DOE SAYS UTILITIES NEED INCENTIVE TO BE EFFICIENT

Several utilities are looking at ways to finance consumers’ efficiency installations, charge via the utility bill and earn returns from the improvements even as their earnings from selling energy wanes.

U.S. DOE Secretary Urges State Incentives For Utility Energy Savings
Matthew Dalton, July 16, 2007 (Dow Jones via Nasdaq)

WHO
Department of Energy (DOE) Secretary Samuel Bodman, National Association of Regulatory Utility Commissioners
The savings can go to whoever pays for the efficiency improvements. (click to enlarge)

WHAT
Bodman told the Commisioners that state regulatory agencies must impose “decoupling” on local utilities, giving them an incentive to help consumers cut energy consumption.

WHEN
Statement July 16.

WHERE
Bodman spoke to the Commissioners in New York City.
California is the only state that currently has a decoupling program. It has been successful but required mediation when applied to the new “Million Solar Roofs” initiative.

WHY
Decoupling: In public utility regulation, decoupling refers to the disassociation of a utility profit's from its sales of the energy commodity. Instead, a rate of return is aligned with meeting revenue targets, and rates are trued up or down to meet the target at the end of the adjustment period. This makes the utility indifferent to selling less product and improves the ability of energy efficiency and distributed generation to operate within the utility environment.
If the utilities encourage conservation, they lose revenue, so why would they? It's like if you were once the head of an oil company and then you became Vice President, why would you encourage people to drive cars that consumed less gas? (click to enlarge)

QUOTES
Bodman: "This is among the most important and urgent principles for each state to consider for itself…The DOE will help states to initiate these types of programs…"