United States
Environmental Protection
Agency
430S06002
Clean Energy-Environment Guide to Action
»* *
Action Steps for States
xecutive Summary
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Clean Energy-Environment Guide to Action
Policies, Best Practices,
and Action Steps for States
Executive Summary
April 2006
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Overview
Across the country, states are using clean energy
policies to help meet their expanding energy demand
in a clean, low-cost, reliable manner. In addition, a
growing number of states are interested in learning
about successful clean energy strategies and their
economic and environmental benefits.
The U.S. Environmental Protection Agency's (EPA's)
Clean Energy-Environment Guide to Action is
designed to share the experiences and lessons
learned from successful state clean energy policies
and help states evaluate these options, programs,
and policies to determine what is most appropriate
for them. The Guide to Action describes 16 clean
energy policies, details the best practices and attrib-
utes of effective state programs, and provides
resources for more information. The policies were
selected from among a larger universe of clean
energy strategies because of their proven effective-
ness and their successful implementation.
States that are developing new clean energy programs or
enhancing existing ones can use the Guide to Action to:
Develop clean energy programs and policies appro-
priate to their state.
Identify the roles and responsibilities of key deci-
sionmakers-such as environmental regulators,
state legislatures, public utility commissioners, and
state energy offices.
Access and apply technical assistance resources,
models, and tools available for state-specific
analyses and program implementation.
Learn from each other as they develop their own
clean energy programs and policies.
Clean EnergyEnvironment
STATE PARTNERSHIP
Executive Summary
EPA's Clean Energy-Environment State
Partnership Program
The Clean Energy-Environment State Partnership
Program is a voluntary program designed to help
states analyze and implement available policies and
programs that effectively integrate clean energy into a
low-cost, clean, reliable energy system for the state.
States participating in the Clean Energy-Environment
State Partnership Program will use the Guide to Action
to develop a Clean Energy-Environment State Action
Plan for implementing existing and new energy policies
and programs to increase their use of clean energy.
The EPA Clean Energy-Environment Guide to Action
identifies and describes 16 clean energy policies and
strategies that are delivering economic and environmen-
tal results for states. These policies focus on clean ener-
gy opportunities for public entities, industry, electricity
generators and suppliers, homes, and businesses. There
are also opportunities for states to promote clean ener-
gy in the transportation sector. These policies and pro-
grams are beyond the scope of the current Guide to
Action but may be addressed in future editions.
jro-
'
Why Clean Energy?
Clean energy offers a cost-effective way to meet our
nation's growing demand for electricity and natural
gas while reducing emissions of air pollutants and
greenhouse gases, lowering energy costs, and
improving the reliability and security of the energy
system.
States and the U.S. energy industry face multiple
energy and environmental challenges in providing
affordable, clean, and reliable energy in today's com-
plex energy markets. In terms of energy challenges,
total U.S. energy demand is expected to increase by
more than one-third by 2025, with electricity
Executive Summary
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EPA Clean Energy-Environment Guide to Action
Clean EnargyEnriranmant
STATE PARTNERSHIP
demand rising by almost 40% (EIA 2005a). This
growth stresses current systems, reduces reliability,
and requires substantial new investment in system
expansions. In addition, higher natural gas prices
increase energy costs for households and businesses
and raise the financial risk associated with the
development of new generation based on gas tech-
nologies. Environmental challenges stem from fossil
fuel-based electricity generation, which is a major
source of air pollutants that form ground-level ozone
and fine particulate matter, as well as greenhouse
gases. Although emission levels are declining, high
pollution levels persist in many parts of the United
States-nearly half of the U.S. population lives in
counties where air quality sometimes exceeds the
federal 8-hour standard for ozone (EPA 2005a)J
Clean energy includes demand- and supply-side
resources that deliver clean, reliable, and low-cost
ways to meet energy demand and reduce peak elec-
tricity system loads. Energy efficiency measures
reduce demand for energy generation, which reduces
What Is Clean Energy?
Clean energy includes energy efficiency and clean
energy supply, which refers to clean distributed gener-
ation and renewable energy.
Energy efficiency (EE) reduces demand for energy and
peak electricity system loads. Common energy effi-
ciency measures include hundreds of technologies
and processes for practically all end uses across all
sectors of the economy.
Renewable energy (RE) is partially or entirely generat-
ed from non-fossil energy sources. Renewable energy
definitions vary by state, but usually include wind,
solar, and geothermal energy; some states might also
include low-impact or small hydro, biomass, biogas,
and waste-to-energy.
Combined heat and power (CHP), also known as cogen-
eration, is a clean, efficient approach to generating
electric and thermal energy from a single fuel source.
Clean distributed generation (DG) refers to non-
centralizedusually small-scalerenewable energy
and CHP.
the amount of fuel needed to power our daily lives.
Renewable energy sources avoid the use of fossil
fuels, and combined heat and power (CHP) can pro-
vide much greater energy output for the amount of
fuel used.
States are finding clean energy to be cost-competitive
with traditional sources of generation. Figure ES.1
illustrates the comparative cost of electricity from a
range of sources, including energy efficiency and
wind. More specifically, states' experiences with clean
energy programs and policies have shown that:
Well-Designed Energy Efficiency Programs Cost
Less Than Supplying New Generation from Power
Plants. Energy efficiency programs are saving
energy at an average life cycle cost of about $0.03
Figure ES.1: Clean Energy Is Competitive with
Fossil Fuel and Nuclear Generation Technologies
10.0
| Capital Costs | O&M Costs Q Fuel Costs Q Transmission Costs
Note: The costs for nuclear, coal, wind, and gas combined cycle are
projections for the cost of producing energy from new plants in 2010.
The cost for energy efficiency is a median figure based on recent
reports of the cost of energy saved over a portfolio of programs in lead-
ing states.
Sources: ACEEE 2004, EIA 2004.
1 In April 2005,134 million people were living in 470 counties where the air quality sometimes exceeds the federal 8-hour standard for ozone.
Seventy-five million people were living in more than 200 counties that do not meet the PM2.5 standard (EPA 2005a).
Executive Summary
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EPA Clean Energy-Environment Guide to Action
Clean EnergyEnriranmant
STATE PARTNERSHIP
Energy Savings Potential from State Clean
Energy Actions
'
ih
The potential energy savings achievable through
state actions is significant. EPA estimates that if each
state were to implement cost-effective clean energy-
environment policies, the expected growth in demand
for electricity could be cut in half by 2025, and more
demand could be met through cleaner energy supply.
This would mean annual savings of more than 900 bil-
lion kilowatt-hours (kWh) and $70 billion in energy
costs by 2025, while preventing the need for more
than 300 power plants and reducing greenhouse gas
emissions by an amount equivalent to emissions from
80 million of today's vehicles.3
a This estimate is based on EPA analysis of independent evaluations
of the potential for cost-effective energy efficiency investments to
help meet the nation's growing demand for energy and electricity.
Evaluations include a 2004 meta-analysis that examined the results
of 11 different studies that estimated the potential for energy effi-
ciency in various states and regions in the country and for the
United States as a whole (Nadel et al. 2004).
per kilowatt-hour (kWh) saved, which is 50% to
75% of the typical cost of new power sources and
less than one-half of the average retail price of
electricity (ACEEE 2004a, EIA 2005b).
There Is Significant Potential for Additional Cost-
Effective Investment in Energy Efficiency. State and
regional energy efficiency potential studies have
found that adoption of economically feasible and
technically achievable, but as yet untapped, energy
efficiency could yield a 24% savings in total elec-
tricity demand nationwide by 2025, which is
equivalent to a 50% or greater reduction in elec-
tricity growth (SWEEP 2002, Nadel et al. 2004,
NEEP 2005, NWPCC 2005). Many states could
capture a greater portion of achievable energy
potential and lower energy costs for consumers
and businesses by increasing spending on cost-
effective energy efficiency.
Renewable Energy Technologies Are Increasingly
Competitive with Conventional Generation.
Renewable energy continues to grow rapidly, in
part because state policies are helping increase its
cost competitiveness. For example, depending on
geographic location, wind energy technology can
produce power at about $0.04 to $0.06/kWh,
which is competitive with conventional natural
gas combined cycle generation (Navigant 2003). In
2004, approximately 18 gigawatts (GW) of non-
hydro renewable capacity was operational in the
United States, representing about 2% of total U.S.
electricity generation capacity (EIA 2005c).
CHP Systems Are Substantially More Efficient Than
Traditional Electricity Generation Purchased from
the Grid and for Meeting Thermal Needs with a
Boiler or Process Heater Alone. CHP systems
achieve fuel use efficiencies that typically range
between 60% and 75%, a significant improvement
over the average efficiency of separately generat-
ed heat and power. In 2004, approximately 80 GW
of CHP were operational in the United States (EPA
2004a).
States are also using clean energy to promote eco-
nomic development by reducing energy costs, creat-
ing jobs, and attracting business investments in
clean energy technologies and services. For example,
investment in energy efficiency leads to energy bill
savings, with those savings being reinvested in the
economy and supporting more jobs than if the ener-
gy were purchased (SWEEP 2002). Clean energy proj-
ects create short-term construction and installation
jobs and provide numerous long-term opportunities
associated with new clean energy businesses.
Clean energy addresses environmental challenges by
helping improve air quality. Energy efficiency, renew-
able resources, and clean energy technologies such
as CHP systems can reduce air pollution and green-
house gas emissions. States are implementing a
range of innovative approaches that are achieving
quantifiable reductions in air pollutants through
clean energy programs, policies, and measures.
Executive Summary
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EPA Clean Energy-Environment Guide to Action
Clean EnargyEnriranmant
STATE PARTNERSHIP
Opportunities for State Action
State governments are increasingly developing poli-
cies and programs that address their energy chal-
lenges and spur greater investment in energy effi-
ciency, renewable energy, and clean distributed
resources. For example, states are:
Leading by example by establishing programs that
achieve substantial energy cost savings within
their own state facilities, fleets, and operations
and encouraging the broader adoption of clean
energy by the public and private sectors. State
governments across the country are collaborating
with state agencies, local governments, and
schools to identify and capture energy savings
within their facilities and operations, purchase or
generate renewable energy, and use clean DG/CHP
in their facilities.
Establishing ratepayer-funded energy efficiency
programs (e.g., public benefits funds) to help over-
come a variety of first-cost, informational, split-
incentive, and other market barriers that limit
greater reliance on energy efficiency. Seventeen
states and Washington, D.C. have adopted public
benefits funds (PBFs) for energy efficiency, and 16
states have developed PBFs for clean energy sup-
ply (ACEEE 2004b, ACEEE 2004c, UCS 2004, DSIRE
2005, Navigant 2005).
Adopting state minimum appliance efficiency stan-
dards for products not covered by the federal gov-
ernment that yield net cost savings to businesses
and consumers. Ten states have adopted appliance
standards covering 36 types of appliances (Delaski
2005, Nadel et al. 2005).
Establishing renewable portfolio standards (RPS)
that direct electric utilities and other retail electric
providers to supply a specified minimum percent-
age (or absolute amount) of customer load with
eligible sources of renewable electricity. Twenty-
one states and Washington, D.C. have adopted RPS
requirements, which are expected to generate
more than 26,000 MW of new renewable energy
capacity by 2015 (Navigant 2005).
Reviewing utility incentives and planning processes
and designing policies that accurately value ener-
gy efficiency, renewables, and distributed
resources in a way that "levels the playing field"
so public utility commissions and consumers can
make fair, economically based comparisons
between clean energy and other resources. More
than 12 states have developed approaches that
remove disincentives for utilities to invest in
demand-side resources.
Executive Summary
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EPA Clean Energy-Environment Guide to Action
Clean EnergyEnriranmant
STATE PARTNERSHIP
The Guide to Action
The Guide to Action presents a menu of 16 clean
energy strategies that states can review and choose
from when developing their clean energy policies or
Clean Energy-Environment Action Plans (see What
States Can Do, page ES-21, for additional informa-
tion about Clean Energy-Environment Action Plans).
States have found that a combination of clean
energy policies, developed as a coordinated package,
is the most effective approach. Typically, states have
chosen policies to address each of the clean energy
areas: energy efficiency (EE), renewable energy (RE),
and clean DG.
Table ES.1 provides an overview of the policies
addressed in the Guide to Action and the type(s) of
clean energy targeted by each policy. These policies
were selected for inclusion in the Guide to Action
because of their proven effectiveness, their ability to
help overcome the barriers states face as they pro-
mote clean energy, and their successful implementa-
tion by a number of states. The information present-
ed about each policy is based on proven models,
state experiences, and lessons learned.
