What is PBR methodology?
Performance-based Rate-Setting Methodology (PBR) It is an internationally-accepted methodology which uses projections of operating and capital expenditures to enable the regulator to evaluate investment in facilities to meet customer requirements and prescribed service levels.
What is PBR in energy?
Performance-based regulation (“PBR”) includes a set of alternative regulatory mechanisms intended to focus utilities on performance and desired outcomes, such as increased renewable energy, lower cost, and improved customer service.
What are the benefits of PBR methodology?
PBR is an alternative to traditional utility regulation that emphasizes incentives for good performance. It can reduce utilities’ incentives to grow their rate base and use of their system and strengthen incentives to use DERs to reduce costs.
What is a regulatory incentive?
1 By ‘regulatory incentives’ in this context we mean those administrative conditions offered by governments to foreign firms other than special fiscal (e.g. tax) or financial (e.g. subsidies) treatment.
What is process based regulation?
Process-based regulation specifies risk identification, assessment and control processes that must be undertaken, documented and (usually) audited. It is most commonly used in contexts in which there are multiple risk sources and multiple feasible risk controls.
What is a prescriptive regulatory regime?
In the prescriptive regulatory regime, the regulated entity has to comply with certain technical and procedural requirements set by the regulator. Under the prescriptive regulatory regime, the regulator’s function is to ensure that regulated entities comply with specified requirements.
What is utility performance?
The level of performance of an electric utility is determined by the soundness of its financial situation, the efficiency of its technology, and the quality of service it provides customers. Its financial underpinning is a balance of costs and revenue (from customer payments, government, and other sources).
How does incentive regulation improve efficiency?
A second alterative to mitigate this revenue erosion is incentive regulation that financially rewards the utility for encouraging energy efficiency or compensates the utility for lost revenue, thus making them indifferent to or even encouraging them to promote energy efficiency in their service area.
How can a company benefit from incentive regulation?
For the company: Creates opportunities for maximizing earnings through internal efficiency measures: reduction in both capital and operating expenditures. Realized earnings may depart significantly from intended levels. „Excessive‟ profits could cause political backlash.
What is outcome based regulation?
Outcomes-based regulation is a move away from reliance on detailed prescriptive rules, to high level, broadly stated outcomes that must be achieved.
What does prescriptive regulation mean?
We define prescriptive regulation as a tendency to identify which staff should do what work and when and how they should do it. Interpretative regulation reflects a tendency to broadly define care but not which staff should do it, nor when and how they should do it.
What is the difference between prescriptive and performance based regulation?
For example, a highly-prescriptive regulation specifies particular materials to be used and particular grades of the material that are acceptable for different conditions. A performance-based regulation specifies a threshold of acceptable performance and a means for verifying that the threshold has been met.