Back to OurEnergyLibrary search




Applying Discount Rates in Energy Utilities’ Benefit-Cost Analyses

Applying Discount Rates in Energy Utilities’ Benefit-Cost Analyses

Full Title: Applying Discount Rates in Energy Utilities’ Benefit-Cost Analyses
Author(s): Elizabeth B. Stein, Chris Holt, Peter Howard, and Jason A. Schwartz
Publisher(s): Institute for Policy Integrity - New York University School of Law
Publication Date: March 27, 2025
Full Text: Download Resource
Description (excerpt):

Selecting the proper discount rate is a critical choice when state regulators assess whether utilities’ alternative investments—like electrified heating programs or energy-efficiency incentives—will generate benefits greater than their costs. The discount rate is the metric used to translate costs and benefits that occur in the future into equivalent “present values,” reflecting the fact that society typically prefers to have a dollar now rather than later. This issue brief gives a menu of options that state regulators can choose from when deciding which discount rate they will use in benefit-cost analyses.

All statements and/or propositions in discussion prompts are meant exclusively to stimulate discussion and do not represent the views of OurEnergyPolicy.org, its Partners, Topic Directors or Experts, nor of any individual or organization. Comments by and opinions of Expert participants are their own.

Sign up for our Press Release Distribution List

    Your Name (required)

    Your Email (required)

    Please sign me up to receive press releases from OurEnergyPolicy.org.