Creating the energy utility for the 21st Century
A recent report by the target=”_blank”>American Council for an Energy-Efficient Economy
(ACEEE) identifies an important conflict of
interest when an energy
utility’s financial objectives are at odds with customer energy
efficiency programs.
Traditional utility rate programs dictate that
utilities generate profits by selling more energy, while
conservation programs are aimed at just that,
conservation.
The ACEEE argues that utilities will avoid ‘funding and the
implementation of energy-efficient programs’ unless regulatory
changes are put in place to create new business models and
eliminate the conflict between ‘saving energy and earning
profits’.
One of the key regulatory changes is the decoupling of energy
sales from profits, in addition to sharing the benefits of energy
savings with utilities and putting financial incentives in place
for performance targets.
At BC Hydro, energy rates and conservation are partially
decoupled, in that each year they are set based on a breakeven or
revenue neutral model.
Rates are set to allow BC Hydro to recoup costs for capital and
operating expenses, while the
Smart campaign
aggressively promotes energy
efficiency.
An interesting consideration for energy utilities in
BC and elsewhere in Canada is that energy conserved domestically
can be sold in the US, often at higher prices if it is
hydro.
target=”_blank”>When viewed through a continental lens, BC’s
clean electricity exported to the US often displaces higher carbon
generation, so the net impact on GHG emissions may be
positive.
The ACEEE White Paper is available here.
Reprinted with permission from the
Scan - 27 September 2011 Produced by ISIS, Sauder School of
Business, UBC, Editors: James Tansey, Jessica Worsley
.
Source: aceee.org
