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Our experts assist companies around the world in developing and implementing innovative regulatory mechanisms, communicating their merits to regulators and other stakeholders, and supporting proposed regulatory frameworks through expert testimony and whitepapers. Among these mechanisms are various forms of incentive or performance-based regulation, formula-based rates, and innovative tolls for the recovery of uncontrollable costs, capital expenditures, and the cost of environmental compliance. We have assisted utilities in North America, Europe, and Australia in reviewing available alternative regulatory solutions to help develop, propose, and/or implement innovative incentive regulation plans.

Our extensive expertise in regulatory strategy, utility capital and operating expenditures, key financial issues affecting regulated utilities, cost of capital, regulatory accounting practices and processes, and quality of service issues play a key role in our work on incentive regulation.

Engagements
REPRESENTATIVE ENGAGEMENTS

Below is a list of representative engagements for our Incentive Regulation practice.

Performance-based regulation in Alberta
Brattle experts engaged in workshops and also provided expert testimony in Alberta regarding performance-based regulation and the implementation hereof. We analyzed approaches to determine the so-called X-factor in a price cap formula, which adjusts for productivity, and we developed alternatives to flawed proposals from intervenors. As part of this work, we also surveyed the use of performance-based regulation in jurisdictions around the globe.
Incentive regulation for electric distribution platform operations
One emerging expectation about distributed energy resource (DER) penetration is that it will lead to a new kind of “platform-based” operations on the distribution system, involving customer and commercial aggregator transactions for power supply, energy management, information services, and possibly new uses of the grid. Brattle evaluated alternative cost recovery and incentive mechanisms for a large urban utility seeking to make long-term commitments to accomplish these changes in its system.
Incentives for offshore cable operator
A European energy regulator asked Brattle experts to assist with the design of a regulatory framework for the newly-introduced activity of building and operating offshore transmission cables (to connect off-shore wind generators to the transmission grid). We were responsible for recommending incentive arrangements that would encourage the cable operator to ensure that the cable would be reliable and delivered on time. The recommendations were developed by reviewing limited experience with such incentives in other jurisdictions and industries, and through illustrative examples of the financial impact of incentives on a hypothetical cable operator. The key issue was designing a sufficiently powerful incentive that would not threaten to bankrupt the operator.
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