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New Incentives for Texas Energy Efficiency

July 5, 2011

Texas electric utility companies are required to undertake energy savings incentive programs which shall be coursed through Retail Electric Providers (REP) or through Energy Efficiency Service Providers (EESP). Such energy efficiency programs are geared towards reducing peak demand in the State as well as considerably reduce energy consumption and the corresponding costs. Each Texas utility company has energy efficiency goals and they can attain or achieve these goals by providing and administering energy efficiency projects through Standard Offer Programs (SOP) or Targeted Market Transformation Program (MTP). All these energy efficiency programs are made available to the Texas consumer, who has the power to choose their energy efficiency options and alternatives. Legislation The requirement for administering energy efficiency programs by Texas electric and utility companies were established back in 1999 with the passing of Senate Bill 7 by the Texas Legislature. This legislation mandated that Investor Owned Utilities or IOUs should have at least 10% of their annual power demand coming from energy efficiency programs. In 2007, these energy efficiency goals were amended and increased to 20% of IOU’s annual demand growth with the passing of House Bill 3693. Then in 2010, the Public Utility Commission of Texas (PUCT) established new procedures for meeting these energy efficiency mandates. They did this by modifying Substantive Rule §25.181 which placed energy efficiency goals at varying levels per year: 20% by 2011; 25% by 2012 and 30% by 2013. Then in current 82nd Legislature, energy efficiency goals for the state were once again modified with the passing of Senate Bill 1125. The new mandate specified that by 2013, IOUs should have at least 30% of its annual energy demand growth coming from energy efficiency programs. The goal metric was also changed, switching from a goal based on the percentage of load growth and to a percentage of peak demand. Energy Efficiency Incentive Programs in Texas Texas electricity companies and other large investor owned electric utilities have initiated energy efficiency incentive programs for them to meet the mandated legislation. Many of these initiatives include the SOPs or the Standard Offer Programs which are provided to retail electric service companies and other energy efficiency service companies. Many involved offsetting a portion of the upfront cost for energy efficiency initiatives. Aside from the SOPs, Texas electric utility companies also have market transformation programs, part of which involved the training and education of building owners, managers and HVAC installers on energy efficiency best practices. This also takes into consideration the sale of equipment with higher energy efficiency, which will also receive rebates or tax exemptions such as the installation of renewable energy equipment such as solar panels or wind energy turbines. Other financial incentives are also available to commercial and residential consumers which include: Corporate Deductions; Green Building Incentives; Industry Recruitment and Support; Local Grant Program; Local Loan Program; Local Rebate Program; Performance-Based Incentive; Property Tax Incentive; Sales Tax Incentives; State Grant Programs; State Loan Programs such as the LoanSTAR Revolving Loan Program; Utility Grant Programs; Utility Loan Programs and Utility Rebate Programs.

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