Industrial Energy EfficiencyA Midwestern Report

Midwestern Governors Association

Industrial Energy Efficiency Work Group

September 1, 2011

Regional Industrial OverviewTotal Use: 6,179.70 Trillion BTU

Regional Industrial Activities

• Key Industries

– Food manufacturing

– Machinery manufacturing

– Transportation equipment manufacturing

– Fabricated metal product manufacturing

– Chemical manufacturing

– Computer and electronic product

manufacturing

Midwestern Governors

after 2010 ElectionsParty Change

No Change

No Election

Jack Dalrymple*

Dennis Daugaard**

Dave Heineman

Sam Brownback

Terry

Branstad

Scott

Walker

Rick

Snyder

John

KasichMitch

Daniels

* ND Lt. Gov assumed

Governor’s office on

12/7

Mark

Dayton

Jay

Nixon

Pat

Quinn

Steve

Beshear

** New Governor, Same

Party

Midwestern State Senates

(Republican)

Ratios are

Majority: Minority

(vacant)

Previous Majority

Changed After

2011 Recall

Election**

Midwestern State Houses

after 2010 Elections

No State

House

Ratios are

Majority:Minority

(:Independent)

Previous Majority

Regional EE Statute OverviewState Rate-Payer Efficiency

Program?

Amount, % of kWh sales

Illinois Yes 0.8%, 2011

Indiana Yes

Iowa Yes 1.5%, year 2008- not required for

all utilities, opt in

Kansas No

Michigan Yes 0.3%, 2009 to 1% by 2012

Minnesota Yes 1.5%, 1% from EE, 2010

Missouri Yes

Nebraska No

North Dakota No

Ohio Yes 0.3%, 2009, 1% 2014

South Dakota No

Wisconsin Yes 0.75%, 2011 to 1.5% in 2014

Industrial Self-Direct/Opt Out

• YES

– Illinois

– Michigan

– Minnesota

– Missouri

– Ohio

– Wisconsin

• NO

– Iowa

– Indiana

• N/A

– Nebraska

– North Dakota

– South Dakota

Regional Industrial Energy

Efficiency Programs

• Characteristics of Utility Funded Rebate

Programs, varied across utilities

– Common Prescriptive Incentives

• Lighting, Refrigeration, HVAC, Variable Speed

Drives, Sensors, and Weatherization among others

– Program Cost Rebates

• Utilities fund 25%-75% of project costs, under a

certain threshold, often $50,000, but can be more

– Energy Audits

• To guide management in adopting EE technology

State by State Breakdown

Industrial, Statute, Self-Direct/Opt

Out, and EE Program Overviews

Illinois Industrial Overview

• Total Industrial Energy

Consumption, 2008

– 1,236.9 trillion BTU

– Ranked 7th

• Top Industries

– Chemical manufacturing,

food manufacturing, and

machinery

manufacturingSource

Illinois Political Climate

• In the November 2010 elections there

were no majority party switches in the

state House, Senate, or Governor

– Also there is the same majority of when the

energy policy was adopted

– Generally positive climate for energy

efficiency. Considering Illinois's high ranking

in industrial energy use there is potential for

continued legislative efforts in industrial EE.

Illinois Statute Overview

• Energy Efficiency Resource Standards– Public Act 96- 0033 (2007), Source

– Electric Sales Reduction- 2.0% reduction of 2008 energy

sales (GWh) by 2015

• Annual percentage escalator (0.2% / 0.4%)

– Electric Peak Demand Reduction- 1.1% reduction of 2008

peak load demand (GW) by 2018

• Annual percentage escalator (0.1%)

– Natural Gas Sales Reduction- 1.5% annual natural gas

savings by 2019, 8.6% cumulative savings by 2020

• Annual percentage escalator

Industrial Self-Direct Language

• Public Act 96- 0033 (2007), Source– (m) Subsections (a) through (k) of this Section do not apply to

customers of a natural gas utility that have … annual usage in

the aggregate of 4 million therms or more within the service

territory of the affected gas utility or with aggregate usage of 8

million therms or more in this State

– Customers described in this subsection … shall apply, on a form

approved on or before October 1, 2009 by the Department, to

the Department to be designated as a self-directing customer

("SDC") or as an exempt customer using natural gas as a

feedstock from which other products are made

Illinois Industrial EE

Program Overview

• State Rebate Program

– DCEO - Large-Customer Energy Analysis

Program (LEAP)

