To understand how to transform your utility into Utility 2.0, it’s important to start at the beginning. From the early days of regulations to the new REV standards, the world of energy efficiency has evolved – making it very important for utilities to understand these shifts to best position themselves for future success.
In the early 1990s, utilities began offering a combination of educational and financial incentives to encourage consumers to save energy. These programs, funded by ratepayers, included consumer education, energy audits, weatherization, HVAC/mechanical retrofits, efficient appliance rebates, commercial lighting retrofits, and industrial energy efficiency efforts. These early endeavors also included programs to shift load away from peak times.
Such efforts combined to reduce electricity energy demands by the equivalent of approximately a hundred 300-MW power plants.
However, with deregulation in the mid-1990s came decreases in utility energy efficiency program budgets of nearly 50%, significantly undercutting the success of the previous few years.
Then, in the mid-2000s, the rise in fuel costs and a growing public concern with resource consumption sparked renewed interest in energy efficiency programs. By 2012, the total budget across states for electric and natural gas efficiency programs had reached approximately $8.3 billion.
Throughout this process, several states addressed their energy concerns by creating Energy Efficiency Resource Standards (EERS) for utilities, and by 2014, approximately half of the states in the U.S. had fully implemented their own EERS regulations. These regulations are designed to reward utilities that meet the standards, and penalize those that don’t. While EERS have successfully led to significant energy savings across the country, they suffer from serious weaknesses, not the least of which is a lack of consistency across states and an equal lack of strength for enforcing their measures.
For several years, many states and utilities have sought a national EERS to standardize programs across the country and improve widespread implementation of smart energy management. A nationwide standard would reduce competition between states for limited resources, and improve outcomes for all utility companies.
With the release of REV standards in 2015, New York regulators and utilities are working in partnership to bring changes that could be used as a national set of standards. Most industry leaders now expect that some version of REV will be adopted in most states within the next few years, and possibly lead to the sought-after national standard.
While individual utilities may have different opinions about creating a new model for energy generation and distribution, no utility can afford to ignore the coming changes. It’s clear that utilities that adopt the new standards now have the opportunity to emerge at the top of the growing competition in the next decade.