Continuing with this weekend's close reading of the stimulus package, Katie Fehrenbacher at Earth2Tech made a great catch this week:
The text in the stimulus bill doesn’t require decoupling per se in order to get funds, but requires the state governors to get certification from their respective commissions that the states in question will:
“…seek to implement…a general policy that ensures that utility financial incentives are aligned with helping their customers use energy more efficiently and that provide timely cost recovery and a timely earnings opportunity for utilities associated with cost-effective and verifiable efficiency savings, in a way that sustains or enhances utility customers’ incentives to use energy more efficiently.”
In short, the stimulus package asks the states which are accepting stimulus money to pretty-please think about decoupling. Decoupling is a policy which allows state regulators to set the electricity rates for utilities with allowances for investments in energy efficiency and reasonable rates of return on those investments, thereby separating (or decoupling) the price of electricity from the demand. Under a decoupling regime, utilities can make money while lowering electricity consumption; without it, utilities have a built-in incentive to encourage consumption, even to the point of overconsumption that leads to new power plant construction.
The text that made it into the law is weak - a watering-down of decoupling language inserted by Henry Waxman in late January - but it's something, and considering the federalist problem (utilities are typically regulated at the state or municipal level), it might be about as good as what we can expect, as Fehrenbacher explains.
Decoupling is a highly successful environmental responsibility policy, and its implementation in California over the past three decades has contributed to the slow-down in California energy usage - the average Californian now uses about 33% less electricity than the average American (PDF). Energy innovators are very aware of the impact of California's decoupling policy, too - pretty much every energy startup presentation I've attended has a line along the lines of "we think we can get our kilowatt hour price down to here, which as you can see is impractical for most of the US market but is profitable in California...." Particularly in the solar industry, the decoupling policy has been a tremendous incentive for clean energy.
We shouldn't be insensitive to the cost that decoupling might impose on low-income people, so decoupling should be paired with additional policies that allow low-income people to reduce their energy consumption along with everyone else - targeted tax credits and rebates to begin with, but also closer-to-home projects like the weatherization assistance program. Congress will almost certainly revisit this issue in the midst of the budget debate and the next energy bill, and it should take the next step in promoting a decoupling policy that is friendly to low-income consumers.
