Utility Performance Incentive Mechanisms: A Handbook for Regulators

Synapse prepared a report for the Western Interstate Energy Board that describes how regulators can guide and improve utility performance through the use of performance metrics or through performance incentive mechanisms. From reliability and safety standards to customer engagement, these tools have been widely used and are evolving to provide regulators with new means of ensuring that utilities’ incentives are aligned with the public interest. The report identifies many of the metrics and performance incentives that regulators have used to monitor and evaluate utility performance, as well as emerging metrics and incentives that are being discussed in jurisdictions facing new issues and challenges, such as the integration of distributed energy resources. The report also provides a set of principles and recommendations for regulators based on Synapse’s review of the large amount of literature on these topics and lessons learned from case studies.