Energy Efficiency Resource Standard

Origin

Washington voters passed Initiative 937 in 2006, creating a renewable energy standard and an energy efficiency resource standard for the state's electric utilities. Initiative 937, enacted as the Energy Independence Act, calls for electric utilities that serve more than 25,000 customers in the state of Washington to undertake all cost-effective energy conservation. Investor-owned utilities, municipal utilities, rural electric cooperatives and public utility districts that meet the customer total requirements are subject to this standard. Of Washington's 62 utilities, 17 are considered qualifying utilities, representing about 81% of Washington's load (including load served by the Bonneville Power Administration).

Electric Demand and Energy Reduction Standard

Utilities subject to the standard must pursue all available conservation that is cost-effective, reliable, and feasible. Specifically, by January 1, 2010, utilities must (1) identify achieveable cost-effective conservation potential through 2019, with reviews and updates every two years for the subsequent 10 years; and (2) establish and meet biennial targets for conservation. 

High-efficiency cogeneration owned and used by a retail electric customer to meet its own needs may be counted toward conservation targets. Utilities may also count avoided energy supply required as a result of a distribution system upgrade or improved management practice that results in lower line losses and/or transformation losses, to the extent it can be documented. Production efficiency improvements may be measured and reported based upon the fraction of fuel savings achieved.

Program Administrator Type

Washington State's utilities directly administer the energy efficiency and demand-side management programs intended to meet the standard.

Cost Effectiveness and Program Evaluation

To evaluate the cost effectiveness of its efficiency and demand reduction activities, Washington utilizes the Total Resource Cost test (TRC) (one of the five "California tests" from the California Standard Practice Manual) as its primary test for measuring the cost-effectiveness of energy efficiency programs. 

Utility Cost Recovery Provisions

Investor-owned utilities are permitted to propose "positive incentives" related to compliance with the standard. In addition, Washington's three investor-owned utilities have proposed decoupling mechanisms in order to comply with the law. To date, however, no utility has proposed an incentive compensation mechanism, nor has a decoupling mechanism been approved.

Special Provisions 

In determining target levels of efficiency, a utility's projections must be consistent with the methods used by the Northwest Power and Conservation Council (NWPCC) in developing its regional power plan. Utilities may alternatively base their efficiency targets on their most recent integrated resource plan, provided the plan is consistent with the NWPCC's power plan. Utilities must also develop projections of achievable cost-effective conservation potential for the immediate two-year period.Beginning in January 2014, a qualifying utility may apply conservation achieved in excess of its biennial target to meet up to 20% of its subsequent two biennial conservation targets. It may use conservation savings from a single large facility (a facility whose average electrical consumption exceeded 5 average Megawatts before the conservation measure) to meet an additional 5% of the subsequent biennial target.