Support for utility efficiency programs continues to grow


A new report by IEE, State Electric Efficiency Regulatory Frameworks, shows that regulatory frameworks that support utility electric efficiency (EE) programs continue to grow.

Spending and budgets for electric utility company EE programs continue to grow, due in large part to the evolution of state policies that allow utilities to pursue efficiency as a sustainable business. Utility company EE budgets in 2012 totaled $6.9 billion—a 27 percent increase above 2010 levels. By 2025, IEE predicts that EE budgets will exceed $14 billion.

The report finds that all states with ratepayer-funded EE programs have direct cost recovery of program expenditures. Since its last update in July 2012, IEE found that 31 states have some type of fixed-cost recovery mechanism to align utility fixed costs with investments in energy efficiency programs, up from 27 states in 2012. Regarding performance incentives, 28 states currently have them in place, up from 23 states in 2012.

This report summarizes ongoing and recent policy developments that support utility investments in electric efficiency programs, including program cost recovery, fixed cost recovery, and performance incentives for electric utilities on a state-by-state basis.

Since the last IEE update (July 2012), several states have expanded the business environment to support
investments in efficiency programs by electric utilities.

The report includes the following key findings:

“- In total, 32 states have approved fixed cost recovery mechanisms – 14 with revenue decoupling and
18 with lost revenue adjustment mechanisms. This is up from 27 states in 2012. Three additional
states have open cases that await a decision by their respective regulators.
“- 18 states have lost revenue adjustment mechanisms, including Missouri and Louisiana, which received
approval recently. Two additional states – Mississippi and Virginia – await regulatory approval
of lost revenue adjustment mechanisms.
“- 14 states have electric decoupling mechanisms, including Washington, which received approval
recently. Delaware awaits a decision on its proposed decoupling mechanism.

Click here for report


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