Energy Efficiency Resource Standard – Lagging in Texas

The state of Texas is lagging far behind in providing the appropriate incentives for energy efficiency investment. Energy efficiency is the cheapest source of power, costing one-half to one-third less than convention power resources (Figure 1). Further, energy efficiency is a proven, cost effective method to reduce operating costs, create jobs, improve air quality and lower water consumption. Without the appropriate incentives for energy efficiency investment, the cost of doing business will increase significantly as new transmission and distribution infrastructure, as well as generation, will need to be built to supply this inefficient market. CenterPoint’s transmission and distribution charges have doubled between 2003 and 2014 and now make up over 50% of the bill, up from 30% in 2003.

Figure 1 - Energy Efficiency LCOE

Figure 1 – Energy Efficiency LCOE









The current issue for Texas are the significant hurdles that stymie  growth of this low-cost money saving option. One of the most pressing issues is with the energy efficiency resource standard (EERS). The EERS sets the incentive dollars that can be spent by utilities for customers to invest in energy efficiency upgrades. The state of Texas was the first state to pass an EERS. It was passed in 1999 and was seen as a great opportunity for the state to reduce power consumption thereby improving grid stability and reducing costs of doing business in the state. Unfortunately, the state has since lagged behind other states in the EERS and now has the lowest goals in the country (Figure 2).

Figure 2: EERS Saving Goals by State

Figure 2: EERS Saving Goals by State

Without an increase in energy efficiency the state will continue to use a significant amount of its water resources for energy production. Approximately 430 million gallons of water is withdrawn per day to cool Texas power plants[1]. Without this water the power plants would not be able to operate and there would be significant electricity reliability and capacity issues across the state. In 2011, we saw the very close tie between power production and water. During the drought of 2011, many power plants along the Brazos River reduced operations or completely went offline.  A very low cost opportunity to reduce power demand, and subsequently water use, is increasing the energy efficiency of buildings. For example, the residents of the City of Houston consume approximately 24 million megawatt-hour (MWh) per year. It is anticipated that with an energy savings goal of 20% achieved through energy efficiency, the City would realize a 4.8 million MWh reduction in power consumed. The water savings is estimated to be approximately 2 billion gallons[2].
In 2008 a study was released by Itron[3], at the request of the legislature, which looked at the feasibility and potential opportunity for energy efficiency across the state IOUs. The study led to the passage of legislation SB 1125 and the development of PUCT requirements that have resulted in the current state of EERS goals. The study covered energy efficiency feasibility out to 2018. It is now an ideal time to develop a new study to determine opportunities for energy efficiency beyond 2018.

The 2017 Legislative session will be ramping up soon. It is a good time to get in touch with your local representative and ask them about supporting energy efficiency programs for Texas.

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Contact Gavin Dillingham at to learn more.



[1] Stillwell, King et al. 2011)

[2] With less water withdrawal for cooling of the thermoelectric plant, there is less water evaporation.