Designing Performance Incentives to Advance New York State’s Policy Agenda

Author: Benjamin Mandel

Performance incentives_FINAL_Page_01In this Guarini Center policy brief, Energy Law & Policy Fellow Benjamin Mandel examines how the New York State Public Service Commission (PSC) can implement an expanded set of performance incentives for electric utilities to realize its ambitious policy objectives. The brief outlines the steps regulators must address in order to design an effective performance incentive framework and describes the approach taken by regulators in Great Britain and Ontario.

Building upon the approach taken by regulators abroad, Mandel proposes specific metrics that the PSC can deploy to advance the goals of its “Reforming the Energy Vision” proceeding. He further recommends that the PSC proceed judiciously, beginning with primarily reputational incentives for nontraditional performance metrics and phasing in financial incentives once robust data and rigorous analysis can support the determination of appropriate performance targets and financial terms.

Read the full policy brief here, and refer to an earlier brief on the benefits and drawbacks of various forms of performance-based regulation for New York State here.

Performance incentives in RIIO (Great Britain), RRFE (Ontario), and REV (proposed, New York) – click to enlarge

Performance incentives in RIIO (Great Britain), RRFE (Ontario), and REV (proposed, New York)

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