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State Policy Planning for a Clean Smart Grid
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| Lisa Schwartz March 2010
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| PDF 352KB |
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RAP's Lisa Schwartz made this presentation to EPA's State Climate and Energy Technical Forum, describing policies states should consider to reap clean energy benefits from smart grid investments.
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Financial Analysis of Incentive Mechanisms to Promote Energy Efficiency: Case Study of a Prototypical Southwest Utility
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| Chuck Goldman, Peter Cappers, Michele Chait, George Edgar, Jeff Schlegel & Wayne Shirley March 2009
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| PDF 2MB |
This is the main study report.
In this study, we modeled a prototypical vertically-integrated electric investor-owned utility in the southwestern US that is considering implementing several energy efficiency portfolios that have increasing energy savings targets. We analyze the financial and economic impacts of these energy efficiency portfolios on utility shareholders and customers, including the effects of a decoupling and/or various shareholder incentive mechanisms, compared to a “business as usual” case without energy efficiency programs. We examined three incentive mechanisms that have been implemented at a number of utilities (i.e. Performance Target, Cost Capitalization, and Shared Net Benefits) and the Save-A-Watt mechanisms proposed by Duke Energy in the Carolinas and Ohio. The NAPEE Benefits Calculator, a pro-forma financial model, was significantly expanded to conduct this analysis.
Related documents: Technical Appendices and
PowerPoint Summary
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Revenue Per Customer Decoupling Spreadsheet
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| Wayne Shirley April 2008
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| XLS 200KB |
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This spreadsheet demonstrates the revenue per customer method of decoupling. This file was updated on April 24 by changing some labels to better reflect the nature of the calculations. Specifically, references to "forecast" items were changed to "Post Rate Case" items.
This spreadsheet was presented to the Hawaii Clean Energy Initiative Workshops, April 21-25, 2008.
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Energy Efficiency Policy Toolkit
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| Cheryl Harrington, Cathie Murray & Liz Baldwin January 2007
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| PDF 507KB |
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In light of the higher natural gas prices and electricity prices occurring in their states,
many electric and gas utility regulators have a growing interest in energy efficiency and
renewable energy and in encouraging the use of distributed generation. These clean
energy resources have high value in meeting the need for affordable, reliable generation,
transmission and distribution for both electricity and natural gas, but they require careful
policy groundwork to assure their development.
Rather than address why policy makers might want to develop more aggressive clean
energy policies, this Energy Efficiency Policy Toolkit assumes you are already interested.
It sets out a compendium of tried and true regulatory policies that will advance the
development of cost-effective clean energy within both the electric and gas systems in
your state. We examine policy options in four primary areas: energy efficiency,
renewable energy, distributed resources and rate design. We also discuss the key
importance of regulatory financial incentives which play an essential role in either
discouraging or supporting the development of clean energy, particularly energy
efficiency.
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Decoupling: Characteristics and Impacts
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| Wayne Shirley July 2010
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| PDF 170KB |
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Wayne Shirley made this presentation to the Energy Resources and the Environment Committee at the NARUC summer meetings, held in Sacramento, CA. The presentation highlights the basic mechanics of decoupling revenues from sales. It includes preliminary results from a more extensive case study analyzing the impacts of decoupling on residential customers with low, average and high energy usage under inclining block rates, flat rates and straight-fixed variable rates.
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Decoupling Workshop: Arizona Corporation Commission
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| Wayne Shirley and Jim Lazar April 2010
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| PDF 429KB |
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This is a presentation by Wayne Shirley and Jim Lazar made to the Arizona Corporation Commission. The workshop addressed the fundamentals of decoupling, a discussion of alternatives to decoupling, and a review of the cost of capital impacts of decoupling. Similar presentations were also made to the Pennsylvania PUC Working Group and the Ohio Consumers' Council.
