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Aligning Utility Incentives with Investment in Energy Efficiency

Bryan Kranitz

A leader in the field of energy efficiency, Bryan Kranitz has served as the president of Justice Energy since founding the green-building-design-and-upgrade company in 2015. One of Bryan Kranitz’ areas of professional interest is utility incentives.

In an effort to help companies overcome the negative financial impact of spending on energy-efficiency programs, the Environmental Protection Agency invites companies to participate in an action plan released by the independent National Action Plan for Energy Efficiency Leadership Group. Entitled “Aligning Utility Incentives with Investment in Energy Efficiency,” the action plan begins by examining the various expenses of instituting viable energy-efficiency programs and recognizing that these expenses act as barriers to assertive and sustained utility investment in energy efficiency. The plan then looks at the relative ability of various policy mechanisms to reduce or eliminate these barriers.

In short, the plan recommends the ongoing modification of policies in order to bring utility incentives in line with the cost-effective delivery of energy and to modify rate-making practices to promote energy-efficient investments. The utility incentives under consideration include performance-target incentives, which offer direct company payment for the achievement of specific efficiency metrics, as well as shared-savings mechanisms, which give utilities the opportunity to share the net benefits of energy-efficiency programs with ratepayers.

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