The Efficiency Utility: A Model for Replication

L. Blair Hamilton, Efficiency Vermont
Michael Dworkin, Vermont Public Service Board
Beth Sachs, Vermont Energy Investment Corporation

Keywords

policy, efficiency utility, program implementation, administrative structure, performance contract

Abstract

Four years ago, the state of Vermont created the first "Energy Efficiency Utility" in the United States. It chose to use a non-utility administrator to manage and implement energy efficiency services to all Vermont ratepayers. The administrator operates under a competitively awarded contract. While other jurisdictions have created similar non-utility administrators, none have had as broad a scope of responsibility. Vermont's experiment has had four years of field testing, feedback, refinement and evolution. By the end of this period, the new efficiency utility - called "Efficiency Vermont" - was providing approximately 3% of Vermont's electricity and had reduced Vermont's rate of annual load growth by 50%. A key factor in Efficiency Vermont's success is the structure of the performance contract between the efficiency utility and the state's utility regulatory body. While performance incentives have been used elsewhere for utility-administered efficiency programs, the way these indices and incentives have been used in Vermont has been particularly important in achieving not only specified on-time results, but also balance among a variety of sometimes competing policy objectives. Based on Vermont's experience, a number of other states and provinces are now looking into replicating or adapting this model. Their status is reviewed and discussed.