Table ES.2 presents additional detail about each of
the 16 policies, including information on specific
approaches states can use to implement each policy,
key design issues and resources, and states that can
serve as examples of each policy. (Note that many
other states have also implemented these policies;
for more information, see the policy sections in the
Guide to Action.) A brief description of each of the
16 policies, including highlights of state experiences
with each policy, follows Table ES.2.
Table ES.1: Summary of Clean Energy Policies by
Type of Clean Energy
Type of Clean Energy
Guide to Clean
Action DG/
Clean Energy Policy Section EE RE CHP
State Planning and Incentive Structures
Lead by Example
State and Regional Energy
Planning
Determining the Air Quality
Benefits of Clean Energy
Funding and Incentives
3.1
3.2
3.3
3.4
Energy Efficiency Actions
Energy Efficiency Portfolio
Standards (EEPS)
Public Benefits Funds (PBFs)
for Energy Efficiency
Building Codes for Energy
Efficiency
State Appliance Efficiency
Standards
4.1
4.2
4.3
4.4
Energy Supply Actions (Renewable Energy
and Combined Heat and Power)
Renewable Portfolio
Standards (RPS)
Public Benefits
Funds (PBF) for State Clean
Energy Supply Programs
Output-Based Environmental
Regulations to Support Clean
Energy Supply
Interconnection Standards
Fostering Green Power
Markets
5.1
5.2
5.3
5.4
5.5
Utility Planning and Incentive Structures
Portfolio Management
Strategies
Utility Incentives for Demand-
Side Resources
Emerging Approaches:
Removing Unintended Utility
Rate Barriers to Distributed
Generation
6.1
6.2
6.3
Executive Summary
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EPA Clean Energy-Environment Guide to Action
Clean EnargyEnriranmant
STATE PARTNERSHIP
Table ES.2: Summary of Clean Energy Policies
Policy Description
States lead by example
by establishing pro-
grams that achieve sub-
stantial energy cost sav-
ings within their own
operations, buildings,
and fleets and demon-
strate the feasibility and
benefits of clean energy
to Hie larger market
Energy planning at a
state or regional level
can be an effective
means for ensuring that
clean energy is consid-
ered and used as an
energy resource to help
states address their
multiple energy, eco-
nomic, and environmen-
tal goals.
States estimate the
emission reductions
from their clean energy
programs, incorporate
those reductions into air
quality programs, and
evaluate and report the
emission reduction ben-
efits of their clean ener-
gy programs and poli-
cies.
Specific Approaches
Design Issues
State Planning and Incentive Structures
Section 3.1 Lead by Example
Energy savings targets for
public buildings.
Renewable and energy efficiency
purchase commitments for state
facilities.
State loan and incentive programs
for public buildings.
Energy performance contracting.
Technical support and training.
State clean energy planning.
Understand state's own energy use
and then set aggressive goals.
Collaborate across public agencies,
local governments, schools, private
sector, and nonprofit organizations.
Identify funding sources and develop
funding mechanisms.
Measure, verify, and communicate
energy savings.
CA, CO, IA, NH, NJ,
NY, OR,TX
Section 3.2 State and Regional Energy Planning
Clean energy plan.
Clean energy included within a
comprehensive state energy plan.
Planning conducted by energy
providers.
Analyze a full range of impacts for a
variety of policy scenarios.
Establish specific quantitative and
other goals; monitor and report
progress regularly.
Linkthe plan to action by developing
specific steps for plan adoption and
implementation, and making these
actions enforceable where appropri-
ate.
CA, CT, NM, NY, OR,
Northwest Power
Planning and
Conservation
Council, New
England Governors'
Conference,
Western Governors'
Association,
Western Interstate
Energy Board
Section 3.3 Determining the Air Quality Benefits of Clean Energy
Incorporating clean energy into air
quality plans and long-term utility
planning requirements.
Developing set-asides for energy
efficiency and renewable energy
projects.
Tracking and reporting emission
reductions.
Choose the most appropriate method-
ology for the given purpose, geo-
graphic scope, time scale, magnitude
of energy savings, available
resources, and available data.
Make all assumptions and inputs
transparent; identify how to address
electricity dispatch, imports and
exports, line losses, and transmission
constraints.
Understand and account for how the
results will interact with other pro-
grams.
LA (local), MD
(local), TX,WI,
Western Regional
Air Partnership
Details about state-
specific "lead by
example" program
design.
Evaluation guidelines
and information
resources.
Examples of legislation
and executive orders
passed by states relat-
ed to lead by example
actions.
Design information.
Benefits of energy
plans.
Program implementa-
tion and evaluation.
Links to existing state
and regional energy
plans.
References to articles
on energy planning.
Information about EPA
guidance and analy-
ses.
General and specific
information about
quantification methods
and tools.
Articles about quantify-
ing emission reduc-
tions.
State examples.
(continued on next page)
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EPA Clean Energy-Environment Guide to Action
Clean EnergyEnriranmant
STATE PARTNERSHIP
Table ES.2: Summary of Clean Energy Policies (continued)
Policy Description Specific Approaches
Design Issues
State Planning and Incentive Structures (continued)
Section 3.4 Funding and Incentives
States implement a range of
targeted funding and incen-
tives strategies that encour-
age governments, business-
es, and consumers to save
energy through cost-effective
clean energy investments.
Between 20 and 30 states
have revolving loan funds for
energy efficiency, tax incen-
tives for renewable energy,
grants for renewable energy,
or rebates for renewable
energy.
Revolving loan funds.
Energy performance con-
tracting.
Tax incentives.
Grants, rebates, and gener-
ation incentives.
NOX set-asides for energy
efficiency and renewable
energy projects.
Supplemental Environmental
Projects (SEPs).
Develop specific target markets and
technologies based on technical and
economic analysis.
Use financing and incentives as part of
a broader package of services designed
to encourage investments.
Establish specific technical and
financial criteria for clean energy
investments.
Track program participation, costs, and
energy savings to enable evaluation
and improvement.
CA, CO, I A, MT, NY,
OR,TX,WA
Program design infor-
mation, including fund-
ing sources, levels, and
duration.
Implementation and
evaluation information.
Information about fed-
eral incentives and
existing state pro-
grams.
Examples of legislation.
Energy Efficiency Actions
Section 4.1 Energy Efficiency Portfolio Standards (EEPS)
Similar to Renewable
Portfolio Standards (see
Section 5.1), EEPS direct
energy providers to meet a
specific portion of their elec-
tricity demand through ener-
gy efficiency. Seven states
have direct or indirect EEPS
requirements.
PBFs for energy efficiency
are pools of resources used
by states to invest in energy
efficiency programs and
projects and are typically
created by levying a small
charge on customers' elec-
tricity bills. Seventeen states
and Washington, D.C. have
established PBFs for energy
efficiency.
Energy efficiency targets for
energy providers as a per-
centage of load growth,
base year sales, or fixed
energy savings (e.g., kWh).
Use economic potential studies and CA, IL, NJ, NV, PA,
other analyses to help establish the TX
energy savings target.
State the target clearly (e.g., as a per-
centage of base year energy sales) and
establish a robust measurement and
verification process.
Ensure workable funding mechanisms
are available to meet the goal.
Section 4.2 Public Benefits Funds (PBFs) for Energy Efficiency
Funds for efficiency pro-
grams based on a system-
wide charge (mills per kWh).
Grants, rebates, and loans.
Technical assistance, edu-
cation, and training support
for energy efficiency invest-
ments.
Establish funding via a universal, non-
bypassable charge at a rate that cap-
tures economic energy efficiency
potential, but is not a cap on invest-
ments.
Set the duration for an extended period
of time (e.g., five to 10 years) to provide
continuity and certainty for investors.
Select the most appropriate administer-
ing organization forthe given conditions
(e.g., utilities, state agencies, independ-
ent organizations).
Regularly evaluate the program's quanti-
tative impacts (e.g., energy saved, emis-
sions avoided, dollars saved, jobs creat-
ed) and the effectiveness of program
operations and delivery.
CA, NY, OR, Wl
Information about state
experiences.
Information about
measurement and veri-
fication.
Examples of legislation
and PUC rulemakings.
Descriptions of cost-
effectiveness tests and
information on energy
and cost savings.
Information about PBF
program designs, fund-
ing levels, and evalua-
tion methods.
Examples of legislation
and PUC rulemakings.
(continued on next page)
Executive Summary
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EPA Clean Energy-Environment Guide to Action
Clean EnargyEnriranmant
STATE PARTNERSHIP
Table ES.2: Summary of Clean Energy Policies (continued)
Policy Description
Specific
Approaches
Design Issues
Energy Efficiency Actions (continued)
Section 4.3 Building Codes for Energy Efficiency
Building energy codes estab-
lish energy standards for resi-
dential and commercial build-
ings, thereby setting a mini-
mum level of energy efficiency
and locking in future energy
savings at the time of new con-
struction or renovation. More
than 40 states have implement-
ed some level of building codes
for residential buildings and/or
commercial buildings.
State appliance efficiency
standards set minimum ener-
gy efficiency standards for
equipment and appliances
that are not covered by fed-
eral efficiency standards. Ten
states have adopted appli-
ance standards.
Minimum energy effi-
ciency requirements
for residential and
commercial build-
ings.
Periodic review and
updates to existing
codes.
Code implementation,
evaluation, and com-
pliance assistance.
Develop effective program implementation, evaluation,
and enforcement approaches.
Work collaboratively with builders, developers, and
building owners to ensure compliance.
Establish requirements and process for periodically
reviewing and updating codes to reflect changes in
building technology and design.
Promote "beyond code" building programs to achieve
additional cost-effective energy efficiency.
State
Examples
AZ, CA,
OR,TX,
WA
Key Resources in
the Guide to Action
Information about
individual state codes.
Compliance and analytic
tools.
Examples of code
language.
Section 4.4 State Appliance Efficiency Standards
Minimum energy effi-
ciency levels for con-
sumer products and
commercial equip-
ment.
Periodic evaluation
and review of stan-
dards, markets, and
product applications.
Identify the products covered by federal law and care-
fully define the set of appliances to be covered by the
state standard.
Use established test methods, as developed by federal
agencies, other states, or industry associations, to set
efficiency levels for the state appliance standards.
Consider implementation issues, including
product certification, labeling requirements, and
enforcement.
CA, CT,
NJ, NY
General and state-specific
information about standards.
Definitions of products cov-
ered by federal and state
standards.
Examples of enabling legis-
lation, state rulemakings,
and requests for preemp-
tion waivers.
Energy Supply Actions
Section 5.1 Renewable Portfolio Standards (RPS)
RPS establish requirements
for electric utilities and other
retail electric providers to
serve a specified percentage
or amount of customer load
with eligible resources.
Twenty-one states and
Washington, D.C. have adopt-
ed RPS.
Promoting specified
technologies through
"technology tiers"
and "credit multipli-
ers."
Alternative compli-
ance payments.
Renewable Energy
Certificates (RECs)
trading.
Develop broad support for an RPS, including top-level
support of the governor and/or legislature by performing
studies that analyze job creation, economic develop-
ment, and customer bill impacts.
Specify which renewable energy technologies and
resources will be eligible, based on clearly articulated
goals and objectives.
Consider using energy generation (not installed capac-
ity) as a target, make compliance mandatory for all
retail sellers, allow utility cost recovery, establish cost
caps, and considerflexible compliance mechanisms.
AZ, CA,
MA, TX,
Wl
Section 5.2 Public Benefits Funds (PBFs) for State Clean Energy Supply Programs
PBFs are a pool of resources
used by states to invest in
clean energy supply projects
and are typically created by
levying a small charge on
customers' electricity bills.
Sixteen states have estab-
lished PBFs for clean energy
supply.
Funds for emerging
and commercially
competitive technolo-
gies and clean energy
market development
programs based on a
system-wide charge
(mills per kWh).
Grants, rebates, and
generation incentives.
Protect funding from being diverted for other uses.
Considerthe importance of technology stages.
Ensure that PBFs support the state's energy and envi-
ronmental goals and work in concert with other state
renewable energy initiatives (e.g., RPS and tax credits).
CA, CT,
MA, NJ,
NY, OH
Information on state RPS
requirements and eligible
technologies.
Information on selected
state RPS program
designs.
Description of renewable
energy credits and power
markets.
Information on federal
resources.
General and specific infor-
mation on state approach-
es and models.
Information on funding levels
and technologies supported
by PBFs.
State examples.
