Energy efficiency and demand management are viable tools for meeting federal and state environmental, sustainability, and consumer energy reduction goals. Many utilities are committed to actively pursuing energy efficiency and demand management across their service territories. They are aggressively pursuing opportunities to increase the energy efficiency in their own operations, as well as partnering with customers to achieve higher levels of efficiency in their homes and businesses.
Deployment of advanced smart grid technologies will further improve the efficiency of the grid. Additionally, these products and programs can help customers reduce their energy usage and manage time-of-use.
With increasing efficiency standards, such as the implementation of more efficient lighting standards, we are concerned that energy efficiency mandates will become more difficult and costly to achieve in the future. Legislators in some of our states are rethinking energy efficiency requirements due to these cost and achievability concerns as well. Our concern is that financial penalties could be imposed if we do not achieve escalating benchmark requirements, even if a good-faith effort is made.
Further, certain mandated requirements may be virtually unachievable from an economic perspective. In other words, the cost to attain participation rates necessary to achieve the targets could be much higher than the overall benefits associated with the corresponding impacts. In such instances, AEP would be opposed to implementing energy efficiency and demand response portfolios that are not considered cost-effective, and we believe it would be unfair to penalize us for not being able to reach these unachievable energy efficiency targets.
AEP is proud of the energy efficiency gains we’ve been able to accomplish with our customers across our service territory over the last several years. We have always encouraged our customers to use energy wisely and efficiently. Today, we see achievable levels of energy efficiency and demand response as important resources that are incorporated into our integrated resource planning process.
Energy efficiency and demand reduction programs have received regulatory support in most of the states we serve, and appropriate cost recovery will be essential for us to continue with these consumer offerings. Appropriate recovery of program costs and net lost revenues, as well as an opportunity to earn a reasonable return, ensures that energy efficiency programs are considered financially comparable with supply-side investments, such as power plants.
AEP believes that the cost-effectiveness of energy efficiency and demand management activities is crucial to their ultimate long-term success.
AEP 2013 System Energy Efficiency Results*
||Total Spend ($M)
* Results represent programs/projects implemented in 2013 only. Preliminary results subject to appropriate third-party Evaluation, Measurement and Verification (EM&V), as appropriate.
Energy efficiency at AEP
Starting in 2008, AEP ramped up efforts to reduce peak demand by 1,000 megawatts (MW) and energy consumption by 2,250,000 megawatt-hours (MWh) system-wide by the end of 2012 through the introduction of additional energy efficiency and demand response programs. Since that time, AEP’s operating companies have implemented more than 100 energy efficiency and demand response programs across our service territory.
From 2008 through 2013, these programs reduced energy consumption by more than 4 million (MWhs) and peak demand by more than 1,200 (MWs). To achieve these levels, our companies invested approximately $540 million during that period. These results are preliminary and subject to independent third-party evaluation and verification of savings, as required.
In addition, for the 2013/2014 PJM delivery year, AEP has approximately 600 MW of demand response capability in the PJM Interconnection.