1 Energy Efficiency and Iowa Utilities Presentation to the Energy Policy Advisory Forum, convened by Governor-Elect Chet Culver January 4, 2007 Presented by: John Norris, Chairman Iowa Utilities Board

2 Iowa has a long history of supporting and developing energy efficiency In 1990s, legislation established energy efficiency plans –Mandatory plans for investor-owned utilities (IOUs), with Iowa Utilities Board (IUB) procedures –Voluntary plans for municipal utilities (Munis) and electric cooperatives (RECs), with local control OCA, DNR, utilities, and others participated in IOU plans. –Initial plans used best info from the few states already active –Utilities developed and implemented energy efficiency plans –OCA performs independent review of plans and results

3 Iowa Utility Energy Efficiency Leadership Iowa is a leader in energy efficiency expenditures –On a per capita basis –Source - Consortium for Energy Efficiency –Actual spending; $99 million for IOUs and $11 million for Munis and RECs, equals or exceeds early 1990s Iowa utilities are getting good results –Helping customers implement energy efficiency –Improving homes, farms, and businesses

4 Energy Efficiency $ – Iowa a National Leader

5 Goals changed – from % of spending to saving MW, MWh and Mcf New IOU goals based on economic potential IOUs and other Iowa utilities have been very successful Capability to reduce peak electricity use by 1,400 megawatts –Equals about 11 peaking plants

6 Goals and results for energy savings Electricity Savings –Reduced growth in annual use by 2 million megawatt-hours –Enough to power 200,000 average homes for 1 year Natural Gas Savings –Reduced growth in annual use by 7 billion cubic feet –Enough to heat 85,000 average homes for 1 year

7 Economic Benefits of Energy Efficiency Societal Test for IOUs shows benefits exceed costs –IOUs/customers get back $2 on every $1 invested –NET benefits of more than $200 million per year. Direct savings for participating customers of IOUs –$100 million in retail electric costs –$80 million in retail gas costs Dollars saved by energy efficiency remain in Iowa

8 How are utilities obtaining results? Markets/programs for IOU energy efficiency: –New Construction Goal -- minimize lost opportunities. Technical assistance to architects and developers Incentives to builders and owners –Building Renovation Energy audits to identify opportunities Technical assistance, incentives for customers to –Insulate, install windows, –replace major HVAC equipment –Install lights, appliances, other equipment

9 Utility Programs - Continued Industrial Renovation –Assistance and incentives for factory-wide projects –Targeted incentives for motors, compressed air efficiency, lighting –One program allows large customers to bid for incentives. Demand Response or Load Management –Incentives for interrupting peak energy use –Credits for allowing air conditioners to be cycled as needed Special programs –Recycling old refrigerators –Weatherizing low-income homes –Training vendors and trade allies –Planting trees

10 Innovations and Initiatives IUB initiated the Iowa Weatherization Challenge (2005) –Educate public on benefits of simple steps –Demonstrate opportunities to take personal action. IUB directed IOUs to increase funding for various Low-Income Weatherization programs (2003) IUB, OCA, and utilities worked with the Iowa Finance Authority to develop a program for renovation of multi-family low-income properties ( ) IUB obtained approval to explore construction of a new office building, as a demonstration of high- efficiency new construction (2006)

11 Future challenges and opportunities Gas prices in 2005 caused an overload of requests for energy audits. IOUs efforts to meet the demand highlight problems Iowa may face when larger states realize the need for energy efficiency. New national energy standards are being implemented for Energy Star homes, air conditioners, and other appliances, changing baselines and incentives. New Iowa building code energy requirements should help prevent many lost opportunities, but may be a challenge to builders, developers and building code officials.

12 Challenges - Continued Slowdown in building activity challenges utilities to maintain the high impacts of programs for new construction IOUs will need to file new or updated energy efficiency plans in early 2008, for implementation in 2009

13 Summary – Iowa Utility Energy Efficiency IUB is nationally recognized for EE leadership IUB & Iowa utilities have long record of EE success Utility programs are producing substantial benefits for utilities and customers. $$$ saved stay in Iowa. Utilities are preparing new plans to meet new challenges. New IUB and utility initiatives include efforts to –educate and motivate customers about weatherization –develop programs for markets such as low-income customers.