(continued on next page)
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Clean EnergyEnriranmant
STATE PARTNERSHIP
Table ES.2: Summary of Clean Energy Policies (continued)
Policy Description
Output-based environmen-
tal regulations establish
emissions limits per unit of
productive energy output
of a process (i.e., electrici-
ty, thermal energy, or shaft
power), with Ihe goal of
encouraging fuel conver-
sion efficiency and renew-
able energy as air pollution
control measures. Twelve
states have established
output-based environmen-
tal regulations.
Standard interconnection
rules establish processes
and technical require-
ments that apply to utilities
within the state and
reduce uncertainty and
delays that clean DG sys-
tems can encounter when
obtaining electric grid con-
nection. Fourteen states
have standard intercon-
nection rules, and 39
states offer net metering.
States play a key role in
fostering the development
of voluntary green power
markets that deliver cost-
competitive, environmen-
tally beneficial renewable
energy resources by giving
customers the opportunity
to purchase clean energy.
Green power is available
in more than 40 states.
Specific Approaches
Design Issues
State
Examples
Energy Supply Actions (continued)
Section 5.3 Output Based Environmental Regulations to Support Clean Energy Supply
Conventional emission limits
using an output formula.
Special regulations for small dis-
tributed generators that are out-
put based.
Output-based allowance alloca-
tion methods in a cap and trade
program.
Output-based allowance alloca-
tion set-asides for energy effi-
ciency and renewable energy.
Multi-pollutant emission
regulations using an output-based
format.
Determine the types of DG and CHP tech-
nologies and applications that may be
affected and if the regulation needs to
address any specific technology issues.
Gather/review available output-based emis-
sions data for regulated sources.
Alternatively, convert available data to out-
put-based format.
Evaluate alternative approaches to account
for multiple outputs of CHP units.
Section 5.4 Interconnection Standards
Standard interconnection rules
for DG systems through defined
application processes and techni-
cal requirements.
Net metering, which defines
application processes and techni-
cal requirements, typically for
smaller projects.
Develop standards that cover the scope of
the desired DG technologies, generator
types, sizes, and distribution system types.
Address all components of the interconnec-
tion process, including issues related to the
application process and technical require-
ments.
Create a streamlined process for generators
that are certified compliant with technical
standards such as IEEE Standard 1547 and
UL Standard 1741.
Consider adopting portions of national mod-
els and successful programs in other states.
Section 5.5 Fostering Green Power Markets
Customer access to green power
markets.
Green pricing tariffs.
Green "check-off" programs.
Establishing quantitative goals
and objectives for green power
markets.
Encourage new resources to ensure that
renewable benefits are realized.
Create real value for green power cus-
tomers (e.g., by exempting them from utility
fuel adjustment charges or developing
recognition programs for commercial cus-
tomers).
Create programs with sufficiently long time
horizons to encourage long-term power
contracts.
Determine the appropriate relationship
between green power purchases and com-
pliance with RPS.
CT, IN, MA,
TX
MA, NJ,
NY,TX
CT, MA,
NJ, NM,
WA
Key Resources in
the Guide to Action
Information on federal and
other resources.
Articles on output-based
regulation.
Examples of federal and
state legislation and pro-
gram proposals.
State-by-state assess-
ment and references.
Information on federal and
other resources.
National standards organ-
izations.
Examples of standard
interconnection rules.
Information about state
programs.
Examples of state
legislation and regula-
tions.
Information on federal and
other resources.
(continued on next page)
Executive Summary
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EPA Clean Energy-Environment Guide to Action
Clean EnargyEnriranmant
STATE PARTNERSHIP
Table ES.2: Summary of Clean Energy Policies (continued)
Policy Description
Specific
Approaches
Design Issues
Utility Planning and Incentive Structures
State Key Resources in
Examples the Guide to Action
Portfolio management strate-
gies include energy resource
planning approaches that
place a broad array of sup-
ply and demand options on a
level playing field when com-
paring and evaluating them
in terms of their ability to
meet projected energy
demand and manage uncer-
tainty.
Section 6.1 Portfolio Management Strategies
Energy resource Identify state policy goals for portfolio management, such
planning and pro- as cost, environmental impacts, resource diversity, and
curement. risk management.
Identify the entities that procure and plan for energy sup-
ply, transmission, and distribution.
Determine the appropriate process for acquiring and com-
paring alternative resource options.
Establish clear roles for utility and regulatory authorities in
selecting evaluation criteria, reviewing proposals, and
choosing final resources.
Require that all demand and supply resources be consid-
ered in meeting identified needs.
Integrated resource
planning (IRP).
Retail choice portfo-
lio management.
CA, CT, IA, MT,
NV, OR, PA,
VT, Idaho
Power,
Northwest
Power and
Conservation
Council,
PacifiCorp,
PugetSound
Energy
Section 6.2 Utility Incentives for Demand Side Resources
A number of approaches
including decoupling and per-
formance incentivesremove
disincentives for utilities to
consider energy efficiency
and clean distributed genera-
tion equally with traditional
electricity generation invest-
ments when making electricity
market resource planning
decisions.
Decoupling utility
profits from sales
volume.
Program cost recov-
ery.
Shareholder
performance
incentives.
Understand state utility ratemaking and revenue require-
ments.
Determine if utility rates create financial disincentives for
energy efficiency and clean distributed generation.
Gather information and stakeholder input on utility incen-
tive options.
Devise an implementation plan to remove disincentives.
AZ, CA, CT, ID,
MA, MD, ME,
MN, NM, NV,
NY, OR,WA
Section 6.3 Emerging Approaches: Removing Unintended Utility Rate Barriers to Distributed Generation
Electric and natural gas
rates, set by Public Utility
Commissions, can be
designed to support clean
DG projects and avoid unin-
tended barriers, while also
providing appropriate cost
recovery for utility services
on which consumers
depend.
Utility ratemaking
and revenue require-
ments.
Revised standby rate
structures.
Exit fee exemptions.
Natural gas rates for
DG and/or CHR
In regulated markets,
help generators and
utilities establish
appropriate buyback
rates.
Ensure that state PUC commissioners and staff have cur-
rent and accurate information on rate issues for CHP and
renewables and their potential benefits for the generation
system.
Open a generic PUC docket, if needed, to explore the actu-
al costs and system benefits of onsite clean energy supply
and rate reasonableness.
Engage energy users to accurately examine the costs and
system benefits of existing and planned onsite clean DG.
Exit Fees:
CA, IL, MA
Standby
Rates:
CA, NY
Gas Rates:
NY
Design guidance.
Information on pro-
gram implementa-
tion and evaluation.
State and regional
examples and links
to key references.
Design guidance.
References to state
incentive regulation
efforts.
References to arti-
cles and Web sites
on utility incentives.
Examples of state
legislation and
rules.
Information on fed-
eral resources.
Articles about
ratemaking.
Executive Summary
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EPA Clean Energy-Environment Guide to Action
Clean EnergyEnriranmant
STATE PARTNERSHIP
State Planning and Incentive
Structures
States are substantially reducing energy costs and
emissions and are supporting in-state economic
development through clean energy policies. The
Guide to Action provides resources on the following
policies that states have successfully implemented to
promote clean energy within their own operations,
through state and regional energy and air quality
planning efforts, and funding and incentive pro-
grams.
Lead by Example
State and local governments are implementing a
range of "lead by example" programs and policies
that advance the use of clean energy within their
own facilities, fleets, and operations, substantially
reducing their energy bills. These bills are sizable-
states are responsible for more than 16 billion square
feet of building space and spend more than $11 bil-
lion annually on building energy costs, which can
account for as much as 10% of a typical govern-
ment's annual operating budget (DOE 2005a). In
addition to achieving energy savings within state
States Are Leading by Example
New York's "Green and Clean" State Buildings and
Vehicles, administered by the New York State Energy
Research and Development Authority (NYSERDA),
sets aggressive targets for reducing energy use in
state buildings and vehicles, green power purchas-
ing, and purchasing energy efficient products.
Iowa's Executive Order Number 41 directs state agen-
cies to obtain at least 10% of their electricity from
renewable energy sources by 2010. To satisfy this
requirement, agencies may generate their own renew-
able energy or may participate in their utility's green
power programs (Iowa 2005).
New Hampshire's Executive Order 2005-4 requires
state agencies to reduce energy use by 10% and
purchase ENERGY STAR equipment. Executive Order
2004-7 requires state staff to conduct an inventory of
annual energy use by all state facilities, using EPA's
Energy Performance Rating System to assess ener-
gy efficiency, and to conduct audits to identify ener-
gy efficiency opportunities in state facilities.
facilities, lead by example initiatives promote the
adoption of clean energy technologies by the public
and private sectors.
States have initiated lead by example initiatives
through executive orders, legislation, and agency
rulemakings. Typically, these initiatives are coordinat-
ed by the state energy office, and involve multiple
agencies and programs across state and local gov-
ernment and other public agencies.
State and Regional Energy Planning
Energy planning at a state or regional level is an
effective means for ensuring that clean energy is
considered and used as an energy resource to help
states address their multiple energy and nonenergy
States and Regions Are Developing Energy Plans
California's Integrated Energy Policy Report (IEPR)
is an extensive assessment prepared biennially at
the direction of the state legislature. It includes pol-
icy recommendations for addressing multiple goals,
including conserving resources; protecting the
environment; ensuring reliable, secure, and diverse
energy resources; enhancing the state's economy;
and protecting public health and safety. The IEPR is
complimented by a brief "blueprint" for energy-
related actions, the California "Energy Action Plan"
(CEC2005a).
The Connecticut Energy Advisory Board develops
an Annual Energy Plan that includes specific strate-
gies to support energy efficiency and renewable
resources based on a detailed assessment of sup-
ply and demand options and related policy opportu-
nities and challenges. The Plan describes how pro-
grams and policies across the state help advance
Connecticut's energy and other goals and includes
a progress report on the Connecticut Climate
Change Action Plan, as a significant energy-related
initiative (CEAB 2005).
The Western Governors'Association's Clean and
Diversified Energy Advisory Committee (CDEAC),
created by the governors of 18 western states,
recently undertook an extensive analysis to explore
how to meet a regional goal of developing 30,000
MW of clean energy by 2015 and increasing energy
efficiency 20% by 2020 (WGA 2005).
Executive Summary
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Clean EnargyEnriranmant
STATE PARTNERSHIP
challenges. Energy planning helps support a cost-
effective response to projected load growth (possibly
avoiding the need for new power plants and infra-
structure); improves system reliability, supply diversi-
ty, and security; reduces energy prices and price
volatility; and reduces the environmental impact of
energy generation. Energy plans are usually devel-
oped by one or more state agencies. Typically, the
state energy office leads the planning effort, and a
variety of public and private sector stakeholders play
a role in developing the plan or providing input.
Energy planning takes place in several contexts-it
can be part of a broad, multi-faceted strategy (e.g.,
the New York State Energy Plan), or a more targeted
effort that specifically addresses one or more clean
energy goals (e.g., the Illinois Sustainable Energy
Plan). At the regional level, planning typically occurs
in two separate but related forums. In one approach,
government or quasi-government entities (e.g., gov-
ernors' associations) focus on developing broad
regional policy approaches. Alternatively, power sys-
tem operators engage in rigorous power system
planning (with input from states) that focuses on
providing reliable and adequate power supplies with-
in their region. Both forums offer opportunities to
consider clean energy as a way of meeting future
energy demand.
Determining the Air Quality Benefits of Clean
Energy
Meeting energy demand through clean energy
sources can reduce emissions from fossil-fueled gen-
erators and provide many emissions benefits. States
are employing a number of methods to quantify the
emission reductions from their clean energy pro-
grams and policies and incorporate those reductions
into documentation for air quality planning efforts,
energy planning, and clean energy program results.
Quantifying emission reductions from clean energy
options provides states with additional information
to use when selecting among alternative clean ener-
gy solutions, determining the best way to design
clean energy programs to comply with existing and
prospective regulations, and determining the best
investment opportunities for a specific clean energy
States Are Identifying the Air Quality Benefits
of Clean Energy
The Texas Legislature passed the Texas Emissions
Reduction Plan in 2001, requiring counties to imple-
ment energy efficiency measures and reduce elec-
tricity consumption 5% a year for five years to help
the state comply with federal emissions limits and
standards. The Texas Commission on Environmental
Quality worked with EPA and several Texas organi-
zations to develop a methodology for quantifying the
nitrogen oxide (NOX) emission reductions associat-
ed with energy savings from individual clean energy
projects.
