Energy Efficiency Standards


The Climate and Equitable Jobs Act (CEJA) passed in September 2021, significantly amended the Illinois Power Agency Act and Public Utilities Act. The law requires the Illinois Commerce Commission to establish new cumulative persisting annual savings (CPAS) targets beyond 2030. As it stands, ComEd must attain 21.5% cumulative persisting annual savings by 2030 and Ameren Illinois must ramp up to 16% cumulative persisting annual savings by 2030. The Act allows electric utilities to offer electrification programs as long as they reduce net energy usage at the premises and claim electrification-derived savings toward CPAS targets (subject to guardrails). The Act also enables electric utilities to claim energy savings credit for contributing to advancement of and compliance with building energy codes, appliance standards and municipal actions such as building performance standards and benchmarking ordinances. Additional amendments affecting electric utilities’ programs include changes to the spending cap, providing an opt-out option for customers with peak demand over 10 MW, and increased funding for income-qualified programs and health/safety improvements among other items.

Natural Gas

In 2009, Illinois’ energy efficiency standard was amended to include investor-owned natural gas utilities, and programs under the standard began in 2010. This required a 0.2% natural gas savings through efficiency of energy delivered by 2012 and ramps-up to 1.5% savings by 2019 and every subsequent year. Spending for natural gas energy efficiency programs in Illinois is capped at a maximum rate impact of 2.0%. As of 2020, 8-104(m) eligible large customers are exempt from paying into natural gas utility energy efficiency programs, pursuant to 8-104(n).

Rate Structures & Incentives

Cost Recovery

As authorized by the Public Utilities Act, a utility providing energy efficiency measures is permitted to recover the costs of those measures through an automatic adjustment clause tariff filed with and approved by the ICC, which must be established outside the context of a general rate case. Each year the ICC initiates a review to reconcile any amounts collected with the actual costs and determines the required adjustment to the annual tariff factor to match annual expenditures.

Lost Revenue Recovery

The Future Energy Jobs Act allows, but does not require, electric utilities to rate-base their energy efficiency costs, which means that these costs will be amortized over the lifetime of the measure.

Utility Incentives

The Future Energy Jobs Act allows electric utilities to earn performance incentives for meeting and exceeding their savings goals. The exact percentages for earning incentives differ by utility and over time.

Noncompliance Penalties

The Future Energy Jobs Act includes penalty provisions if savings goals are not met. Again, penalties differ by utility and over time.

Resource Planning

Illinois' energy procurement process serves the same function as integrated resource planning (IRP) though it isn't strictly a traditional IRP process. Each Illinois utility procuring power must provide the Illinois Power Agency (IPA) with an annual assessment of cost-effective energy efficiency programs or measures that could be included in the procurement plan. One required component is an energy efficiency potential study for the utility's service territory.

The Public Utilities Act requires that procurement plans must include an analysis of the impact of building energy codes or appliance standards, as well as an assessment of opportunities to expand energy efficiency programs.

In the prepared procurement plan, the IPA must include energy efficiency programs and measures what it deems cost-effective and associated annual energy savings goals. The commission approves the energy efficiency programs and measures included in the procurement plan, including the annual energy savings goal.

Stakeholder Collaboration

The Illinois Energy Efficiency Stakeholder Advisory Group (SAG) includes representatives from utilities, the Illinois Commerce Commission staff, the Department of Commerce and Economic Opportunity, environmental advocates and energy efficiency consultants.

The SAG, which has met monthly since 2008, shares information and experience among energy efficiency stakeholders. It developed a Technical Resource Manual for the state's utilities and discusses EM&V and other technical issues related to energy efficiency programs. SAG has also created an Energy Efficiency Policy Manual as directed by the Commission, updated on an as-needed basis.

Illinois also has a collaborative specific to low-income energy efficiency programs, the Low-Income Energy Efficiency Accountability Committee. The goal of the Committee is to directly inform the design, implementation and evaluation of the low-income and public-housing energy efficiency programs.

Program Evaluation

Cost Effectiveness Testing

Utilities in Illinois are required by statute to use the TRC test to establish the cost-effectiveness of energy efficiency programs. Other tests may be used by utilities for their internal program design and evaluation purposes but are not required by the commission.

Net vs. Gross

Illinois utilities report net savings in their program evaluation reports to the commission. Free-ridership is measured but spillover generally is not, though in a few cases utilities have measured it for some programs.

Technical Resource Manual

The Stakeholder Advisory Group in Illinois updates the TRM annually, an effort that began in 2012. The current TRM, past versions and information related to the process of its development can be found on the Illinois Stakeholder Advisory Group (IL SAG) website.

State Government

The IL Environmental Protection Agency Office of Energy serves as the state's energy office.

State Energy Plan or Vision

In early 2016, the Illinois Department of Commerce and Economic Opportunity (DCEO) initiated a stakeholder process to develop an Illinois Energy Roadmap to chart the future direction of the energy sector in Illinois. It placed an emphasis on the electric power sector as well as natural gas supply and transport and includes a discussion on how to optimize energy efficiency and renewable energy resources. Efforts to produce a roadmap have been dormant, as a document has yet to be published.

State Agency Energy Reduction Requirement

The 2007 State Agency Energy Efficiency Act directly addresses energy efficiency in state government. It directs all executive-branch state agencies to set a goal of reducing energy use by 10% by 2018. It also requires state agencies to purchase ENERGY STAR®-rated equipment. Governor Quinn expanded the targets in 2009 with Executive Order 7, which set a goal of a 20% energy reduction by 2020 for state facilities and directed the Department of Central Management Services to implement a program to increase energy efficiency, track and reduce energy usage, and improve energy procurement for all State-owned and State-leased facilities.

EE in New State Buildings

Illinois' Green Buildings Act requires that all state-funded new construction or major renovation buildings are to seek LEED, Green Globes or similar green building certification. New buildings and renovation less than 10,000 sq. ft. must follow the guidelines for the highest level of LEED (or equivalent standard) that is practical, though they do not have to seek certification. Buildings or renovations larger than 10,000 sq. ft. must be LEED Silver (or two Green Globes) certified and must receive all of the LEED credits that have been deemed mandatory by the Capital Development Board.

Key Policymaker Contacts