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Sam Randazzo
Senator Seitz
"Pine, Ty"; "Denny Larr"; "Mike Brello"; "Keaton, John A"; "steve.lake@dplinc.com"; "cdwright@aep.com"; Scott
Elisar; Kevin Murray; "jmcgough@mcgough-inc.com"
RE: Significant Energy Efficiency Savings Available to Ohioans for Years to Come
Wednesday, August 26, 2015 6:47:52 PM
High

Executive Summary of Response to Request
Garbage!
More Detailed Discussion
 
Page 1:
“Energy efficiency potential studies estimate the amount of energy that could be
saved by implementing improved technologies and behavioral changes over a
certain time period.” ACEEE discusses this area further beginning at page 10.
The rest of the story: At the urging of the mandate supporters and over our
objections, the PUCO refused to count “behavioral changes” – the lowest cost means
of achieving compliance. I will now move to the more significant defects in ACEEE’s
latest contribution to the garbage pile.
As ACEEE acknowledges, there are at least three different ways to measure
“potential”. See page 2. Something can have potential from a technical perspective
even if it is not achievable. See footnote 6: “The achievable potential portion often
incorporates multiple scenarios, for example by varying the level of financial
incentives to participants.” Essentially, ACEEE is saying that stuff is achievable in
greater amounts as a function of increasing the subsidy paid to participants (and
increasing the cost to nonparticipants).
ACEEE has not developed its own estimate of “potential”.
Instead, it has hijacked stuff developed by investor owned utilities in response to
whatever the PUCO may have said and then made observations about why these
utility estimates of potential energy efficiency may underestimate potential energy
efficiency.
ACEEE (on page 2 ) states that the stuff it hijacked did not transparently identify key
assumptions (meaning we don’t have any clue if the stuff ACEEE hijacked provides a
proper foundation for ACEEE’s rather narrow effort to identify POTENTIAL reasons
why the utility estimates of POTENTIAL are POTENTIALLY understated).
On page 3, ACEEE shows a chart that it says summarizes the non-transparent utility
estimates of the technical, economic and achievable energy efficiency potential
(ACEEE defines “achievable as “[e]nergy savings that are determined to be
realistically achievable because the measures are technically feasible, cost effective,

 and likely to be adopted by customers under existing market conditions and given
different levels of incentive payments.” – see page 2).
There is nothing is this report about the potential for satisfying the peak demand
reduction mandate or satisfying the renewable mandate.
As discussed below, ACEEE actually identifies avoidance of the burden of the
renewable mandate as a benefit of the energy efficiency mandate. (#circularreasoning) In other words, ACEEE is effectively saying that it would be costbeneficial to eliminate the renewable mandate because the elimination of the
renewable mandate would increase the amount of compliance that needs to be
achieved to satisfy the energy efficiency mandate.
Anyway, look at the chart on page 3 and the “achievable” columns (high case and
base case) and you will see utility estimates showing that the 2026 cumulative
compliance requirement for the energy efficiency mandate is not achievable in any
case.
The results for AEP which might initially look like they can hit the compliance
requirement involve a period that runs through 2034 (a twenty year time period)
rather than running through 2026 (FE), 2022 (DP&L) or 2034 (Duke).
According to ACEEE and with regard to AEP’s estimate (page 3 again): “The
achievable potential assessment—examining, as explained above, the cost-effective
savings that are realistically available—identified savings potential of 24% by 2034
with incentives at 50% of incremental measure costs (the base case) and
savings potential of 37% by 2034 with incentives at 75% of incremental
measure costs (the high case). In other words, as the bribe increases, you get
more of what you aggressively subsidize from the people who are paid the bride at
the expense of the people who fund the bribe payments.
ACEEE characterizes the AEP estimates further (also on page 3):
“In its study, AEP Ohio states that the base-case market potential savings would be
sufficient to cost effectively meet the SB 221 requirements through 2019. The highcase achievable potential would cost effectively meet the full SB 221 requirements
through 2025 of 22.2% cumulative savings.”
In other words, if you provide incentives equal to 50% of incremental measure
(program) costs, AEP’s estimate said you might cost effectively be able to reach the
compliance level specified for 2019 and then you are done. In other words, and
according to ACEEE, AEP’s estimates indicate that if you provide incentives equal to
75% of incremental measure (program) costs, you might be able to achieve the
compliance level specified for 2025.
With regard to the Duke estimates, ACEEE states (page 4): “The study finds that a
five-year DSM action plan can be developed that cost effectively meets and exceeds
the SB 221 targets through 2017. The study did not examine achievable potential

