How decoupling has worked so far

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post-top-powermeter2Thanks to recent decisions by the Minnesota Public Utilities Commission, including one earlier this year, some Minnesota utilities are now utilizing a decoupling policy for the first time. Fresh Energy advocated for that decision because decoupling helps move utilities past the business model of simply selling more and more kilowatt hours. Now, with decoupling policies underway, we’re working to research how best to capture the impacts of decoupling on utility achievements and spending within their energy efficiency programs.

Why decoupling matters

One of the most significant benefits to decoupling is that it removes disincentives for utilities to conserve energy. For example, utilities under a standard business model can often increase their profits by selling more energy. The foundation of their business creates a disincentive for energy conservation programs that reduce the amount of energy that customers use. Decoupling does not guarantee that a utility will conserve more energy, but it can certainly mitigate a significant barrier to do so.

Our research, done in collaboration with the Natural Resources Defense Council and presented at the American Council for an Energy Efficient Economy (ACEEE) “Energy Efficiency as a Resource” national conference, aims to find out how much energy conservation took place once that barrier was removed.

Where we looked

We chose utilities that have had decoupling policies in place for at least three years in order to have a reasonable sample size to compare spending and saving levels prior to and after a decoupling policy was put in place. We also selected utilities with energy efficiency programs and reporting data for at least three years prior to the decoupling policy was implemented. While data access is improving across the country, we were limited by the lack of accessible information in various states. In the end, we were able to compare data from seven different electric utilities in Vermont, Idaho, Oregon, and California.

What we found

The chart below presents average annual utility spending and savings achieved over the pre-decoupling years and post-decoupling years. The column “Decoupling Year” indicates the year decoupling was implemented, and is include in the pre-decoupling data to account for implementation lag. The chart also indicates whether complementary policies that promote energy efficiency, such as Energy Efficiency Resource Standards and utility financial incentives, were in place at any time during the pre- or post-decoupling periods.

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It is critical to remember that decoupling only removes a disincentive for utilities to invest in energy efficiency. Other policies are needed to push or incentivize a utility to invest in customer energy savings. However, the above numbers indicate a connection between increased utility spending and savings achieved and the implementation of a decoupling mechanism for electric utilities.

As we move forward and gain more understanding of how decoupling works for our utilities in Minnesota, research like this will help us improve our policies and realize even greater energy savings for consumers and utilities alike.

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