Energy efficiency was a big part of Barack Obama's environmental platform, and among the promises he made on the campaign trail was a pledge to require states to provide incentives for utilities to reduce energy consumption.
What Obama was referring to is known as "decoupling." For most utilities, energy efficiency is linked to revenue; when a utility reduces energy consumption, it sells less energy and reduces its profit. Under this business model, energy efficiency threatens a utility's bottom line. However, under decoupling, if energy sales are less than forecast, energy rates could be adjusted to compensate the utility. These rates are typically set by a state's public utility commission.
Several states, including Massachusetts and California, adopted decoupling policies before the Obama administration took office.
Obama used the stimulus bill to promote decoupling. The package includes $3.1 billion -- over and above the annual appropriation of $45 million -- for states to implement projects related to energy efficiency and renewable energy, according to the Alliance to Save Energy.
But that funding comes with some caveats: States must adopt decoupling and stricter, more energy-efficient building codes to get federal dollars. The promise must be put into a letter. (For example, you can read Wyoming's here .)
According to the Alliance to Save Energy, all states have sent in their letters. While it remains to be seen whether the funding will be effective, Obama promised to require states to provide incentives for utilities to reduce energy consumption through decoupling policies, and the stimulus funding and grant requirements do just that. We give Obama a Promise Kept as a result.