The Solar Electric Power Association (SEPA) has published the White Paper "Decoupling Utility Profits from Sales: Issues for the Photovoltaic Industry," providing valuable insight into a regulatory policy option that addresses the business disincentive that some investor-owned utilities face when their customers install a solar electric system and, as a result, purchase less electricity from the utility. Decoupling changes the way a utility's revenues are structured so that profits are no longer explicitly tied to electricity sales.
Typically, electric utilities recover their costs, and if applicable, generate profits from the sale of electricity. There is an obvious disincentive to this equation if an electric utility's customer purchases less electricity due to the installation of an on-site solar electric system - revenues collected will decline. Revenues can also fluctuate, both up and down, due to energy efficiency efforts, changes in the number of customers, macroeconomic conditions, and abnormal weather conditions.
"Utilities under- and over-collect revenues regularly, and solar is one part of this equation," said Mike Taylor, SEPA research and education director. "The impact of solar energy has been limited on utilities' revenue streams to-date. But with significant solar industry growth in the future, utility and solar industry personnel should begin to educate themselves about this emerging policy instrument that is being discussed on both federal and state levels."
As a policy, decoupling is more common both in the natural gas utility industry and/or energy efficiency program discussions, particularly at the state level. However, a handful of states have implemented decoupling for electric utilities, and now, more are assessing it. Decoupling is also being discussed at the federal level.
"In order to maintain our value as an unbiased source of information, SEPA does not advocate for specific policies or regulatory structures," states Julia Hamm, SEPA executive director. "Instead, we present the facts on all sides of various issues so that our members and stakeholders can form their own educated opinions. This paper lays out what decoupling is, why it might be considered, as well as other options in place of decoupling that address the utility-solar disincentive."
The decoupling white paper is part of SEPA's annual series of research reports and educational programs which bridge electric utilities, solar companies, and other stakeholders to push solar forward more tangibly, one real business at a time, while making solar practical and profitable in today's shifting energy landscape.
Download the full report at:
http://www.solarelectricpower.org/docs/Final%20Decoupling%20Utility%20Profits%20From%20Sales.1_30_09.pdf
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