State Energy Efficiency Resource Standards: Design, Status, and Impacts

An energy efficiency resource standard (EERS) is a policy that requires utilities or other entities to achieve a specified amount of energy savings through customer energy efficiency programs within a specified timeframe. EERSs may apply to electricity usage, natural gas usage, or both. This paper provides an overview of the key design features of EERSs for electricity, reviews the variation in design of EERSs across states, and provides an estimate of the amount of savings required by currently specified EERSs in each state. As of December, 2013, 23 states have active and binding EERSs for electricity. We estimate that state EERSs will require annual electricity savings of approximately 8-11% of total projected demand by 2020 in states with EERSs, however the level of savings targeted by the policies varies significantly across states. In addition to the variation in targeted savings, the design of EERSs varies significantly across states leading to differences in the suite of incentives created by the policy, the flexibility of compliance with the policy, the balance of benefits and costs of the policy between producers and consumers, and the certainty with which the policy will drive long-term savings.