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Carrots and sticks: A comprehensive business model for the successful achievement of energy efficiency resource standards

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  • Satchwell, Andrew
  • Cappers, Peter
  • Goldman, Charles

Abstract

U.S. utilities face significant financial disincentives under traditional regulation in aggressively pursuing cost-effective energy efficiency. Regulators are considering some combination of mandated goals and alternative utility business model components to align the utility’s business and financial interests with state and federal energy efficiency public policy goals. We analyze the financial impacts of an Energy Efficiency Resource Standard on an Arizona electric utility using a pro-forma utility financial model, including impacts on utility earnings, ROE, customer bills and rates. We demonstrate how a viable business model can be designed to improve the business case while retaining sizable benefits for utility customers.

Suggested Citation

  • Satchwell, Andrew & Cappers, Peter & Goldman, Charles, 2011. "Carrots and sticks: A comprehensive business model for the successful achievement of energy efficiency resource standards," Utilities Policy, Elsevier, vol. 19(4), pages 218-225.
    • Handle: RePEc:eee:juipol:v:19:y:2011:i:4:p:218-225
    DOI: 10.1016/j.jup.2011.07.004
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    References listed on IDEAS

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    1. Hirst, Eric & Goldman, Charles & Hopkins, Mary Ellen, 1991. "Integrated resource planning: Electric and gas utilities in the USA," Utilities Policy, Elsevier, vol. 1(2), pages 172-186, January.
    2. Barbose, Galen & Goldman, Charles & Schlegel, Jeff, 2009. "The Shifting Landscape of Ratepayer-Funded Energy Efficiency in the U.S," The Electricity Journal, Elsevier, vol. 22(8), pages 29-44, October.
    3. Blumstein, Carl, 2010. "Program evaluation and incentives for administrators of energy-efficiency programs: Can evaluation solve the principal/agent problem?," Energy Policy, Elsevier, vol. 38(10), pages 6232-6239, October.
    4. Hirst, Eric & Blank, Eric, 1994. "Solutions to regulatory disincentives for utility DSM programmes," Utilities Policy, Elsevier, vol. 4(2), pages 105-112, April.
    5. Croucher, Matt, 2011. "Are energy efficiency standards within the electricity sector a form of regulatory capture?," Energy Policy, Elsevier, vol. 39(6), pages 3602-3604, June.
    6. Eto, Joseph & Stoft, Steven & Belden, Timothy, 1997. "The theory and practice of decoupling utility revenues from sales," Utilities Policy, Elsevier, vol. 6(1), pages 43-55, March.
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    Citations

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    Cited by:

    1. Satchwell, Andrew & Mills, Andrew & Barbose, Galen, 2015. "Quantifying the financial impacts of net-metered PV on utilities and ratepayers," Energy Policy, Elsevier, vol. 80(C), pages 133-144.
    2. Kindström, Daniel & Ottosson, Mikael, 2016. "Local and regional energy companies offering energy services: Key activities and implications for the business model," Applied Energy, Elsevier, vol. 171(C), pages 491-500.
    3. de la Rue du Can, Stephane & Leventis, Greg & Phadke, Amol & Gopal, Anand, 2014. "Design of incentive programs for accelerating penetration of energy-efficient appliances," Energy Policy, Elsevier, vol. 72(C), pages 56-66.
    4. Satchwell, Andrew & Cappers, Peter & Goldman, Charles, 2018. "Customer bill impacts of energy efficiency and net-metered photovoltaic system investments," Utilities Policy, Elsevier, vol. 50(C), pages 144-152.
    5. Oliva H., Sebastian, 2017. "Residential energy efficiency and distributed generation - Natural partners or competition?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 76(C), pages 932-940.
    6. de la Rue du Can, Stephane & Pudleiner, David & Pielli, Katrina, 2018. "Energy efficiency as a means to expand energy access: A Uganda roadmap," Energy Policy, Elsevier, vol. 120(C), pages 354-364.
    7. Croucher, Matthew, 2012. "Energy efficiency: Is re-distribution worth the gains?," Energy Policy, Elsevier, vol. 45(C), pages 304-307.
    8. Flavio Menezes & Joisa Dutra & Xuemei Zheng, 2013. "Energy Efficiency and Price Regulation," Discussion Papers Series 495, School of Economics, University of Queensland, Australia.
    9. Chandrashekeran, Sangeetha & Zuckerman, Julia & Deason, Jeff, 2015. "Raising the stakes for energy efficiency: A qualitative case study of California's risk/reward incentive mechanism," Utilities Policy, Elsevier, vol. 36(C), pages 79-90.
    10. Satchwell, Andrew & Mills, Andrew & Barbose, Galen, 2015. "Regulatory and ratemaking approaches to mitigate financial impacts of net-metered PV on utilities and ratepayers," Energy Policy, Elsevier, vol. 85(C), pages 115-125.
    11. Cui, Yadong & Jiang, Yaohui & Zhang, Zhaowen & Xu, Su, 2023. "Tax reduction, technological progress, and energy efficiency improvement: A quasi-natural experiment from China," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 618-633.
    12. Brinker, Laura & Satchwell, Andrew J., 2020. "A comparative review of municipal energy business models in Germany, California, and Great Britain: Institutional context and forms of energy decentralization," Renewable and Sustainable Energy Reviews, Elsevier, vol. 119(C).

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