Maryland Regulators are Increasing the Value of Energy Efficiency

How Maryland regulators redefined energy efficiency – in 33 pages

Utility Dive, August 5, 2015. Image credit: Broadneck Patch

There are two impressive numbers to come out of the Maryland Public Service Commission’s decision last month to dramatically expand the state’s energy efficiency commitment: 2 and 33.

That’s a 2% energy efficiency goal by 2020, for the five largest utilities in the state. Its a goal that will send the state into a leading position, nationally, when it comes to energy efficiency targets. It’s a target that involved fundamentally reconsidering how energy efficiency is valued. It was a decision years in the making – and less than three dozen pages long.

The new goals give utilities five years to reach the 2% target, and the ramp-up is gradual. Utilities will update their efficiency plans in 2017, and will be required to increase efficiency at least 0.2% annually up to the goal.

The biggest change in Maryland is probably not the 2% target – though environmental advocates widely hailed the commission’s decision to embrace efficiency as the lowest cost option. Maryland regulators found the lifecycle cost of a Kwh for efficiency was 2.6 cents, significantly lower than utility standard offers which range from 6.2 cents to 9.3 cents/kWh.

But how energy efficiency is valued, how a program is determined cost-effective, may be the biggest change in Maryland. The commission committed to considering a far broader array of societal goods, known as Non-Energy Benefits, when trying to determine if a utility program will benefit ratepayers.

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