The Washington Utilities and Transportation Commission has decided to allow Puget Sound Energy to decouple its profits from its sales, a separation that will allow the utility to pursue energy-efficiency programs without suffering losses as energy consumption decreases. The decision is expected to promote energy conservation throughout the Northwest.
What's at Stake
Because utility profits are often tied to how much power is sold, most utilities have a financial disincentive to save energy. Earthjustice took action to decouple the profits of a Pacific NW utility from its sales and in 2013, an agreement was reached that helps Washington’s largest utility increase its energy efficiency savings.
The utilities that supply electricity to consumers typically have a financial disincentive to be energy efficient. They get paid based on how much power they sell, so if they sell less power by increasing energy efficiency, profits drop.
Puget Sound Energy (PSE) is one such utility. Earthjustice took legal action to “decouple” its profits from the amount of electricity it sells. Decoupling breaks the link between the utility’s profits and how much power it sells, allowing utilities to increase their energy efficiency efforts without financial penalties. In June 2013, Washington regulators agreed to a plan that allows PSE to increase its electricity savings by at least 5 percent while making PSE’s revenue more predictable.