This report asks how Austin Energy can optimally operate residential energy efficiency and demand side management programs including demand response measures. Efficient energy use is the act of using less energy to provide the same level of service. Demand side management encompasses utility initiatives that modify the level and pattern of electrical use by customers, without adjusting consumer behavior. Demand side management is required when a utility must respond to increasing energy needs, or demand, by its customers. In order to achieve the 20% carbon emissions and 800 MW peak demand reductions mandate of the Generation, Resource and Climate Plan, AE must aggressively pursue an increase in customer participation by expanding education and technical services, enlist the full functionality of a smart grid and subsequently reduce energy consumption, peak demand, and greenhouse gas emissions. Energy efficiency is in fact the cheapest source of energy that Austin Energy has at its disposal between 2010 and 2020. But this service threatens Austin Energy’s revenues. With the ascent of onsite renewable energy generation and advanced demand side management, utilities must address the ways they generate revenues. As greenhouse gas emissions regulations lurk on the horizon, the century-old business model of “spinning meters” will be fundamentally challenged nationally in the coming years. Austin Energy can develop robust analytical methods to determine its most cost-effective energy efficiency options, while creating a clear policy direction of promoting energy efficiency while addressing the three-fold challenges of peak demand, greenhouse gas emissions and total energy savings. This report concludes by providing market-transforming recommendations for Austin Energy. / text

Renewable Portfolio Standards (RPS) require electricity providers to supply a minimum fixed percentage or total quantity of customer load from designated renewable energy resources by a given date. These policies have become increasingly prevalent in the past decade as state governments seek to increase the use of renewable energy sources. As a policy tool, RPS provide a cost-effective, market-based approach for meeting targets which promote greater use of renewable energy in both regulated and deregulated markets. To facilitate the obtainment of Renewable Portfolio Standards, most states allow the trading of Renewable Energy Credits (RECs). RECs represent the environmental attributes of renewable energy generation which are decoupled from the generated power. These credits are created along with the generation of renewable energy, decoupled from energy generation, tracked by regional systems, and eventually purchased by retail suppliers to fulfill their RPS obligations. As of April 2010, RPS have been passed into law in 29 states and Washington D.C. and an additional 6 states have non-mandatory renewable portfolio goals however the U.S. government has yet to enact a Federal Renewable Portfolio Standard. Although the final requirements and details of a Federal RPS are undecided, federal standards would be unlikely to preempt or override state programs which are already in place. A key concern regarding the passage of a federal RPS is that a national REC market would result in a shift of wealth from states with few renewable energy resources and limited resource potential to regions richer in renewable resources. Because of the implications that a federal renewable portfolio standard would have on the economy, the environment, and the equitable treatment of all the states, many issues and concerns must be resolved before federal standards will be passed into law. A theoretical case study for an electric utility generation planning decision that includes obligations to meet Renewable Portfolio Standard is presented here. A framework is provided that allows decision makers and strategic planning teams to: assess their business situation, identify objectives of generation planning, determine the relative weights of the objectives, recognize tradeoffs, and create an efficient portfolio using Portfolio Theory. The case study follows the business situation for Austin Energy as it seeks to meet Texas State RPS and mandates set by Austin City Council and prepares for potential National RPS legislation. / text

The Pecan Street Project (PSP) is a public-private initiative that seeks to establish the City of Austin and its electric utility, Austin Energy (AE), as leaders in developing the electric utility system of the future and clean energy economy. The four main components of the project are to: 1) develop a local, public-private consortium dedicated to research and development of clean energy technologies and distributed power generation; 2) open the city’s electric grid to act as a lab to test emerging clean energy technologies; 3) develop a new business model to ensure AE’s continued profitability; and 4) show the world how the new business and systems model can work. This report provides a case study of PSP and describes an analytical approach for evaluating projects, programs, and policies proposed by PSP working groups to develop a cleaner, more efficient electric system. This report includes a history of the project, discusses opportunities and challenges identified by PSP, and evaluates the potential economic, environmental, system, and other impacts of different project ideas through a technical analysis. This report concludes with a series of recommendations to PSP and identifies policy implications for the City of Austin, AE, other policymakers, and other electric utilities. / text