State and Local Policy Database

Self Direct and Opt-Out Programs

Some large customers seek to opt out of utility energy efficiency programs, asserting that they have already done all the energy efficiency that is cost effective; however, this is seldom the case. This situation arises from capital allocation decisions (e.g., very short-term payback requirements) that leave many cost-effective energy efficiency opportunities on the table. Failure to include large customer programs in an energy efficiency portfolio will increase the cost of the resource for all customers and reduce the benefits. In effect, allowing the large customers to opt out will force other consumers to subsidize them. While the ideal solution is for utilities to offer programs that are responsive to the needs of these large consumers, research suggests that this does not always happen. An alternative may be offering large customers the option of self-directing their energy efficiency program dollars. This option provides a path to include large customer energy efficiency in portfolio of savings at the same time as it encourages utilities to improve program offerings to become more responsive to all customers’ needs.

Alabama does not have self direct or opt-out provisions for large customers. 

Last updated: July 2017

Alaska does not have self direct or opt-out provisions for large customers. 

Last updated: July 2017

All the major electric utilities offer a self direct option for large customers. APS: Large customers using at least 40 million kWh per calendar year can elect to self-direct energy efficiency funds. Customers must notify APS each year if they wish to participate, after which 85% of the customer's demand-side management contribution will be reserved for future energy efficiency projects. Projects must be completed within two years. Self-direction funds are paid once per year once the project is completed and verified by APS. TEP: to be eligible for self-direction, a customer must use a minimum of 35 million kWh per calendar year. SRP makes self-direction available only to very large customers using more than 240 million kWh per year. For all utilities, a portion of the funds they would have otherwise contributed to energy efficiency is retained to cover the self-direction program administration, management, and evaluation costs.

Last Updated: July 2017

Customers with over 1 MW or 70,000 therms in monthly demand may opt-out.  Only non-manufacturing customers must offer documentation of similar planned or achieved savings. A significant percentage of eligible load has opted-out, although it varies by utility. There is no requirement that energy savings achieved by opt-out customers be evaluated. 

Last Updated: July 2017

California does not have structures in place for large customers to self-direct energy efficiency efforts or to opt-out from funding energy efficiency programs. 

Last updated: July 2017

Self-direct programs for large customers are offered by Xcel Energy and Black Hills.

Xcel's self-direct program is available to commercial and industrial electric customers who have an aggregated peak load of at least 2 MW in any single month and an aggregated annual energy consumption of at least 10 GWh and are not allowed to participate in other conservation products offered by the Company. Rebates are paid based on actual savings from a project, up to $525 per customer kW or $0.10 per kWh; rebates are given for either peak demand or energy savings but not both and are limited to 50% of the incremental cost of the project. Xcel uses raw monitoring results and engineering calculations to demonstrate actual energy and demand savings based on monitoring results.

To participate in the C&I Self-Direct program offered by Black Hills, customers must have an aggregated peak load greater than 1 MW in any single month and aggregated annual energy usage of 5,000 MWh.  Rebates and savings are calculated on a case-by-case basis; rebate values are calculated as either 50% of the incremental cost of the project of $0.30 per kWh savings, whichever is lower. 

More information on large customer self-direct programs can be found in the ACEEE report, Follow the Leaders: Improving Large Customer Self-Direct Programs.

Last Updated: July 2017

Connecticut does not allow for large industrial and commercial customers to self-direct the funds they would have paid for energy efficiency, or to opt-out entirely. 

Last updated: July 2017 

Delaware does not allow for large customers to self-direct the funds they would have paid for energy efficiency, nor to opt-out entirely from participating in energy efficiency programs. 

Last updated: July 2017

DC does not allow for large customers to self-direct the funds they would have paid for energy efficiency, nor to opt-out entirely from participating in energy efficiency programs. 

Last updated: July 2016

Florida does not allow for large customers to self-direct the funds they would have paid for energy efficiency, nor to opt-out entirely from participating in energy efficiency programs. 

Last updated: July 2017

Georgia does not allow for large customers to self-direct the funds they would have paid for energy efficiency, nor to opt-out entirely from participating in energy efficiency programs. 

Last updated: July 2017

Hawaii does not allow for large customers to self-direct the funds they would have paid for energy efficiency, nor to opt-out entirely from participating in energy efficiency programs. 

