The New Jersey Board of Public Utilities finds incentive programs may be a better way.
Jeanne M. Fox is president, Frederick F. Butler is commissioner, Nusha Wyner is energy director, and Jerome May is with the Divsion of Energy at the New Jersey Board of Public Utilities.
Regulated gas utilities have become increasingly enthusiastic about rate-design “decoupling” in recent years, as soaring gas prices have threatened the companies’ delivery margins and, ultimately, their earnings. Advocates of energy efficiency, conservation, and renewable energy also are strong proponents of decoupling mechanisms.
Utilities see decoupling as a way to avoid disincentives to promote conservation and energy efficiency by removing the need to increase throughput to maintain or increase profitability. Many regulatory agencies and consumer groups, on the other hand, view decoupling proposals as attempts to further insulate gas utilities’ profit margins from the vagaries of the marketplace while placing consumers at added risk of increased gas bills.
New Jersey has found a way to achieve conservation objectives while maintaining the regulatory objective for utilities to operate efficiently, without placing additional risk on consumers. The ultimate result is to share the conservation benefits between the utility and the ratepayers.