Decoupling Mechanisms: Energy Efficiency Policy Impacts and Regulatory Implementation

Tory Weber, Southern California Edison Company
Athena Besa, San Diego Gas and Electric Company and Southern California Gas Company
Bill Miller, Pacific Gas and Electric Company

Keywords

Abstract

One of the key policy issues for the use of energy efficiency as a resource is the loss of sales that results from the reduction in customer energy usage and the implications for utility
revenues. A principal response to this issue is the development and implementation of regulatory mechanisms which decouple the impacts of energy efficiency programs from the
energy sales levels which are utilized to derive utility revenues. This work presents the experience in California of the use of decoupling mechanisms to address this issue. Background
on the history of decoupling mechanisms in California and the progression of these mechanisms to those in place today is presented. A discussion is provided on the policy implications of the decoupling mechanisms utilized by each of the California Investor-Owned Utilities (IOUs) on historic and current energy efficiency programs. Details on the mechanics of each of the decoupling mechanisms utilized by the individual California IOUs are presented, including a description of the regulatory processes and the ratemaking implications. The use of decoupling mechanisms in California has contributed to the resurgence in the use of energy efficiency as a primary energy resource. Such mechanisms can be used as a resource for other states in their discussions and development of an appropriate means to also deal with the implications of energy usage reductions attributed to the use of energy efficiency programs as a resource.