Program Basics


The 76th Texas Legislature passed a law requiring electric Transmission & Distribution Utilities (TDUs) to meet certain energy efficiency goals.  The Public Utility Commission of Texas (PUC) Substantive Rule §25.181 (Energy Efficiency Rule) establishes procedures for meeting these goals.

To comply with the Energy Efficiency Rule, the TDUs offer energy efficiency programs to customers within their respective service territories.  These programs involve the installation of energy efficiency measures such as insulation, high efficiency lighting, photovoltaic systems, and more.  In addition, the utilities also offer programs directed specifically at cities and schools to help local governments reduce operating costs and save energy.

Because state legislation mandates that TDUs cannot directly perform energy efficiency services or install efficiency measures directly for end-use consumers, the TDUs partner with independent, third-party service providers who are responsible for installing enegy efficiency measures at residences and businesses.  Referred to as “project sponsors,” these third-party providers  include air conditioning contractors, insulation installers, lighting contractors, retail electric providers, energy service companies, and other energy efficiency service contractors.  The project sponsors receive incentive payments from the TDUs for installing energy efficiency measures that result in peak demand reductions and electricity savings.

Project sponsors contact electricity consumers from all customer classes (resiential, commercial or industrial) within each TDUs service area about performing work to save energy and reduce their electric bills.  This gives each customer a variety of energy efficiency alternatives.  Customers select the contractor, decide what equipment will be installed, and choose what work the contractor will do.  Price, warranty, financing, and other purchasing matters are entirely between the contractor and customer.

Types of Programs

Standard Offer Program (SOP)

An SOP is a type of energy efficiency program where parties enter into a contract with standard terms and conditions.  Utilities offer standard incentives for a wide range of measures that are bundled together as a project. Payment is based on energy efficiency performance.

The SOPs offered by the Texas IOUs are:

  • Commercial programs target customers that meet minimum demand requirements with incentives for measures that provide verifiable demand and energy savings.
  • Residential and small commercial programs provide incentives on a wide range of measures that reduce system peak demand, energy consumption and energy costs.
  • Low income programs encourage energy efficiency improvements in households with annual incomes at or below 200% of the federal poverty guideline.
  • Load management programs encourage electric load control or shifting of electric loads in facilities from on-peak to off-peak periods.

Market Transformation Program (MTP)

An MTP is a strategic effort to make lasting changes in the market that result in increased adoption of energy efficieny technologies, services, and practices.  MTPs are designed to overcome specific market barriers that prevent energy efficient technologies from being accepted.  There are more than fifteen different MTPs offered in Texas, including the following:

  • ENERGY STAR New Home Construction
  • Texas Schools Conserving Our Resources (SCORE) and CitySmart Programs
  • Commercial Retro-commissioning
  • AC Installer and AC Distributor Programs