnson • jjohnson@gpisd.net • Matthew Brown • matthew.brown@interenergysolutions.com • David Von Hippel • dvonhip@igc.org 26

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