• Works with large energy users

to manage and reduce energy costs

Utility Funded Program Examples

• Ameren Illinois Act on Energy

– Custom, HVAC, and Motor Business

Efficiency Incentives

• ComEd Smart Ideas

– Rebates for many lighting, refrigeration,

HVAC, and VSD efficiency improvements

• IMEA Energy Efficiency Program

– Rebate up to 75% of the project cost for

qualified efficiency projects

Iowa Industrial Overview

• Total Industrial Energy

Consumption, 2008

– 654.1 trillion BTU

– Ranked 13th

• Top Industries

– Food manufacturing,

machinery

manufacturing, and

chemical manufacturing

Source

Iowa Political Climate

• Following the November 2010 elections

the Iowa Governor and House of

Representatives switched majorities, from

Democratic to Republican, State Senate

still has Democrat majority

• Governor Branstad has since opted to

close the Iowa Office of Energy

Independence and transition the work to a

new Economic Development agency

Iowa Statute Overview

• Energy Efficiency Resource Standards

– Utility Opt In, voluntary but binding after set

• Electric: Varies by utility, energy efficiency savings

targets of 1-1.5% annually by 2013

• Natural Gas: Varies by utility, energy efficiency

savings targets of 0.74-1.2% annually by 2013

– Since standards are opt-in, there is no self-

direct language in statute or code

– Iowa Code § 476

– Senate Bill 2386, May 2008

Iowa Industrial EE

Program Overview

• Utility Funded Program Examples

– MidAmerican Energy Advantage Program

• Incentives combined with curtailment

program, paid if industrials reduce

electricity use by 250 kW during peak periods

– Cedar Falls Utilities, Commercial EE Program

• Rebates vary by technology and must meet

specified energy efficiency requirements

– Black Hills Energy Commercial Rebates

• Incentives and audits, but must be

less than 25,000 square foot facility

Michigan Industrial Overview

• Total Industrial Energy

Consumption, 2008

– 756.0 trillion BTU

– Ranked 11th

• Top Industries

– Transportation equipment,

machinery manufacturing,

and fabricated metal

product manufacturing

Source

Michigan Political Climate

• Following the 2010 November elections,

the House and Governor switched

majorities from Democrat to Republican

– Senate maintained a Republican majority

• State Energy Office split into two

departments. The Michigan Energy Office

with a smaller plate of work is under the

Michigan Economic Development

Corporation

Michigan Statute Overview

• Energy Efficiency Resource Standards

– Public Act 295 of 2008, Source

• Electric utilities to achieve 0.3% savings in 2009;

0.5% in 2010; 0.75% in 2011; and 1.0% in 2012

and each year thereafter.

– Percentages are savings relative to the prior year’s total

retail electricity sales

• Natural gas utilities to achieve 0.1% savings in

2009; 0.25% in 2010; 0.5% in 2011; and 0.75% in

2012 and each year thereafter.

– Percentages are of the prior year’s total annual retail

natural gas sales in dekatherms or equivalent MCFs

Industrial Self-Direct Language

• 460.1093: Self-directed energy optimization plan

– An electric customer is not eligible unless it is a

commercial or industrial electric customer and

meets all of the following requirements: • In 2011, 2012, or 2013, the customer or customers must have had

an annual peak demand in the preceding year of at least 1

megawatt at each site or 5 megawatts in the aggregate at all

sites to be covered by the plan

• In 2014 or any year thereafter, the customer or customers must

have had an annual peak demand in the preceding year of at least 1

megawatt in the aggregate at all sites to be covered by the self-

directed plan

Michigan Industrial EE

Program Overview

• Utility Funded EE Programs

– Consumers Energy Commercial EE Program

• Largest program in state, both gas and electric,

payback needs to be within 1-10 years

– Efficiency United and Energy Optimization

• Provide EE services to small utilities, Industrial

custom program additionally

– Energy Smart Rebate Program (21 municipal

utilities participate)

