decoupling

Fri, 2013-08-16 07:00Guest
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Study Finds Utility Decoupling is Gaining Traction

This is a guest post by Clint Robertson.

A new study found that 25 states had adopted revenue decoupling for at least one natural gas or electric utility by December 2012. In total, 24 electric and 49 natural gas utilities participate in decoupling according to the report by the American Council for an Energy-Efficient Economy, the Regulatory Assistance Project and the Natural Resources Defense Council.  

This is a big increase over 2009 data, which found that just 28 natural gas and 12 electric utilities had adopted revenue decoupling. So why the sudden increase in utility interest for decoupling?

Under most regulatory conditions, utilities make money based on how much energy their customers consume each month.  The more energy a utility sells, the larger its profit margin. While it's an effective way for utilities to make money and the system has worked well for over a century, it’s a hindrance to energy-efficiency initiatives that many states are mandating.

Basically, for utilities, waste and pollution equal profit.  If a utility promotes energy savings, it sells less energy, and in turn loses money.  To further complicate things, the decreased revenue makes it harder for utilities to cover fixed costs, such as the regular maintenance of power lines and facilities necessary for reliable energy service. So in an age where going green prevails and climate change initiatives stretch across the globe, it's not easy to get a utility to support energy-efficiency initiatives.

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