What is a Revenue Decoupling Mechanism, and how does that benefit customers?
The largely fixed operating costs of owning, operating and maintaining the natural gas and electric infrastructure is recovered by delivery rates based on a forecasted delivery volume (supply prices are for the energy portion only, and are based on market costs for electricity and natural gas). If delivery volumes are too low, utilities do not earn authorized delivery revenues to operate and maintain the system; and if delivery volumes are too high, revenues rise above the level considered reasonable by our regulators. A revenue decoupling mechanism, or RDM, breaks the link between sales and revenues by providing utilities with the necessary revenues to operate and maintain the system – no more, and no less – through periodic adjustments (up and down) to delivery rates. Since delivery rates are the smaller part of utility bills, customers will continue to save through energy efficiency. This is a fundamental change to the way that our rates have been structured for the last century. An