• Prescriptive rebates in general EE technology

Minnesota Industrial Overview

• Total Industrial Energy

Consumption, 2008

– 615.1 trillion BTU

– Ranked 16th

• Top Industries

– Food manufacturing,

computer and electronic product

manufacturing, and petroleum

and coal products manufacturing

Source

Minnesota Political Climate

• After the 2010 November elections

– Both the House and Senate changed

Democratic to Republican majorities

– The Governorship changed from Republican

to Democrat with the election of Mark Dayton

• Government shutdown recently ended,

due to prolonged budget impasse

– Energy efficiency retrofits new priority

Minnesota Statute Overview

• Energy Efficiency Resource Standards

– Next Generation Energy Act, Minnesota

Statutes 2008 § 216B.241

– Electric: 1.5% annual savings in retail sales

beginning in 2010

– Natural Gas: 0.75% annual savings in retail

sales from 2010-2012; 1.5% annual savings

in 2013

Industrial Self-Direct Language

• Less structured self-direct program

– 216B.241 Energy Conservation Improvement

– The owner of a large electric customer

facility may petition the commissioner to

exempt both electric and gas utilities serving

the large energy customer facility from the

investment and expenditure requirements with

respect to retail revenues attributable to the

facility.

Definition for Exemption

• H.F. No. 1189, Amended 216B.2401

– "Large energy customer " means a customer

facility or facilities that impose a peak

electrical demand on an electric utility's

system of not less than 10,000 kilowatts

– Or a customer with a facility or facilities that

consume a peak gas demand on a gas utility's

system of not less than 500,000 dekatherms

annual consumption.

Minnesota Industrial EE

Program Overview

• Utility Funded Industrial Program Examples

– Otter Tail C&I EE Rebate Programs

• Installation of high-efficiency equipment upgrades

– Xcel Energy Business EE Rebate Programs

• Prescriptive Incentives, curtailment

options, custom designs

– MMPA – C&I Energy Efficiency Program

• 8 communities participate, typical prescriptive

rebates for energy efficiency technology

– Many other municipal programs

North Dakota Industrial Overview

• Total Industrial Energy

Consumption, 2008

– 213.7 trillion BTU

– Ranked 37th

• Top Industries

– Machinery manufacturing,

food manufacturing, and

computer and electronic

product manufacturingSource

North Dakota Political Climate

• There are no party majority changes after

the November 2010 elections, they are

Republican

– Governor Dalrymple is planning to open an

Office of Energy under North Dakota

Department of Commerce

– PU-06-290, PU-07-641 – In 2007 the

Commission investigated, but did not adopt,

certain energy efficiency and other electric

utility standards

North Dakota Statute Overview

• There currently are no Energy Efficiency

Resource Standards in the State, for either

electricity or gas, or other energy policy

• Due to North Dakota’s low price of

electricity, energy efficiency is a hard sell

– As prices increase, energy efficiency “will

become common sense”; according to Duane

Hafner of the Nodak Electric Cooperative.

“Can’t support mandates at this time”

North Dakota Industrial EE

Program Overview

• Utility Funded Industrial EE Programs

– North Dakota Utility Rebate Program

• Funded by ARRA, highly successful, for

co-op members, rebates and audits

– Xcel Energy - Commercial EE Rebate Program

• Saver's Switch program gives business

owners a bill credit during the summer months in

exchange for agreeing to have their air conditioning

systems cycled during peak energy demand periods.

Ohio Industrial Overview

• Total Industrial Energy

Consumption, 2008

– 1,341.0 trillion BTU

– Ranked 4th

• Top Industries

– Transportation equipment,

fabricated metal product

manufacturing, and

chemical manufacturing

Source

Ohio Political Climate

• After the 2010 November elections, the

Governor and House switched parties

from Democrat to Republican

– Senate remained Republican

• State Energy Office remains under Ohio

Department of Development

• New Chair of PUCO is focused on

Economic Development and has been

quoted as his role is the Chief ED Officer

Ohio Statute Overview

• Energy Efficiency Resource Standards

• 22% by 2025 (0.3% annual savings in

2009, ramping up to 1% in 2014 and 2% in

2019)- no Natural Gas EERS

– Senate Bill 221, signed into law May 1, 2008,

included both an Energy Efficiency Portfolio

Standard (EEPS), and Alternative Energy

Portfolio Standard (RPS), among other

provisions. Also see Ohio Code 4928.66

Industrial Self-Direct Language

• Senate Bill 221

• Any mechanism designed to recover the

cost of energy efficiency and peak

demand reduction programs … may

exempt mercantile customers that

commit their demand-response or other

customer-sited capabilities

Definition for Exemption

• "Mercantile customer"

