Taking Cost Trackers Off Auto-Renew

Many people know the feeling: a product purchased on trial turns into yet another subscription, an annual membership you no longer use auto-renews, or yet another laundry detergent refill arrives on automatic delivery because you forgot to pause the order. These charges may be small on their own, but many small charges can quietly add up to become a drag on the household budget.

Although utility cost trackers are not consumer subscriptions, they can create a similar autopay problem on utility bills. Cost trackers are ratemaking mechanisms that allow utilities to recover specific expense categories on an expedited basis instead of having to wait until the next general rate case (a proceeding when a utility can ask its regulator if it can change the rates it charges customers).

Once a tracker is approved, it can be used to keep collecting money from ratepayers on a continual basis — like an automatic subscription or a blank check — outside a rate case. The use of cost trackers has expanded significantly since the 1970s, and is likely exacerbating the drivers of increasing costs, culminating in the current energy affordability crisis.

For households dealing with automatic payments, the fix is to take stock of recent spending and cancel subscriptions that no longer make sense. For utilities, the solution is similar. Several states — including Massachusetts, Washington, and Virginia — are taking action to examine the role that cost trackers play in their state, identify where they are problematic, and begin to rein them in.

A framework for taking cost trackers off autopilot

Although cost trackers can serve a legitimate regulatory purpose, and may be appropriate for certain applications or for limited periods, their main appeal for utilities is that they reduce financial risk by accelerating the timeline for cost recovery. Cost trackers provide a higher level of certainty that costs will be approved because reviews of tracked costs tend to be shorter and less thorough. When used to recover capital expenditures, trackers can exacerbate capital expenditure bias and weaken utilities’ incentives to be disciplined in their spending, leading to increased bills and energy burdens.

In A Smarter Approach to Cost Trackers to Support Affordability, RMI calls attention to a variety of actions regulators can take to address the overuse of cost trackers and the strain on affordability they may represent. These include revisiting the rationale for their use, retiring cost trackers in instances where they are not necessary, consolidating relevant cost categories back into base rates when appropriate, and implementing complementary utility cost control mechanisms for any trackers that remain in place. Recent efforts in Massachusetts, Washington, and Virginia show how states are beginning to apply these opportunities for reform using a variety of regulatory and legislative paths.

Massachusetts: Starting with the customer bill

In 2025, the Massachusetts Department of Public Utilities (DPU) opened an investigatory proceeding (D.P.U. 25-200) to evaluate all investor-owned gas and electric delivery charges, with the stated aims of containing customer costs, reducing bill volatility, and improving bill transparency and accessibility. According to the DPU’s reports, reconciliation mechanisms accounted for 39% of total electric utility delivery revenue requirements in 2025 and 40% of total gas utility delivery revenue requirements.

The DPU is now evaluating whether certain electric and gas reconciling mechanisms (the term used for cost trackers in Massachusetts) should be eliminated and included in base distribution rates, recovered through fixed rather than volumetric charges, or consolidated into annual retail rate filings instead of separate dockets to reduce administrative burden.

The number of reconciling mechanisms implemented in Massachusetts has grown considerably in recent years. To better understand the role that cost trackers play, the DPU required each utility to file a report on all reconciling mechanisms and their rate impacts, including what costs are recovered, the revenue requirement, when the mechanism was first established, and the bill impact of potential changes for customers at different usage levels.

Directing utilities to submit a comprehensive report on existing reconciling mechanisms is a crucial first step to build a common understanding of their cumulative impact on bills and   determine which expenses may warrant continued recovery through cost trackers, which cost trackers should be consolidated, and which costs should be moved back into base rates.

Washington: Evaluating the entire regulatory framework (including trackers) against cost control

In Washington, the Utilities and Transportation Commission (UTC) is taking a broader approach than the Massachusetts DPU. Legislation passed in 2021 directed the UTC to develop a policy statement addressing performance-based regulation (PBR) (Docket U-210590). Since then, the UTC has issued several policy statements on elements of PBR, but there has yet to be a holistic review of the new PBR and old cost-of-service mechanisms, and how they are working in tandem.

The UTC initiated a new phase in the PBR process in May 2025, in which stakeholders and staff contribute to an evaluation of the existing regulatory structure, examining all mechanisms used for cost recovery and how each contributes to the goal of cost containment. Through technical workshops, written comments, and data requests, UTC staff are gathering data and inputs on the historical bill impacts of various PBR and traditional cost-of-service regulatory mechanisms in Washington, including accounting deferrals and cost trackers.

The Commission staff issued a straw proposal evaluating the cost control impact of various cost-recovery mechanisms, including existing cost trackers, and offered recommendations on how the Commission can improve these mechanisms to better support cost control. Stakeholders will be given an opportunity to comment on the staff’s straw proposal before the UTC issues a policy statement.

Virginia: Ensuring existing cost trackers are in the public interest

In Virginia, legislation is driving an investigation into cost tracker reform. In April 2026, the General Assembly passed SB 251, An Act to direct the State Corporation Commission to evaluate electric utility performance in the Commonwealth, which directs the State Corporation Commission (SCC) to consider whether elements of PBR could improve electric utility performance and cost control incentives. The law requires the SCC to evaluate, among other issues, the feasibility, effectiveness, and customer benefits of consolidating existing rate adjustment clauses (RACs) — Virginia’s term for cost trackers —  and moving some costs now recovered through RACs back into base rates.

The bill is timely because it overlaps with broader conversations already underway about PBR in Virginia. The General Assembly had previously directed the SCC to study PBR and alternative regulatory tools. That work led to a report that identified Virginia’s heavy reliance on RACs as a major area of concern for cost control and transparency. The report found that Virginia’s use of RACs goes beyond the limited uses commonly associated with trackers. For a typical Dominion residential customer, RACs represented almost $40 per month in 2024 on the average residential bill, and $47.91 for a typical Appalachian Power Company customer. In 2007, RACs represented less than $2 on Virginia’s customer bills.

The report also flagged that RACs individual regulatory reviews create a heavy administrative burden for the SCC, utilities, and intervenors. While not requiring the SCC to act on cost tracker reform, the new law mandates that the SCC examine whether Virginia’s current RACs are in the public interest, and how the state can restore stronger cost control incentives without sacrificing transparency.

Virginia’s example shows how important the joint role of legislators and regulators can be, particularly when cost trackers are authorized in statute, as many are in Virginia.

Tackling the autopay challenge

Used carefully, cost trackers can help utilities recover costs that are volatile, difficult to forecast, or outside management control. But when trackers expand across too many cost categories, they can start to work like regulatory autopay: continuing year after year, outside the general rate case process with reduced visibility into prudence and weakened incentives for the utility to contain costs. This approach leaves customers on the hook, while utility shareholders benefit from significantly reduced risk.

Massachusetts, Virginia, and Washington demonstrate a range of different approaches to tackling the “autopay” challenge that cost trackers can represent. As more states look for ways to address affordability, improve transparency, and strengthen utility cost control, taking cost trackers off auto-renew is a practical place to start.