Energy-efficiency programs have been a part of electric-utility operations for a decade or more, since state utility commissions began valuing the kilowatt-hours saved (aka negawatts) as an alternative to the new generation capacity they could potentially displace. Some utilities are beginning to argue against the cost-effectiveness of such efforts, while advocates say we have only begun to realize efficiency’s potential.


In December 2014, the utility Ameren Missouri filed its energy-efficiency plan with the Missouri Public Service Commission. It came with a caveat for its customers and agency commissioners: despite greater-than-expected savings in the current plan, the utility anticipated its proposed effort would net less than half of the original plan’s savings. The utility argued the low-hanging fruit had been gathered in the few years of utility-financed efficiency upgrades, and further progress was going to be more expensive.


On the surface, this might seem like a reasonable argument. After all, in its first year, the current 2013–2016 plan is estimated to have saved much more than 300 gigawatt-hours (GWh) of electricity use. The utility is shooting for close to 800 GWh in total savings by the end of 2015, which the company said is enough to put off the need for a new power plant. However, these savings have largely been achieved through lighting upgrades, and national efficiency experts say they’ve likely only scratched the surface.


“Lighting has been the biggest target. It has been a major source of energy savings nationally,” said Ian Hoffman, researcher with the Lawrence Berkeley National Laboratory’s (LBL) Electricity Markets and Policy Group. 


These savings are easy to understand with some simple math. Replacing a 60-watt (W) incandescent lamp with an equally bright compact fluorescent lamp or light-emitting diode product can save 40–45W apiece. 


Hoffman said home air conditioning also has been a big target for achievable residential savings, though these emphases now are shifting.


“Now we’re seeing a proliferation of other plug loads in the house,” he said.There has also been a lot going on in commercial offices and the industrial process space, where a few changes can result in significantly larger savings.


Missouri—along with Ohio and Indiana, where utility-led campaigns have frozen or eliminated mandated energy-efficiency programs—has a regulated electricity market and vertically integrated utilities, meaning electric utilities in those states own both generation and distribution, giving them a direct interest in growing their generation business. Meanwhile, states leading the efficiency pack, including Massachusetts and Vermont, operate under deregulated rules, which separate the financial relationship between generation and distribution.


There isn’t a direct relationship, however, between deregulation and successful efficiency incentives. California, a regulated state, was second only to Massachusetts in 2014 energy savings, according to the 2014 State Energy Efficiency Scorecard prepared by the American Council for an Energy-­Efficient Economy. Matthias Bell, manager of Boulder, Colo.-based Rocky Mountain Institute’s (RMI) electricity practice, said the difference between California and some other regulated states lies in an acceptance by both Golden State utilities and regulators that the relationship between electricity providers and their customers is changing.


“There are utilities in the U.S. that have that mindset—we need to change to make ourselves more service oriented,” he said. “Energy efficiency is a good first step.”


Such utilities see a need to think beyond easy fixes, such as one-for-one lamp replacements, to more systemic efficiency options. For example, Bell said that RMI sees a big opportunity in “retrocommissioning” the operations of mid-size buildings. This involves a close audit of how motors, lighting, heating and air conditioning and other energy-using systems are operating, comparing those findings to original specifications, and making the adjustments necessary to bring operations back up to original design levels (or even improving them).


Other utilities are finding success in behavioral-based programs. Used by both electricity and heating-gas utilities, these efforts involve sending out monthly reports to residential customers, which enables them to compare their energy consumption to that of their neighbors. Such a keeping-up-with-the-Joneses approach might seem a little silly on the surface, but the competitive motivation seems to be working. According to LBL’s Hoffman, resulting year-over-year savings attributed to these monthly reports are totaling 1.2–1.5 percent.


Consumer awareness and control over their electricity use is only growing as utilities begin to tap into the information potential offered by the millions of smart meters now being deployed across the country. Hoffman said planners are paying new attention to how energy efficiency and demand response—that is, the ability of customers to dial down electricity consumption during high-usage periods—can work together, possibly leading to new kinds of incentives to limit the need for new generation.


“There’s a lot of thinking out there about the integration of energy efficiency and demand response, really looking at how you can shave and shift peaks,” he said.