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Arizona Energy Policy Update

Arizona Energy Policy Update. Jeff Schlegel, The Southwest Energy Efficiency Project USGBC Arizona Chapter ; March 17, 2011. Southwest Energy Efficiency Project (SWEEP). Public interest initiative founded in 2001 Promotes greater energy efficiency (EE) in AZ and SW

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Arizona Energy Policy Update

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  1. Arizona Energy Policy Update Jeff Schlegel, The SouthwestEnergyEfficiency Project USGBC Arizona Chapter; March 17, 2011

  2. Southwest Energy Efficiency Project (SWEEP) • Public interest initiative founded in 2001 • Promotes greater energy efficiency (EE) in AZ and SW • Board of Directors includes utility, state government, national laboratory, and private sector representatives • Funding provided by the Energy Foundation, Hewlett Foundation, Edwards Mother Earth Foundation, U.S. Department of Energy (DOE), and U.S. Environmental Protection Agency (EPA) www.swenergy.org

  3. Energy EfficiencyDeliversBenefits for: Customers (Consumers & Businesses) The Utility System (Electric & Gas) Our Economy Our Environment

  4. Arizona Energy Policy Forums Salt River Project Board and Managers Arizona State Legislature Arizona Corporation Commission Governor’s Office& State Administration Cities & Counties Congressional Delegation

  5. Arizona Corporation Commission (ACC) • 5 elected commissioners • Has jurisdiction over qualityof service & rates chargedby public service utilities • Regulates 14 electric utilities including APS & TEP, not SRP • Approves/denies manyutility actions (i.e. rates) • Can establish rules further governing utilities

  6. Recent Policy Developments at the ACC • Electric Efficiency StandardRequires 22% energy savings by 2020 • Gas Efficiency StandardRequires 6% energy savings by 2020 • Decoupling Policy StatementAllows investor-owned electric and gas utilities to file specific decoupling proposals to align utility financialinterests with the interests of customers and the public (which supports EE, RE DG) (Decoupling “de-couples” utility revenues from energy sales) • Integrated Resource Planning RulesAllows meaningful opportunities for EE & RE to compete on a level playing field with conventional resources.

  7. What is the Electric Efficiency Standard (EES)? • Approved unanimously by ACC in July 2010 • Requires investor-owned utilities to: • Achieve cumulative annual energy savings of 22% by 2020 • Includes a 2% credit for peak reductions from Demand Response • Electric Coops required to meet 75% of standard • Countable energy savings include: • Savings from combined heat and power (CHP) • 1/3 of measured savings from building energy code support • Gas Efficiency Standard • Approved Unanimously  • Requires 6% Savings by 2020  • Savings from CHP, building energy codes, & standards 

  8. EES Impact on Retail Sales Retail EnergySales Forecast Retail Energy Sales (MWh) Energy SalesForecast with EES • APS’ energy sales growth reduced from 2.8% to 1.1% per year • TEP’s energy sales growth reduced from 1.5% to -0.2% per year

  9. The Effect of Much Higher EE Savings AZ 2008 AZ 2020 • Energy efficiency becomes one-fifth of the energy “pie” in 2020 • Lower total costs, lower utility bills, more jobs, less pollution • Deferral of 3 large baseload plants from early 2020’s to2030’s (and by then renewables, storage, electric vehicles, etc.) • Plus $9 billion in lower customer bills (2011-2030)

  10. EE: ACC Policy Advancements In Action • TEP 2011-2012 EE Implementation Plan Filed • New programs, expansions of existing programs • Continuation and expansion of new construction programs • Includes pilot program to support building energy codes • Also EE programs for existing buildings • APS 2011 EE Implementation Plan Approved • New programs (including multi-family new construction) and program expansions

  11. TEP’s Residential New Construction Program • Uses an incentive schedule that awards larger incentives for more energy-efficient homes • To qualify, homes must: • Be tested by an approved energy rater • Meet one of three tiers in the program based on aHome Energy Rating System (HERS) Index Score: • Tier 1: ≤ 85 ($400 incentive per home to builder) • Tier 2 ≤ 70 ($1,500 incentive) • Tier 3 ≤ 45 ($3,000 incentive)

  12. TEP’s Commercial New Construction Program • Offers rebates to non-residential customers in TEP serviceterritory who design and/or build new energy efficient facilities • Two rebate types offered: • Design Assistance RebatesPromote EE integration into design process • New Construction RebatesPromote incorporation of EE products/practicesduring construction • Rebate Caps • Customer CapsDepends on funding availability & number of program participants • Measure Caps • Design Assistance: 50% of the incremental cost up to a max of $10K • New Construction: 50% of the incremental cost up to max of $75K New in ’11-’12:High PerformanceWindow Glazing

  13. APS Multi-Family New Construction Program NEW! • Promotes EE in construction/renovation ofnew multi-family buildings • Building owners/developers offered an incentive per dwelling unit forinstalling select packages of EE improvements in each unit. • Four different packages • One package targets major renovation projects • Three packagestarget new construction • New construction packagesoffer progressively higher incentives for projects that meet higher levels of energy • Eligibility • All existing multi-family rental housing complexes and new multi-family rentalconstruction projects within APS service territory with five dwelling units or more areeligible for the program • No owner-occupied condominiums or townhomes

  14. Support Building Energy Code Advancement Building energy codes ensure our homes& offices are “built right” the first time 70% USED Energy efficient homes are more affordable &reduce the risk of defaults and foreclosures ENERGY Building energy codes are a cost-efficient policy strategy for reducing energy costs and pollution 30% WASTED

  15. Building Energy Codes in Arizona • Arizona is a “home rule state” (local jurisdictions enact building codes) • Only 33% of 111 municipalities haveadopted a version of the InternationalEnergy Conservation Code (IECC) • To date, no single municipality has adopted the 2009 IECC (although several are working on it) • Also, Green Building Codes and “beyond code” standards

  16. Arizona Legislature EXAMPLES OF SWEEP ACTION • HB2574 energy districts (PACE) – failed (10) • HB2332 schools; energy contracts (09) -- (appliance standards) • HB2496 schools; energy savings (07) • HB2430 energy savings; state bldgs (06) • HB2429 solar tax incentives (06) • HB2390 appliance standards (05) • HB2703 performance contracting (04) • HB2324 state energy savings goals (03) • f

  17. Arizona Legislature – Current Session • SB 1172 – Performance contracting and energy savings accounts for cities and counties (failed in Senate committee but may come back) • Greenhouse gas “freedom to breath” proposals to prevent action on climate (SB 1393, SB 1394) • Challenges to ACC authority (HB 2195, HB 2185) • HB 2501 – “ambiguous” rules or laws • “Energy parks” and “energy districts” • Sustainable finance authority • BUDGET

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