Rate Design

Issue context, Background, & Resources

Revenue decoupling is a form of utility regulation that seeks to better align utility financial incentives with the goal of achieving increased energy efficiency in the Commonwealth.

As energy efficiency and other technologies become more common, customers are using less electricity, and saving money on their bills. However, under the Commonwealth’s current cost-of-service utility regulation, when customers consume less electricity, utilities collect less revenue. Therefore, there is little incentive for utilities to grow the efficiency market.

Revenue decoupling addresses this problem by “de-coupling” utility revenues from utility sales of electricity. Decoupling, along with other policy mechanisms such as performance incentives for efficiency performance, will create innovative and new financial incentives for utilities, grow the efficiency market in the Commonwealth, and decrease ratepayer costs.

KEEA continues to work with our state and national partners to advance revenue decoupling in the Commonwealth. By designing an electricity rate structure that better reflects market trends, and acknowledges the real-world benefits of energy efficiency, KEEA hopes to make energy efficiency a revenue opportunity for electric utilities, rather than a cost.

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