Comparative Performance of Electrical Energy Efficiency Portfolios in Seven Northeast States

Stuart Slote, Optimal Energy, Inc.
Glenn Reed, Vermont Energy Investment Corporation
John Plunkett, Green Energy Economics Group, Inc.

Keywords

Abstract

This paper compares energy efficiency portfolio performance in seven Northeast states from 2001 through 2004. Meaningful comparisons between different states’ performance are fraught with challenges. Differences in customer mix, climate, efficiency spending levels, program balance, program maturity, economic conditions, electricity rates and avoided electricity supply costs all account for variations in the electricity savings that portfolios achieve.

Two basic indices of efficiency portfolio performance are devised: savings yield (annual MWh energy saved per (real) dollar expended), and savings depth (annual energy savings divided into total annual retail sector electricity sales). We calculate one additional indicator, spending depth, to reflect the relative magnitudes of each state’s portfolio funding compared to electricity sales.

We compare the indices separately for the residential and nonresidential sectors, at least roughly compensating for broad differences in customer mixes between states. Dividing savings into program spending and sector sales in the yield and depth indices accounts somewhat for differences in size between states. Confining the comparisons to portfolios in the Northeast helps limit the degree to which climactic differences account for different outcomes. Keeping a regional perspective also helps limit the potential influence of differences in efficiency technology cost-effectiveness due to major differences in avoided supply costs.

Neither indicator is very revealing by itself. High savings yield and low savings depth could be indicative of cream-skimming. Savings depth alone is also problematic. Program administrators could concentrate resources on achieving deep savings beyond the point of costeffectiveness, resulting in uneconomically low portfolio yield. Accordingly, both indices should be considered together and over time.