IF CUSTOMERS SAVE ElECTRICITY, MUST RATES RISE?

This briefing argues that energy efficiency programs are unlikely to necessitate rate increases for utilities and that, even if rates were to rise, customer bills would still decrease. The author contends that focusing on rates rather than total bills is an economic error that ignores the joint production of electricity and efficiency.

• Utilities can save electricity without raising rates per kilowatt-hour if the speed of saving is lower than the combined rate of asset depreciation, growth in service demand, the ability to use saved operating costs to prepay debt, and potential wholesale export opportunities.
• The belief that efficiency requires rate hikes is based on the misconception that fixed costs are static; in reality, they decline over time through depreciation, and saved operating costs can be used to offset these fixed costs.
• Evaluating energy efficiency based on rates rather than total bills is economically inefficient because it treats efficiency as a cost added to electricity rather than a cheaper substitute input for delivering energy services.
• Even in scenarios where rapid efficiency gains might lead to higher rates, total customer bills would still decrease because the reduction in consumption would outweigh the price increase.

APA

RMI (n.d.). IF CUSTOMERS SAVE ElECTRICITY, MUST RATES RISE? https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_U88-16_MustRatesRise.pdf

Chicago

RMI. IF CUSTOMERS SAVE ElECTRICITY, MUST RATES RISE? n.d. https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_U88-16_MustRatesRise.pdf.

Wikipedia

{{cite report |author=RMI |title=IF CUSTOMERS SAVE ElECTRICITY, MUST RATES RISE? |url=https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_U88-16_MustRatesRise.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmindcustomers, author = {{RMI}}, title = {{IF CUSTOMERS SAVE ElECTRICITY, MUST RATES RISE?}}, institution = {RMI}, url = {https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_U88-16_MustRatesRise.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }