Utilities expect fewer savings during COVID-19 but have the same goals

By Gabe Cuadra
June 2, 2020

Utilities expect fewer savings during COVID-19 but have the same goals

Utility demand-side management (DSM) executives predict they’ll have less savings from their energy-efficiency programs in 2020 due to COVID-19. However, most utility savings goals haven’t changed. And it’s unclear how many will.

Why energy-efficiency goals matter and who sets them

Many states set energy-efficiency goals for their investor-owned utilities. By achieving these savings goals, utilities can avoid building new power plants, delay upgrading infrastructure, and reduce emissions. This ultimately saves customers money.

In some states, investor-owned utilities earn incentives if they meet their goals or face penalties if they don’t. State legislation or state regulatory bodies set these goals. Municipal utilities and cooperatives generally aren’t subject to state goals but may set their own targets.

During two virtual sessions of the E Source DSM Executive Council, we surveyed executives about COVID-19’s impacts on savings (figure 1). The majority of attendees said they expect their savings to decrease by at least 11% and many expect savings to decrease by more than 20%.

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Figure 1: How utilities expect COVID-19 to impact their savings

Results from a poll at the virtual DSM Executive Council show that utility executives are expecting COVID-19 to significantly reduce their 2020 savings achievements. Most attendees expect a reduction of at least 11%.
This chart shows how demand-side management executives answered the question, 'To what extent do you expect COVID-19 will impact your savings forecast?' There are survey results from two dates: April 29, 2020 and May 19, 2020. On April 29, 2020, there were 31 utility respondents. Thirteen percent of them said they expected less than a 10% savings reduction, 45% said they expected savings reductions between 11% and 20%, 32% said they expected savings reductions of more than 20%, and 10% said they didn't know. On May 19, 2020, there were 26 utility respondents. None of them said they expected less than a 10% savings reduction, 69% said they expected savings reductions between 11% and 20%, 23% said they expected savings reductions of more than 20%, and 8% said they didn't know. This data is from the Spring 2020 DSM Executive Council.

When we asked about their saving goals, however, a majority of attendees expected them to stay the same (figure 2).

Figure 2: How energy-saving targets are changing due to COVID-19

Most regulators haven’t changed the savings goals for utilities due to COVID-19.
This graph shows how demand-side management (DSM) executives answered the question, 'Which phrase best describes your energy-savings targets?' There are survey results from two dates: April 29, 2020 and May 19, 2020. On April 29, 2020, there were 33 utility respondents. None of those utilities said the savings targets were being reduced, 58% said the targets were staying the same, none said the targets were being increased, and 42% said they didn't know. On May 19, 2020, there were 27 utility respondents. Eleven percent of those utilities said the savings targets were being reduced, 78% said the targets were staying the same, none said the targets were being increased, and 11% said they didn't know. This data is from the Spring 2020 DSM Executive Council.

Some utilities are facing budget uncertainty as well. Organizations in Missouri, New York, Ohio, and Pennsylvania have requested that utility commissions redirect energy-efficiency funds or remove public-benefit charges from bills. We’re unaware of any commissions that have done this. Without energy-efficiency funds or public-benefit charges, it would be even harder for efficiency groups to reach their goals.

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