A better path forward for utility regulation in Connecticut
In spring 2021, Connecticut’s utility oversight agency, Public Utility Regulatory Authority (PURA), launched an investigation into the possibility of reworking our broken utility incentive structure via Performance Based Regulation (PBR). In contrast to the system often used today, which compensates utilities based on their investments, PBR is all about outcomes. In other words, PBR has the potential to put utilities and the public back on the same path by aligning the public interest with the utilities’ financial incentives. Over the last few months, PURA has made great strides. While still in Phase 1 of the proceeding, PURA staff have authored two concept papers, held two workshops, and requested comments and feedback from stakeholders.
PURA staff is prioritizing engagement and input from a variety of stakeholders, including ratepayers and clean energy advocates. Rather than focus on the specific mechanisms to build out PBR, PURA staff are channeling their focus on identifying outcomes that ratepayers and stakeholders want to achieve. Their phased conceptual approach should be applauded.
In PURA Staff’s first concept paper they put forth a set of proposed goals and outcomes and encouraged feedback through a virtual workshop, followed by an opportunity for written comments. PURA then followed up with a second Staff concept paper that focused on assessing the existing regulatory framework in Connecticut while incorporating feedback received from the first round of comment solicitation. Following the second concept paper, a group of ten environmental and clean energy advocacy groups, including Vote Solar, submitted further recommendations to PURA. In our comments, we assessed existing regulatory programs to determine whether they’re conducive to meeting desired outcomes, like operations and investment efficiency.
Later in Phase 1, PURA Staff will work with stakeholders to identify performance metrics and potential modifications to the regulatory structure based on priority outcomes. Phase 2 will introduce new performance incentive mechanisms and other regulatory tools to be evaluated and implemented.
Other public utility commissions should take note of PURA’s inclusive and collaborative process. By encouraging constructive stakeholder dialogue, this proceeding provides a robust and flexible process for participants to voice their concerns and suggestions to align utility incentives with customer benefits and state policy objectives. Vote Solar and our partners look forward to the next step in the process and are excited to be part of the meaningful impact this switch from cost-of-service regulation will have on the Nutmeg State and its ratepayers.
Please see our library for more resources on Performance-Based Regulation of Connecticut Utilities.