Energy Efficiency Progress by America's Utilities: An Update

March 27, 2014
For utilities, energy efficiency is a winning strategy, a way to help customers get more work out of less electricity and natural gas. NRDC’s Ralph Cavanagh explains the economics.

Ralph Cavanagh, NRDC

Some people are surprised to learn that our electric and natural gas utilities spend billions of dollars a year to help customers need and use less energy. But helping people get more work out of less electricity and natural gas has long been a winning strategy for many of America’s hometown utilities – and a report released this week shows that their energy efficiency budgets reached an all-time high of $7 billion last year.

In fact, these programs ranging from weatherization to high-efficiency appliance rebates saved a whopping 126 terawatt-hours (TWh) of electricity in 2012, enough to power more than 12.2 million U.S. homes for one year, and avoided the generation of 89 million metric tons of carbon dioxide. That’s why the latest annual review by the Consortium for Energy Efficiency (CEE) on the “State of the Efficiency Program Industry” is a welcome reminder of progress already made and benefits still to come.

The headline for the March 2014 edition is the continuation of a five-year trend in steadily increasing expenditures by U.S. electric and natural gas utilities on all aspects of “demand-side management,” which involve low-cost ways to reduce customers’ energy needs and avoid the need tap more costly resources. These programs range from equipment and building upgrades to measures that shift energy consumption away from peak periods when distribution systems are under maximum stress.


The investment increase in energy efficiency programs from 2008–2012 was a robust 80 percent (from $4 billion to $7.2 billion). Electric utilities dominated that total, recording $6.1 billion in 2012, but rates of growth were similar for both electric and natural gas utilities, and the sustained increases over the past five years are a welcome change from an earlier roller-coaster pattern, which had frustrated creation of a durable energy efficiency infrastructure by creating corrosive uncertainty about whether and where funding would be available.

The very existence of the Consortium for Energy Efficiency demonstrates the importance of that infrastructure; the group representing energy efficiency program administrators in the United States and Canada serves as an invaluable “best practices” advisor and assistant to literally hundreds of utilities across North America, making sure that all learn quickly from both successes and failures everywhere on the continent.

Preliminary data for 2013 suggest that utilities’ efficiency programs  will continue to grow, although at a more modest pace. Canada shows similar trends, and the healthy annual climate dividend from U.S. and Canadian utility efforts combined is the equivalent of more than 20 million tons a year (the emissions from at least 4 million cars).

The best guarantor of additional cost-effective savings is to reward the utilities that achieve those savings and at minimum to ensure that their financial health is no longer tied to increases in their sales of electricity and natural gas. Doing so provides them more of an incentive to keep investing in efficiency programs that cut our energy waste, which also reduces the need for dirty fossil fuels to generate our electricity and emit pollution that warms our planet and harms our health.


The investments in energy efficiency that CEE tracks are only a small fraction of our annual payments to the utilities that provide our heat and lights (our total electricity bill alone exceeds $360 billion), but they have yielded a remarkable return in lower costs to both customers and the environment.

The latest evidence is a brand new study from the Lawrence Berkeley National Laboratory, which looks at the average cost of saved energy from utility programs throughout the country and pegs it at about 2 cents per kilowatt-hour, a small fraction of what comparable energy production from new facilities would have cost.

Energy efficiency remains our largest, cheapest and cleanest energy “resource.” This means that if we use less electricity, utilities don’t need to generate or buy as much power – or build huge new power plants to serve the needs of residential, business and industrial customers – which  helps keeps bills low for everyone.

Indeed, a recent NRDC report shows that energy efficiency has outperformed all other energy resources COMBINED (including coal, oil, natural gas and nuclear power plants) in meeting the needs of a growing U.S. economy over the past four decades. Our utilities have been important partners in that very good cause, and the latest CEE findings are a reminder that much more can be done.

About the Author

Elisa Wood | Editor-in-Chief

Elisa Wood is the editor and founder of She is co-founder and former editor of Microgrid Knowledge.