The Natural Resources Defense Council ‎‎(“NRDC”) and the Edison Electric Institute‎‎ (“EEI”) ‎announced last week that they agree – in principle – that certain changes are needed to the rate ‎structures of electric utilities. The agreement  was announced during a joint presentation at the ‎Winter Meetings of the National Association of Regulatory Utility Commissioners ‎ (“NARUC”) ‎and has been covered by many sources as “a kumbaya moment” between two organizations that ‎rarely agree on anything. While it is refreshing to see two important stakeholders making ‎progress on these difficult subjects, the agreement is missing too many details to make it a real ‎breakthrough.‎

For example, with respect to net metering the agreement states that “owners and operators of on-‎site distributed generation must provide reasonable cost-based compensation for the utility ‎services they use, while also being compensated fairly for the services they provide.” As we ‎wrote about, when the Arizona Corporation Commission addressed net metering last ‎year, both sides agreed that rooftop solar customers should pay their fair share of grid costs and ‎be compensated for their energy. But they were far apart on actually calculating the net benefits ‎flowing between the utility and its rooftop solar customers.‎

Most of the joint statement focuses on need to decouple utilities’ revenue from the volume of ‎electricity sold. From the EEI and utility side, this is not surprising since they have been ‎advocating various forms of decoupling for years in response to eroding demand. NRDC’s ‎support for decoupling is based on its pursuit of energy efficiency (“EE”) and distributed (clean) ‎generation (“DG”). NRDC clearly recognizes that EE and DG goals will be imminently more ‎attainable once the utilities are on board and that utilities will not get on board until their ‎financial disincentive – volumetric rates – is removed.‎

The agreement also touches on giving utilities performance based financial incentives, making EE ‎available to low-income customers, and encouraging investment in “smart meters” and “smart ‎grids”.‎

NRDC is one of the country’s most powerful environmental groups that consistently advocates ‎for the promotion of clean energy and efforts to curb global climate change.‎

EEI is an industry association of investor-owned utilities.‎