How Texas Will Meet Its Energy Efficiency Goals

Abstract

While competition is being introduced in the retail electricity markets in Texas, efforts are also underway to structure a competitive market for the provision of energy efficiency and other competitive energy services. Under the state's 1999 electric utility restructuring legislation, the regulated distribution arm of each investor-owned utility must meet at least 10% of its annual load growth through energy efficiency, beginning January 1, 2004 (municipally-owned and rural electric utilities are specifically exempted). This will be accomplished with standard offer programs and limited, targeted market transformation programs. Eight new standard offer and market transformation programs have been developed and unveiled in the state that leads the nation in electricity consumption. This paper describes the new programs and presents Texas' plan for addressing the following key issues: 1) How the standardization of energy efficiency program design among the various utilities will be achieved 2) How the new energy efficiency programs will be funded 3) How measurement and verification (M&V) of energy efficiency measures and results may be simplified without unduly sacrificing accuracy 4) What program outreach activities may be necessary and should be pursued 5) How competition may be fairly promoted among all interested energy efficiency service providers (EESPs) 6) How all Texans may have access to energy efficiency services as the electricity markets are restructured 7) How customer protection provisions may be adequately addressed. Also, achievements and lessons learned from pilot programs that were conducted in 2000-2001 are reported here. This paper is of particular importance to policy makers, analysts and other interested parties in areas where electricity markets are undergoing restructuring and similar challenges are being addressed.