Full Title: Ensuring Better Regulatory Outcomes – The Need for Careful Consideration of Performance-Based Ratemaking Policies
Author(s): Steve Weissman
Publisher(s): Center for Sustainable Energy (CSE)
Publication Date: January 12, 2021
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Traditional ratemaking encourages utilities to over-invest in facilities, underspend on operations and maintenance, and promote wasteful use of energy. Some states are exploring a performance-based ratemaking framework to align utility performance with goals to reduce greenhouse gas emissions and increase distributed energy resources. But designing effective incentives requires comprehensive study, analysis and enforcement. This paper outlines key considerations for policymakers and provides examples of unintended consequences of past utility reward programs. Author Steve Weissman, a senior policy adviser at CSE, teaches at the UC Berkeley Goldman School of Public Policy, created and directed the Energy Law program at Berkeley Law, and previously served as an administrative law judge and policy adviser for the California Public Utilities Commission.