Rate "Decoupling" in NC

Recently, at our annual conservation forum, Ivan Urlaub of the North Carolina Sustainable Energy Association gave a quick and thorough rundown on "rate decoupling" and the political feasibility of different strategies to bring it about in a gas and electricity regulated state.

As Ivan explained, our current regulatory policies are price and reliability driven. The investor owned utilities in NC - Duke Energy, Progress Energy, Dominion/NC Power - are regulated monopolies with a guaranteed profit margin, which in turn encourages and fosters a regulatory structure that is volume based. By selling more power, the regulated utilities earn higher revenue, which is good for shareholders but undoubtedly bad for energy efficiency and conservation efforts (but that's a separate post).

Rate decoupling is a way of talking about changing the current rate structure, a difficult conversation when you're talking about guaranteed profit margins. Which is why, in NC, there are basically five overall policy options, with the lowest being the most easily attainable:
  1. Reform regulatory rate structure entirely
  2. Implement technologies that provide customers with clear, easy to understand price signals and consumption information
  3. Funding/financing for efficiency efforts that maintain utility profits.
  4. Third party administered fund for energy efficiency, outside of utility control.
  5. Incentives for consumers to adopt EE.
Rate decoupling is essentially a tool to separate a utility's revenue from energy sales. The way things are, regulated utilities have, as Ivan said, "a disincentive" with regards to efficiency efforts. You can watch video of Ivan's presentation on our Facebook page or check out all the presentation's from that day on our website.

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