The Western Regional Air Partnership (WRAP) was
established in 1997 to help incorporate 10% renew-
able energy into its resource mix by 2010 and 20%
by 2015 in an effort to reduce regional haze. A
WRAP study of the air emission reductions from
state clean energy programs estimated that NOX
emissions would be reduced by about 14,000 tons
and carbon dioxide (C02) emissions by about 56 mil-
lion metric tons by 2018 (WRAP 2003).
program. Some states are working with EPA to
include clean energy as an emission reduction meas-
ure in air quality plans. EPA provides guidance and
can help states identify ways to use emission reduc-
tion data and appropriate quantification methods
and documentation requirements (EPA 2004b).
Funding and Incentives
States are using well-designed, targeted funding and
incentives for a broad range of clean energy tech-
nologies and services. State funding and incentive
programs, some of which are self-sustaining (e.g.,
revolving loan funds), deliver energy and cost savings
for governments, businesses, and consumers. These
programs help overcome barriers, stimulate markets
and build infrastructure, and leverage public and pri-
vate sector investment. States have made additional
investments and achieved subsequent savings by
coordinating financial incentives with federal incen-
tives (e.g., the production tax credit for renewable
energy generation), other state programs, and utility-
based clean energy programs.
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Clean EnergyEnriranmant
STATE PARTNERSHIP
States Are Providing Funding and Incentives
for Clean Energy
The Texas LoanSTAR program is a self-sustaining
program that provides low-interest loans to finance
energy conservation retrofits in state public facili-
ties. Loans are repaid in four years or less using
cost savings from verified energy reductions. Public
agencies in Texas have reduced their energy costs
by more than $150 million through the LoanSTAR
program (DOE 2005c, Texas SECO 2005).
Oregon offers the Business Energy Tax Credit
(BETC) and Residential Energy Tax Credit (RETC) to
businesses and residents. Through 2004, more than
12,000 energy tax credits worth $243 million have
been awarded. Altogether, these investments save
or generate energy worth about $215 million a year
(Oregon DOE 2005).
''
Energy Efficiency Actions
States have implemented a variety of policies and
programs that encourage investment in and adoption
of energy efficiency. Cost-effective energy efficiency
programs can be structured to help remove the key
market, regulatory, and institutional barriers that
might otherwise hinder investment in energy effi-
ciency measures by consumers, businesses, utilities,
and public agencies. The Guide to Action describes
four energy efficiency policies that a number of
states have successfully implemented to support
greater investment in and adoption of energy effi-
ciency.
Energy Efficiency Portfolio Standards (EEPS)
EEPS require energy providers to meet a specific por-
tion of their electricity demand through energy effi-
ciency. A relatively recent policy tool, EEPS have been
developed primarily in states with restructured utility
markets, typically as a partial replacement for their
Integrated Resource Planning (IRP) requirements.
EEPS offer several policy advantages, including sim-
plicity, specificity, and economies of scale.
To date, seven states have adopted EEPS either
directly or indirectly (with energy efficiency as a
component of a larger clean energy target or goal).
Overall, these EEPS targets range from the equivalent
of a 10% to 50% reduction in energy demand
growth (EPA 2005b). Specific EEPS designs vary by
state. Some states, such as California, have estab-
lished specific energy savings goals defined in terms
of the amount of savings (e.g., expressed as MW,
megawatt-hours [MWh], and/or therm savings)
required over a specified time frame. Other states
(e.g., Connecticut, Texas, and Illinois) require utilities
to use energy efficiency to meet a specified percent-
age of total energy sales or forecast load growth
over a certain time period. EEPS targets have been
established by state legislatures and are administered
by the state public utility commission (or other regu-
latory body), with input from utilities, public interest
organizations, and the general public.
States Are Adopting Energy Efficiency
Portfolio Standards
The California EEPS sets ambitious annual energy
savings goals for the period 2004 to 2013 for the
state's four largest investor-owned utilities (lOUs).
The cumulative effect of these goals is estimated to
result in annual savings in 2013 of 23,183 GWh, 4,885
MW of peak demand, and 444 million therms of nat-
ural gas and to meet more than half of the lOUs'
electricity sales growth and nearly half of natural
gas sales growth (CPUC 2004, CEC and CPUC 2005).
Texas was the first state to implement an EEPS. The
Texas PUC calculated that it has exceeded its target
of a 10% reduction in load growth by 2004 and has
saved more than 400 million kWh of electricity at a
cost of $82 million, for a net benefit of $76 million to
date (Gross 2005).
Executive Summary
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EPA Clean Energy-Environment Guide to Action
Clean EnargyEnriranmant
STATE PARTNERSHIP
Public Benefits Funds (PBFs) for Energy
Efficiency
Many states have found that PBFs, also known as
system benefits charges (SBCs) or clean energy
funds, are an effective mechanism for securing
investment in cost-effective energy efficiency, result-
ing in lower-cost, cleaner energy. PBFs are typically
created by levying a small charge on every cus-
tomer's electricity bill, thus providing an annual rev-
enue stream to fund energy efficiency programs.
States with restructured as well as traditional elec-
tricity markets are using PBFs as a component of
their clean energy policy portfolios.
To date, 17 states and Washington, D.C. have estab-
lished PBFs to support energy efficiency at various
levels of funding (ACEEE 2004b, ACEEE 2004c). For
the more comprehensive programs, funding levels
range from about 1% to 3% of total utility revenues.
PBF charges range from 0.03 to 3 mills2 per kWh and
are equivalent to about $0.27 to $2.50 on a residen-
tial customer's monthly energy bill (ACEEE 2004b).
PBFs have supported programs that reduce energy
demand and related emissions at a lower cost than
new supply. For example, for just 12 of the states
with energy efficiency PBFs, total annual investments
of about $870 million in 2002/2003 yielded nearly
2.8 million kWh of electricity savings. Emission
reductions from nine of these states included a total
of 1.8 million tons of C02. The median program cost
was $0.03 per kWh saved, which is 50% to 75% of
the typical cost of new power sources and less than
half of the average retail price of electricity (ACEEE
2004a, EIA 2005b).
States Are Establishing Public Benefits Funds
for Energy Efficiency
In New York, NYSERDA administers the PBF pro-
gram with the goals of improving system-wide relia-
bility, reducing peak load, improving energy efficien-
cy and access to energy options for underserved
customers, reducing environmental impacts, and
facilitating competition in the electricity markets.
NYSERDA has invested more than $350 million in
energy efficiency programs and brought about an
estimated additional investment of $850 million, for a
total of $1.2 billion in public and private sector ener-
gy- and efficiency-related investments in the state.
The program is expected to result in a total of $2.8
billion in new public and private investment in New
York (NYSERDA 2004).
California established the first PBF for energy effi-
ciency in 1996. The California Public Utility
Commission (CPUC) provides policy oversight of the
state PBF (known in the state as the "Public Goods
Charge"), approves plans for efficiency programs in
each of the utility service areas, and coordinates
statewide activities. The PBF provides $289 million
annually for energy efficiency programs, at a cost of
less than 3 cents per kWh saved. The CPUC has
adopted aggressive energy efficiency savings goals
for regulated electric and natural gas utilities, which
will capture additional cost-effective energy sav-
ings, with $2 billion authorized for energy efficiency
programs in 2006-2008. This investment will achieve
$2.7 billion in net savings to consumers and meet
more than half of future electricity load growth over
the next decadeavoiding the need for three large
(500 MW) power plants (CPUC 2005).
The Wisconsin PBF, Focus on Energy, is a public-
private partnership with the goals of encouraging
energy efficiency and renewable energy, enhancing
the environment, and ensuring a future supply of
energy. This program realized a total lifetime energy
savings of $214.5 million during FY 2004 for a pro-
gram benefit-cost ratio of 5.4 to 1 (Wl DOA 2004).
2 A mill is equivalent to one-tenth of a cent.
Executive Summary
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Clean EnergyEnriranmant
STATE PARTNERSHIP
Building Codes for Energy Efficiency
Building energy codes establish standards that set a
minimum level of energy efficiency for residential
and commercial buildings, thereby locking in the
energy savings at the time of new construction or
renovation. Well-designed, implemented, and
enforced codes can help eliminate inefficient con-
struction practices and technologies with little or no
increase in total project costs.
Codes typically specify requirements for "thermal
resistance" in the building shell and windows, mini-
mum air leakage, and minimum heating and cooling
equipment efficiencies. These measures can reduce
energy use by 30% or more, resulting in cost savings
for businesses and consumers (DOE 2005b). Building
energy codes also reduce peak energy demand, air
pollution, and greenhouse gas emissions. Recognizing
these benefits, a majority of states have adopted
building energy codes in some form for residential
and commercial construction.
State Appliance Efficiency Standards
State appliance efficiency standards establish mini-
mum energy efficiency levels for appliances and
other energy-consuming products that are not
already covered by federal efficiency standards.
Federal laws such as the recent Energy Policy Act of
2005 (EPAct 2005) have established appliance effi-
ciency standards for more than 40 products. States
are preempted from setting their own standards for
the products covered by federal standards but can
enact standards for products that are not yet covered
by federal law (which in many cases emerged from
state standard-setting activities) or may petition for
a waiver under particular circumstances. Ten states
have adopted standards covering a total of 36 types
of appliances and at least two additional states are
considering adopting standards (Delaski 2005, Nadel
et al. 2005).
States Are Implementing Building Energy
Codes for Energy Efficiency
California's Title 24 standards for residential and
commercial buildings are stringent and well
enforced. They include a combination of perform-
ance-based and mandatory provisions that are
expected to yield $43 billion in electricity and natu-
ral gas savings by 2011. The standards are expected
to reduce annual energy demand by 180 MW, equiv-
alent to the electricity requirements of 180,000 aver-
age-sized California homes (CEC 2003).
Oregon and Washington take a simple and prescrip-
tive approach to building energy codes. The result
is a high level of code compliance; a recent con-
struction practice survey found that 94% of homes
surveyed in Washington and 100% in Oregon met or
exceeded code requirements for the building enve-
lope (Ecotope 2001).
States Are Implementing Appliance Efficiency
Standards
California was the first state to initiate an appliance
efficiency standards program (in 1977) and main-
tains the most active and well-funded standards
program of any state. California law now covers 30
products; new or upgraded standards are under
consideration for three products. Operated by the
California Energy Commission (CEC), the appliance
standard program is currently reducing peak elec-
tric demand by about 2,000 MW or about 5% of peak
load. These savings account for about 20% of
California's total peak demand reductions from all
efficiency programs over the past 20 years (CEC
2005a, CEC 2005b).
New York's Appliance and Equipment Energy
Efficiency Standards Act of 2005 established state
energy efficiency standards for 14 household appli-
ances and electronic equipment not covered by fed-
eral standards. The law also requires efficiency stan-
dards for electronic products that use standby power
when they are turned off but remain plugged in (e.g.,
DVD players and recorders) to reduce "phantom"
energy consumption. These standards are expected
to save 2,096 GWh of electricity annually, enough to
power 350,000 homes. This equates to annual savings
of $284 million per year (State of New York 2005).
Executive Summary
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EPA Clean Energy-Environment Guide to Action
Clean EnargyEnriranmant
STATE PARTNERSHIP
Energy Supply Actions
States can achieve a number of environmental and eco-
nomic benefits by encouraging the development of clean
energy supply (i.e., renewable energy and CHP) as part of
a balanced energy portfolio. The Guide to Action describes
five policies that states have successfully used to support
and encourage continued growth of clean energy supply
in their state.
Renewable Portfolio Standards (RPS)
RPS provide states with a tool to increase the amount of
renewable energy using a cost-effective, market-based
approach. RPS, which can be used in both regulated and
restructured electricity markets, require electric utilities
and other retail electric providers to supply a specified
minimum percentage or amount of customer load with
eligible sources of renewable electricity. As of September
2005, RPS requirements have been established in 21
states and Washington, D.C. More than 2,300 MW of
new renewable energy capacity (through 2003) is attrib-
utable to RPS programs. RPS is cited as the driving force
behind the installation of approximately 47% of new
wind capacity additions in the United States between
2001 and 2004 (Bird and Swezey 2004).
PBFs for State Clean Energy Supply Programs
PBFs for clean energy supply accelerate the develop-
ment of renewable energy and CHP within a state.
They are typically created by levying a small fee or
surcharge on customers' electricity rates (e.g., for
renewable energy, this fee ranges from approximately
0.01 to 0.1 mills/kWh). While PBFs have traditionally
been used to fund energy efficiency and low-income
programs, states have recently begun to implement
PBFs to support clean energy supply. PBFs were initial-
ly established by states undergoing electricity market
restructuring but are now used by both restructured
states and states with traditional electricity markets.
As of 2005, 16 states had established renewable
energy programs that are expected to provide more
than $300 million annually in support of clean ener-
gy supply. PBFs will provide much of this funding;
according to one estimate, clean energy funding will
total $4 billion by 2017 (UCS 2004, DSIRE 2005,
Navigant 2005).
