Utility regulators in two US states are embracing performance-based regulations to encourage the transition to renewables and clean energy.
Hawaii’s Public Utilities Commission is drafting a framework to tie utility revenues to performance outcomes, including the embrace of solar and other renewables, and the shift towards a more decentralized energy grid. The aim is to help the state obtain 100 percent of the state’s electricity from renewable sources by 2045.
Last year’s Hawaii Ratepayer Protection Act stipulated that the link between allowable revenues and investments be broken by no later than the end of 2020. This framework has served as the business model for electric utilities since the 1930s. It allows electricity providers to make a specific level of profit on top of what they invest to maintain and upgrade the grid based on their revenues.
PUC chair Jay Griffin acknowledges that it won’t be easy for Hawaii Electric Co. to carry out the necessary changes. “This is our highest priority … asking a company and an industry that’s basically operating under a model that’s been the same for 100 years … to move into the 21st century,” he explains.