Last updated: July 2017

Idaho Power offers its largest customers an option to self-direct the 4% energy efficiency rider that appears on all customers’ bills.  Customers have three years to complete projects and have 100% of funds available to fund up to 100% of project costs.  Self-direct projects are subject to the same criteria as projects in other efficiency programs. Self-direct options are only available to special contract customers.

More information on large customer self-direct programs can be found in the ACEEE report, Follow the Leaders: Improving Large Customer Self-Direct Programs.

Last Updated: July 2017

A self-direct option is available statewide for natural gas customers that meet the following criteria: annual natural gas usage in the aggregate of 4 million therms or more within the service territory of the affected gas utility, or with aggregate usage of 8 million therms or more in this state and using natural gas as feedstock to the extent such annual feedstock usage is greater than 60% of the customer's total annual usage of natural gas. Qualified gas customers put money into an account of their own that amounts to the lesser of 2% of the customer's cost of natural gas or $150,000.  The funds are required to be used for energy efficiency projects. No evaluation is required. 

Large industrial and commercial customers are not able to opt-out entirely of paying for energy efficiency programs in Illinois.

Last Updated: July 2017

The opt-out applies to the five investor-owned electric utilities. Eligible customers are those that operate a single site with at least one meter constituting more than 1 MW demand for any one billing period within the previous 12 months to opt out of programs. Documentation not required. No evaluation is conducted. About 70%-80% of eligible load has opted out.

Last Updated: July 2017

Iowa does not have self direct or opt-out programs. 

Last updated: July 2017

Duke Energy offers a self-direct program option only to customers that take transmission service on rate TT and are thus described as having “energy intensive processes” and are therefore eligible under statute for such a program. Customers in a self-direct program do not pay any of the cost of the Duke Energy efficiency programs and are not eligible to join them.  Duke does not measure or verify the savings of a self-direct program. 

Industrial rate class customer statewide are eligible to opt out. About 80% of eligible load has opted out, with the remaining 20% made up primarily of TVA customers. Documentation is not required.

Last Updated: July 2016

Large customers that take transmission and sub-transmission service are automatically opted-out of Maine's efficiency programming. These customers do not pay into Maine's cost-recovery mechanism (CRM) programming, although federal stimulus funds and collected money from the Regional Greenhouse Gas Initiative have allowed Efficiency Maine to offer energy efficiency programming to the state's largest industrial customers. However this effort has been weakened this year with the passage of LD 1398, which increases the amount of RGGI returned to business ratepayers, from 15% to 55%. LD 1559, enacted in 2013, approved the first direct contract between Maine’s investor owned utilities and Efficiency Maine for the purpose of delivering new efficiency and distributed generation projects for large industrial customers.

More information on large customer self-direct programs can be found in the ACEEE report, Follow the Leaders: Improving Large Customer Self-Direct Programs.

Last Updated: September 2017

There are no self-direct or opt-out provisions available to utilities in Maryland.

Last updated: July 2017

The top 5 energy users in each utility were able to opt in to the self-direction option. However, the pilot program ended in December of 2015.

Last Updated: September 2017

Self-direct is available statewide.  Customer(s) must have had an annual peak demand in the preceeding year of at least 1 megawatt in the aggregate at all sites. The customer may use the amount of funds that would otherwise have been paid to the utility provider for energy efficiency programs. They must, however, submit the portion of the EE funds that would have been collected and used for low income programs to their utility provider. They then calculate the energy savings achieved and provide it to their utility provider. In 2015, there were 20 customers self-directing

Last Updated: September 2107

Minnesota offers a self-direct option, with a full exemption from assigned CRM fees, to customers with 20 MW average electric demand or 500,000 MCF of gas consumption. Customers must also show that they are making "reasonable" efforts to identify or implement energy efficiency and that they are subject to competitive pressures that make it helpful for them to be exempted from the CRM fees. Participating customers must submit new reports every five years to maintain exempt status. The utility is not involved in self-direct program administration; the state Department of Commerce functions as the manager of self-direct accounts and is the arbiter of whether a company qualifies for self-direct and is satisfying its obligations. 

Commercial gas customers served by a gas utility with less than 600,000 gas customers in Minnesota that do not meet either threshold may opt-out if they can demonstrate that they have acquired or can reasonably acquire the ability to bypass use of the utility's gas distribution system. They must file a report every five years for up to ten years demonstrating that they are continuing to make reasonable efforts towards energy efficiency improvements.  If the majority ownership of the facility changes, that period can be extended another ten years.  Minnesota Department of Commerce staff will evaluate their spending and savings claims. 57 facilities have opted-out. 

