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Performance-Based Regulation Options

Performance-Based Regulation Options

Full Title: Performance-Based Regulation Options
Author(s): David Littell and Jessica Shipley
Publisher(s): Regulatory Assistance Project
Publication Date: August 1, 2017
Full Text: Download Resource
Description (excerpt):

Performance-based regulation (PBR) is an option for regulators and utility executives interested in changing utility motivation. It differs from traditional cost-of-service regulation by recompensing utilities based upon their performance outputs and rewarding performance beyond business as usual. PBR enables regulators to reform hundred-year-old regulatory structures to meet the challenges of grid modernization and a transforming power sector. Innovative technologies are transforming the way electricity is generated, delivered, and consumed. Electricity customers are increasingly empowered, and have new ways to interact with the electric grid. These changes in the electric energy system and customer capacities means that there is a need to reform traditional cost-of-service regulation, and PBR incentivizes utilities to do so.

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