هویج و چماق: مدل کسب و کار جامع برای دستیابی موفق به استانداردهای بهره وری منابع انرژی

U.S. utilities face significant financial disincentives under traditional regulation in aggressively pursuing cost-effective energy efficiency. Regulators are considering some combination of mandated goals and alternative utility business model components to align the utility’s business and financial interests with state and federal energy efficiency public policy goals. We analyze the financial impacts of an Energy Efficiency Resource Standard on an Arizona electric utility using a pro-forma utility financial model, including impacts on utility earnings, ROE, customer bills and rates. We demonstrate how a viable business model can be designed to improve the business case while retaining sizable benefits for utility customers.

U.S. regulators and legislators are utilizing energy savings goals in the form of energy efficiency resource standards (EERS) as a means to mandate aggressive energy efficiency (EE) savings (Barbose et al., 2009). As of December 2010, twenty-six U.S. states had some form of an EERS. Policy drivers for such mandates include offsetting potentially higher costs and environmental impacts associated with the construction of new generation resources and providing additional options for customers to control their energy costs. In the U.S., energy efficiency programs funded by utility customers are a common means of delivering these savings. U.S. utilities face significant financial disincentives under traditional regulation in pursuing aggressive energy efficiency goals which limits the interest of shareholders and managers. Both are concerned that the pursuit of aggressive EE savings will result in reduced utility revenues, affecting the utility’s ability to fully recover its fixed costs and ultimately increasing the likelihood that the utility under-achieves its authorized return on equity (ROE), and limited opportunities to expand rate base thereby foregoing earnings-generating investments. Regulators and policymakers are considering or have adopted more comprehensive business models (e.g., shareholder incentives, and/or lost revenue recovery mechanisms) to align the utility’s business and financial interests with a state’s public policy goals for the electricity sector (e.g., increased efficiency, reduced emissions). In establishing energy efficiency goals and targets, policymakers and legislators in the U.S. can utilize varying combinations of “sticks” and “carrots”. At one extreme is a “stick-only” approach, whereby utilities must meet mandated energy savings targets or face financial penalties. This approach is common in many U.S. states that have adopted a Renewable Portfolio Standard (RPS) with an alternative compliance payment provision if a utility does not achieve renewable energy goals. However, this “stick-only” approach (i.e., mandate with penalties) is much less common in the U.S. for energy efficiency.1 As a practical matter though, because of financial disincentives, some U.S. utilities would characterize an energy savings mandate (i.e., EERS) absent the ability to recover fixed costs as a “stick-only” approach. In the U.S., utility energy efficiency programs have been most successful in those states that utilize a “sticks-and-carrots” approach, combining a mandated savings goal or target with a comprehensive business model (see Croucher, 2011). This study examines (1) the customer bill and rate impacts, and (2) the shareholder earnings and return on equity impacts when a utility achieves aggressive energy savings due to the existence of an EERS. Our analysis will compare a “stick-only” approach of mandated energy savings goals to a “sticks-and-carrots” approach that includes a comprehensive business model. We model our analysis based on the Arizona Energy Efficiency Standard (EES), which directs Arizona investor-owned utilities to achieve 22% cumulative energy savings by 2020.2 We provide a long-term assessment of impacts on ratepayers and shareholders from energy efficiency programs that achieve these savings reduction targets (about 2% per year) through 2020 with impacts over a 20-year time horizon (2011–2030) to fully capture the benefits over the economic lifetime of the installed EE measures. We characterize and model Arizona Public Service (APS), which is the largest investor-owned utility in Arizona, and analyze two EE portfolios: (1) a “business as usual” (BAU) EE scenario as if the EES was not enacted and APS continues on its pre-existing EE savings path of approximately 1% annual savings; and (2) an EES scenario as if APS meets the EES savings targets of about 2% annual savings.3 We examine issues from a customer perspective – impacts of the EES on aggregate customer bills and rates compared to the “business as usual” case. We also analyze issues from the perspective of utility shareholders and managers and assess the effects on earnings and ROE of the EES compared to the “business as usual” case with and without a comprehensive business model (e.g., a revenue-per-customer decoupling mechanism and a shareholder incentive mechanism). The remainder of the paper describes the comprehensive business model, discusses the study approach (including the utility financial characterization, EE portfolios, and ratepayer and shareholder impact scenarios), presents analysis results, and concludes with key findings and policy discussion.

This analysis quantifies the impacts on ratepayers and shareholders when a state like Arizona mandates aggressive energy efficiency goals: ∼2.0% savings as percent of annual retail sales through ratepayer-funded programs offered by its electric utilities. We focus on the ability of a comprehensive business model, including program cost recovery, decoupling to support fixed cost recovery, and a shareholder incentive, to align the interests of utility shareholders and managers with the state’s public policy goals (i.e., achieving aggressive EE savings targets). The portfolio of energy efficiency programs included in the EES is an attractive, relatively low-cost resource for Arizona Public Service Company customers. We estimate that the portfolio of EE programs that meets EES goals would provide ∼$1.4B in net resource benefits over the analysis period (2011–2030). Customer bills would be about $4.6B lower (or 5.9%) over the lifetime of installed measures (2011–2030) compared to the “business as usual” case that includes the pre-existing path of EE savings.23 These bill savings account for and are net of any rate increases necessary to fund the increased energy efficiency efforts. Rates are modestly increased by ∼1.0 cents/kWh higher, on average, than in the pre-existing case. Our analysis also suggests that the utility faces significant erosion in earnings and a lower ROE as more aggressive energy efficiency programs are implemented. Without the effect of an RPC decoupling mechanism, utility earnings are ∼$220M lower under the EES scenario compared to the BAU with EE scenario. Our analysis, however, shows that it is possible to design an RPC decoupling mechanism that allows the utility to effectively remove the impacts on the utility’s achieved ROE from the lower sales and thus reduced recovery of fixed costs. With the implementation of an RPC decoupling mechanism designed in this fashion along with a shareholder incentive that provides the Arizona utility with 14% of program costs on a pre-tax basis, shareholder returns (i.e., ROE) would be comparable to the BAU with EE scenario. The implementation of this type of decoupling mechanism would only slightly increase average all-in retail rates by ∼1.0%.