RAP worked directly with the Arkansas Public Service Commission to provide analysis and technical assistance, with the end goal of informing policy makers about utility program designs and regulatory policies to improve end-use energy efficiency. Photo: Arkansas State capitol, Little Rock. L. Allen Brewer/Flickr.
Work supported by the Clean Energy Ministerial’s 21st Century Power Partnership (21CPP) has helped expand energy efficiency programs in the U.S. state of Arkansas. The Regulatory Assistance Project (RAP), a global nonprofit organization that advises public officials on regulatory and competitive utilities policies, was commissioned by 21CPP to conduct a ‘deep dive’ into a U.S. state. with the goal of informing policy makers on utility program designs and regulatory policies to improve end-use energy efficiency.
The state of Arkansas was chosen based on a number of criteria, but with two uppermost; the level of energy efficiency in the state offered significant opportunities for progress, and there was strong buy-in and desire from the Arkansas Public Service Commission for assistance. Although the state has some of the lowest electricity rates in the U.S., the residential bills are close to the national average because of high usage.
“Energy efficiency is the cheapest way we can help manage energy usage and rates,” said Commission Chairman Colette Honorable. “This focus on efficiency allows us to get the greatest return on consumers' investment."
RAP worked directly with the Commission to provide expert analysis and on-the-ground technical assistance in the areas of utility energy efficiency targets and projects, weatherization programs, analysis of combined heat and power, and coordination of utility and environmental planning. The ambitious 20-month work program culminated in the implementation of a comprehensive Energy Efficiency Roadmap, issued as a final order in September 2013.
The Roadmap and other work in Arkansas resulted in a number of significant accomplishments, including the following:
- The 2015 energy efficiency target for electric utilities was increased to 0.9% from 0.75% and for gas utilities to 0.5% from 0.4%. Increasing targets are expected for 2016 and 2017.
- A tiered incentive system was created that provided significantly more motivation for utilities to exceed these new, higher energy savings goals.
- A standardized approach was developed for determining avoided costs related to energy efficiency efforts.
- A collaborative was created to develop uniform statewide best practices, particularly with residential weatherization programs and commercial and industrial energy efficiency programs.
The Commission has also invited proposals from utilities on decoupling revenues from sales. Decoupling is considered a crucial step in removing barriers for utilities to pursue energy efficiency and will be particularly important as energy efficiency target increase over time. RAP’s work provided suggested parameters for the issues all proposals are required to address. Work is also continuing on developing robust integrated resource planning (IRP) rules that will allow the Commission to review least-cost alternatives to proposed power plant expansion and upgrades.
“There was a substantial amount of work accomplished in a very short period of time,” said Matthew Wittenstein, lead coordinator for 21CPP. “This success was dependent on very dedicated and enthusiastic participants and stakeholders who worked tirelessly on this project.”
This deep dive work program in Arkansas is already serving as a model for energy efficiency efforts in other U.S. states as well as sub-national efforts in other countries. Neighboring state Mississippi recently issued rules that largely followed those in Arkansas. A similar work program is also taking place in India.
The detailed report outlining the work programs and outcomes, The Clean Energy Ministerial’s U.S. Strategic Engagement on Energy Efficiency in Arkansas, is now available on the Clean Energy Ministerial website.