Tracking energy efficiency policy

Today, reporter Dan Haugen takes a look at how states are turning to financial incentives – rather than mandates – to encourage utilities to promote energy efficiency.

Utilities have no market incentive to convince people to use less of their product – in order to make more money, they have to keep building more power plants and transmission lines. In the long run, saving energy is more cost effective, so state regulators have come up with a variety of schemes to reward utilities for selling less power.

Minnesota’s new incentive structure helped Xcel Energy save 416 gigawatt hours of electricity last year – a record.

But what’s going on in other states?

Haugen recommends the Edison Foundation’s State Electric Efficiency Regulatory Frameworks report (PDF), which was just released in June. The report includes state-by-state summaries of the types of efficiency incentives that are being used.

It’s a little wonky, but now that you know the difference between a Revenue Decoupling Mechanism and a Lost Revenue Adjustment Mechanism, you should be able to sort it out

One thought on “Tracking energy efficiency policy

  1. Good stuff!

    In the transportation fuel side of energy policy, vehicles in the state fleet used nearly a million gallons of E85 in 2010 as part of their SmartFleet incentive to reduce petroleum use in state-owned vehicles. Many municipal and county fleets are doing the same. One standout is Dakota County, which was awarded a 2010 Government Green Fleet Award.

    North Dakota has invested in “blender pump” infrastructure, as a result their E85 sales have more than doubled in just one year. Sales are also up in MN, SD and Iowa.

    On the diesel front, Minnesota’s B5 biodiesel requiremnt has had the air pollution equivalent of removing 55,000 vehicles from the road, every year. It’s scheduled to go to 10% next year.