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Stakeholders review energy‑efficiency savings targets, consider decoupling and third‑party models
Summary
Meeting participants discussed Virginia’s energy‑efficiency savings targets, mixed results across utilities, and possible complementary tools such as decoupling, multi‑year rate plans, and third‑party efficiency utilities.
Stakeholders at the Virginia Department of Energy‑facilitated meeting reviewed responses to a regulatory assessment and then turned to the state’s energy‑efficiency savings target mechanism. Participants noted that investor‑owned utilities have differing performance: some jurisdictions (for example, Appalachian Power territory) have exceeded targets while others (Dominion) did not meet the 2022 target, prompting questions about whether current incentives are sufficient.
SCC staff and stakeholders described the mechanics: utilities earn returns on investments in demand‑side programs and can receive performance bonuses tied to overachievement (participants cited a structure giving a 20‑basis‑point ROE adder for each 0.1 percentage point of overachievement on efficiency targets). The statutory penalty for not meeting targets was cited as a limitation: failure to meet targets can constrain commission approval of new carbon‑emitting facilities, but exemptions exist for reliability or security needs.
Several participants said the current incentives may be insufficient and proposed complementary tools. Stakeholders raised decoupling — separating utility revenues from volumetric sales — as a potentially relevant mechanism to align incentives with energy‑saving outcomes. Others suggested alternative delivery models: a third‑party energy‑efficiency utility (examples cited included the District of Columbia Sustainable Energy Utility and Energy Trust of Oregon) that would be funded or overseen separately from the jurisdictional utility and operate on measurable performance metrics.
Speakers also highlighted practical issues for verification and targeting. Several participants asked for clearer, disaggregated reporting to track participation and impacts — for example, how low‑income customers are served — and asked the SCC and utilities for better data on demographic impacts and measurement & verification protocols. The group flagged that future recommendations should define metrics and verification clearly so that targets are observable and enforceable.
No formal action was taken. The stakeholder group invited further comment on how decoupling, multi‑year rate plans or third‑party program administrators could be designed to support energy‑efficiency goals.
