Public utility commission (PUC) long-term planning policies and utility incentive and rate structures play an important role in determining the attractiveness of investments in energy efficiency and clean distributed generation (DG). In most states, utility profits are reduced if they experience reduced energy sales as a result of aggressive investments in energy efficiency or customer-sited distributed generation. Most utilities can also lose an opportunity for additional revenue when investing in demand-side resources instead of new supply, transmission, and distribution. Rate structures, including exit fees, standby rates, and buyback rates, can create unintended barriers to distributed generation. State PUCs can achieve goals for low-cost, reliable energy market
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