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"Decoupling" Energy Use From Profits

Posted: 11:28 am MDT May 18, 2009Updated: 10:53 am MDT May 20, 2009

Most power companies make money based on how much energy they sell. So, what incentive do these power companies have to get people to use less energy? An idea already established in a few states and gaining support nationally is called decoupling.

Simply put, decoupling separates profits from sales: electric utilities would generate their revenues based on the services they provide rather than just how much electricity they sell. Decoupling is a way to cut electricity use and the carbon dioxide gas emissions that contribute to climate change. And by using less electricity, it's a way for consumers to save money on their utility bills.

Some industry and consumer groups oppose decoupling, saying it's not an effective way to promote energy efficiency. Some argue this concept could also lead to higher rates if not implemented well.

However, there is bipartisan support in Congress to have policies in place that support energy efficiency standards that would also reduce greenhouse gas emissions. The American Recovery and Reinvestment Act of 2009 signed into law last February helps states implement decoupling policies through federal grants. Some believe it might just make it profitable for electric companies to help consumers save on energy. However, while some lawmakers pushed for the money to be directly tied into implement this decoupling concept, for now this idea will have to be implemented voluntarily.

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