States Are Implementing Renewable Portfolio
Standards
Texas was among the first states to establish a RPS
requirement and is considered by many policymak-
ers and advocates to be among the most success-
ful. Between 1999, when the RPS was initiated, and
February 2005,1,187 MW of renewable energy
capacity was installed in Texas. The Texas RPS
includes long-term contracts, penalties for non-
compliance, and RECs trading.
California's RPSenacted by the state legislature in
September 2002is among the most aggressive in
the country. The RPS requires retail sellers of elec-
tricity to purchase 20% renewable electricity by 2017.
At a minimum, retailers must increase their use of
renewable electricity by 1% each year. California is
considering increasing the RPS requirement to 33%
by2020(CEC2005a). "
States Are Establishing Public Benefits Funds
for State Clean Energy Supply Programs
New Jersey's clean energy initiative, administered by
the New Jersey Board of Public Utilities, provides
information and financial incentives and creates
enabling regulations designed to help New Jersey
residents, businesses, and communities reduce their
energy use, lower costs, and protect the environment.
New Jersey's Clean Energy Program has three com-
ponents: residential programs, commercial and indus-
trial programs, and renewable energy programs. CHP
is funded as an efficiency measure through the com-
mercial and industrial programs.
In New York, the New York State Energy Research
and Development Authority (NYSERDA) administers
the New York Energy Smart program, which is
designed to support certain public benefits programs
during the transition to a more competitive electricity
market About 2,700 projects in 40 programs are fund-
ed by a charge on the electricity transmitted and
distributed by the state's investor-owned utilities.
Executive Summary
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EPA Clean Energy-Environment Guide to Action
Clean EnergyEnriranmant
STATE PARTNERSHIP
Output-Based Environmental Regulations to
Support Clean Energy
Designing environmental regulations that account
for the emission reduction benefits of energy effi-
ciency, renewable energy, and CHP increases the
attractiveness for facilities to install clean energy
technologies and increase efficiency. Output-based
environmental regulations, which relate emissions to
the productive output of a process, accomplish this
by encouraging the use of fuel conversion efficiency
and renewable energy as air pollution control meas-
ures. For electric generation, this unit of measure is
the amount of emissions per MWh (Ib/MWh). In con-
trast, most environmental regulations for power gen-
erators and boilers have historically established
emission limits based on heat input or exhaust con-
centration (Ib/MMBtu or parts per million [ppm]).
These traditional input-based limits do not account
for the pollution prevention benefits of process effi-
ciency in ways that encourage the application of
more efficient generation approaches.
Interconnection Standards
Standard interconnection rules encourage the con-
nection of clean distributed generation (DG) systems
(i.e., renewable and CHP) to the electric grid by
establishing uniform processes and technical require-
ments that apply to utilities within a state. These
rules reduce the uncertainty and prevent long delays
and costs that clean DG systems may encounter
when obtaining approval for grid connection. In
addition, some states use net metering rules to
Are Establishing Interconnection Standards
In New Jersey, the New Jersey Board of Public
Utilities developed net metering and interconnection
standards for Class I renewable energy systems.
These rules, which became effective on October 4,
2004, are separated into three levels based on system
size and technical certification. Each level has specif-
ic interconnection review procedures and timelines
for each step in the review process. The New Jersey
interconnection standard is designed to support sys-
tems up to 2 MW.
In Texas, the Texas Public Utility Commission adopted
substantive rules in November 1999 that apply to gener-
States Are Developing Output-Based
Regulations
Connecticut has adopted an output-based regula-
Ition for NOX, particulate matter, carbon monoxide
(CO), and C02 from small distributed generators
(< 15 MW capacity), including CHP. The regulation
values the efficiency of CHP based on the emis-
sions that are avoided by not having separate elec-
tric and thermal generation. Connecticut also allo-
cates allowances based on energy output in its
NOXtrading program.
Massachusetts has incorporated the output-based
approach in several important regulations. The
Massachusetts NOX cap and trade program allo-
cates emission allowances to affected sources
(generators > 25 MW) on an output basis, including
the thermal output of CHP. This approach provides a
significant economic incentive for CHP within the
emissions cap. Massachusetts also has a multi-pol-
lutant emission regulation (NOX, sulfur dioxide [S02],
mercury [Hg], C02) for existing power plants, which
uses an output-based format for conventional emis-
sion limits. In addition, Massachusetts allocates 5%
of its NOX state trading program budget to a public
benefits set-aside account to provide for allocations
for energy efficiency and renewable energy.
govern interconnection of smaller DG systems. Net
metering, which can be considered a subset of inter-
connection standards for small-scale projects, allows
smaller DG owners to offset power that they obtain
from the grid with excess power that they can supply
ation facilities of 10 MW or less that connect to distri-
bution-level voltages at the point of common coupling.
These rules are intended to streamline the interconnec-
tion process for applicants, particularly those with
smaller devices and those that are likely to have mini-
mal impact on the electric utility grid. This ruling applies
to both radial and secondary network systems3 and
requires Texas utilities to evaluate applications based
on pre-specified screening criteria, including equip-
ment size and the relative size of the DG system to
feeder load.
A radial distribution system is the most common electric power sys-
tem. In this system, power flows in one direction from the utility
source to the customer load.
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through their grid connection. As of November 2005,
14 states had adopted standard interconnection
requirements for distributed generators and seven
additional states were in the process of developing
similar standards. As of early 2005, 39 states and
Washington, D.C. had rules or provisions for net
metering (Navigant 2005).
Fostering Green Power Markets
Green power is a small but growing market that
provides electricity customers the opportunity to
make environmental choices about their electricity
consumption by purchasing electricity generated by
renewable resources. Green power programs in more
than 40 states currently serve approximately
540,000 customers, representing nearly 4 billion
kWh annually. These green power markets have
resulted in the construction of more than 2,200 MW
of new renewable capacity over the past 10 years. A
recent study estimates this could reach 8,000 MW
by 2015 by giving customers the choice to support
cleaner electricity generation options in both verti-
cally integrated and competitive retail markets
(Wiser etal. 2001).
Because participation in green power programs is
voluntary, the role for states may be more limited
than with other clean energy policy options, but it is
still important. In vertically integrated markets (i.e.,
states where regulated utilities perform generation,
transmission, and distribution functions), several
states require utilities to offer a green pricing tariff.
This policy ensures that all customers have the
option available to them. In restructured markets,
green power products are available from a range of
competitive suppliers. Customers are also increasing-
ly able to add renewable energy to their default serv-
ice with "green check-off" programs, which enable
customers to select green power while maintaining
service with the default provider.
Utility Planning and Incentive
Structures
Long-term utility planning policies and incentive
structures play an important role in determining the
attractiveness of investments in energy efficiency
States Are Encouraging Green Power Markets
New Jerseyis the first state with restructured elec-
tricity markets to institute a statewide voluntary
green power program. The New Jersey Clean
Energy Council established a goal to double the
amount of green electricity purchased by electric
customers and increase the load served by qualified
renewable resources by 50% over the Class I RPS.
The state's Green Power Choice Program supports
this goal by implementing a statewide green check-
off program that requires utilities to offer retail elec-
tricity customers the option of selecting an energy
product with a higher level of renewable energy
than required by the state RPS.
New Mexico provides a state-mandated utility
green pricing program that was created by regula-
tory authority. In 2002, the New Mexico Public
Regulation Commission (PRC) adopted regulations
requiring all investor-owned utilities and electric
cooperatives in the state to offer their customers a
voluntary renewable energy tariff. These tariffs
allow consumers the option of purchasing more
renewable energy than is required by the RPS,
range from 1.8 cents/kWh to 3.2 cents/kWh, and
combine varying mixes of wind, solar, and biomass.
Utilities are also required to develop educational
programs for their customers on the benefits and
availability of the voluntary renewable energy pro-
gram (DOE 2005d).
and clean DG. In many states, utility profits are
reduced if they experience decreased energy sales as
a result of aggressive investments in energy efficien-
cy or customer-sited DG. The Guide to Action
describes specific approaches state PUCs can use to
address these disincentives to creating low-cost,
clean energy markets by allowing for a fair, economi-
cally based comparison between supply- and
demand-side resource alternatives.
Portfolio Management Strategies
Portfolio management refers to the electric utility's
energy resource planning and procurement strate-
gies, covering both supply- and demand-side
resources. State PUCs are requiring electric utilities
to conduct portfolio management as a way to pro-
vide least-cost and stable electric and natural gas
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States Are Requiring Utilities to Manage Their
Portfolios
The Northwest Power and Conservation Council's
Fifth Northwest Electric Power and Conservation
Plan includes policies to enable the region to man-
age uncertainties that affect the power system and
mitigate risks associated with these uncertainties.
Clean energy options promoted in the plan include
energy conservation and efficiency (targeted at 700
MW between 2005 and 2009), demand response (tar-
geted at 500 MW between 2005 and 2009), and wind
power (targeted at 1,100 MW between 2005 and 2014
from system benefits charges and utility integrated
resource plans) (Northwest Power and Conservation
Council 2005).
In California, the CPUC requires each utility to sub-
mit a 10-year procurement plan biennially. Each
plan must demonstrate that the utility has adequate,
reliable supplies and complies with CPUC goals for
efficiency and renewable energy. Utilities must pri-
oritize their resource procurements by following the
"loading order" established in the state's Energy
Action Plan (EAP), as follows: (1) energy efficiency
and demand response, (2) renewable energy
(including renewable DG), and (3) clean fossil-
fueled DG and clean fossil-fueled central-station
generation. CPUC authorized $2 billion in procure-
ment funding for energy efficiency programs from
2006 to 2008. These measures are expected to
achieve $2.7 billion in net savings to consumers and
avoid the need for three large (500 MW) power
plants (CPUC 2005).
'
service to customers over the long term. Portfolio
management can also increase energy efficiency,
renewable generation, and clean DG in order to
address reliability, safety, and environmental issues.
Portfolio management strategies are implemented
through individual utilities' integrated resource plans
in states served by regulated, vertically integrated
utilities. These plans consider a broad array of supply
and demand options using predefined criteria for
evaluating options to meet projected needs. They
compare a utility's current and projected future gen-
eration needs to all of its available generation
demand- and supply-side options. "Retail Choice"
portfolio management strategies refer to portfolio
management by deregulated utilities. These strate-
gies strive to protect consumers from high electricity
prices by requiring competitive procurement policies.
In either case, an ideal portfolio is diversified and
involves choosing among a variety of electricity
products and contracts, including energy efficiency,
renewables, and clean DG, to enable the utility to
adapt to shifting market conditions.
Utility Incentives for Demand-Side Resources
States are reworking traditional electric and gas utility
rate structures to incorporate incentives for demand-
side resources (e.g., energy efficiency and clean DG).
Traditional ratemaking structures link a utility's finan-
cial health to the volume of electricity or gas it sells,
thus providing a disincentive to investing in cost-
effective demand-side resources that reduce sales.
Aligning utilities' investment incentives with state
interests of providing efficient, affordable, and reliable
energy can "level the playing field" to allow for a fair,
States Are Creating Incentives for Utilities to
Invest in Demand-Side Resources
In 2005, California re-adopted a revenue balancing
mechanism that applies between rate cases and
removes the throughput disincentive by allowing for
rate adjustment based on actual electricity sales.
The California public utilities are also returning to
larger-scale promotion of energy efficiency through
their demand-side management programs.
Simultaneously, the CPUC is revising its policies to
establish a common approach for evaluating the
performance of energy efficiency programs that
defer more costly supply-side investments (CEC and
CPUC 2005).
In September 2002, the Oregon PUC adopted a par-
tial decoupling mechanism for one of its gas utili-
ties, Northwest Natural Gas, that uses a price elas-
ticity adjustment and a revenue deferral account
(Oregon PUC 2002). An evaluation found that the
mechanism reduced, but did not completely
remove, the link between sales and profits and that
it "is an effective means of reducing NW
[Northwest] Natural's disincentive to promote ener-
gy efficiency" (Hansen and Braithwait2005).
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economically based comparison between supply- and
demand-side resource alternatives.
States with incentive policies for demand-side
resources have implemented policies that: (1) remove
disincentives by "decoupling" profits from sales vol-
umes, (2) ensure that utilities recover their costs for
effective, economic energy efficiency and clean DG
programs, and (3) create incentives for utility man-
agers and shareholders to actively invest in well-run
and high-performing energy efficiency and clean DG
programs.
Emerging Approaches: Removing Unintended
Utility Rate Barriers to Distributed Generation
The unique operating profile of clean energy supply
projects (i.e., renewable energy and CHP) may require
different types of rates and different rate structures.
