Utility Revenue Decoupling

Utility revenue decoupling, sometimes also more generally referred to as revenue regulation, is a policy mechanism that can stabilize utility revenues, and remove perverse incentives that some utilities have to increase electricity sales even when it is less expensive to invest in energy efficiency and other kinds of demand side management.

Selected Decoupling Resources:

  • The Old Model Isn’t Working (Download PDF): a 15 page white paper published in 2011 by the American Council for an Energy Efficient Economy (ACEEE).  It outlines the three major policy pieces required for a robust utility led demand side management (DSM) program: cost recovery, performance incentives, and the removal of the throughput incentive… often using revenue decoupling. A great introduction for anyone wondering why utilities aren’t always enthusiastic about energy efficiency.
  • Decoupling Options to Encourage Utility Energy Efficiency (Download PDF): An 8 page brief published in 2009 by the National Renewable Energy Lab (NREL), looking at the difference between “traditional” utility revenue regulation and decoupling. Includes and overview of the different choices regulators need to make when implementing a decoupling policy.
  • FAQ on Decoupling for Electric and Gas Utilities (Download PDF): A 12 page backgrounder/FAQ from the National Association of Regulatory Association Commissioners (NARUC) Committee on Energy Resources and the Environment.  Aimed at regulators and their staff.  Short and dense, including some simple case study and example asides. Published in 2007.
  • Revenue Regulation and Decoupling: A Guide to Theory and Application (Download PDF): A 94 page deep dive from the Regulatory Assistance Project, explaining many of the different variables that regulators should consider when implementing revenue decoupling and other revenue regulation mechanisms.  The first half is the core of it, the second half is case studies.  Bring plenty of coffee… this one is very dry. Published in 2011.

Featured CEA Decoupling Posts:

  • A Decoupling Update (11/24/2014) - So, it’s been quite a while since our last long policy post, focusing on utility revenue decoupling in connection with Xcel’s current rate case (14AL-0660E) before the Colorado PUC.  That’s because we’ve been busy actually intervening in the case! A Climate Intervention We filed our motion to intervene in early August.  As you might already … Continue reading A Decoupling Update
  • Utilities Decoupling to Cover Their… Assets (7/28/2014) - Last month, Xcel Energy subsidiary Public Service Company of Colorado (PSCo) filed a rate case at the Colorado Public Utilities Commission (Docket: 14AL-0660E).  A lot of the case — the part that’s gotten most of the press — is about PSCo recovering the costs of retiring and retrofitting coal plants as agreed to under the … Continue reading Utilities Decoupling to Cover Their… Assets

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