In the Energy Conservation Endorsement Act of 1977, Ark. Code Ann. §§ 23-3-401 to 405 (2003), (“the Act”), the Arkansas General Assembly recognized that “enormous amounts of energy are wasted by consumers of all classes and economic levels due to inadequate insulation of buildings and other inefficiencies in the use of energy.” [FN1] The Act broadly defines “energy conservation programs and measures,” [FN2] and states that “energy conservation programs and measures” are broadly defined and that “[i]t shall be considered a proper and essential function of public utilities regulated by the Arkansas Public Service Commission to engage in energy conservation programs, projects, and practices which conserve, as well as distribute, electrical energy and supplies of natural gas, oil, and other fuels.” [FN3]

Furthermore, the Act provides the Commission with the authority to “propose, develop, solicit, approve, require, implement, and monitor” energy efficiency programs “by utility companies” if the Commission finds that such programs and measures “will be beneficial to the ratepayers of such public utilities and to the utilities themselves.” [FN4] “At the time any such programs or measures are approved and ordered into effect” by the Commission, the Act requires that the affected utility also “be allowed to increase its rates or charges as necessary to recover any costs incurred by the public utility company as a result of its engaging in any such program or measure.” [FN5]

Due to the current level and expected increases in energy prices for both infrastructure investment and commodity purchases, along with the minimal level of energy efficiency programs in Arkansas, Commission action regarding energy efficiency is necessary. Consequently, the Commission has developed these rules. These rules apply to the provision of both electricity and natural gas service subject to the jurisdiction of the Arkansas Public Service Commission.