State Reviews Efficiency Incentives For Utilities

State regulators are drafting a new rate plan to guarantee that utilities won't lose money if their customers use less electricity. This framework, known as revenue decoupling, aims to revamp rate structures, which environmentalists and utilities say pose barriers to energy efficiency and lower consumption. Currently, utilities make more money by delivering more electricity, giving them little incentive to promote efficiency measures that reduce sales.

Decoupling aims to break the connection between sales and revenue, typically by fixing per-customer delivery charges, which are now adjusted regularly to compensate for changes in sales volumes. Freed from the need to increase sales, utilities can pursue efficiency measures to help customers use less energy and save money, decoupling supporters say.