A Brief History of Utility Incentives

Posted on August 31, 2017

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The 1973 oil embargo and succeeding energy crisis led people to think differently about how the United States uses energy. It exposed the country to global vulnerability because of unstable energy supplies and, combined with other factors, ushered in a period of high inflation. During this time, prices of energy and various material commodities rose greatly, which triggered fears that an era of resource scarcity with economic, political, and security stresses had begun.

Growing concerns about America’s dependence on foreign sources of oil and the environmental consequences of electricity and nuclear power generation were a major catalyst that spurred entrepreneurs to develop new ways to combat the rise in energy costs. Demand-side management programs, the active efforts by electric and gas utilities to modify customers’ energy use patterns, were established in the 1970’s in response to the crisis. These programs grew rapidly as state regulators provided incentives for utilities to pursue least-cost or integrated resource planning principles.

Today, government agencies and utilities offer a variety of tax credits, rebates and other incentives to support energy efficiency and lower pollution. Most notably, utility companies offer a wide array of incentives funded by ratepayers through a systems benefits charge, which in many cases accrues into a Public Benefits Fund (PBF) that supports energy efficiency investments. State governments also can access PBFs to offer financial incentives.

Many states commonly provide financial incentives through their individual Energy Offices and Departments of Revenue, which ensure consumers, retailers, and energy service providers understand the array of financing opportunities available. These incentives are funded through state appropriations, Recovery Act funds, and forgone tax revenue. State governments have also implemented electric and natural gas utility energy efficiency programs that now garner annual multibillion dollar investments. The role of ENERGY STAR, technical assistance and outreach, and other voluntary programs have also raised consumer awareness and advanced the bar for manufacturers, designers, builders, and other stakeholders.

The United States has made significant gains in energy productivity in the years since the 1973 energy crisis. In the new millennium, utility companies have shown that when provided with appropriate incentives, they can provide a powerful movement to energy efficiency in the private sector.

Fairbanks Energy Services has over 30 years of experience working with local utilities across the country to qualify our projects for utility incentives and faster ROI’s. Peter Fairbanks, the company’s President, founded his first energy conservation firm in 1990 to help commercial and industrial building owners reduce their energy consumption. Our staff has extensive knowledge in this field which we use in-turn to help our customers save energy while lowering project costs.

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Topics: utility, incentive programs