A performance appraisal, in the workplace, is the evaluation of an employee’s execution of duties assigned. In the energy sector, state regulators want to increase performance-based evaluations for utilities.
The Virginia General Assembly approved an electric utility regulation bill last month. The bill requires regulators to set performance standards for Dominion and Appalachian Power Company. This could lead to the State Corporation Commission adjusting regulator-approved profit margins. “The key difference in this case is that it sets up a process to determine what will constitute proper evidence and standards for performance-based returns,” said lobbying group, Executive Director, Brennan Gilmore of Clean Virginia.
How are utilities reacting to the news?
Dominion Energy Inc. is now 100% performance-based regulation. Chief Executive Officer, Bob Blue’s compensation will depend on how the utility performs. A filing stated, “These modifications were approved to more closely align CEO compensation with long-term share price performance, consistent with the objectives of the current strategic business review.”
According to PURA, more changes are on the horizon. “What performance-based regulation is seeking to achieve, at a very high level, is to better align the utilities service and regulations with the expectations of consumers and the public policy of the state,” explained Josh Ryor, Managing Director of Technical Staff at PURA during a presentation on the report.
ComEd suggested that metrics should be quantified using reasonably available data that does not disclose proprietary or sensitive information. Ameren Illinois recommended that metrics must be designed considering the availability of baseline information. NRDC agreed with the importance of identifying a baseline. Ameren Illinois also noted the differences in circumstances in different areas.
State officials have already started enacting laws authorizing Performance-Based Regulation (PBR).