Revenue Decoupling (2010)

Revenue Decoupling was enacted in 2010, and removed a major barrier to utility investment in all cost-effective energy efficiency by breaking the link between utility profits and sales volume. Decoupling changed the way utilities in Rhode Island recover the fixed costs of maintaining the electric and gas distribution systems. Before decoupling, utilities collected distribution charges on a per kWh or BTU basis, which meant that customer investments in energy efficiency reduced utility revenue. Decoupling resolved this discrepancy by tying the size of the distribution charge to the actual costs of maintaining the distribution system (the utility’s revenue requirement), rather than the amount of energy sold. The utility must justify these costs in a rate proceeding before the Rhode Island Public Utilities Commission. If the utility over-collects, customers receive a credit on their bills; if the utility under-collects, customers pay a surcharge.