Clean Energy-Environment Guide to Action

Energy Efficiency Policy Tool Kit

Energy Efficiency's Next Generation: Innovation at the State Level

NARUC Resolution Supporting the National Action Plan for Energy Efficiency

National Action Plan for Energy Efficiency

Energy Efficiency and Resource Standards: Experience and Recommendations

Efficiency Means Business: New Study Shows Regulatory Paths for Utilities to Profit from Energy Efficiency Programs

Washington, D.C. (November 2, 2006): The American Council for an Energy-Efficient Economy (ACEEE) today released Aligning Utility Interests with Energy Efficiency Objectives: A Review of Recent Efforts at Decoupling and Performance Incentives, a comprehensive national review of state regulatory mechanisms to encourage utilities to provide customer energy efficiency programs. Such policies have been adopted in over a dozen states around the country and appear to be successfully enhancing utility support for funding and implementing energy efficiency programs.

A number of key factors are converging to produce a rapidly growing interest in energy efficiency by policymakers, regulators, and even utilities themselves. These include: high fuel prices; escalating power plant construction costs; increased uncertainty surrounding cost-recovery for new generating plants; mounting concerns around utility system reliability; public opposition to the location of new generation and transmission facilities; and looming environmental costs, particularly including potential carbon emissions costs.

"In 25 years of work in this field, I have never seen a more compelling set of circumstances for energy efficiency," observed ACEEE Utilities Program Director Dr. Martin Kushler, co-author of the study. "Unfortunately, under traditional regulation, utilities are reluctant to encourage customer energy efficiency because lower customer sales mean less utility profit. That's why these regulatory reform mechanisms are so important."

This new ACEEE report provides a user-friendly explanation of the regulatory issues involved and a comprehensive picture of which states have enacted or proposed these types of regulatory policies. These include mechanisms to "decouple" revenues and profits from sales, and also approaches that provide shareholder financial incentives for achieving energy efficiency program objectives. "Such policies really work to gain the support of senior utility management for customer energy efficiency programs, which is critical for such programs to be offered and for them to succeed," observed Dr. Dan York, co-author of the study. "These policies enable utilities to 'do well by doing good'-we expect to see more and more states enact such policies as the experience with these mechanisms becomes more widely known."

Aligning Utility Interests with Energy Efficiency Objectives: A Review of Recent Efforts at Decoupling and Performance Incentives,including appendices with summaries of a number of state examples, is available for free download at http://aceee.org/pubs/u061.htm or a hard copy can be purchased for $30 plus $5 postage and handling from ACEEE Publications, 1001 Connecticut Avenue, N.W., Suite 801, Washington, D.C. 20036-5525, phone: 202-429-0063, fax: 202-429-0193, e-mail: aceee_publications@aceee.org.