However, if not properly designed, these rates and
charges can create unnecessary barriers to the use of
renewables and CHP. Appropriate rate design is criti-
cal to allowing utility cost recovery while also provid-
ing appropriate price signals for clean energy supply.
Customer-sited clean energy supply projects are
usually interconnected to the power grid and may
purchase electricity from or sell to the grid. Electric
utilities typically charge these customers special
rates for electricity and for services associated with
this interconnection. These rates include exit fees,
standby rates, and buyback rates. A key state PUC
objective is to ensure that consumers receive reli-
able power at the lowest cost. In approving these
rates, the PUC can support renewable and CHP proj-
ects and avoid unanticipated barriers while also pro-
viding appropriate cost recovery for the utility serv-
ices on which consumers depend.
As of early 2005, several states had evaluated or
begun to evaluate utility rate structures and had
made changes to promote CHP and renewables as
part of their larger efforts to support cost-effective
clean energy supply as an alternative to expansion of
the electric grid. This type of work is typically con-
ducted by the state PUC through a formal process
(i.e., docket or rulemaking) that elicits input from all
stakeholders.
States Are Developing Utility Rates to Support
Clean Energy Supplies
In California, several types of exit and transition fees
exist that are handled differently depending on the util-
ity. Fee exemptions exist for various classes of renew-
able and CHP systems, including: systems smaller than
1 MW that are net-metered or are eligible for CPUC or
CEC incentives for being clean and super-clean; ultra-
clean and low-emission systems that are 1 MW or
greater and comply with California Air Resources
Board (CARB) 2007 air emission standards; and zero-
emitting or highly efficient (> 42.5% efficiency) systems
built after May 1,2001.
In New York, the New York State Public Service
Commission (NYPSC) voted in July 2003 to approve new
standby rates for utilities' standby electric delivery
service to DG customers and standby service to inde-
pendent wholesale electric generating plants that
import electricity as "station power" to support their
operations. A key consideration was for the rates to
result in onsite generation running when it is less
expensive than purchasing power from the grid. The
NYPSC has also directed electric utilities to consider
DG as an alternative to traditional electric distribution
system improvement projects. It required natural gas
companies to create a natural gas rate class specifical-
ly for DG users that provides predictable gas rates for
the emerging DG industry (ceilings are frozen until at
least the end of 2007).
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What States Can Do
As described previously in this Executive Summary,
states are supporting clean energy through a diverse
range of programs and policies. Each policy descrip-
tion in the Guide to Action includes specific action
steps and best practices drawn from state experi-
ences for designing, implementing, and evaluating
clean energy programs. When developing a compre-
hensive approach to clean energy, states can use this
information to:
Develop a Clean Energy-Environment Action Plan
that establishes clean energy goals to increase the
use of cost-effective clean energy in their state
and identifies programs and policies to achieve
these goals.
Implement a coordinated package of policies, pro-
grams, and strategies defined in the Clean Energy-
Environment Action Plan.
Draw on federal, state, and other resources to help
achieve clean energy goals.
Develop a Clean Energy-Environment
Action Plan
A Clean Energy-Environment Action Plan describes a
clear strategy for delivering clean, low-cost, reliable,
and stable-priced energy to state residents through a
portfolio of energy efficiency, renewable energy, and
clean DG policies and programs. Chapter 2 of the
Guide to Action details the key steps involved in
developing this clean energy strategy. These steps
typically include:
1. Create a Collaborative. States have found it partic-
ularly useful to reach out to the parties in their
states that are interested in and/or may be affect-
ed by changes in energy use within the state. Key
players in the collaborative can include represen-
tatives from the governor's office, state legislature,
state agencies, and universities. Stakeholders
include utilities; independent system operators and
regional transmission organizations; independent
power producers, independent transmission system
Using the Guide to Action
The Guide to Action provides a menu of clean energy
policies and programs that states have successfully
implemented. When using the Guide to Action:
Select from the menu of policies by reviewing Table
ES.2 and the chapter introductions to identify poli-
cies that are most likely to meet state goals. Cross-
references are provided within each section to help
efficiently navigate the document.
Keep in mind that some of the policies described in
the Guide to Action represent different paths to the
same goal or can be used in combination to achieve
a goal.
Consider designing clean energy programs by build-
ing upon the established models, examples, and
action items described for each policy.
owners, and energy suppliers; environmental and
consumer organizations; other private sector inter-
ests; and the public.
2. Establish a Quantitative Goal Based on Future
Energy Use Expectations and the Potential for
Clean Energy in the State. A quantitative clean
energy goal defines a specific level of cost-
effective clean energy the state can strive to
acquire during a particular period of time. To
define their goals, states can:
Develop or refine a baseline inventory of their
energy use and emissions and make projections
about the future.
Conduct energy efficiency and/or renewable
energy potential analyses to determine areas of
greatest opportunity for energy savings. These
findings help states identify opportunities and
determine the feasibility of different goals
based on technologies or resource availability.
Understanding and quantifying the potential for
clean energy within the state also helps states
ensure that they are providing adequate funding
to make cost-effective investments in clean
energy.
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Quantify the full range of savings to maximize
the benefits of clean energy. By assessing and
quantifying the full range of short- and long-
term energy, environmental, and economic ben-
efits from energy efficiency and renewable
energy, states can ensure that their policy deci-
sions are based on a complete accounting of
the benefits of clean energy.
3. Identify Both Existing and New Clean Energy
Policies and Programs. As states develop their
Clean Energy-Environment Action Plans, they iden-
tify policies that could help achieve their goal by
conducting an inventory of existing policies, iden-
tifying new clean energy policies that build on les-
sons learned from their own experience and other
states' experiences, and establishing criteria to
evaluate the policies. When selecting policies to
include in their plan, states also can identify the
market, regulatory, and/or institutional barriers to
implementing the clean energy programs and
develop approaches to mitigate or remove these
barriers. Finally, states can also target support for
investment in new clean energy technologies as
they emerge in the marketplace.
4. Design Policies and Evaluate Their Impacts. States
compare the impacts of different clean energy
policies to ensure that they work well together.
They also find it advantageous to identify the type
of action, key players required, and time frame for
implementation when designing a policy. Once
policies are initially designed, states use analytic
tools to evaluate the options based on the criteria
they have developed. The tools enable states to
quantify the impacts of the various policies and
rank them according to the agreed-upon criteria.
This usually includes an assessment of the energy,
economic, and/or environmental and public health
impacts of the options.
5. Develop a Measurement, Evaluation, and Reporting
Plan. As states design and evaluate clean energy
policy options, they often find it beneficial to con-
sider in advance the ways they will measure the
success of the implemented policies. This measure-
ment, evaluation, and reporting plan enables
states to regularly check their progress against
their goals and adjust their course as needed.
6. Recommend Specific Actions for State Decision-
Makers. Once policy options have been assessed
and ranked according to the desired criteria, the
collaborative typically reviews the findings. Based
on the rankings and discussion among the stake-
holders, recommendations for action are presented
in the Clean Energy-Environment Action Plan.
Implement the Clean Energy-
Environment Action Plan
The actions required to design and implement the
clean energy programs articulated in a Clean Energy-
Environment Action Plan vary according to type of
program. Nevertheless, the following key themes
have emerged that apply to all clean energy pro-
grams and that states can follow to help ensure the
success of their programs:
Involve Stakeholders in Clean Energy Program
Development and Deployment. Clean energy policy
objectives require broad public and political sup-
port to be successful. Successful states have
implemented clean energy policies with the sup-
port of their governor, legislature, and state agen-
cies. If support is lacking, states can consider
implementing education programs on the environ-
mental and economic benefits of clean energy.
When support for clean energy activities is estab-
lished, it is important to involve multiple stake-
holders during discussions and negotiations about
clean energy objectives.
Incorporate Clean Energy As a Resource in Other
State and Utility-Level Resource Planning
Decisions. States can look for opportunities to
incorporate clean energy policies as part of other
state and utility-level planning decisions.
Evaluate the Effectiveness of Clean Energy Programs.
Evaluation is important to sustaining the success of
state clean energy programs. By measuring program
success against stated objectives on a regular basis
and in a transparent way, states can identify prob-
lems, develop approaches for addressing these
issues, and ensure continued support from stake-
holders. Evaluating energy efficiency programs can
also entail using special techniques to measure and
verify the energy savings from these programs.
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Communicate Program Results. States communi-
cate the findings from their program evaluation to
key players and stakeholders on a regular basis. By
reporting on the progress and lessons learned for
each clean energy policy and for the overall pro-
gram and soliciting feedback on these findings,
states can ensure a transparent implementation
process and continued support for their program.
States can also help ensure continued support for
clean energy policies by communicating the ener-
gy, economic, and environmental benefits accrued
from these programs to stakeholders.
Each of the policy description sections in the Guide
to Action describes how states consider these and
other themes as they develop and implement clean
energy programs and policies.
Leverage Federal, State, and Other
Resources
As states pursue policies and programs for promoting
clean energy, they can work with a variety of federal,
state, and nonprofit organizations to help enhance
their clean energy programs. Table ES.3 provides
examples of how these federal, state, and other
resources can be used when developing each of the
16 clean energy policies and programs covered in the
Guide to Action. The following section, Information
Resources, provides a list of the key federal voluntary
program resources available to states (a more
detailed description is provided in Appendix A,
Federal Clean Energy Programs) and a summary of
the Web sites for each of the resources described in
Table ES.3.
Clean EnergyEnriranmant
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Table ES.3: Federal, State, and Nonprofit Resources for Enhancing State Clean Energy Programs
Policy Name
(Section No.)
Examples of State Actions3
Lead by Example (3.1)
Chapter 3. State Planning and Incentive Structures
Establish energy savings and renewable energy goals for state and local government facilities (including leased
space), schools, colleges, and universities. Use ENERGY STAR tools, guidelines, and partnerships and join the ENERGY
STAR Challenge to improve building energy efficiency by 10% or more.
Procure ENERGY STAR-qualified products using ENERGY STAR product procurement information and online training
resources.
Require ENERGY STAR certification as part of green building/energy efficiency standards in new state and local gov-
ernment buildings, K-12 schools, and colleges and universities.
Purchase renewable energy for state facilities under EPA's Green Power Partnership Program.
Use CHP in public facilities with help from EPA's CHP Partnership.
Leverage ENERGY STAR consumer education activities, such as National Campaigns.
State and Regional
Energy Planning (3.2)
Develop and implement a Clean Energy-Environment Action P/anwith guidance and support from EPA's Clean Energy-
Environment State Partnership Program.
Leverage DOE State Energy Program funding (to state energy offices) and grants authorized by EPAct 2005 (Section
140) to support state energy planning and deploy clean energy technologies.
Determining the Air
Quality Benefits of
Clean Energy (3.3)
Use the software tools, analyses, and EPA guidance described in Section 3.3 of the Guide toActionlo evaluate the air
quality benefits of clean energy policies and programs.
Incorporate emission reductions from clean energy into air quality planning using EPA's Guidance: Incorporating
Emerging and Voluntary Measures in a State Implementation Plan (2004).
Funding and
Incentives (3.4)
Energy Efficiency
Portfolio Standards
(EEPS)(4.1)
Use ENERGY STAR financing information and training sessions for public and private sector organizations.
Learn about federal and state funding opportunities using EPA's Funding Opportunities Directory and CHP and bio-
mass/biogas funding opportunities database.
Use EPA's Supplemental Environmental Projects Toolkit to convert environmental enforcement settlements into envi-
ronmentally beneficial projects.
Include provisions for energy savings performance contracting using the information resources in Section 3.4. Identify
energy service companies in your state using ENERGY STAR'S online directory of service and product providers.
Leverage federal tax incentives authorized by EPAct 2005 for energy efficiency and renewable energy.
Chapter 4. Energy Efficiency Actions
Assess energy efficiency potential, evaluate past successes, and then design, develop, implement, and evaluate a cus-
tomized EEPS program for your state. Contact EPA's Clean Energy-Environment State Partnership Program for more
information and technical assistance to support the design of an EEPS for your state.
Public Benefits Funds
(PBFs) for Energy
Efficiency (4.2)
Enhance PBF programs by leveraging ENERGY STAR'S portfolio of energy efficiency program and service delivery
models, building performance and product specifications, network of partners, and consumer education and aware-
ness campaigns.
Building Codes for
Energy Efficiency (4.3)
Regularly update, implement, evaluate, and enforce building codes using compliance tools, technical assistance, and
other code information and support available from DOE and the Building Codes Assistance Project.
