Electric Utility Decoupling in North Carolina: Removing Disincentives for Energy Efficiency
Date
2010-12-09
Author
Advisors
Choi, Caroline
Patino Echeverri, Dalia
Repository Usage Stats
651
views
views
794
downloads
downloads
Abstract
North Carolina’s demand for electricity will grow at approximately 1.1% annually through
2035. That could mean an additional yearly demand of 39 million megawatt hours (MWh)
by 2035, enough to power 2.9 million North Carolina households. If residents paid
the current rate for that additional electricity, it would increase yearly electric
utility bills by $3.9 billion. This cost will almost certainly increase due to the
need to build new generation plants in order to meet increased demand. However, North
Carolina has the potential to meet or exceed its future increase in demand through
energy efficiency. Moreover, energy efficiency is less expensive per kilowatt-hour
(kWh) than any other form of new generation.
However, current regulation of electric utilities in the state makes it unlikely that
any utility would choose to implement energy efficiency over increased generation.
Under traditional regulation, electric utilities earn revenue based on the amount
of electricity they sell, in kWh. Increased sales lead to more profits and decreased
sales lead to reduced profits and more risk for the utility. Since energy efficiency
would decrease the amount of electricity sold, compared to projections, it financially
penalizes the utility by damaging its core business- selling electricity. Traditional
regulation creates a link between sales volume and revenue, which creates the throughput
incentive. The throughput incentive has two parts: 1) an incentive for the utility
to increase sales and, 2) a disincentive for the utility to decrease sales (or implement
energy efficiency which would decrease sales). Full decoupling breaks the link between
sales volume and revenue and completely removes the throughput incentive.
This Master’s Project examines the current regulation of electric utilities in North
Carolina and the implications of that regulation for energy efficiency. It then examines
current knowledge of full decoupling and details options for implementation. Next,
it examines the positions of some North Carolina stakeholders around full decoupling.
Finally, the report offers suggestions for further study that should be done in the
state before full decoupling is put into practice.
Type
Master's projectPermalink
https://hdl.handle.net/10161/2869Citation
Watson, Elizabeth (2010). Electric Utility Decoupling in North Carolina: Removing Disincentives for Energy
Efficiency. Master's project, Duke University. Retrieved from https://hdl.handle.net/10161/2869.Collections
More Info
Show full item record
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License.
Rights for Collection: Nicholas School of the Environment
Works are deposited here by their authors, and represent their research and opinions, not that of Duke University. Some materials and descriptions may include offensive content. More info