ORIGINAL REPORTING: How the Colorado decoupling proposal united Xcel and distributed energy advocates
Colorado decoupling proposal unites Xcel, distributed energy advocates; Separating utility revenues from power sales would benefit efficiency and DERs, but some critics are worried about consumer costs
Herman K. Trabish, June 7, 2017 (Utility Dive)
Editor’s note: The tension between New Energy advocates and consumer advocates over cost continues to be an obstacle. Regulators DO need to be reminded of the costs of remaking the power grid but they also must be reninded of WHY they need to remake the power system.
In the landmark 2016 Colorado distributed energy settlement between Xcel Energy and solar advocates, a small provision about something called “decoupling” went somewhat overlooked. The 26 stakeholder groups agreed to not oppose Xcel’s request for decoupling in a parallel proceeding when Xcel withdrew its request for proposed fixed charges. It is noteworthy that Xcel found decoupling worth the tradeoff. Interest in decoupling has been “on the rise,” according to Decoupling Policies: Options to Encourage Energy Efficiency Policies for Utilities from the National Renewable Energy Laboratories report. Only 12 electric utilities used it in 2009, but 24 used it in 2013 and it is now in place at 33 utilities, according to the Natural Resources Defense Council.
Decoupling is a tool that breaks the link between how much energy a utility delivers and its revenues, eliminating the disincentive to the utility for using energy efficiency to reduce its sales. With decoupling, regulators authorize a utility that is facing revenue losses to reset rates between rate cases. The revenue loss can be due to weather, the economy, or shifts in customer behavior driven by technology advances or policy supporting energy efficiency and distributed generation. The rate reset either charges or credits customers when the utility’s actual revenues are less or more than the projection. Xcel’s proceeding filing listed a range reasons the utility wants decoupling, primarily because it aligns the company’s financial interests with customer preferences for distributed generation and efficiency… click here for more