Aligning Regulatory Processes for Distribution Cost Containment

Since 2014, investments in distribution have been the fastest growing category of utility spending. Why? Utilities must replace aging infrastructure while preparing the grid for new load growth, more extreme weather, and new technologies.

Meeting these needs while containing costs can be aided by considering how distribution system planning, customer offerings, cost recovery, and accountability mechanisms interact with one another. By thinking of these processes holistically, public utility commissions (PUCs) can:

• Maximize investment value: Ensure that distribution investments are efficient and meet multiple objectives, including grid needs and policy goals, at the lowest possible cost.
• Make utility distribution investment strategies and decisions more transparent: Enable better visibility of utility processes that support decision-making.
• Monitor performance to ensure investments deliver benefits: Minimize the risk of underutilized investments through increased accountability that allows for iteration, adjustments, and in some cases, disallowance.

We are already seeing positive results from states that coordinate these processes. For instance, Illinois now leverages the utilities’ investment plans that emerge from their planning process to determine the forecasted rate base for the utilities’ multi-year rate plans. This has unlocked more thorough cost-benefit analyses and stakeholder feedback on investments prior to cost recovery decisions. Coordinated approaches maximize the value of grid investments, improve accountability, and provide regulators with clearer tools to manage rising distribution costs.

This report acts as a roadmap for regulators, utilities, and stakeholders seeking to manage distribution costs, improve transparency, and ensure benefits are delivered to customers. Readers can learn from leading state examples and identify opportunities to better align planning, customer programs, accountability, and cost recovery in their own state contexts.

Interested in learning how this may work in your state? Download our report or reach out to RMI at stephanie.bieler@rmi.org.