Northwest Energy Efficiency Council

Nonprofit trade association of the energy efficiency industry

  • News
    • Job Postings
    • Member Press Releases
  • Events
  • NEEC Programs
    • Smart Buildings Center
    • Tool Lending Library
    • Building Operator Certification (BOC)
    • Clean Buildings Performance Standard Helpdesk
    • K-12 Ventilation & Indoor Air Quality Helpdesk
  • Members
  • Resources
    • Building Tune-Ups Service Providers
    • Portland Benchmarking Providers
    • Seattle Benchmarking Providers
  • About
    • Staff
    • Contact
  • Membership
You are here: Home / Industry / LADWP Adopts Decoupling

LADWP Adopts Decoupling

November 5, 2012 By NEEC

Los Angeles Department of Water and Power (LADWP) which serves electricity to Los Angeles will be using an automatic rate adjustment mechanism called decoupling. The Los Angeles City Council this month approved decoupling, making it the first public power utility in the country to do so (a handful of investor owned utilities have incorporated the concept). An approach long advocated by Ralph Cavanaugh of the Natural Resource Defense Council, (read his blog post on it here) decoupling is an automatic rate adjustment mechanism (that is, no political action is necessary) should reduced revenues from sales, triggered by energy efficiency improvements, result in a shortfall of recovery in the utility’s authorized non-fuel costs. In the case of LADWP, this increased certainty in the recovery of the utility’s fixed costs is triggering a doubling of that utility’s energy efficiency incentive budget to $265M over the next two years.

So what problem is this solving? Utilities must recover their fixed cost of operation through retail revenues (unless they are also lucky enough to have excess power for wholesale market transactions). Energy efficiency, while the least expensive resource for a utility over time, does inescapably affect retail revenues by diminishing sales volume. While public utilities have more control over ratemaking than their regulated counterparts, rates are never changed in a political vacuum. In the case of LADWP, an automatic and transparent adjustment to its rates predicated by energy efficiency success provided additional increments of certainty in that utility’s ability to meet its revenue requirements. While the long term value of acquiring energy efficiency is real and calculable, for some public utilities the risk and anguish of rate adjustment in a political environment can dilute fervor for an aggressive efficiency acquisition strategy. Time will tell whether LADWP finds decoupling to be a good option for a public utility. It is important to note as LADWP celebrates its success, that many investor owned utilities find simple decoupling as nice but insufficient in addressing underlying business model deficiencies when operating substantial energy efficiency acquisition programs. NEEC shares these business model concerns and supports a progressive regional and national dialogue on an improved utility business model that can accommodate an expansive energy efficiency acquisition effort.

Filed Under: Industry

Subscribe to NEEC Updates via email

2022 Impact Snapshot

ECONorthwest Reports

Report cover

Two reports, commissioned by NEEC, provide quantitative results on the economic development effects of energy efficiency in WA and OR

View Reports

Events Calendar

Loading view.
  • There are no upcoming events.
  • March 2023

Calendar of Events

M Mon

T Tue

W Wed

T Thu

F Fri

S Sat

S Sun

0 events, 27

0 events, 28

0 events, 1

0 events, 2

0 events, 3

0 events, 4

0 events, 5

0 events, 6

0 events, 7

0 events, 8

0 events, 9

0 events, 10

0 events, 11

0 events, 12

0 events, 13

0 events, 14

0 events, 15

0 events, 16

0 events, 17

0 events, 18

0 events, 19

0 events, 20

0 events, 21

0 events, 22

0 events, 23

0 events, 24

0 events, 25

0 events, 26

0 events, 27

0 events, 28

0 events, 29

0 events, 30

0 events, 31

0 events, 1

0 events, 2

  • There are no upcoming events.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
  • There are no events on this day.
View Calendar

Recent News Posts

Job Posting (Oregon): Energy Engineer/Energy Coach

March 23, 2023

Job Posting (Oregon): Measure Development Manager, Deadline 3/31

March 23, 2023

Tier 2 Rulemaking Kick-Off Webinar April 13th 10:30AM – 12PM

March 23, 2023

Puget Sound Energy’s 2023 Accelerator program is open for business

March 17, 2023

CEM Training at the SBC, May 1st-5th

March 17, 2023

LinkedIn   Facebook

Northwest Energy Efficiency Council · Pacific Tower, 1200 12th Ave. S., Suite 110, Seattle, WA 98144 · info@neec.net · Contact Us

© 2023 · Northwest Energy Efficiency Council