Energy Efficiency

1. Energy Efficiency Successes, Opportunities and Challenges Marsha Smith Commissioner, Idaho Public Utilities Commission President, National Association Regulatory Utility Commissioners EPRI Summer Seminar August 4, 2008

2. Successes • Near Universal Utility Acceptance As A Resource • Many Successful Program Models • Spanning all customer segments • Utility operated and non-utility programs • Improved Building Codes & Appliance Standards • i.e. 2007 Energy Act phase out of incandescent bulbs • Move towards “Smart Grids”

3. Successes • Idaho Governor, Public Utilities Commission, Energy Division and Department of Environmental Quality:Fixed-cost adjustment mechanism pilot, expanding by 6 times money available for low-income weatherization, 2007 Idaho Energy Plan requires cost-effective conservation, EE and demand response as priority resources in IRP filings. • California MOU (also captures Governor, Utilities, State Government):EE institutionalized as first priority resource for IOUs and POUs; CPUC adopted new performance-base EE risk/reward mechanism; new Big Bold EE Strategies extends goals through 2020; continued support for best practices database • NJ Board of Public Utilities:With other state agencies, set goal to reduce projected energy use by 20% by 2020 • NY PSC:Energy Efficiency Portfolio Standard (EPS) for a 15% reduction in electricity usage below the 2015 forecasted level; to establish goal for gas • Hawaii PUC:EE Order determined cost recovery and incentives mechanisms • Vermont Public Service Board:2008 budget is 76% higher than previous EE statutory cap; EE and DSM receiving capacity payments in ISO-NE

4. Successes • BPA:on track to achieve its higher 260 aMW 5-year target savings • Duke Energy: hosted Energy Efficiency Summits and stakeholder collaboratives in its five states; increased efficiency program offerings • Entergy:new programs in Arkansas; co-funding New Orleans collaborative • Exelon: expanded program offerings across sectors • Great River Energy:savings goal of 1.5% of annual energy sales • MidAmerican Energy Company: 2006 program savings of 36 MW and 160,000 MWh of electricity, and 457,000 Mcf of gas • PNM Resources: EE and DR evaluated and modeled consistent and comparable to supply-side resources in IRP; joined with 7 other utilities under Clinton Global Initiative to focus on EE as strategy to reduce GHG emissions. • Seattle City Light:Efficiency is "Resource of First Choice" in IRP—140 average MW of cost effective EE over the next 20 years • Southern Company:Recent IPR process resulted in 6 new Georgia Power efficiency initiatives, increasing annual spending by $9.4 million

5. Successes - Idaho • Idaho Power: Irrigation Peak Rewards Program • Voluntary, 75 horsepower or larger • Weekdays, 4-8 p.m. • Incentives : • $4.36 per kW demand for 3 days/week • $3.36 per kW for 2 days per week • $2.01 per kW for 1 day/week • Nearly 20% of qualifying irrigators participate • Average peak reduction of 28.9 MW • Maximum peak reduction of 37.4 MW • Avista Third-Party Contracting • Avista seeks out third-party contractors to augment its programs when specific measures or market segments can benefit from their specialized expertise. • HVAC efficiency program, • commercial refrigeration, • government buildings and • multifamily residential customers.  • This represents approximately 20,000 MWh (10%) of Avista's annual DSM savings.

6. Opportunities • Address Capacity as well as Energy • Demand response efforts • AC cycling - Idaho Power’s Cool Credits Program • Building Codes and Appliance Standards - continue upgrading • Market Transformation • Compact Fluorescent Bulbs In PNW • Pricing Options • AMI enhances multiple options • AutomationOf End Use Controls • Occupancy sensors, set back thermostats, • Smart Homes - Stagger timing of high demand applications • delay water heating if household demand is already high • Federal, State, Municipal and Utility Buildings As Demonstrations • Overall “Green” movement • Conservation is boring; Green is trendy.

7. Challenges • Market Transformation • Make EE standard consumer practice • Cities with most major buildings lit all night long. • Look at buildings you visit – are they using EE?? • Lack of Management Commitment/Priority • Misperception that energy efficiency is not a guaranteed, reliable cost effective resource • Actions not equal to words - Funding allocations may not reflect claimed priorities • Possible Solutions • Fixed Cost Recovery • Third party implementers; Energy Trust of Oregon, Wisconsin Energy Conservation Corporation • New Regulatory Approaches???

8. Challenges, continued • Uncertainty - What is the marginal cost? • Is nuclear acceptable, financeable, reliable, economical? • Will carbon capture be an option? When? • Volatility of natural gas prices. • Conflicting Studies/Reports • McKinsey Study - “How Much At What Cost” – Supports More EE • CERA Study – “The Cost of Energy Efficiency Investments” – Questions low EE cost claims • Improve evaluation/analysis tools • How much EE really is available at any specific price? • Setting Appropriate Incentive Levels • Most DSM currently acquired at a utility cost that is well below marginal cost. Are higher incentives prudent? Are we cream skimming? • Constrained Delivery Resources • Staff needs growing while experienced staff is retiring