Encourage construction of beyond-code ENERGY STAR-qualified new homes using ENERGY STAR education and train-
ing resources.
State Appliance
Efficiency Standards
(4.4)
Use DOE's information resources to identify products that are covered by federal standards and obtain information
about state appliance standards.
Identify potential products for which standards could be established, and estimate the overall benefits and costs of
upgrading current standards or setting new standards using the information resources provided by the California
Energy Commission and the Appliance Standards Awareness Project.
See Federal, State, and Nongovernmental Clean Energy Resources on page ES-27 for the URLs for the underlined
resources listed in this table.
(continued on next page)
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Table ES.3: Federal, State, and Nonprofit Resources for Enhancing State Clean Energy Programs (continued)
Policy Name
(Section No.)
Examples of State Actions3
Renewable Portfolio
Standards (RPS) (5.1)
Chapter 5. Energy Supply Actions
Determine the renewable energy and CHP potential in your state and develop an RPS foryour state with assistance
from the National Renewable Energy Lab (NREL) and EPA's CHP Partnership.
Leverage the federal production tax credit and other federal incentives to advance renewable energy resource devel-
opment and achieve standards.
Public Benefits Funds
(PBF) for State Clean
Energy Supply
Programs (5.2)
Use lessons learned from other state PBF programs described in Section 5.2 of the Guide to Action to establish or
enhance your state programs.
Leverage other funding sources without activating "double-dipping" clauses. For example, incentives for wind projects
allow developers to take advantage of federal incentives such as the production tax credit (PTC) and accelerated
depreciation.
Contact EPA's CHP Partnership for assistance in designing a CHP incentive program.
Output-Based
Environmental
Regulations to
Support Clean Energy
Supply (5.3)
Review federal programs that have adopted output-based regulations with recognition of CHP, including the proposed
New Source Performance Standards (NSPS) for NOX from electric utility boilers and combustion turbines, and the new
EPA cap and trade programs (Clean Air Interstate Rule and the Clean Air Mercury Rule). For more information, visit the
CHP Partnership State Resources Web site.
Use EPA's CHP Partnership resources, including Output-Based Regulations: A Handbook for Air Regulators to evaluate
opportunities to adopt output-based regulations.
Interconnection
Standards (5.4)
Review existing model rules, such as those developed by FERC, NARUC, and IREC, as well as other state rules
described in Section 5.4.
Develop an interconnection standard for clean DG/CHP projects with assistance from EPA's CHP Partnership.
Fostering Green
Power Markets (5.5)
Use EPA's Green Power Partnership resources and partners to enhance green power markets programs.
Learn about other state Green Power programs and policy approaches using the information resources available in
Section 5.5 of the Guide to Action and from the DOE Green Power Network.
Take advantage of federal renewable energy incentives to complement state efforts to foster green power markets.
Chapter 6. Utility Planning and Incentive Structures
Portfolio
Management
Strategies (6.1)
Link portfolio management policies to other state policies described in Section 6.1, such as RPS, energy efficiency poli-
cies, and energy planning policies.
Incorporate lessons learned from other states and regions as described in Section 6.1 of the Guide to Action.
Contact the EPA-State Energy Efficiency and Renewable Energy Projects staff and/or EPA/DOE Energy Efficiency
Action Plan staff for further assistance.
Utility Incentives for
Demand-Side
Resources (6.2)
Incorporate lessons learned from states to remove financial disincentives and create incentives for utilities to invest in
demand-side resources as described in Section 6.2 of the Guide to Action.
Contact the EPA-State Energy Efficiency and Renewable Energy Projects staff and/or EPA/DOE Energy Efficiency
Action Plan staff for further assistance.
Emerging
Approaches:
Removing Unintended
Utility Rate Barriers to
Distributed
Generation (6.3)
Contact EPA's CHP Partnership for assistance in evaluating current utility rate structures for DG, such as standby rates,
and developing rate structures that avoid unwarranted barriers, while also providing appropriate cost recovery for utili-
ty services.
Review the Regulatory Assistance Project's report. Accommodating Distributed Resources in the Wholesale Market.
See Federal, State, and Nongovernmental Clean Energy Resources on page ES-27 for the URLs for the underlined resources listed in this table.
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Information Resources
Key Federal Program Resources
A list of key EPA and DOE voluntary program resources available to states is provided below.
Federal Clean Energy Programs
EPA and DOE administer a number of
voluntary programs that promote the
production and use of clean energy and
complement the Clean Energy-
Environment State Partnership
Program. These programs include:
ENERGY STAR
ENERGY STAR is a voluntary, public-
private partnership designed to reduce
energy use and related greenhouse gas
emissions. The program, administered
jointly by EPA and DOE, has an exten-
sive network of partners including
equipment manufacturers, retailers,
builders, energy service companies, pri-
vate businesses, and public sector
organizations. EPA and DOE invest in a
portfolio of energy efficiency efforts that
state and utility energy efficiency pro-
grams can leverage to further their
energy efficiency programs, including:
Establishing performance specifica-
tions and performing outreach on
efficient products.
Establishing energy efficiency deliv-
ery models to existing homes.
Establishing performance specifica-
tions and performing outreach for
new homes.
Improving the performance of new
and existing commercial buildings.
Conducting education and aware-
ness building.
More information about ENERGY STAR
can be found at:
http://www.energystar.gov.
EPA-State Energy Efficiency and
Renewable Energy Projects
This program is a joint initiative between
EPA, the National Association of
Regulatory Utility Commissioners
(NARUC), and individual state utility com-
missions. It explores utility regulatory and
market-based approaches that deliver
significant energy cost savings and other
benefits through greater use of energy
efficiency, renewable energy, and clean
distributed generation. More information
can be found at:
http://www.epa.gov/cleanenergy/
utilitypolicy/.
Energy Efficiency Action Plan
This joint effort between DOE and EPA
engages energy market leaders
including electric and gas utilities, state
utility regulators and energy agencies,
energy consumers, energy service
providers, and environmental/energy
efficiency advocatesin the develop-
ment of an Energy Efficiency Action
Plan. Action Plan participants will identi-
fy key barriers limiting greater U.S.
investment in energy efficiency and
develop and document sound business
practices for removing these barriers.
More information is available at:
http://epa.gov/cleanenergy/
eeactionplan.htm.
The Combined Heat and Power
(CHP) Partnership
This EPA partnership seeks to reduce the
environmental impact of power genera-
tion by fostering the use of CHP. The CHP
Partnership works closely with energy
users, the CHP industry, state and local
governments, and other stakeholders to
support the development of new policies,
programs, and projects and promotes
their energy, environmental, and eco-
nomic benefits. More information is
available at: http://www.epa.gov/chp.
The Green Power Partnership
EPA's Green Power Partnership is a vol-
untary partnership between EPA and
organizations that are interested in buy-
ing green power. Through this program,
EPA supports organizations that are
buying, or planning to buy, green power.
As a Green Power Partner, an organiza-
tion pledges to replace a portion of its
electricity consumption with green
power within one year of joining the
partnership. See http://www.epa.gov/
greenpower.
State Activities and Partnerships
DOE's Office of Energy Efficiency and
Renewable Energy (EERE) provides
technical assistance to state and local
jurisdictions that enables them to adopt
renewable energy and energy efficien-
cy technologies. The program offers
training, technical assistance, and
information on state activities. More
information can be found at:
http://www.eere.energy.gov/states/.
The State Energy Program
DOE provides grants to states and
directs funding to state energy offices
from technology programs in EERE.
States use grants to address their ener-
gy priorities and program funding to
deploy emerging renewable energy and
energy efficiency technologies. More
information is available at:
http://www.eere.energy.gov/
state_energy_program/.
e
Technical Assistance Program (TAP)
TAP provides state and local officials
quick, short-term access to experts at
DOE national laboratories for assistance
with crosscutting renewable energy and
energy efficiency policies and programs.
TAP helps states in crosscutting areas
not currently covered by an existing DOE
program. More information is available
at: http://www.eere.energy.gov/
wip/informationsources/Tap.html.
ib
DOE
>le
For more information on EPA, DOE,
and other federal agency clean
energy efforts, see Appendix A,
Federal Clean Energy Programs.
Executive Summary
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EPA Clean Energy-Environment Guide to Action
Clean EnergyEnriranmant
STATE PARTNERSHIP
Federal, State, and Nongovernmental Clean Energy Resources
The following Web sites provide links to the federal, state, and nonprofit information resources and technical assis-
tance opportunities that are described in Table ES.3.
Organization
EPA and DOE
Resource
ENERGY STAR
Energy Efficiency Action Plan
ENERGY STAR Financing Strategies
ENERGY STAR for Government
ENERGY STAR National Campaigns
ENERGY STAR Online Training
Sessions
ENERGY STAR Purchasings
Procurement
ENERGY STAR Qualified New Homes
ENERGY STAR Qualified Products
ENERGY STAR Residential
Marketing and Sales Materials
ENERGY STAR Service and Product
Provider Directory
Federal Tax Credits for Residential
Energy Efficiency
Federal Resources
http://www.energystar.gov/index.cfm?c=hom.index
http://www.epa.gov/cleanenergy/eeactionplan.htm
http://www.ene rgystar.gov/index. cfm?c=business.bus_internet_presentations#money
http://www.ene rgystar.gov/index. cfm?c=government.bus_government
http://www.energystar.gov/index.cfm?c=promotions.pt_national_promotions
http://www.energystar.gov/index.cfm?c=business.bus_internet_presentations#procure
http://www.ene rgystar.gov/index. cfm?c=bulk_purchasing.bus_purchasing
http://www.energystar.gov/index.cfm?c=new_homes.hm_index
http://www.ene rgystar.gov/index. cfm?fuseaction=find_a_product
http://www.ene rgystar.gov/index. cfm?c=bldrs_lenders_raters.pt_ResMktgSalesM ate rials
http://www.ene rgystar.gov/index. cfm?fuseaction=SPP_D I RECTORY
http://www.energystar.gov/index.cfm?c=products.pr_tax_credits
EPA
Clean Energy-Environment State
Partnership Program
http://www.epa.gov/cleanenergy/stateandlocal/ourpartners.htm
Combined Heat and Power
Partnership
CHP Partner Resources, Funding
Opportunities
CHP Partnership State Resources
CHP Partnership State Resources:
Output-Based Regulations
CHP Partnership State
Resources: Utility Rates
http://www.epa.gov/chp/
http://www.epa.goV/chp/f unding_opps.htm
http://www.epa.gov/chp/state_resources.htm
http://www.epa.gov/chp/state_resources/output_based_reg.htm
http://www.epa.gov/chp/state_resources/utility.htm
EPA Guidance Documents:
Incorporating Emerging and
Voluntary Measures in a State
Implementation Plan
http://www.epa.gov/ttn/oarpg/t1/memoranda/evm_ievm_g.pdf
(http://www.epa.gov/cleanenergy/stateandlocal/guidance.htm)
EPA-State Energy Efficiency
Renewable Energy Projects
http://www.epa.gov/cleanenergy/utilitypolicy/
Funding Opportunities: A Directory
of Energy Efficiency, Renewable
Energy and Environmental
Protection Assistance Programs
http://www.epa.gov/cleanenergy/pdf/eerejun.pdf
Executive Summary
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EPA Clean Energy-Environment Guide to Action
Clean EnargyEnriranmant
STATE PARTNERSHIP
Organization
EPA
Resource
Green Power Partnership
Federal Resources (continued)
http://www.epa.gov/greenpower/
Supplemental Environmental
Projects Toolkit
http://www.epa.gov/cleanenergy/pdf/se p_toolkit.pdf
DOE
Appliances and Commercial
Equipment Standards
http://www.eere.energy.gov/buildings/appliance_standards/
Building Energy Codes Program
http://www.energycodes.gov/
Energy Policy Act of 2005: Tax
Credits for Renewable Energy
http://www.energy.gov/taxbreaks.htm
The Green Power Network
http://www.eere.energy.gov/greenpower/
National Renewable Energy
Laboratory
http://www.nrel.gov/
Appliance
Standards
Awareness
Project
State Energy Program
Appliance Standards Awareness
Project Web site
http://www.ee re.energy.gov/state_energy_prog ram/a bout, cfm
State and Nonprofit Resources
http://www.standardsasap.org
Building Codes
Assistance
Project
Building codes implementation and
technical assistance
http://www.bcap-energy.org
California
Energy
Commission
Appliance efficiency regulations
and products database
http://www.energy.ca.gov/appliances/
DSIRE
Information on federal incentives
for renewable energy and energy
efficiency
http://www.dsireusa.org/library/includes/genericfederal.cfm7CurrentPage I D=1&state=us
The Regulatory
Assistance
Project (RAP)
RAP report: Accommodating
Distributed Resources in the
Wholesale Market
http://www.raponline.org/showpdf.asp?PDF_URL=%22Pubs/DRSeries/DRWhllMkt.pdf%22
U.S. Green
Building Council
LEED certification requirements
http://www.usgbc.org
Executive Summary
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EPA Clean Energy-Environment Guide to Action
Clean EnergyEnriranmant
STATE PARTNERSHIP
EPA Clean Energy-Environment State Partnership Program Contact Information
To download the Clean Energy-Environment Guide to Action, visit EPA's Clean Energy Web site at:
http://www.epa.gov/cleanenergy/stateandlocal/.
