Performance-based ratemaking is an emerging regulatory framework that attempts to bridge the gap between traditional grid infrastructure investments and distributed energy resources (DERs). Innovation on the grid edge transforms customers from loads to resources. The grid will continue to evolve to be more bidirectional, and traditional ratemaking favoring capital-intensive investments to ensure supply will no longer be adequate. This report focuses on one alternative to traditional utility ratemaking: performance-based ratemaking (PBR).
This report focuses on PBR activity since 2015 at state utility commissions and utilities, finding activity in 19 states plus Washington, D.C., an increase of 6 states over spring 2018. It examines the drivers behind PBR activity at varied stages, looks at regulatory tools for commissions, and analyzes the progress in determining performance metrics and incentives.
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The executive summary includes:
- Summary of select report takeaways
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The full report is available as part of Wood Mackenzie's Grid Edge Service.