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Regulatory Barriers to Energy Efficiency
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| Richard Sedano December 2009
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| PDF 399KB |
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Richard Sedano delivered this presentation to the National Conference of State Legislatures' Advisory Committee on Energy, addressing how regulation and underlying statutes present barriers to deployment of energy efficiency and how to lower or remove those barriers.
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Energy Efficiency Incentives for Utilities: Approaches in US, Stakeholder Process in Idaho
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| Lisa Schwartz, Jim Lazar and Wayne Shirley November 2009
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| PDF 151KB |
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RAP presentation for a Webinar convened by Idaho State Senator Elliot Werk. Explains how sales and conservation affect utility profits and how positive financial incentives for utilities can promote acquisition of all cost-effective energy efficiency. Covers types of shareholder incentives, design features, and pros and cons. Describes the Idaho Power stakeholder process for developing an incentive mechanism for consideration by the Idaho Public Utilities Commission and principles for legislative actions. Includes a map of energy efficiency incentives in place as of November 2009 for US utilities.
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Energy Efficiency Incentives for Utilities: A Review of the Approaches So Far
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| Lisa Schwartz and Wayne Shirley October 2009
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| PDF 466KB |
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Presentation by Lisa Schwartz and Wayne Shirley for a workshop on energy efficiency incentives for utilities, hosted by the Idaho Office of Energy Resources on October 6, 2009. Includes an overview of incentive approaches and a survey of current incentive mechanisms for U.S. utilities based on a review of source documents.
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The Role of Decoupling Where Energy Efficiency Is Required by Law
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| Lisa Schwartz August 2009
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| PDF 263KB |
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The September 2009 RAP Issuesletter gives an overview of energy efficiency resource standards and explains why such standards -- or broader requirements to acquire all cost-effective energy efficiency -- make it even more urgent that regulators decouple utility profits from utility sales in order to more fully tap the deep well of cost-effective efficiency resources and meet clean energy goals. The Issuesletter includes a basic description of decoupling and explains why decoupling is needed even where a third party administers energy efficiency programs.
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Implementing Energy Efficiency in Wyoming
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| Richard Sedano and Lisa Schwartz August 2009
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| PDF 1MB |
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This is a presentation made by Richard Sedano and Lisa Schwartz at an Energy Efficiency Workshop for the Wyoming Public Service Commission.
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The Utility Business Model and Energy Efficiency
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| Richard Sedano July 2009
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| PDF 509KB |
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This is a presentation made by Richard Sedano on a recent study by the Lawrence Berkeley National Lab (LBNL) and RAP entitled "Financial Analysis of Incentive Mechanisms to Promote Energy Efficiency: Case Study on Protypical Southwest Utility." This presentation was made at a Workshop on Energy Efficiency as part of the Arkansas Public Service Commission's Sustainable Energy Resources Collaborative.
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Rate Impacts and Key Design Elements of Gas and Electric Utility Decoupling: A Comprehensive Review
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| Pamela Lesh, NRDC June 2009
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| PDF 304KB |
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This report, written by Pamela Lesh of NRDC, compiles the rate impact experience during this decade with decoupling of retail gas and electric utility revenues from sales volumes and provides, along with this, information on relevant order numbers, statutes, mechanism descriptions, and implementing tariffs. Sources included utility and state regulatory commission websites, the American Gas Association and the Edison Electric Institute, and, in a few cases, helpful utilities.
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Ramping up Energy Efficiency: Three Issues along the Way
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| Richard Sedano May 2009
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| PDF 232KB |
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Rich Sedano delivered this presentation on energy efficiency to the 2009 NECPUC symposium. The presentation addresses all-fuels energy efficiency, utility incentives to ramp up energy efficiency commitments and attribution of savings.
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Financial Analysis of Incentive Mechanisms to Promote Energy Efficiency: Case Study of a Prototypical Southwest Utility
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| Chuck Goldman, Peter Cappers, Michele Chait, George Edgar, Jeff Schlegel & Wayne Shirley March 2009
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| PDF 720KB |
This is a PowerPoint summary of this study.