 over a longer time period. Study authors stated that their assessment of economic
potential was short of the SB 221 targets for 2025.”
With regard to the DP&L estimates, ACEEE states (page 4): “DP&L finds that its
medium achievable scenario would continue to meet the SB 221 targets through
2018. Beyond 2018, however, the study’s identified achievable savings would not be
sufficient to meet longer-term targets”.
With regard to FE’s estimates, ACEEE states (page 5): “The achievable potential
assessment for its high-case [bigger incentives] assumptions in 2026 finds
cumulative electricity savings of 16.8% for Ohio Edison, 13.1% for Toledo Edison,
and 16.3% for Cleveland Electric Illuminating. For the base case, the range of
average annual savings over the study period is 0.7–0.9%, or an average of 0.8%
across the three service areas.”
After acknowledging (eventually) that the utility estimates indicate that the mandated
cumulative level of compliance is not “achievable”, it then spends the balance of the
“report” (starting at page 5) speculating about things that might cause the utility
estimates to understate what might be achievable.
In the list of things that ACEEE offers (page 7) as to why the utility estimates may
understate what is potentially achievable, you will see that ACEEE includes what we
have come to call “wholesale price suppression” (“DRIPE” according to ACEEE)
which offers no benefit to Ohio customers (bills have gone up) and, if it exists, flows
to customers in the entire PJM region, 80% of which are not located in Ohio. All of
this price suppression mumbo jumbo was previously explained by Dr. Lesser as
being bogus.
And, are you sitting down? I ask because ACEEE’s list (page 7) indicates that the
“avoided cost of renewable portfolio standards” should be counted as a benefit for
purposes of evaluating what is cost effective from an energy efficiency mandate
perspective. You can’t make this stuff up!
On page 8, ACEEE favorable quotes from Duke’s estimates and indicates that
potential may be understated because both electric and gas savings are not
counted. Well, here again, the PUCO refused to count non-electric energy efficiency
gains and we also ran into some resistance (related) from the executive branch
during the SB 58/SB 310 discussions (as you may recall).
If “all means all”, yes you may be able to cost effectively obtain a larger level of
compliance but the mandate supporters (including ACEEE) worked to make sure that
“all means some”.
In summary, garbage.
The foregoing message may be protected by the attorney client privilege. If you believe that it has been
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Sam Randazzo

McNees Wallace & Nurick LLC
(founded 1935)

21 E. State Street, 17th Floor, Columbus, Ohio 43215
(614) 719-2840 (office), (614) 469-4653 (fax) (614) 395-4268 (cell) sam@mwncmh.com (e-mail)
 
From: Senator Seitz [mailto:Seitz@ohiosenate.gov]
Sent: Wednesday, August 26, 2015 3:42 PM
To: Sam Randazzo; 'Pine, Ty'; 'Denny Larr'; 'Mike Brello'; 'Keaton, John A'; steve.lake@dplinc.com;
cdwright@aep.com
Subject: FW: Significant Energy Efficiency Savings Available to Ohioans for Years to Come

 
And you say?
 

From: Madeline Fleisher [mailto:MFleisher@elpc.org]
Sent: Wednesday, August 26, 2015 3:07 PM
To: Madeline Fleisher
Cc: Samantha Williams (swilliams@nrdc.org)
Subject: Significant Energy Efficiency Savings Available to Ohioans for Years to Come

 
Good afternoon –
 
For your information, I’m attaching a new report from the American Council for an Energy Efficient
Economy (ACEEE) regarding energy efficiency potential in Ohio, which was released this morning. As
described in the press release (below), ACEEE examined the most recent studies conducted by
Ohio’s four investor-owned utilities analyzing the energy savings that the state can achieve costeffectively, as well as additional program opportunities that the utilities did not fully consider.
 
ACEEE found that there is sufficient potential to cost-effectively meet the 22% by 2025 EERS
requirement (or by 2027, accounting for the SB 310 freeze). We hope that this report will be useful
as the Energy Mandates Study Committee, and the legislature as a whole, considers how to move
forward with Ohio’s clean energy standards.
 
Let us know if you’d like to discuss any of the report’s findings, or if you have other questions.
 
