California said it had approved the most aggressive energy efficiency plan among U.S. states on Thursday, earmarking $3.1 billion to retrofit homes and other programs that will cut power needs equivalent to three medium-sized power plants.

Conservation and efficiency have become national buzzwords as the economy has failed, since such investments have some of the quickest paybacks of any in 'green' industries.

The California Public Utilities Commission set a three-year budget for utilities 42 percent higher than the previous plan. The state pioneered the concept of letting utilities raise rates as they spurred conservation, which still is not the case in many U.S. states.

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