Performance-Based Regulation and Climate Change

Climate and Energy published an article on “Performance-Based Regulation and Climate Change” in its July issue. The article, coauthored by Matthew Makos and Mark Newton Lowry, discusses four established approaches to PBR and then explains how it has helped to address mounting climate concerns. These concerns have boosted the popularity of PBR in the United States, for several reasons. The key role of California in the development of American PBR is noted. A state of the art, climate-minded regulatory system is a multiyear rate plan that also features the other three established PBR approaches. Current challenges in the design of climate-related provisions of these plans are emphasized. Climate-minded ratemaking proposals should give utilities the incentive to embrace them while also encouraging general operating efficiency, regulatory efficiency, and good value for customers.