In recent years, many states have grappled with the
challenge of balancing the interests of regulated energy utilities to earn
revenue by selling power with the public policy goal of reducing energy
consumption. To meet this challenge, more than 30 states in the U.S. have
successfully used innovative utility rates, termed “alternative ratemaking,” to
better align utility financial incentives with the public policy goal of
increasing energy efficiency and distributed energy resources. Research by the American
Council for an Energy-Efficient Economy shows that states with
alternative ratemaking policies achieve 50% higher savings from their energy
efficiency programs. Following two recent actions, the Commonwealth of
Pennsylvania is now poised to take advantage of these tools as well.
