Study: Decoupling policies could boost efficiency spending, savings

Dive Brief:

  • Fresh Energy and the Natural Resources Defense Council (NRDC) have co-authored a paper in Electricity Journal examining five efficiency programs to show how spending and savings increased following a decoupling of utility revenues.
  • "Every utility demonstrated an increase in both spending and savings after decoupling was implemented," and in some instances doubling, according to the author Will Nissen in a blog post
  • The groups stressed, however, that decoupling would simply break the link between sales and revenues. "Complementary policies" like efficiency resource standards and demandside incentives are also needed to ensure savings.

Dive Insight:

The NRDC guest post in Intelligent Utility noted that "the flat, and in some cases declining, demand for utility-delivered energy necessitates policies like decouling that can remove the traditional disincentive for utilities to invest in energy efficiency. " 

Nissen affirmed that statement in his blog post breaking down some of the study's findings over at Fresh Energy. 

"Our research found a clear connection between decoupling mechanisms and increases in electric utility spending on energy efficiency and savings achieved," he writes. "As electric and gas utilities gain more experience with decoupling policies, better data should be available to dive even deeper into the connection between decoupling and utility energy efficiency performance."

Nissen's article looks at five utilities' efficiency programs, including: Idaho Power; Portland General Electric; Pacific Gas & Electric; San Diego Gas & Electric; and Southern California Edison. 

For Idaho Power, for instance, the research looked at efficiency and spending from 2002 to 2014 – with the utility's rates decoupled in 2007. Both efficiency spending and savings increased 400% following decoupling. Other utilities showed less dramatic returns, but still significant: SDG&E saw a 200% increase in spending and an almost-30% rise in savings.

Nissen said there are difficulties in conducting the research on a bigger scale, but as electric and gas utilities gain more experience with decoupling policies,"better data should be available to dive even deeper into the connection between decoupling and utility energy efficiency performance."

Along with decoupling, Nissen also said said "complementary policies such as Energy Efficiency Resource Standards and demandside management financial incentives are needed to drive utility engagement on energy efficiency."

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Top image credit: Aaron McMahon