New Regulatory Frameworks



Edison Electric Institute:

There is a classic “paradigm shift” underway in the investor-owned electric utility (IOU) industry. Energy growth is slowing at a time when utilities need to raise large amounts of new capital to replace and expand infrastructure of all kinds.  The result, under traditional regulatory policies and practices, is unsustainable financial pressure on utilities.  What are needed are new regulatory frameworks which rebalance risk and provide a way forward for consumers, investors, and society.


  • Forward Test Years for U.S. Electric Utilities | August 2010
    A comprehensive explanation of the key role unit cost plays in driving the need for utility rate increases. Explains how input price inflation, productivity, and average use affect changes in unit cost.
  • Alternative Regulation for Evolving Utility Challenges: An Updated Survey | January 2013
    A survey of recent state regulatory innovations designed to address regulatory lag, a problem that is gaining urgency as slowing sales growth takes away revenues that used to offset the lack of timely cost recovery. Reflects precedent involving cost trackers, construction work in progress (CWIP) in rate base, multiyear rate and revenue caps, various kinds of revenue decoupling, formula rates, and forward test years.
  • Case Study of Alabama Rate Stabilization and Equalization Mechanism | June 2011
    An eight-page case study that describes the design, operation, and experience with Alabama’s Rate Stabilization and Equalization mechanism. Includes key lessons learned.

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