The customer bill as an index of utility performance
Some policy makers have proposed using the customer bill to measure a utility`s success at implementing a least-cost plan, including its demand-side management program. Use of a bill index results in imperfect incentives and unfair comparisons, and should be rejected as a performance index. Customers care about more than their bills - they also care about the quantity and quality of energy services received. Thus, a low per-customer bill is not necessarily a good indicator of utility performance. Basing regulatory rewards on relative bills sends inappropriate signals to utilities - rewarding uneconomical activity, such as the discouragement of efficient electricity consumption. Not only are there perverse incentives associated with the use of bills as indicators of performance, but the creation of comparable indices for a target firm and peer utilities is an administrative (and analytical) nightmare.
- OSTI ID:
- 75509
- Journal Information:
- Electricity Journal, Vol. 8, Issue 1; Other Information: PBD: Jan-Feb 1995
- Country of Publication:
- United States
- Language:
- English
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