Energy Efficiency Portfolio Standard

Summary

NOTE- THIS PROGRAM INCLUDES SUMMARY OF NY EEPS FROM 2008-2015. POST 2015 SUMMARY IS INCLUDED IN A NEW EEPS SUMMARY PAGE. 

NOTE: In January 2016, the New York Public Service Commission (PUC) approved $5 billion Clean Energy Fund (CEF) as a successor to the New York’s Energy Efficiency Portfolio Standard (EEPS) and Renewable Portfolio Standard (RPS) fund. Please visit the DSIRE CEF summary for more information. 

Origin

In May 2007 the New York Public Service Commission (PSC) issued an order instituting a proceeding to develop an Energy Efficiency Portfolio Standard (EEPS). The order set a goal of reducing electricity usage in New York by 15% from projected electricity usage in 2015. After examining comments and input from staff and stakeholders, the PSC issued a further order in June 2008 establishing detailed program targets, ratepayer collections to fund energy efficiency programs, and various other protocols for the EEPS. The June 2008 order also established collections from natural gas customers to fund gas efficiency programs although at the time targets for natural gas efficiency were still under development. In May 2009 the PSC issued another order establishing gas efficiency targets. In October 2011 the PSC issued a further order reauthorizing EEPS programs through December 31, 2015 and suspending a portion of the program that provides utilities with financial incentives for achieving efficiency targets. A subsequent March 2012 order reinstated the utility incentives for for 2012 - 2015 under a revised structure.

Electric and Natural Gas Sales Reduction

New York's EEPS goal is based on a statewide goal of 15% by 2015. In terms of the development of the EEPS targets, the annual achievements of these targets was interpreted by the NY PSC as a linear interpolation of progress towards the 15% target from 2008 to 2015. Thus, the goals, in percentage terms were set by the NY PSC as laid out in the table below.

It should be noted, however, that the targets above were developed and defined with the recognition that some factors which affect electricity and natural gas consumption are beyond the jurisdiction and control of the PSC. For instance, for the electricity savings targets and funding requirements, the PSC calculated “jurisdictional gap” targets that accounts for the electricity savings by providers not under the PSC’s jurisdiction (e.g., LIPA, NYPA) and electricity savings contributions from other sources (e.g., codes and standards, existing SBC programs, state agency mandates). Thus while total electricity sales reductions under the 15% by 2015 standard would require savings of roughly 29.4 million megawatt-hours (MWh) annually in 2015, the EEPS jurisdictional program target is roughly 7.7 million MWh annually in 2015. When combined with the incorporation of SBC III programs into the EEPS, the total electric jurisdictional gap is 11.2 million MWh annually in 2015. 

Likewise, the total reduction in gas usage expected from EEPS gas savings programs is 44 Bcf annually in 2020, but savings from other sources could increase this to 112 Bcf annually by 2020. Savings of 112 Bcf annually would equate to a gas usage reduction of roughly 14.7% of expected demand in 2020. A December 2012 PSC order made reductions to the MWh and dekatherm targets associated with the New York State Energy Research and Development Authority (NYSERDA)'s suite of EEPS programs in response to changing market conditions and better information about program operation and effectiveness. The order indicates that the PSC does not view the changes as jeopardizing the achievement of the overall 2015 jurisdictional target.

The program web site above contains the full history of EEPS program development under the PSC, including information on EEPS evaluation methods, measurement and verification, and PSC approvals of NYSERDA and utility program offerings.

Program Administrator Type

While the utilities themselves administer a significant degree of the programs used to meet the standard, some of the programs are administered by non-rate regulated utilities, as well as by NYSERDA.

Cost Effectiveness and Program Evaluation

New York uses the Total Resource Cost Test (TRC), one of the five "California tests" from the California Standard Practice Manual, as its primary cost effectiveness test. The PSC requires the TRC to exceed 1.0 at the portfolio level. The Commission is developing a new Benefit Cost Analysis (BCA) framework at a part of the NY REV, which would eventually apply to energy efficiency programs. 

Utility Cost Recovery Provisions

Starting in 2007, New York required its utilities to propose full revenue decoupling mechanisms in each succeeding rate case. As a result, all of New York's rate-regulated electric and gas utilities operate with their revenues decoupled from their sales. 

In addition, New York has designed an innovative two-step incentive for energy efficiency achievements. Overall, utilities are eligible for two incentive "steps" - the first based on achievement of their individual goals, and the second based on collective utility (and NYSERDA) achievement of statewide electric and gas sales reduction requirements. The table below summarizes the breakdown of the total incentive pool for both electric and gas utilities.

In addition, utility-specific incentives are on a sliding scale based on achievement of between 80% and 100% of individual goals. Utility incentives will not be calculated until 2016, when the 2015-2016 period is complete.