To order a print copy of the Guide to Action, contact the National Service Center for Environmental Publications
(NSCEP) at: http://www.epa.gov/ncepihom/ordering.htm. Or call NSCEP at: 1-800-490-9198.
Request EPA Publication No. 430-R-06-001.
For more information about the Guide to Action, please contact the EPA Clean Energy-Environment State
Partnership Program staff:
EPA Clean Energy-Environment State Partnership Program Contacts:
Julie Rosenberg, Branch Chief
Phone:202-343-9154
E-mail: rosenberg.julie@epa.gov
Steve Dunn, Policy Analyst
Phone: 202-343-9341
E-mail: dunn.stevev@epa.gov
Mailing Address:
U.S. Environmental Protection Agency
1200 Pennsylvania Avenue, NW
6202J
Washington, DC 20460
Executive Summary
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EPA Clean Energy-Environment Guide to Action
Clean EnargyEnriranmant
STATE PARTNERSHIP
References
Title/Description URL Address
ACEEE. 2004a. A Federal System Benefits Fund: Assisting States to Establish Energy
Efficiency and Other System Benefit Programs. American Council for an Energy-
Efficient Economy, Washington, DC.
ACEEE. 2004b. Five Years In: An Examination of the First Half-Decade of Public
Benefits Energy Efficiency Policies. Report# U041. American Council for an Energy-
Efficient Economy, Washington, DC. April.
ACEEE. 2004c. Summary Table of Public Benefit Programs and Electric Utility
Restructuring. American Council for an Energy-Efficient Economy, Washington, DC.
Bird, L. and B. Swezey. 2004. Green Power Marketing in the United States: A Status
Report. Seventh Edition. NREL/TP-620-36823. National Renewable Energy Laboratory,
Golden, CO. September.
CEC. 2003. Initial Study/Proposed Negative Declaration for the 2005 Building Energy
Efficiency Standards for Residential and Nonresidential Buildings. P400-03-018.
September. California Energy Commission.
CEC. 2005a. California Energy Commission. Integrated Energy Policy Report. Adopted
November 21, 2005. Docket #04-IEP-1 et. al.
CEC. 2005b. California Appliance Efficiency Regulations. CEC-400-2005-012. April.
CEC and CPUC. 2005. California Energy Commission and California Public Utilities
Commission. Energy Action Plan II, Implementation Roadmap for Energy Policies.
October.
CEAB. 2005. Energy Plan for Connecticut. Prepared by the Connecticut Energy
Advisory Board forthe Connecticut General Assembly. January.
CPUC. 2004. Order Instituting Rulemaking to Examine the Commission's Future
Energy Efficiency Projects, Administration and Programs, September 23, 2004,
Decision 04-09-060, Rulemaking 01-08-028 "Interim Opinion: Energy Savings Goals for
Program Year 2006 and Beyond." California Public Utilities Commission.
CPUC. 2005. Press Release: Comments at September 22, 2005 PUC Meeting by
Commissioner Susan P. Kennedy. "PUC Launches Groundbreaking Energy Efficiency
Effort." September 22, 2005.
Delaski. 2005. Personal memo from Andrew Delaski, Appliance Standards
Awareness Project. August 1.
DOE. 2005a. State Energy Program: Projects by Topic What Are State and Local
Government Facility Projects in the States?
DOE. 2005b. State Energy Alternatives: Energy Codes and Standards. Energy Efficiency
and Renewable Energy Web Site. U.S. Department of Energy, Washington, DC.
DOE. 2005c. Texas Revolving LoanSTAR Conservation Update Feature Story. U.S.
Department of Energy, Energy Efficiency and Renewable Energy, State Energy
Program Web site. January/February.
DOE. 2005d. Green Power Markets: Green Pricing Utility Programs by State. Energy
Efficiency and Renewable Energy, DOE Web site. December 9.
DSIRE. 2005. Database of State Incentives for Renewable Energy Web site.
http://www.aceee.org/energy/pbf.htm
http://www.aceee.org/pubs/u041.htm
http://www.aceee.org/briefs/mktabl.htm
http://www.eere.energy.gov/greenpower/pdfs/36823.pdf
http://www.energy.ca.gov/reports/
2003-09-12_400-03-018.PDF
http://www.energy.ca.gov/energypolicy/index.html
http://www.energy.ca.gov/appliances/2005regulations/
index.html
http://www.cpuc.ca.gov/PUBLISHED/REPORT/51604.htm
http://www.ee rc.com/pdfs/ceabe nergyplan_final05.pdf
http://www.cpuc.ca.gov/PUBLISHED/FINAL DECISION/
40212.htm
http://www.cpuc.ca.gov/PUBLISHED/NEWS RELEASE/
49757.htm
N.A.
http://www.eere. energy.gov/state_energy_program/
topic_definition_detail.cfm/topic=115
http://www.eere.energy.gov/states/alternatives/
codes_standards.cfm
http://www.eere. energy.gov/state_energy_program/
feature_detail_info.cfm
http://www.eere.energy.gov/greenpower/markets/
pricing. shtml?page=1
http://www.dsi reusa.org/index.cfm?&CurrentPagelD=2
Executive Summary
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EPA Clean Energy-Environment Guide to Action
Clean EnergyEnriranmant
STATE PARTNERSHIP
References (continued)
Title/Description URL Address
Ecotope. 2001. Baseline Characteristics of the Residential Sector: Idaho, Montana,
Oregon, and Washington. Northwest Energy Efficiency Alliance, Portland, OR.
December.
EIA. 2005a. Annual Energy Outlook 2005. DOE/EIA-0383(2005). U.S. Energy Information
Administration, Washington, DC. January.
EIA. 2005b. Electric Power Monthly, December 2005. Table 5.6.A. Average Retail Price
of Electricity to Ultimate Customers by End-Use Sector, by State, September 2005 and
2004. U.S. Energy Information Administration, Washington, DC.
EIA. 2005c. U.S. Electric Net Summer Capacity, data for 2004. Coal, Nuclear, Electric
and Alternate Fuels, August 2005. U.S. Energy Information Administration,
Washington. DC.
EPA. 2004a. Output-Based Regulations: A Handbook for Air Regulators.
Environmental Protection Agency. April 22.
EPA. 2004b. Incorporating Emerging and Voluntary Measures in a State
Implementation Plan. U.S. Environmental Protection Agency, Office of Air Quality
Planning and Standards. September.
EPA. 2005a. Air Data Web site. 2005 data. Environmental Protection Agency.
Accessed November 2005.
EPA. 2005b. EPA Research. Complied by EPA from various state legislation and regu-
lations.
Gross, T. 2005. Texas PUC personal communication with Theresa Gross.
Hansen, D.G. and S.D. Braithwait. 2005. Christensen Associates. A Review of
Distribution Margin Normalization as Approved by the Oregon Public Utility
Commission for Northwest Natural. March.
Iowa. 2005. Governor Vilsack Directs State Agencies to Improve Their Energy
Efficiency. April 22.
Nadel, S., A. Shipley, and R.N. Elliott. 2004. The Technical, Economic and Achievable
Potential for Energy Efficiency in the U.S. A Meta-Analysis of Recent Studies.
American Council for an Energy-Efficient Economy, Washington, DC. From the pro-
ceedings of the 2004 ACEEE Summer Study on Energy Efficiency in Buildings.
Nadel, S., A. deLaski, J. Kleisch, and T. Kubo. 2005. Leading the Way: Continued
Opportunities for New State Appliance and Equipment Efficiency Standards. Report
Number ASAP-5/ACEEE-A051. American Council for an Energy Efficiency Economy,
Washington, DC, and Appliance Standards Awareness Project, Boston, MA. January.
Navigant. 2003. The Changing Face of Renewable Energy. October.
http://www.nwalliance.com/resources/reports/95.pdf
http://www.eia.doe.gov/oiaf/archive/aeo05/index.html
http://tonto.eia.doe.gov/ftproo1/electricity/epm/02260512.pdf
http://www.eia.doe.gov/cneaf/solar.renewables/page/
trendsAable12.html
http://www.epa.gov/chp/pdf/output_rpt.pdf
http://www.epa.gov/ttn/caaa/t1/meta/m8507.html
http://www.epa.gov/air/data/index.html and
http://www.epa.gov/air/data/nonat.html?
us~usa~United%20States
N.A.
N.A.
Contact:
Christensen Associates Energy Consulting, LLC
4610 University Avenue, Suite 700
Madison, Wisconsin 53705-2164
Phone 608-231-2266 Fax 608-231 -2108
http://www.governor.state.ia.us/news/2005/april/
april2205_1.html
http://www.aceee.org/conf/04ss/rnemeta.pdf
http://www.standardsasap.org/a051.pdf
URL not available.
Executive Summary
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EPA Clean Energy-Environment Guide to Action
Clean EnargyEnriranmant
STATE PARTNERSHIP
References (continued)
Title/Description URL Address
Navigant. 2005. Company intelligence. Navigant Consulting Inc. Also see: Katofsky, R.
and L. Frantzis. 2005. Financing renewables in competitive electricity markets. Power
Engineering. March 1.
INFER 2005. Economically Achievable Energy Efficiency Potential in New England.
Northeast Energy Efficiency Partnerships by Optimal Energy. Updated May 2005.
Northwest Power and Conservation Council. 2005. The 5th Northwest Electric Power
and Conservation Plan. Northwest Power and Conservation Council. May 2005.
NYSERDA. 2004. New York Energy SmartSM Program Evaluation and Status Report.
Report to the System Benefits Charge Advisory Group. Final Report. New York State
Energy Research and Development Authority, Albany. May.
Oregon DOE. 2005. Oregon Business Energy Tax Credit (BETC) and Residential Energy
Tax Credit (RETC). Oregon Department of Energy Conservation Division, Salem.
Oregon PUC. 2002. Order No. 02-634, Application for Public Purposes Funding and
Distribution Margin Normalization. Oregon Public Utility Commission. September 12.
SWEEP. 2002. The New Mother Lode: The Potential for More Efficient Electricity Use
in the Southwest. Report for the Hewlett Foundation Energy Series. Southwest
Energy Efficiency Project. November.
State of New York. 2005. Governor Pataki's press release for the Appliance and
Equipment Energy Efficiency Standards Act of 2005.
Texas SECO. 2005. Texas State Energy Conservation Office. LoanSTAR Revolving
Loan Program Web site.
UCS. 2004. Table of State Renewable Energy Funds. Union of Concerned Scientists.
WGA. 2005. The Potential for More Efficient Electricity Use in the Western U.S.:
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Wl DOA. 2004. Wisconsin Public Benefits Programs Annual Report. July 1, 2003 to
June 30, 2004. Department of Administration, Division of Energy, Madison, Wl.
Wiser, R., M. Bolinger, E. Holt, and B. Swezey. 2001. Forecasting the Growth of Green
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Renewable Energy Laboratory, October.
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%20Renewables%20in%20Competitve%20Electricity%
20Markets_Power%20Engineering_March%202005.pdf
http://www.neep.org/files/Updated Achievable Potential
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http://www.nwppc.org/energy/powerplan/default.htm
http://www.nyserda.org/EnergyJnformation/04sbcreport.asp
http://egov.oregon.gov/Energy/CONS/BUS/BETC.shtml
http://egov.oregon.gov/Energy/CONS/RES/RETC.shtml
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Click on Orders, View Orders 2000 to Current, List Orders for
2002, Order No. 02-634.
http://www.swenergy.org/nml
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http://www.seco.cpa.state.tx.us/ls.htm
http://www.ucsusa.org/clean_energy/
clean_energy_policies/
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Click on PDF Link: State Renewable Energy Funds
http://www.westgov.org/wga/initiatives/cdeac/
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2004FocusAnnualReport.pdf
http://www.eere.energy.gov/greenpower/resources/
pdfs/301 01.pdf
http://www.wrapair.org/forums/ap2/docs.html
Executive Summary
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