The Financial Effect of Energy Efficiency on Utilities: A Closer Look at Decoupling

A Webinar, Oct. 28, 1:00 p.m., from the Energy Center of Wisconsin:

Many energy efficiency advocates believe that revenue decoupling consistently removes the disincentive for utilities to promote energy efficiency. Finance principles suggest a more nuanced conclusion.

In this webinar, Steve Kihm explains that utility managers ultimately care about stock prices, of which rate of return is only one component. Energy efficiency affects all three key drivers of a utility’s stock price: rate of return, cost of capital and investment scale. Decoupling, however, addresses only the rate of return driver. When Steve applies the more comprehensive financial framework, he shows that decoupling is a tactical tool that can be applied effectively to some utilities rather than a strategic approach that will work for all utilities.