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Decoupling: removing market barriers to energy efficiency.

Publication: The Review of Policy Research
Publication Date: 01-SEP-07 		Format: Online
Delivery: Immediate Online Access
Full Article Title: Decoupling: removing market barriers to energy efficiency.(25 ideas)(Legislation)

Article Excerpt
Under decoupling, utilities use standard rate-making procedures to predict energy sales and required revenue, from which electricity rates are determined. However, rather than generating revenue from actual energy sales multiplied by the rate, the utilities are guaranteed an "authorized revenue" that includes operating costs and a predetermined return on investment.

If the income from electricity sales is above the authorized revenue, the utilities place excess income in a balancing account. Similarly, if the income from electricity sales is below the authorized revenue, the utilities draw from the balancing account to meet their authorized revenue. Doing so insulates the utilities' profits from the price shocks that occur under normal market regulation.

California's...

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