Performance-Based Regulation in a High Distributed Energy Resources Future

Publication Type

Report

Date Published

01/2016

Series Editor

LBNL Report Number

LBNL-1004130

Abstract

The report explores key elements and variations of such regulation and its advantages and disadvantages from the perspectives of utilities and customers. A unique feature of the report is its treatment of comprehensive, performance-based approaches to regulation in the context of a potential future with a high reliance on energy efficiency, peak load management, distributed generation and storage. It is the third report in Berkeley Lab's "Future Electric Utility Regulation" series.

Performance-based regulation (PBR) of utilities has been an important ratemaking option in numerous jurisdictions across the United States and other advanced industrialized countries. PBR aims to strengthen performance incentives, streamline regulation, and provide utilities with greater operating flexibility. Ideally, the utility and its customers share the benefits of better performance.

PBR is an alternative to traditional cost-of-service regulation (COSR), where utility revenues are based on investment and operating costs. This traditional approach can conflict with certain policy goals, since it provides strong incentives to increase electricity sales and utility rate base. COSR also may not provide utilities with appropriate financial incentives to address evolving electric industry challenges such as changing customer demands for electricity services, growth of distributed energy resources, and changing federal and state policies.

Series Title

Future Electric Utility Regulation Report Series

Volume

FEUR Report No. 3

Year of Publication

2016

Custom 1

FEUR Report No. 3 authored by: Tim Woolf (Synapse Energy Economics) and Mark Lowry (Pacific Economics Group). Click the publication title above to see all documents related to this publication and for a link to the related webinar. 

Notes

The National Electricity Delivery Division of the U.S. Department of Energy's Office of Electricity Delivery and Energy Reliability provides funding for the Future Electric Utility Regulation series. Lisa Schwartz, in Berkeley Lab's Electricity Markets and Policy Group, is the project manager and technical editor.

To see more information on this report series, click here.

Lawrence Berkeley National Laboratory hosted a webinar on January 27, 2016 entitled "Performance-Based Regulation in a High Distributed Energy Resources Future." To view a recording of the webinar, click here.

Articles related to this report:

GTM article: How Should We Structure Performance-Based Regulation of Utilities?

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