Minnesota advances on performance-based rates, asks what metrics to consider
- Minnesota regulators are continuing efforts to overhaul the state's ratemaking structure and develop performance-based rates, and now want to hear from stakeholders about what metrics should be considered.
- The Minnesota Public Utilities Commission (PUC) on April 5 said it will take comments until May 6 on how to assess outcomes like affordability, reliability, customer service and others.
- In January, the PUC issued an order that established procedures and goals in setting performance-based rates, and kept the state at the forefront of a movement away from existing cost-of-service regulation. Hawaii and Rhode Island are also closely examining the idea.
Minnesota regulators are attempting to determine what data points must be measured in order to evaluate utility performance — the first step in linking those outcomes to utility rates.
In particular, the PUC said it wants to know if it should seek to limit the specific number of metrics assessed, and whether the commission ought to "establish priorities on implementing certain metrics, such as metrics that directly fall under statutory energy policies."
While the list of performance outcomes is a manageable five — affordability, reliability, customer service quality, environmental performance and cost-effectively aligning generation to load — the Great Plains Institute (GPI) hosted a stakeholder meeting last month where roughly 100 performance metric topics were discussed.
Following the PUC's initial comment period, GPI plans to bring stakeholders back together. The PUC has set a reply comment deadline of June 4, and the institute hopes to generate alignment among stakeholders before those comments are due.
In a report summarizing the March 20 meeting, GPI said many stakeholders felt that metrics "should measure desired outcomes, not deployment of specific technologies or approaches that can, but aren’t guaranteed to, deliver those outcomes."
"Some metrics run the risk of bias towards specific technologies or approaches," the report added. "Stakeholders generally felt that metrics should be agnostic to specific technologies or approaches."
GPI noted in its report that it is not necessary to resolve all of the metric design principles in the first stage of the process, which was split into two parts. The first will identify an initial list of metrics while the second "aims to develop concrete procedures for calculating, verifying, and reporting those metrics."
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