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Title: Next-Generation Performance-Based Regulation. Volume 1: Introduction - Global Lessons for Success; Volume 2: Primer - Essential Elements of Design and Implementation; Volume 3: Innovative Examples from Around the World

Abstract

Performance-based regulations (PBRs) provide a regulatory framework to connect goals, targets, and measures to utility performance or executive compensation. Well-designed PBRs provide incentives for utility performance, benefiting consumers and utility owners alike. This report considers the role of both PBRs and more discrete performance incentive mechanisms (PIMs) in 21st century power sector transformation. Innovative technologies are transforming the way electricity is generated, delivered, and consumed. PBRs have the potential to realign utility, investor, and consumer incentives and mitigate emerging challenges to the utility business model, renewable integration, and even cyber security.The goals of PBRs in the form of multi-year rate plans are in many respects the same in terms of providing reasonably priced and reliable service to customers. However, today's technologies have changed, and there is more emphasis on clean energy. Thus, the pathways and the potential outcomes are different than they were in the 20th century when centralized generator stations and large infrastructure additions dominated the utility landscape. Given unprecedented changes underway in the electricity sector, PBRs - by specifying expectations of utility performance and outcomes for consumers, while staying agnostic to the exact means of delivery - constitute a form of prescient regulation that harnesses disruption. PBRs aremore » one tool in a broader toolbox in the transition toward flexible regulatory and market structures that rewards utilities that adapt or evolve in reaction to market and technology change. PBRs and PIMs have great value for the electric industry when designed well and can be applied to many different situations. How exactly PBR mechanisms are most effectively enacted will vary based on the utility ownership model, institutional arrangements, and a variety of other local factors. PBRs should be tailored to the needs and goals of each jurisdiction, and perhaps each utility, to most effectively achieve the needs of a 21st century power grid in that jurisdiction. Presented in three volumes, this report highlights the lessons learned from their evolving history, explores essential elements of their design and implementation as well as considerations for how they may be best applied, and examines leading examples of PBRs from the United Kingdom, New York, Denmark, Mexico, and South Africa. The full report, 'Next-Generation Performance Based Regulation - Emphasizing Utility Performance to Unleash Power Sector Innovation,' published in September 2017, can be accessed at https://www.nrel.gov/docs/fy17osti/68512.pdf.« less

Authors:
 [1];  [1];  [1];  [1];  [1];  [1];  [1];  [1];  [1];  [1];  [1];  [1]
  1. National Renewable Energy Laboratory (NREL), Golden, CO (United States)
Publication Date:
Research Org.:
National Renewable Energy Lab. (NREL), Golden, CO (United States)
Sponsoring Org.:
21st Century Power Partnership; USDOE
OSTI Identifier:
1438339
Report Number(s):
NREL/TP-6A20-70822
DOE Contract Number:  
AC36-08GO28308
Resource Type:
Technical Report
Country of Publication:
United States
Language:
English
Subject:
29 ENERGY PLANNING, POLICY, AND ECONOMY; performance-based regulations; performance incentive mechanisms; power sector transformation; utility business models; renewable energy integration; cyber-security; power grids

