PROMOTING ENERGY EFFICIENCY AND “DECOUPLING” BY THE NATION’S ELECTRIC AND GAS UTILITIES

WHEREAS, the nation’s electric and gas utilities provide the U.S. economy’s business and residential energy users with the majority of energy services; and

WHEREAS, under traditional regulatory rate structures, utility revenues are proportional to sales of electricity and natural gas, while many utility costs are fixed regardless of sales; and

WHEREAS, as a result of this rate structure, programs that improve energy efficiency among customers can result in reduced energy sales and a negative effect on utility profits; and

WHEREAS, traditional regulatory rate structures actually  result in a utility benefiting from increased energy production and sales –called the energy  “throughput incentive”-- that serves as a barrier to the utility implementing energy efficiency programs;  and

WHEREAS, it is critical that the nation’s utilities aggressively promote, invest in, and implement energy efficiency projects and programs to address the mounting concern over climate protection and energy independence;  and

WHEREAS, the rate method  known as “decoupling”  disassociates a utility’s profits  from its total electric or gas sales, modifying the traditional ratemaking method by adjusting rates frequently to ensure that utility revenues is neither more nor less than what is needed to cover costs and a fair return; and

WHEREAS, “decoupling” removes the market barrier to utility engagement in energy efficiency and selling less energy; and

WHEREAS,  States such as California, which have adopted decoupling, have seen per capita usage of electricity use remain flat over a 30 year period when the nation’s per capita use of electricity has increased; and

WHEREAS, the cheapest, most cost effective kilowatt to produce is a “kilowatt saved” through energy conservation and efficiency programs; and

WHEREAS, the U.S. Department of Defense projects that global warming will have negative and dire impacts on global weather and vulnerable nations, resulting in the de-stabilization of geopolitics,

NOW, THEREFORE, BE IT RESOLVED, that The U.S. Conference of Mayors urges Congress to provide an Energy Decoupling Incentive program that requires States to adopt “decoupling” into their ratemaking regulatory regime; and

BE IT FURTHER RESOLVED, that all electric and gas utilities be required to meet an Emergency Energy Efficiency Resource Standard determined by the Secretary of the Department of Energy, in consultation with the Secretary of the Treasury, the Secretary of Defense and the Administrator of the  U.S. Environmental Protection Agency,  taking  into account factors such as global economic competitiveness,  the pace of global warming, assessments by the Department of Defense on the geopolitical impact of global warming, and other factors deemed appropriate.