In this study, we modeled a prototypical vertically-integrated electric investor-owned utility in the southwestern US that is considering implementing several energy efficiency portfolios that have increasing energy savings targets. We analyze the financial and economic impacts of these energy efficiency portfolios on utility shareholders and customers, including the effects of a decoupling and/or various shareholder incentive mechanisms, compared to a “business as usual” case without energy efficiency programs. We examined three incentive mechanisms that have been implemented at a number of utilities (i.e. Performance Target, Cost Capitalization, and Shared Net Benefits) and the Save-A-Watt mechanisms proposed by Duke Energy in the Carolinas and Ohio. The NAPEE Benefits Calculator, a pro-forma financial model, was significantly expanded to conduct this analysis.
Related documents:Technical Appendices and Main Report
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Financial Analysis of Incentive Mechanisms to Promote Energy Efficiency: Case Study of a Prototypical Southwest Utility: Technical Appendices
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| Chuck Goldman, Peter Cappers, Michele Chait, George Edgar, Jeff Schlegel & Wayne Shirley March 2009
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| PDF 346KB |
These are the technical appendices to the main report.
In this study, we modeled a prototypical vertically-integrated electric investor-owned utility in the southwestern US that is considering implementing several energy efficiency portfolios that have increasing energy savings targets. We analyze the financial and economic impacts of these energy efficiency portfolios on utility shareholders and customers, including the effects of a decoupling and/or various shareholder incentive mechanisms, compared to a “business as usual” case without energy efficiency programs. We examined three incentive mechanisms that have been implemented at a number of utilities (i.e. Performance Target, Cost Capitalization, and Shared Net Benefits) and the Save-A-Watt mechanisms proposed by Duke Energy in the Carolinas and Ohio. The NAPEE Benefits Calculator, a pro-forma financial model, was significantly expanded to conduct this analysis.
Related documents: PowerPoint Summary and
Main Report
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Utility Sector Incentives and Disincentives for Renewable Energy
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| Wayne Shirley January 2009
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| PDF 132KB |
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This is a white paper prepared for the Arizona Leadership Summit on Solar Energy and Economics held in Phoenix on January 9, 2009. This paper addresses utility sector economic incentives and disincentives and their impact on the deployment of renewable energy. It focuses on the use of revenue decoupling to address disincentive issues faced by utilities.
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Overview of Utility Incentives
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| Wayne Shirley August 2008
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| PDF 437KB |
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This is the presentation made by Wayne Shirley at the Kansas Corporation Commission Workshop on Energy Efficiency on August 26, 2008.
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Decoupling: Mechanics and Issues
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| Wayne Shirley July 2008
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| PDF 308KB |
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This is a presentation made by Wayne Shirley to the New Mexico Public Regulation Commission on July 16-17, 2008 for a workshop on energy efficiency incentives for public utilities.
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Overview of Utility Energy Efficiency Incentives
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| Wayne Shirley July 2008
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| PDF 128KB |
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This is a presentation made by Wayne Shirley to the New Mexico Public Regulation Commission on July 16-17, 2008 for a workshop on energy efficiency incentives for public utilities.
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Revenue Decoupling - Standards and Criteria, A Report to the Minnesota Public Utilities Commission
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| Wayne Shirley, Jim Lazar and Frederick Weston June 2008
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| PDF 596KB |
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In 2007, the Minnesota legislature enacted a new statute, Section 216B.2412, in which it defined an alternative approach to utility regulation, decoupling, and directed the Public Utilities Commission (PUC) to “establish criteria and standards” by which decoupling could be adopted for the state’s rate-regulated utilities. In addition, the legislation authorized the PUC to allow one or more utilities “to participate in a pilot program to assess the merits of a rate-decoupling strategy to promote energy efficiency and conservation,” subject to the criteria and standards that the PUC will have established.
