Tuesday, June 26, 2007

Terminology Tuesday: Decoupling

This one's a doozy.

Utilities make more money the more energy they sell. So energy efficiency policies would hurt a utility's bottom line because less energy is sold and less revenue is made.

"Decoupling" is when utility sales and revenues are separated so there is not a disincentive for companies to invest in efficiency. Policies vary, but in California, for example, rates are structured so that a customer's last few kilowatt-hours are extremely expensive, raising the incentive to buy more efficient equipment.

The state was one of the first to give utilities rate increases for spending money to improve the efficiency with which customers use electricity (although many complain that customers should not be subsidizing a utility's efficiency measures).

via Northeast Energy Efficiency Partnerships and StopGlobalWarming.org

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