The business disincentives that keep some utilities from encouraging customer-owned renewable power systems could be removed, according to a new white paper release by the Solar Electric Power Association (SEPA).
"Decoupling Utility Profits from Sales: Issues for the Photovoltaic Industry," addresses decoupling as a regulatory policy to change the way a utility’s revenues are structured, so that profits are no longer explicitly tied to electricity sales. Under a decoupled structure, utilities would be free to encourage the installation of customer-owned solar and wind power systems, as welll as energy efficiency measures, without worrying about a loss of profitability.
Typically, electric utilities recover their costs, and if applicable, generate profits from the sale of electricity. There is an obvious disincentive to this equation if an electric utility’s customer purchases less electricity due to the installation of an on-site solar electric system–revenues collected will decline. Revenues can also fluctuate, both up and down, due to energy efficiency efforts, changes in the number of customers, macroeconomic conditions, and abnormal weather conditions.
"Utilities under- and over-collect revenues regularly, and solar is one part of this equation," said Mike Taylor, SEPA research and education director. "The impact of solar energy has been limited on utilities’ revenue streams to-date. But with significant solar industry growth in the future, utility and solar industry personnel should begin to educate themselves about this emerging policy instrument that is being discussed on both federal and state levels."
As a policy, decoupling is more common both in the natural gas utility industry and/or energy efficiency program discussions, particularly at the state level. However, a handful of states have implemented decoupling for electric utilities, and now, more are assessing it. Decoupling is also being discussed at the federal level.
The report can be downloaded at the link below.
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