Last Updated: July 2017

There are no self direct or opt-out programs in Mississippi. 

Last updated: July 2017

MEEIA allows customers to opt-out of all DSM programs’ costs recovery if they have a demand of at least 5,000 kW in the previous twelve months, if they are an interstate pumping station of any size, or if they show they a "comprehensive" demand or energy efficiency program in place that is saving an amount at least equal to utility-provided programs, and have a demand of at least 2,500 kW. Customers opting out under the 2,500 kW/comprehensive demand-side management plan category must submit their plan to the Missouri Public Service Commission for review. Customers wishing to opt out under either of the other categories simply provide notification to their utilities that they wish to opt out. Staff of the Missouri Public Service Commission perform a desk audit of all claimed savings and may perform a field audit.

Last Updated: September 2017

Self direct is available statewide in regulated utility service territory. About 90% of the population is served by NorthWestern Energy. NorthWestern Energy allows customers with demand larger than 1 MW to channel their cost-recovery mechanism (CRM) funds to an escrow account that repays them on a quarterly basis for completed self-direct projects. The annual maximum contribution is $500,000 and companies have two years to use their funds before they are returned to the larger pool of CRM revenues. NorthWestern administers the funds but provides no measurement or verification. Self-direct customers file annual reports with the Montana Department of Revenue. The department publishes these reports and a public "challenge" process is provided for as the only scrutiny or review. About 60 customers use self direct. 

More information on large customer self-direct programs can be found in the ACEEE report, Follow the Leaders: Improving Large Customer Self-Direct Programs.

Last Updated: September 2017

There are no self direct or opt-out programs in Nebraska. 

Last updated: July 2017

There are no self direct or opt-out provisions in Nevada. 

Last updated: September 2017

New Hampshire does not have Self Direct or Opt-Out programs.

Last updated: July 2017

There are no opt-out programs in New Jersey.

A Societal Benefits Credit (SBC) program, with elements of a self-direct program, allows commercial and industrial (C&I) ratepayers to establish a credit against their SBC contributions. No company has implemented an SBC program to date.The credit would be equal to one-half of the costs incurred for the purchase and installation of Clean Energy Program-supported energy efficiency products and services in the preceding calendar year, and up to 50% of the SBC contributions for a given year, per utility account.  

The Large Energy Users Program is designed to promote self-investment in energy efficiency and combined heat and power projects with incentives up to $4 million for eligible projects in the states' largest commercial and industrial facilities.

Last Updated: September 2017

A self direct option is offered statewide in the territories of three investor-owned utilities. Eligible customers must have electricity consumption greater than 7,000 MWh per year. Participants can receive credit for up to 70% of the annual energy efficiency rider. Self direct customers provide their own engineering analysis and must meet the same total resource cost test as all the other industrial and commercial offerings.

There is no provision for large customers to opt out entirely from paying for energy efficiency programs

Last Updated: September 2017

In an order issued in Case 14-M-0101 on February 26, 2015, the Commission required Staff to work with the utilities and large industrial customers to develop Self-Direct Program Guidelines to be filed by August 3, 2015.  The order also required electric utilities to implement a self-direct program in accordance with the Self-Direct Program Guidelines no later than January 1, 2017.

In May 2016, the State Senate passed a bill to establish the program, currently referred to as the New York State Clean Energy Tech Production Program. The bill was referred to Assembly Committee in June 2016. The PSC would provide oversight of the program, which would allow customers with a 36-month average demand of 2 MW (or an aggregated 36-month average demand of 4 MW or more) to treat their surcharges as dedicated funds for EE, RE, and DERs. It requires several mechanisms to help ensure the program is effective including a requirement to establish baseline energy use data, a requirement to establish a method to measure and verify all savings claimed, a mechanism to recoup funds if they are misused, etc.

Last updated: July 2016

In North Carolina, all industrial class electric customers are eligible for opt-out. By Commission Rule R8-69 (d), large commercial class with 1,000,000 kWhs of annual energy consumption are eligible to opt out. About 40% of eligible load has opted out.

Last Updated: May 2017

Self-direct options are available for large customers in Ohio. Under SB 221, a mercantile customer, which is a commercial or industrial customer that consumes more than 700,000 kWh per year, may enter into a special arrangement with an electric utility to integrate the customer’s demand reduction, demand response, or energy efficiency programs with those of the electric utility. If the specified reduction levels are met, the customer can request exemption from the cost recovery mechanism.  

