There is currently no policy in place that decouples electric utility profits from sales, but the Tennessee Valley Authority made a determination that efforts will be made to address the issue of lost contributions to fixed costs for distributors. In 2008, OtterTail Power received approval for its energy efficiency programs, with a flat-rate bonus if the utility met its efficiency goals. Any over/under collection for the first year (including interest), plus forecasted DSM program costs and lost revenues for the second year, are added together to compute rates for the second year. In 2010, the South Dakota Public Utilities Commission authorized the first lost revenue adjustment mechanism for Montana-Dakota Utilities in docket NG09-001.
- Following an April 2007 order (Cases 03-E-0640 and 06-G-0746), electric and gas utilities must file proposals for true-up-based decoupling mechanisms in ongoing and new rate cases.
- The incentive is based on a combination of elements including energy savings, benefit-cost analysis, and market transformation results.
- The Kansas Corporation Commission will consider proposals from electric and gas utilities that include shared savings performance incentives on a case by case basis (Docket 08-GIMX-441-GIV).
- In addition, some utilities earn a rate of return on their efficiency spending, as they would for investments in generation or transmission and distribution infrastructure; these incentives can also be aligned with performance criteria.
- For gas and electric utilities, the percent of net benefits awarded increases as a utility achieves a higher level of energy savings measured as a percentage of retail sales.
PA 295 (2008) contained two provisions whereby utilities could receive an economic incentive for implementing energy efficiency programs. With the passage of Act 342, electric utility providers serving less than 100,000 customers are now eligible to propose a decoupling mechanism for energy efficiency programs. Because the statute requires demand reduction resources in the portfolio, they are implicitly incented in the standard PI for their benefits as calculated for the cost-effectiveness test. https://innovatenexes.com/network-safety-measures.html The enabling statute calls for all cost-effective energy efficiency and demand reduction resources (ch. 25 section 21). The incentive is based on a combination of elements including energy savings, benefit-cost analysis, and market transformation results.
In December 2010 the PSC issued an order approving a general policy under which the Commission outlined steps to approve incentives to reward achievement in the delivery of essential energy conservation services by investor-owned utilities. There is currently no policy in place that rewards successful energy efficiency programs. Alabama Power and Alabama Gas Company may recover a reasonable rate of return on efficiency spending via a rate rider. Alabama Power Company and Alabama Gas Company recover their retail costs (including a reasonable return) through a formulary rate approach called Rate RSE (Rate Stabilization and Equalization). By examining strategies from the water and energy sectors, the guidebook will provide utilities with a menu of options tailored to diverse scenarios, from urban growth to rural population decline. A Collaborative Effort with Expert Insights A key element of the project is a working group composed of leaders from water utilities, government agencies, NGOs, and other sectors.
- Florida does not have decoupling or lost revenue adjustment mechanisms in place for electric or natural gas utilities.
- Dominion Energy retains 9.9 percent of the savings its energy efficiency programs produce, while Duke Energy Carolinas and Duke Energy progress retain 11.5 percent and 11.75 percent, respectively, of the savings its EE programs generate.
- It provides the opportunity for the PUC to consider EDC plan filings that would decouple profits from sales, and allow for alternative methods of cost-recovery including incentives based on program performance.
- Energy efficiency performance incentives are awarded annually for achievement ranging between 80% and 120% of the Commission-established performance goal.
Related Insights
Following an April 2007 order (Cases 03-E-0640 and 06-G-0746), electric and gas utilities must file proposals for true-up-based decoupling mechanisms in ongoing and new rate cases. A penalty is assessed if performance of the target is between 50% and 90%, and a utility is deemed non-compliant if achieving 50% or less of its target. The NJBPU as a state agency does not receive performance incentives for achieving energy savings targets. The Commission has authorized revenue decoupling (in lieu of LBR) for all electric and gas utilities except for one, who is required to propose a decoupling mechanism in its next distribution rate case. The PI formula is the similar for electric and gas utilities comparing planned versus actual. The rules specify a revenue-per-customer system for determining utility revenues to recover fixed costs.
This revenue instability can deter investment in water efficiency measures that offer long-term benefits, including cost savings for utilities and customers. For other ways to give to RMI, including checks or gifts of stock, please visit Other Ways to Give. These reductions would achieve 32 percent of what RMI showed was possible across all sectors (electricity, buildings, and transportation) in the Stepping Up report. The electrification of the energy system would have large implications for the utility, including changes to traditional electricity demand—our research suggested a 31-percent decrease in building energy use and almost 320 MW of distributed solar on customers’ roofs. Our work is supported by philanthropy as well as partnerships, including fee-for-service engagements. It provides in-depth reporting on energy sector R&D, industry and technology news, EPRI thought leadership, and guest perspectives from industry leaders.
- In 2008, OtterTail Power received approval for its energy efficiency programs, with a flat-rate bonus if the utility met its efficiency goals.
- A penalty is assessed if performance of the target is between 50% and 90%, and a utility is deemed non-compliant if achieving 50% or less of its target.
- As part of decoupling, all electric investor owned utilities in Washington have now been committed to increasing acquisition of electric conservation savings by 5% above the Energy Independence Act (EIA) biennial conservation targets while the decoupling mechanism is in effect.
- The performance bonus is based on the utility’s energy efficiency achievements for programs implemented in the previous year (PUCT Substantive Rule §25.181).
- (ii) amortize the annual cost for demand side management over a period of 10 years;
Both Public Service Oklahoma (PSO) and Oklahoma Gas and Electric Company (OG&E) have shared benefit incentive plans. In January 2015, Ohio Senate Bill 310 gave certain customers the ability to opt-out of energy efficiency programs entirely. In the natural gas sector, Piedmont Natural Gas and Public Service Company of North Carolina both have revenue-per-customer decoupling with semi-annual adjustments. Rate-regulated utilities may seek to recover the costs for energy efficiency programs through a Demand-Side Management/Energy Efficiency rate rider. In New York, utilities have earned variations on a rate of return for total expenditures on Non-Wires and Non-Pipes Solutions as well “share-of-savings” incentive mechanisms for Non-Wires Solutions projects. In 2008, the Commission established incentives for electric utility energy efficiency programs under the Energy Efficiency Portfolio Standard (EEPS) proceeding.
THE UTILITY BUSINESS MODEL OF THE FUTURE
Delmarva proposed to recover the costs of the program, amortized over a five-year period, using the same rate of return as their supply-side capital investments. In 2014, the state legislature passed SB 150, calling for the expansion of cost-effective electric and natural gas utility programs and allowing utilities to deliver these programs and recover costs through rates. The docket has been on hold since late 2011 because the conditions required to implement https://caribbean21.com/modern-technologies-in-trading-new-opportunities-for-traders.html decoupling could not be met until Delmarva Power was able to implement energy efficiency programs that benefit its customers.
Given the rapid and unprecedented pace of change in the electricity sector, utilities must embed innovation into their business models, culture, and operations. For example, one paper will assess the implications of energy being viewed as an integrated system—including electricity, heat, and liquid fuels—interacting in complex ways and with differing business models. The sector’s experience with transformational change may provide lessons for utilities. Over the past 20 years, a combination of deregulation, technology advances, and customer demands have upended traditional models in the telecom sector.