Director, Division of Energy Efficiency Recent Developments in New England’s Bedrock EE Programs Restructuring Roundtable, June 18th, 2010 Frank Gorke Director, Division of Energy Efficiency frank.gorke@state.ma.us 617.626.7352 www.mass.gov/doer

Clean Energy Activity Global Warming Solutions Act Green Communities Act IOU Energy Efficiency Programs Utility Rate Decoupling Renewable Portfolio Standard Alternative Energy Portfolio Standard Building Energy Codes Green Communities Division Zero Net Energy Buildings Leading by Example Regional Greenhouse Gas Initiative MA Clean Energy Center American Recovery and Reinvestment Act

MA is #2

GCA Efficiency Program Vision Least cost procurement requirement on IOUs Programs operated by IOUs and CLC Three year plans From fixed budget to entrepreneurial Expanded role for CHP Stakeholder involvement SBC, RGGI, FCM, EERF funding sources LCP mandate requires much more aggressive savings goals 3 year plans – hopefully, longer horizon, more flexibility New orientation: outward facing, entrepreneurial, renewed focus on customers Emphasize what a change it is to go from having to spend a fixed budget as cost effectively as possible every year, to optimizing programs to reach all savings opportunities in all customer buildings. Our conclusion: The right vision. Multiple benefits of more EE. Good model.

Nation-Leading Energy Efficiency Plans Energy Efficiency Advisory Council (EEAC) 25 public meetings Chaired by DOER Commissioner Phil Giudice 11 voting members Business, industry and environmental groups, residential energy users, state environmental and economic development officials, the Attorney General Program Administrators EEAC unanimously approved plans (10/09) DPU approved plans (1/10) Thousands of pages of documents, spreadsheets Robust discussion of all issues

Progress update: Two years out from the GCA Great goals, strong plans Solid, open process Building off the old programs – good and bad Some great new approaches Improving integration of programs and program delivery Ahead of the goals in some programs; behind in others Stakeholder involvement, unprecedented collaboration, ON TIME Robust debate about whether to continue working to improve or let things run their course DOER is not satisfied; clearly laid out a do-learn-adapt approach at the beginning, and if we need to adapt we should

Three-Year Plan: Benefits at a Glance About 3x the annual savings over 2008 Electric 2.4M Residential, Low Income, and Commercial participants over 3 years Investment of $1.7B over 3 years 30,000 GWh savings over the lifetime of the measures Efficiency represents 2.4% of sales in 2012 Gas 920,000 Residential, Low Income and Commercial participants over 3 years Investment of $483M over 3 years 897M therms savings over the lifetime of the measures Efficiency represents 1.15% of sales in 2012

Efficiency plans Built on Experience Most ambitious plans in US 3 year Plans $ 6 billion savings from $2 billion investment 3X per capita CA’s 3 year plan 60 million MWh Efficiency 40 million MWh Generation 1991 2012 Source: DOER 9

Challenges: MA Reaching and motivating customers Deeper savings Financing and outside funding Some program design issues Doing all the hardest things Settling at the appropriate level of regulatory and stakeholder review Have solid plans, need to deliver results for customers , e.g. residential contractor model : multifamily, rented space, financing, multiple complicated pilot programs Best analogy I’ve heard: living in the house as we build it.

Challenges: Global Policy – Federal/State; working relationships; patchwork Calculations Free Riders, Spill Over, Market transformation, Useful remaining life Measurement and verification, end usage data, documented outcomes TRC; Benefit/Cost Onerous well established regulatory processes Appropriate incentives for achieving results; making a profit Removing disincentives for achieving results Assigning attributable causation Delivery Capitalizing on diverse delivery models – free market approaches Creating valuable jobs while changing delivery models Customer interest Making people care about it when its not economically of interest End user time frames, split incentives Making efficiency easy for end users Tailored to the vast variety of end users Funding Shift focus a bit to global setting 11

Perceived Efficiency Panaceas Decoupling PACE Economic self interest Smart Grid, real time pricing Technology breakthroughs EERS/ White Tags Competitive market solutions Communication None of these is going to solve all our problems. 12

Two Invitational Global Priorities Buildings Codes  stringent  stretch  ZNEB Labeling: asset and operational Appliances Beyond minimum standards One watt stand-by Two things we ought to all prioritize

Closing Thoughts Efficiency matters and will take work New ideas are needed and existing approaches are valuable – change is hard Lots of work remains – leadership and partnership needed Success is highly likely – shared commitment exists Opportunity to be a showcase – reducing energy waste while growing our economy In addition to focusing on those two subjects: need to keep at it together to develop the best efficiency programs in the world and deliver results for customers here in MA. Quick, cheap, easy – not true Quicker, cheaper, easier – true Best first fuel – true