Wednesday, July 6, 2016

How can power utilities stay healthy as customers buy less

Tom Johnson of NJ Spotlight reported yesterday:

The (New Jersey)Legislature may tackle one of the more contentious issues confronting the energy sector: How do utilities thrive when their customers are using less gas and electricity, and sometimes generating their own power?

The move is driven by increased energy conservation due to high prices and a growing reliance on producing electricity from other than conventional power plants, many of which are among the biggest sources of greenhouse gas emissions contributing to global climate change.
Good new for consumers, but not for utilities, if the trend continues as most expect it will. For utilities, it raises concerns about whether they will have the money to invest in maintaining their infrastructure at a time when they are under pressure from regulators to improve the resilience of the power grid.
One possible answer is to revamp the more than century-old business model that rewards utilities according to how much energy customers use. Instead, it would incent utilities to invest in energy conservation and renewable energy by adjusting ratepayers’ bills -- even if sales fall.
Dubbed “decoupling,” it is a strategy adopted by more than two dozen other states with varying degrees of success, but a concept that has failed to win strong backing in New Jersey. But legislators seem inclined to try again.
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