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Revenue decoupling, energy demand, and energy efficiency: Empirical evidence from the U.S. electricity sector

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  • von Loessl, Victor
  • Wetzel, Heike

Abstract

This paper investigates the relationship between the regulatory policy revenue decoupling, which separates utilities’ revenue from sales fluctuations, and electricity customers’ energy demand and efficiency in the U.S. electricity sector. To this end, we use recent Stochastic Frontier Analysis estimation techniques that account for both persistent and transient energy efficiency. The results show a significant negative correlation between decoupling and electricity consumption. However, the implementation year, which serves as a reference for price adjustments, is associated with increasing electricity demand and decreasing transient energy efficiency. Therefore, utilities seem to anticipate the implementation of decoupling, which partially offsets the benefits.

Suggested Citation

  • von Loessl, Victor & Wetzel, Heike, 2022. "Revenue decoupling, energy demand, and energy efficiency: Empirical evidence from the U.S. electricity sector," Utilities Policy, Elsevier, vol. 79(C).
    • Handle: RePEc:eee:juipol:v:79:y:2022:i:c:s0957178722000807
    DOI: 10.1016/j.jup.2022.101416
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    More about this item

    Keywords

    Revenue decoupling; Energy demand; Energy efficiency;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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