MPSC reports increased savings, now totaling $4.2B, for utility energy waste reduction programs

Contact: Judy Palnau, 517-284-8300
Agency: Michigan Public Service Commission

October 1, 2015 - Michigan energy customers in 2014 continued to reap benefits from the state’s energy optimization (EO) programs designed to help them slash bills, the Michigan Public Service Commission (MPSC) said in a report issued yesterday. The programs have saved customers money every year since they got their start in 2009. Overall program expenditures of $1.1 billion from 2010 to 2014 are estimated to achieve lifetime savings to all customers of $4.2 billion.

The MPSC’s report on state’s energy optimization programs and the cost effectiveness of Public Act 295 of 2008 (PA 295) shows that overall, 2014 EO program savings achieved for electric utilities were 141 percent of the target, and the 2014 EO program savings achieved for natural gas utilities were 130 percent of the target.  Targets were established in Public Act 295 of 2008.

"The cheapest energy is the energy never used, and this has proven to be the case again with Michigan's energy optimization programs in 2014," said MPSC Chairman John D. Quackenbush. "Because they focus on reducing energy waste, energy efficiency programs benefit all utility customers. For every dollar spent on these programs in 2014, customers can expect to realize $4.38 in savings - more than any year since 2010. Customers who take advantage of energy efficiency programs personally benefit even more."

For measures installed in program year 2014, electric savings total over 1.4 million megawatt-hours, and natural gas savings total over 4.8 million Mcf.

In 2014, aggregate EO program expenditures of $257 million by all natural gas and electric utilities in the state are estimated to result in lifecycle savings to customers of $1.12 billion.

This year's report also includes an assessment of the cost effectiveness of the state’s renewable energy and energy optimization programs. EO programs are evaluated using the Utility System Resource Cost Test (USRCT), as required by PA 295. A score of 1.0 or higher indicates that a program is cost effective. The combined USRCT for all EO programs in Michigan is 4.4, indicating that the programs in place are providing cost-effective energy savings for Michigan customers.

The report notes that the downward pricing trend for renewable energy resources and continued low cost of energy optimization has resulted in a combined weighted cost of $37 per megawatt-hour, which is less than any new generation, including new natural gas combined cycle plants, when compared to the Energy Information Administration levelized plant costs for 2014. Renewable energy and energy optimization continue to be cost-effective resources in the state of Michigan.

Public Act 295 of 2008 requires all electric and natural gas utilities in Michigan to establish energy optimization programs designed to save utility customers money by reducing the future costs of providing electricity and natural gas to customers. In particular, programs are designed to delay the need for construction of new electric generating facilities, thereby protecting consumers from incurring the costs of such construction.

More information on Michigan’s energy optimization programs is available on the MPSC’s energy efficiency website.

For more information about the MPSC, please visit www.michigan.gov/mpsc.

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