Decoupling and demand-side management: Evidence from the US electric industry

Abstract

This paper examines the impact of revenue decoupling policies on energy efficiency spending by electric utility companies in the US. I identify this impact by using the variation in the implementation of decoupling measures over time and across utility companies in the US. Using individual utility-level data between 2007 and 2011 from the US Energy Information Administration on energy efficiency spending and other utility characteristics I find that decoupled utilities spend, on average, about $16 per customer more on energy efficiency than utilities that have not been decoupled. Therefore, given the increasing importance of energy efficiency as an effective way to reduce the emission of greenhouse gases and an ongoing increase in different regulatory environments of electric utilities, it appears that decoupling policies may be effective instruments to promote energy efficiency spending.