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|Focus on Energy|
|Public Service Commission|
Focus on Energy, Wisconsin's statewide energy-efficiency and renewable resource program, encourages utility customers to reduce fossil fuel consumption by providing incentives for customers to purchase products and services that are energy efficient or use renewable energy sources. Wisconsin's electric and natural gas utilities collectively fund Focus on Energy and recover their contributions from their customers through electricity and natural gas rates.
Because Focus on Energy funding affects rates paid by utility customers, and because Focus on Energy programs are designed to affect energy consumption statewide, concerns have been raised about the operation and cost-effectiveness of the program. Therefore, at the request of the Joint Legislative Audit Committee, we analyzed:
Program Administration and Oversight
Statutes require certain utilities to hire a private contractor to serve as the program administrator for Focus on Energy. The program administrator designs energy-savings programs that support the use of energy-efficient and renewable energy products and services.
The program administrator also subcontracts with other private firms, which provide financial incentives for customers to participate in its energy-savings programs; help with customer training and education; and provide outreach and technical support to businesses developing and selling energy-efficient and renewable energy products.
To help ensure adequate program oversight, statutes require the PSC to conduct a review of Focus on Energy at least every four years and contract for independent program evaluations and financial audits of the program. The PSC also provides oversight by establishing the annual energy-savings goals to be achieved through Focus on Energy, approving the design of Focus on Energy programs, and monitoring program budgets.
In conducting our analyses of Focus on Energy, we reviewed documentation and data maintained by the utilities, private contractors, and the PSC. We also interviewed program staff, participants, and other stakeholders regarding program administration and oversight.
Focus on Energy Contributions
Statutes require investor-owned
utilities to fund energy-efficiency
and renewable resource programs,
and municipal electric utilities
and retail electric cooperatives to
fund energy-efficiency programs.
Although they may choose to fund
their own programs, all investor-owned
utilities, all municipal
electric utilities, and 12 of 24 retail
electric cooperatives currently
contribute exclusively to Focus on
Energy. Collectively, these utilities
provided funding of
From 2008 through 2010, at least
Although variations in facility type and energy use limit efforts to define average energy consumption by non-residential customers, we found that the Focus on Energy payments from non-residential customers of different utilities varied significantly. In 2010, for example, non-residential customers of certain investor-owned utilities paid less than one-half as much as customers of other investor-owned utilities for using the same amount of natural gas.
In response to concerns about
variation in the Focus on Energy
payments by customers of different
utilities, 2005 Wisconsin Act 141
froze at 2005 levels the Focus on
Energy payments made by utility
customers that use large amounts
of energy. Subsequently, those
payments have been adjusted for
the lesser of inflation or increases
in utility operating revenues,
as required by the Act. The PSC
estimated that in 2010 those
provisions of Act 141 would
collectively reduce the Focus on
Energy payments of non-residential
large energy customers at the six
largest investor-owned utilities by
Expenditures and Participation
In 2010, Focus on Energy's program
The majority of all 2010 energy efficiency
incentives were for
non-residential customers. Non-residential
Residential customers received
energy-efficiency incentives of
We estimate that Focus on Energy
paid financial incentives to more
In 2010, Focus on Energy expenditures
To measure overall cost-effectiveness, the PSC contracts for evaluations that compare the societal benefits of program activities to their associated costs. The PSC states that this societal approach is consistent with program goals, such as reduced energy use, reduced environmental impacts, and market development. We found this approach to be consistent with national standards for evaluating energy savings programs and with practices in Minnesota, Iowa, and Indiana.
Focus on Energy's contracted
evaluators estimated that statewide
benefits of the energy savings
achieved by Focus on Energy
programs in 2010, including a
reduced need for constructing
new power plants and reduced
emissions of pollutants, exceeded
costs by a ratio of
While it is probable that Focus on Energy has additional effects, including on employment and business sales, the difficulty of accurately measuring such effects makes it reasonable for the PSC to limit annual estimates to include only those benefits most directly linked to program activities.
We found that the PSC has not fully complied with statutory requirements to report on Focus on Energy activities. To position the Legislature and the public for a more informed discussion of Focus on Energy funding levels, the PSC could use its existing reporting requirements to provide enhanced information about Focus on Energy's effects on utility customers, including payments made to fund Focus on Energy, and the cost-effectiveness of Focus on Energy and other energy-efficiency programs.
We recommend the PSC report to the
Joint Legislative Audit Committee
Our report also includes recommendations for the PSC to enhance oversight of Focus on Energy by: