What is ‘performance-based regulation’, and how can it lower utility bills?

(VIRGINIA MERCURY) — Lawmakers are advancing legislation that could lay the groundwork for future bills aimed at pushing major utilities to lower costs, reduce outages and improve customer service through a model known as “Performance Based Regulation.”

Senate Bill 251, sponsored by Sen. Scott Surovell, D-Fairfax, and House Bill 903, sponsored by Del. Rip Sullivan, D-Fairfax, would direct the State Corporation Commission to establish a study group to determine how to implement regulatory changes designed to reduce utility bills.

Sullivan said in an interview with The Mercury that, “There’s a sort of an unfortunate incentive built into the current process where, in a way, spending more money is good for Dominion’s bottom line. So let’s make spending less money good for their bottom line.”

Utilities such as Dominion Energy and Appalachian Power Company petition the SCC for a return on equity, or ROE, which determines how much they can earn on the projects they build and other aspects of their portfolio.

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