spiderdijon’s Recent Comments

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  ah ha!.........but.............

  Thanks Sean for taking the time to explain this to a dufus such as myself. I understand now that $/kWh rates are adjusted so that revenues are unaffected by varying kWh sales.

  However, it now seems to me that the 2 choices open to the utility are:

  Business As Usual option (no conservation) -

  Higher kWh sales would mean that the rate is adjusted downwards so that revenue remains constant. A 2nd plant is needed, from which the utility makes a guaranteed return-on-capital.

  Conservation option -

  Lower kWh sales (due to conservation) mean a higher rate to keep utility revenues constant (though how is this consistent with lower electricity bills for consumers?). So in terms of the 1st power plant, the utility is agnostic.

  However, there is a reduced liklihood of needing the 2nd plant, so the utility misses out on the guaranteed return that comes with building this extra plant.So the BAU option is still preferred.

  (I know that this is a very simplistic scenario in which I assume 1 plant for conservation and possibly 2 plants otherwise, but as I said before, I have a simple mind :-)

  I must still be missing something......but I'll work it out eventually!
  On Regulatory reform of utilities could lessen the need for new power plants posted 2 years, 1 month ago 16 Responses

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  My simple mind

  There is something my simple mind cannot quite work out.....how is the utility better off from encouraging energy efficiency. Sure, it saves the cost of building another power plant.....but doesn't a utility make money from building power plants?

  So instead of the business-as-usual scenario in which the utility makes more money from the original power plant (higher consumer bills) and also makes money from a 2nd plant (required due to energy demand growth left unchecked), we have the decoupling scenario in which the utility makes less money from the original plant (consumer saves money on bills) and cannot make any money from a 2nd plant, as this is not needed. Wouldn't the utility choose the 1st scenario?

  Please someone explain where I am going wrong here. I am not trying to criticise the idea, I genuinely cant work out how it is "win-win". Me stupid.On Regulatory reform of utilities could lessen the need for new power plants posted 2 years, 1 month ago 16 Responses