Photo by njtrout_2000, used under a Creative Commons license.
In recent years, many states have grappled with the challenge of balancing the interests of regulated energy utilities to earn revenue by selling power with the public policy goal of reducing energy consumption. To meet this challenge, more than 30 states in the U.S. have successfully used innovative utility rates, termed “alternative ratemaking,” to better align utility financial incentives with the public policy goal of increasing energy efficiency and distributed energy resources. Research by the American Council for an Energy-Efficient Economy shows that states with alternative ratemaking policies achieve 50% higher savings from their energy efficiency programs. Following two recent actions, the Commonwealth of Pennsylvania is now poised to take advantage of these tools as well.