Utilities and Energy Efficiency – How to Bridge the Gap


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As much as such improvements can provide positive financial returns to utility customers, the utilities themselves face some very real financial barriers to offering customer energy efficiency programs.

Duane Tilden‘s insight:

>The inherent conflict between a utility’s business objectives and the objectives of customer energy efficiency programs has long been recognized. Alternative regulatory mechanisms can be implemented that not only make utilities indifferent to the amount of energy they sell, but that also can provide positive earnings from their customer energy efficiency programs. Alternative regulatory mechanisms such as “decoupling,” (separating an utility’s revenues from the amount of energy it sells to customers) are in place in a growing number of states.

Since the premise of these alternative regulatory mechanisms is that they can protect utilities from suffering financial harm from energy efficiency programs, ACEEE examined the experiences of a selected group of utilities to find out how well such regulations have worked. The utilities we selected all have relatively large-scale energy efficiency programs that serve all types of customers. We interviewed utility program managers and executives as well as clean-energy advocates and regulators. We also examined the financial performance of these utilities as represented by their stock performance.

What we found is that these utilities all have performed well financially. We found no evidence to suggest that energy efficiency programs have had negative effects on shareholder returns. While addressing utility business concerns with energy efficiency programs is clearly important, doing so is really just one part of comprehensive policies and regulations that support customer energy efficiency programs. Other keys to successful energy efficiency programs include:

Strong commitments to energy efficiency by regulators and utilities,Ongoing collaboration among utilities and stakeholders,Shared sense of purpose and common goals, and Willingness to experiment and learn from experiences.

See on aceee.org


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