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Lec 10 - Law 270.6 Performance Based Ratemaking and “Decoupling”; and Integrate

Law 270.6 Performance Based Ratemaking and “Decoupling”; and Integrate Class 11: Performance Based Ratemaking and Decoupling; and Integrated Resource Planning and Portfolio Planning - April 3, 2008. Under traditional ratemaking, utilities generally make higher profits if they sell more power and lose profits as customers become more efficient. Performance-based ratemaking can address the problem of utility disincentives to promote customer energy efficiency by decoupling utility profits from the amount of sales. It also is a mechanism that can encourage beneficial behavior in many areas of utility operation. Also, introduction to integrated resource planning and portfolio planning for the right mix of generation types, transmission and conservation. Portfolio Management (PM) and Integrated Resource Planning (IRP) both constitute planning exercises and present similar issues. PM, a newer term, focuses on a single utility or other load serving entity. IRP can be performed by a state regulator on a system wide, regional or service area basis, or by a utility for its service area.

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