Energy efficiency is recognized as a low-cost, reliable resource, yet investments in efficiency programs lag far behind the level needed to capture all cost-effective efficiency resources. Energy efficiency is often undervalued, in large part because many of the benefits it generates can be difficult to analyze and quantify.

State utility commissions can support increased efficiency investments by conducting a full valuation of energy efficiency benefits. In many cases, only electric utility-related benefits are considered when evaluating energy efficiency measures. Other benefits, including resource benefits like water, sewer, and natural gas savings, have been regarded as “externalities” – external to power system considerations – and typically are not evaluated, despite clear evidence of the magnitude of these benefits to society. However, the non-electricity benefits of efficiency measures are often equal to or greater than the energy benefits.

In the recent paper Recognizing the Full Value of Energy Efficiency, Jim Lazar and Ken Colburn identify three categories of efficiency benefits—utility system, participant, and societal benefits—and provide guidance for properly quantifying each type. Drawing on a “layer cake” analogy, the authors build each layer of benefits to create a cake that is taller and more valuable than many recognize.

In a webinar held on October 9, 2013, Mr. Lazar and Mr. Colburn

• Share case studies demonstrating how different states quantify the significant categories of efficiency savings.
• Examine the full spectrum of energy efficiency benefits, including so-called non-energy benefits.
• Explore how energy regulators can identify areas that have benefits outside of energy and where it may be appropriate for a joint consideration of those benefits with air, water, health, low-income assistance, and economic development agencies.