How Rate Reform can Help Turn Energy Efficiency into a ‘Profit Center’ for Utilities

Utility Dive, April 2016

Decoupling and performance-based regulation can make saving energy more appealing to power providers

It’s a common quip in energy efficiency circles that the most cost-effective megawatt is a megawatt saved. But for utilities, the financial incentive often works the other way.

Power providers make money off the electricity they sell, so efficiency improvements can cut into company revenues if there’s no regulatory mechanism to prevent it.

But such problems can be easily fixed with good policy, according to a new report for Texas regulators from the South-central Partnership for Energy Efficiency as a Resource, or SPEER.

“Utilities are in business to make money and the tendency to impose energy efficiency mandates on them fails to take into account that those mandates could impose losses and stranded costs,” said Steve Isser, co-author of the SPEER paper and president of the consultancy and analysis firm Energy Law and Economics.

To read the full article: How Rate Reform Can Help Turn Energy Efficiency into a ‘Profit Center’ for Utilities