Sincerely,
Madeline
 
Madeline Fleisher
Staff Attorney
Environmental Law & Policy Center
21 W. Broad St., Suite 500
Columbus, OH 43215

 mfleisher@elpc.org
Office: 614-670-5586
Cell: 857-636-0371
 
 
FOR IMMEDIATE RELEASE
Contact:
ACEEE: Glee Murray – gmurray@ACEEE.org, 202-507-4010
ELPC: David Jakubiak - djakubiak@elpc.org, 312-795-3713
NRDC: Angela Guyadeen – aguyadeen@nrdc.org, 312-257-1110

Significant Energy Efficiency Savings Available to Ohioans for Years
to Come
CHICAGO (August 26, 2015) – A new study finds there is huge potential in Ohio to save families and
businesses money on their utility bills through energy saving programs. This study by the American
Council for an Energy-Efficient Economy (ACEEE), which examines reports from Ohio utilities as well as
industry-standard programs that Ohio has yet to take into account, concludes the state has significant,
cost-effective, and untapped energy efficiency potential just waiting to be utilized.
Ohio’s four major electric utilities—AEP, Dayton Power & Light, Duke Energy, and FirstEnergy—are
seeking ways to reduce their energy consumption 22.2% by 2027. These utilities have been running
wildly successful energy efficiency programs for homes and businesses since at least 2010, saving
Ohioans over $1 billion on their energy bills and delivering a 2:1 return on their investment. ACEEE
concludes Ohio’s utilities will be able to continue to meet these energy efficiency goals through costeffective programs that provide tremendous benefits for customers.
Beyond the significant untapped savings Ohio’s utilities could be capturing, the ACEEE report finds that
the state has not even scratched the surface of the benefits available to Ohioans over the long term.
These include currently available and cost-effective programs like LED lighting, multi-family housing
retrofits, combined heat and power projects, and low-interest financing opportunities.
The report also finds increased potential for emerging technologies—potential that Ohio has yet to
capture. Technologies such as smart thermostats and advanced clothes dryers can give customers more
choice on how they use energy and help save money. With the clean energy industry evolving at a rapid
pace, innovation in energy efficiency has also come faster than expected, in some cases with rapidly
falling prices. For example, the price of LED lighting has decreased over 85% in the last five years.
“Innovation in energy-efficient products and services creates enormous opportunities for cost-effective
energy savings, and helps customers make smarter choices about how they use energy,” said Maggie
Molina, utilities, state, and local policy director at ACEEE. “Thankfully for Ohio, utilities recognize some of
the opportunities to capture these emerging technologies and will be able to help their customers save
money over the coming years.”
Molina continued, “Our report finds even more ground can be covered at low cost in areas where Ohio
could see benefits immediately, like multifamily housing and LEDs, and in technologies such as ‘smart’
thermostats that are just now emerging.”
When utilities run better and more innovative programs that target a wide range of consumers, they add

 to Ohio’s growing clean energy economy. For example, AEP estimated that its energy efficiency
programs will create 4,000 jobs over the next few years. And that’s just one of four major utilities that run
programs in the state.
Energy efficiency companies in Ohio see this potential first hand.
According to Greg Smith, President and CEO of Energy Optimizers, USA in Tipp City, Ohio, which
retrofits schools and other government buildings across the state, “We’re only hitting the tip of the
iceberg in Ohio with how much we can improve the efficiency of homes and businesses, along with
commercial and industrial facilities. In the last few years, my business has taken off as we continue to
rapidly expand our team. We’ve grown from a true start-up to a $14,000,000 a year company. We have
smart people from right here in Ohio who we want to put to work immediately. It’s that simple—we just
need the right ingredients and investments to make it happen.”
Unfortunately, the future of these programs is in jeopardy.
Just as energy efficiency and renewable policies were taking off following the 2008 enactment of SB 221,
Ohio passed SB 310, which froze these policies at their 2014 levels and pushed back the deadline to
meet the 22.2% energy efficiency target by two years. A committee was established to examine the
clean energy policies and determine their fate, which remains uncertain.
“Across Ohio, residential, business, and industrial customers are saving money because of utility energy
efficiency programs,” said Madeline Fleisher, staff attorney with the Environmental Law & Policy Center.
"As technologies advance, these opportunities are growing, but achieving this potential will require strong
programs that are available to all utility customers. Continuing these programs will position Ohio as a
leader in the clean energy sector, providing lower customer bills, creating sustainable jobs, and cutting
pollution.”
The committee is set to release a report in September and may make recommendations on the future of
Ohio’s energy landscape, including whether these cost-saving programs will continue to exist.
According to Samantha Williams, energy policy advocate for the Natural Resources Defense Council,
“Energy efficiency efforts in Ohio still have plenty of fruit to bear. Luckily Ohioans are still craving ways to
save money by lowering their energy use, which brings all kinds of benefits like cleaner air and more jobs
to the state. This report adds to the mounting evidence, and hopefully the committee will come to the
same conclusion ACEEE did—that these programs are integral to low-cost power and will continue to
reap benefits for Ohioans today and tomorrow.”
A link to the full ACEEE report can be found here: http://aceee.org/white-paper/ohio-potential
###

 

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