Citation Formats

Logan, Jeffrey S., Zinaman, Owen R., Littell, David, Kadoch, Camille, Baker, Phil, Bharvirkar, Ranjit, Dupuy, Max, Hausauer, Brenda, Linvill, Carl, Migden-Ostrander, Janine, Rosenow, Jan, and Xuan, Wang. Next-Generation Performance-Based Regulation. Volume 1: Introduction - Global Lessons for Success; Volume 2: Primer - Essential Elements of Design and Implementation; Volume 3: Innovative Examples from Around the World. United States: N. p., 2018. Web. doi:10.2172/1438339.
Logan, Jeffrey S., Zinaman, Owen R., Littell, David, Kadoch, Camille, Baker, Phil, Bharvirkar, Ranjit, Dupuy, Max, Hausauer, Brenda, Linvill, Carl, Migden-Ostrander, Janine, Rosenow, Jan, & Xuan, Wang. Next-Generation Performance-Based Regulation. Volume 1: Introduction - Global Lessons for Success; Volume 2: Primer - Essential Elements of Design and Implementation; Volume 3: Innovative Examples from Around the World. United States. doi:10.2172/1438339.
Logan, Jeffrey S., Zinaman, Owen R., Littell, David, Kadoch, Camille, Baker, Phil, Bharvirkar, Ranjit, Dupuy, Max, Hausauer, Brenda, Linvill, Carl, Migden-Ostrander, Janine, Rosenow, Jan, and Xuan, Wang. Wed . "Next-Generation Performance-Based Regulation. Volume 1: Introduction - Global Lessons for Success; Volume 2: Primer - Essential Elements of Design and Implementation; Volume 3: Innovative Examples from Around the World". United States. doi:10.2172/1438339. https://www.osti.gov/servlets/purl/1438339.
@article{osti_1438339,
title = {Next-Generation Performance-Based Regulation. Volume 1: Introduction - Global Lessons for Success; Volume 2: Primer - Essential Elements of Design and Implementation; Volume 3: Innovative Examples from Around the World},
author = {Logan, Jeffrey S. and Zinaman, Owen R. and Littell, David and Kadoch, Camille and Baker, Phil and Bharvirkar, Ranjit and Dupuy, Max and Hausauer, Brenda and Linvill, Carl and Migden-Ostrander, Janine and Rosenow, Jan and Xuan, Wang},
abstractNote = {Performance-based regulations (PBRs) provide a regulatory framework to connect goals, targets, and measures to utility performance or executive compensation. Well-designed PBRs provide incentives for utility performance, benefiting consumers and utility owners alike. This report considers the role of both PBRs and more discrete performance incentive mechanisms (PIMs) in 21st century power sector transformation. Innovative technologies are transforming the way electricity is generated, delivered, and consumed. PBRs have the potential to realign utility, investor, and consumer incentives and mitigate emerging challenges to the utility business model, renewable integration, and even cyber security.The goals of PBRs in the form of multi-year rate plans are in many respects the same in terms of providing reasonably priced and reliable service to customers. However, today's technologies have changed, and there is more emphasis on clean energy. Thus, the pathways and the potential outcomes are different than they were in the 20th century when centralized generator stations and large infrastructure additions dominated the utility landscape. Given unprecedented changes underway in the electricity sector, PBRs - by specifying expectations of utility performance and outcomes for consumers, while staying agnostic to the exact means of delivery - constitute a form of prescient regulation that harnesses disruption. PBRs are one tool in a broader toolbox in the transition toward flexible regulatory and market structures that rewards utilities that adapt or evolve in reaction to market and technology change. PBRs and PIMs have great value for the electric industry when designed well and can be applied to many different situations. How exactly PBR mechanisms are most effectively enacted will vary based on the utility ownership model, institutional arrangements, and a variety of other local factors. PBRs should be tailored to the needs and goals of each jurisdiction, and perhaps each utility, to most effectively achieve the needs of a 21st century power grid in that jurisdiction. Presented in three volumes, this report highlights the lessons learned from their evolving history, explores essential elements of their design and implementation as well as considerations for how they may be best applied, and examines leading examples of PBRs from the United Kingdom, New York, Denmark, Mexico, and South Africa. The full report, 'Next-Generation Performance Based Regulation - Emphasizing Utility Performance to Unleash Power Sector Innovation,' published in September 2017, can be accessed at https://www.nrel.gov/docs/fy17osti/68512.pdf.},
doi = {10.2172/1438339},
journal = {},
number = ,
volume = ,
place = {United States},
year = {Wed May 16 00:00:00 EDT 2018},
month = {Wed May 16 00:00:00 EDT 2018}
}

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