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Electricity System Transition

Performance-Based Regulation

Several public utility commissions and stakeholders are exploring performance-based regulation, a regulatory framework to connect achievement of specified objectives to utility financial performance and executive compensation.  PBR can include a collection of performance incentive mechanisms (PIMs) and supporting metrics or formulas that determine the levels of financial rewards or penalties (i.e., adjustments to allowed revenues) to achieve a specified objective or goals. NARUC facilitates the PBR State Working Group (details below) to support commissioners and commission staff in exploring the degree to which PBR can be a useful tool for balancing the interests of customers and financial requirements for utilities.  Resources, activities, and partnerships that support these efforts are available below. 

  • MegaModel Utility Business Models Game

    NARUC has developed an interactive, discussion-based game to teach regulators, legislators, advocates, and other decision-makers about utility business models and regulatory regimes. As a new utility manager, your team can explore performance-based and cost-of-service regulation in vertically integrated and restructured environments.

    During the game, each utility manager team runs a utility for five, two-year planning periods (10 years total). In each period, players can choose to build or contract for generation; build transmission, distribution, and flexibility resources; and institute or respond to new policies. The MegaModel Excel-based platform shows how these decisions impact customer bills, reliability (minutes of outages), earnings per share, and air emissions (carbon dioxide).

    NARUC has routinely provided the MegaModel training to attendees of the Legislative Energy Horizon Institute and Wisconsin Public Utility Institute Basics course.

    Watch the 7-minute demonstration video and contact us if you are interested in being trained to deliver the MegaModel game

  • Webinar: Strategies for Developing Effective Performance Incentive Mechanisms – Part 2 (Vermont) December 1, 2022
    This webinar examined the Vermont Commission’s latest approaches for establishing metrics and creating effective Performance Incentive Mechanisms (PIMS). This included an explanation of the statutory basis for PBR implementation, an overview of the state’s energy efficiency programs, as well as a description of the PBR process (metrics, compensation, and utilities). The webinar concludes with lessons learned as the Vermont Commission continues to implement a performance-based regulatory framework.

    Moderator: Hon Abigail Anthony, Rhode Island

    Speaker: Joan White, Vermont Public Utility Commission

    Speaker presentation

  • Webinar: Strategies for Developing Effective Performance Incentive Mechanisms – Part 1 (Hawaii) October 6, 2022
    This webinar examined strategies for developing effective Performance Incentive Mechanisms (PIMS) and explored incentive and penalty frameworks in Hawaii. This included an overview of Hawaii’s PBR framework, with information on how the state developed their PIMS and corresponding targets. Additionally, the speaker explained how performance incentives are tied to various policies, including the state’s Renewable Portfolio Standard, deployment of advanced metering infrastructure (AMI), and cost savings sharing mechanisms. The upcoming Part 2 of this two-part expert webinar series will focus on PIMs-related developments in Vermont.

    Moderator: Hon Abigail Anthony, Rhode Island

    Speaker: Grace Relf, Hawaii Public Utilities Commission

    Speaker presentation

  • Webinar: Beyond the Metrics: Tracking Performance Targets September 1, 2022
    As the second part of a three-part webinar series exploring explore various subtopics of PBR implementation, experts will discuss some of approaches and frameworks for tracking performance targets. Participants will present information that can help regulators better understand how to establish performance criteria to facility the effective tracking of utility progress as various initiatives are advanced through the PBR framework.

    Moderator: Hon Abigail Anthony, Rhode Island

    Speakers: Jessica Shipley, Regulatory Assistance Project; Gennelle Wilson, Rocky Mountain Institute

    Speaker presentations

  • Webinar: Establishing Metrics April 14, 2022
    This the first of a three-part webinar series exploring explore various subtopics of PBR implementation. This first session examined performance considerations for establishing jurisdiction-specific metrics, including peak load reduction, third-party resource deployment, interconnection, data access, reliability and resilience, energy efficiency.

