Texas Stakeholders Find Common Ground in Utility Revenue Recovery

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A broad coalition of stakeholders in the Texas grid say investor-owned utilities (IOUs) should not have to risk their revenues to meet the demands of 21st century power consumers.

Regulated utilities that advance energy efficiency and distributed energy resources (DERs) should have incentives or a rate structure that keeps them financially whole, according to a new consensus statement from the South-central Partnership for Energy Efficiency as a Resource (SPEER).

SPEER members include top executives with Texas transmission and distribution (T&D) utilities, competitive electricity retailers, and advocates for efficiency, distributed resources, and energy management software. Though the group broke new ground by agreeing in principle that regulated utilities have the right to financial protection, it could not agree on a specific remedies in the ratemaking process, said SPEER CEO Bob King.

DERs — including demand response (DR), energy efficiency, storage and on-site generation like rooftop solar — can help relieve system congestion and avoid traditional infrastructure costs, King said. But because of a “complex and multidimensional” set of disincentives embedded in traditional ratemaking, “utilities have no incentive to invest in them, even if they reduce overall costs.”

T&D utilities are obligated to their shareholders make investments on which they earn a rate of return, said Doug Lewin, vice president for energy efficiency provider CLEAResult.

“The hundred-year-old regulatory construct was created to drive those investments,” he said. “But we need utilities to use new resources that reduce customer costs and strengthen the system.”…

This article can be read in its entirety at Utility Dive.