In the ongoing battle to save the planet and still keep the lights on, energy efficiency is emerging along with alternative fuel sources as a potent weapon. One state agency has recognized the trend and is making a sizable investment.

The New York State Public Service Commission, which regulates utilities in the state, has agreed to set aside up to $27 million, with an extra $5 million for New York City, to encourage electric utilities to develop their own cost-effective programs for their consumers. The money will be made available to the utilities as an incentive for them to help consumers improve energy efficiency and reduce steep anticipated increases in utility bills.

The types of programs that the incentives are designed to encourage include retrofitting outdated, inefficient residential commercial and industrial properties; installing new energy-efficient equipment; and informing the public about the new opportunities for savings on energy bills. According to the commission, when fully funded, the program will provide more than $4 billion in benefits to customers through 2015.

The incentives are intended to forestall an expected rapid rise in energy consumption, which could exceed current levels by 11 percent in the year 2015. The commission has assigned targeted levels of energy reduction for each of the utilities’ service areas, which collectively are intended to reduce consumption by up to nearly 694,000 megawatt-hours (MWhs) annually. This, in turn, will help the commission reach its share of the statewide goal to reduce electricity consumption by 15 percent by 2015.

The incentive program combines a carrot-and-stick approach by requiring utilities to meet their targeted reduction goals in order to receive funding. Similarly sized negative financial adjustments will be applied for failure to meet these targets.