Connecticut will become one of the first states in the country to establish performance-based regulation for electric utilities, following a decision by the Public Utilities Regulatory Authority (PURA) Wednesday morning.
PURA’s decision creates a framework for implementing a performance-based incentive system for utilities, consistent with legislation passed in October 2020, called the “Take Back Our Grid Act.”
The system will link utilities’ earnings and profits to good performance.
Gov. Ned Lamont signed the Take Back Our Grid Act into law after Tropical Storm Isaias, which knocked out power to thousands of homes and businesses for weeks. The act seeks to hold utilities accountable for their performance.
PURA’s decision, approved unanimously Wednesday morning, includes a framework for implementing the system.
PURA adopted four regulatory goals, five foundational considerations and nine priority outcomes to guide future electric utility regulation. It plans additional performance-based regulation reforms over the next year.
PURA also formally adopted five regulatory considerations – safety, equity, economic opportunity, risk distribution and transparency – that will serve as essential principles in all of its deliberations and proceedings.
PURA Chairman Marissa Gillett called the decision a “leap forward for customer-centric utility regulation.”
“Performance-Based Regulation has the potential to align all our regulatory tools to strengthen accountability for utilities and to achieve priority outcomes for customers,” Gillett said. “These reforms are especially important now, with the transformation underway in the energy and utility industries and with many customers continuing to struggle with high monthly bills.”
According to RMI, a nonprofit group that supports decarbonization, performance-based regulation has been authorized by law in six other states: Hawaii, Colorado, Illinois, Nevada, North Carolina and Washington.
