Dive Brief:

• Massachusetts, California and Vermont retained the first, second and third highest rankings, respectively, in the American Council for an Energy-Efficient Economy’s ninth annual energy efficiency scorecard ranking, released last week.
• Among the states showing the most improvement were Maryland, which gained five points for a total score of 35 out of 50 points; Illinois, which gained four points, and the District of Columbia, which gained 3.5 points. Texas and the District of Columbia had the biggest gains in rank, rising eight places and seven places, respectively.
• The states with the most noticeable drops in energy efficiency scores from last year’s rankings were New Mexico, which lost four points and dropped to a total score of 13; Wisconsin, which lost 3.5 points, and Louisiana and Nevada, which each lost three points.

Dive Insight:

The American Council for an Energy-Efficient Economy released its ninth annual scorecard on energy efficiency last week, showing aggregate nationwide gains in energy savings of 25.7 million MWh, a 5.8% increase over last year.

While the boost in conservation was welcomed by environmentalists and consumer advocates, increases in energy efficiency have dampened sales at many electric utilities.

The trend continues to gain traction, however, as more states adopt energy efficiency policies and targets and utility spending on energy efficiency increases.

In its 2015 report, the ACEEE estimated that utility spending for electric efficiency programs in 2014 totaled $5.9 billion. Adding in natural gas programs of $1.4 billion, total utility spending on energy efficiency reached $7.3 billion in 2014.

The ACEEE estimates that utility spending on electric and natural gas energy efficiency programs will reach $15.6 billion by 2025.

Energy efficiency programs and spending is also likely to increase as states draft plans to comply with the Environmental Protection Agency’s recently finalized Clean Power Plan, which for the first time places limits power plant greenhouse gas emissions.

Energy efficiency measures were identified as one of four key “building blocks” by which the EPA set state emission standards in its first draft of the regulatory package. The agency eliminated the efficiency block in its final version, but encouraged states to use energy conservation measures to meet their greenhouse gas goals, saying they will be “a significant component” of state compliance plans. The EPA estimates that the use of demand-side energy efficiency in complying with the CPP will spur a 7% reduction in electricity demand by 2030.

Some states, nonetheless, are falling behind in energy efficiency programs. According to the ACEEE, 16 states fell in the rankings. The organization noted that some states, such as New Mexico, Louisiana and Wisconsin rely on outdated versions of building energy codes. Additionally, many of the states that fell in the rankings have opt-out provisions in their energy efficiency programs.

Some states that fell in the rankings also do not have policies that encourage utilities to take advantage of energy efficiency as a resource, for instance, with provisions for decoupling of revenues from sales.

The ACEEE expects to see improvement on that front over the next several years in states such as New Mexico and Louisiana that are exploring policies to promote energy efficiency.

In it rankings, the ACEEE assigns point scores to each state’s policy and programs for energy efficiency in six categories: utility and public programs, transportation, building energy codes, combined heat and power, state government initiatives, and appliance efficiency standards.