Washington State started it off by blocking an effort by one of Warren Buffett's utilities to introduce regressive fixed customer charges on electric customer bills, which would have brought the utility more revenue while reducing customers' rewards for saving energy. The Washington Commission told PacificCorp to ask instead for "revenue decoupling," a fundamental change in regulation that eliminates any linkage between utilities' financial health and growth in electricity sales, while ensuring that customers pay for electricity based solely on how much they use.
An NRDC priority is to persuade state utility commissions to adopt decoupling because it removes a disincentive for the utilities to invest in energy efficiency programs like weatherization or rebates for upgraded appliances to help customers optimize energy use. That means that when customers do the right thing and use less energy, utilities still can recover their authorized costs for grid maintenance and modernization even when their electricity or natural gas sales go down (although decoupling doesn't guarantee utility profits or increase their authorized costs).
Photo by Argonne National Laboratory, under Creative Commons
The Washington case builds on earlier precedents that NRDC helped create with Puget Sound Energy, Avista, the Northwest Energy Coalition and Earthjustice. The Washington Commission said that it would not retreat from its goal of "promoting conservation investment and encouraging, or at least not impeding, the development of distributed generation." We hope for a swift and constructive response from Mr. Buffet's management group of Berkshire Hathaway Energy Company.
Minnesota's Largest Electric Utility
Minnesota and New York weighed in immediately afterward, in unrelated cases that have been pending for months, with important new revenue decoupling orders. Minnesota approved the state's first-ever decoupling
for the state's largest electric utility, Xcel, which deserves credit for filing a sound proposal and working constructively with NRDC and key environmental allies like Sierra Club, Fresh Energy, and Izaak Walton League, and critical consumer voices like EnergyCENTS Coalition and AARP throughout the proceeding. NRDC's Samantha Williams led our participation in the case, which will help ensure that Xcel, which serves 1.2 million electricity customers in Minnesota, maintains its status as a Midwest energy efficiency and renewable energy leader. Minnesota now becomes the 18th state to adopt this fundamental regulatory reform for at least one of its electric utilities. Similar to the Washington win, Minnesota at the same time rejected a request to increase monthly fixed charges for residential consumers and small businesses, finding that the new decoupling approach would grant Xcel reasonable cost recovery while - importantly - maintaining customer rewards for saving energy and investing in distributed resources. This decision in Minnesota comes on the heels of a similar ruling in which NRDC took part, favoring decoupling
in lieu of customer charges for CenterPoint Gas case.
New York advances
Finally, in New York, a coalition including NRDC, Sierra Club, Citizens Campaign for the Environment, Renewable Energy Long Island, Sustainability Institute at Molloy College, and the Pace Energy and Climate Center helped persuade the Long Island Power Authority's [LIPA
] Board of Trustees to adopt a revenue decoupling proposal
for one of the nation's largest publicly owned utilities--serving over 1.1 million customers. By embracing decoupling as it expands its partnership with PSEG-Long Island
to operate its grid, LIPA reminds the public power community that even nonprofit utilities need relief from an addiction to increased electricity use that would otherwise impair their capacity to promote energy efficiency and small-scale "distributed" (or onsite) power generation.
The course of state-by-state utility reform often feels agonizingly slow, but all involved can take heart from a burst of progress this week that will reverberate across the nation, and beyond.
This blog was co-written with my colleagues Samantha Williams and Jackson Morris.