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PURA Files Proposed Final Decision In Investigation Into Revenue Adjustment Mechanisms For Performance-Based Regulation Framework
From Proposed Final Decision:
[ *** ] In October 2020, partially in response to the impact of Tropical Storm Isaias, the State of Connecticut commenced the process of re-envisioning how public service companies, particularly the state’s two investor-owned electric distribution companies (EDCs), are regulated. A cornerstone of this new public policy was the stated goal of transitioning from traditional “cost-of-service” regulation to a “performance-based” regulation (PBR). See Section § 1, Public Act 20-5, An Act Concerning Emergency Response by Electric Distribution Companies, the Regulation of Other Public Utilities and Nexus Provision for Certain Disaster-Related or Emergency-Related Work Performed in the State (Take Back Our Grid Act). The General Assembly tasked the Public Utilities Regulatory Authority (Authority or PURA) with implementing PBR by adopting a framework (PBR Framework). General Statutes § 16-244aa(b).
In accordance with the April 26, 2023 Decision in Docket No. 21-05-15, PURA Investigation into A Performance-Based Regulation Framework For The Electric Distribution Companies (Phase 1 Decision), the Authority, through this Decision, adopts a component of the PBR Framework. Specifically, after conducting a robust stakeholder feedback and analysis process, the Authority “identif[ies] specific mechanisms to be implemented to align utility performance with the [adopted] standards and metrics . . . .” General Statutes § 16-244aa(b)(3). These mechanisms are: (1) multi-year rate plans (MRP); (2) the earnings sharing mechanism (ESM); and (3) the revenue decoupling mechanism (RDM; collectively, Revenue Adjustment Mechanisms).
The Revenue Adjustment Mechanisms are a component of the adopted PBR framework (PBR Framework) which will be employed to implement PBR in any future EDC rate case. Importantly, the Revenue Adjustment Mechanisms and the PBR Framework are just that — a framework — and constitute a series of well-considered concepts, models, and guidance that will facilitate future implementation of PBR. The application of the Revenue Adjustment Mechanisms and the PBR Framework will be tailored to the specific facts and circumstances of the EDC’s individual rate amendment application filed pursuant to General Statutes § 16-19. To achieve the objectives stated in the Take Back Our Grid Act, the Authority may use some, all, or none of the Revenue Adjustment Mechanisms and other components of the PBR Framework. The PBR Framework provides both a lens through which to examine an EDC’s rate amendment application and a toolbox of vetted ideas to advance PBR.
The purpose of this Decision is to explain the process employed by the Authority, to document the substantial stakeholder input, and to provide an explanation as to why the Authority is adopting specific mechanisms. In addition, this Decision provides guidance to the EDCs (and other stakeholders) to facilitate the state’s unambiguous public policy of transitioning to PBR in future rate cases. The adopted Revenue Adjustment Mechanisms are detailed in Appendix A of this Decision. [ *** ]
Proposed Final Decision (07/14/2025)
21-05-15RE01 (05/03/2023)
(PURA Investigation Into Revenue Adjustment Mechanisms For A Performance-Based Regulation Framework)