One of the state’s utilities, AEP, has a self-direct program that offers customers an incentive for previously implemented energy efficiency measures. The one-time incentive is 75% of what the measure would cost under AEP programs and has a maximum limit of $225,000.  Projects must have been implemented after Jan. 1, 2008 and must produce 100% of stated energy savings and/or peak demand reductions over a five-year period.  Customers taking the incentive are still eligible to participate in the utility's other energy efficiency programs because they are still paying the cost-recovery mechanism (CRM) fee. 

Last Updated: September 2016

All transportation-only gas customers are eligible to opt-out. For electric utilities, any customer with consumption greater than 15 million kWhs annually may opt out. Combined meters may meet the threshold. Approximately 90% of eligible customers opt-out, representing about 30% of total load.

Last Updated: July 2016

The self-direct option for the Public Purpose Charge is required for two of the three investor-owned utilities. This program is uniform statewide across all impacted utilities. One consumer-owned utility has chosen to design and run a self-direction program. Programs cover approximately 80% of the electric customers in Oregon. Eligible sites must demonstrate they were over 1 MW avg in the prior year to enter and remain in the program. Participants in the three participating programs have the proposed projects technically reviewed by the Oregon Dept of Energy. In two programs, the expenditures toward qualified projects are used as credit to offset future Public Purpose Charges. The credit is applied on-bill.  In the third, the utility does a set-aside program in combination with credit toward future Public Purpose Charges.  These funds are provided by check and/or on-bill. A technical review of claimed savings is conducted by the Oregon Department of Energy prior to construction of a project. A sampling of projects are reviewed for actual performance. 17 out of the estimated 230 eligible sites are participating. The percentage of eligible load is not published by the utilities. Total savings for 2015 was 2,743,000 kWh.

Last Updated: July 2017

There are no self direct or opt-out provisions in place. 

Last updated: July 2017

Industrial, manufacturing or retail commercial customers with 1,000,000 kwh annual usage or greater are eligible to opt-out. Self certification only is required. Roughly 50% of  eligible load is opted-out.

Last Updated: July 2016

In Texas, for-profit customers that take electric service at the transmission level are not allowed to participate in utilities' energy efficiency programming and therefore do not pay for it. Instead industrial customers develop their own energy efficiency plans if desired and work with third-party providers to implement and finance energy efficiency investments. There is no measurement or monitoring of the investments. Please see Energy Efficiency Rule, section W. 

More information on large customer self-direct programs can be found in the ACEEE report, Follow the Leaders: Improving Large Customer Self-Direct Programs.

 Last Updated: July 2017

Rocky Mountain Power's self-direct program is a project-based rate credit program that offers up to an 80% credit of eligible project costs back to customers as a rate credit against the 3.7% cost-recovery mechanism (CRM) charge all customers pay. Customers earn a credit up to 100% of their CRM charge, but pay a flat $500/project administrative fee for each self-directed project. Customers can choose to engage in self-direct and more traditional CRM programs simultaneously, provided the different programs are used to deploy different projects. Rocky Mountain Power may qualify participants, at its discretion, based on criteria the Company considers necessary to ensure the effective operation of the measures and utility system. Criteria may include, but will not be limited to cost effectiveness.

More information on large customer self-direct programs can be found in the ACEEE report, Follow the Leaders: Improving Large Customer Self-Direct Programs.

Last Updated: July 2017

For electric energy efficiency, there are three self-direct options availible statewide:  SMEEP (Self-Managed Enenergy Efficiency Program), CCP (Customer Credit Program) and ESA (Energy Savings Accounts.) SMEEP is also available for the one eligible gas customer. The SMEEP options requires prospective participants or their successors to have contributed $1.5 million to the Energy Efficiency Fund in 2008 through the Efficiency Charge adder on their electric costs to meet the requirements, one only customer meets that standard.  Additionally an eligible customer must commit to investing a minimum of $3 million over a three-year program cycle. The ESA option allows Vermont business that pay an Energy Efficiency Charge (EEC) in excess of $5,000 total per year (or an average $5,000 total per year over three years) to use a portion of their EEC to support energy efficiency projects in their facilities.

