Plan to save energy also protects profit
A proposal for the most fundamental overhaul of utility regulation in Massachusetts history -- meant to promote energy conservation while ensuring utilities benefit financially, or at least don't suffer from energy-saving efforts -- is drawing support from an unusually broad coalition of utilities, environmentalists, and energy-sector leaders.
Utilities such as NStar and National Grid have in general terms backed the plan, called "decoupling," because it separates the question of how much money utilities make from how much energy their customers use. This week, both utilities and Western Massachusetts Electric Co. signed a formal statement of support along with groups such as the Conservation Law Foundation, Environment Massachusetts, Northeast Energy Efficiency Council, and the Massachusetts Energy Consumers Alliance .
In a letter to state Department of Public Utilities chairman Paul Hibbard , the 17 signatories agreed "the time is right" to pursue decoupling plans. Environmentalists and conservation interests said they agree utilities "should be in no worse position than they would have been [financially] had the current rate order remained in effect." They agreed to back annual or semiannual distribution rate increases to help utilities recoup lost revenue from efforts they make to get customers to use less energy.
Under current regulation, Massachusetts electric and gas customers now pay for the cost of the energy they use plus a utility delivery fee per kilowatt-hour of electricity or therm of gas. If they cut their power or gas use, the utility loses revenue.
Through decoupling, utilities proving they've promoted more conservation could recoup the lost delivery revenue through an increase in the delivery rate. Customers would still on balance save money because the plan would keep their total delivery bill steady and their energy charge would drop because of lower consumption.
Even energy providers, such as power-plant owners, voiced support. Angela M. O'Connor , president of the New England Power Generation Association , said in an e-mail, "While it would seem that generators would oppose decoupling because in theory if there is more energy efficiency, people are using less power, quite the opposite is true. NEPGA and its members support the most efficient use of electricity and view energy efficiency as an essential element of a well-functioning energy market." O'Connor said the group still argues that more power plants, along with better conservation, are needed.
Robert Keough , a spokesman for state Energy and Environmental Affairs Secretary Ian A. Bowles , who oversees the utility commission and is leading the decoupling push, wouldn't say if or when the commission will launch rate-setting cases to implement the policy. But Keough added, "We're starting to hear from people across the spectrum, and we appreciate the interest."