Accounting for Big Energy Efficiency in RTO Plans and Forecasts: Keeping the Lights on While Avoiding Major Supply Investments

States in several regions are investing in “Big EE”defined as energy efficiency
programs with annual energy savings of around 2% or more of retail salesto meet significant
portions of customer energy needs. Energy efficiency is the largest future energy resource in
several states, and its share of the total resource mix is growing quickly. Regional Transmission Organizations (RTOs) in these regions are examining their planning practices to consider and account for the impacts of Big EE, now that energy efficiency is no longer background noise in their forecasts. It is crucial to neither under-count nor over-count the impacts of Big EE: on the one hand, under-counting will lead to billions of dollars of unneeded supply and transmission investments, thereby eliminating a portion of the economic value of the EE programs; on the other hand, over-counting the impacts will result in reductions in system reliability. Since the stakes are high, several RTOs are paying closer attention, although questions remain about the accuracy and effectiveness of the revised RTO planning methods. In this paper we review the changing planning and forecasting practices of RTOs in two regions that have substantial EE programs by analyzing how RTOs: (1) treat EE in their forecasts, (2) forecast EE impacts in future years beyond the time period covered by available EE plans, (3) distinguish energy vs. peak demand impacts, and (4) address the performance uncertainties and risks of future EE, including any discounting practices. We conclude with a summary of best practices to date among RTOs. 

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