CLEAResult and Energy Infrastructure Advocates: Aligning Performance Incentives

Customers want the lower bills that come from energy efficiency. Utilities want their customers to be happy, but they cannot responsibly forgo earning opportunities for their shareholders. Regulators want lower costs and lower emissions. Utilities are increasingly emphasizing customer satisfaction, engagement and empowerment.

Efficiency can deliver on all counts, producing positive outcomes for customers, utilities and policymakers alike, according this report that includes contributions from CLEAResult, Advanced Energy Economy, American Council for an Energy Efficient Economy and Energy Innovation LLC. The report was written by CLEAResult’s Doug Lewin and Peter Kind, of Energy Infrastructure Advocates LLC.

Their survey of Wall Street analysts reveals that a clear pathway to a 10 percent increase in earned returns on equity, or ROE, from performance incentives would positively impact shareholder value. This increase is roughly equal to a 1 percent increase in ROE. The current performance incentives are important but insufficient to motivate boards of directors and utility executives to drive the shift in culture, behavior and motivation to pursue additional EE measures.

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