Customer Support

Utility Revenue Decoupling

What is revenue decoupling?

Decoupling breaks the link between a utility’s energy sales and the revenue collected from its customers. Doing so helps align the utility with customer energy savings goals, by allowing for reasonable cost recovery for the utility while maintaining customer rewards for using less electricity through energy conservation efforts.

FAQ - Utility Revenue Decoupling (PDF)

How it Works

The majority of costs recovered through utility base rates (the non-fuel amount you pay for electricity) do not vary with the amount of energy consumed. However, base rates are structured in such a way that revenues for a utility like Xcel Energy rise and fall with total energy consumption.

This commodity based relationship creates a natural disincentive for a utility company to invest in energy efficiency programs that reduce the amount of electricity sold. The purpose of revenue decoupling is to eliminate this. As a result, we will no longer lose revenue by helping customers reduce their electricity use and conserve energy.

Revenue Decoupling Adjustments: Example-Residential
Description Avg Rates
$/kWh

Year 1
Usage:
750/month



Year 2

 with Decoupling

Year 2

with Decoupling

Uses 5% less**

Monthly Bill Impact
(a) (b) (c) (d) (e) (f=e-c)
Energy Usage   750 750 713 (38)
Customer Charge 8.00   8.00  8.00 8.00  -
Energy Charge 0.095647  71.74  71.74 68.15  (3.59)
Fuel Cost Charge  0.027270 20.45 20.45  19.43  (1.02)
Riders  0.006701  5.56 5.56  5.30 (0.25)
Decoupling Adjustment*  -0.000649  - (0.49) (0.46)  (0.46)
Total Bill   105.74 105.26 100.42 (5.32)

*The decoupling adjustment reflects a decoupling credit due to excess energy revenues the previous rate period (year 1).

  • If overall energy use is lower, the Decoupling Adjustment will reflect a surcharge that recovers the revenue shortfall.
  • If overall energy use is higher, the Decoupling Adjustment will reflect an excess revenues credit to customers.

**When a customer is more energy efficient and uses less energy, they see the cost savings despite the Decoupling Adjustment surcharge.

Pilot Program Started January 2016

The three-year pilot program allows Xcel Energy to adjust its rates up or down for residential and small business customers once a year to make up for any shortfall or correct for excess in non-fuel revenue.

The pilot program began with January 2016 usage. The first decoupling surcharge or credit will appear as a line item on Oct./Nov. 2017 customer bills.

Additional Resources

2017 Oct. MN Electric Decoupling Onsert

Energy Saving Tip

Make sure to regularly change the air filters on your HVAC system (at least once per month). Old, clogged filters are far less efficient than new ones.

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Gas Meter Safety

Keep your natural gas meter dry and clear of snow and ice at all times to avoid the potential for dangerous indoor natural gas buildup.

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