Revenue Regulation, aka, Decoupling
Many utility-sector stakeholders have recognized the conflicts implicit in traditional regulation that compel a utility to encourage energy consumption by its customers, and they have long sought ways to reconcile the utility business model with contradictory public policy objectives. Economic and environmental imperatives demand that we reshape our energy portfolios to make greater use of end-use efficiency, demand response, and distributed, clean resources, and to rely less on polluting central utility supplies. Decoupling—breaking the link between utility sales and revenues—is a key component of a broader strategy to better align the utility’s incentives with societal interests.In a presentation to the New Mexico Public Regulation Commission, Janine Migden-Ostrander discussed regulation and decoupling, including consumer protections for decoupling, and decoupling design and choices. She also examined straight/fixed variable rates and offered a sample rate design structure for discussion purposes.