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.
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|
Uses 5% less**
|Monthly Bill Impact|
|Fuel Cost Charge||0.027270||20.45||20.45||19.43||(1.02)|
*The decoupling adjustment reflects a decoupling credit due to excess energy revenues the previous rate period (year 1).
**When a customer is more energy efficient and uses less energy, they see the cost savings despite the Decoupling Adjustment surcharge.
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.
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