MARYLAND APPROVES DECOUPLING

From Wikipedia: Decoupling: In public utility regulation, decoupling refers to the disassociation of a utility’s profits 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.

Energy Conservation Tool Approved in Md.
Brian White, July 20, 2007 (AP via WTOP News)

WHO
Maryland Public Service Commission (MPSC) utility regulators, Chairman Steven Larsen; Maryland utility Pepco Holdings, Inc.,Joseph Rigby, senior vp/cfo; Maryland Gov. Martin O'Malley;
California's PG & E can support programs like this one because it has "decoupling" so the utility does not lose when the consumer wins.

WHAT
The MPSC approved “decoupling” for the state, allowing energy companies to initiate conservation measures and programs.

WHEN
Gov. O’Malley’s goal is to cut Maryland electricity consumption 15% by 2015. He is also holding a state energy summit next week.

WHERE
Announcement made in Annapolis, Maryland’s capital city.

WHY
- If customers conserve, it means they don’t buy as much energy. It they don’t buy as much energy, the power company doesn’t make as much money. So why would they want to encourage customers to conserve? The answer is “decoupling.”
- A Baltimore Gas and Electric Co. rate rise of 50% that went into effect in June prompted the regulators to look more carefully at how to incentivize energy conservation.
- Gov. O’Malley intends to consider the state’s transmission system and development of alternative energy sources.
- The MPSC also allowed smaller than requested rate increases for major utilities Pepco and Delmarva.
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QUOTES
- Larsen: “[MPSC] removed the financial disincentives companies face if aggressive conservation efforts are successful and sales of electricity are reduced."
- Rigby: "Having this kind of mechanism being approved directly allies the interests of the utility to the customers…"