The groundwork for this report was laid through a series of meetings in April and May 2008 with commissioners and staff of the PUC, officials at the Office of the Attorney General, and staff at the Office of Energy Security, through written comments from stakeholders, and through a two-day workshop attended by representatives of the state agencies, affected utilities, and other interested parties. This report is the product of that collaboration.
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Perspectives on Energy
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| Wayne Shirley June 2008
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| PDF 398KB |
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This is the presentation made by Wayne Shirley to the City of New Orleans City Council Utility Committee on June 25, 2008.
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Utility Incentives and Disincentives
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| Wayne Shirley April 2008
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| PDF 301KB |
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This a presentation by Wayne Shirley to the Hawaii Clean Energy Initiative Workshop in Honolulu, April 21-25. It addresses issues relating utilities' throughput incentives, decoupling revenues from sales and approaches for positive incentives to support energy efficiency.
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Hawaii Clean Energy Initiative - Regulatory Training Intro
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| Alison Silverstein, Contractor for Office of Electricity Delivery and Energy Reliability U.S. Department of Energy April 2008
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| PDF 938KB |
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This is a presentation given by Alison Silverstein at the Hawaii Clean Energy Initiative Workshops.
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Energy Efficiency Policy Tookit
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| Cheryl Harrington, Catherine Murray, Liz Baldwin November 2006
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| PDF 591KB |
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In light of the higher natural gas prices and electricity prices occurring in their states,
many electric and gas utility regulators have a growing interest in energy efficiency and
renewable energy and in encouraging the use of distributed generation. These clean
energy resources have high value in meeting the need for affordable, reliable generation,
transmission and distribution for both electricity and natural gas, but they require careful
policy groundwork to assure their development.
Rather than address why policy makers might want to develop more aggressive clean
energy policies, this Energy Efficiency Policy Toolkit assumes you are already interested.
It sets out a compendium of tried and true regulatory policies that will advance the
development of cost-effective clean energy within both the electric and gas systems in
your state. We examine policy options in four primary areas: energy efficiency,
renewable energy, distributed resources and rate design. We also discuss the key
importance of regulatory financial incentives which play an essential role in either
discouraging or supporting the development of clean energy, particularly energy
efficiency.
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Decoupling Utility Profits From Sales
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| Wayne Shirley September 2006
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| PDF 121KB |
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This is the presentation made by Wayne Shirley at the September 18, 2006 Arizona Decoupling Stakeholder Meeting.
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Presentation and Related Files for the NARUC Workshop Aligning Regulatory Incentives with Demand-Side Reources
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| David Moskovitz and Wayne Shirley August 2006
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| ZIP 950KB |
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This Zip file contains presentations made by David Moskovitz and Wayne Shirley NARUC Workshop Aligning Regulatory Incentives with Demand-Side Reources at the NARUC 2006 Summer Committee Meetings in San Francisco, California. This file also include the Mid-Atlantic Distributed Resources Initiative (MADRI) Revenue Stability Model Rate Rider and the associated Model Rate Rider Case Study. It also include a sample decoupling "problem" and the associated answer key.
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Minnesota Decoupling Workshop
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| Cheryl Harrington and Jim Lazar May 2006
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| PDF 207KB |
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Presentations made by Jim Lazar and Cheryl Harrington at the Minnesota Decoupling Workshop
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Indiana Decoupling Workshop
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| Cheryl Harrington and Jim Lazar April 2006
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| PDF 274KB |
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Presentations made by Cheryl Harrington and Jim Lazar to the Indiana Public Utilities Commission Workshop on Decoupling
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Barriers to Energy Efficiency
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| Wayne Shirley July 2005
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| PDF 100KB |
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Presentation by Wayne Shirley to 2005 MACRUC Meeting on Barriers to Energy Efficiency, including policies for decoupling utility profits from sales volume.
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Distributed Resource Barriers
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| Wayne Shirley June 2005
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| PDF 34KB |
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Presentation by Wayne Shirley to the 12th Annual New England Energy Conference and Exposition on June 14, 2005.
