Assessment of net lost revenue adjustment mechanisms for utility DSM programs

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Utility shareholders can lose money on demand-side management (DSM) investments between rate cases. Several industry analysts argue that the revenues lost from utility DSM programs are an important financial disincentive to utility DSM investment. A key utility regulatory reform undertaken since 1989 allows utilities to recover the lost revenues incurred through successful operation of DSM programs. Explicitly defined net lost revenue adjustment (NLRA) mechanisms are states` preferred approach to lost revenue recovery from DSM programs. This report examines the experiences states and utilities are having with the NLRA approach. The report has three objectives. First, we determine whether NLRA is ... continued below

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112 p.

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Baxter, L.W. January 1, 1995.

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Description

Utility shareholders can lose money on demand-side management (DSM) investments between rate cases. Several industry analysts argue that the revenues lost from utility DSM programs are an important financial disincentive to utility DSM investment. A key utility regulatory reform undertaken since 1989 allows utilities to recover the lost revenues incurred through successful operation of DSM programs. Explicitly defined net lost revenue adjustment (NLRA) mechanisms are states` preferred approach to lost revenue recovery from DSM programs. This report examines the experiences states and utilities are having with the NLRA approach. The report has three objectives. First, we determine whether NLRA is a feasible and successful approach to removing the lost-revenue disincentive to utility operation of DSM programs. Second, we identify the conditions linked to successful implementation of NLRA mechanisms in different states and assess whether NLRA has changed utility investment behavior. Third, we suggest improvements to NLRA mechanisms. We first identify states with NLRA mechanisms where utilities are recovering lost revenues from DSM programs. We interview staff at regulatory agencies in all these states and utility staff in four states. These interviews focus on the status of NLRA, implementation issues, DSM measurement issues, and NLRA results. We also analyze regulatory agency orders on NLRA, as well as associated testimony, reports, and utility lost revenue recovery filings. Finally, we use qualitative and quantitative indicators to assess NLRA`s effectiveness. Contrary to the concerns raised by some industry analysts, our results indicate NLRA is a feasible approach to the lost-revenue disincentive.

Physical Description

112 p.

Notes

OSTI as DE95008209

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  • Other Information: PBD: Jan 1995

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  • Other: DE95008209
  • Report No.: ORNL/CON--408
  • Grant Number: AC05-84OR21400
  • DOI: 10.2172/32788 | External Link
  • Office of Scientific & Technical Information Report Number: 32788
  • Archival Resource Key: ark:/67531/metadc680812

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Office of Scientific & Technical Information Technical Reports

Reports, articles and other documents harvested from the Office of Scientific and Technical Information.

Office of Scientific and Technical Information (OSTI) is the Department of Energy (DOE) office that collects, preserves, and disseminates DOE-sponsored research and development (R&D) results that are the outcomes of R&D projects or other funded activities at DOE labs and facilities nationwide and grantees at universities and other institutions.

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  • January 1, 1995

Added to The UNT Digital Library

  • July 25, 2015, 2:20 a.m.

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  • Jan. 15, 2016, 12:48 p.m.

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Baxter, L.W. Assessment of net lost revenue adjustment mechanisms for utility DSM programs, report, January 1, 1995; Tennessee. (digital.library.unt.edu/ark:/67531/metadc680812/: accessed November 22, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.