From Steeplechase to Sprint: How to Remove the Hurdles and get Utilities to Embrace Energy Efficiency

February 27, 2008 - 12:00pm
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With global warming suddenly on everyone's lips, it seems that energy efficiency is poised to make a profound resurgence after nearly a decade of neglect and disuse.  Historically, utilities begrudgingly ran energy efficiency programs only upon direct orders from regulators, often times falling well short of goals set forth by commissioners.  But in today's world where both the public and politicians are demanding that utilities take substantially more ownership for their detrimental impacts on the environment, it would seem that utilities are finding ample reason to suddenly embrace the mantle of environmental stewardship.  Such, however is not the case.  Utilities still have significant institutional and financial barriers to overcome before energy efficiency can become "mainstream" policy for this sector of the economy. This presentation will explore the different options available to regulators who want to bring down or eliminate the barriers limiting acceptance and the pursuit of aggressive energy efficiency goals. Specifically, drawing upon past and present EMP group work, the presentation will discuss the reasons utilities have heretofore been reticent about implementing ambitious energy efficiency programs and what specific regulatory mechanisms (e.g., decoupling and shareholder incentives) can be used to overcome this reluctance.  In addition, the presentation will provide several numerical examples of the impact these mechanisms can have on the different stakeholders involved (i.e., shareholders, utility executives, and rate payers).  The research presented will be used to inform regulators of the tradeoffs that will be required between these sometimes competing perspectives in order to achieve long-term energy savings goals.

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