Texas Electric Choice Act Energy Efficiency Program Overview

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1 Texas Electric Choice Act Energy Efficiency Program Overview Air Quality 2005 Energy Leadership & Emissions Reduction Conference November 9, 2005 Dallas, Texas

2 Texas Electric Choice Act All Texas investor-owned utilities must meet 10% of their annual growth in electricity demand through: market-based standard offer programs or limited, targeted, market transformation programs All customers shall have access to energy efficiency in order to reduce energy consumption and costs. Programs to be administered by distribution utilities. Programs are implemented by 3 rd party Energy Efficiency Services Providers. Program rules and guidelines established by PUCT. 2

3 Energy Efficiency Program Implementation As of September 1, 2000, distribution utilities can no longer provide competitive energy services directly to customers. Distribution utilities can no longer provide any of the traditional energy efficiency programs, such as air conditioner rebate programs, energy audits, weatherization programs, or energy information programs. However, distribution utilities are allowed to perform outreach activities to energy efficiency service providers and large commercial customers concerning programs. 3

4 Program Funding Funding for program is collected in T&D charges to retail electric providers. Utility administrative costs are capped at 10% of program expenditures. Program budget is submitted to PUCT each year for approval. Unspent funds must be rolled-over to next year program budget. 4

5 Who are the Program Implementers? Energy efficiency programs are be administered by investor-owned utilities: AEP Companies CenterPoint Energy El Paso Electric Entergy Texas Texas - New Mexico Power Company TXU Electric Delivery Xcel Energy Municipal Electric Companies, Rural Electric Co-operatives and River Authorities are not required to implement programs unless they implement customer choice 5

6 Utility Responsibilities Outreach to energy efficiency energy services community. Enter into contracts with Project Sponsors and Market Transformation Program contractors. Perform pre and post-installation inspections. Make incentive and contract payments. Report results to Public Utility Commission. Cannot provide energy efficiency services to end-use customers. 6

7 Texas Historical Results Program Year MW Saved MWH Saved * 370,000* * 435,000* *All Energy Efficiency Programs including small/large commercial and industrial customers 7

8 Standard Offer Programs Program offers a fixed incentive payment for each kw and kwh saved in an energy efficiency project. Parties enter a standard contract. Contracts awarded on a first come, first served basis. Program participants are called Project Sponsors. A Project Sponsor cannot receive more than 20% of any program budget. Different from rebates. Incentive payments are based on performance. 8

9 Market Transformation Programs Strategic efforts to make lasting changes in the market that result in increased adoption of energy efficient technologies, services, and practices. Programs are designed to overcome specific market barriers that prevent energy efficient technologies from being accepted. Typical market barriers include: Information First cost Split Incentives Access to energy efficiency measures 9

10 PUCT Approved Residential Programs STANDARD OFFER PROGRAMS Hard-to Reach Residential/Small Commercial MARKET TRANSFORMATION PROGRAMS Air Conditioning Distributor Air Conditioning Installer & Information Energy Star New Homes Home Performance with Energy Star Multi-Family Water and Space Heating Residential Energy Star Windows Solar Water Heating 10

11 Hard-to-Reach Low Income Standard Offer Program Targets residential customers with household incomes at or below 200% of federal poverty guidelines. These customers are considered hard to reach. Existing single family, multi-family and new construction of affordable housing. Typical measures are attic insulation, air sealing, duct sealing and CFL s. Includes both Large and Small Program components. Higher Incentive payments are allowed. Deemed Savings for all installed measures. 11

12 Residential-Small Commercial Standard Offer Program Targets residential and small commercial customers with maximum demands that are under 100 kw. Only retrofit projects are eligible. Typical measures are attic insulation, air sealing, duct sealing and air conditioning. Single family, multi-family and mobile homes. Typical measures include A/C retrofits, attic insulation, and duct efficiency improvement. Includes both Large and Small Program components. Deemed Savings for all installed measures. 12

13 Air Conditioning Distributor Market Transformation Program Includes high-efficiency air conditioning units less than 20 tons in size in residential, small commercial and large commercial applications. Only open to Air Conditioner Distributors. Individual air conditioning contractors participate through their local distributor. Eligible equipment may be installed in either retrofit or new construction applications. Window air conditioning units are excluded. 13

14 Air Conditioning Installer Market Transformation Program Encourages improved installation practices for HVAC, including measures designed to reduce leakage in air ducts. Both new construction and retrofit installations may qualify. Qualified installations based on equipment efficiency, sizing, proper refrigerant charge, duct leakage and fan flow. 14

15 Energy Star Homes Program EPA Program that targets residential new construction. Homes must be at least 15% more efficient than State Energy Code. Requires third party inspection of home by a certified Home Energy Rater. Provides education, technical assistance and incentives to builders. Building and supporting the certified Home Energy Rater industry in Texas. 15

16 Home Performance with Energy Star Market Transformation Program Encourages comprehensive, whole-house energy efficiency retrofits. Targeted to single family retrofit. Promotes diagnostic services. Certified energy services providers. Utilizes deemed savings values for individual measures. 16

17 Multi-Family Water and Space Heating Market Transformation Program Encourages the installation of non-electric water heating and space heating. New construction multi-family only. Targets market barrier of higher installation costs of gas facilities. 17

18 Residential Energy Star Market Transformation Program Promotes the sale of Energy Star rated windows. New construction multi-family only. Upstream and Midstream program designed to educate manufacturers and retailers about the energy efficiency benefits of high efficiency windows. 18

19 Solar Water Heating Market Transformation Program Designed to increase the number of solar water heating systems installed in residential and commercial applications. Addresses key market and technical barriers: - Limited number of contractors with sufficient technical skills. - Lack of information on the benefits of efficiency. - Lack of market differentiation. - Lack of information regarding cost. Provides training and education to installers. 19

20 Detailed Information Program specific information for each utility service area can be found at: 20

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