The Waxman-Markey discussion draft entitled, “The American Clean Energy and Security Act of 2009”, places energy efficiency as title two, second to clean energy. Within this section is the promotion of energy efficiency in buildings, manufactured homes, appliances, transportation and utilities. Specifically with respect to utilities, the draft creates a new energy efficiency resource standard designed to solicit the participation of electricity and natural gas distribution companies in enhancing our nation’s energy efficiency.

What is being proposed by the Waxman-Markey draft is a demonstration on behalf of each distribution company that its customers have achieved a required level of cumulative electricity or natural gas savings, based on relative business-as-usual projections. As indicated in the discussion draft summary, the efficiency standard starts with a 1% electricity savings and 0.75% natural gas savings in 2012 and gradually increases to a 15% cumulative electricity savings and a 10% cumulative natural gas savings by 2020.

NRDC’s experience has confirmed repeatedly that utilities are vital partners in energy efficiency efforts.  Yet the regulatory status quo has traditionally unintentionally undercut utility engagement, by penalizing their shareholders for any reductions in customers’ natural gas or electricity use, regardless of the cost-effectiveness of any contributing energy-efficiency measures.  A grave, if unintended, pathology of current ratemaking practice is the linkage of utilities’ financial health to retail gas or electricity use.  Increased retail sales produce higher fixed cost recovery and profits, and reduced sales have the opposite effect.  This has created a direct financial disincentive for utilities to support energy efficiency and clean distributed generation.  This has perpetuated a direct financial disincentive for utilities to support energy efficiency and clean distributed generation. This bill begins to address these issues by establishing a new energy efficiency resource standard (EERS). Examples of state level EERS-like laws are currently in operation in California, Connecticut, Texas, Vermont, to name a few; confirming that this effort presents an incredible opportunity to cost-effectively capture energy savings.

This 648 document is designed to address both energy and climate change in one piece of legislation and according to Chairman Waxman, “will create millions of clean energy jobs, put America on the path to energy independence, and cut global warming pollution.” With the loss of an additional 663,000 jobs in March of this year alone, the promise of this bill with respect to aiding our economic and employment woes with the creation of green jobs is essential. 

While this legislation does not directly address some of the mechanics of addressing climate change, specifically how emissions allowances will be distributed this effort is nevertheless exciting and begins to shape a dialogue with specific targets to address many of our nation’s energy concerns.  Energy efficiency has finally taken center stage as a part of the solution with bipartisan support, moving from “low-hanging fruit” to title II.

The Energy and Commerce Committee will complete consideration of the legislation by Memorial Day. The preliminary schedule follows:

• Week of April 20: Energy and Environment Subcommittee Hearings
• Week of April 27: Energy and Environment Subcommittee Markup Period Begins
• Week of May 11: Full Energy and Commerce Committee Markup Period Begins