OSU study: Let's reward renewable-friendly utilities

An Oregon State University study suggests that utilities should be rewarded more for adopting energy efficiency programs.

The study, by assistant professor Inara Scott, also recommends that reforms are needed to make energy efficiency as attractive as renewables. Scott's study, published in the most recent edition of Environmental Law, pores through key differences between energy efficiency projects and renewable resources. Scott said efficiency should be considered in the same manner of renewable energy.

To that end, she recommends redesigning rate structures, setting hard targets, streamlining cost-effective tests and addressing market barriers.

Scott noted that many investor-owned utilities base their cost-recovery systems on outmoded rate structures. That is, the more energy that is produced, the higher return for shareholders.“You don’t want to penalize utilities for selling less energy,” she said.

States should instead "use ratemaking mechanisms to decouple the link between utility sales and revenues and establish performance incentives for the adoption of efficiency programs." Scott added that the state of Oregon is on the right track by setting a 25 percent renewable energy usage goal by 2025. Other states should set similar benchmarks, she said.

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