Weighing decoupling vs. lost revenues: Regulatory considerations

In 1989 a resolution adopted by the National Association of Regulatory Utility Commissioners expressly recognized that utilities lose revenues and profits when they or their customers invest in cost-effective energy efficiency. NARUC called for reform of regulation so that the successful implementat...

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Bibliographic Details
Published in:The Electricity journal 1992-11, Vol.5 (9), p.58-63
Main Authors: Moskovitz, David, Harrington, Cheryl, Austin, Tom
Format: Article
Language:English
Subjects:
296000 - Energy Planning & Policy- Electric Power
990100 - Management
COMPARATIVE EVALUATIONS
COST
DECOUPLING
ECONOMIC ANALYSIS
ECONOMICS
EFFICIENCY
ELECTRIC UTILITIES
ENERGY EFFICIENCY
ENERGY PLANNING, POLICY AND ECONOMY
EVALUATION
GENERAL AND MISCELLANEOUS//MATHEMATICS, COMPUTING, AND INFORMATION SCIENCE
MANAGEMENT
PUBLIC UTILITIES
RATE STRUCTURE
REGULATIONS
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Summary:In 1989 a resolution adopted by the National Association of Regulatory Utility Commissioners expressly recognized that utilities lose revenues and profits when they or their customers invest in cost-effective energy efficiency. NARUC called for reform of regulation so that the successful implementation of a utility's least-cost plan was also its most profitable course of action. NARUC said that regulation should align the utility's financial interest with the interests of its customers. Much of the effort to align utility shareholders' financial interests with the goals of least-cost planning has focused on the removal of the potent disincentives to energy efficiency created by the current ratesetting process. Decoupling and lost revenue recovery are the two general approaches used to eliminate the disincentives. This paper discusses the important characteristics and distinctions between the two options. 1 tab.
ISSN:1040-6190
1873-6874
DOI:10.1016/1040-6190(92)90096-P