    Moderator: Hon. CJ Manthe, Nevada

    Speakers: Ryan Katofsky, Advanced Energy Economy; Rachel Gold, Rocky Mountain Institute; Doug Scott, Great Plains Institute

    Speaker presentations

  • Webinar: Performance Incentive Mechanisms (PIMs) for Resilience June 24, 2021
    Ultimately, for distribution company regulators, the desired outcomes for increased resiliency is avoided loss of load while simultaneously lowering infrastructure costs. A modern, efficient system will provide a high quality of service without overpaying for it. Additionally, regulators must consider who ultimately gains from resilience benefits and who ultimately pays for those benefits. How may a regulator incentive a utility to maximize the value of resiliency gains via a PIM? In March, the group met for a webinar on PIMs 101 and in April, a webinar on Resilience Metrics. This webinar will apply what we heard in the previous sessions to PIMs for resilience.

    Moderator: Commissioner Michael T. Richard, Maryland Public Service Commission

    Speakers: Mark Lowry, Pacific Economics; David Littell, Regulator Assistance Project; Commissioner Lillian Mateo Santos, Puerto Rico Energy Board

    Speaker biographies and presentations

  • Webinar: Resilience Metrics April 16, 2021
    This webinar oriented participants with resilience metrics in preparation for a meeting on PIMs for resilience. This webinar will discuss what metrics are in use today, but will and also explore how to think about constructing metrics adequate for your state and utility, and social, economic, and national security dynamics. Background materials include the IEEE Resilience Framework, Methods, and Metrics for the Electricity Sector white paper.

    Moderator: Hon. Charlotte Mitchell, North Carolina Utilities Commission

    Speakers: Joe Eto, Lawrence Berkeley National Laboratory;, Bill Chiu, SCE/Chair of IEEE Task Force on Resilience Framework, Methods, and Metrics for the Electricity Sector;, and Bobby Jeffers, Sandia National Laboratory


  • Webinar: Performance Incentive Mechanisms 101 March 12, 2021.
    The NARUC CPI PBR State Working Group met to discuss the foundational components of performance incentive mechanisms (PIMs). This regulatory approach offers financial upsides or downsides to utilities for performance against targeted outcomes via cash payments or incentive rates of return.

    Moderator: Dan Scripps, Michigan

    Speakers: Mike O’Boyle, Energy Innovation, Grace Relf, Hawaii Commission, Ian Dobson, Minnesota Assistant Attorney General; and Pete Cappers, Lawrence Berkeley National Laboratory.


  • Webinar: Earnings Sharing Mechanisms August 13, 2020
    Earnings sharing mechanisms are one way that a commission can manage a utility's actual rate of return and share efficiency gains with customers, although it may reduce the incentive to be efficient. In this state session, working group members heard from public utility commission staff from Hawaii, Nevada, and Vermont on how they have approached earnings sharing/adjustment mechanisms.

    Speakers: Daniel Park, Hawaii Public Utilities Commission; Kim Lighthart, Public Utilities Commission of Nevada; Joan White, Vermont Public Utility Commission


  • Webinar: Multi-Year Rate Plan Considerations and Examples June 3, 2020
    Multi-year rate plans are one way that commissions can reduce the frequency of rate cases by leveraging sophisticated forecasting and design to apply a rate for longer that a 12-month period. In this state working group session, members heard perspectives from Maine, Georgia, and Washington.

    Speakers: David Littell, Former Maine Commissioner, Senior Regulatory Advisor at the Regulatory Assistance Project and Attorney at BernsteinShur; Jamie Barber, Georgia PSC Staff; Amy Andrews, Washington UTC Staff


  • Webinar: Performance-Based Regulation Foundations April 13, 2020
    On this webinar, speakers discussed the principals of PBR, including key similarities and differences of cost-of-service and performance-based-regulation and the available tools to implement it.

    Speakers: Michael O’Boyle, Energy Innovation; Matt McDonnell, Strategen

    View recording

PBR State Working Group Leadership:

Chair: Commissioner Abigail Anthony, Rhode Island Public Utilities Commission

  • Membership: Over 30 jurisdictions in North America are members of the PBR state working group, including: Arizona, British Columbia, Canada, Colorado, Connecticut, District of Columbia , Delaware, Georgia, Hawaii, Idaho, Illinois, Indiana, Kentucky, Massachusetts, Maryland, Maine, Michigan, Minnesota, Missouri, North Carolina, Nevada, Ohio, Oregon, Oklahoma, Puerto Rico, Rhode Island, Texas, Utah, Vermont, Washington, Wisconsin.

Funder: NARUC is grateful to the U.S. Department of Energy, Office of Electricity and Grid Deployment Office, which enables most of the resources and activities described on this webpage.

NARUC staff experts who support these activities: