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National Association of Energy Service Companies

NAESCO Advocacy Report

First Quarter 2008

NAESCO has firmly established itself as the national voice of the ESCO industry through its national and regional advocacy efforts. NAESCO has taken a leadership role in working with the US Department of Energy to accelerate the ESPC project award pipeline, encourage federal streamlining efforts, and expand federal organizational capabilities to support the expected expansion of ESPC investment at federal facilities.

NAESCO will be examining the effect of these changes on the overall federal ESPC investment level and project pipeline at its upcoming Federal Market Workshop. Entitled "Reinvigorating the Pursuit of Energy Efficiency at Federal Buildings: A Report from the Trenches", the workshop will be held on March 10, 2008 in Washington DC. Click here for additional information about the workshop.

NAESCO works to ensure that state initiatives focus on creating verifiable energy savings and stimulate industry market opportunities. In 2007, NAESCO provided written testimony in NY, CA, MA, TX, NC and NJ state proceedings and participated as a witness in Senate hearings on green job opportunities. NAESCO has also strengthened organizational ties with the ESC, NASEO, BOMA, the FPCC, the Apollo Alliance, ACEEE, and the NEMA CBTD Coalition. NAESCO also participated in the national coalition to enact a federal Efficiency Performance Standard, and in the Apollo Alliance Clean Energy Investment Task Force to develop policies for the investment of potential carbon cap-and-trade revenues into energy efficiency.

During 2008, NAESCO will emphasize promoting energy efficiency as a complement to new power plant construction in state regulatory proceedings across the country; striving to make ESCO services part of "demand response" programs; and, working to ensure that the new demand-side "bidding" programs are as ESCO-friendly as possible.

Ratepayer-funded energy efficiency programs currently spend nearly $2 billion per year nationwide and NAESCO participates in state proceedings where significant program decisions are being made. In 2008, NAESCO' advocacy plan includes the following focus:

  • California: The annual IOU funding level for energy efficiency is about $600 million for the current program cycle ending in 2008. ESCOs have the opportunity to access approximately $750 million in incentives under the standard performance contract, express efficiency and several residential programs. NAESCO served this year and last on the Program Advisory Groups that help the utilities operate their program portfolios. NAESCO worked on the issues of third-party contracts, and co-authored the PAG reports asking the CPUC to improve utility administration of third-party programs. The CPUC has changed the program planning process to longer-term strategic planning, which will require even more of NAESCO's resources in 2008 and beyond to continue to represent industry interests.
  • New York: The current NYSERDA Energy$mart programs invest about $175 million each year for the next five years; NYSERDA and ConEdison are operating a second program that is spending $225 million in the ConEdison service territory; and the New York Power Authority and the Long Island Power Authority operate independent programs that invest an additional $100 million or more each year in energy efficiency. In addition, Governor Spitzer has announced a "15 by 15" initiative that mandates New York utilities to procure 15% of their energy supply from energy efficiency by 2015 We anticipate that New York will have to approximately triple its energy efficiency spending to reach the Governor's goal and the current PSC Staff proposal for "Fast Track" programs increases the spending on the Commercial Industrial Performance Program from about $22 million in 2007 to almost $90 million in 2009.

    NAESCO continues to serve on the SBC Advisory Group that formally evaluates the NYSERDA-administered programs for the NY PUC, as well as on the NYSERDA technical advisory panel monitoring the energy supply situation and producing the state energy plan. NAESCO serves as well on the Collaboratives that approve the new programs in the ConEd service territory and is also participating in the Collaborative effort that is making the Governor's "15 by 15" initiative into workable programs.
  • North Carolina: The North Carolina legislature has enacted a Renewable Energy Portfolio Standard that includes a substantial set aside for energy efficiency. NAESCO was part of a coalition that worked to support that effort and would like to see similar types of EE/RE portfolio standards adopted by other states as well as codified in federal legislation.

    Also in North Carolina, Duke Energy responded to a NCPUC mandate to spend 1% of its retail revenues on energy efficiency by filing a program that it calls Save-a-Watt, which the utility has also filed in South Carolina and Indiana, and plans to file in Kentucky and Ohio. While the program is potentially groundbreaking investing hundreds of millions of dollars in energy efficiency- NAESCO is working with a coalition of North Carolina and national stakeholders to help Duke refine its SAW proposal into a set of programs that we think are sustainable and fair to ratepayers. The work to date has been in North Carolina, and is now expanding into South Carolina and Indiana. NAESCO President Donald Gilligan testified before the SC PUC on the Duke program in early February.
  • Massachusetts: The state legislature, with the support of Governor Patrick is enacting legislation that will significantly change the way that the state's energy efficiency and renewable energy programs are funded and implemented. NAESCO has participated in the Save Energy Coalition, a broad-based group of stakeholders that has helped the Legislature and the Administration refine the pending legislation. NAESCO anticipates being active in 2008 program design efforts that will be required to implement the legislation.

State-Specific Business Issues

NAESCO participates in initiatives designed to address state- specific industry business issues. Typically these involve delays in the implementation of state buildings performance contracting programs and/or program rules hindering project implementation. For example, NAESCO delivered a workshop in Louisiana on M&V in May 2007 to staff from various state agencies, and agreed to support their effort to develop standard protocols in Louisiana. NAESCO has subsequently secured funding from the US DOE to develop in 2008 a model M&V protocol for O&M and capital cost avoidance savings. NAESCO expects to work in several states including Louisiana on this issue, as well as in Tennessee, Ohio, Massachusetts, New Jersey, Georgia, and Illinois in 2008 on other state-specific issues. NAESCO will continue to respond to specific industry issues as they emerge over the course of the year.