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New math for utilities: sell less, make more

Five states have adopted 'decoupling' plans, offering electric-power companies incentives to conserve energy.

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In Idaho's Snake River Valley, where potato farmers depend on electric pumps to water their crops, the state's largest power company hopes to stand tradition on its head and profit by selling farmers less, not more, electricity.

To do that, Idaho Power is vastly expanding its energy-efficiency programs for 395,000 residential customers, small businesses, and farmers. Usually the more customers save, the less utilities make. But under an innovative deal with state regulators in March, Idaho Power gets paid for its plants and equipment and boosts profits by winning incentive payments for reducing electric demand.

It's an idea that appears to be catching on as legislatures fret about global warming and utilities scramble to meet rising demand without the increasing hassle and cost of building new power plants. Idaho is among 13 states whose regulators have either adopted or proposed measures in the past year to decouple utility profits from electricity production. Decoupling is advancing even faster for natural-gas utilities, with 25 states either adopting or proposing decoupling plans in recent years.

"This wave toward 'decoupling' is clearly gathering momentum," says Martin Kushler of the American Council for an Energy-Efficient Economy in Washington. "More states seem to be calling every week to find out about this."


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