Performance-based regulation: How Minnesota is inching toward a new oversight model

April 26, 2018 | Media

Utility Dive’s Herman Trabish takes a “deep dive’ into the e21 stakeholder process to explore performance-based regulation in Minnesota.

From Utility Dive, April 24th, 2018:

Performance-based regulation needs more work before it is ready to effectively deal with the perverse incentive, according a stakeholder group studying cutting-edge utility oversight proposals in Minnesota…

…Using performance incentives that link earnings to how well a utility achieves policy goals was a “central recommendation” from a stakeholder process led by Minnesota’s e21 Initiative in December 2016…

…Citizens Utility Board (CUB) of Minnesota Executive Director Annie Levenson-Falk said the e21 discussions revealed high-level common ground on PBR and significant differences on details like goals and metrics. “CUB would like to see the MPUC open a docket on this because there is still a long way to go,” she told Utility Dive…

…All the participants in the e21 discussions accept that “the perverse incentive is a very real thing that influences outcomes, though there might be disagreement about how much it influences decisions or drives utility actions,” [Allen Gleckner of Fresh Energy] said…

…Great Plains Institute’s Nordstrom said that Xcel is “working hard to stay a step ahead” on public policy objectives. Its efforts to meet customer demand have “taken some pressure off” the existing revenue model and “nobody wants to change the system just to change it,” he said. “We want to be discerning and surgical about using PBR because we would rather do it well than fast.”…

…More utilities need to follow Xcel’s lead and “lean in” to meet customer demand, [Mike Bull of Center for Energy and Environment] said. “To capture new revenue streams that allow utilities to maintain their financial health, they need to learn to be innovative and competitive. Responding to performance incentives is an incremental step toward a new utility culture of ‘leaning in.’”

Click here to read the full article at Utility Dive