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PURA approves Performance-Based Regulation for electric utilities

There will soon be brand new rules governing the regulation of the state’s electric utilities, following a decision by the Public Utilities Regulatory Authority (PURA) this week. 

PURA’s board on Wednesday issued a final decision in its investigation into performance-based regulation (PBR), a stated priority for the authority this year. The goal of PBR is to create incentives for electric providers that are based on maintenance, improvements, and customer-focused policies. The move toward PBR is part of the Take Back Our Grid Act that was signed into law in 2020.

The current regulatory model, according to PURA, is “fundamentally based on a cost of service (COS) model under which electric distribution companies (EDCs) recover costs incurred for providing electric distribution service, while incentives are primarily driven by the opportunity to earn a reasonable return on capital expenditures.”

In their decision, PURA’s board members say that a move toward PBR helps move regulation to “better serve the public interest.” 

“Performance-Based Regulation has the potential to align all our regulatory tools to strengthen accountability for utilities and to achieve priority outcomes for customers,” said PURA Chairman Marissa Gillett in a statement announcing the decision. “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.” 

“Creating a performance-based incentive system will ensure that the earnings and profits of utility companies are tied to good performance and certain penalties can be enacted amid extensive service disruptions,” Governor Lamont said in a statement praising the decision. “I signed the Take Back Our Grid Act into law because ratepayers deserve a level of respect that puts them above the profits.”

Wednesday’s decision won’t affect Connecticut residents’ electric bills right away. Rather, the decision approved a framework, regulatory goals, and priority outcomes for PBR. These goals include improving operational performance, empowering customers, better social equity, and lowering costs to make power more affordable for residents.

Next steps will involve implementing regulatory reforms for electric companies and creating a new regulatory strategy.

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Tricia Ennis

An Emmy and AP award-winning journalist, Tricia has spent more than a decade working in digital and broadcast media. She has covered everything from government corruption to science and space to entertainment and is always looking for new and interesting stories to tell. She believes in the power of journalism to affect change and to change minds and wants to hear from you about the stories you think about being overlooked.

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