Rewarding utilities for conservation success through "decoupling."
by Alan Durning
Utilities are among the few remaining large companies that are relatively solvent and profitable. Harnessing their might to retrofits for all would be a powerful step toward economic stimulus.
But most utilities in Cascadia are conflicted about helping their customers save energy. On the one hand, they’re legally obligated to do it. On the other hand, if they do it successfully, they don’t make as much money.
Resolving this conflict in favor of conservation requires an innovative form of utility regulation called “decoupling.” A decoupled utility makes profits not in proportion to its sales but in proportion to its success in advancing efficiency. (Decoupled utilities, furthermore, have nothing to fear from comprehensive, auctioned cap and trade with built-in protections for working families.)
In recent years, Cascadian utilities and utility regulators have been making stepwise progress on decoupling. Oregon’s two big natural gas companies—NW Natural and Cascade--are decoupled, as is the natural gas division of Spokane-based Avista. California decoupled all its utilities in one sweeping move a few years ago. Perhaps more surprisingly, since March of 2007, Idaho Power has operated under the most progressive decoupling rules in Cascadia. You heard me: Idaho Power.
Oregon’s electric companies and most of Washington’s utilities operate under the conflicted old rules. But we may see progress soon. At present, the Oregon Public Utility Commission is considering a proposal from Portland General Electric to decouple its electric rates. If the commission approves PGE’s proposal, then Oregon’s other big electric utility PacifiCorps probably will follow.
Then we’ll need action from Washington and British Columbia.
Decoupling is an ideologically neutral innovation that helps save energy, lower customer bills, reduce greenhouse gas emissions, and unlock green-collar jobs. Interestingly, in both Washington and British Columbia, decoupling is getting held up by the right of the political spectrum. BC’s center-right climate champion Premier Gordon Campbell has yet to follow his ideological soul mate Arnold Schwarzenegger and decouple utility profits from sales. In Washington, whose Puget Sound Power & Light once led the continent on decoupling (before the wave of deregulation ended all that in the mid-1990s), center-right Attorney General Rob McKenna—or his office—has been a consistent obstacle to decoupling, whenever it’s proposed before the Transportation and Utilities Commission. Perhaps decoupled California’s Republican governor—or just about any elected official in deep R Idaho—could put in calls to the premier and the AG?
Image credit: Flickr/thomas.merton.
This piece originally appeared on the Sightline Institute's blog, The Daily Score.