Historically, distribution companies have established an electricity sales forecast that includes both fixed and variable costs of electricity production, and set rates in accordance with that forecast. Once these rates are determined, the distribution companies’ revenue is directly dependent on the amount of kilowatt hours sold. Under this construct, a reduction in kilowatt hours sales due to the success of efficiency programs can be harmful to a distribution company's financial performance. One solution is to “decouple” utility sales from revenues so there is less of a disincentive for companies to invest in energy efficiency. On this page, you will find background information, reports and recent state legislation and regulations.
Background Information and Reports
Regulatory Reform: Removing the Disincentives to Utility Investment in Energy Efficiency The Regulatory Assistance Project (RAP)- September 2005
In this report, RAP discusses the reasons why decoupling mechanisms are necessary in a deregulated market and how they assist with rate design.
Do Electric-Resource Portfolio Managers Have an Inherent Conflict-of- Interest with Energy Efficiency? Natural Resources Defense Council (NRDC) for ACEEE Summer Study- 2004
This paper looks at how to structure incentives for energy efficiency in the context of an entire portfolio of resources, drawing heavily on California’s recent experience.
Breaking the Consumption Habit Ratemaking for Efficient Resource Decisions
NRDC- December 2001
This article, published in the Electricity Journal, gives a thorough background of decoupling mechanisms and identifies historical experiences from California, Oregon, Washington, New York, and Maine.
State Legislation and Regulations
Connecticut
Department of Public Utilities Docket 05-09-09
Massachusetts
Department of Public Utilities Docket 07-50
New Hampshire
Public Utilities Commission Docket 07-064
New Jersey
New Jersey Natural Gas Company Decoupling Pilot Press Release
New York
Public Service Commission Docket 06-G-0746
