Section 170IAC4-8-7. Demand-side management incentives

   (a) A utility is allowed an opportunity for earnings from prudent investments in both supply-side and demand-side resources. When appropriate, the commission may provide the utility with a shareholder incentive to encourage participation in and promotion of a demand-side management program. A utility may propose a shareholder incentive based on particular attributes of a DSM program and the program's desired results. A shareholder incentive may include, but is not limited to, the following:

(1) Grant a utility a percentage share of the net benefit attributable to a demand-side management program.

(2) Allow a utility to earn a greater than normal return on equity for a rate based demand-side management expenditure.

(3) Adjust a utility's overall return on equity in response to quantitative or qualitative evaluation of demand-side management program performance.

  (b) The commission may terminate, when appropriate, a shareholder incentive.

  (c) A shareholder incentive shall not provide an incentive payment for a program unless the net kilowatt or kilowatt-hour impact, or both, can be reasonably determined.

  (d) Load building and load retention programs are not eligible for shareholder incentives.

  (e) A utility must include a comprehensive measurement and evaluation plan with a shareholder incentive request as described in section 4 of this rule.

  (f) A shareholder incentive mechanism must reflect the value to the utility's customers of the supply-side resource cost avoided or deferred by the utility's DSM program minus incurred utility DSM program cost.

  (g) In order to reflect only the conservation and load management impact of a utility-sponsored DSM program, the shareholder incentive mechanism must exclude the effect of free-riders from the incentive calculation.

  (h) A shareholder incentive applicable to a DSM program may be based on prespecified demand and energy savings until the information on demand and energy savings from utility measurement and evaluation activities becomes available.

  (i) Commission approval of a mechanism for the recovery of a shareholder incentive based on a utility-sponsored DSM program is not approval for a specific dollar amount. The reasonableness or prudence of a revenue requirement for recovery of a shareholder incentive may be debated in a future proceeding before the commission. (Indiana Utility Regulatory Commission; 170 IAC 4-8-7; filed Aug 31, 1995, 10:00 a.m.: 19 IR 28; readopted filed Jul 11, 2001, 4:30 p.m.: 24 IR 4233; readopted filed Apr 24, 2007, 8:21 a.m.: 20070509-IR-170070147RFA; readopted filed Aug 2, 2013, 2:16 p.m.: 20130828-IR-170130227RFA)