California Energy Efficiency Year in Review And What's on Tap for 2015

Efficiency Saves Utility Customers Money.png

Part of NRDC’s Year-End Series Reviewing 2014 Clean Energy Developments  

Thanks to new initiatives and tried and true approaches to help customers optimize their energy use, California’s energy efficiency programs saved customers more than $600 million on their energy bills over the last year and cut as much dangerous carbon pollution as comes from over 200,000 cars. While these 2014 successes helped utilities reduce their investments in power that pollutes our air and are cause for celebration, they’re only the beginning of what’s possible.

Looking forward, there are a number of areas where we can improve efficiency programs, expand our reliance on energy conservation in lieu of conventional power, and help Californians use energy smarter while building on the state’s 40-year record of energy efficiency success. Here’s a snapshot of 2014 and what’s needed in 2015:

1. Efficiency programs saved millions and helped low-income customers, but more is possible. In 2014, the state’s private and public utilities (with partners like trade allies, companies, non-profits, and local governments) deployed $1 billion in energy efficiency initiatives like weatherization and rebates for more efficient appliances. As shown in the graph, these programs helped customers save $12 billion (after accounting for the program costs) since 2006.

Efficiency Saves Utility Customers Money               

  • Looking ahead, critical policy changes -- some already in the works -- are needed to ensure all implementers are allowed to design the types of programs that reach more customers and capture more energy savings. By improving policy rules – like how we determine saving estimates, count what savings occur from the programs, and measure the value of efficiency -- California can capture substantial savings that are currently being left on the table.

The California Public Utilities Commission (CPUC) also adopted program enhancements for the state’s largest low-income efficiency program (the no-cost basic retrofit service for eligible customers served by the state’s privately owned utilities). These improvements will lead to more energy and bill savings for those customers who need it the most while improving the comfort and safety of their homes.

  • In 2015, the Commission plans to address a number of issues, which will help scale-up savings in the future. Increased investment -- in particular in the multifamily sector -- and process changes to the program would also make more savings available to hundreds of thousands of Californians.

2. California used more efficiency to avoid dirty power, but is still missing opportunities. The California Energy Commission made history this year when it included future energy efficiency savings in projecting California’s energy consumption over the next decade. The result? First, as illustrated in the graph, helping customers use energy smarter will reduce the amount of peak power required to meet customers’ needs, nearly flattening demand growth (which means lower pollution and cheaper electricity). Second, counting the full amount of energy savings helps get the forecast right, which means the utilities won't be wasting their customers’ money on unnecessary pollution-emitting power plants.

Efficiency Lowers How Much Electricity California Needs

Efficiency Lowers How Much Electricity California Needs.png

The CPUC also made a historic decision to use clean energy resources to replace two-thirds of the power the San Onofre Nuclear Generation Station (SONGS) previously provided to southern California. The other third was to be filled through a competitive bid, which would have allowed any resource to compete. Instead, the commission staff decided to move forward with a plan to rely on a natural gas plant to fill most of this gap, which crowded out the meaningful opportunity for clean energy resources to compete for the remaining need. This likely means more gas plants that emit pollution harmful to our health.

Also in 2014, Southern California Edison had to look for alternate energy resources due to impending retirements of old gas plants and proposed to use 300 megawatts (MW) of clean energy resources above what the CPUC required. Meanwhile the California Independent System Operator – which oversees electric service reliability – for the first time considered potential efficiency savings in its transmission infrastructure planning, noting these savings could avoid the need to build five San Diego area projects, saving utility customers money.

  • Next year, the state energy agencies need to continue pushing policies – like integrating efficiency into all levels of system planning and using preferred resources before approving conventional plants – to ensure clean energy is equally relied upon to provide service to Californians.

3. The public utilities’ overall efficiency record improved, but many utilities still need to scale up. NRDC’s assessment of California’s public power efficiency programs shows that collectively the nearly 40 publicly owned utilities (POUs) saved more energy through efficiency than the previous year, enough to reduce pollution equivalent to emissions from 50,000 cars. But the increase was largely carried by LADWP’s expansion of its efficiency initiatives. The Sacramento Municipal Utility District and a few of the mid-sized POUs, which together serve the vast majority of public power’s customers in California, are also reaching nationally competitive levels of energy savings but most smaller ones are lagging.

Efficiency Savings as a Percent of Electricity Sales 

Thumbnail image for Publicly Owned Utilities Savings as a Percent of Electricity Sales.png
  • In 2015, all public utilities should continue to ramp up investment and expand efficiency programs (like LADWP’s plan to reduce its customers’ energy use by 15% by 2020). Utilities should also partner with other utilities to reach more customers at a lower cost and explore the opportunity (as LADWP and Glendale did) to remove the link between electricity sales and revenues to ensure the utility is kept financially whole even when investing heavily in efficiency programs that lead to reduced electricity sales.

Without doubt, California in 2014 continued to cement its strong energy efficiency policy foundation. And there were many more positive steps toward capturing additional savings: like using the technical expertise of the California Technical Forum to build confidence in how new energy saving estimates are established, moving forward on appliance and electronics efficiency standards for 15 product categories, advancing the rolling portfolio idea to enable longer term and improved efficiency program approaches, ensuring ongoing investing in clean energy research, and beginning to tackle the challenging issue of data needs.  

Even so, there are additional opportunities for California to push forward much quicker. Leveraging the 2014 successful efforts and aligning key policies to enable even more effective programs is necessary to reach the magnitude of savings needed to meet our climate goals. To ensure the state continues to be an efficiency leader in 2015, policymakers, implementers, and stakeholders must work together to prioritize strategies that will advance efficiency efforts to the next level, which will also support a clean energy economy, lower energy bills, and protect our air and the planet.