CCP: Eligible customers must be ISO 14001-certified and meet several conditions similar to Energy Star for industrial facilities. For natural gas energy efficiency, eligible only for transmission and industrial electric and natural gas ratepayers,  customer efficiency charges for electric usage must be a minumum of $1.5 million. SMEEP allows an eligible customer to be exempt from the (electric) energy efficiency charge ("EEC") provided that the customer commits to spending an annual average of no less than $1 million per year over a three-year period on energy efficiency investments. In addition, the Vermont Public Service Board has established an option for eligible Vermont business customers to self-administer energy efficiency through the use of an Energy Savings Account (ESA) or the Customer Credit Program , these funds are still paid into the VEEUF and disbursed to the participants upon completion of an elegible energy efficiency measure.

For natual gas, ESA and CCP participants can access a percentage of the funds paid into the VEEUF to undertake approved energy efficiency measures. For SMEEP electric, an eligible customer must demonstrate that it has a comprehensive energy management program with annual objectives, or demonstrate that it has achieved certification of ISO standard 14001. They then provide a report to the Public Service Board (PSB) detailing the measures undertaken, estimated savings and related costs. These reports are then reviewed and approved by the PSB. ESA: The ESA is run through the Efficiency Vermont program and related savings are reported and verified through the Savings Verification mechanism. CCP: Eligible customers must be ISO 14001-certified and meet several conditions similar to Energy Star for industrial facilities, savings are then verified through exisitng mechanisms.

Last Updated July 2016

Certain large customers are exempt from paying for the costs of new energy efficiency programs. Dominion Power customers may qualify for their opt-out program by having average demands between 500kW;and 10MW; Customers over 10 MW do not participate in the state's energy efficiency programming by law. Once customers opt-out, they cannot take advantage of existing programming nor be charged for it. Customers must show that they have already made energy efficiency investments or plan to in the future. Customers must submit measurement and verification reports yearly in support of their opting out of programs funded by a cost-recovery mechanism (CRM). 

Last Updated: July 2016

Washington state allows utilities to develop self-direct options for industrial and commercial customers, but of the investor-owned utilities only Puget Sound Energy has developed a program. Puget Sound Energy's self-direct program is only available to Industrial or Commercial customers on electric rate specific rate schedules. The self-direct program operates on a 4 year cycle comprised of two phases, non-competitive and competitive.  During the non-competitive phase, customers have exclusive access to their energy efficiency funds, which are the funds collected over the 4 year period.  When this phase closes, any unused funds are pooled together and competitively bid on by the members of the self-directed program.  Customers receive payment in the form of a check once the project is complete and verified.  Participating customers do not receive any rate relief when they complete energy efficiency investments. 100% of projects are pre- and post- verified by the utility.  This includes review and revision of savings calculations by the utility to determine incentive levels. The program is included in the third party evaluation cycle like all other utility conservation programs. More information on large customer self-direct programs can be found in the ACEEE report, Follow the Leaders: Improving Large Customer Self-Direct Programs.

Last Updated: July 2017

Opt out is is developed individually by utilities. Customers with demand of 1MW or greater may opt out. Participants must document that they have achieved similar/equivalent savings on their own in order to retain opt-out status. Claims of energy and/or demand reduction are certified to utilities with future evaluation by the Commission to take place in a later proceding.  The method has not been specified. Twenty  large customers have opted out.

Last Updated: July 2016

While self-direct is available, no customer has taken this option- all participate in Focus on Energy instead. For self-direct, customer must meet statutory definition of a large energy customer: has a monthly demand of at least 1 MW or 10,000 decatherms, and a monthly utility bill of at least $60,000.  Statute says that a customer may deduct the amount of program funding from the amount they must contribute to Focus through their utility, if/when they receive Commission approval for that program. By administrative code, any proposals for a customer to run such a program require an M&V plan, must pass a cost-effectiveness screening, and set and measure performance goals.

More information on large customer self-direct programs can be found in the ACEEE report, Follow the Leaders: Improving Large Customer Self-Direct Programs.

 Last Updated: July 2017

Rocky Mountain Power offers a self-direct option for customers. The self-direct program is a project-based rate credit program that offers up to an 80% credit of eligible project costs back to customers as a rate credit against the 3.7% cost-recovery mechanism (CRM) charge all customers pay.  Customers earn a credit up to 100% of their CRM charge, but do pay a flat $500/project administrative fee for each self-directed project.  Customers can choose to engage in self-direct and more traditional CRM programs simultaneously, provided the different programs are used to deploy different projects.

Last Updated: July 2016