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Performance Based Regulation for Distribution Utilities
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| Regulatory Assistance Project December 2000
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| PDF 86KB |
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This report provides regulators and their staffs with practical advice on performance-based regulation
(PBR) for distribution utilities. It focuses, in particular, on how to design and evaluate PBRs that
encourage deployment of cost-effective distributed resources – both smaller-scale dispersed generation
and end-use efficiency. Most commissions will confront PBR issues in context of a particular utility
proposal. Of course, no report can anticipate all of the issues or details that such a filing will raise; but it
is both possible and worthwhile to describe a relatively straightforward series of steps and questions
that can guide commissions and their staffs in dealing with the most important issues. For commissions
that have the luxury of considering PBR outside the context of a particular case, this same set of steps
and questions will help form the foundation of a general PBR rule.
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Profits and Progress Through Distributed Resources
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| David Moskovitz February 2000
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| PDF 247KB |
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This paper explores technological advances in the aerospace industry, small and micro-scale power plants, technologies born in the military and automotive industries (fuel cell car engines will be fuel cell power plants). These distributed generating resources are located in the utility’s distribution system and can be on either side of a customer’s electric meter. Along with better known and proven energy efficiency and load management technologies, these distributed resources are poised to revolutionize the electric utility industry. Many, but not all, of these small fuel-based technologies are highly efficient, mobile, and cleaner than central station generation. Distributed resources based on renewables (wind and photovoltaics) and energy efficiency are always cleaner. And, thanks to small size and mass production, the cost of all these technologies is dropping fast. The combination of advances in distributed resources and in control and information technologies means that distributed resources can play a central role if markets and regulators allow these resources to compete.
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Issuesletter: Performance Based Regulation: A Policy for a Changing World
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| Regulatory Assistance Project September 1994
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| PDF 216KB |
Performance based regulation (PBR) is a concept presented as a regulatory alternative. Rather
than frequent reviews of utility costs and setting rates to reimburse utilities for what they spend,
PBR takes a longer term view and focuses on how utilities perform. In a well-designed PBR,
good performance should lead to higher profits. Poor performance should lead to lower profits.
The modern roots of PBR in electric utility regulation can be found in NARUC¹s 1989
Resolution which calls for ratemaking practices that align utilities' pursuit of profits with the
implementation of their least-cost plans. Section 111 of the Energy Policy Act of 1992
subsequently embraced this policy.
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Regulatory Reform: Removing Disincentives
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| Regulatory Assistance Project June 1994
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| PDF 320KB |
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Every regulatory system creates a set of incentives and disincentives. Some are deliberate, and
others are unintended but just as effective. Traditional ratemaking results in some strong
disincentives to acquiring demand-side resources. These include:
1. Utilities are restricted in how they can recover DSM program expenses.
2. Utilities by devoting resources to DSM programs rather than to other profit-making
activities forego earning opportunities.
3. Utilities can lose revenues and profits from sales not made as a result of successful
energy efficiency programs.
It is incumbent upon regulators to recognize what disincentives in the traditional ratemaking
process make DSM investments financially objectionable to utilities and decide whether
incentives should be instituted. Regulators cannot police every decision utility management
makes. Aligning a utility's financial interest with articulated public policy objectives is a
powerful means of encouraging utilities to make decisions in a manner that is consistent with
policy objectives.
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Profits and Progress Through Least-Cost Planning
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| David Moskovitz November 1989
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| PDF 291KB |
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Least-cost planning (LCP) is a process of examining all electricity-saving and electricity-producing options to select a mixture of options that minimizes total consumer cost, often including consideration of environmental concerns and other responsibilities. In the broadest sense, this paper discusses issues relating to the earnings implications that flow from the pursuit of least-cost plans. More narrowly, however, the issues, discussion, and conclusions apply with equal force whenever a utility implements cost-effective demand-side measures, whether as part of a least-cost plan or not. To a lesser extent, the paper addresses how these issues relate to many supply-side options, particularly cogeneration and renewable resources.
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