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A Consumer Advocate's View: Decoupling and Energy Efficiency

Two sides of the same coin.

Fortnightly Magazine - June 2006

through 2030) indicates that the future will bring increases in energy demand while Alaskan natural-gas production (if authorized), and production from the lower 48 states will not offset the impacts of resource depletion. Another report by the American Gas Association, Evaluating U.S. Natural Gas Production, 2006, concurs with EIA by saying that “the net result is that today even record numbers of annual well completions only keep up with the annual declines in more traditional producing wells and production on the whole remains flat.”

5. U.S. EIA, Annual Energy Outlook 2006, p. 5.

5. American Gas Association Fact Sheet, “Snapshot of U.S. Natural Gas Production,” May 2005.

7. Kushler, M., D. York, and P. Witte. Examining the Potential for Energy Efficiency to Help Address the Natural Gas Crisis in the Midwest, Washington, D.C.: American Council for an Energy-Efficient Economy, 2005.

8. Energy-efficient appliances and home insulation have lifetimes of 15 to 30 years.

9. Elsewhere, John Baldacci, Maine governor and chairman of the Coalition of Northeastern Governors, is asking other governors in New England to commit to a conservation and energy-efficiency effort aimed at cutting New England’s natural-gas use 5 percent over the next 6 years. California’s adopted natural-gas goals for gas efficiency programs range from $50 million in 2004 to $150 million by 2012.

10. See Eto, J., S. Stoft, and T. Belden. The Theory and Practice of Decoupling, Berkeley, Calif.: Lawrence Berkeley Laboratory. LBL-34555, 1993. Another way of decoupling is by going to a straight-fixed variable rate design, where the fixed monthly charge is raised to recover all fixed costs. This approach is politically challenging as it is perceived as a major rate increase and will engender consumer opposition. Moreover, this approach would tend to discourage conservation due to the lower variable charge.

11. This example adds utility energy efficiency expenditures to an example contained in Ken Costello's presentation to the NARUC Natural Gas Subcommittee, “Revenue Decouplinng for Natural Gas Utilities: Issues and Observations,” NRRI, Jan. 13, 2006.

12. Kushler et al.