Raising the stakes for energy efficiency: A qualitative case study of California's risk/reward incentive mechanism

Abstract

This article examines California's experience implementing the Risk/Reward Incentive Mechanism (RRIM) between 2007 and 2012. RRIM is a system of financial rewards and penalties designed to motivate California's investor-owned utilities to expand their energy efficiency programs and meet ambitious energy-savings targets. The RRIM is credited with achieving a substantial amount of cost-effective energy savings. Nevertheless, a dispute over the savings attained and the subsequent impact on ratepayers led the California Public Utilities Commission (CPUC) to pause halfway through the implementation period and overhaul the incentive system. The following policy recommendations flow from the analys..