– commercial or industrial customer if the

electricity consumed is for nonresidential use

and the customer consumes more than

seven hundred thousand kilowatt hours

per year or is part of a national account

involving multiple facilities in one or more

states.

• Source

Ohio Industrial EE

Program Overview

• Utility Funded Industrial EE Programs

– Duke Energy Industrial EE Program

• Wide range of equipment rebates,

also 50% cost recovery on projects

– AEP Ohio Multiple Industrial EE Programs

• Many options, custom projects,

self-direct, audits and prescriptive rebates

– Dayton Power and Light Business EE Program

• Prescriptive rebates, along with custom projects

South Dakota Industrial Overview

• Total Industrial Energy

Consumption, 2008

– 129.9 trillion BTU

– Ranked 44th

• Top Industries

– Food, machinery,

and computer and

electronic product

manufacturingSource

South Dakota Political Climate

• There are no party majority changes after

the November 2010 elections

• Republicans hold majority in the House,

Senate, and Governorship

South Dakota Statute Review

• Energy Efficiency Resource Standards

– There is currently no EERS in place

• Energy Efficiency as a Resource

– There is currently no policy in place that

treats energy efficiency as a resource

South Dakota Industrial EE

Program Overview

• Utility Funded Industrial EE Programs

– Otter Tail Commercial EE Rebate Program

• Rebates are available for geothermal as

well as other more common technology

upgrades

– Black Hills Power - Commercial Energy

Efficiency Programs

• 15 year program, great results, rebates, technical

assistance, retrofits and audits

Wisconsin Industrial Overview

• Total Industrial Energy

Consumption, 2008

– 619.0 trillion BTU

– Ranked 15th

• Top Industries

– Food manufacturing,

transportation equipment

manufacturing, and

machinery manufacturingSource

Wisconsin Political Climate

• After the 2010 November elections there

were party switches in the Senate, House

and Governorship from Democrat to

Republican majorities

• Recall elections decreased Republican

majority to 17-16 from 19-14, but

Republicans still control Senate

• Due to budget impasse, Focus on

Energy’s 2012 Budget cut $20 million

Wisconsin Statute Overview

• Electricity and natural gas savings goals

– Utilities to spend 1.2% of revenues

• Focus on Energy

– Achieved .7% Electric savings in 2009

– Achieved .4% Natural Gas savings in 2009

Industrial Self-Direct Language

• 2005 Wisconsin Act 141

• Large energy customer may administer

and fund its own energy efficiency

programs if the customer satisfies the

definition of a large energy customer for

any month in the 12 months preceding the

date of the customer’s request for

approval

Definition for Exemption

• 2005 Wisconsin Act 141

– Customer of an energy utility that has an

energy demand of at least 1,000 kilowatts

of electricity per month or of at least 10,000

decatherms of natural gas per month and

that, in a month, is billed at least $60,000 for

electric service, natural gas service, or both,

for all of the facilities of the customer within

the energy utility’s service territory

Wisconsin Industrial EE

Program Overview

• State Funded Programs

– Focus on Energy - Commercial/Industrial

Efficiency in Existing Buildings

• Prescriptive incentives for variety of technologies,

$250,000 per project and $500,000 for all FOE

programs per customer per year

– Focus on Energy - Commercial/Industrial

Efficiency in New Construction

• Coordinate throughout the design process, Review

plans to identify energy-saving opportunities,

Analyze energy savings

Contact

Stacey Paradis

Deputy Director

312-784-7267

sparadis@mwalliance.org

Brian Olsen

Director of Industrial Initiatives

bolsen@mwalliance.org