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For over 25 years, utility-funded energy efficiency programs have proven to be a widely available resource for meeting customer demand at low cost. We now have a wealth of experience [...]

With competition looming, electric utilities increasingly resort to price discounts, both to retain customers and to alleviate some of the pressure to introduce retail competition. Performance-based ratemaking (PBR), which allows [...]

The article describes regulatory practices and conventions that hinder the identification and development of the full potential of energy efficiency resources in the U.S. to better comply with the U.S. Environmental Protection Agency's (EPA) Clean Power Plan and also suggests some strategies to address such hindrances. It discusses outdated practices and rate impacts, the factors involved in setting carbon dioxide emission reduction targets and some success stories about energy efficiency.

Performance-based ratemaking is increasingly being considered an alternative to traditional regulation within a more competitive electricity industry. If designed well, PBR can provide better financial incentives than exist today. But regulators should carefully design PBR mechanisms that incorporate long-term public policy objectives as well as short-term profit incentives.