Unprecedented Effort to Slash Energy Use, Create Clean Energy Industry
Albany, NY — The New York State Public Service Commission (Commission)
recently commenced its historic Energy Efficiency Portfolio Standard (EEPS), a far-reaching,
ground-breaking energy efficiency initiative that seeks to reverse the pattern of ever-increasing
energy use in New York by reducing electric usage 15 percent of projected levels by 2015; one
of the most aggressive efficiency programs in the nation.
"Never before have we faced such significant energy challenges," said Commission
Chairman Garry Brown. "The unprecedented rise in energy prices we are experiencing puts to
rest any doubts the market is changing. To confront this new and unpleasant reality, we must
immediately take bold steps to improve energy efficiency and reduce consumption of ever-more
costly fossil fuels that we have come to depend on. Doing nothing should not be considered as an
Chairman Brown added: "The unprecedented energy efficiency program we are
approving today will be critically important for the State's future energy policy. Without doubt,
energy efficiency is the most cost-effective, and most immediate, way to reduce the burden of
rising energy and environmental costs on residential and business customers. The steps we are
taking will establish a framework for ensuring energy efficiency becomes an integral part of the
New York energy industry. This initiative is squarely in context of broader State policies
designed to develop a clean energy industry and economy."
The energy efficiency proceeding is designed to forestall an expected rise in energy
consumption. At current trends, by 2015 electric energy usage in New York is estimated to be 11
percent higher than current levels. These factors, combined with expected fuel price increases
and supply uncertainty, and the need to reduce greenhouse gas emissions, make it necessary to
create energy efficiency programs and quickly find ways to reduce energy use.
The ultimate program contemplated when fully funded is expected to provide more than
$4 billion in benefits to customers through 2015. In addition, it is anticipated that thousands of
jobs will be created to support the new energy efficiency programs — retrofitting outdated,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 —
With its action, the Commission establishes efficiency targets to be achieved by
regulated entities through 2011. It also requires utilities to commence collecting additional set
asides of $172 million annually, beginning in October 2008, in System Benefits Charge (SBC)
funding to invest in energy efficiency programs.
Furthermore, the development of an efficiency target for natural gas will provide the
basis for additional benefits. The $13 million annually through 2011 in natural gas energy
efficiency programs included in the SBC funding is expected to result in a net benefit to New
York's economy of more than $160 million.
One of New York State's highest energy priorities is to develop and encourage costeffective
energy efficiency over the long term, and immediately to commence or augment nearterm
efficiency measures. This initiative is in the context of the broader State policies for the
development of the clean energy industry and economy in the State: policies including Executive
Order No. 2 of Governor David Paterson, the Renewable Portfolio Standard, the Regional
Greenhouse Gas Initiative, improvements in State energy building codes and appliance
efficiency standards, and the Renewable Energy Task Force Report of then-Lieutenant Governor
The Commission also approved certain New York State Energy Research and
Development Authority (NYSERDA) energy efficiency programs on a fast-track. In addition, the
Commission expects utilities to submit new energy efficiency programs for approval, which will
be expedited for programs in specific pre-approved categories. Average customer bill impacts
are projected to be modest.
Meanwhile, the Commission continues to develop additional issues of program design.
Included among these are issues of setting a target for natural gas energy efficiency, utility
performance incentives, on-bill financing, the roles of demand response and distributed
generation, along with the impact on rental and low-income customers.
Working toward and ultimately attaining the aggressive goal will moderate expected
increases in average customer bills and the State's energy costs over time, ease wholesale prices
and transmission and distribution congestion, reduce greenhouse gas emissions and local air
pollution from the energy sector, improve New York's energy security, and foster economic
development by creating investment opportunities and clean energy jobs for New Yorkers.
In attaining these objectives, careful attention to program benefit/cost ratios is very
important as there is a need to achieve a maximum return on each incremental energy efficiency
investment and to reduce rate impacts on customers. An EEPS should be designed ultimately to
reduce customer bills, stimulate State economic development, and create jobs for New Yorkers.
On May 16, 2007, the Commission issued its Order instituting the EEPS proceeding.
Since then, Staff of the Department of Public Service and a number of interested parties,
including the major utilities in the State as well as relevant governmental groups, have been
working diligently on the initiative.
In addition to the near-term efficiency goal adopted in this order, the Commission is
emphasizing the importance of demand reduction as a critical objective of this proceeding.
Reducing peak demand — the amount of power required to supply customers at times when need is greatest — will moderate commodity prices, improve system reliability, and potentially
reduce, or at least defer, the need for construction of generation, transmission and distribution
As part of the $172 million initiative, the Commission authorized $85 million annually to
fund a balanced group of fast-track NYSERDA programs, as well as $87 million annually in
funding for utility-administered programs that could receive expedited approval. Five of the fast
track programs are administered by NYSERDA; utility proposals for others are expected soon.
The EEPS will be a joint effort by NYSERDA, the utilities, and other entities that are
capable of administering and delivering programs and which are willing and able to be
accountable for results. The EEPS is designed to meet targets and goals for energy efficiency to
contribute to the reduction of the State's dependence upon imported and fossil fuel-based
generation; reduce its greenhouse gas emissions, reduce participating customer bills, stimulate
economic development and create jobs in the clean energy sector for New Yorkers.
The Commission will issue an Order reflecting the recent action. That order, when
available, may be obtained from the Commission's www.dps.state.ny.us Web site by accessing
the Commission's File Room section of the homepage and referencing Case 07-M-0548. Many
libraries offer free Internet access. Commission orders may also be obtained from the
Commission's Files Office, 14th floor, Three Empire State Plaza, Albany, NY 12223 (518-474-
SOURCE: New York State Public Service Commission