Energy Efficiency Takes Center Stage in Texas

For decades, it’s been well-known in the country and western (C&W) music industry that "if you’re gonna play in Texas, you gotta have a fiddle in the band." The guitars, drums, harmonicas, and piano — they’re all expected on stage. But as the legendary C&W group Alabama recognized, a fiddle is a must when performing in Texas.

The Texas energy industry also has an imperative — and that’s energy efficiency, which has been strumming progressive practices in the Lone Star state in recent years.

Our Association of Electric Companies of Texas (AECT) has been supportive of energy efficiency over the years, with one special caveat: There is no "silver bullet" for dealing with solutions to the state’s growing electricity demand issues. Energy efficiency, renewables, and traditional generation coupled with new technologies are all necessary in the near- and long-term future.

Efficiency, Meet Demand

The state’s population is projected to leap from 25.1 million in 2010 to 30 million by 2020 and to 43.6 million by 2040. The Electric Reliability Council of Texas (ERCOT) is the grid operator for 85% of the statewide load. It expects electricity demand inside ERCOT to climb from nearly 65,000 MW in 2008 to approximately 90,000 MW in 2025 — a 28% increase. Again, all energy-saving strategies available will be needed to meet this increased demand.

Energy efficiency programs in Texas have grown over the past decade. The Texas Electric Choice Act passed in 1999 created an energy efficiency program that has proven to be highly successful. The act required each electric utility to provide energy efficiency programs and incentives. Multiple low-income energy efficiency programs were made available, both through individual companies and federal programs.

The statewide benefits of energy efficiency have been validated in numerous ways. In Texas, energy savings from standard-offer programs and market transformation programs resulted in a reduction equivalent to 650,094 pounds of nitrogen oxide emissions per year.

In 2007 (the most recent year for which data are available), utilities in Texas exceeded their statewide legislative energy efficiency goals for the fifth straight year. Utilities achieved 167 MW of peak demand reduction in 2007, which was 23% above their 136 MW goal.

New energy efficiency legislation passed in 2007 resulted in several programs to help reduce electricity consumption in Texas. The legislation raised the energy efficiency goal for electric utilities from 10% of annual demand growth to 15% in 2008 and 20% this year. The legislation also called for the Public Utility Commission (PUC) of Texas to study the possibility of moving those goals to 30% and eventually 50% of load.

That legislation included provisions, among others, aimed at reducing energy consumption by schools and government buildings. It established more energy efficient building standards for low-income housing. It also created an annual sales tax holiday during Memorial Day weekend for energy efficient products that bear the federal Energy Star label.

Rising Star: Advanced Metering

Other exciting efforts to improve energy efficiency are advancing in Texas — notably, advanced metering and a PUC study completed in December 2008 that will guide the current 2009 Texas Legislature regarding what energy efficiency goals are achievable in the long term.

The 2007 legislation included provisions allowing utilities to deploy advanced meters more quickly. That legislation recognized the positive impact that these meters could have by reducing customer consumption and bills, facilitating additional retail electric provider offerings, reducing transmission and distribution utilities’ costs, and enhancing reliability. Advanced metering systems will open up a world of information to customers and will enable them to have access to features such as energy usage analyses, new innovative rate plans (such as those based on time-of-day usage), load control services, and services not even envisioned today.

The PUC has moved aggressively to accommodate the advanced meter objectives. It recently approved advanced metering deployment plans for the customers of two utility companies: CenterPoint Energy and Oncor Electric Delivery. CenterPoint will deploy an advanced metering system across its service territory over the next five years, beginning this spring. Over time, everyone in Oncor’s service area will receive an advanced meter with access to a Web portal that will track energy consumption in 15-minute intervals. AEP Texas Central and AEP Texas North are expected to file advanced metering plans soon.

As stated earlier, AECT members support energy efficiency. An issue we will continue to monitor, and a term we will insist upon, is compensation for the outlays our member companies make in order to meet the energy efficiency goals through available programs.

But all in all, we recognize that energy efficiency — much like the fiddle — has become a key player in Texas, and our association definitely wants a part on the stage.

— John W. Fainter, Jr., is CEO and president of the 15-member Association of Electric Companies of Texas (www.aect.net), which is a trade organization of investor-owned electric companies. Organized in 1978, the AECT provides a forum for member company representatives to exchange information about public policy and to communicate with government officials and the public.