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Energy Efficiency Policies, Initiatives, and Predictions: Illinois

Illinois is one of approximately 25 states in the U.S. with a fully funded Energy Efficiency Resource Standards (EERS) initiative as of the beginning of 2015. In July 2007, the Illinois General Assembly passed legislation to establish the Illinois Power Agency Act (IPAA). The IPAA requires electric and natural gas utilities to provide customer energy efficiency programs and to meet annual energy savings goals. It also promotes using demand-response programs to reduce direct and indirect costs to consumers.

In conjunction with establishing the IPAA in 2007, the Illinois General Assembly also created the Illinois Power Agency. With the mission to “ensure adequate, reliable, affordable, efficient and environmentally sustainable electric service at the lowest total cost over time,†the Illinois Power Agency buys power on behalf of the state’s two biggest utilities – Ameren and ComEd. Once the procurement process is finalized, the Illinois Power Agency is responsible for enforcing the IPAA’s requirements to make sure Illinois achieves state energy efficiency goals.

The IPAA’s electric savings requirement started at 0.2% in 2008, ramping up to an annual savings requirement of 2% by 2015 and beyond. The natural gas initiative calls for 8.5% cumulative savings by the end of 2020, starting at 0.2% sales reduction in 2012 and ramping up to 1.5% in annual savings by 2019.

Illinois At a Glance

Statewide EERS: Yes.

Primary Energy Sources: 45% coal; 41% nuclear; 7% biofuels; 5% other renewable sources; 2% crude oil [Source]

Energy Efficiency Approach: Illinois’s policy requires electric utilities to ramp up annual savings to 2% in 2015, with an annual peak demand reduction of 0.1% through 2018 and total savings of 8.5% by 2020. Initiatives may fund measures with utility-designed and commission-approved tariffs, not to exceed an established cost-cap of 2% of customer rates. Individual utilities administer 75% of total funds to target residential and commercial customers, and the Illinois Department of Commerce and Economic Opportunity (DCEO) administers 25% of funds to target government facilities, low-income households, and market-transformation-oriented information and training programs.

Municipalities with Local Initiatives: A large number of municipalities, including Chicago, offer local and regional rebate and incentive programs.

Illinois Overview

Illinois is a major hub for both production and transportation of energy resources, with more than a dozen interstate natural gas pipelines, two natural gas market centers, several petroleum and petroleum product pipelines, and an oil port. The state is also fourth in the nation for crude oil refining capacity and second in the nation for recoverable coal reserves at producing mines.

Illinois leads the nation in generating capacity and net electricity generation from nuclear power, accounting for more than 12% of the nation’s nuclear power. Despite higher production than other states, plus cold winters and hot summers, lower utility rates translate to residents spending only 2% more for energy than the U.S. average.

Illinois has proactively remained ahead of the energy efficiency movement with well-funded EERS initiatives and plentiful state and county programs. Illinois’s programs are backed by approval for tariffs to cover costs plus statutory penalties for non-compliance.

To help pay for initiatives, utilities instituting approved energy efficiency and demand-response measures may file an automatic adjustment clause tariff with the Utilities Commission. Additionally, revenue-per-customer decoupling pilot programs have been approved for several utility companies as part of their rate cases. The Illinois Energy Now program provides millions of dollars in rebates to public facilities that make large-scale energy efficiency improvements.

Local and Regional Programs

Following state policy makers’ lead, Illinois boasts a long list of local and county municipalities that have instituted their own energy efficiency programs both within their governments and for residential and commercial energy users. The result is a wide variety of programs available to residents, businesses, and government agencies, including grants, rebates, and other programs administered by both the municipalities and the utilities themselves.

A few notable small business energy efficiency programs:

  • City of Chicago Small Business Improvement Fund provides grants for equipment installation, lighting, chillers, furnaces, boilers, heat pumps, central air conditioners, programmable thermostats, energy management systems, building controls, windows, roofs, and more. Grants may cover 25%, 50% or 75% of cost. More information:
  • Ameren offers rebates for lighting improvements to utility customers. More information:
  • City Water Light and Power offers a utility rebate program for businesses to install lighting, heat pumps, central air conditioning, building insulation, and retro-commissioning.
  • ComEd offers a utility rebate program for commercial lighting, HVAC, building envelope, and building controls.

Click here for a full listing of programs in Illinois.

2015 and Beyond

Illinois remains committed to its plan to reduce energy consumption by 8.5% by 2020. Following NY’s REV 2.0 initiative, expect to see Illinois’s commitment to energy efficiency strengthen, and new, innovative programs take shape.

The current challenge for Illinois utilities is finding new ways to continually meet the state’s increasing efficiency demands. The low-hanging fruit of efficient lighting and winterization upgrades has been largely tapped; and most areas have penetrated residential, along with large commercial markets with rebate and incentive programs.

However, one area many utilities have yet to tap into is the small business market to meet increasing demands. By working with a small business energy efficiency partner, not only will your utility be able to reach EERS and IPAA goals, you’ll truly make a difference in the lives of your customers. Here are three ways Lime Energy can help you go beyond your annual savings goals:

1. Meet EERS and IPAA Goals

So far, Illinois is the only state in the Midwest to institute statutory penalties for noncompliance with energy efficiency standards. Fines can reach $100,000 per day, plus a mandatory contribution to Low Income Home Energy Assistance Programs (LIHEAP). Additionally, noncompliant utilities may have their energy efficiency programs legally removed from their control and placed under third-party administration. With strict Illinois Power Agency enforcement, it’s key for utilities to meet EERS goals. That’s where Lime Energy comes in.

We partner with you to create large-scale energy efficiency programs for small businesses. Our fully-integrated model starts with free energy assessments provide owners with measurable results to show exactly what they can save with the recommended energy-efficient upgrades and ends with a project signoff – all under one roof. So far, Lime Energy has paid $110 million in incentives to business owners and has saved 450,000 MWh for utilities – making the results a win-win for both small businesses and your utility.

2. Customer Receives Entire Incentive

Currently, incentives can be used for both utility and state-administered programs. With individual utilities required to administer 75% of the total funds to residential and commercial customers, the other 25% is administered by the Illinois DCEO to government facilities, low-income households, and market transformation-oriented information and training programs.

Lime Energy believes the customer deserves 100% of the incentive, given they are paying a rate recovery fee. With our Pay-For-Performance model, there are no extra administrative fees. We deliver the entire incentive to the customer, and are only paid when the small business program is a success, aligning our goals perfectly with yours. Plus, by giving small businesses the full incentive, it increases participation, helping your utility company to meet EERS and IPAA goals.

3. One-Stop-Shop for Energy Services

Imagine not having to use multiple trade allies for all of your small business customer’s energy service needs. No going between companies, no trying to align multiple schedules for efficient installation, no disturbing business owners, and no expensive fees. Just a one-stop-shop to get the job done.

Once on board, the Lime Energy team provides all of the Demand Response, HVAC Tune-up and energy efficiency services you need under one roof. No multiple trade allies involved, just our experienced team implementing changes with limited interruptions to every-day business. Not only does this make the customer happy, it also makes the implementation process quick and simple – which means you’ll start seeing real results in no time at all!

Programs that specifically target the under-served small business market may provide a significant boost in the next few years for utilities looking to see significant reductions within the cost caps provided by the state.

Additional Resources

For more information about energy efficiency trends and initiatives in Illinois, bookmark these valuable resources.




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